Danielle Kelley, Esq. Swings Back at Separation of Note and Mortgage

If the banks lose the application of the UCC, which they should, they are dead in the water because they have no way to prove the transactions upon which they rely in collection and foreclosure.

Internet Store Notice: As requested by customer service, this is to explain the use of the COMBO, Consultation and Expert Declaration. The only reason they are separate is that too many people only wanted or could only afford one or the other — all three should be purchased. The Combo is a road map for the attorney to set up his file and start drafting the appropriate pleadings. It reveals defects in the title chain and inferentially in the money chain and provides the facts relative to making specific allegations concerning securitization issues. The consultation looks at your specific case and gives the benefit of litigation support consultation and advice that I can give to lawyers but I cannot give to pro se litigants. The expert declaration is my explanation to the Court of the findings of the forensic analysis. It is rare that I am actually called as a witness apparently because the cases are settled before a hearing at which evidence is taken.
If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services. Get advice from attorneys licensed in the jurisdiction in which your property is located. We do provide litigation support — but only for licensed attorneys.
See LivingLies Store: Reports and Analysis

Danielle Kelley, Esq. whom I admired before she became my law partner has again broke some old/new ground in compelling fashion. This is not legal advice and nobody should use it without consulting an attorney who is properly licensed in good standing in the jurisdiction in which the property is located and who is competent on the subject of bills and notes.

The bottom line: if the note and mortgage were intended by the law to be considered one instrument, they would be one instrument. But they are not because all the conditions in the mortgage would render the note non-negotiable under the UCC and that would be true even if the loan was actually sold, for real, with payment and an assignment. The conditions expressed in the mortgage or deed of trust render the mortgage non-negotiable. Hence an alleged transfer of the note separates the note from the mortgage because the mortgage is by definition non-negotiable. If the banks lose the application of the UCC, which they should, they are dead in the water because they have no way to prove the transactions upon which they rely in collection and foreclosure.

All of this leads us back to the “sale” of the loan because the presumption arising out of being a holder or holder in due course does not exist where the paper is non-negotiable. The Banks must allege and prove the origination and sale the old fashioned way — by alleging that on the ___ day of ___, in the year ___ XYZ loaned the homeowner $____________. Pursuant to that transaction the defendant executed a note and mortgage (or deed of trust), attached hereto and incorporated by reference. On the ___ day of ________ in the year ________, Plaintiff acquired said loan by payment of valuable consideration and received an assignment that was recorded in the public records at page ___, Book ____ of the public records of ____ County. Defendant failed or refused to make payment commencing the ___ day of ____ in the year ____. Plaintiff gave notice of the delinquency and default, provided the Defendant with an opportunity to reinstate as required by the mortgage and applicable law (copy of said notices attached). Defendant will suffer financial loss without collection of the debt for which it owns the account receivable. Pursuant to the terms of the mortgage which is attached hereto, Defendant agreed that the subject property was pledged as collateral for the faithful performance of the duties under the note, to wit: payment.

Of course the Banks refuse to do that because it opens the door to discovery to exactly what money was paid, to whom and why. AND it would show that there were no actual transactions — just shuffling of paper.

Affirmative defense

Non-negotiability of Subject Note Prohibits Plaintiff from Enforcing it Pursuant to Fla. Stat. §673, et seq and Failure to Attach Documents Pursuant to Florida Rule of Civil Procedure 1.130

With regard to all counts of the Complaint, the Plaintiff’s claims are barred in whole or in part because the subject note that the Plaintiff may produce is not a negotiable instrument and therefore the Plaintiff cannot claim enforcement of the note pursuant to Fla. Stat. §673, et seq.  In order for an instrument to be negotiable it must not, amongst other things, “state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money.”  §673.1041(1)(c).  While there is no appellate case law in Florida (and precious little in the entire country) which has ever interpreted this portion of the statute to mortgage promissory notes, the Second District has interpreted this section with respect to retail installment sales contracts in GMAC v. Honest Air Conditioning & Heating, Inc., et al., 933 So. 2d 34 (Fla. 2d DCA 2006).  There, the Second District held that clauses in the RISC such as the requirement for late fees and NSF charges rendered the contract non-negotiable.  This Court should be mindful that the GMAC case was recently applied to a mortgage foreclosure in the Sixth Judicial Circuit.  See Wells Fargo Bank, N.A. v. Christopher J. Chesney, Case No. 51-2009-CA-6509-WS/G (6th Judicial Circuit/Hon. Stanley R. Mills February 22, 2010).

The note attached to Plaintiff’s Complaint contains the following obligations other than the payment of money

1.      The obligation that the borrower pay a late charge if the lender has not received payment by the end of a certain period of days after the payment is due.  Defendants assert this defense although Section 7(a) of the Note attached states “See Attached Rider”.  The only riders attached to the Complaint are a “Prepayment Rider to Note” and an “Adjustable Rate Rider”, the latter of which deals with the interest change, not late fees.  Therefore there are documents potentially missing from the Complaint which runs afoul of Florida Rule of Civil Procedure 1.130 that such documents be attached as they are a document upon which a defense can be made.  Defendants are asserting the defense without the applicable rider; however, if Plaintiff is in possession of the original note, as they should be in order to foreclose, Plaintiff would have had said document to file.   

2.      The obligation that the borrower to tell the lender, in writing, if borrower opts to may prepay in clause 5 of the Note and the Prepayment Rider to the Note. 

3.      The obligation that the lender send any notices that must be given to the borrower pursuant to the terms of the subject note by either delivering it or mailing it by first class mail in clause 8; and

4.       The obligation of the borrower to waive the right of presentment and notice of dishonor in clause 9.

Because the subject note contains undertakings or instructions other than the payment of money, the subject note is not negotiable and therefore the Plaintiff cannot claim that it is entitled to enforce same pursuant to Fla. Stat. §673, et seq.

In addition to, or in alternative of, the following argument, even if the subject note is deemed negotiable, Fla. Stat. §673, et seq. (and therefore negotiation) cannot be utilized to transfer the non-negotiable mortgage, which is a separate transaction.  See in Sims v. New Falls Corporation, 37 So. 3d 358, 360 (Fla. 3d DCA 2010) (providing that a note and mortgage were two separate transactions).  The terms of the mortgage are expressly not incorporated into the terms of the note; rather, they are merely referenced by the note.  See clause 11 of the note.  Indeed, nowhere in the subject note is the right to foreclose the mortgage a remedy for default under the note.  It is clause 22 of the mortgage, on the other hand, which allows this.  Clause 22 of the mortgage, however, cannot be transferred to Plaintiff by negotiation as the mortgage is not negotiable.  


54 Responses

  1. I like this

  2. Reblogged this on Mario Kenny.

  3. Neil, Danielle claimed a late fee in the note renders the note non-negotiable (the fee becomes another undertaking). I thought that seemed weird. Sure enough, it is:

    Florida Statute 673.1041 Negotiable instrument.—
    (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 holder;
    (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, but the promise or order may contain:
    1. An undertaking or power to give, maintain, or protect collateral to secure payment;
    2. An authorization or power to the holder to confess judgment or realize on or dispose of collateral; or
    3. A waiver of the benefit of any law intended for the advantage or protection of an obligor.

    Also, I don’t think Patrick “gets it.” He seems to believe securitization of a note renders it non-negotiable. He’d better tell the judges around America because they obviously don’t agree with that notion.

  4. @ian

    The previous post describes an old fashioned servicing arrangement.

    You must understand that a modern servicer is collecting for the benefit of a limited assignee, not a holder. The assignee is a loan contract investor who took limited rights in the note rather than full ownership of all rights and privileges via transfer.

    The modern servicer is the selling party which retains the lenders right to collect for the investor. Its the loan investing party that takes the lenders right to receive and enjoy the borrowers periodic payments in exchange for consideration paid to the seller. A receivables financing scheme.

    It is this consideration accepted by the seller which forever finances the receivables reported on the sellers ledger. Because the seller now has less than full ownership of all rights and privileges in the note, it can’t transfer the note via negotiation because it doesn’t hold title to beneficial rights and privileges – only the right to collect. The paper becomes static, incapable of being fully negotiated because the receivables manifested by the paper have already been realized by the seller.

    So any payment advanced to the loan contract investor by the modern servicer won’t reduce a corresponding receivables ledger because those have already been realized by the seller. Any attempt by the seller to enforce the note in its possession is an attempt to double dip. The seller who retained possession of the non negotiable paper or its digital equivalent cannot be paid twice so as to realize those same receivables. Which means the borrowers payments aren’t being used to discharge receivables manifested by the borrowers note. Which means the modern seller/servicer has no right to collect from the note maker. Which means the borrower can’t default. Which means that any notice of default and acceleration of receivables due and owing on the note is bogus because they don’t exist on a corresponding ledger – they’ve already been realized.

  5. @ian

    The borrowers note doesn’t stipulate that payments must come exclusively from the borrower’s account. For if it did, it would be non negotiable paper. Anybody can make payments to discharge the receivables due on the borrower’s note. If a servicer decides to advance payment due and owing under a note, that amount advanced becomes unsecured by the lien and cannot be recouped via forced sale of a borrowers home.

    Likewise, if payment was advanced by a factor in return for rights to the payment stream, that advance eliminates receivables to become due and owing under the borrowers note. Whatever receivables amount was eliminated from the ledger becomes unsecured debt. The factor, or the servicer, are third parties to the borrowers two party mortgage contract.

    The lien only secures receivables still reported on the ledger ( un factored or un financed receivables). Any advance discharges debt due and owing and reduces the secured sum by a corresponding amount.

    The creditor is only entitled to the benefit of the bargain – that is to say the remaining receivables ledger manifested by the borrowers note.

  6. Patrick- does that include when a servicer makes just several payments to keep their loans from being shown as late in the remittance reports?

  7. ukg- I don’t fault you cor your skepticism, if we weren’t all skeptics here, we wouldn’t be questioning these things. I will post again later this morning about MBS defaults.

  8. A note that has its corresponding receivables prepaid by a third party before scheduled maturities is non negotiable. By its very operation, securitization is an elaborate scheme to factor or finance receivables that are to become due and owing under the note. A ” true sale” of limited rights to anticipated loan receivables via separate unrecorded assignment has the same effect as if the third party assignee has paid up all or a portion of the borrower’s scheduled payments due under the instrument issued.

    The assignor of that right receives valuable consideration and has already realized the value of the borrowers note – removing the risk of borrower default unto the third party. The assignor has also removed the reward of note ownership from its books without transferring the tangible document. So when this person waves the note around and attempts to invoke ucc3, its simply not available to them. The note is not a manifestation of anticipated receivables on a ledger if those receivables have already been financed or factored via securitization.

    Servicing rights to the borrowers instrument have an embedded call option. That is to say that right disappears the moment the borrowers note is refinanced, paid off at maturity, or prepaid before maturity – even if by a third party. Therefore a servicer collecting for the benefit of a third party assignee rather than the note owner has no right to service the borrowers note.

    Likewise, the mortgage lien has an embedded call option. It disappears the moment the note is refinanced or otherwise had its corresponding receivables paid – even if by a third party assignee. A factored or financed note cannot be secured by a lien because the paper can no longer manifest rights to anticipated receivables reported on the ledger of the person in possession.

  9. Gault sez:
    “Dammit. If someone else’s defaut impacts another’s loan in any way, shape, or form, there is definitely something amiss here with this whole deal, even had things been done as agreed by the players.”

    that’s what a trigger event is when the bond defaults. If that happens, the remaining performing loans left in trust were seen through to default, whether or not the borrowers paid. Pure speculation on my part.
    soliman would be the one to answer as to what happens post default of the certificates.


  10. eggs@3:05
    The orig dot is not retained by the recorder. All dot’s have instruction about where to mail them after recording (and it’s often that black hole in Lewisville, TX – something going on down there and always has been, eps with title cos. earlier on) But I think it’s worth noting on the recorded dot where it was to be sent since you mention it.
    No attorneys I know of want to get into this argument, BUT, delivery of a deed is the one thing required for its validity. No delivery – no deal. period.
    Don’t take my word for it – look it up.
    The deed of trust is in fact a conveyance of an estate in real property. It conveys an estate, an interest, a form of title to the dot trustee. It is a DEED of trust. It’s treated like a lien, but it’s literally, factually a conveyance.

    If anyone other than the lender does the closing, the lender may never had the dot. The title co keeps the original for recording and after that it goes to some black hole, either the black hole in Lewisville or elsewhere. Many if not all states (have to see each state – yawn) hold that a TC is not the agent of the lender, and accordingly, the TC’s poss of the dot is not the poss
    of the lender. Similarly, if the black hole in Lewisville or anywhere else
    the recorded dot is sent is not the contractual agent or contractual custodian for the lender, the lender never had possession of the original executed DEED of trust.

    Weidner may have disavowed the ‘note isn’t a neg instrument’ argument
    based on too many courts dismissing it as an argument. Doesn’t mean the argument has ever been made appropriately. Most of the arguments were based solely on language in the note about other obligations other than just paying as agreed, which I personally believe is a valid argument, but way not the more operative one. .

  11. ian – I don’t understand that pool default stuff. I got it what you said about a triggering event – sort of. 7% of the loans are in default and then what is it exactly that happens? The MS declares the trust what exactly? This default implodes the trust? And who is the insured and on what basis? If you mean to say that 7% puts the whole pool in default and triggers someone’s liability (AIG of FGIC, say) for the whole pool and someone took that bet or insurance, it defies reason, except:
    The AIG shareholders took a mongo hit. The stock went down to under a dollar. Lot of money to be made there if that were foreseeable, which how could it not be.
    I have been mucking about it ResCap’s bk to try to figure out who was the insured, but it’s very time-consuming, plus, briefly, I hate it. The bk interferes with a clear view of the named insured imo, but that could just be my ignorance.

    Dammit. If someone else’s defaut impacts another’s loan in any way, shape, or form, there is definitely something amiss here with this whole deal, even had things been done as agreed by the players.

  12. Ian – I don’t know, but I think I’ve seen that, too. Course, a gazillion were foreclosed, but since they continue to write “MERS” mortgages, that would account for some of the ‘missing’ by foreclosure. Is the media being helpful in downplaying “MERS” role here? Could be.

  13. they don’t want 65 million people knowing their mortgages are most likely invalid.

  14. johngault- you are the MERS expert, so riddle me this: since 2008 the ms media has reported that “MERS is on 66 million mortgages in the US”. As of real recently, we are seeing “MERS is on over 30 million mortgages in the US”. My question: what happened to the other 35-odd million mortgages?

  15. Yes, very interesting. BTW, the case is: Kirby v. Palos Verdes Escrow Co., 183 Cal. App. 3d 57 (Cal. App. 1st Dist. 1986).

    It would appear then, based on that case and Civ. Code Section 2944, the Cal. UCC applies and Non-Judicial foreclosures in California are illegal…because Civ. Code Section 2924 (the “comprehensive scheme” for non judcical foreclosures) falls under Chapter 2 Article 1. Mortgages in General

    And Section 2944 states:

    “None of the provisions of this chapter applies to any transaction or security interest governed by the Commercial Code, except to the extent made applicable by reason of an election made by the secured party pursuant to subparagraph (B) of paragraph (1) of subdivision (a) of Section 9604 of the Commercial Code.”

  16. dickhurts, that’s a pretty pejorative generalization, wouldn’t you say? Those that are still in their home, whose finances may or may not be still in the ditch, have limited ability to support litigation. those like Mr. Bob G. who bring forth a business plan to remedy the situation provide counsel and relief. Some foreclosure defense attorneys actually pursue the facts under the rule of law and attack the fiction put forth by bank foreclosure-mill fraudsters. The Statute of Frauds is alive and well, buddy! State real estate laws still apply. Don’t forget it.
    Unconscionable loans at inception are a valid affirmative defense, as well as HAMP, servicing fee, bankruptcy fraud,the list goes on.

    Most of the SOL’s on origination fraud are expired unless they’re preserved via a filed action.

  17. npv, I need you to speak with my attorney. allregs specifies the fraud in that the servicer is to hide at all costs the identity of Freddie or Fannie.

  18. But again, elex et al, I hasten to point out that even as the note uses the word “holder”, the note has its own definition of who is a “holder” and imo it isn’t the same as that found in the UCC III.

  19. elex – I think I got it from your info that a note secured by a dot doesn’t fall within the ambit of the UCC. What implicates the UCC is when that note and dot are pledged to secure another debt. The UCC prescribes the rights of the secured party in the second transaction. The distinction being made, I get it, is that the note and dot are not being sold to the second party; they’re being pledged to secure another obligation. (Oddly, somewhere along the road I’ve read that Blackacre thing). Is that your take? And yes, I love case law, especially older case law which is not contorted and tweaked by bad influences.
    The banksters have posited in white papers that 903(g,) think it was, says a coll instrument follows a note. That’s not at all what it says. It says that if a security interest is created in a note (such as by a pledge in Blackacre), a security interest is also created in any coll interest securing that note.

    So, if “Blackacre” is taken as fact, what does this mean? These notes reference a “holder’, a UCC-specific designation, and defines that person.
    If a set of laws doesn’t in fact regulate X, may that be altered contractually, and if so, does the language in these notes??

  20. neidermeyer – what do you suppose was the basis for AIG paying off a loan on which the note was current?! That sounds incredible.
    We need to know what is the triggering event for any kind of insurance claim and payment. There is stuff here I really don’t understand. If banksters sold loans to trusts, why did they need to de-recognize them on their books (and here I remember Ally’s huge loan portfolio, for instance)? All buy-backs? Don’t believe it. AIG must have insured only non-GSE loans because why would insurance be taken on loans already guaranteed? The banksters would be subject to buy-backs with the GSE’s. who actually guaranteed the investors (as I get it), not the guys who sold them the loans.
    Would the banksters have been insuring their buy-back liability or what the heck? Why would a bank need to de-recognize a liability? To whom was the liability? Is it because the bank is in fact the primary obligor to the trusts? It has to be, does it not? So again, I just don’t get exactly what AIG was insuring and on what basis. What are those suits you referenced?

  21. Ahh, don’t you just love Ca case law –

    The provisions of article I, chapter 2 of the Civil Code do not apply because the promissory note and trust deed involved fall within the coverage of the California Uniform Commercial Code.

    fn. 1 (Civ. Code, section 2944.) The CUCC applies “[t]o any transaction … which is intended to create a security interest in personal property … including … instruments … and also …. [?] … to security interests created by contract including [183 Cal.App.3d 62] … trust [deeds] ….” (? 9102, subds. (1)(a), (2).) “The application of [division 9] to a security interest in a secured obligation is not affected by the fact that the obligation is itself secured by a transaction or interest to which this division does not apply.” (? 9102, subd. (3).)

    [2] A promissory note is personal property (Civ. Code, ?? 657, 663), and a deed of trust securing such note is a “mere incident of the debt it secures” with no separable, ascertainable market value. (Domarad v. Fisher & Burke, Inc. (1969) 270 Cal.App.2d 543, 553-554 [76 Cal.Rptr. 529].) [3] Although liens on real property are not covered by the CUCC (? 9104, subd. (j)), division 9 does apply to security interests in instruments which are themselves secured by interests in real property. (? 9102, subd. (3); Riebe v. Budget Financial Corp. (1968) 264 Cal.App.2d 576, 583 [70 Cal.Rptr. 654]; Landmark Land Co., Inc. v. Sprague (S.D.N.Y. 1981) 529 F.Supp. 971, 977; see also Stewart, Trust Deed Collateral Loans and the California Commercial Code (1974) 2 Western St. U. L.Rev. 57.)

    This concept is illustrated by the following comment to the CUCC: “The owner of Blackacre borrows $10,000 from his neighbor, and secures his note by a mortgage on Blackacre. fn. 2 This Article is not applicable to the creation of the real estate mortgage. Nor is it applicable to a sale of the note by the mortgagee, even though the mortgage continues to secure the note. However, when the mortgagee pledges the note to secure his own obligation to X, this Article applies to the security interest thus created, which is a security interest in an instrument even though the instrument is secured by a real estate mortgage.” (See com. 4, 23C West’s Ann. CUCC, ? 9102 (1986 pocket supp.) p. 86.) [1b] In the present case, Universal assigned the Pierce note with its security, the second deed of trust, to the Kirbys as security for its own previously unsecured promissory note. Thus, a security interest was created in the Pierces’ debt instrument even though it was secured by a lien on real property, bringing this case within the coverage of the CUCC.

  22. johngault- keep in mind that when 7 pct of an MBS defaulted after 31 days, the entire pool was placed in default, including the remaining 93 pct who were current. I think the monolines insured on a loan-by-loan basis, and the CDS CDO paid on the entire kit and kaboodle “defaulting”. It is the master servicer who declares the trigger event.

  23. neidermeier- which federal suits point out AIG as the counterparty to a BOA payment? I was at AIG FP on Rte 7 in Wilton CT the day they took their sign down. Which was the day after 2 busloads of protesters created a stir there. Their HQ is still there. No sign, though.

  24. @ Johngault ,

    You are 100% correct , AIG was fully complicit and their officers (and more) should be jailed … I fully intend to roll around in the mud with AIG and Bank of America because it is the only undeniable PROOF OF PAYMENT TO ANY PARTY I can point to … Bank of America funded my loan AND they were paid off 100% while the loan was current… CASE CLOSED … it’s undeniable with the facts represented in 3 Federal suits …. I can show impropriety everywhere … it’s a start … we just have to get the wedge in and keep fighting.

  25. @ IWANTMYNPV ,

    Which companies had it that the “depositor” held the physical notes? I have Option One Mortgage Corp , with Option One Mortgage Acceptance Corp as “depositor” , OOMAC is just a different cubicle in the same building as OOMC .. I have it from my local branch manager of OOMC that no physical notes were ever FedEx’d to Calif. ,, just scanned. OOMC is now Sand Canyon , CEO states Sand Canyon owns (and supposedly that means holds) NOTHING … The PSA’s clearly state the original notes must be surrendered by depositor … there is no money trail showing any sale from OOMC at any point to anyone except for a (freshly created .. SURPRISE!) allonge directly to the master servicer (with no consideration exhibited) ?? Certainly nothing showing any OOMAC involvement…

    I’m pretty sure that WF did the same…

    Can you give a link to ANY PSA that authorized the depositor to withhold the notes? Doesn’t make sense … give me a few truckloads of notes and I’ll retire to be KING OF THE CAYMANS…

  26. Trespass Unwanted – followed the link, listened for 24 mins or so. Don’t get it. The interviewer ref’d a link to the docs. I could find no link. Did you?
    Anyway to link the docs? thanks

  27. Do we give a rusty if AIG paid insurance claims on our loans with borrowed money (the bailout loan?) No, we don’t. Borrowed money is the borrower’s. Have to pay it back, but it’s still the borrower’s. So, AIG paid off the claims
    for someone’s non-payment. Metaphorically one could say the bailout paid off the claims, but technically, they were paid by an insurance company.

  28. What was the alleged or real big threat for the bail out of AIG? It was that
    banks, which had been allowed to de-recognize liabilities for all these loans
    on the basis that THEY HAD INSURED THEM would all have to re-recognize them if AIG, who had insured the vast majority, went bankrupt, and further that all banks would have to do that at the SAME time, on the date AIG filed bk. Every single bit of this could have been avoided with proper regulatory oversight by the respective regulatory authorities. NO one was paying attention to what AIG was doing. NO one was paying attn to what ANY of these players were doing. My God! I hate saying those words, but really, Lord help us.

    What interests, or maybe better yet liabilities, did the banks have to insure?
    How does insuring a potential loss allow a bank to remove a liability
    from its books?
    How could one company (AIG) feasibly have the’ financial statement’ to cover all those potential losses? It didn’t, is what. And yet it continued to write it and allow lenders to “write-their-own with a software program they must have been oh so proud of.
    One of the ways AIG, who stinking unbelievably still lives and no one in jail, rigged their books was to pretend it had essentially sub’d out a bunch
    of that insurance to sub-insurers. (If there are better words, I can’t think of them right now). This was done to willfully understate AIG’s totally untenable liabilities. What the you know what were they thinking? That they surmised real property, which has always been cyclical, wouldn’t decline in value is the lamest, sickest excuse I’ve ever heard, even if they actually believed that. Oh please. Tthey willfully broke the law and need to be treated accordingly. One couldn’t make this stuff up if one tried.

    What else I wanna know is where, how AIG, which waived stinking subrogation, managed to get the dough to pay back the majority of
    that bailout. Really. Think about it (f you will) Where did it come from?

    Oh, my goodness me oh my. Did AIG waive subrogation because doing so would have messed with the de-recognition of liability on the bank’s books by AIG’s insurance?
    I’m going to throw up. Not kidding. Holy Sh&t! Anyone?

  29. @eggs – interesting arguments. X that a note may only be enforced by a payee named on the note. The “assignment” of the note by “MERS” I’ve maintained is being used as a purchase and sale agreement. The banksters still mostly rely in arguments on poss of a note end’d in blank or to an identified party with zero reference to the alleged purchase and sale agreement. That’s why I’ve suggested getting a more definitive statement – is the bankster relying for its claim on that “MERS” assignment, not just on the endorsement? The assignment of the ben interest in a dot does not require consideration. The consideration being recited in those (bs) assignments is for the note. The assignment is either being tacitly claimed as 1) thee purchase and sale agreement itself or 2) a memorialization for public record of an actual purchase and sale agreement.
    Somewhere in the sec’n trust’s governing docs is a doc or should be a doc which must set forth that there IS a purchase and sale of loans and somewhere also must be an identification of those loans (the loan schedule).
    The only governing docs I’ve looked at to date don’t in fact identify the loans with requisite particularity if at all. When that’s the case, it’s my understanding there has been no purchase / sale, at least not by way of that purchase and sale agreement.
    Such a purchase and sale agreement would imo appropriately be called and comprise a ‘bulk transaction’ (for 500 loans, say) IF executed properly and if it identified those loans with the particularity the law requires.

    Remembering that the UCC is default law used in the absence of a contract, say, when a loan (evidenced by a note and a dot) is transferred by way of a purchase and sale agreement, it still requires a transfer of possession of those documents and likely an endorsement on the note. If a legit P & S contract exists, is there yet a req that the note be endorsed? I don’t know, but likely not. An endorsement seems to implicate the UCC and maybe it’s not in play here on these notes at all and they are in fact sold by a purchase and sale agreement. Or should be.
    As to the collateral instrument, the P & S agreement is imo evidence of the assignment of the dot (it’s a writing which meets the provs of the statute of frauds). Whether or not a transfer of the physical dot is required, I don’t know. Seems like it would need to be, altho
    it’s been perfected by recordation (If of course it were recorded).

    To put this in context, say your family started a mtg business and after a time were able to retain loans and not sell them to bigger fish.
    Now you’re up to 200 loans the biz made and owns. Then 2 key players in your biz leave for whatever reason, so you want to unload those 200 loans.
    You look around for a buyer and find one. Your biz may sell those loans to the buyer in a written bulk transaction, a purchase and sale contract, and you avoid at least an individual assignment for each of the 200 loans. The buyer demands poss of the notes and dots (as prudent if not a must). The agreement is executed and money and docs changes hands. The buyer now owns those loans.
    A month later, Brad Smith defaults on one of those loans and buyer would like to get paid or foreclose. Mr Smith says eat a rock. I don’t owe you anything. In order for buyer to enforce against smith, smith must have NOTICE (take 10) of buyer’s right, which buyer actually has, with enf subject only to smith’s notice of those rights.
    The prudent buyer would have recorded that purchase and sale contract in the first place (involves real property interests so he may). He might do this prudently and or because that state’s law mandates recordation of assignments, and there have been 200. However, this buyer didn’t (at his peril re: subsequent liens on those properties and avoidance in certain bk cases). He can do one of two things: record the purchase and sale contract (I swear I’ve seen them years ago at the recorders but do not know, do not recall, how they’re indexed so as to give notice on each parcel / property). Or he may go back to the seller if it’s still around and request an ind written assignment of smith’s collateral instrument. In this case, because buyer was truly assigned.the coll instrument in a written contract which met the statute of frauds, the correct eff date of the individual asignment would be the date of the exec of the P & S contract between mtg co. and buyer.
    But one way or another, smith must have notice of buyer’s interest (and if the buyer didn’t record the P & S contract earlier in a state which mandates recordation of assignments, he owes the county a lot of money)
    Could buyer give smith a certified, authenticated copy of the P & S contract as Notice?
    I suppose so, if it contains all governing issues between seller and buyer. It may be effective notice between buyer and smith. But not as to public record because the seller owes the record a complete chain. Can’t have the official record reflect mtg-co- seller as ben but then show buyer, a diff party, as seller to f/c buyer or as a credit bidder. So buyer either gets an ind assgt of smith’s coll instrument from seller and records it or records the (written) P & S agreement. Out of choices. Either must be acknowledged before a notary, at least in order to be recorded in county land records.

    Moving right along, buyer opted for the assignment from seller on smiths
    loan, which is recently executed, but it shows the eff date as the eff date of the P & S contract between buyer and seller. Can smith demand evid of the eff date? I doubt it. There’s no cause partly because the record owner assigned directly to buyer and no middle men / intervening parties involved. But other reasons are that this buyer didn’t have a
    strictly-construed statutory cut-off date, for which failure to comply would void the assignment as a matter of law, and further there’s no argument that the seller didn’t have the auth to execute the assignment to buyer.

  30. Why Foreclosures of Crooked Mortgages are Valid
    by Bob Hurt, 5 September 2013
    People often fight like crazy to save their homes from foreclosure EVEN THOUGH THEY KNOW they breached the terms of the note and must forfeit the collateral, the house, to foreclosure auction. That seems only fair, if the mortgage loan has validity.

    But what if it doesn’t? What if lenders or agents cheat 90% of mortgagors at the inception of the loan?

    You cannot expect the foreclosure attorney, plaintiff, defense attorney, or judge to point this out. And if nobody points it out, the mortgagor in default can, must, and will lose the house, except by agreeing to an onerous loan modification. That makes foreclosure of crooked mortgages valid. Consider why:
    The judge operates like a bus driver who follows legal directions in the form of pleadings, motions, objections, notices, etc. They don’t dream up and present those to themselves. Litigants must do that.

    The plaintiff and plaintiff’s attorney will never jeopardize their case by admitting “Hold on, Judge, the original lender cheated the mortgagor by lying about the value of the house and fraudulently inducing the mortgagor to get that loan.”

    The foreclosure defense attorney (right, YOUR attorney) makes money by selling loan mods and bilking the client (YOU) out of a monthly fee, pretending to do you a favor by keeping you in the house as long as possible while filing frivolous arguments with the court: bifurcation of the note from the mortgage; wrong plaintiff; securitization; bad chain of note ownership; vapor money; etc. Your lawyer will do nothing to upset the flow of gravy from his gravy train (you), even if the lawyer has to engage in legal malpractice to do it. YOUR LAWYER KNOWS the INEVITABILITY of your FORECLOSURE SALE: you will lose the house, that’s all there is to it, and the lawyer knows it. So that lawyer will never tell the court “Judge, you cannot allow this foreclosure because the lender cheated my client at the beginning of the loan process.”
    Why WON’T the foreclosure pretender defender EVER inform the judge that the lender cheated the mortgagor? Simple. The pretender NEVER BOTHERS TO EXAMINE THE MORTGAGE for evidence of causes of action underlying the loan. So he can rightly claim “Hey, I didn’t know THAT” to you, as the judge signs the Writ of Possession to have you evicted and thrown on the street.


    You could lose your home because you don’t know the lender cheated you. If you face foreclosure or lost your house, you could qualify for financial compensation, or your house free and clear, or both, if you ONLY EXAMINE YOUR MORTGAGE for CAUSES OF ACTION against the lender or lender’s agents.

    90% of all mortgagors could prevent foreclosures with that simple method. Unfortunately NO mortgagors have the skill to examine their mortgages. But I know the ONLY professional mortgage examiner in America with such skill. Many of his clients have saved their homes from foreclosure and obtained favorable settlements including favorable refinancing or their homes free and clear.

    If this interests you, call me and learn how you might obtain the same benefits. I’ll explain everything, and put you in direct touch with the Chief Examiner, absolutely FREE.

    Incidentally, I suggested in the title I’d explain how crooked mortgages validly go through foreclosure. Here’s the reason: NOBODY TELLS THE COURT ABOUT THE CROOKEDNESS.

    Let me show you how badly intentionally ignoring mortgage fraud has affected the smallest state.



    The above-linked article depicts the failure of a Rhode Island court judge to HALT 800 VALID foreclosures. The US District Court there ordered him to lift the injunction because all of the foreclosure victims DESERVED FORECLOSURE. The federal judge thinks it just plain WRONG to stop the banks from getting their money back on non-productive loans on which mortgagors defaulted.

    I agree with the judge and so do you. Right is right.

    That remains true even though the lender or lender’s agents CHEATED 720 of those 800 FORECLOSURE VICTIMS (90% of them) at the inception of their mortgages.

    Why? Because NOBODY reported the lender’s tortious conduct, contract breaches, and legal errors to the court.

    Why? Greed, in spite of the revelation at http://fcic.law.stanford.edu/report (Financial Crisis Inquiry Commission Report) that government colluded with lenders in predatory lending that destroyed homeowner equities and caused massive numbers of foreclosures across America.

    AND, if NONE OF THOSE FORECLOSURE VICTIMS examine their mortgages for causes of action, ALL will LOSE THEIR HOMES, even though upwards of 90% could save them.

    BUT, If you face foreclosure or loss of your home, or EVEN IF YOU DON’T, you can CALL ME to learn precisely how you can gather the evidence that the lender or agents of the LENDER CHEATED YOU, and present it so as to stop the foreclosure or receive compensation for your injury.
    Act on this NOW:
    Forward this message to others in need.
    CALL ME NOW at 727 669 5511 for FREE, fact-based strategic guidance (not legal advice) that can help YOU CONTROL THE OUTCOME of your mortgage issues.

  31. The Depositor is holding all the notes – just read the Trust Agreement filed as an exhibit. I am 5-0 writing dismiss motions for my firm. Not bad for six months?

    The way the banks have been circumventing the courts in NY for years was the Plaintiff (the servicer)not naming the Trust at all, and always when it is a GSE Pool, including the loans and MBS on the FHLB’s balance sheet.

  32. Check it out if you can. It’s back online.

    He says just because you win a QT doesn’t mean it’s over. There are so many resources they have for going after the homeowner.

    I know nothing.

    Trespass Unwanted, Creator, Corporeal, People, Life, Free, Independent, State, In Jure Proprio, Jure Divino

  33. Nevermind. Host disconnected. Guest hung up. It’s a dud except for what may have already been recorded. Nothing to hear here.
    Apologies for the interruption.

    Trespass Unwanted, Creator, Corporeal, People, Life, Free, Independent, State, In Jure Proprio, Jure Divino

  34. http://www.talkshoe.com/talkshoe/web/talkCast.jsp?masterId=39904&cmd=tc
    Someone won a quiet title action.

    Trespass Unwanted, Creator, Corporeal, People, Life, Free, Independent, State, In Jure Proprio, Jure Divino

  35. HSBC continues it’s evil ways,,,,,,
    Who’s side are they on, anyway?


  36. We are working to hard here and not paying attention to why Szymoniak got pay was because it was the separation of the Note and debt. Yes there is a problem also with the Note and mortgage/dot/security deed but let review why there is a security interest in the first place and that is there is a debt.

    Only Szymoniak got it and it was that who was having the assignment forged could not prove they were the debt holder because simply they did not have proof of purchase.

    Why must attorney to feel as if they discovered something on their very own when Szymoniak build the bridge and all you have to do is cross it. If you find any ANY government insured loan that was in a Ginnie Mae pool as 96% or so are, and the loan was foreclosed, I am telling you there is a case where the Note and debt were separated and cannot ever be reunited because the holder of the blank Note cannot act on the Note as they are not listed in the endorsements.

    There are a 800,000 government insured loan that were not even process for the HAMP for one reason and that was Ginnie Mae who was holding the blank Notes (UCC 3) did not and could not purchase the debt, now also comes the fact that Ginnie Mae is not and cannot be in title so the Note and the securities instruments (mortgage/dot/security deed) are separated forever and the Note no longer exist as a Note, and no lien can be placed at the county recorder office!

  37. These pretenders still report to credit reporting bureaus claiming a purported debt late, or written off, or any number of things.

    We always have the option to work with what we can.
    When the pretender demanded payment without an assignment, I looked on my credit report and saw they took over two of the three bureaus, replacing my lender I had a relationship with, with their name.

    I disputed it then.
    Now I still have the opportunity to place my dispute there.
    A complaint can be as simple, layman terms. ‘I’ve never done business with this company, they are unknown persons. They won’t validate the purported debt. We have never had a meeting of the minds. They stole my home.’ (I don’t know anything, I don’t give advice, I have opinions, I do what I do. I do not tell others what to do or how to live their life according to ‘their will’.)

    Of course the wording can be what the one who has the ‘scar’ on their report determines is the truth behind the claim that they are the creditor and money is owed.

    CFPB issued a bulletin dated Sept 4th

    The FCRA’s requirement to investigate disputes and review “all
    relevant” information provided by consumer reporting agencies
    (CRAs) about the dispute

    Wherever we can tell our truths of the matter, we should use those avenues. Most people get access to one free credit report per year. We have the opportunity to let someone know that a debt is in dispute.

    Read the bulletin and see what must be done when we dispute an entry on our credit report

    Trespass Unwanted, Creator, Corporeal, People, Life, Free, Independent, State, In Jure Proprio, Jure Divino

  38. nice article over at the Chicago Tribune RE the dismissal of the BofA class action brought by homeowners over failure to HAMP.
    Maybe some of you would like to spew.

  39. Americans turn in passports as new tax law hits
    By Sophia Yan @sophia_yan September 5, 2013: 9:35 AM ET


    Americans leave and are being replaced by refugees from non English-speaking people (55,000 in 2010, and increasing every year). That ought to really help pick up the economy…

  40. Good. Anything hitting Chase is good. Hope there’s plenty more where that one came from…


    JPMorgan must face lawsuits over failed credit unions: judge
    Know what works for your loan mod. Get the REST Report.

    2013-09-05 — reuters.com

    “(Reuters) – A U.S. regulator may proceed with parts of three lawsuits against JPMorgan Chase & Co to recover losses that now-defunct credit unions suffered on billions of dollars of residential mortgage-backed securities, a federal judge in Kansas has ruled.

    U.S. District Judge John Lungstrum said the National Credit Union Administration may pursue civil claims that the largest U.S. bank and two companies it bought, Bear Stearns Cos and Washington Mutual Inc, misrepresented the quality of dozens of securities sold to four credit unions in 2006 and 2007.

    In a separate decision on Tuesday, the Kansas City-based judge also let the regulator pursue part of a lawsuit against Swiss bank UBS AG over securities sales to two of the credit unions.”

  41. [Cite as
    U.S. Bank Natl. Assn. v. Perry, 2013-Ohio-3814.]

    Court of Appeals of Ohio

    No. 99608





    Civil Appeal from the Cuyahoga County Court of Common Pleas
    Case No. CV-664469
    Blackmon, J., Boyle, P.J., and Keough, J.

    RELEASED AND JOURNALIZED: September 5, 2013

    Judgment is affirmed. It is ordered that appellees recover from appellant costs herein taxed. The court finds there were reasonable grounds for this appeal. It is ordered that a special mandate be sent to the common pleas court to carry this judgment into execution.
    A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure.


    Bank loses. Again. Bank must pay appelees’ costs. Yeppee!!!


    U.S. BANK, N.A. : JUDGES:

    -vs- :

    VICKIE L. DOWD, ET AL. : Case No. 2013CA00071

    Defendants – Appellants : O P I N I O N
    CHARACTER OF PROCEEDING: Appeal from the Stark County Court
    of Common Pleas, Case No. 2012-CV-02674

    JUDGMENT: Reversed and Remanded

    DATE OF JUDGMENT: September 4, 2013


    Grounds: lack of jurisdiction.

  43. Anyone know why a sheriff sale listed in paper is 220,000 yet the reinstatement amount sent from the fraudservicer is for $130,000 with a 150,000 mortgage , which totals ===$280,000

  44. Yep. That’s how it is.


    Bill Hicks Puppet Show – “Bullies, Politics & The Elite”

  45. Senators Authorizing Syria Strike Got More Defense Cash Than Lawmakers Voting No

    By David Kravets – 09.05.13 – 6:30 AM

    Senators voting Wednesday to authorize a Syria strike received, on average, 83 percent more campaign financing from defense contractors than lawmakers voting against war.

    Overall, political action committees and employees from defense and intelligence firms such as Lockheed Martin, Boeing, United Technologies, Honeywell International, and others ponied up $1,006,887 to the 17 members of the Senate Foreign Relations Committee who voted yes or no on the authorization Wednesday, according to an analysis by Maplight, the Berkeley-based nonprofit that performed the inquiry at WIRED’s request.

    Committee members who voted to authorize what the resolution called a “limited” strike averaged $72,850 in defense campaign financing from the pot. Committee members who voted against the resolution averaged $39,770, according to the data.

    The analysis of contributions from employees and PACs of defense industry interests ranges from 2007 through 2012 — based on data tracked by OpenSecrets.org.

    The authorization must be approved by the full Senate and House.

    Among other things, the deal sets a 60-day engagement limit, and bars U.S. ground troops from combat missions. The plan essentially is the legal basis to authorize President Barack Obama to punish Syria for allegedly using chemical weapons, killing some 1,400 people as part of its ongoing civil war.

    The top three defense-campaign earners who voted “yes” were Sen. John McCain (R-Arizona) at $176,000; Sen. Dick Durbin (D-Illinois) at $127,350; and Sen. Timothy Kaine (D-Virginia) at $101,025.

    The top three defense-campaign earners who voted “no” were Sen. John Barrasso (R-Wyoming) at $86,500; Sen. Marco Rubio (R-Florida) at $62,790; and Sen. Chris Murphy (D-Connecticut) at $59,250.


    Any question?

  46. Just by way of an update: The True story behind robo-signing attorney Thomas P. Dore’s suspension from practice: http://mortgagemovies.blogspot.com/2013/09/kingcast-and-mortgage-movies-watch.html

  47. and many of the “original” lenders are out of business…so, there is no going back to a dead fish to swim upstream again. and, another entity cannot go back and claim to be the lender in succession as they have no standing. 😉 (?) gotta be able to prove you were the one who executed it and have standing…(?)

  48. Glaski vs. BofA

  49. In my post below, I meant “bullshit a victory in favor of the bank.” Wish we could edit our comments…

  50. This is a very intriguing article. I used to wonder about the mortgage/DOT—where is the “original” mortgage/DOT? I have never known for sure and still don’t know. However, my impression is that the “original” mortgage/DOT is what is on file at the county recorder’s office. If this is true (not saying it is), then there is no question that the mortgage/DOT is at all times separate from the Note, despite language in the mortgage/DOT that it must be sold “together with the Note.”

    And I certainly think that the UCC definition of “negotiability” necessarily means that the standard Fannie/Freddie Note is unquestionably non-negotiable, as Neil points out here. Matt Weidner used to be a big proponent of the non-negotiability argument but has now removed all of his blog posts about it from his website, which I find curious. If one searches “Matt Weidner” and “non-negotiable” in Google, one finds all kinds of links to his articles on that subject but when one clicks through to read them, one gets a “file not found” error. Anybody have any thoughts on that?

    And as to Neil’s post yesterday about Weidner’s great lawyering, I must say that although I love Matt Weidner and think he’s one of the best fighters we have, the fact pattern in that case was pretty clear cut, so clear cut that even the judge couldn’t figure out a way to bullshit a victory in favor of the homeowner. After all, since Weidner’s client had a special endorsement—not a blank endorsement—to a party that was not named in the lawsuit, there is no way around the fact that the named plaintiff in the case had no standing to foreclose.

    Certainly Weidner came across as very knowledgeable and made some very well-timed and specific objections, and I do not mean to take anything away from his skills as an attorney and a foreclosure fraud fighter. However, the blank endorsements that magically appear from nowhere after a case has been in litigation for years are the problem. I would like to see a Matt Weidner or Mark Stopa or David Rogers case where they successfully challenged a ta-da blank endorsement.

    And it would seem to this non-attorney that is not giving legal advice that the most convenient and easiest way to counter such a blank endorsement would be the non-negotiability argument, because under that legal theory, the blank endorsement (or even special endorsement) does not matter at all because the Note itself is, under the UCC, completely non-negotiable, so that no party but the party named in the Note could possibly have standing/legal authority to declare default and foreclose the mortgage/DOT.

    One last comment about the non-negotiability argument that I think I’ve made here before: I think that it was actually the intent of the banks/lenders to make the notes non-negotiable. I think they knew very well that the notes were non-negotiable and they made them that way so that if their fake securitization scam was ever found out (which it now has been—Syzmoniak being one famous example), at least the originating banks could still claim to be the holders of notes and take the collateral. And now that I think about it, that non-negotiability may be the very reason the banks did not deliver the notes to the trust either at all or in a timely fashion—because the banks KNEW the notes were non-negotiable and expressly INTENDED for them to be non-negotiable.

  51. So now do we all understand where im
    Going with that 1099a Well maybe if you read the appeal.
    9th circuit 12-16192
    Its ok all our cases ate different you end up where you end up. Let your conscience be your guide.
    Very good info and power to esq kelley.

  52. Neil,

    Based on your initial premise regarding the “banks” losing application of the UCC, they are dead in the water…in California, interestingly enough, the non-judicial foreclsoure “all comprehensive scheme” In Civil Code Section 2924 et seq., has problems in this area.

    Civ. Code Section 2944 (of Chapter 2 sections 2920-2967 on Mortgages) states “None of the provisions of this chapter applies to any transaciton or security interest governed by the Commercial Code…”

    The “Commercial Code” is California’s version of the UCC. This means, in California, the UCC does NOT apply to mortgages by statute.

  53. […] Danielle Kelley, Esq. Swings Back at Separation of Note and Mortgage […]

  54. Section 4 of my note gives me the RIGHT to PARTIAL Prepayment to the NOTE HOLDER. If I then make an electronic partial Prepayment to the servicer, how will the NOTE HOLDER and person entitled to enforce the instrument be notified of this. This partial Prepayment in essence changes the FIXED amount on the note.

    If there is no FIXED amount the note can not be negotiable.

    It appears the drafters of the document had this in mind as the periodic payments can be made to a servicer, but Prepayments and Partial Prepayments are to be made to the note holder.

    Should the partial prepayment amount be affixed to the note as to adjust the “fixed” value of the note?

    This alone, in my mind, renders the note non-negotiable.

    Any thoughts on this?

Contribute to the discussion!

%d bloggers like this: