Freddie and Fannie: Plaintiffs? Standing? Modification?

I recently had a case in which the issue of standing, ownership and modification of the loan were all at issue. The case is an example of what happens when the parties purportedly representing the GSE’s bring a foreclosure action in the name of Fannie or Freddie, and then offer through a servicer (authorized or unauthroized). This is why Fannie and Freddie have said publicly that no servicer should use its name in a foreclosure action — and tangentially this could be extended to cases where in the testimony of the corporate representative, Fannie was the “investor” from the start.

First let’s get something straight. Neither Fannie nor Freddie is an loan originator. Their primary purpose is to guarantee loans and then act as Master Trustee of REMIC Trusts that allegedly purchase them at the time of the sale. It doesn’t really work that way but that is how the documents say it should work. Secondarily the GSE are allowed to buy loans. And the principal currency used for such purchases are the mortgage bonds issued by REMIC Trusts for whom it is the Master Trustee.

Either way each of the underlying REMIC Trusts hidden from view have their own Trustee, whose duties are spelled out in an ordinary Pooling and Servicing Agreement, which is the Trust instrument.

If the GSE was acting in its principal capacity, it is impossible for it to be the Plaintiff in a foreclosure action. The guarantee payment to the actual creditors who say they lost money does not occur until after the loss realized which means after the home has been through final liquidation to a third party. If the modification was offered by a servicer with apparent authority, they can hardly disclaim that authority when the standing to file foreclosure depends upon the evidence from that apparent servicer.

Here is the way I put it the currently pending case:

“It should be noted that the Law Offices of David Stern, Esq. were summarily discharged by virtually of its clients including the Plaintiff in the action below. That discharge was based upon allegations that the law office had engaged in a pattern of conduct of producing robo-signed, unauthorized forged documents that were fabricated for the purposes of litigation. The Court is encouraged to take note of the removal of said law firm in this case, and the hundreds of articles and formal announcements of Freddie in the public domain.

As stated below the alleged movement of fabricated documents belies the allegation that Freddie Mac ever had any interest in the subject loan. No allegation nor any proof offered that Freddie was or even could be a lender. The court is requested to take judicial notice of the public announcements from Freddie in which its enabling legislation and documents show that there is only two ways that this quasi-public entity can become involved in a specific loan, and neither of them allow Freddie to be named as the lender nor as plaintiff in a foreclosure action.

It seems plausible that the primary purpose and actions of Freddie were at work here — guarantee of the loan in which case it could not possibly have brought the action because the payment of the guarantee is based upon the loss to the claimant which is computed after final liquidation of the property. Hence Freddie had no loss or any economic interest in the debt, loan, note or mortgage, thus depriving it of any claim of standing. In fact, the bringing of this action would Cause the loss which might otherwise have been mitigated by settlement and/or modification — which was somehow achieved and which now the Plaintiff insists should not have been enforced.
On the other hand, the same sources suggest that Freddie could purchase the loans using bonds of REMIC trusts. No such transaction is suggested by the pleading or the proof offered on behalf of Freddie.
In fact, no allegation nor offer of proof was ever offered in the court below as to how Freddie came to be named as Plaintiff — or for that matter whether they know of the existence of this action or have been given the opportunity to approve or disapprove. No witness or document from Freddie was ever alleged or produced or proffered as evidence. Defendant in the court below challenged Freddie to answer claims that it had not established standing, which is a jurisdictional issue. Freddie is principally a guarantor whose name should not be used in mortgage foreclosures according to its own pronouncements.

At the time of filing of the complaint there was no recorded assignment of the note or mortgage. The evidence produced by Freddie or on behalf of Freddie showed that delivery of the debt, note and mortgage could not possibly have occurred,  to wit: no party whose authority to “represent” Freddie as agent or otherwise received said documents and no allegation nor any proof was offered that Freddie even acquired the loan, debt, note or mortgage through payment of value in good faith without knowledge of the borrower’s defenses (i.e., as a holder in due course).

The allegation is made that Freddie is a holder, which means that the plaintiff in the court below admits that it had NOT purchased the loan for value in good faith with no knowledge of borrower’s defenses. If Freddie was not the holder in due course, the actual owner of the debt, note and mortgage, then who fits that description? The answer is neither apparent from the record nor evidence from the pleadings nor the proof in the record below.

Pure logic required that if someone claims to be a holder and the “holder” is claiming rights to enforce, that those rights to enforce must be conferred from some set of documents, fact or both. There is nothing in the record in the allegations or proof as to why Freddie is named as “holder”, whether it had rights to enforce, or how it came to possess the rights to enforce — which of necessity would require the production of a witness or document or both showing that Freddie was named as agent to collect by the actual creditor.

This of course would require the identification of the actual creditor a basic right under all lending laws governing fair practices and  preventing predatory lending. To hold otherwise would allow any stranger to the transaction to self proclaim itself as a party with rights to enforce contrary to the rights of the actual creditor.

But worse, naming Freddie as a mere holder belies its central purposes as a quasi governmental entity. If Freddie is a mere holder who won’t even claim that it has rights to enforce or show how it has rights to enforce, how is the consumer, the government or anyone else to determine the identity of the true creditor? In foreclosures this is especially important since ONLY an actual creditor on the actual secured debt can submit a credit bid in lieu of cash at the auction of the property — and only that party can be paid if the borrower seeks to redeem the property.

In this case, the Court was clearly confused by the conflicting evidence and pleadings but saw a way out — the Defendant in the Court below sought to enforce a modification agreement in which the modification had been subject to underwriting, the trial payments were made, but he “Plaintiff” wanted to foreclose anyway. The court concluded that the modification should be enforced, but in order to do so arrived at the dubious conclusion that Freddie was the proper party in the action.

Hoisted on its own petards, Freddie now seeks to overturn the ruling that it must abide by a modification agreement it proposed, was accepted by the Defendant and for which it received consideration.

18 Responses

  1. Rock, there are many wins, mostly concealed with sealed settlements. I can’t speak to Mr. G’s record, but I do follow the case law emanating from courts around the country.
    Take”B of A v. Greenleaf”. MERS took an interest to RECORD A MORTGAGE, no beneficial interest to anything other than THE RIGHT TO RECORD. Poof!
    As to Fannie and Freddie, the foreclosures are concealed. The servicers are executing and prosecuting in their own name and surreptitiously passing title (or NOT?) to the GSEs. When you throw evidence of ownership of the GSE in front of the judge, and nowhere in the pleadings was a GSE ever mentioned (only a litany of forged, false documentary evidence of transfers to alleged owners of servicing rights that never occured) you have, I would say, “fraud on the court”.
    Every foreclosure-afflicted HOMEOWNER (get that straight: it’s our house, first, the money transaction/contractual issues are second to that fact, and thirdly, but most importantly, is the proof of the security intterest in the debt) is set up to defend against a pseudo-plaintiff, who holds no documentary evidence of ownership of the note OR the mortgage, when these cases are filed. It’s all a myth. The default, the funding at origination, the placement and sale of your note ONE TIME to ONE TRUST are all a myth. A giant fraud. After years and years of research, pleading, discovery, and ultimately landing in appellate proceedings to find a correct reading and application of the law, and finally boxing a bunch of criminals into a corner they built on fraudulent documents, a settlement generally appears. I have had two HAMPS, neither was a “settlement”, both resulted in breach of contract by the servicer, and prove the “debt collection” argument.
    My case is unique in that I cannot SETTLE. There has been bad law entered on the books and it is my job to reverse that ruling. No amount of money can make you walk away from a judgment obtained with fraud on the courts that will be used against homeowners for years to come in my state and in BK courts (bank lawyers are already jumping on it even though it is in an appellate stage).

    Oh, and Rock, I appreciate the jaundiced eye, but….
    Are you a wrench thrower?

  2. @ Lauren email me at

  3. To Beth Stoops Jacobson: I hope u see this message…I am in Maryland and just looked up your case….would you recommend the lawyer you have who is representing you …I am in desperate need of a lawyer In Maryland? Thank you.

  4. iwantmynpv, how do you know this is a win when there is no case name or # to check out. Moreover, loan mods are no great shake anyway:


  6. I hear you loud and clear…

  7. @Disgusted1 – and don’t allow crocodile tears from Wells / Chase over the money laundering. Wells got a sweet deal in tax breaks for picking up the flailing Wachovia bankster family from Congress thanks to Timmy Geithner. Bear in mind that the deal with Wells finalized Dec. 31, 2008 when you consider the assignment. Or was it a gift to a drug cartel member?

  8. @Disgusted1 – it’s not like you were dealing with the most savory of characters (Wikipedia entry) –
    In April 2008 Wachovia was also investigated by United States federal prosecutors as part of a probe into drug money laundering by Mexican and Colombian money-transferring firms. The investigation of the alleged laundering also included other large U.S. banks.[70]

    Wells Fargo has since admitted that its Wachovia unit was involved in money laundering for drug traffickers.[71] It allowed money to be transferred in and out of casas de cambio, without proper due diligence, in violation of the Bank Secrecy Act. In March 2010 Wachovia agreed to pay a $160 million fine for involvement in Mexican drug cartel money laundering that could total up to $420 billion.[72] Said Jeffrey Sloman, the chief US prosecutor in the case, “Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations.” – Vulliamy, Ed, The Observer

    Do you suppose the court would be interested in aiding and abetting drug cartels? Think there might be a conflict of ethics there?

  9. Thank you Beth

  10. @Disgusted1 – sounds like you, too, may have a Kalicki case –

  11. Deborah Wynn my case no. is 20C12007978 Driscoll v Jacobson
    Judiciary Case search will provide you the docket entries but not the actual motions. I’m more than happy to provide any of the motions, mine or the other sides as well as any of the Orders.

  12. Beth
    Please post your case number (s) I would like to see your pleadings. Thx

  13. They cave the day before trial when sufficiently hammered.

  14. I am in a similar situation and not sure how they get away with this.. Chase ( As Servicer) tried to foreclose on me for 3 years.. After they figured out they where getting some push back assigned the mortgage to Fannie, Mid Case ( WTF ).. Judge allowed the substitution even after my attorney objected.. Thing that gets me is this is an original loan from Wachovia ( Whom as we all know Wells acquired in 08).. No where in the land records is there an assignment from Wells to Chase or Wachovia to Wells for that matter.. It goes straight from Wachovia to Chase Via Bogus assignment in 2011 and Chase to FNMA in 2014 mid Case.. I encourage your comment’s..


  15. Rock I can explain it. Read the link below.
    Plus how do you know Neil’s record?

    Enough with the home bred legal Terrorism.


  16. My case is very similar to your case. Freddie Mac is the claimed “owner/investor” and Wells Fargo is the servicer. Since I live in a Deed of Trust state (Maryland) the actual foreclosure complaint lists the plaintiff as the substitute trustees. The sub trustees claim their power via Freddie Mac by way of Wells Fargo as servicer. Wells Fargo claims in one Aff’d that Freddie Mac is the owner but Freddie Mac has “authorized” Wells Fargo to be the “note holder” for the purposes of the foreclosure action. Of course, no proof of this “authorization” has been submitted. The problem for homeowners in Maryland is that case law (Duetsche v Brock) solves any standing issues raised if the Plaintiff can produce the original note. Doesn’t matter is the purported owner changes 1/2 way through the proceeding as long as the substitute trustees can literally wave the original note at the hearing.

    I countered sued Wells Fargo for failing to convert my trial period loan mod to a permanent after I had paid 7 TPP (4 more than the required 3) and then WF returned all 7 payments. The judge has allowed the counter claim to move forward.

    WF actually sold the house at foreclosure sale claiming Freddie Mac purchased it back. I’ve now appealed the foreclosure (which unfortunately means the counter claim is stayed until the foreclosure case has run through the appeal process) due to procedural issues such as the judge requiring me to post a bond based on a retro active amount due which is not the way the law reads. I was prohibited from arguing my case because the judge wanted over $25,000 posted which is clearly not the correct reading of the law. Assuming I win at the appeal level, my case should be remanded back to the lower court so that I can argue my case. One such argument will be that Wells Fargo settled with Freddie Mac back in Oct 2013 (the time my house was sold) due to WF selling Freddie Mac “unqualified” loans. So did WF purchase my loan back, did the settlement go towards paying off or down my loan – etc. Those are all questions that I will pose and ask for discovery on.

    Any attorneys interested in this case let me know. I trying to separate out the counter claim so that can move forward – I’ve already submitted interrogs and request for production of documents to WF. I have an attorney and therefore can get any out of state atty admitted pro hac vice. There is another element to the counter claim – retaliation as I blew the whistle on WF costing them $175 million settlement with DOJ due to reverse red lining. The judge agreed with me so far by leaving in the counts regarding the retaliation which then bodes well for punitive damages. WF has 2 law firms fighting this case so any attorney interested in joining the fight which is a jury trial where I have countered sued for $10 million, let me know.

  17. Rock, this is a win! The homeowner wants to keep their home and the Court enforced an affordable modification that was agreed and accepted by the parties. It also sets precedent for many other cases that will be filed by the Servicers for the former GSE’s.

    Basically, they can’t get two swipes at the apple.

  18. Mr. Garfield, I often see where you comment on cases that you are involved in, but I have never seen any evidence of wins, just losses.

    Could you explain this?

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