9th Circuit Circular Logic: Medrano v Flagstar


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Editor’s Note: If a Court wants to come to a certain conclusion, it will, regardless of how it must twist the law or facts. In this case, the Court found that a letter that challenges the terms of the loan or the current loan receivable is not a qualified written request under RESPA.

The reasoning of the court is that a challenge or question about the real balance and real creditor and real terms of the deal is not related to servicing of the loan and therefore the requirement of an answer to a QWR is not required.

The Court should reconsider its ruling. Servicing of a loan account assumes that there is a loan account that the presumed subservicer has received authorization to service. The borrower gets notice often from companies they never heard of but they assume that the servicing function is properly authorized.

The “servicer” is used too generally as a term, which is part of the problem. The fact that there is a Master Servicer with information on ALL the transactions affecting the alleged loan receivable from inception to the present is completely overlooked by most litigants, trial judges an appellate courts.

The “servicer” they refer to is actually the subservicer whose authority could only come from appointment by the Master Servicer. But the Master Servicer could only have such power to appoint the subservicer if the loan was properly “securitized” meaning the original loan was properly documented with the right payee and the lien rights alleged in the recorded mortgage existed.

If the party asserts itself as the “Servicer” it is asserting its appointment by the Master Servicer who also has other information on the money trial. It should be required to answer a QWR and based upon current law, should be required to answer on behalf of all parties including the Master Servicer and the “trustee” of the loan pool claiming rights to the loan. If there are problems with the transfer of the loan compounding problems with origination of the loan, the borrower has a right to know that and the QWR is the appropriate vehicle for that.

The servicer cannot perform its duties unless it has the or can produce the necessary information about the identity of the real creditor, the transactions by which that party became a creditor and proof of payment or funding of the original loan and proof of payment for the assignments of the loan, along with an explanation of why the “Trustee” for the pool was not named in the original transaction or in a recorded assignment immediately after the “closing” of the loan transaction.

The 9th Circuit, ignoring the realities of the industry has chosen to accept the conclusion that the “servicer” is only the subservicer and that information requested in a QWR can only be required from the subservicer without any duty to provide the data that corroborates the monthly statement of principal and interest due. The new rule from the Federal Consumer Financial Board stating that all parties are subject to the Federal lending laws underscores and codifies industry practice and common sense.

The Court is ignoring the reality that the lender is the investor (pension funds etc.) and the borrower is the homeowner, and that all others are intermediaries subject to TILA, RESPA, Reg Z etc. The servicer appointed by the Master Servicer is a subservicer who can only provide a snapshot of a small slice of the financial transactions related to the subject loan and the pool claiming to own the loan.

They are avoiding the clear premise of the single transaction doctrine. If the investors did not advance money there would have been no loan. If the borrower had not accepted a loan, there would have been no loan. That is the essence of the single transaction doctrine.

Now they are opening the door to breaking down single transactions into component parts that can change the contractual terms by which the lenders loaned money and the borrower borrowed money.

It is the same as if you wrote a check to a store for payment of a TV or groceries and the intermediary banks and the financial data processors suddenly claimed that they each were part of the transaction and there had ownership rights to the TV or groceries. It is absurd. But if the question is one of payment they are ALL required to show their records of the transaction. This includes in our case the investment banker who is the one directing all movements of money and documents.

If the Court leaves this decision in its current form it is challenging the law of unintended consequences where no transaction is safe from claims by third party intermediaries. Even if Flagstar had no authority to service the account, which is likely, they were acting with apparent authority and must be considered an intermediary servicer for purposes of RESPA and a QWR.

PRACTICE TIP: When writing a QWR be more explicit about the connections between your questions, your suspicion of error as to amount due, payments due etc. Show that the amount being used as a balance due is incorrect or might be incorrect based upon your findings of fact. Challenge the right of the “servicer” to be the servicer and ask them who appointed them to that position.

9th Circuit Medrano v Flagstar on Qualified Written Request

40 Responses

  1. I agree Patrick. These servicers are in reality, third party debt collectors and are not the holder nor do they have any legal rights of a holder. The servicers duties are very limited and they do not have any of the duties of a trustee. The FEDSTERS are big scammers. The servicers are engaging in a cover up for the fraud of the issuer and all subsequent transferees.

  2. The servicer is only required to answer questions relating to the servicing of the loan.

    This would include questions about the details of their servicing contract.

    Does the servicer currently realize a servicing contract for the borrower’s loan as an asset on its books of account? (if yes, the servicer is not mortgagee and does not have a claim of its own to accelerate and sue upon.)

    Can the servicer provide a chain of title to its servicing contract from its inception?

    Who is the servicer’s contractual counterparty? (This should be the note owner or master servicer)

    Is the counterparty a person entitled to enforce the note against the borrower? (only a payment received by a person entitled to enforce the note will discharge the obligation. Also a person entitled to enforce is not necessarily the creditor to whom a debt is owed but must be included in the chain of holdership to any bearer instrument)

    Is the servicer contractually entitled to keep a percentage of the borrower’s periodic payment as a fee or servicing strip before passing the balance through to the servicer’s contractual counterparty? (if yes, the note is rendered non-negotiable the instant the servicing contract is executed. Both the servicer and the investor would control limited rights to discounted proceeds and those are property rights in the note that must be assigned outside UCC 3)

    Answers to these questions in writing may be handy as evidence that tends to prove the existence of circumstances and conditions which make it more or less likely an affirmative defense exists in a judicial proceeding.

  3. BSE…I agree and I believe the amount of evil roaming the earth is unprecedented.

  4. Realize that these people ( Banking Cartel ) are cut from the flesh of Satan and no other. Justice will prevail maybe not in this life but in the next life. The war has been won and done ! Their greed and satisfaction has no enternity.

  5. Time will tell D.C…I still have faith good will prevail.

  6. When, on the other hand, the gods purge the earth with a deluge of water, the survivors in your country are herdsmen and shepherds who dwell on the mountains, but those who, like you, live in cities are carried by the rivers into the sea. Whereas in this land, neither then nor at any other time, does the water come down from above on the fields, having always a tendency to come up from below; for which reason the traditions preserved here are the most ancient.

    The fact is, that wherever the extremity of winter frost or of summer does not prevent, mankind exist, sometimes in greater, sometimes in lesser numbers. And whatever happened either in your country or in ours, or in any other region of which we are informed-if there were any actions noble or great or in any other way remarkable, they have all been written down by us of old, and are preserved in our temples.

    Whereas just when you and other nations are beginning to be provided with letters and the other requisites of civilized life, after the usual interval, the stream from heaven, like a pestilence, comes pouring down, and leaves only those of you who are destitute of letters and education; and so you have to begin all over again like children, and know nothing of what happened in ancient times, either among us or among yourselves. As for those genealogies of yours which you just now recounted to us, Solon, they are no better than the tales of children. In the first place you remember a single deluge only, but there were many previous ones; in the next place, you do not know that there formerly dwelt in your land the fairest and noblest race of men which ever lived, and that you and your whole city are descended from a small seed or remnant of them which survived. And this was unknown to you, because, for many generations, the survivors of that destruction died, leaving no written word.

  7. Well if the Mayan Calendar & Nostradamus were wrong then this is going to get pretty interesting.


    Ill tell you what–ill believe that if they dont file anything on that deadline date ——-and lets see by coincidence thats Mayan end of times right—so ill expect the world to shake and the core to spin upside down too—then ill believe about the conscience

  9. We may be making them have a conscience and they don’t want that.

    Ha Ha Ha —i needed a laugh–whoever you are

  10. Well it sounds like you have a date with the same crew that I do around the same time. I hope we win so we can have our lives back. I don’t think they like controversy very much. We may be making them have a conscience and they don’t want that.

  11. @STRIPES —im not up on red the red alert bonus minutes yet am i –due date is not until December 21 right–so you can start piling on at the higher rate on monday

    lets see whats your guys got planned for XMAS for me this year? besides the MTD –the motion to dismiss on the pleadings—the dismissal of all affidavits, oh yes all my motions—-

    and im guessing a motion to declare settlement valid, and note good consideration —set for evidentiary hearing huh?

    oh yeah and to make this XMAS special how about sanctions for something or other –threat of jail somehow–

    It takes some imagination to beat the Emergency hearing notice on the 23rd last year 2011—-hearing on secrecy orders on 30th for new years eve—-that was a twofer there

    but still its tough to beat XMAS 25th 2010—when the house froze–and the new years demand on my insurance policy proceeds

    but i liked xmas day 2009 even better—preparing the last minute 12/29/09 amended complaint and RICO

    I just cant wait for my newest 12–21–2012–for XMAS surprise–what are they gonna do for me on 12-21-12?????

  12. It is all just ridiculous to me that little people like us could be any sort of threat to these people. All I want is justice. Why do they have to be so greedy & steal from us?

  13. You are hilarious DC…I am learning as I go along just like everyone else. I never got tripped up on my name. I have nothing to hide. Just because I used a different name when I registered at another site and it popped up here doesn’t mean I am using multiple names. That is simply untrue. You need to calm down. I am as patriotic as they come. My life is pretty mundane stuff in the context of all of this craziness.

  14. well lets see —would have to be an entity that has debt collectors as customers or members—-and offers foreclosure and default legal support services ….computerized–data handler –maybe even a legal network —-if i were an outfit like that–with a tendancy to overcome obstacles with creative energy, id want that capability for my best customers——-hmmm now how many possible candidates might there be??? i dont know stripes or chains or ivent or whatever you call yourself at this moment—i stll havent forgotten how you got your names mixed up in that exchange before you were blocked last time–but better to study you i guess

  15. Who are they?

  16. @STRIPES —–sure jump onto that site folks and watch your virus scans shake and shudder—-youll get hijacked and keystrokes tracked

    once they get past your firewall—they get access and watch your strokes—scanwith search words and focus on you —they can even link into your court deadlines —and then work on you while you prepare—–iv lost track of how many times iv got right up to a deadline and had my computer mysteriously go down 2 days before

    be careful about these sidetrails

  17. WOW DC…bank shill….?..left wing hippie? Anti-this and commie that…? Nazi…? LOL.. All I can say is you have gone completely nuts and off the radar. Here is a story from Crain’s Chicago Business….. Crown family member in middle of JPMORGAN firestorm….

  18. Please allow me to repost that link DC…….I missed a letter..

  19. @STRIPES: You are a paid bank plant–fed with a clever bunch of right wing material and me too BS to distract people, feed them misinformation and make the site look extremist—even to the point of shunting people–and their electronic rails into right wing extremist hate sites.

    Ok its your risght if you want to be a left wing no meat long hair hippie freak –more power—or even an honest not in hiding nazi—-its your affair——–but it is intolerable to see you lead people into dead ends, deceits and some of the most pernicious deception that your PR can come up with—who is it “American Bankers Association–is that who you work for? or BoA—-its fairly obvious ……..the deluges of meaningless one liners–and the ocassional reinforcing collaborator–

    yeah anti-commie and everybody a commie—i think you need to work up a more substantive approach–its too easy to see this one

  20. @STRIPES

    No not the article —its the whole website —why are you stearing people into this extremist sites—-i see the anti-semitism etc —what is this a nazi thing? is that what this is a trick to lure innocent forclosure people onto an extreme right wing quasi terrorist cell site —to get them on the terrorist lists–is that what you are doing stripes–cute trick —pump hits on that terrorist site–get people trapped on lists

  21. That is not the name of the article D.C.

  22. @ALL—just in case you click on this great offering that stripes is posting her—–see this one Neil Garfield—your post now contains:

    “The Total Collapse: World War III guaranteed”

    OK if thats what you people are about then you are right —its no longer rational or useful–

  23. Interesting article…. Communist Victory America- http://english.pravda.ru/opinion/columnists/03-12-2012/123005-communist_victory_amerika-0/

  24. For example Vanguard, who are one of the worlds largest institutional investors are the biggest investor in IBM…notice IBM emblazoned computers all over the banks. Vanguard is who Obama happens to have his pension invested in. Hmmm…right..? CNBC said….follow the investments. Sure to make your head spin like a top.

  25. They named no names in this video of course but, it is the shareholders who are the culprits. That is why Matt Taibi was defending them. The banks do what they are told by their shareholders who are their biggest investors. As if these bank heads would do anything to jeopardize their shareholders positions. Jamie Dimon would be hanging from the Brooklyn bridge….Lloyd Blankfein as well…They are all doing the devils work.

  26. They just want to steal until there is nothing left. They have millions of us down to our last few pennies. These Corporate Government crooks have stripped us of all of our equity, businesses, our health insurance, our livelihoods, our savings, our pensions now they want to steal the roof over our heads. These politicians need to be impeached.

  27. way way back i sent the QWR- al who received and benefitted from the loan transaction for the life of the loan, got a computer print out, of payments made to indymac,and words that said under RESPA, thats all we gotta give ya. means nada, i rescinded and tendred loan – minus equitible setoffs, they said no ya cant do that , well excuse me, you think you can modify a loan, you cant do that i said….they BS us to death…

  28. Ocwen sent me a QWR with a zero balance?

  29. What are they fraudclosing on….? No one knows. The servicer told me they were going to fraudclose on the mortgage that I still owed. The truth is…..The Originating bank already cashed the NOTE/CHECK & THAT WAS THE MORTGAGE. THE MORTGAGE IS NOT A CHECK.

  30. I can tell you what they probably will send you….not what you are asking them for…..you will likely receive…a print out of your last few payments….some escrow info & copies of the mortgage & note with scribbles & scratch outs & redacting all over everything….you know…altered docs…. and they will tell you that sorry but you asked for too much stuff & they can’t possibly comply with all of your requests.

  31. I sent a QWR to my new servicer and haven’t heard anything back yet. However, they have called three times and hang up when I answer and have sent a new collection letter without answering the QWR. They identify themselves as debt collectors attempting to collect a debt in all their correspondence and when I have spoken to them on the phone. IMO that requires them to answer the QWR. ????

  32. Thank you for sharing your story. We’re working to make markets for consumer financial products and services work in a fair, transparent, and competitive manner and your story is invaluable to that work.

    Are there others we should hear from? Forward this message to them and ask them to tell their story: https://help.consumerfinance.gov/app/tellyourstory

    If you need help, file a complaint: http://consumerfinance.gov

    If you have questions about consumer financial products or services, visit “Ask CFPB” at consumerfinance.gov/ASKCFPB.

    Thank you,

    Office of Consumer Response
    Consumer Financial Protection Bureau
    (855) 411-CFPB (2372)

  33. Bank Foreclosures Hit Nine-Month High In November: RealtyTrac

    By ALEX VEIGA 12/13/12 12:02 AM ET EST AP


  34. thanx christine

  35. LIKE.
    gotta see the posture of the 9th circuit but stick to law and the preservation of justice being proper procedures

  36. The opinion can be read here. Based on the recitation of the facts in the case, the dismissal was proper in my views and the QWR failed to state a cause of action other than “the broker said my payments would not exceed $1,900”. Flagstar doesn’t even appear to have anything to do with that broker’s promise. Suing it for failure to answer a couple of QWRs which failed to even broach any misdeed committed by Flagstar was dumb. Anyone who has a mortgage knows that it is bound to increase because of:
    1) Tax increase
    2) Insurance premium increase

    I don’t see a problem with that case and that decision. And I don’t see any correlation between what Neil’s take on it is and the actual facts of the case.


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