Confusion in The Courts: Pleading vs Proof

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A lot of the questions that come in to me relate to the issue of whether the ability to enforce a set of loan documents is a question of law or a question of fact. The answer, I think, is both.

The confusion seems to be on the issue of pleading vs proof. As a matter of law, the courts are largely correct as to their ruling on whether the Plaintiff in a judicial state is fine with alleging bare statements of ultimate facts upon which relief could be granted. But where the judges go astray, based upon improper legal reasoning advanced by the banks, is that they apply the same pleading requirements at trial or even summary judgment.

At trial they must prove the transactions upon which they rely. If the allegation from the owner or the denial and affirmative defenses of the homeowner raise an issue of fact as to the authenticity, validity or enforceability of the paperwork relied upon by the bank, then the bank must prove the underlying transaction. If the homeowner does not raise that issue of fact, then the court is correct in allowing virtually anything in as evidence and awarding the foreclosure to the bank.

But that said, to return to yesteryear, Judges are supposed to actually review the paperwork even in an uncontested situation to see if there are inconsistencies or even something that jumps out at them this is plainly wrong. for example, if the default letter says that for reinstatement, you must pay $6700 in monthly payments to bring the account current and your monthly payments are $3100, the letter is defective. How many months are they saying you are in default? It’s a simple matter of division. This also throws off the date of the alleged default, so there is no compliance with paragraph 22 provisions.

Similarly, if the foreclosing party is saying they have rights to enforce, that is enough to plead their case. But at trial they must tell the story of how they came into the right to enforce the paper. It is this latter part where the courts have erred and where the reversals from appellate courts are coming from. The presumptions at the pleading stage do not apply to the burden of proving facts.

I think the courts are coming around on this issue but it must be presented properly. A thief can sue on the note he stole even if he forged a blank or special endorsement. He will survive a motion to dismiss although law enforcement might be waiting in the back of the room to arrest him.

The presumption at the pleading stage is that possession implies being a holder. And being a holder implies being a holder with rights to enforce, and potentially one might even infer that the holder is a holder in due course. But at trial where the facts are contested, the thief must tell the story of his possession and rights to enforce. The fact that the actual payee or holder does not know the note was stolen does not or should not shift the burden of proof onto the homeowner to prove facts that are exclusively within the knowledge and care, custody and control of the thief.

The homeowner must merely deny that the thief is a holder with rights to enforce.

28 Responses

  1. shadowcat – one last thing. You need a lawyer, as i said. Skip all that other stuff – it’s only distracting. really. You might just say (if i got this right) that there was a warranty deed (don’t make anything else of a warranty deed – warranty deeds just make certain affirmations about the title being conveyed from a seller to a buyer that aren’t found in say a quit claim deed) which conveyed title to you and your spouse (assuming that you took delivery of the deed because its delivery and only delivery which makes that deed operative, and by the way, did you take delivery?) Then explain that the deed to you wasn’t recorded but a loan was nevertheless made to your spouse and that you didn’t sign the mortgage. We’re talking a purchase money loan, right? The attorney will need a copy of the note and mtg.
    Spend the money. Ask a true r.e. expert. You may come out ahead.

  2. Oh, wait, shadowcat, yes, one would basically be saying / warranting in a mtg that one had title TO mortgage. So that must be their reliance. IMO. But then you’re saying YOU didn’t warrant anything since you didn’t sign the mortgage, only your spouse did. Now there’s a pickle. i think. You really should see a good lawyer who practices real estate law (read knows S from shortcakes about r.e. law). It may be that at best for the lender, only your spouse’s interest could be found to be encumbered with the mtg, but that may depend on how you took title in the deed to you both.

  3. shadowcat, if i got what you’re saying, someone didn’t record the deed to you from the seller, but did record your mortgage. Oops. I don’t know the ramifications of that. But I don’t know who sued who over the “off-record lien” or even what you mean by that (unless its the term for a lien with no deed to the mortgagor). I imagine a legit lender would want to do whatever it could to protect its lien. There’s generally nothing on schedule B having anything to do with securitization. Not recording that deed to you is a pretty big blunder by probably the
    title company. In issuing a lender’s title policy, the title co. warranted that the borrower had good title. In my lay opinion, the lender has a cause of action against the title company, so it may be the title company funding any suit to “fix” this mess.

  4. RE: (Subject to any exclusions shown on schedule B of the policy). You nailed It!!!!! ***** transactions****

    Don’t worry MERS..has that 30 year warrange joke on the table…. that should protect us..

  5. RE: (Subject to any exclusions shown on schedule B of the policy). You nailed It!!!!! ***** transactions****

  6. Attack the Mortgage! Irrevocably grant\transfer\convey and warrant free and clear of liens and encumbrances?

  7. Two problems JG. 1) The dipstick didn’t put me on the Trustee Deed filed @ the recorders office without the Trustee Agreement. The Warranty Deed from the sellers estate to both my husband and myself was not filed. 2) The Warranty Deed we conveyed isn’t filed either.

    Let me add it’s a Mortgage not a Dot…and their is no lien. They sued for off record -unrecorded lien…huh? Now why would they do that? Oh right… the trust and the mortgage can’t exist @ the same time? File the note and the sky falls.

  8. shadowcat – I suppose you did mol warrant you had title to put in the trust created in and by the dot. I don’t think you were a surety, tho. The title co. might have been to the extent of their title insurance, but only as to your good and merchantable title (subject to any exceptions shown on schedule B of the policy). They don’t really assure anything else that I know of.

  9. it will probably be on the borrower to demonstrate that he was an intended 3rd party beneficiary of securitization and mers participation. The only suggestion I have is what I said – by amassing their early propaganda wherein they alleged the borrowers as intended beneficiaries. And better get some before it’s all scrubbed. I’m still looking for how it was determined that CW was the custodian. If it were on CW’s (or any successor to CW’s) testimony or whatnot, imo that wouldn’t hold water (proferring an unambiguous contract spelling that out might be an exception, but only imo if the contract were actually executed for the trust by someone who had the right and authority to do so and that, too, has to be demonstrated, also imo) Generally, the asserted relationship (sometimes called master-servant) has to be confirmed by the ‘principal’ (aka master), not the custodian, agent, att in fact, and so on. As to gene’s info, the NY AG, in the link e.tolle provided, specifically cited some of the language in at least one PSA and that language, at least, didn’t mention anything at all about CW or anyone else being custodian. The language called for delivery to the trust trustee who was to ascertain that this got done. So Gene’s statement, because what he asserted is unsupported, is a conclusion and we don’t know its basis. I’d like to believe he didn’t pull it out of the air, so somewhere it must have been adjudicated. My question is on what evidence. I’m really hard pressed to believe that any trustee would say he was authorized and did enter an agreement for custody of the loan docs when the PSA’s said otherwise and because of the gravitas (had to look that up to make sure I got the word right) of the issue of delivery. But, who knows. They do all kinds of stuff when they think the coast is clear and it suits them.

  10. The Trustee was not acting in my best interest. The Reconner.s actions slandered my title and caused me harm. I will wash your ass’ et alright!!!

  11. I warranted the deed into trust. The borrower purchased borrower and lender title ins. I am surety?

  12. It was also Gene who said the question is … does a 3rd party beneficiary, a borrower have a right to challenge an assignment? That’s a good question. What about 3rd party beneficiaries who are not borrowers? I ask good questions to.

  13. @ johngault,

    It was Gene who told me failure to physically transfer the note becomes a non-argument particularly in answer to Kemp v Countrywide because, according to Gene:

    Gene, on January 28, 2015 at 3:11 pm said:
    2. You are right about CW not transferring notes by possession. But here is what you miss. CW was also the loan custodian for many of the Trusts. The Custodian keeps the loan documents for the Investor per the various Trust Agreements. So this would invalidate that line of reasoning if CW was the custodian.

    I went looking for CW as custodian and found they bought “Treasury Bank” a private bank in 2001. It had something to do with “Effinity Bank” also.

    Among the things I read, none of them said specifically that CW was a custodian although they did refer to them in some instances as a “holding company”.

    I admit I have no idea what that means.

    Gene’s response to me is taken from the recent post, “Bondholders Clash With Ocwen Over Bad Servicing”. It is roughly the 14th post from the bottom.

    It is not my place to disparage Gene or to infer I have a better understanding of the voodoo and hocus-pocus world of the banks in which he seems to practice his craft, except to say…

    I feel he comes to this argument fully vested in the prejudice directed against borrowers that have been abused. I can say this because he inferred at one point I felt the bankers were “dumb” and didn’t know as much as I did.

    Unfortunately, I am speaking from experience with evidence now in my hand; which is to say, my experience and possession of material facts, concerning the fraud directed against the well-being of my family trumps whatever industry positions have calcified around the banker’s mumbo-jumbo in this argument.

  14. @ JvE ,

    Thanks ,, that’s where I’m at … I’ll be making 3 “HAMP mod trial pmts” and then cutting their heads off in an appeal … their one and only reply to each discovery question was quite literally “NO , And it would not help the defendant anyway.” , fortunately I was busy collecting data early on and have been holding evidence that not only destroys the acceleration letter but should demonstrate the plaintiff is not WF but is OCWEN… They thought they had won 15 months ago… but I’m still here.

  15. Some courts say that borrowers have no standing to argue about late assgts to the trusts because they aren’t 1) parties thereto or 2)
    intended third party beneficiaries, to which I say ‘really’? I say it because in their propaganda for the creation and implementation of mers and securitization, that whole gang repeatedly said borrowers would benefit (by lower rates). I mean it was like bread and butter. When they avowed one alleged benefit, they also alleged a benefit to borrowers. I have some of that propaganda saved and if I can find it , I’ll be happy to spread it around. Anyone else should, too. imo. So, the point is, where do they now get off saying the borrower isn’t an intended third party beneficiary? Aren’t they estopped?

  16. Hey, e.tolle – I read the NY AG’s 2011 intervention in BofA/ CW’s pennies on the dollar proposed settlement. Interesting, except that damm yellow-out all over the place. What happened? I don’t remember. I think by the non-delivery to the trusts for notes paid for, the trust investors had only security interests in the notes by operation of law, something neither side would like at all. Well, that is, that should be their fate, but then somewhere I’ve yet to find (or lost or forgotten), someone claims to have established CW as the doc custodian. Bull.
    One thing I for sure know only a little about is what happens when one becomes an unintentional secured party. I think under “normal”
    conditions, one of the remedies is a suit for delivery (plus any damages), aka performance. But what about when (still normal deals) the unintentional secured party no longer wants performance / delivery, like when, oh, the underlying collateral is worth about 40% of what it used to be and then, oh some more, 20% of the notes are now in default? That would be very ugly. These trusts, I think, can’t or won’t sue for delivery because, if for no other reason, they’d get eaten alive on taxation for any funds already received and to be received. Wouldn’t they? Well, actually, if so, that should fall in the damage category, and yet……..? In this deal, it sure as heck doesn’t look like anyone was suing for delivery. I don’t know what the allegations were in the actual suit. Never saw it that I recall. Except for (yawn) the allegation that CW was the doc custodian, the settlement agreement and the suit should be prima facie evidence of the non-delivery IF in fact the unredacted suit and intervention by the AG establish non-delivery (it’s certainly suggested by the AG in what you can read). In fact, it may be that the settlement and or the suit themselves give rise to issue preclusion against an allegation that CW is / was the doc custodian. Hmm……
    That would sure make some hearts sing.

  17. Jan, so glad you brought up aggrievement aka injury. ( Plus I appreciate your humor, like e.tolle’s.) That’s where the Article 3 bearer provisions and the FRCP’s part ways imo. I’ve posited this before: a thief may not look to a court of fed jurisdiction to enforce a note, having suffered no injury. If someone wants to demonstrate otherwise, I’ll be happy to read whatever supports “otherwise”. Good info about the aff defenses – thanks.

  18. #JvE – what you will get in CA are weasel wordsmithing decisions like that avoid the obvious question of jurisdiction of a party to enforce by playing ‘the borrower owes the debt’ card and therefore owes someone, even if it’s apparent a wrong party clouded the title with felonious documents and ‘declared a default’. Based on the presumption a debt remains, wasn’t paid off early, or paid by third party. Good example is if wrong party auctions home, then foreclosure insurance provider sues borrower as well. To the Mexifornia judiciary, the borrower deserves this because, after all, he is a mere indentured servant.

    I am not an attorney, and I see a lot of wiggle room in this decision for review, but I don’t think Bergman & Gutierrez (who had earlier success) will get any better reception from a state suckpreme court review. Even the concept that questions of jurisdiction are determined before questions of equity escape the best judges money can buy in the land of liberality.

  19. Standoff…
    Ivent are you ok?

  20. One exception to the issue of filing “affirmative defenses” up front in the first responsive Pleading flows from the situation where facts are hidden from the homeowner, and only uncovered later on. Another exception might arise where Requests for Admissions have been submitted, then ignored, and then treated as deemed admitted.

    take for example the construct where the Plaintiff pleads that the Note is secured by mortgage and Plaintiff is the holder of the mortgage by way of Assignment, etc. Well, right out of the box you have no realistic way of knowing whether any of that is true. After some digging you suspect that the Note and Loan are really owned by say Freddie or Fannie and that the plaintiff is a mere Servicer (and that is common enough in today’s litigation arena). As a Servicer, the Plaintiff is a stranger to the transaction and has no real aggrievement;” that is to say, there is nothing that the Defendant can do or not do that is going to make any difference to the wallet of the Plaintiff servicer. At that point you can plead, as a new affirmative defense, that there is no justiciable interest to address, therefore the Complaint is want of jurisdiction.

    the Courts are not there simply to provide entertainment for bankster lawyers, or as some kind of argumentative platform for soapbox debates. They are paid for by the taxpayers to resolve only real controversies between real parties at interest. if the real owner of that Note is not in Court, what is there for the Court to resolve?

  21. neidermeyer – not unless one could find an exception to the rule that aff defenses MUST be filed in the first responsive pleading or they’re waived as a matter of law. imo. I’ve never seen an exception, but I haven’t looked for it, either.

  22. I am not an attorney so for whatever it is worth.
    There is case law in California that for Simple Quiet Title you do not have to provide or prove tender.

    But to defend a Foreclosure there is debate about it. Which does not make sense unless you live in Iran, Cuba, Russia or maybe China and California.


  23. In California especially in the coastal areas Most Homeowners are now above water ( can provide full tender).

    thank you elexquisitor with your correct input.

    This case might solve the problem.


  24. If the affirmative defenses listed here were not explicitly plead BUT one could easily read into the discovery motion(s) that the defendant was attempting to go down that road … would these defenses be “on the table” in an appeal if the plaintiff was totally unresponsive to discovery?

  25. @A-man
    Not simple in CA. Presumption is against homeowner defending against illegitimate debt (regardless of alleged lender / beneficiary), and has to tender full amount owing in order to be heard on quiet title. And it’s not like existing case law is unavailable.

  26. any one know and can explain the difference between a noninstitutional investor and a institutional investor as it apples to mortgage closing?

  27. Simple Quiet Title in California


  28. A major problem is that non-judicial foreclosure is more prevalent than judicial foreclosure. (31 states including Mexifornia). So not only does the homeowner have to overcome the presumptions accorded to the banksters by their lackey judges, they have to provide a preponderance of evidence from documents mostly held by their adversaries. For most homeowners, the cost of discovery of those documents is out of reach, and the judges hardly have to bend over to tweak the case to deny meaningful discovery.

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