Challenging Deeds Issued After Auction (Sale) of Property

One of the rewarding aspects of what I do is to see more and more people not only hopping on board, understanding securitization, but adding to the body of knowledge I have amassed. In the following article Bill Paatalo, who has done the loan level accounting for many of our readers, expands upon a topic that I have introduced (and of course Dan Edstrom) but not explained nearly as well as Bill does: see

EDITOR’S NOTE: I would add that where servicer advances are paid to the creditor (or who we think is the creditor), then there is often an overpayment, which might account for why the “credit bid” is lower than the total amount demanded by the servicer for redemption or reinstatement. This anomaly could void the notice of default and notice of sale and create a problem on the amount required for redemption after the so-called sale.

The legal issue presented by Bill is whether the party who submitted the bid satisfies the state’s legal definition of a creditor who is allowed to submit a credit bid at closing in lieu of cash. This issue is fairly easily analyzed before any order or judgment is entered by a court.

But afterwards, because of the rubber stamping, the judgments mostly state something along the lines that $XXXX.XX is owed by the borrower to the opposing party in litigation. The judgment is final until overturned by appeal or a motion to vacate.

That Judgment makes them a possible creditor and even raises the presumption that they are a creditor when in fact there was no evidence to support that finding in the order or judgment. And ordinarily the courts require that the motion or other attack be verified by a sworn statement from the homeowner. That gets tricky because without having an actual forensic report in your hands, how would the borrower even know about such things?

The judgment can be attacked for fraud because the opposing party had never entered into a transaction wherein it paid value (see Article 9 of UCC) to originate or acquire the loan. Procedural rules vary from state to state on  how this is done and the time limit fro such challenges. In fact, none of the people in the cloud of “securitization” paid anything for the loan, with the exception of the servicer who is credited with having paid servicer advances to the creditor when in fact it appears as though the servicer advances were paid by the investment bank who reserved money out of the pool of money advanced by investors to pay the investors out of their own money. Hence, we see the reason for calling the scheme a PONZI scheme. This is why the issue of STANDING keep bouncing back front and center.

Without an attack on the Judgment I doubt if your state law will allow you to challenge the sale or the sale price. Obviously, before you act on anything on this blog, you need to consult with an attorney who is licensed and experienced in such matters and who practices in the jurisdiction in which your property is located.

For those who are good with computer graphics, here are two drawings I recently made to describe the process of securitization as it played out. The bottom line is that the investment bank diverted the money from the trust and diverted the documentation that was due to the investors to its own strawmen, trading on that documentation and making a ton of money while the investor/lenders and homeowner/borrowers lost either everything or a substantial amount of their wealth that ended up in the pocket of the banks. Anyone who is good with graphics is invited to donate their time to this website and make my hand drawn sketches easier to read and perhaps animated. Neil Garfield Securitization Diagrams 12-20-13

Posted by BPIA on December 18, 2013 bi Bill Paatalo:

For the past couple of years, I have been providing clients with the internal loan level accounting data, which reveals in most instances of private securitization, that all payments “due” on the notes have been paid regularly by undisclosed “co-obligors.” Thus there becomes an issue of fact as to whether or not the “note” is actually in “default.” Word through the grapevine is that this particular argument is gaining some momentum in certain jurisdictions throughout the United States.

Well now it’s time to use the same internal accounting data to attack those dubious “Trustee’s Deeds.” In non-judicial foreclosure states, a ”Trustee’s Deed Upon Sale” or Trustee’s Deed” is recorded after the foreclosure sale. Often, the property is sold back to the supposed creditor into what is called “REO” status. In cases where the subject loans were alleged to have been securitized, the Trustee’s Deed will typically state that the Trustee for “XYZ Mortgage-Backed Trust” was the “highest bidder” at the sale and paid cash in the amount of $………..(whatever dollar figure.) There are many reasons to question the validity of these documents; such as the actual parties submitting the “credit bids,” and whether or not any actual cash exchanged hands as attested to under notary acknowledgment. However, there is a way to provide evidence and proof that no such payment ever exchanged hands.

The following language was extracted from a typical Trustee’s Deed:

Trustees Deed language snip

In this particular case, the alleged amount owed in the “Notice of Default” was roughly $314,000.00. A check of the internal accounting for this particular loan (6-months after the sale) shows the loan in “REO” status with no such payment having ever been applied. In fact, the certificateholders (investors) are still receiving their monthly payments of P&I with the trust showing “zero” losses.

This is good hard evidence that the sale and subsequent Trustee’s Deed filed in this case was a “sham” transaction.

If your loan was alleged to have been securitized by a private mbs trust, and your home sold in similar fashion with a recorded Trustee’s Deed, contact me today ( to see if your Trustee’s Deed matches up with the internal accounting data.

Living lies now offers Expert Affidavits showing what was stated in the Trustee’s Deed as opposed to what has actually occurred behind the curtains. See Most people ask for consults with me and/or the expert, like Bill, so their lawyer understands what to do with this information.

24 Responses

  1. hey hey look at this.
    FTC OKs $2.9B Fidelity-Lender Processing deal
    Businessweek – ‎10 hours ago‎
    EW YORK (AP) — The Federal Trade Commission on Tuesday approved Fidelity National Financial’s $2.9 billion acquisition of Lender Processing Services after ordering the companies to sell some assets. The FTC said Fidelity National will have to sell its ..

  2. @ Johngault

    Sent you an email RE:
    Is this to say that the trustee’s deed shows a named trust as the grantee? Seriously, if anyone has ever seen and can document a named trust as a grantee on any deed, I’d like to see it. I have a hard time believing that, because first of all I’m not convinced a trust may make a credit bid* (never minding hocus-pocus with the “assignment” of one – and that’s ‘why MERS’ and that’s why there’s an “assignment” of the credit bid) and secondly, trusts don’t have reo, real estate owned. I’m still on these trusts can’t own real estate.
    *Even if a trust had the right to a credit bid, using it is doing business, business I don’t believe they may perform as special purpose entities as well an any potential “doing businesss” licensing requirements in states.

  3. Are California courts complicit in foreclosure bid-rigging scheme? Are we talking about accessories after the fact?

    The tactic of bid-rigging explains a lot about the late-filed assignments, particularly in non-judicial states like California. We are talking about trustee sales as a result of auction, aka, trustee ‘sale’. The scam works like this. A GSE or MBS who cannot tender a ‘credit bid’ because they are not lenders are recorded with the county recorder. Then a NOD is recorded, naming ‘an agent of the beneficiary’ as trustee of a beneficiary who is unknown to the loan documents (e.g., the loan servicer). A member of the public who has access to the county records might see the NOD, and do further checking to discover the names on the NOD and assignment don’t match. A prudent man would assume the title is clouded and either reduce their bid or pass on bidding altogether. Then within a few weeks of the sale date an assignment is made from the previously recorded beneficiary to the beneficiary on the NOD who is a lender by law and can make a credit bid. Such bid is benefited by the lack of competing bids and lower bid amounts. Again, a prudent man would know that an assignment after the NOD is subject to defenses of title by the borrower, e.g., potential clouded title.

    The California courts are calling this ‘sloppy paperwork’ and making the absurd rationalizations that since deed of trust loans don’t need to be recorded in order to elect non-judicial foreclosure there is no prejudice to the borrower.

    So now you know why they call the post-NOD assignment the ‘vesting assignment’, because no money was exchanged, and the ‘consideration’ stated on the assignment is not a value greater than zero.

  4. BA in this post – said
    “In cases where the subject loans were alleged to have been securitized, the Trustee’s Deed will typically state that the Trustee for “XYZ Mortgage-Backed Trust” was the “highest bidder” at the sale and paid cash in the amount of $………..(whatever dollar figure.)”

    Is this to say that the trustee’s deed shows a named trust as the grantee? Seriously, if anyone has ever seen and can document a named trust as a grantee on any deed, I’d like to see it. I have a hard time believing that, because first of all I’m not convinced a trust may make a credit bid* (never minding hocus-pocus with the “assignment” of one – and that’s ‘why MERS’ and that’s why there’s an “assignment” of the credit bid) and secondly, trusts don’t have reo, real estate owned. I’m still on these trusts can’t own real estate.
    *Even if a trust had the right to a credit bid, using it is doing business, business I don’t believe they may perform as special purpose entities as well an any potential “doing businesss” licensing requirements in states.
    But the accounting trail – heck yes! Seems to me that if an alleged credit bid is made at sale, when making use of the info, one can’t forget to support that the amt of the credit bid satisfies the note dollar for dollar.

  5. And title companies are not regulated why >>> ??………………….

  6. Not Everybody can be bought and paid for Christine ..

    Happy Holidays Everyone!
    May Your Blessings Be Many!

  7. The A Man,

    I wasn’t offended.

    I’m increasingly wondering if “focusing on the broken chain of title” is going to make any difference in a country where everyone can be bought and has been.

  8. Christine you may be right but I think we need to focus on Broken chain of title. That is what really matters

    Sorry if I was a vulgar.

  9. Back in 2008 I WROTE A SIMPLE LETTER TO WILLIAM fOLEY of Fidelity Title ” what went wrong that your NY Thomas Malone finds himself fighting for a forged deed AND FIDELITY’S ANSWER FOR FOLEY WAS ‘it is PROPER’
    That shows how organized they were into fraud using LPS DOCX DOCUMENTS AND FACILITATING the transfering of fraudulent documents at the county registers. It was Fidelitys attorney Thomas MALONE AND HIS PARTNER IN CRIME David K Fiveson that paid a bribe to JUDGE aLICE sCHLESINGER OF NYSC TO MAKE AN INVALID VOID AB INITIO JUDGMENT APPEAR VALID.

  10. Irish banking world rocked as three financiers in court
    published by Tom Sullivan on Fri, 2013-12-20 20:56

    A former chief executive of Irish Life & Permanent (IL&P) and two other former bankers will stand trial on charges of conspiring to mislead Anglo Irish Bank investors in the run-up to the banking crisis of September 2008.

    One of the three men charged is Denis Casey (54) from Raheny, Dublin, who becomes the first chief executive officer (CEO) who was in charge of an Irish financial institution during the crash to have charges brought against him.

    The trials will be closely watched by investors who lost out as a result of their decision to hold on to Anglo Irish Bank shares and junior bonds in the period before the bank was nationalised.

    Investors will be seeking any evidence that could help them make legal claims to recoup losses.

    The three former senior bank executives will stand trial accused of conspiring to mislead Anglo Irish Bank investors in relation to €7.2bn transactions.

    Source and full story: Irish Independent, 19 December 2013

    We, American people dictating morals all over the world by waging endless wars, don’t have the guts to do that to our own bankers. Is this a great country or what?

  11. Regarding recent posts on HSBC money laundering, I have it on irrefutable information that not only did HSBC know that money laundering is illegal, internal documents showed that they were in the process of opening up to 12 additional branch offices along the US-Mexico border in order to increase their illegal drug money laundering activities

  12. Hilyzik calls that phenomenon “fascinating”. Sickening is more like it.

    CashCall, the ex-regulator and the revolving door

    By Michael Hiltzik
    December 17, 2013, 1:05 p.m.

    One fascinating aspect of a federal regulator’s lawsuit this week against online lender CashCall for making allegedly illegal collections from borrowers is the identity of CashCall’s defense lawyer.

    He’s Neil Barofsky, the former federal prosecutor and government watchdog who made his name fighting for consumers and taxpayers victimized by fraudulent banking activities…,0,7129707.story#ixzz2o4W5Jv25

  13. I have a Fannie Mae loan. GMAC Mortgage claims on the Trustee Deed that paid $308,000 at a foreclosure sale while insolvent and in bankruptcy and Trust Deeded it to Fannie. GMAC filed for Chpt. 11 in May 2012 and and as beneficiary on my DOT purchased my property on a MERS Assignment in July 2012. GMAC did not claim my property as an asset in its bankruptcy filing. Now Fannie Mae is evicting. The Trustee claimed to be selling the Lein and not the property…does this make any sense?

  14. This is very unsettling. Read who the attorneys for CashCal are. Those types of outfits are everywhere. Granted, one does NOT have to take loans or shpouldn’t have to. Well, in today’s economy, with people barely functioning from pay check to pay check and many not able to get a bank account, those outfits have sprung up like mushrooms and prey on the poor more than ever. With interests ranging from 90% to 350%!!!

    Even Neil Barofsky is for sale. Everybody has a price…

    Colorado and feds sue online loan servicers

    The federal government and several states, including Colorado, on Monday began a crackdown on unscrupulous online loan servicers that allegedly have violated state licensing requirements or state interest-rate caps in their operations nationwide.

    Colorado Attorney General John Suthers and Richard Cordray, director of the federal Consumer Financial Protection Bureau, said during a news conference that consumers who fell victim to the alleged scheme were being charged annual interest rates on loans ranging from 90 percent to 350 percent.

    Suthers said Colorado allows a maximum of a 21 percent annual percentage rate on such loans.

    Cordray said that at the federal level, the CFPB had filed its first online-lending lawsuit against California-based CashCall, WS Funding and Delbert Services, along with J. Paul Reddam, the owner of the three businesses.

    “Today we are taking action against CashCall for collecting money it had no right to take from consumers,” Cordray said. “Online lending is rapidly growing and deserves ample regulatory attention.”

    Cordray alleged the defendants engaged in unfair, deceptive and abusive practices, including illegally debiting consumer checking accounts for loans that were void.

    CashCall, through lawyers Neil Barofsky and Katya Jestin, denied it did anything wrong.

    “The CFPB’s charges today against CashCall fly in the face of Congress’ clear intent when it plainly and simply declared out of bounds any effort by the CFPB to impose rate caps,” said the lawyers.

    On the state level, Suthers announced that a lawsuit naming the same defendants had been filed in Denver District Court by his office.

    In the Colorado attorney general’s lawsuit, the defendants are accused of operating illegally in Colorado and servicing and collecting “predatory” loans made to about 5,000 consumers statewide.

  15. Very important court ruling.


    Was it you who asked what happened when the original lender died off/went bankrupt BEFORE the mortgage was allegedly transferred?
    This case may very well answer your question.

    Filed under: Uncategorized | Comments (0)

    December 16, 2013

    With the release of the US Bank admissions per our post of November 6, 2013; the issuance of the opinions from the Supreme Courts of Oregon and Montana holding that MERS is not the “beneficiary”; and recent opinions from various jurisdictions which are now, finally, holding that securitization-related issues are relevant in a foreclosure, a host of new legal issues are about to be litigated in the trial and appellate courts throughout the country. It has taken six (6) years and coast-to-coast work to get courts to realize that securitization of a mortgage loan raises issues as to standing, real party in interest, and the alleged authority to foreclose, and that the simplistic mantra of the “banks” and servicers of “we have the note, thus we win” is no longer to be blindly accepted.

    One issue which we and others are litigating relates to mortgage loans originated by Option One, which changed its name to Sand Canyon Corporation and thereafter ceased all mortgage loan operations. Pursuant to the sworn testimony of the former President of Sand Canyon, it stopped owning mortgage loans as of 2008. However, even after this cessation of any involvement with servicing or ownership of mortgage loans, we see “Assignments” from Option One or Sand Canyon to a securitization trustee bank or other third party long after 2008.

    The United States District Court for the District of New Hampshire concluded, with the admission of the President of Sand Canyon, that the homeowner’s challenge to the foreclosure based on a 2011 alleged transfer from Sand Canyon to Wells Fargo was not an “attack on the assignment” which certain jurisdictions have precluded on the alleged basis that the borrower is not a party to the assignment, but is a situation where no assignment occurred because it could not have as a matter of admitted fact, as Sand Canyon could not assign something it did not have. The case is Drouin v. American Home Mortgage Servicing, Inc. and Wells Fargo, etc., No. 11-cv-596-JL.

    The Option One/Sand Canyon situation is not unique: there are many originating “lenders” which allegedly “assigned” mortgages or Deeds of Trust long after they went out of business or filed for Bankruptcy, with no evidence of post-closing assignment authority or that the Bankruptcy court having jurisdiction over a bankrupt lender ever granted permission for the alleged transfer of the loan (which is an asset of the Bankruptcy estate) out of the estate. Such a transfer without proof of authority to do so implicates bankruptcy fraud (which is a serious crime punishable under United States criminal statutes), and fraud on the court in a foreclosure case where such an alleged assignment is relied upon by the foreclosing party.

    As we stated in our post of November 6, the admission of US Bank that a borrower is a party to any MBS transaction and that the loan is governed by the trust documents means that the borrower is, in fact, a party to any assignment of that borrower’s loan, and should thus be permitted to seek discovery as to any alleged assignment and all issues related to the securitization of the loan. We have put this issue out in many of our cases, and will be arguing this position at both the trial and appellate levels beginning early 2014.

    Jeff Barnes, Esq.,

  16. The A Man,

    Nothing happens in a vacuum. It is as much part of the problem as banks, Bill Gates and Microsoft (docx behind the LPS atrocities), Warren Buffer and hedge funds, oil, Big Pharma, chemicals and… the petrodollar. Trying to fight foreclosure in a vacuum is futile and, obviously, not very effective.

    It is systemic.

  17. Who gives a f###ck about Monsato?

  18. And by the way… do you know why Monsanto has gone after so many small farmers in whose fields some GMOs had been found, dropped by birds or carried by the wind? Because Monsanto and cohort know that within 2 generations, nature completely undoes what they have done, those seeds revert automatically to non-GMO and they can be replanted without anyone having to indebt himself with big pharma and chemical industries.

  19. Neidermeyer,

    I do realize counterfeiting is a Chinese, shall we say… trademark (pun intended)?

    If they’re stupid enough to steal GMO corn and feed it to their people, so be it. I find that hard to believe when China violently opposed any tampering of the rice by Monsanto but it’s like everything else: we probably won’t know the truth. As far as I am concerned and given the damages GMO and Monsanto and its likes have caused to the planet, anything derogatory about those industries is good news. All I have to do is look at the GMO-fed hippopotamuses we harbor in this country and in Australia to know that GMOs are dangerous, toxic and deadly.

    And you’re right: there are ongoing trade wars being wagered behind the scene everywhere on every front but if, instead of keeping everything close to the vest and occulting progress as they have for centuries, the US had played the cooperation card right from the get go, we, as a species, wouldn’t be where we are, with 1/3 of the world population lacking in everything and quite a few wars would have been prevented. What goes around comes around…

  20. @ Christine ,

    DES MOINES, Iowa — Six men from China including the CEO of a seed corn subsidiary of a Chinese conglomerate have been charged with conspiring to steal patented seed corn from two of the nation’s leading seed developers, prosecutors said Thursday.

    One man, Mo Hailong, also known as Robert Mo, was arrested Wednesday in Miami, where he lives, said U.S. Attorney Nicholas Klinefeldt, the Des Moines-based federal prosecutor for central Iowa. Mo is charged with conspiracy to steal trade secrets. The other five men charged are being sought by federal authorities, Klinefeldt said.

    Court documents read like an espionage novel with Chinese men found crawling on their knees in Midwest cornfields secretly stealing corn ears and federal agents obtaining court orders to tap the cell phone and bug the rental car of the CEO of Kings Nower Seed, a subsidiary of Beijing-based conglomerate DBN Group.

    The FBI also placed GPS tracking devices on cars and tracked the men as they moved around the Midwest countryside stopping at cornfields and buying bags of seed from dealers in Iowa and Missouri.

  21. Neil ,

    It’s common here in Orlando to see orders that specifically allow plaintiff to assign their bid prior to auction… as obviously if one assumes the creditor who legitimately has a credit bid at their disposal assigns their bid , the new assignee cannot legitimately pay on credit… and the judge who created the orders should be sanctioned for inducing fraud. It’s time to attack on all fronts… The judges need to become scared when asked to assist in the scheme. At the very least the county loses MILLIONS of dollars that usually go directly to the court/clerk because the “doc stamps” are paid out of that ether we call a credit bid…

    I would like to sue the clerk for allowing the substitution and fraudulent use of a credit bid ,,, it harms me directly as a taxpayer in that county… Any willing lawyers out there… I am your figurehead for a good action..

  22. Christine ,

    Don’t believe their lies … China has had agents buying GMO corn seed and even digging up freshly planted seed of many varieties in Illinois and Iowa… They like the higher yields but don’t have the years to spend developing what our companies have .. they are growing it themselves to create a large enough seed crop…

  23. This may be right in my wheelhouse. House sold at sheriff sale. But I could never understand why the upset price was 30,000 lower than What I was told by servicer was the redemption balance.

  24. Off topic but… this can’t be good for the hugely imbalanced trade balance… There go a few more houses to make up for this deficit.

    “This should be a warning to every American about the dangers of GMO foods, when even China, not exactly known for their ”safe products,” understands and rejects 545,000 tons of US GM corn, returning all 12 shipments because it contained unapproved MIR162 which is a a strain of insect-resistant transgenic corn.”

    The good thing is GMOs are safe here. The American people will continue ingesting that poison as long as it is manufactured and sold.

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