Appellate Courts Drilling Down Through the Paper to the REAL TRANSACTION

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see DOC080715 Balch v LaSalle Bank Fla. 4th DCA 8-5-15

A court that gets it! Reversed and remand with orders to enter involuntary dismissal! Finally the smoke and mirrors are clearing out. This court has pierced through the paperwork and is asking “how do we know there is any reality to what is stated on the paperwork relied upon by the foreclosing party?” In other words, show me the real transaction, prove the payments. Let’s see if any real transaction ever took place. By raising the issue of INTENT the Court is saying to the banks “we don’t trust you.”

  1. “No evidence indicating when the special indorsement in favor of Washington Mutual bank was placed on the note”
  2. “Where the Plaintiff contends that its standing to foreclose derives [note the wording “derives” as in derivative] from an endorsement of the note, the plaintiff must show that the endorsement occurred prior to the inception of the lawsuit.”
  3. “Assignment is insufficient to establish standing, as the assignment was executed after the complaint was filed”
  4. “Evidence that the note was transferred into the Trust prior to the foreclosure action is insufficient by itself to confer standing because there was no evidence that the indorsee had the intent to transfer any interest to the Trustee.”

11 Responses

  1. § 3-302. HOLDER IN DUE COURSE.
    (a) Subject to subsection (c) and Section 3-106(d), “holder in due course” means the holder of an instrument if:

    (1) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and

    (2) the holder took the instrument (i) for value, (ii) in good faith, (iii) without notice that the instrument is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series, (iv) without notice that the instrument contains an unauthorized signature or has been altered, (v) without notice of any claim to the instrument described in Section 3-306, and (vi) without notice that any party has a defense or claim in recoupment described in Section 3-305(a).

    (b) Notice of discharge of a party, other than discharge in an insolvency proceeding, is not notice of a defense under subsection (a), but discharge is effective against a person who became a holder in due course with notice of the discharge. Public filing or recording of a document does not of itself constitute notice of a defense, claim in recoupment, or claim to the instrument.

    (c) Except to the extent a transferor or predecessor in interest has rights as a holder in due course, a person does not acquire rights of a holder in due course of an instrument taken (i) by legal process or by purchase in an execution, bankruptcy, or creditor’s sale or similar proceeding, (ii) by purchase as part of a bulk transaction not in ordinary course of business of the transferor, or (iii) as the successor in interest to an estate or other organization.

    (d) If, under Section 3-303(a)(1), the promise of performance that is the consideration for an instrument has been partially performed, the holder may assert rights as a holder in due course of the instrument only to the fraction of the amount payable under the instrument equal to the value of the partial performance divided by the value of the promised performance.

    (e) If (i) the person entitled to enforce an instrument has only a security interest in the instrument and (ii) the person obliged to pay the instrument has a defense, claim in recoupment, or claim to the instrument that may be asserted against the person who granted the security interest, the person entitled to enforce the instrument may assert rights as a holder in due course only to an amount payable under the instrument which, at the time of enforcement of the instrument, does not exceed the amount of the unpaid obligation secured.

    (f) To be effective, notice must be received at a time and in a manner that gives a reasonable opportunity to act on it.

    (g) This section is subject to any law limiting status as a holder in due course in particular classes of transactions.


    – – – – – – – – – – – – – – – – – -x
    In re: :
    JAIME RODRIGUES and : BK No. 00-11297
    Debtors :
    Plaintiffs :
    v. : A.P. No. 00-1123
    U.S. BANK :
    – – – – – – – – – – – – – – – – – -x
    TITLE: Rodrigues v. U.S. Bank (In re Rodrigues)
    Christopher M. Lefebvre, Esq.
    Attorney for Debtors/Plaintiffs
    P.O. Box 479
    Pawtucket, Rhode Island 02862
    E. Martin Stutchfield, Esq.
    Attorney for Defendant
    123 Dyer Street
    Providence, Rhode Island 02903

    B. U.S. Bank as Assignee
    U.S. Bank argues that under 15 U.S.C. § 1641, the assignee of
    a HOEPA loan is not liable for the mistakes of the assignor. On
    the present record, this argument is completely without merit.
    Section 1641(d) makes clear that assignees of defective HOEPA loans
    have only one defense– that at the time of assignment, the assignee
    was without notice that the loan in question was a HOEPA loan.
    There is no evidence that U.S. Bank was unaware of the HOEPA status

    5 “Notwithstanding any rule of evidence, written acknowledgment of
    receipt of any disclosures required under this subchapter by a
    person to whom information, forms, and a statement is required to
    be given pursuant to this section does no more than create a
    rebuttable presumption of delivery thereof.” 15 U.S.C. § 1635(c).
    6 An obligor’s right of rescission shall expire three years after
    the date of consummation of the transaction or upon the sale of the
    property, whichever occurs first, notwithstanding the fact that the
    information and forms required under this section or any other
    disclosures required under this part have not been delivered to the
    15 U.S.C. § 1635(f).
    here, and it would absolutely be U.S. Bank’s burden to establish
    such lack of knowledge. Section 1641(d) states:
    Any person who purchases or is otherwise assigned a
    mortgage referred to in section 1602(aa) of this title
    shall be subject to all claims and defenses with respect
    to that mortgage that the consumer could assert against
    the creditor of the mortgage, unless the purchaser or
    assignee demonstrates, by a preponderance of the
    evidence, that a reasonable person exercising ordinary
    due diligence, could not determine, based on the
    documentation required by this subchapter, the
    itemization of the amount financed, and other disclosure
    of disbursements that the mortgage was a mortgage
    referred to in section 1602(aa) of this title. The
    preceding sentence does not affect rights of a consumer
    under subsection (a), (b), or (c) of this section or any
    other provision of this subchapter.
    15 U.S.C. § 1641(d)(1).
    The legislative history indicates Congress’s intent to
    establish a strict liability standard for assignees of such loans,
    as Senator Reigle, the sponsor of the HOEPA Senate amendments, said
    in his following explanation of the amendments:
    The bill eliminates “holder-in-due-course” protections
    for assignees of High Cost Mortgages. Assignees of High
    Cost Mortgages are subject to all claims and defenses,
    whether under Truth in Lending or other law, that could
    be raised against the original lender.
    S. Rep. No. 103-169, at 29 (1993). Congress’s intent could not be
    clearer: assignees of HOEPA mortgages are precluded from holder in
    due course protection, as well as the defense that the violations
    were not apparent on the face of the loan documents. The case law
    regarding the defenses available to an assignee of a HOEPA loan,

  3. In re Donna McCAUSLAND a/k/a Donna Blank, Debtor.
    Donna McCAUSLAND, Plaintiff,

    Bankruptcy No. 85-04475G, Adv. No. 86-0266G.
    United States Bankruptcy Court, E.D. Pennsylvania.

    (3) in the case of any successful action to enforce foregoing liability or in any action in which a person is determined to have a right of rescission under section 1635 of this title, the costs of the action, together with a reasonable attorney’s fee as determined by the court. In determining the amount of award in any class action, the court shall consider, among other relevant factors, the amount of any actual damages awarded, the frequency and persistence of failures of compliance by the creditor, the resources of the creditor, the number of persons adversely affected, and the extent to which the creditor’s failure of compliance was intentional. In connection with the disclosures referred to in section 1637 of this title, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 1635, section 1637(a), or of paragraph (4), (5), (6), (7), (8), (9), or (10) of section 1637(b) of this title or for failing to comply with disclosure requirements under State law for any term or item which the Board has determined to be substantially the same in meaning under section 1610(a)(2) of this title as any of the terms or items referred to in section 1637(a) of this title or any of those paragraphs of section 1637(b) of this title. In connection with the disclosures referred to in section 1638 of this title, a creditor shall have a liability determined under paragraph (2) only for failing to comply with the requirements of section 1635 of this title or of paragraph (2) (insofar as it requires a disclosure of the “amount financed”), (3), (4), (5), (6), or (9) of section 1638(a) of this title, or for failing to comply with disclosure requirements under State law for any term which the Board has determined to be substantially the same in meaning under section 1610(a)(2) of this title as any of the terms referred to in any of those paragraphs of section 1638(a) of this title. With respect to any failure to make disclosures required under this part or part D or E of this subchapter, liability shall be imposed only upon the creditor required to make disclosure, except as provided in section 1641 of this title.

    15 U.S.C. § 1640(a).

    [3] At the time of the origination of the loan the matter currently found in 1638(a)(9) was found in 15 U.S.C. § 1638(a)(10) (1974):

    1638 Sales not under open end credit plans.

    (a) Required disclosures by creditor

    In connection with each consumer credit sale not under an open end credit plan, the creditor shall disclose each of the following items which is applicable:

    * * * * * *

    (10) A description of any security interest held or to be retained or acquired by the creditor in connection with the extension of credit, and a clear identification of the property to which the security interest relates.

    15 U.S.C. § 1638(a)(10) (1970).

    [4] The debtor has advanced other bases on which liability may be predicated, but we need not address them since the debtor cannot receive multiple awards simply because several provisions of the statute were violated. 15 U.S.C. § 1640(g).

  4. Well, let’ see. As NG said, years ago there were no trusts. First f/c’s were done by servicers in mers name. Scratch that. Then assgts were done to servicers. Scratch that. Now they’re being done years after closing dates to trusts (which now exist). *
    But apparently, they still can’t make up their minds which side of their faces to talk out of from day to day.
    Acc to this article, it’s Aurora which is (well, 2012) claiming to be on first for the purpose of demanding that companies who sold loans to them now repurchase if Aurora didn’t like the loans.

    “Nationstar Mortgage LLC, an indirectly-held, wholly-owned subsidiary of Nationstar Mortgage Holdings Inc., has completed its acquisition of approximately $63.7 billion in residential mortgage servicing rights from Aurora Bank FSB (f/k/a Lehman Brothers Bank) and its wholly owned subsidiary Aurora Loan Services LLC , a subsidiary of Lehman Brothers Bancorp Inc.

    Aurora and Lehman were once major players in the subprime-mortgage market, requiring little or no low down payments and income and/or asset documentation — risky lending practices that ultimately brought down Lehman and set off a global financial crisis.

    This sale of servicing rights to Nationstar is part of the wind down of Aurora Bank and Aurora Loan Services, which ultimately is expected to help funnel $1.5 billion to creditors of Lehman, which filed for bankruptcy in 2008.

    Thus, there appears to be a fund raising mentality at Lehman/Aurora, which perhaps explains why, years after the fact, originator/correspondents across the country were suddenly bombarded with repurchase demands for loans purportedly owned by Aurora Bank.
    Questionable Motives?

    This sale of servicing rights to Nationstar may have further revealed Lehman’s/Aurora’s motives. Recent articles indicate that ALL of the servicing rights which Aurora held were transferred to Nationstar, and that these servicing rights relate to approximately 75% of non-conforming loans in private label securitizations and the balance relate to conforming loans in GSE pools.

    If this information is correct, it is a logical deduction that Aurora does not have an interest in any of the loans it purchased or originated years ago from originators and correspondents for which it has been seeking repurchase. This apparent lack of an ownership or other interest in the underlying loans should have precluded Aurora Services from making any loan repurchase demands on behalf of Aurora Bank against its former correspondents and originators, yet Aurora has aggressively been pursuing these claims.

    If Nationstar now continues to demand the repurchase of loans on which Aurora had previously made such demands (and/or pursues additional claims), originators/correspondents should consider requiring adequate documentation in support of all these claims, such as proof of Nationstar’s entitlement to pursue the claims on loans purportedly owned by Aurora.”

    *The absurd truth is that as long as assignments are done by “mers”
    to anyone the actual party making the call (read servicer, possibly aka guarantor, possibly aka co-obligor poss, possibly aka party who gave trusts mere security interests), they can assign to the man in the moon and courts will say the borrower has no standing to argue the assignment. This is bullsh$t. If an assignor has nothing to assign, the instrument assigns nothing and in that regard, these assgts are more akin to qc deeds, like me quit claiming any interest I have in McGillacuddy’s house to DWynn: I’ve given DW nothing, because I had nothing to give her. Tell me McGillacuddy’s heirs have no standing to dispute the deed. Of course they do.
    A lot of this other stuff becomes merely rhetoric unless we make inroads on discovery and worthy challenges to these bogus assignments, including demands for evidence of acceptance by a party imo unable to accept them as a matter of law. (I’ve already put in my 3 cents about the impossiblility of acceptance in any way, including by the potential for radification because there is none). Also imo we and attorneys should be working on the “why” courts must uphold trust law. Every dot requires compliance with state and federal law. To my way of thinking, that extends to assignments of the beneficial interest. We’ve been accused of all kinds of stuff, including drinking too much of our own kool-aid. Much as I want to respect the judiciary, I can’t figure how THEY justify acquiescence of alleged transfers of beneficial interests by a party who has been more than vocal that it has none and may not assign its alleged principal’s interest. An assignment done by a corporate officer does, as a matter of law, convey the interest of the corporation (if there are exceptions, I don’t know them). But that doesn’t in any way, shape, or form mean the corporation had anything to assign, and the assignment doesn’t stand as any kind of evidence that it did. (There was the case a couple years ago wherein the judge said that a corporate officer had executed the assignment and that meant there had been a transfer. He misapplied the law, because that’s not at all what it says. The law says what I said it says: IF the corporation has anything to assign, the corporation is bound by its officer’s execution (assuming acceptance by the assignor).
    People might want to look into the “voluntary payment doctrine” and “information asymmetry” to see if there’s anything useful.
    lay opinions as always

  5. Disclosure requirements for consumer loans are governed by 15 U.S.C.S. § 1639 12 CFR § 226.8(b), (d). A
    violator of the disclosure requirements is held to a standard of strict liability. Therefore, a plaintiff need not
    show that the creditor in fact deceived him by making substandard disclosures. Since Transworld Systems Inc.
    have not cancelled the security interest and return all monies paid by Ms. Sherrie I. LaForce within the 20 days
    of receipt of the letter of rescission of October 7, 2009, the lenders named above are responsible for actual and
    statutory damages pursuant to 15 U.S.C. 1640(a).

  6. After 6 yrs of defending – Another win! David 6 – Goliath 0
    But whos keeping score? Lol.
    Alas if only people would learn the law – the fight would be over!


  7. Now this is interesting. I just ran across some local rules of a bk ct.
    On certain properties (and the fight is still on as to what those are), a debtor may strip the wholly unsecured loan of a jr lienholder. This particular court has said that may only be done when there is evidence of the validity and amt of the senior mtg loan. Jr lienholders must be be behind this – they prob don’t want to lose their liens to an imposter re: the first!!

  8. 🌟🌟🌟MERS had no authority to assign the mortgage.🌟🌟🌟

  9. Apparently I can’t read. The court didn’t order the bankster to file an inv dismissal, it ordered one. And I think I remember that wrong – an inv dismissal is the one more likely to have rj effect.

    The bankster alleged a number of different things re the loan in this deal, inconsistancies. One of the things I found to have been alleged is that the loan was transferred to the trust by the pooling and servicing agreement but that 2 years later the mtg was assigned by mers. Interestingly, the court noted that mers wasn’t a party to the psa, which the court didn’t expound on, but is worth some thought. imo.

  10. Since I’m not an attorney, I don’t know how a court may order anyone to file an involuntary dismissal. (Aren’t those generally negotiated?) But as a lay person, I believe I’ve learned that a bankster’s involuntary dismissal is a bad idea for the homeowner and I might file a mtn for sj to stop it (sj = adj on merits). With an involuntary dismissal, the bankster can just regroup and come back. imo.

  11. Reblogged this on Deadly Clear and commented:
    What in the world are these judges going to do when they finally realize the patented software scheme for these quasi-securities has no statutory law?!

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