Why Are Trusts Alleging Holder Status and Not Holder in Due Course?




In situations where the alleged REMIC Trust is the party initiating foreclosure, you will find in most instances that they are alleging that they are the holder. The fact that they are not alleging that they are the holder in due course raises some interesting questions. First, it is an admission that they did not pay for the loan for value in good faith and without notice of borrower’s defenses.

This in turn leads us to the PSA where you can see for yourself that only good loans properly underwritten can be included in the trust based upon the procedures for transfer and payment that are set forth or implied in the trust instrument (the PSA). Remember that the ONLY reason the party is appearing in court as the foreclosing entity is by virtue of the Pooling and Servicing Agreement (PSA). Their ONLY authority, as a “holder with rights to enforce” derives from the trust instrument (PSA). So any argument that the PSA is irrelevant is nonsense — it should be an exhibit in court or else the foreclosure should be dismissed. If they want to argue to the contrary, they must reveal the creditor and reveal the alternative authority to enforce apart from the trust instrument. If it has anything to do with the trust or trust beneficiaries however, the document (Power of Attorney) derives its power from the trust instrument as well (PSA).

The way the Banks tell it, an assignment dated not only after the cutoff date, but after the alleged declared default of the loan forces investors to accept that which they specifically excluded in the  trust instrument (PSA) — a bad loan that violates the REMIC provisions of the Internal Revenue Code subject them to adverse tax consequences and economic losses that were NOT built into the deal. How can a state judge in Florida or any other state order or enter judgment that forces a bad loan on investors who specifically called fro a cutoff of any new loans in the pool years before the foreclosure? If the loan was already declared in default. how can the trust beneficiaries be forced to accept a bad loan?

At the very least these John Does must be given notice and since the servicer knows who they are (because they have been paying them) they should give notice to the investors that their rights may be significantly impacted by a court decision in which the servicer or trustee of the REMIC trust is taking a position adverse to the interests of the trust beneficiaries and in violation of the trust indenture.

Since the requirements of the PSA always provide for circumstances that are identical to the definition of a holder in due course, why is the allegation that they are just a holder? The answer is plain: in order to establish that they are a holder in due course their proof would be limited to the fact that they paid for the loan, in good faith and without knowledge of borrower’s defenses. That proof would insulate the trust and trust beneficiaries from borrower’s defenses by definition (see Article 3, UCC). The allegation of only being a holder, exposes the trust and trust beneficiaries to defenses that were intended to be barred by virtue of being holders in due course of each and every loan. Thus this too is an allegation contrary or adverse to the interests of the trust and the trust beneficiaries. Again without notice to the trust beneficiaries that the trustee or at least lawyers for the trustee are taking positions adverse to the interests of the investors and the trust.

What difference does it make? It makes a difference because of money which is after all what this case is supposed to be about. The investors’ money either went into the REMIC trust or it didn’t. If it did, then the trust is the right vehicle for the transaction although most PSA’s say the trust cannot bring the foreclosure action. But if it didn’t go into the REMIC trust account, and the trust was ignored in the origination and/or acquisition of the, loan then the borrower is even more entitled to know what payments the investors (f/k/a/ trust beneficiaries) have received. If there have been settlements, then how much of the original debt is left? If there were servicer payments, was there ever a default and how much of the original debt is left? If there were third party payments to the creditors then how much of the original debt is left?

What seems to be an elusive concept for judges, lawyers and even borrowers is that their debt was paid by someone else. That is what happens when you have fraudulent transactions and the perpetrators get caught. In this case, there was plenty of money available to private settle more than $1 Trillion in claims of fraud from investors and fines that are steadily increasing into the tens of billions of dollars. Because the intermediary banks had essentially stolen the identity of the lenders and the borrowers, they made claims and got paid as though they were the lenders. Now they are using the proceeds of what were disguised sales of the same loan multiple times to settle with investors and settle only with those borrowers who present a credible threat. In the end the banks are wiling to pay trillions because they got illegally trillions more.

The big question is when it will occur to enough enough judges, lawyers and borrowers that they are entitled to offset for those payments that were actually received or on behalf of the actual creditors. It isn’t a difficult computation. Thus the notice of default, the notice of the right to reinstatement, the end of month statements, and the acceleration letter all state the wrong amounts and are fatally defective. They are misrepresentations that are part of a string of misrepresentations starting with the lies told to the managers of stable managed funds who purchased, and kept on purchasing mortgage bonds issued by an apparent REMIC trust whose terms were being routinely ignored.

Thus it is not RELIEF that the borrower is asking, it is JUSTICE. The creditor is only entitled to get paid once on each debt. The creditors are the investors or trust beneficiaries. The demands made on borrowers for the last 7 years have actually been demands from the intermediaries for payment of fees, commissions and advances made or earned by them, according to their story. They are not claims on the mortgage loan, which was either paid down or paid off without disclosure to the borrower. Had the pay down or payoff been recorded and applied, virtually all of the loans that were improperly foreclosed by strangers to the original transaction (no privity) would have been avoided because the amount of the payment could have been dropped easily under HAMP. As stated repeatedly on these pages, this is not a gift of principal REDUCTION. It is justice applying a principal CORRECTION due to payment received — the ultimate defense under any lawsuit for financial damages.

For more information please call 954-495-9867.

17 Responses

  1. The states that are vested in these loans will not allow this …… This means the very state officials participated in the fraud. Meaning the pension funds are at stake therefore there is no Judge that will rule against the alleged forecloser. Note or not !

  2. @JohnR – Your case is eerily similar to mine as I was plaintiff and could only point to absence of evidence as a result of trial court denying discovery. At the appellate level the judges had to lie about material facts and concocted an ‘issue’ on behalf of the banksters that the banksters didn’t even support because it exposed their ‘bid rigging’ ploy.

    The point to remember is to appeal, and prepare a record of appeal showing you tried to produce evidence and were thwarted by trial court; and make the evidence supporting your trial court briefs a part of the record to catch the appellate court altering your material facts to fit their Opinion.

  3. There is no statute of limitations on robbing people.

  4. Thanks a million to this website , I was able to beat back a lift stay motion filed by a lender who had no business filing it in the first place. My loan was rescinded in 2008, and as expected the lender sent a rejection letter instead of doing what the truth in lending act required. They kept pursuing foreclosure even after the rescission, I was left with no choice but to list the voided lien as unsecured in a chapter 7 bankruptcy. The pretend lender then filed its own bankruptcy immediately thereafter but prior to their filing , they withdrew their motion to lift stay at midnight prior to the hearing date. The trustee kept the case open for two years after the discharge before he finally abandoned the property. In February 2013, Ocwen sent a letter that they are the new servicers of a rescinded and discharged loan. My attorney immediately sent out a copy of the rescission letter, a copy of the discharge order included and a debt validation letter. They ignored my attorney’s letter for six months. In August 2013, I received a letter of reassignment to a new servicer which was followed a few days later by a notice of default filed by Ocwen in August 2013. I immediately sent out a letter to Ocwen and the servicer which would remain nameless for now followed by phone calls. I was assured that Ocwen could not have filed a NOD and reassign the servicing to another lender. Well I had the evidence on front of me with Ocwen written all of it. Few weeks later ,I received an order to docket in Ocwen’s name instead of the servicer. The new servicer and Ocwen were adamantly insisting that my eyes were deceiving me as it’s impossible that it was Ocwen who filed the foreclosure. I tried to no avail to plead with the sub trustee and the new servicer that they are wrong in pursuing this case. I filed complaints with the consumer finance protection bureau and my state’s financial regulation agencies. These complaints which cited the Gilbert vs residential funding out of the 4 circuit court of appeals were forwarded on my behalf by these agencies to the servicer and their debt collectors to no avail. In the complaint ,I raised issues such as time barred debt and the violation of my FDCPA in addition to the rescission. All of the above fell on deaf ears as they once again set a sale date for my property. They were stopped by a chapter 13 ,in my schedules my attorney listed the property as an asset . They filed a lift stay motion to which my attorney challenged them to prove that they have standing , reminded the court that the pooling and servicing agreement still showed that the note was never removed, he reminded the court that upon sending the rescission letter,the security interest no longer exists,he furthered reminded the court and the judge agreed that the unsecured debt was wiped out in the chapter 7.
    At the 341 meeting of creditors, the trustee who I thought should have familiarize himself with the case made a statement to me and my attorney that he’s going to file a motion to dismiss because of excessive debt as he would not recognize our rescission . This is very bizarre. Even after my attorney tried to educate him on the truth in lending act, rescission and the Gilbert vs Residential funding case and the debt discharge in chapter 7, the man would not listen. My attorney told him he’s willing to take this issue to wherever it may lead. I hope fellow fighters in this blog how best to proceed .

  5. You can try to not become what you are fighting .. Taking the high road with the mega-goons @ Foreclosure Inc. WILL NOT WORK.

    Jam their houses up with liens. Loads of them – You can record mechanics liens against the house they foreclosed on and send them a little reminder this aint’ gonna happen all nice and easy sorry in advance.

    They will keep doing it as long as they can get away with it.

    Surprised there are not more stories of people emptying a Glock into their office’s.


    I wonder if Wal Mart is sold out of ammo everywhere or is it just here?

    2 box limit per customer not that it matters because there isn’t any.

    Local gun shop owner was on the radio recently, get this: said he was scared to advertise he had a shipment of ammo //of xyz popular caliber coming in because he was afraid it would trigger a stampede.

    There has been a very-very bitter wind blowing for a very long time.

    Make it a Great Day.

  6. Unfunded Trusts. The connection didn’t click until recently. Good Grief

  7. Dwight. I mainly argued the balance and NOD Were incorrect. Because they were. Then strongly argued the AOM were robo signed. Post dated broken chain. Out of order. Because they were. Then I argued the SERVICER owned nothing , held nothing and had no right to foreclosure. Never did the appeal, although I guess I should have. Once they got the sheriff sale, I started to fight them for money. No longer care about the house they stole. Still looking at money damages moving forward. Just not sure how good of chance I have. But a little birdie, keeps chirping in my ear…..SLAM DUNK. SLAM DUNK.


  8. Java , Did you “Deny” the transaction in your answer to the complaint? or did you raise other defenses? This time I will be sure not to admit to anything, as I see many decisions justify by stating the borrower admits he took the loan and admits he is in default … the Judge then goes on to Pooh-pooh away the other arguments about bad documents by saying “you borrowed money and didn’t make the payments, you can’t get a free house , and no other parties have come forward seeking to collect … so we must assume this is the true party in interest.” … All of the defenses and issues about the illegal origination get lost because he zeros in on the fact that we admit the default. All of the discussion about the PSA and how they broke laws , etc, etc, are never allowed to be spoken on the record because he takes over the narrative , he is completely aware of what he is doing by not allowing you to create “a record that an appeals court could review”: and potentially reverse. The most critical part of appearing Pro Se in the lower court is to at least get your points on the record, in spoken form and submitted in written form and exhibits. The main thought being , regardless of how this Judge feels about any of this, I must build an appealable case on the record that another higher court could possibly review and reverse.

    Did you attempt to appeal to the appellate division?

  9. Javagold … Yes, I live in Ocean County along the beautiful Jersey Shore. Judge Buczynski was sitting on the bench in my case. I know he was setting me up for the fall by couching all his remarks on the record to establish that 1) Defendant does not deny the loan transaction took place 2) Defendant admits he missed pymts and is in default 3) Plaintiff (servicer Wells Fargo) is Holder of the Note 4) Note was mysteriously found and “ta-da” it now had the stamp on it and was endorsed in blank by WaMu .. My case was ultimately dismissed because he ordered a plenary hearing and wanted Wells Fargo to bring in the female employee who supposedly reviewed the debt and certified the amount due and default, etc. , he was probably covering his ass to show that a robo-signer was not involved. At the time of this happening, the state of NJ was dealing with the robo–signer fiasco and the Chief Justice of the state supreme court was concerned that the integrity of the justice system be safeguarded and protected from these frauds and bad documents. I’m sure the judge wanted to foreclose on my property, but he was probably attempting to go the extra mile to show that I had no reason for appeal.

    But during this time while WF was substituting counsel out for their main law firm to come in and handle this , I was also going on the record and getting the Judge to agree with me that 1) this is not solely about the certification of debt and the employee being a firsthand testimony, it should also work to establish if … a) That we take a look at the documents involved, by authenticating the Note and AOM … my argument to the Judge was the need to establish, verify, authenticate the dates that the note was allegedly stamped and negotiated to WF .. and to make sure the paperwork document trail wasn’t just fabricated out of thin air with no credible authentication of dates and people involved with the alleged negotiation and delivery and receipt. My argument was based on my belief that they just back-engineered their fraudulent paperwork to fit their story in order to foreclose. Anyone can fabricate documents to say whatever they want them to say, was my point .. according to UCC and the Sandra Ford NJ Appellate reversal, the dates , people and authentication are essential.

    My email is … taskforce4us@verizon.net

  10. Heyhey I was there when MERS was new. A trading platform, similar to a merchant account ( I was not there when those where new).

    But it made all the sense in the world and it was brilliant.

    Nothing was online in those days and MERS fixed that. Fixed a lot of things and like everything else, any business is only as good as it’s people.

    Make it a Great Day.

  11. Dwight. Dream on. Not going to happen. My fraudvlosure, sounds very similar to yours. Same state. Same bad actors. Fought for 5 years. Pro se. Had mountain of paperwork, proof of robo sign, post dates, broken chain of AOM etc. Etc. Etc. 4 judges. Some mean..some nice. All ruled against me. House fraudclosed. End of story.

    May be. Maybe not. If you are ever in ocean county area, let me know. Maybe we can compare notes.

  12. John R ,

    Thanks for posting that , it has many of the same elements in my case, same robo-signer Topeka Love on my AOM from LPS , ETC .. This is exactly what I want to argue in my case, except that in my case WF and Fannie Mae have not divulged the trust or any info regarding what they did with my note. All I get out of them is “Fannie Mae is the investor” .

    Using the case or cases you posted, I want to argue before the court that because of these issues in securitizations, I am entitled as the homeowner to demand and receive full discovery from and with the help of the court. The courts cannot proceed with business as usual in light of what’s happening. They cannot continue to allow servicers to swoop in and take property without all of the proofs and facts being revealed to determine if they have standing or the legal right to do so. We already know the answer … the answer is “NO, THEY DO NOT HAVE THE RIGHT”.

    The courts have been helping to perpetuate the crime that the Dept of Justice has identified and settled for huge monetary amounts. Everybody is aware of the crime , yet the Judges who sit in the courts are aiding and abetting the continuation of the criminal act thru to its full completion. A Judge has a sworn duty to uphold the law regardless of how he personally feels about it. These Judges in most courts are letting their personal feelings get in the way of administering justice. They are refusing to peel back the layers of the onion to reveal the truth. Every homeowner who is in a situation where he is not being allowed to see where his note really went and to what trust it was a part of under the Fannie Mae shroud of protection, should have their cases dismissed with prejudice. Period.

    The time has come to confront the Judges and put them on the hot seat for their conduct. They are either for us, or against us. For the American way of truth and justice, or they are not for the American way of truth and justice. And if these Judges can’t handle the truth, then they need to be taken down off their benches. If the truth means that some borrowers/homeowners get to keep their homes clear and free, so be it … that’s the way the cookie crumbles.

    The banks made a conscious decision to get involved in breaking the laws and they got caught. Now they have to face the consequences of their bad decisions.

    Not all homeowners are in this type of situation, those who are not will still lose their property. But for those who are in this situation and fall into this category, for the small percentage of folks who actually even answer their foreclosure complaints , allowing justice to prevail will not destroy our country and throw us into chaos … the few borrowers who happen to fight and go to court, and it is revealed that securitization voids the ability to foreclose .. than our Judges need to be told by higher authorities that they need to stop impeding justice, they need to allow justice to take its course by allowing the whole truth to come out.
    All Judges need to be put on notice , that their actions will not be tolerated if it is determined that they are purposely inhibiting the truth from being revealed by allowing Fannie Mae to keep secrets about where the homeowners notes went, keeping secrets about the trusts , etc … this is not justice, not when you allow one side to keep the truth covered up and hidden from a family who will lose their property. When property rights are at stake , there are no more secrets allowed. You want to keep secrets ? Then the homeowner gets a clear title. That is how we’ll deal with you Fannie Mae … go ahead, keep it covered up and don’t reveal the information needed by this court to make a fair ruling on this foreclosure action .. you refuse to reveal the facts, then you lose .. homeowner receives clear title. Next case ??

    R. Druskin
    Robert Druskin
    Executive Chairman, The Depository Trust & Clearing Corporation
    Read Full Bio
    Michael Bodson
    Michael C. Bodson
    President and Chief Executive Officer, DTCC; President and Chief Executive Officer of DTC, FICC and NSCC; Chairman of the Board of Managers of Omgeo, LLC
    Read Full Bio
    Robert Colby
    Robert L.D. Colby
    Chief Legal Officer of the Financial Industry Regulatory Authority (FINRA)
    Read Full Bio

  14. Neal Garfield …. let’s see what you think of this..

    As is explained in more specific detail below, because of the very nature, laws governing and structure of REMIC securitized trusts, and the contractual agreements held within the trust’s controlling document, the Pooling and Servicing Agreement (PSA), Plaintiff was never and can never be the PETE for this alleged mortgage & note. No court can on the basis of contract law change a trust which is specifically governed by its business indenture.

    The short story is that every securitization—including Fannie Mae and Freddie Mac securitizations—requires the creation and funding of a securitization trust that must, by law and by contract take physical possession and control of the trust property on or before the closing date of the trust. This transfer of the trust property, the legal res, to the trust at or around the loan origination is a necessary condition precedent to a valid securitization. It is necessary for several reasons.

    First, someone must be the “legal” owner of the mortgage loan. Only the legal owner of the loan has the legal right to sell mortgage-backed securities (“MBS”) to investors. Second, actual physical transfer of ownership is necessary because the cash flows that go from the homeowner through the securitization trust to the MBS purchasers are tax exempt. If the trust does not perfect legal title by taking physical possession of the notes and mortgages, the Internal Revenue Code, specifically 26 U.S.C. § 860G(d)(1), provides for a 100 percent tax penalty on those non-complying cash flows. Third, the legal ownership of the loans must be “bankruptcy remote” that is, because bankruptcy trustees have the right to reach back and seize assets from bankrupt entities, the transfer to the trustee must be clean and no prior transferee in the securitization chain of title can have any cognizable interest in the loans.

    For this reason, all REMIC securitization trusts are “special purpose vehicles” (“SPVs”) created for the sole purpose of taking legal title to securitized loans and all securitization trustees represent and certify to the MBS purchasers that the purchase is a “true sale” in accordance with FASB 140.

    The “owner of rights or interest in property” is a necessary party to a foreclosure action.

    Thus, if plaintiff has offered no evidence that it owned the note and mortgage when the Complaint was filed, it would not be entitled to judgment as a matter of law.” U.S. Bank Natl. Assn. v. Duvall, 2010-0hio-6478,¶14 citing Wells Fargo Bank, NA. v. Jordan, 2009-0hio-l092
    “Accordingly, we conclude that plaintiff had no standing to file a foreclosure action against defendants on October 15, 2007, because, at that time, Wells Fargo owned the mortgage. Plaintiff failed in its burden of demonstrating that it was the real party in interest at the time the complaint was filed. Plaintiffs’ sole assignment of error is overruled. “U.S. Bank Natl. Assn. v, Duvall, 2010-0hio-6478,~15.

    Defendant submits that it was an Error of Law to determine standing without first considering and determining if delivery and acceptance of the Asset perfected and dominion and control over the Assets was relinquished by the giver of the Asset pursuant to the controlling Law thereby giving the Trust control over the Asset and to consider the future contractual rights of Plaintiff trustee Wells Fargo, the Lender Option One or the Trust itself.

    To give standing on a future, unattainable right that is Expressly Prohibited by Local law, by the trust’s controlling document titled the Pooling and Servicing Agreement (PSA), the trust’s parties contractually agreed ruling law (NY EPTL) and the IRS Code, was erroneous.

    If there were a legal assignment of the Asset to the Plaintiff Trust on January 1st, 2006 then the need to create one on March 7th, 2008, over 2 years later, would not have been required. Most telling is that in the mortgage assignment of March 7TH, 2008, it is Lender Option One Mort. Corp. that assigns the Note, clearly indicating, the Plaintiff Trust never legally possessed [it] on or before March 7th, 2008. See Assignment of Mortgage (AOM) Exhibit “E”. Also telling is the necessity for Plaintiff to travel all the way across country to Minnesota to have another company, Lender Processing Services, create and authenticate an assignment for them. The fact that Wells Fargo had to go to Minnesota to find someone to sign the 3/7/08 AOM when it is headquartered in San Francisco is powerful and dispositive evidence that it did not acquire legal title to the loan prior to March 7th, 2008 and in fact as is explained in greater detail below, could not then and cannot now ever acquire legal title to the alleged mortgage loan.

    In the case at bar, Wells Fargo Bank, N.A, as Trustee of the “Trust”, claims to be the sole and exclusive owner of the securitized mortgage. If Wells, as Trustee for the “Trust” is in fact the owner, it must have acquired legal title to the loan within 90 days of January 1, 2006.

    In explanation of the above; New York law states that transfers to a trust after the closing date of the trust are void. N.Y. Estates, Powers and Trusts Law §§ 7-1.18, 7-2.4. Glaski v. Bank of America, N.A., 218 Cal.Rptr.4th 1079 (2013). See also, Saldivar v. JPMorgan Chase, 2013 WL 2452699 (Bky. SD Tex. 6/5/13) (holding that trustee mortgagee’s position is void if notes and assignments of mortgage not delivered within 90 day of closing of trust); Wells Fargo v. Erobobo, 2013 WL 1831799 (NY Slip Op. 4/29/13) (holding that NY trust law governs securitization and that notes and assignments of mortgage must be physically delivered to trustee within 90 days of closing for trustee to have claim of ownership). The Internal Revenue Code provides for 100 percent tax penalties for asset transfers to the trust after the closing date of the trust and the Trust’s PSA specifically forbids all participants in the securitization of the assets of the trust to perform any action in contravention to the IRS code.

    Since Wells Fargo Bank as Trustee for the “Trust” cannot show physical receipt of the note and mortgage AND/OR has failed to produce any legal authenticated documentation proving it’s chain of title to the rights and interests of the note and mortgage (PETE) prior to April 1st, 2006, (the Jan. 1, 2006 trust closing date + 90 days) under governing law (NY EPTL) its claim to the note, mortgage and ultimately the home is void.

    Similarly, if the only evidence Wells Fargo has of ownership is a document executed after April 1st, 2006, (Jan 1 closing date + 90 days), then again its claim of ownership is void. In the case at bar the assignment of mortgage produced by Plaintiff was executed on March 7th, 2008 (“3/7/08 AOM”) and was signed by a known Robo-Signer Ms. Topaka Love. Ms. Love is an employee of Lender Processing Services in Dakota County, Minnesota and as such the AOM was also fraudulently signed by a person who has no authority to sign. It is patently fraudulent. It was executed two years after the Plaintiff trust closed. Every fraudulently securitized mortgage foreclosure has this smoking gun. There are millions of these recorded throughout the country.

    These fraudulent assignments of mortgage exist in almost every securitized mortgage foreclosure. They are always executed years after the closing of the securitization trust and typically by someone who has no idea what they are signing (Robo-Signer). They are also always executed in a state a long distance from, and outside the subpoena power of, the state in which the foreclosed property is located.

    The significance of the too late assignment of mortgage is this. Wells Fargo, the Plaintiff Trust, never acquired “legal title” to the securitized loan. This is an unfixable error. It also exposes the MBS holders to 100 percent tax penalties. Because of this, Wells Fargo, according to the Erobobo, Salidivar and Glaski cases cited above, does not and cannot ever have “legal capacity” or legal “standing” to make a claim to the property. In short, the 3/07/08 AOM is irrefutable evidence that the Plaintiff Trust is a “busted trust” with no identifiable owner of the mortgage.

    Because Defendant’s alleged loan securitized in 2006 – it must stand that when the Plaintiff Trust filed, they filed as the purported legal owner and holder of the note and alleged a legal right to enforce the mortgage. The Plaintiff Trust is not the originator of the mortgage, the servicer of the mortgage loan, or even an actual bank. Instead, this entity is a New York Common Law Trust created by an agreement known as the “Pooling and Service Agreement” (PSA). Purportedly, the Defendants loan, along with thousands of other loans, were pooled into a specific type of trust known as a Real Estate Mortgage Investment Conduit (REMIC)Trust which separated the income streams generated from those notes and converted them into residential mortgage-backed securities (RMBS) that are bought and sold by investors – a process known as securitization – as certificates.

    Defendant merely points out that the Plaintiff’s are contractually bound by the Trust Indenture, its Instrument’s and must adhere to those Instrument’s and if it does not, then IRS & New York Law, inter alia, deems the Party’s action void. The rights and duties bestowed on the Parties of the Trust are only derived from the Trust Instrument’s and to shed light on whether these Rights exist, we must refer to the Instruments, the Indenture of the Trust.

    The Plaintiff Trust in the instant action, through their use of the fraudulently created AOM only solidified their lack of rights in the Asset when they violated IRS & New York Law, inter alia, and therefore, had no standing to invoke jurisdiction in the Ohio Land Court.

    Expressio unius est exclusio alterius.

    The expression of one thing is the exclusion of another.

    At the risk of being repetitious let me repeat again. Defendants’ position is simple that under IRS & New York law, the applicant in this case is not the holder of the note and /or owner of the mortgage loan and this is not a matter of privity of contract but of the application of the NY EPTL (Estates Powers and Trusts Law) and the case law applicable to it at the time of foreclosure filing. Moreover, the full property of the Trust (Trust Funds) had to be delivered on the closing date of the trust, and because of that, the AOM is a conveyance that is void because it violates the Trust’s Indenture, the PSA. EPTL § 7-2.4

    To explain: An express life trust in New York is governed by New York Law (EPTL) and it requires the property, the intention to create a trust, the beneficiaries and the actual delivery of the property to the trust. Defendant submits that by the language of the preliminary statement (page # l) of the PSA, the PSA designated the property for the Trust which was the Trust Fund that upon delivery to the designated trustee created the trust. What is property or not of the trust is governed by the PSA. It is not a matter of the Defendants not having privity to enforce the PSA.

    What matters is if under the applicable controlling law that governs this trust and trustee, the trust was a real party in interest at the time that the foreclosure action was filed. Defendant submits that Plaintiff was not, that it remains not and that by controlling law it can never be the real party in interest and therefore it lacked the capacity to invoke the jurisdiction of the court.

    In New York, the mere intention to create a trust without delivery of the trust assets to the trustee has not legal consequences; it does not create a trust, if the Settler is the sale trustee, the transfer of Title assets is completed by recording the DEED or registering the securities or accounts in the name of the trust. If the trust names a third party as a trustee, the property, titled assets, documents evidencing ownership of the property must be formally transferred to the trustee. A transfer is not effected by mere recital of assignment, but the written assignment and all documents of property must be actually delivered to the trustee ( EPTL §7-1.8). As stated above the property is passed to the trustee with the intention to pass legal title thereto to it as trustee. Brown v. Spehr, 180 N.Y. 201 (N.Y. 1904). There is no valid trust until actual delivery of the assets to the trust. Riezel v. Central Hanover Bank and Trust Co..,_266 App. Div. 586.

    There is no trust if the trust fails to acquire the property. Kermani v. Liberty Mut. Ins. Co., 4 A.D. 2d 603 (N.Y. App. Div. sa Depart. 1957).

    The delivery of the property must be done to the trust as designated in the instrument creating the Trust ( EPTL §7.2.1(c)). The PSA prescribes the specific method of transfer. This is not subject to variation because it is set in the instrument. No court can ignore and create contractual remedies that were omitted in the PSA. Schmid v. Magnetic Head Corp., 468 NYS 2d 649 (NY App. Div. 1983). However, the court can enforce the prescription of the PSA. Morlee Corp. v. Manufacturer Trust Co., 172 N.E. 2d 280 ( N.Y. l96l). But no court can on the basis of contract law change a trust which is specifically governed by its business indenture.

    What is valid delivery to the trustee is governed by the corporate business indenture, because the Trustee in the present case is a corporate trustee. Under a corporate indenture the right of the trustee are not governed by fiduciary relationship but by the term(s) of the agreement (the PSA). The cases that do not see that it is not simply a matter of privity fail to see that if the property is not received in the manner prescribed by the indenture, then the property is not property of the trust, and if not delivered as prescribed and delivered in violation of it, there is not trust because there has not been complete and perfected delivery of the property to the trust. AG Capital Funding Partners, L.P. v. State St. Bank & Trust Co., 2008 N.Y. Slip Op. 5766; Hazard v. Chase National Bank, 159 Misc. 57, 287 N.Y.S. 541 (Sup Ct 1936) aff’d 257 A.D. 950 14 N.Y.S. 147 (1st Dept.) aff’d 282 N.Y. 652 cert. de. 311 U.S. 708 (1940). The duties and power of the trustee are set by the agreement (PSA). In RE IBJ Schroeder Bank and Trust Co., 271 A.D. 2d 322 (N.Y. App. Div. 1st Dept. 2000).

    The PSA is also the agreement that creates the trust, it is a mistake to think that under New York Law you can create a trust without complete delivery of the designated property of the trust and in the manner specified by the document that creates it. Without the delivery of the property designated to it, there is not trust.

    The delivery under the PSA requires under the corporate indenture strict compliance with the mandatory terms of the trust indenture, because the property has to be delivered as prescribed and the securities ascertained if not, no right to beneficiaries arise. Wells Fargo Bank, N.A. v. Farmer, 2008 N.Y. Slip OP. 51133 U 6 ( N.Y. Sup. Ct 2008) and no right in the trust arises without consideration paid (in this case the depositor to the sponsor).

    The delivery necessary to consummate a gift must be perfected as to the nature of the property. There must be actual surrender and control and authority over the things surrendered must be intended. It is the consummation that completes the transaction, intention alone is not sufficient. Vincent v. Putnam, 248 N.Y. 76 (N.Y. 1928). The Consummation Act of the delivery of all the property and documents is necessary. Phillipsen v. Emigrant Inds. Saving Bank, 86 N.Y.S. 2nd 133 ( N.Y. Sup. Ct. 1948). Therefore, if the note and the mortgage and the interim assignment were not delivered by the closing date (of the trust) they are not property of the trust.

    The delivery rule requires that the delivery necessary to consummate a gift must be perfected as to the nature of the property and the circumstances permit. Vincent v. Rix, 248 N.Y. 76 as cited in Gruen v. Gruen, 68 N.Y. 2d 48 ( N.Y. 1986). See also Sussman v. Sussman, 61 A.D, 2d 838 ( N.Y. App. Div. 2d Dept, 1978); Riegel v. Hanover Bank TrustCo., 266 App. Div. 586 there must be a change of dominion over the thing intended to be given. Vincent v. Putnam, 248 N.Y. 76, 82-84 ( N.Y. 1928).Undelivered note and assignments after the closing date if not contemplated in the PSA are not property of the trust. Any act, sale, and conveyance by the trustee in violation of the PSA is void under NY EPTL law § 7-2.4.

    Four essential elements for valid trust property must be present:

    1) A designated beneficiary
    2) A designated trustee
    3) A fund or property, sufficiently designated or identified to enable title to pass to the
    4) Actual delivery of the fund or property or the legal assignments.

    In the present case, the transfer did not comply with the PSA because in each step of the entire mortgage securitization process there are no authenticated documents proving legitimate transfer of the Note & Mortgage and also because the only proffered assignment of mortgage & note occurred after the date of the closing of the trust. In fact the assignments from Option One Mortgage Corporation (Lender) occurred years after the closing date. In addition, there is no specific endorsement from Lender Option One Mortgage Corp. (Lender), to anyone, only an incomplete, non-authenticated by affidavit, unexecuted “Order” Instrument (Allonge) left blank to anyone.

    The chain of delivery for the acquisition of the property by plaintiff, as per the PSA was not followed, the note and the mortgage were not endorsed and assigned from Originator to Seller to Sponsor to Depositor, to the Trust , all of which are in violation of the PSA. There was not a single iota of proof offered that this is the case in the present application.

    Moreover, the actual chain of Plaintiff’s assignment was from Option One Mort. Corp. (who allegedly had previously relinquished ownership of the note & mortgage to Barclays Bank) to the Trustee, is not the prescribed path of the PSA agreement. All of this was done years after the closing date of the trust and even after the filing of the foreclosure complaint.

    Any act of the trustee contrary to the trust agreement (PSA) is void ( NY EPTL § 7-2.4). Therefore, the acceptance of the assignment from Option One to Plaintiff is void.

    In order to prove injury in fact the plaintiff has to prove that it has legal standing by showing that it is a real party in interest. If the plaintiff cannot prove that the loan became an asset of the trust under New York Law EPTL (Trust Law) and the trust’s controlling document, the PSA, then it can never be able to prove standing.

    In the PSA Section 2.01 stipulates that as promptly as practicable subsequent to such transfer and assignment in any event within 120 days after such transfer and assignment the trustee shall cause such assignment to be recorded in the appropriate public office for real property records for assignments of the mortgages. This is because assignments of the mortgages under New York laws are required to be filed in order to affect as a lien on the property. N.Y. RPL Section 417 (New York Real Property Law) and Section 418.

    Moreover, the documents that affect the transfer (assignments) of the property must be completely registered in the name of the trustee or the trust for the property to become property of the trust. EPTL § 7-1.18, the law applicable as to what becomes property of the trust is New York law. The negotiable instrument(s) that are the property of the Trust when they become such property as per the PSA are in New York regardless that the collateral may be anywhere in the world, and the PSA is clear that New York law applies to all substantive issue and it is New York Law that governs the mandatory requirements to effectively transfer an asset to a trust. There has been no contest by Plaintiff that securitization trusts such as the one for which Plaintiff is the trustee are subject to New York Common Law.

    New York Law is a venerable and ancient law. Under New York law whether an asset is trust property is determined under the law of gifts. In order to have a valid inter vivos gift there must be delivery of the gift. Since at least 1935 in Burgoyne v. James, 282 N.Y.S. 18,21 (N.Y. App. Div. 1935), the New York Supreme Court recognized that business trusts are deemed to be common law trust. In Re Estate Plotkin , 290 N.Y.S. 2d 46, 49 (N.Y.Sur. 1968) other jurisdictions agreed. Mayfiled v. First Nat’l Bank of Chattanooga, 137 F.2 d10l3 (6th’ Cir. 1943). Therefore, all of the conditions stated above for the transfer of property to a trust and the ownership of the trust of such property apply also to business trust so called “Massachusetts Trusts” In Re Plotkin Supra.

  15. HSBC proceeded as owner and holder in the foreclosure; they held nothing. Trailing assignments and endorsements are ultra vires. As Bob said, what if they simply “feigned” the transfer to obtain contract law protections? Judges have simply refused to look inside the box.

    We’ll see how it goes in the 7th Circuit. Brief filing tomorrow.

  16. I agree 100%. Unfortunately houses are still being fraudclosed on ….. Isn’t it about time. To put this to end, once and for all !!!

Contribute to the discussion!

%d bloggers like this: