What is the right return on investment for stolen capital?

Editor’s Comment: One of the interesting things about this case is where we all stood on application of law back in 1979 versus what goes on now. If you read the entire case — pointed out to me by “KC” in her comments to the blog, you see how the court approached this case in an entirely different state of mind. If the courts had maintained the state of mind they had in 1979, and applied the law the way they did in 1979, the dockets would be free from foreclosures. Why?

Taking someone’s property by forfeiture is not like horse shoes — getting close doesn’t count at all, or at least it didn’t until the courts bent themselves into pretzels looking for ways not only to justify the forfeiture but to expedite in the fools errand of supposedly clearing the docket. What they have done is swept a mountain of explosive litigation under the rug, which as Judge Holloway in New Mexico said, is going to come back and haunt us in years to come.

But you can’t just blame the courts. Until 2007, no lawyer was presenting cases and defenses based upon any knowledge of actual securitization of debt and the illusion of securitization. Such defenses were classified along side of “Television intoxication” and other creative criminal defenses that have been tried. But now there is a difference. Since the middle of 2012, lawyers have gradually made the turn to realizing that they don’t need some elaborate legal excuse for their client to win. No, they simply need the truth.

And since then the tide has been turning. Because the truth is that the banks were and always will be intermediaries who violated every oath, law, rule and sense of fair play that could ever be applied. They stole the investors money, stole the investor’s identities, stole the borrower’s identity and made two different deals with each of them without either one knowing the identity of the other or the terms of the deal. It was a neat trick, because both sides  THOUGHT they knew the terms of the deal and many still labor under that delusion.

The problem that is creeping up on the banks is that at the end of the day, everybody knows everything. They made a deal with the lenders (investors) and agreed to get them repaid through the trust. The trust joined into the deal by issuing mortgage bonds or certificates of indebtedness and ownership of loans. The deal called for all kinds of safeguards to protect the investor, but those safeguards were diverted from the investor to the intermediaries themselves. In most cases the investors HAVE been paid part or all of the amount they were due and the rest has been settled in deals totaling over $200 Billion and moving toward $300 Billion.

In the final analysis the deal with the investors was between the broker dealers (investment banks) and the investors directly — because the investment banks never followed through on the plan they had presented to the lenders (investors) through the prospectus and pooling and servicing agreement. The investment banks didn’t pool the money in the trust because the trust had no account. The bonds were completely bogus issued by an entity (REMIC trust, which has now been granted “amnesty” by the IRS to get their ducks in a row) that had no money, no assets, no income and no prospects — the very same thing that happened down at the borrower’s level with the NINJA loans (no income, no job, no assets — no problem, here’s is your loan). And the investment banks didn’t make the loans they said they would fund.

So the money that SHOULD have gone into the REMIC trust was instead funneled into the accounts of closing agents along with closing instructions from an originator who was not allowed to touch the money and who wasn’t the author of the closing instructions. The terms of repayment were, well, undocumented. There is no other way to say it. The terms of repayment were also false — fraudulent in the true sense of the word (as opposed to “selling forward” and putting the bonds in “street name nominee, non-objecting” status). No, this was all a lie.

So the broker dealers then  created relationships with existing entities and brand new entities that would have official sounding names, or existing reputations that were being sold down the toilet to participate in the largest PONZI scheme in human history — a  mark that will no doubt be retained for hundreds of years. The originators never entered into any financial transaction with anyone, for the most part, and no assignee ever paid for the assignment of the debt, note, mortgage, deed of trust, contract for loan or anything else; they didn’t need to pay it because the investors’ money was in play and nobody had to observe the usual nicety of actually paying a reasonable price for a $300,000 mortgage loan. There is of course an exception to this rule — each player in the chain was paid a FEE for pretending that there was an actual transaction. So technically, money did change hands.

Of course the deal with the borrowers was entirely different than the one that the lenders approved and gave up pension money to fund this scheme. The average interest rate was higher than projected. This seemed good too except for those nasty people who deal in truth. They argued that if the interest rate was rising then so was the risk of loss. The risk that investment banks were taking with the investor’s money was literally illegal. Those managed funds that invested in these bogus mortgage bonds were regulated such that they COULD NOT invest in anything other than the highest rated income securities. Using their money to fund higher risk loans, let alone toxic waste loans was and remains illegal.

The interest rate and the risk started to go up sharply in 2004 when the investment banks ran out of credit worthy people to finance new home purchases or refinance old home purchases. BUT the income was kept constant by “servicer advances” which I am sure will turn out to be funded by the broker dealers, because the servicers would have no other reasonable business purpose to advance payments on defaulted loans. If the borrower had learned that the participants in this scheme were being paid at the rate of 3-5 times the principal amount of the loan they would have been alerted to the fact that this loan would blow up in the face of everyone (except the investment banks who were claiming losses because they were claiming ownership, but in the final analysis pitched the loss over to the investor when they were done squeezing the orange for the last drop).

So we have two deals created by the investment bank — one with the lender and one with the borrower, with a “bankruptcy remote vehicle” layered between the investor lenders and the broker dealer and another “bankruptcy remote vehicle” (much of the time) layered between the borrower and the broker dealer.

So here is the real question: what is the proper rate of return on investment when the pretender lender was a thief who used the money of other people in a manner that was completely violative of the intent of the real lenders — and also violates law? If the answer is zero, so goes the foreclosures.

The REAL DEAL should be between the investors and the borrowers who meet for the first time and make a deal they can both live with. The servicers, investment bankers et al should be removed from the communication lines. And most of all, the decision as to whether the servicer can foreclose or foreclose in the name of the investors should NOT be entirely up to a third party; the principal in the transaction should actually see the proposed settlements and modifications that are being rejected by the servicers who report that the investor turned down the offer when in fact, the investor never knew about it.

MGIC FIN. v. HA Briggs Co., 600 P.2d 573 (Wash. Ct. App. 1979)

Court of Appeals of Washington

Date Filed: August 9th, 1979

Status: Precedential

Citations: 600 P.2d 573, 24 Wash. App. 1

Docket Number: 3481-2

Judges: Reed

24 Wn. App. 1 (1979)

600 P.2d 573

Having examined the record submitted, we agree with the trial court’s conclusion that this case is ripe for summary judgment. It is undisputed that MGIC knew of the Davises’ surety interest. Yet without the Davises’ consent, MGIC garnered title to virtually all of the debtor’s real estate, released the debtor’s personal liability on the deed of trust note, and failed for more than 3 years to join the Davises as defendants in the foreclosure suit while interest steadily accrued on the debt. Whether by design or neglect, the net result of these omissions was decidedly one-sided in favor of MGIC. The trial court properly balanced the equities when it released the Davises from the danger of losing their land to satisfy the debt of a principal who already had been discharged of all liability.

*10• The summary judgment in favor of the Davises is affirmed

53 Responses

  1. @ Charles Reed ,

    I haven’t brought it up in my case yet but I can confirm that in the case of Option One (H&R Block) in Orlando that the physical notes were never forwarded to California , they were shredded… I have that directly from the person who was branch manager in the 2004-2008 timeframe (ex co-worker of my wife ,, when this OO manager was in the restaurant business) … when you combine that with the AIG based info that BOA was in every relevant way the originator and owner I have absolutely no problem believing this.

  2. @ Charles Reed ,

    Right now AIG is holding the $8.5 billion settlement with BOA hostage because of another claim of $10 billion AIG has against the bank, where they want to know the true value of these modified loans.

    AIG has claimed that BOA who we know was the shelf funder for Option One was not only the source of funds for OOMC but also that they performed the underwriting and approval of loans.. making every Option One loan that was supposedly sold/assigned to another entity at any time a completely bogus transaction as Option One had no role or ownership. The 2007 AIG annual report shows $11.5B in losses on MBS’s , BOA was a very large part of the loss… both on BOA MBS’s and through their surrogate Option One.

  3. yeah, they don’t like the tax rams or the return of snarfed funds isms (here the investors snarfed funds, as applicable). If they had to pay taxes, first of all, the trust gets taxed on the incoming funds, so couldn’t meet the agreed payouts, whatever the h those are.
    Then the people receiving those funds (what’s left after the first taxation) have to pay taxes on those funds. Whether or not investors are currently taxed on their returns (income), I actually don’t know, (prob – trusts to my knowledge simply 86 the taxation to the trust entity) but they would have to and so would the trust if what should be admitted is admitted. It’s the banksters, not so much the investors, who are being protected by the pretense. To avoid admitting the failure, the law has to be turned on its head pretty much. Since by its membership rules, as I get them, MERS had to claim (by way of the servicer-employee wearing a mers’ hat, that mers was entitled to enforce the notes, that means the trust wasn’t, doesn’t it? Haven’t they admitted the non-transfer every single time “MERS” foreclosed? That would be quite a long list of monies where taxes are due. That’s why they’re screaming about Glaski – taxes.

  4. Financial Institutions Reform, Recovery and Enforcement Act of 1989 (“FIRREA”), 12 U.S.C. §1833a. 2

  5. What is the right return on investment for stolen capital?

    If your referring to the thieves returns, you should refer to FIERRA.

    Zero-Hedge Buzz Cuts

  6. Neil, I’ve given a lot of thought to your question, “Article Headline”.

    What is the right return on investment for stolen capital?

    I’m thinking if we can not get our capital back … maybe we should be entitled to collecting & receiving the benefit of the the rents during the lifetime of the Estate.

    Or, have the value of the capital returned to us.

    Have you come up with a better solution that I don’t know about?

  7. E. Tolle I agree with you that imo that none of these guy actually transfer the Notes. As you can probably tell I all about Ginnie Mae MBS, and because they are this government agencies, all loans go through the exact same process, and they don’t store the documents themselves, so they leave this count on the large lenders to do for them what they cannot do themselves.

    I don’t believe that Ginnie Mae actual never has a Trust, and there is no mention of a trust in the BOA or JPM settlement. However I believe that since the MBS are 100% insured and that the payment are trust pass through terminology for the payment if not for something more of a tax trick?

    However I know there not trust between Ginnie Mae and those Notes!

  8. Charles, it was SOP in Florida, which explains all the lost note affidavits there. I’m sure you’ll recall this letter, from the Florida Bankers Association to the Florida Supreme Court:

    The reason “many firms file lost note counts as a standard alternative pleading in the complaint” is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file. See State Street Bank and Trust Company v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003). Electronic storage is almost universally acknowledged as safer, more efficient and less expensive than maintaining the originals in hard copy, which bears the concomitant costs of physical indexing, archiving and maintaining security. It is a standard in the industry and becoming the benchmark of modern efficiency across the spectrum of commerce—including the court system.

    As to the previous discussion about them not transferring the notes, Yves Smith writes:

    One of my colleagues had a long conversation with the CEO of a major subprime lender that was later acquired by a larger bank that was a major residential mortgage player. This buddy went through his explanation of why he thought mortgage trusts were in trouble if more people wised up to how they had messed up with making sure they got the note. The former CEO was initially resistant, arguing that they had gotten opinions from top law firms. My contact was very familiar with those opinions, and told him how qualified they were, and did not cover the little problem of not complying with the terms of the pooling and servicing agreement. He also rebutted other objections of the CEO. They guy then laughed nervously and said, “Well, if you’re right, we’re fucked. We never transferred the paper. No one in the industry transferred the paper.”

    They did it to themselves. Now they’ll ask Congress to fix it.

  9. E. Tolle I am not talking about all these clowns because I heard on situation down in Florida where the were burning Notes!

  10. E. Tolle they are not destroying all the Notes as after the fact I requested that my Note be sent to the OCC and it was and it was very much still very blank as it had to be.

    Here is were Ginnie Mae is caught, because they can never transfer the blank Note once it get in their hand because they got no legal way to transfer it once they get it.

    So what they are up against if they say the Note is destroyed is no way to proof they ever possessed it as there are no date on the Note nor is the endorsement made out to Ginnie Mae. However because of the Ginnie Mae regulation we know exactly how the process is to have worked in every single case!

    HUD last week put out a memo saying immediately that they were accepting e-signature for documents. The writing is on the wall as this is a issue that in every single case in the Ginnie Mae pools, cannot be verified as to what date the Note became into the possession of Ginnie Mae. They are screwed for any loan property that was foreclosed.

  11. Not only all that, but we all know they destroyed the notes. How then, can HUD say to all mortgagees seeking reimbursement from HUD:

    Pursuant to 24 CFR § 203.371(d), if the mortgagee does not provide HUD with the original promissory note and security instruments related to the partial claim within the prescribed deadlines, the mortgagee will be required to reimburse the full claim amount, including the incentive fee.

    I guess they’re just looking the other way….you know….rather than spoil the party.

    Just like the IRS is doing.

  12. Charles, I don’t think you understood my comment.

  13. E. Tolle not trying to argue but you must understand the Ginnie Mae only has a ownership if it has physical possession of the blank Note because of the FACT they cannot and do not purchase the Note.

    With the WaMu government loans Wells Fargo was claiming that they were the servicer and trustee. There is no actual trustee because they entire system is a fake.

    If you relinquish to me the blank endorsed Note and you not exchanged monies once you do not have the blank Note you have nothing, so you cannot turn the Note over to another party as you no longer have a stake in that loan legally!

    This is why there are dead in the water because UCC is clear on handling the blank Note and who got the burden of proof!

  14. Charles Reed said, “….what they do to get around the delivery of the Notes in the case of Ginnie Mae is make the lender/servicer the custodian of records. This in ways never takes the Note out the hands of the lender as there is no physical exchange of the blank Notes.”

    And there’s not one thing legal about this act. We all know that in order to satisfy long established trust law, there MUST be a specific transfer shown, A (originator) = B (sponsor) = C (depositor) = D (trust). The endorsements also have to be wet ink; no electronic signatures permitted, or stamps such as Michelle Sjolander testified about….dozens of her stamps being used to transfer by anyone that wants to. And as CW learned the hard way from Kemp, it’s no good to simply try and explain away why the loan docs were never transferred correctly. Nearly isn’t good enough in trust law or pregnancy test kits, but I have no doubt that the GSE’s not only ordained this practice, but they probably originated it as well, which doesn’t make it any more legal.

    So, as to Charles Reed’s point of making “….the lender/servicer the custodian of records….” what they’re obviously trying to do here is akin to having an embassy in a foreign land, where inside the host country the embassy is considered to be soil of the embassy nation, only in this case, it’s totally ludicrous for any lender/servicer to claim that a proper transfer took place if in fact the docs have never been legally handed over, as in….PHYSICALLY TRANSFERRED from the lender/servicer, which by that very nature means that the notes (endorsed in blank) were never delivered to the trustee of any trusts or to the GSEs as required by Article 3 of the UCC. The notes, along with Elvis, never left the building, which means that they are so screwed. But that’s not the consensus from the banker/lawyer stance, some of which pop into LL on occasion.

    This is where we get back to the post from a few days ago from Gene, and I’d venture a guess that it’s also agreed to be kosher by tnharry and others from the dark side, that it’s simply way too big of a problem to let these issues of unlawful and broken transfers get in the way of a perfectly good heist. The theory that this problem is just too big, that it involves millions upon millions of mortgages, that they (whoever in the hell they are in this instance), will never let this issue out of the dark because it would cause a meltdown like when they opened the Ark of the Covenant in Raiders, is just plain stupid from a legal standpoint, due to the little problem of:


    The next thing you know, all of our messages will be eavesdropped by the NSA, which will mean an end to any possibility of the hope and change we’ve all been waiting for.

    And let’s not forget this all-important fact, these are state law issues, NOT federal. When the bought and paid for legislators in DC decide they’re going to cross the aisle and hand in hand rectify these problems by some sort of de facto legislation in order to satisfy their bosses, it’s all over…. the fat lady can go ahead and sing God bless America for the last time, out of key for all I care, as what little’s left of this once great land sinks into the United Kleptocracy once and for all. If they pull this off, I’m off to the Amazon with a machete. My chances of survival are probably better there than in this decaying stench of a failed democracy.

  15. @johngualt what they do to get around the delivery of the Notes in the case of Ginnie Mae is make the lender/servicer the custodian of records. This in ways never takes the Note out the hands of the lender as there is no physical exchange of the blank Notes.

    But the scheme has been screwed up in the cases of Countrywide, WaMu, IndyMac and other failed or merged mortgage lenders.

    I believe Wells Fargo handling of the WaMu government insure loans is the perfect example of just how this thing was carried off!

    What I did using the Federal Government in the OCC was make Wells who foreclosed as if they were the “lien holder” write a letter that they were not the “lien holder”!

    Now I don’t think there anyway around the fact that a non lender can example that they claimed to the court in their action of filing a assignment of the DOT saying they were the “legally holder of the Note” and get place in title as the “holder in due course” when there is not procedure for one other than the “holder in due course” to be the title holder!

    Given the 1.3 million FHA & VA loans that Wells was servicing for WaMu at what the OCC matrix numbers gave for foreclosed loan in the HAMP and just taking only a 3% default rate of all Gov loans that is 39,000 loans in one group of loans, that are all concentrated with one lender!

    Now of this loan are going to have Wells on its title until shortly before the foreclosure, until MERS does the assignments! Soon as the rest of the world catches up this thing is over!

  16. “Under the discovery rule used
    in Arizona*, “a cause of action does not accrue until the
    plaintiff knows or with reasonable diligence should know the
    facts underlying the cause.” Doe v. Roe,
    191 Ariz. 313, 955 P.2d 951, 960 (1998). …….See Schultz v Dept of Army, 886 F.2d 1157, 1159 (9th Cir. 1989) (“When the question of accrual of the statute of limitations turns on what a reasonable person
    should know, it is, like negligence, a mixed question of fact and law ….
    …. Because the cause of action did not accrue until 2001, Lopez’s decision to bring suit in 2003 was not unreasonable or prejudicial, and Musinorte’s laches argument fails. See Mathieu v. Mahoney, 174 Ariz. 456, 851 P.2d 81, 84 (1993).”

    Aren’t there things that people who lost their homes know now that they couldn’t have reasonably been expected to know at the time of the loss? If so, and one can properly demonstrate this, it may be that the statute of limitations would just begin (upon learning)……for damages.

  17. trespass unwanted @ 9:56 – makes you wonder if these are MBS’s or CDO’s. The failure to deliver the loans, as applicable, and the way these certs pay in tranches make them seem more like CDO’s (and maybe that’s been a reason for non-delivery?)

  18. @trespass unwanted, Ginnie Mae cannot buy or sell any home mortgage at all, as they cannot created a debt for the US taxpayer plus they are not a lender.

    We got to understand that one that buy a loan must be a mortgage lender, because they have to act as a lender. You cannot get a surrogate to service the loan if you cannot preform that function yourself!

    Go to Google and type in Ginnie Mae FAQ and first question to pop up is “If Ginnie Mae is listed as the investor in MERS, does that mean that Ginnie Mae can modify my loan” and the answers tell you that Ginnie Mae is not an “investor” and does not buy or sell home mortgages or is an investor or owner of securities it guarantees.

  19. Excerpt of the end of the remarks made today, Feb 19, by Deputy Director Steven Antonakes of CFPB (Consumer Financial Protection Bureau), at the Mortgage Bankers Association

    “In our view, the intense human suffering inflicted on American consumers by an all-too-frequently indifferent mortgage servicing system has required us to change the paradigm in mortgage servicing forever. Frankly, the notion that government intervention has been required to get the mortgage industry to perform basic functions correctly – like customer service and record keeping – is bizarre to me but, regrettably, necessary. I recognize that many of you in this room have put in countless hours and spent millions of dollars preparing your businesses for our new rules. The Bureau has valued your input and engagement in the rulemaking and implementation process. It’s that kind of investment in compliance that was sorely lacking in the response to the financial crisis and it speaks well of fundamental changes in the financial services industry in general.

    But please understand: if you choose to operate in this space, the fundamental rules have changed forever. It’s not just about collecting payments. It’s about recognizing that you must treat Americans who are struggling to pay their mortgages fairly before exercising your right to foreclose. We have raised the bar in favor of American consumers and we are ready, willing and able to vigorously enforce that bar.

    Ultimately, these profound changes will be good for all Americans, including industry. But please understand, business as usual has ended in mortgage servicing. Groundhog Day is over. Thank you.”

    Trespass Unwanted

  20. Found at jdsupra
    The “Mortgage Banking” booklet applies to all banks engaged in mortgage banking activities.

    “Banks can sell loans directly to GSEs and private investors or they can convert loans into mortgage-backed securities (MBS). MBSs include pass-through securities , an arrangement in which undivided interests or participations in the pool are sold and the security holders
    receive prorata shares of the resultant cash flows. Collateralized mortgage obligations (CMO) are another form of MBS. CMOs stratify credit and prepayment risk into tranches with various levels of risk and return for investors. ”

    Trespass Unwanted

  21. If you ask me, and if the money was put in a trust, the trustee should be a defendant with the named defendant and if an investor, or investor firm put up the money, the pretend lender has some record of the transaction and the foreclosure (that can only be done by the true creditor) would have the investor or the investor firm as a defendant, one of those et. al. or et.rem. or John Does 1 -99, and if the defendent is a person, an entity/corporation that has a registered agent with the state, as per that Fiduciary duty document I posted a link or two back, then they have the address of the all CAP name registered with the Secretary of the State, and they know who created the entity, and who is the representative agent and they are to send all civil cases, and other issues to that agent and give proper notice.

    So judges are culpable in handing over the assets of a corporate entity registered and represented when everyone is not given proper notice but assets are transferred. No wonder they are reviewing and discussing that fiduciary stuff for corporations created in Delaware and Texas as Mergers and Acquisitions.

    It is what it is, someone is taking the assets of a corporation, claiming ot have lost the note, filing out a lost not affidavit to take the assets of another corporation. Sounds like acquisition to me.

    And I’m sure my footprints did not determine that I represented anything that they were placed upon before my brain could even register where I was, what was done to me, and before my mouth could say ‘no’.

    I know nothing.

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

  22. @johngault why are we talking default went the party bring the claim cannot establish ownership of the loan. You got a bank that illegally foreclosing why? If you got the proper paper work your action is not invalid.

    I believe this is where christine is talking about voidable or void. Why if it is true that the lender does hold the Note and debt there is no problem as long as the Note not been relinquished with a blank endorsement with out a sale. The bank only needs to bring in proof of the sale and assignment signed that day, with or without filing the assignment.

    However if the Note and debt have been separated it can never be reunited because there no way to attach a lien to the property as one without the other does not establish “holder in due course”!

    How are you coming to court claiming after months or year that you own the debt but you got no receipt you originated the loan or purchased it. How does an bank not have accountability of a purchase of a property, and no sale documents from either their end or the seller end?

    We got millions of cases and the paperwork on both end is missing and the bank in court who other than a forged assignment is allowed to bring a claim. Have I missed something! The court at first simply went with history and did not give thought to the law because attorney did not bring up the obvious fact of how do you own this!

  23. And please start looking at failure to mitigate. As far as I know, it’s
    “just” an affirmative defense (available to make – right after the claimant demonstrates his right to have a court adjudicate his claim of injury). A NM case someone linked here recently (KC?) cited some NM-specific statutes which I thought demanded that foreclosure was the last resort, not the first. NM imo demonstrates that one’s home is not to be taken lightly – literally. Courts have fallen into a “you’re in default, so you’re losing your home” stance, when that really, I think, is not the proper attitude even if it’s true one is in default and the other guy has injury. To what extent other state’s statutes require lenders to make efforts to mitigate, I don’t know. FHA requires a face to face (I think) with a borrower in default, for instance, to see what can be done. But, failure to mitigate is not based solely in a state’s statute, so if there isn’t one, it won’t change the responsibility to mitigate or a rightful allegation of failure to mitigate – the statute would be handier to point to, of course. I don’t believe that a better outcome for a lender precludes the prudence or obligation to mitigate, but can’t swear to it. It may be that mitigation contemplates less damage to both parties, not just one of them. But if there weren’t something of substance to failure to mitigate, it wouldn’t be at least an affirmative defense. And, also, while I’m at it, Neil, maybe you will address the value of affirmative defenses. I know them, but what else I think I know is limited: the survival of any affirmative defense 86’s any mtn to dismiss or sj (and that aff defenses must be made in the first responsive pleading). This should or could lead to a case management order, including discovery.

  24. Neil, you still have not told us why you so strongly believe the investors funds were funneled down to the closing table instead of directly into the trusts. This theory is getting old, since to date to my knowledge, it’s unproven. Imho, it should either be demonstrated in a case or laid to rest in favor of threshold (including injury) and discovery issues. In fact, I find this unproven theory more distracting than useful. The best thing you’ve brought up lately, actually for a long time, is a hint of how to debunk reliance on alleged business records as the hearsay they are.
    That said, do you really think securitization is legitimate if the investors funds weren’t used to fund loans? I don’t. I think what we’ve got here, among other illicit and borrower-lender infringing ‘stuff’, is a system where a trust purports to buy some assets and the IRS has agreed to a favorable tax treatment ‘as long as’, but of course I agree the IRS has now agreed to a pretense and threw the homeowner a bone by way of no taxation on debt forgiveness. The latter has run its course, while the pretense for the other class of citizens continues. I’m not sure the IRS is doing anyone any favor with this stuff. Taxation where appropriate would likely bring many skeletons out of closets and help return us to a land of law, without which, well, pick your own theory.
    Anyway, I can’t find any validity to this schematic when the payout on certificates doesn’t really mirror the monies generated by those assets, succinctly. For that reason and others, I think it’s a waste of valuable time to keep at it on a theorywhich, even if proven, is not going to save our homes. What’s going to save our homes is stopping the claimants at the door and we’re just not armed to do that. I respectfully suggest you could make all the difference if you choose. imo. Once they get in the door, because courts solely apply the UCC holder provisions and ignore the injury requirement for judicial oversight and resolution of disputes, no matter what you could prove about investor funding or anything else out of any of us won’t be heard.

  25. Well I guess that show that show me the Note works! It the Constitution that law are followed. I love it being said so simply that “If the bank could lawfully foreclosed then they should”!

    What crazy is these people are submitting forgeries to foreclose and the government like settled for something like a million that DocX allow has done, but they not informed the victims of those forgeries. They settled on the Robo stuff also, so why is it that this guy had to go to trial with these clown and BOA paid billion in settlements over this exact same types of crimes.

    Why is that the court is not referring the law violation to the law enforcement. If the court determines that the work part foreclosed in court, this why is that suspect not charged with the crime?

  26. The truths is hard to find. Check out ORA TV. New channel put together that is Off the Grid. check it out. Lots of truth.

  27. A Washington State attorney, Scott Stafne, has just won his 41st case for homeowners. The case is Bradburn v ReconTrust and the judge declared that BOA’s foreclosure action was unconstitutional–i.e. did not comply with the State’s constitution. It’s all over You Tube. Just enter “unconstitutional foreclosure” and you’ll find everything, including a video of the hearing and the judge’s declaration.  


    >________________________________ > From: Livinglies’s Weblog >To: nkmccarter@yahoo.com >Sent: Wednesday, February 19, 2014 8:55 AM >Subject: [New post] What is the right return on investment for stolen capital? > > > > WordPress.com >Neil Garfield posted: “Editor’s Comment: One of the interesting things about this case is where we all stood on application of law back in 1979 versus what goes on now. If you read the entire case — pointed out to me by “KC” in her comments to the blog, you see how the court ” >

  28. Riddle me this
    ” . The bonds were completely bogus issued by an entity (REMIC trust, which has now been granted “amnesty” by the IRS to get their ducks in a row) ”
    I have taken up my part with the IRS document 1099a issued by a “debt collector” perse , named “lender” and the issues I raised in my lawsuit with HSBC as trustee with controversial debt amount of 90 k difference between the 1099a issued on day of trustee sale of my home and trustees deed upon sale. No explanation and no 1099c so far. As victim of a financial crime I need answers because I lost my every dime I had invested and so much more in this scheme. They lost ? Investors money ?
    All got to be proved to a judge but discovery is needed for that don’t forget however involving other agencies that show preferential treatment to wall street should be challenged I like the idea what’s good for the goose is good for the gander I pay my taxes so must they under the IRS own rules thank you very much.

  29. MGIC FINANCIAL CORPORATION, Appellant, v. H.A. BRIGGS COMPANY, ET AL, Defendants, EDDY D. DAVIS, ET AL, Respondents

  30. @ The A Man, even that I put down my true name, and not a handle but you mention that I sounded like this other bum, but that cool. I do agree with you 100% it about “Show me the Note”, because it is the fact that a Contract does not even include these parties, that are not even listed on the Contract/Note. It complex but so easy to solve simply by producing the Note and if you not listed on that document, then you got no claim, and the burden is place dead on the shoulder of the party claiming the interest!

  31. MGIC FIN. v. HA Briggs Co., 600 P.2d 573 (Wash. Ct. App. 1979)

    Court of Appeals of Washington

    Date Filed: August 9th, 1979

    Status: Precedential

    Citations: 600 P.2d 573, 24 Wash. App. 1

    Docket Number: 3481-2

    Judges: Reed

    Fingerprint: 19fa8c5a097b3aecbdae9bd33b7de33bfa906593

    24 Wn. App. 1 (1979)

    600 P.2d 573

    H.A. BRIGGS COMPANY, ET AL, Defendants, EDDY D. DAVIS, ET AL, Respondents.

    No. 3481-2.

    The Court of Appeals of Washington, Division Two.

    August 9, 1979.

    Ronald E. Cox, for appellant.

    Samuel H. Pemberton, Jr., for respondents.

    REED, A.C.J.

    Plaintiff MGIC Financial Corporation (MGIC), the beneficiary under a deed of trust, appeals from a summary judgment in its foreclosure suit against defendants Eddy and Margaret Davis. We affirm.

    On February 9, 1970, H.A. Briggs Company (Briggs) executed a promissory note to MGIC for about $1.42 million. To secure the note, Briggs and another company, Enterprise Company, executed a deed of trust which covered several parcels of land in King and Pierce Counties. MGIC also secured a personal guaranty on the note from Walter and Christine Kassuba. The note and deed of trust were recorded in both King and Pierce Counties.

    On June 29, 1971, Enterprise conveyed one of the encumbered parcels, lot 5, to Eddy and Margaret Davis, for about $8,000. Although the preliminary title report disclosed MGIC’s interest, there was no assumption of it by Davis.

    *3• In 1973 payments on the note became delinquent, and on December 21, 1973, the Kassubas and the two companies went into bankruptcy. On the same date, MGIC filed a lawsuit in King County against Briggs, based on the 1970 note and deed of trust, and another lawsuit in Florida, against the Kassubas, based on their personal guaranty on the note. MGIC did not join the Davises as defendants in the foreclosure action, even though it found out in January 1974 that the Davises owned lot 5.[1]

    On May 31, 1974, MGIC, Briggs and the Kassubas reached a written settlement agreement. The agreement provided, in part:

    (a) The Property shall be conveyed absolutely to MGIC, free and clear of all liens and encumbrances .. .

    (b) Following such conveyance, MGIC shall cause all pending litigation against KASSUBA, as aforesaid, to be dismissed with prejudice.

    (c) The aforesaid Deed of Trust Note (Exhibit “A”) and Deed of Trust (Exhibit “B”) shall be cancelled and satisfied of record and all parties shall be relieved of any further liability thereunder, whether as maker or guarantor.

    In December 1974, pursuant to the May 1974 settlement agreement, most of the encumbered parcels were conveyed by quitclaim deed to MGIC. The parties have stipulated that the quitclaim deeds released Briggs from personal liability on the note and deed of trust. The Kassubas later were released from personal liability on August 20, 1975, when MGIC voluntarily dismissed its Florida lawsuit against them.

    On April 4, 1977, more than three years after the original suit had been filed, MGIC amended its King County foreclosure complaint to join the Davises as defendants. On May 1, 1978, the trial court granted a motion for summary *4• judgment in favor of the Davises and dismissed the complaint against them.

    [1] The purpose of a summary judgment is to avoid unnecessary trials; it is available only where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Lamon v. McDonnell Douglas Corp., 91 Wn.2d 345, 349-50, 588 P.2d 1346 (1979); International Ass’n of Firefighters Local 2088 v. Tukwila, 22 Wn. App. 683, 591 P.2d 475 (1979).

    The trial court based its summary judgment upon the equitable rule set out in Coyle v. Davis, 20 Wis. 564 (1866): Where a mortgagee has notice of a later purchaser of part of the mortgaged premises, the mortgagee’s release of the mortgagor’s personal liability diminishes the subrogation rights of the later purchaser and thereby operates to discharge the lien against that part of the premises sold to the later purchaser.[2]

    [2] In Coyle, as here, the mortgagor sold part of his mortgaged property by warranty deed to a purchaser. The mortgagor sold the remainder of the mortgaged property to a second purchaser. At the second sale the mortgagee, who knew about the first purchaser’s interest, nevertheless released the mortgagor from personal liability on the note, and agreed to look only to the second purchaser and to the encumbered land to secure the note. When the mortgagee later attempted to foreclose against the first purchaser’s property, the Wisconsin court barred the foreclosure, stating:

    [The first purchaser of the mortgaged property] stands in the relation of a surety for [the mortgagor], and any agreement between [the mortgagee] and [the mortgagor] which operated to diminish [the purchaser’s] security or to increase her liability, was a release of all obligation on [the purchaser’s] part. The right of insisting upon the *5• personal liability of [the mortgagor] was one of the safeguards of [the purchaser’s] title, and, by voluntarily depriving [the purchaser] of that, [the mortgagee] deprived himself of the right of insisting upon the liens of his mortgages upon the lands owned by [the purchaser]. [The purchaser] is accordingly entitled to have them discharged.

    Coyle v. Davis, supra at 568. The court pointed out that the first purchaser’s remedy under the covenant of warranty and the covenant against encumbrances — basically limited to the price paid for the property — would have been grossly inadequate because

    the sums due upon the mortgages greatly exceed the price or value of the lands owned by [the purchaser], and she might be obliged to pay much more than the consideration money and interest in order to remove the incumbrances.

    Coyle v. Davis, supra at 569. The Coyle rule was extended in Sexton v. Pickett, 24 Wis. 346 (1868), where the court held that a release of the mortgagor’s personal liability will subordinate or even release the lien of the mortgage as to a subsequent mortgage holder. Research has failed to disclose any other case involving precisely the same factual situation as that found in Coyle. The basic principle underlying the Coyle and Sexton rules, however, has been stated with approval in several cases and treatises. In simplest terms the principle is that courts must protect subrogation rights of junior interest holders against prejudicial acts by senior interest holders. See Gandrud v. Hansen, 210 Minn. 125, 297 N.W. 730, 735 (1941); Seale v. Berryman, 46 Ariz. 233, 49 P.2d 997, 999-1000, 101 A.L.R. 613, 616, (1935); Rielly v. Arnsmeier, 220 Wis. 564, 265 N.W. 713, 715-16 (1936); Minneapolis Inv. Co. v. National Security Inv. Co., 178 Minn. 50, 226 N.W. 189, 190, 63 A.L.R. 1516 (1929); 2 L. Jones, Law of Mortgages of Real Property § 899, at 238 n. 51 (8th ed. 1928); 11 G. Thompson, Law of Real Property § 4779, at 507 (1958 Repl.); 5 H. Tiffany, Real Property § 1495, at 544 n. 96 (1939); 59 C.J.S. Mortgages § 282, at 345 n. 87 and § 276, at 339 n. 21 (1949).

    *6• [3] We agree with the equitable principle expressed by the Wisconsin court in Coyle and Sexton, and we see no reason why it should not apply here. Subrogation is an equity extending to parties who, although not personally bound to pay a debt, are compelled to do so in order to protect their property interest. See G. Osborne, Mortgages, ch. 10, § 279, at 565 (2d ed. 1970); 73 Am.Jur.2d Subrogation § 3, at 600 (1974). Subrogation entitles the party paying the debt to all of the rights, priorities, liens and securities which the senior mortgagee had against the mortgagor. See Restatement of Security § 141 (1941); Restatement of Restitution § 162 (1937); 73 Am.Jur.2d Subrogation § 106, at 665 (1974).

    As subsequent purchasers, the Davises had the right to pay off the deed of trust note and be subrogated to whatever rights MGIC, the senior lienor, had against Briggs — including the right to seek a personal judgment against Briggs. MGIC has stipulated that it had notice of the Davises’ interest in lot 5 when it released Briggs from personal liability on the note. There is no question that the Davises did not consent to the release, and that the release deprived the Davises of their equitable right to pay off the debt and seek a personal judgment against Briggs. Moreover, interest accrued on the outstanding principal at an annual rate of 16 percent for 39 months while MGIC delayed in joining the Davises as defendants. We hold that this situation caused sufficient prejudice to the Davises’ equitable rights to discharge the lien against their property under the Coyle rule.[3]

    *7• This holding follows the spirit of the general rule of suretyship: Where a secured creditor surrenders to the debtor, negligently loses or damages the security, it discharges the surety to the extent of the value so lost. See American Law of Property § 16.141, at 332 n. 22 (1952); Restatement of Security § 132 (1941); H. Arant, Law of Suretyship and Guaranty §§ 62, 63, at 219 (1931). It also comports with the rule that the release of a principal, without consent of the surety, generally releases the surety. See Restatement of Security § 122 (1941). Washington implicitly adopted these basic principles in Insley v. Webb, 122 Wash. 98, 209 P. 1093, 41 A.L.R. 274 (1922), in which the principal debtor, an assuming grantee, had been released by the mortgagee from liability on a deficiency judgment. The court held that the release also absolved the mortgagor, who was a surety. The court stated at page 103:

    An examination of many cases and authorities convinces us that the very great weight of authority supports the view that the release given by the [mortgagee] to [the grantee/principal] had the effect of discharging the [mortgagor/surety] from further liability on the deficiency judgment.

    See also Corkrell v. Poe, 100 Wash. 625, 628, 171 P. 522, 12 A.L.R. 1524 (1918); 2 L. Jones, Law of Mortgages of Real Property, § 742 (8th ed. 1928).

    When MGIC took title to Briggs’ property and released Briggs from personal liability pursuant to the May 1974 agreement, it in effect did the same thing that the mortgagee in Insley had done. That is, it released the principal debtor from liability on a deficiency judgment without the consent of the surety. Equity requires that the surety, the Davises, likewise be released from the burden of having to forfeit their land to satisfy a debt for which the principal debtor already has been released.

    MGIC argues that the release of Briggs’ personal obligation by itself causes insufficient prejudice to warrant application of the Coyle rule. It reasons that the Davises actually suffered no loss because they could not have paid off the *8• debt in the first place; and because even if they had paid the debt, they would have been subrogated to nothing more than the dubious right to seek a personal judgment against a bankrupt company. The Coyle and Sexton opinions, however, placed no minimum requirement as to the legal detriment to be incurred by the surety, and we find no such requirement in the cases or treatises which synopsize this rule. It is sufficient that there was a release, without which the Davises could have paid off the note and been subrogated to whatever rights MGIC had against Briggs’ personal liability in federal bankruptcy court. MGIC bases its argument upon Scrivner v. Kansas City Life Ins. Co., 143 P.2d 619 (Okla. 1943). Contrary to MGIC’s assertions, the Scrivner court did acknowledge the rule that a surety will prevail where the mortgagee releases the mortgagor’s personal liability; the court found no occasion either to apply or reject the rule, however, because under the particular facts of the case, the junior interest holder had not lost even his subrogation rights. Scrivner v. Kansas City Life Ins. Co., supra at 621.

    [4] In another assignment of error, MGIC argues that the trial court violated the “law of the case doctrine” by granting the motion for summary judgment several days after another trial judge had denied a similar motion. The law of the case doctrine generally applies only to parties who raise identical issues on successive appeals of the same case. Greene v. Rothschild, 68 Wn.2d 1, 10, 402 P.2d 356 (1965), 414 P.2d 1013 (1966); Pierce County v. Desart, 9 Wn. App. 760, 761 n. 1, 515 P.2d 550 (1973). MGIC presents no relevant authority for extending the doctrine to apply to motions raised several times at the trial court level. We see no reason to extend the doctrine here.[4]

    *9• Both parties have requested attorney’s fees. In the absence of contract, statute or recognized ground of equity, courts are without power to award attorney’s fees as part of the costs of litigation. Hsu Ying Li v. Tang, 87 Wn.2d 796, 797-80, 557 P.2d 342 (1976); Ritchie v. Markley, 23 Wn. App. 569, 597 P.2d 449 (1979). MGIC bases its claim on the attorney fee provision of the 1970 deed of trust note. That provision does not bind the Davises to pay attorney fees because they neither signed the note nor assumed its obligations when they took their property by statutory warranty deed. As for the Davises’ claim for attorney’s fees, the court lacks jurisdiction to consider the question because the Davises have failed to file a notice of appeal. RAP 5.1, 5.2; Simpson Timber Co. v. Aetna Cas. & Sur. Co., 19 Wn. App. 535, 542, 576 P.2d 437 (1978); DeBlasio v. Kittitas, 57 Wn.2d 208, 356 P.2d 606 (1960). In any event, we find no authority for an award of attorney’s fees to Davises in this case.

    Having examined the record submitted, we agree with the trial court’s conclusion that this case is ripe for summary judgment. It is undisputed that MGIC knew of the Davises’ surety interest. Yet without the Davises’ consent, MGIC garnered title to virtually all of the debtor’s real estate, released the debtor’s personal liability on the deed of trust note, and failed for more than 3 years to join the Davises as defendants in the foreclosure suit while interest steadily accrued on the debt. Whether by design or neglect, the net result of these omissions was decidedly one-sided in favor of MGIC. The trial court properly balanced the equities when it released the Davises from the danger of losing their land to satisfy the debt of a principal who already had been discharged of all liability.

    *10• The summary judgment in favor of the Davises is affirmed.

    PETRIE and SOULE, JJ., concur.

    Reconsideration denied August 29, 1979.

    Review denied by Supreme Court November 30, 1979.


    [1] On October 15, 1974, one of MGIC Financial Corporation’s attorneys wrote to the Davises advising them that their property was subject to the deed of trust, and that they “hence would be a party to our lawsuit if a foreclosure is necessary.” The letter, however, did not mention that the foreclosure suit already had been filed more than 9 months before.

    [2] Statutory deeds of trust have been held to be generally a species of mortgage. Rustad Heating & Plumbing Co. v. Waldt, 92 Wn.2d 372, 376, 588 P.2d 1153 (1979). For purposes of this decision, the equitable principles of cases dealing with mortgage foreclosures apply equally to foreclosures of deeds of trust.

    [3] Although technically the Davises’ statutory warranty deed provided them with a remedy through the covenant against encumbrances, the remedy would have been inadequate in this case. The remedy for breach of the covenant against encumbrances is limited to the price paid for the property, plus interest. 7 G. Thompson, Law of Real Property § 3187, at 318-19 (1962 Repl.); 6 R. Powell, Law of Real Property § 907 (1979). The maximum recovery would have been dwarfed by the sum the Davises would have had to pay to clear the lien of the deed of trust from their title.

    [4] The first trial judge denied the earlier summary judgment motion “without prejudice,” and reserved the right to require an additional pretrial conference, stating that “this case may be determined on the issues presented by the cases mentioned herein [i.e., Coyle v. Davis, 20 Wis. 564 (1866) and its related cases].” Several days later MGIC Financial Corporation paved the way for the second summary judgment motion by stipulating that it had notice of the Davises’ ownership interest in lot 5 when it released Briggs from personal liability on the 1970 note and deed of trust.

  32. It is so complex That is why all we need to know is that the chain of title was broken. The people who made the law were pretty smart and foresaw this mess.

    The Brooklyn Bridge.

    Oh by the way regarding my 1099 I never received a check for $1K.


  33. Hank Greenberg is helping to solve this matter because he lost 95% of his stock value over at AIG. Greenberg is the ultimate whistleblower because he was the insurance company.

    AIG was damaged by these bs securities even as AIG was an investor in this activity. I believe that Paulson & Geithner screw AIG who did enable this activity but should not have shoulder the entire load.

    Right now AIG is holding the $8.5 billion settlement with BOA hostage because of another claim of $10 billion AIG has against the bank, where they want to know the true value of these modified loans.

    It the combination of all these things that are going to help us win!

  34. to all. Believe in truth. No matter what the outcome- detach from the outcome because it’s up to god. AZ,KC- might be a few differences but it’s common law for the most part I believe ( not legal advise)

  35. Let that take a purchase where there must be funds to purchase the properties form the seller who are selling the properties for X amount of dollars. There must be a check to the seller at the time of closing in order to complete the transaction…period.

    I get what Neil is talking about that the money are coming from another party and not the party originating the loan. However what Neil does not want to understand is that a loan shark lends money but it cannot come to court and collect because the are not authorized to lend and are not license by the State or are a National banks.

    The money source if they are that, cannot use the court system to say to the borrower that their money financed the purchase of the house, when in fact that not in the Note/contract and the “investor’ is not a register home mortgage lender.

    This investor is not even in court today making that claim of a default, but some servicer and MERS are there claiming the loan for a party that got “No Standing” as they already relinquish all financial interest in the loan. But MERS is jumping over the last party that has a financial interest to make it appear that there is no break in the chain of title.

    Neil is not observing that there are banking rules and laws which prevent the investors from claiming damage because they are not authorized by State or Federal rules to lend. Now I believe they come to that understanding here recently and I feel that they will get together with loan that are current and correct what happen as no harm has been done with these contracts.

    However with loan that have been already foreclosed the damage has been done, and with that damage the federal law of Forgery has been committed and False Claim against the Federal Government has occurred.

    It what Neil is thinking were true and the borrowers have no claim for the whole property, then the Federal Government does not have a right to claw back the False Claim they are doing now.

    As what Neil said is pretty much there were no attorney handling this law until 2007 and I would say that still now there is less than 1% who are practicing this law, but they are a victim of lack of knowledge just as the FBI is when they investigate these mortgage financial crimes.

    This area is so complex to someone who has not been involve with these vehicles, and as a result the regulating & law enforcement agencies are decades behind in knowledge. The first thing out there mouths are “were you behind on your payment” and once a borrowers says Yes there is laughter and to the Man, its case close with “what did you expect” result.

    What funny is there is no cause and effect understanding of what took place and it is assumed that all these loan were some type of Stated Loan, when in fact only about 10% of the foreclosed loan were Stated Loans! Now of what Szymoniak has just filed were Stated Loan as they are all government insured loans that were all full income documented underwritten loans. She claiming around 1 million loans.

    A key ruling is MERS v. State of Nebraska Banking & Finance were MERS argued that they were not a “mortgage bank” and the NE Supreme Court agreed with MERS that in fact they were not a “mortgage bank”. MERS who does not have any financial interest in the loans, so that make MERS claim of acting for not applicable.

    Here what I did a little over two weeks ago, as I wrote Ms Yellen at the Fed and that was to remind her that these bank holding companies are over these banks and are the one supposing to be lending their banks monies for these loans, and they should know and be responsible for their bank’s conduct. Ms Yellen within the week putting out a statement to the fact that the bank holding companies do have a responsibility for their banks.

    Neil has a theory as to the funding of these loans, and I believe he is party right but I also believe he has a hard time dealing with the fact that some people are going to get the house or the value of the house in this debacle. This is about who got an equity position and that one payment or 10 years of payments that the homeowners paid and the servicer/lender have no proof of financial interest!

  36. I got a 1099 from Bof A for $1k. That means they collected the insurance money for the loan of $1Million plus all the money the government gave them and they did not foreclose on me Not to mention the broken chain of title (which means they sold the loan multiple times). Not a bad deal. Hey Judge excuse me Your Honor can you spell “Unjust Enrichment”.


  37. Estreat

  38. So, the question is: what, why, who instructed the judges to rule in a way that is not in agreement with the law when it comes to foreclosures?

  39. ….Fannie Mae has been the investor , since the very day of the refinance….

    Same story here Javagold. I guess they figure knowing who the owner of your loan is is on a need to know basis. We peasants should just get back to work, if we can find any. They’ll tell us what we need to know. We mustn’t concern ourselves with things above our station.

    Boot-black, anyone?

  40. Keyword: … ” surety “

  41. At this point I no longer care about the house they stole…….it’s time to make this about the money ….. And hopefully that’s before it becomes worthless !!!!

  42. I have out ,unfortunately after the theft of house, that Fannie Mae has been the investor , since the very day of the refinance……yet shows up nowhere on any paperwork at closing or 7+ years later at Fraudclosure !!!!!

  43. DW, I don’t know the laws in your state but I sure have kept you in my prayers…, Best of Luck to You!

  44. You gave Christine her case law …. 🙂

    Any reasonable person would hire a Good Attorney!

  45. Nice kC. Thank you

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