How Legal Presumptions Work

We must accept the unacceptable premise that judicial public policy and assumptions are in direct conflict with legislative public policy…

If all other elements of HDC [Holder in Due Course] are present then the only one that obviously doesn’t exist is a business transaction in which the REMIC Trust paid money for the acquisition of the loan. If they didn’t pay for it then they didn’t acquire it. If they didn’t acquire it then it follows that neither the trust nor the servicer has any right to collect on the debt or enforce the alleged loan documents. And no “successor” acquires any greater rights than its predecessors.




This is a summary of my research and analysis of presumptions as they are used in court proceedings. The most important thing is that presumptions are rebuttable, but the timing of when to attack them might lead you into a position where you are stuck with them.

For example, in judicial states, the foreclosing party files a complaint in which legal standing must be alleged — in a short plain statement of ultimate facts that would support the allegation. So if a pretender lender says it is the holder and owner of the note, it is presumed that they are the holder and owner of the note.

But this presumption ONLY applies for purposes of a hearing on a motion to dismiss filed by the defendant homeowner. The mistake made by lawyers and judges alike is that the lawyer for the pretender lender acts as though the matter has already been decided and the court agrees. This is most likely to happen at trial where the homeowner has no evidence to suggest that the presumption is rebutted unless the lawyer for the homeowner “blows up” the witness for the servicer.

The purpose of trial is for the Plaintiff first to prove the allegations in the complaint. It is not proper to assume that the Plaintiff’s allegations are true. What better way to prove that (best evidence) than to prove the payment of the original loan by the originator whose name appears on the note and then the payment to the originator by some successor who honestly bought the debt, note and mortgage?

Instead what is offered is an MLS (mortgage Loan Schedule) that purports to show the sale of loans to the REMIC Trust from a “seller” who is NOT the originator nor the successor. The court presumes that this is a facially valid document, but upon proper inquiry it is revealed to be a fabricated self-serving instrument that purports to be evidence of a transaction that does not exist — the transfer of money from the REMIC Trust to the Seller.

The time for an attack on presumptions is really in discovery where the questions are allowed to be far more wide ranging than at trial where the judge is attempting to end the case as quickly as possible.

In our example, it is reversible error, in my opinion, to stop a homeowner from questioning the FACT that the Plaintiff is the owner and holder of the note. In hearings on objections typically raised by pretender lenders or motions to compel answers to discovery requests, the attorney for the homeowner must be prepared with a memo of law on presumptions and good analysis of why he/she needs the answers.

Typically it would be that whether the Plaintiff is the owner or the holder is an issue in dispute. The defendant homeowner is entitled to rebut that. But the only one who has information or no information (or access to the information) on whether that is true is the Plaintiff or the alleged servicer — or their unidentified affiliates. But if the Defendant has properly made an issue of whether the loan never made it into the REMIC Trust, then the authority of the servicer also becomes a contested fact and the homeowner is entitled to ask for discovery on that.

In addition, we have the issue of whether the REMIC Trust actually has anything to do with the loan and whether the documents of transfer to the REMIC Trust are a sham. While this can be shown with the help of an expert witness on the custom and practices of the industry, it can be corroborated with a simple legal analysis. In discovery, it might be wise to ask for information about each of the elements of a holder in due course [HDC] even though that is an allegation that is virtually never alleged.

The argument, on summary judgment, after such discovery, would be that the bank lawyers contend that there is a presumption that the Trust bought the loan. That is where they want the issue to end — most likely because their client has no credible evidence that Trust was ever active or ever purchased anything, much less the subject loan. In other words, they want the presumption rather than the fact because the presumption conflicts with the facts.

The representatives (legal, attorney in fact, servicer etc.) of what is actually an inactive trust never assert or allege that the REMIC Trust had nothing to do with the loan origination. It is a hard road to say that the REMIC Trust was not acting in good faith or knew about the borrower’s defenses — when it acquired the debt, note and mortgage; but that is based upon the untrue presumption that the Trust or other party claiming to enforce, ever actually acquired the debt, note and mortgage in the real world.

The presumptions arise only in the bubble of legal theory and conflict directly with reality.. So there is no issue except whether they paid for it — and that is what you would want to establish in discovery. A holder in due course is someone who pays value in good faith, without knowledge of the borrower’s defenses when the loan is not already in default.

STATUTES MATTER: IF AN INNOCENT THIRD PARTY PAYS FOR THE NOTE AND MORTGAGE —under existing law, it has been nearly always held that the risk of loss even in a sham transaction (the loan origination or acquisition) falls on the person who signed the note and mortgage even though those documents might otherwise be invalid. The actual purchase (i.e., with money) in good faith without knowledge of borrower’s defenses is sufficient to elevate the rights of the holder to a virtually conclusive presumption that they can enforce the note and mortgage. We are not having a philosophical discussion about whether that is fair or whether that should be public policy. It is the law and it is public policy. No amount of argument against the policy will suffice in court because the legislature is the only body empowered to make law and establish public policy.

PURE LOGIC AND REASONING SHOWS THE FRAUD BY THE PARTIES INITIATING FORECLOSURE: If the REMIC Trust DID purchase the debt and did purchase the note and did purchase the mortgage (or deed of trust) it would be silly and virtual malpractice for the lawyers not to assert or allege the status of HDC. They would not mince words —the lawyers would allege HDC status rather than “holder” status. Yet we see none of that. In no case have I seen HDC asserted and I have even seen cases where the lawyer for the bank argued strongly against being considered a holder in due course. Why?

If they bought it, they would have a lock, free from the borrower’s defenses. Case over. But they don’t allege that, which means that one or more elements of the requirements to allege status as HDC MUST be missing because there is no credible business or legal reason not to allege HDC status. If all other elements of HDC are present then the only one that obviously doesn’t exist is a business transaction in which the REMIC Trust paid money for the acquisition of the loan. If they didn’t pay for it then they didn’t acquire it. If they didn’t acquire it then it follows that neither the trust nor the servicer has any right to collect on the debt or enforce the alleged loan documents. And no “successor” acquires any greater rights than its predecessors.

PRESUMPTION VERSUS REALITY: But the presumption is that the REMIC TRUST (OR OTHER PARTY ALLEGING CONSTRUCTIVE OWNERSHIP” OF THE NOTE) did acquire the note and mortgage if they have an assignment that is facially valid. Hence in discovery you would want to show that they didn’t acquire it.

And that leads to the question of whether they can identify ANYONE who did acquire the alleged “loan”. The answer is going to be that they can’t. And that is where all of the alleged presumptions about the holder of the note collapse. What could be argued to the judge is that they have only alleged holder status with presumed rights to enforce — but the lawyers for the banks seek treatment as though they were holders in due course. This highlights the defects and inconsistencies between the paper trail and the money trail.

My premise is that they don’t have a creditor to name on whose behalf they are enforcing the note. It is counter-intuitive yet true. If the origination of the loan used table-funded sources from conduits of conduits, then the base entity at the beginning of the paper trail received a false document (note and mortgage) and executed a false document (endorsement and assignment) because they never loaned the money and they never owned the debt — meaning that they never anything to transfer, making the endorsement and assignment void (something that the Yvanova Court in California was talking about).

If the party named on the note as Payee (and the party named on the mortgage or deed of trust) did not loan any money to the homeowner, then it follows that the loan contract between THAT originator/broker and the homeowner never existed. The burden SHOULD shift back to the bank to prove that the originator had some actual contractual privity with the source of funding (which means they would need to disclose the identity of the creditor whose money was used to fund the loan, regardless of whether or not the “Investor” was aware of the transaction. Hence the note is not evidence of ANY debt (i.e., the debt alleged between the originator and the homeowner).

This premise is entirely consistent with subsequent events in which mostly fabricated, forged and robo-signed documents are used to paper over nonexistent transactions. It is also why I like rescission so much.

Procedurally all rescissions are effective as a matter of law whether disputed or not. So even a rescission based upon faulty premises is effective. It can be vacated — but only by a party with legal standing — i.e., a creditor whose identity has been withheld from everyone including the investors whose money is in the deal. Rescission is a procedural strategy — rescind the loan contract, void the note, void the mortgage and create a claim for all the money ever paid on the alleged loan; then wait forever for the bank to file an action to vacate the rescission. The note and mortgage are void instruments and can no longer be used as a basis to assert legal standing.

The Banks are thus forced to produce the real McCoy. But Mr. McCoy does not exist. Mr. McCoy is really thousands of investors whose money was illegally parked in a hopelessly commingled dark pool of funds entirely under the control of the investment bank who created the REMIC Trusts — whose existence was totally ignored by the same banks that created those Trusts.

Thus my point is that you can ask why they didn’t allege HDC status as a means of showing that they had neither HDC nor holder status and that the Plaintiff had no rights to enforce (or can’t prove rights to enforce) because of the absence of a creditor.

The truth is that there were no transactions in which money was paid for the transfer of the loan because the “loan” was already treated as “owned” by the Investment Bank who also played the role of Master Servicer and who was disguising their behavior through a layer of a trust documentation for a “trust” that was never active, funded or otherwise in business in any sense of the word. The REMIC Trust are thus shown to be alter egos of the investment bank who created the false securitization scheme.

In plain language, an alleged loan (of dubious properties) is not subject to the management by a Trust that doesn’t own it nor by the servicer appointed by the Trust. The current judicial presumption of validity as to the status of the servicers is wrong. The records and rights of the servicer are only as strong as their employer — the Trust or other entity claimed to be the principal.

And unless it can be shown that the REMIC Trust (i.e., the employer) actually owned the debt, the note and the mortgage, neither the servicer nor the Trust had any right — ever — to collect, enforce or otherwise use the fatally defective loan documents in any manner.

The assertion that the Trust is merely the “holder” of the note and mortgage is ridiculous; the sole purpose of the REMIC Trust is to acquire loans not to represent others who own loans. The assertion by the major banks that they are owners or “constructive owners” of the note is equally ridiculous, although moves a step closer tot he truth — the real party in interest is the investment banker who stole the money from investors, failed to put those funds under management of a REMIC Trust, and instead used the money in any way that maximized “profit” to the bank at the clear expense to the investors.

The homeowners were merely victims and pawns in a scheme to get them to sign documents that would be used in a vast scheme that included identity theft. It is not a free house when the alleged loan results in your loss of money, of your home, your job, your reputation, your family, your health or even your life. Those alleged loan documents were sold as many as 42 items using the creditor reputation of the party who signed them without their knowledge or consent. those alleged loan documents (especially the notes) were intentionally destroyed to maintain the illusion that the issue was just a matter of “paperwork.” The windfall, as I have said for 10 years, has always been where the wind was blowing — toward the banks.

I think you can’t get to the bottom line for homeowners without putting the issue of presumptions front and center in the litigation. And it is, in my opinion, only then that the long-awaited sea change in judicial policy will change. We must accept the unacceptable premise that judicial public policy and assumptions are in direct conflict with legislative public policy. We can argue all we want that the judiciary is not permitted under our constitution to make public policy or laws. But they are doing it anyway because they think they are saving the banking system while they are in fact, contradicting the express intention of Federal and State legislative bodies, who have exclusive authority to announce public policy.

Neil F Garfield


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From Florida Statutes—

90.302 Classification of rebuttable presumptions.—Every rebuttable presumption is either:

(1) A presumption affecting the burden of producing evidence and requiring the trier of fact to assume the existence of the presumed fact, unless credible evidence sufficient to sustain a finding of the nonexistence of the presumed fact is introduced, in which event, the existence or nonexistence of the presumed fact shall be determined from the evidence without regard to the presumption; or

(2) A presumption affecting the burden of proof that imposes upon the party against whom it operates the burden of proof concerning the nonexistence of the presumed fact.

History.—s. 1, ch. 76-237; s. 1, ch. 77-77; s. 22, ch. 78-361; s. 1, ch. 78-379.


(a) Except as provided in subsections (c) and (d), “negotiable instrument” means an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

(1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

(2) is payable on demand or at a definite time; and

(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize on or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor. [Mortgage is not a negotiable instrument because it contains numerous non-financial undertakings] 

(b) “Instrument” means a negotiable instrument.


(a) An instrument payable on demand becomes overdue at the earliest of the following times:

(1) on the day after the day demand for payment is duly made;

(2) if the instrument is a check, 90 days after its date; or

(3) if the instrument is not a check, when the instrument has been outstanding for a period of time after its date which is unreasonably long under the circumstances of the particular case in light of the nature of the instrument and usage of the trade.

(b) With respect to an instrument payable at a definite time the following rules apply:

(1) If the principal is payable in installments and a due date has not been accelerated, the instrument becomes overdue upon default under the instrument for nonpayment of an installment, and the instrument remains overdue until the default is cured.

(2) If the principal is not payable in installments and the due date has not been accelerated, the instrument becomes overdue on the day after the due date.

(3) If a due date with respect to principal has been accelerated, the instrument becomes overdue on the day after the accelerated due date.

(c) Unless the due date of principal has been accelerated, an instrument does not become overdue if there is default in payment of interest but no default in payment of principal.


(a) A person whose failure to exercise ordinary care substantially contributes to an alteration of an instrument or to the making of a forged signature on an instrument is precluded from asserting the alteration or the forgery against a person who, in good faith, pays the instrument or takes it for value or for collection.

(b) Under subsection (a), if the person asserting the preclusion fails to exercise ordinary care in paying or taking the instrument and that failure substantially contributes to loss, the loss is allocated between the person precluded and the person asserting the preclusion according to the extent to which the failure of each to exercise ordinary care contributed to the loss.

(c) Under subsection (a), the burden of proving failure to exercise ordinary care is on the person asserting the preclusion. Under subsection (b), the burden of proving failure to exercise ordinary care is on the person precluded.


UCC 3-203) Transfer of instrument; rights acquired by transfer.

(A)  An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.

(B)  Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course, but the transferee cannot acquire rights of a holder in due course by a direct or indirect transfer from a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.

(C)  Unless otherwise agreed, if an instrument is transferred for value the transferee has a specifically enforceable right to the unqualified indorsement of the transferor, but negotiation of the instrument does not occur until the indorsement is made by the transferor.

(D)  If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur, the transferee of that instrument obtains no rights under this chapter, and the transferee of that instrument has only the rights of a partial assignee.

Overview of the Holder-in-Due-Course Concept

Importance of the Holder-in-Due-Course Concept

A holder is a person in possession of an instrument payable to bearer or to the identified person possessing it. But a holder’s rights are ordinary, as we noted briefly in Chapter 13 “Nature and Form of Commercial Paper”. If a person to whom an instrument is negotiated becomes nothing more than a holder, the law of commercial paper would not be very significant, nor would a negotiable instrument be a particularly useful commercial device. A mere holder is simply an assignee, who acquires the assignor’s rights but also his liabilities; an ordinary holder must defend against claims and overcome defenses just as his assignor would. The holder in due course is really the crux of the concept of commercial paper and the key to its success and importance. What the holder in due course gets is an instrument free of claims or defenses by previous possessors. A holder with such a preferred position can then treat the instrument almost as money, free from the worry that someone might show up and prove it defective.

Requirements for Being a Holder in Due Course

Under Section 3-302 of the Uniform Commercial Code (UCC), to be a holder in due course (HDC), a transferee must fulfill the following:

  1. Be a holder of a negotiable instrument;
  2. Have taken it:
  3. a) for value,
  4. b) in good faith,
  5. c) without notice

(1) that it is overdue or

(2) has been dishonored (not paid), or

(3) is subject to a valid claim or defense by any party, or

(4) that there is an uncured default with respect to payment of another instrument issued as part of the same series, or

(5) that it contains an unauthorized signature or has been altered, and

  1. Have no reason to question its authenticity on account of apparent evidence of forgery, alteration, irregularity or incompleteness.

The point is that the HDC should honestly pay for the instrument and not know of anything wrong with it. If that’s her status, she gets paid on it, almost no matter what.

Specific Analysis of Holder-in-Due-Course Requirements


Again, a holder is a person who possesses a negotiable instrument “payable to bearer or, the case of an instrument payable to an identified person, if the identified person is in possession.”Uniform Commercial Code, Section 1-201(20). An instrument is payable to an identified person if she is the named payee, or if it is indorsed to her. So a holder is one who possesses an instrument and who has all the necessary indorsements.

Taken for Value

Section 3-303 of the UCC describes what is meant by transferring an instrument “for value.” In a broad sense, it means the holder has given something for it, which sounds like consideration. But “value” here is not the same as consideration under contract law. Here is the UCC language:

An instrument is issued or transferred for value if any of the following apply:

(1) The instrument is issued or transferred for a promise of performance, to the extent the promise has been performed.

(2) The transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceeding.

(3) The instrument is issued or transferred as payment of, or as security for, an antecedent claim against any person, whether or not the claim is due.

(4) The instrument is issued or transferred in exchange for a negotiable instrument.

(5) The instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.

  1. For a promise, to the extent performed. Suppose A contracts with B: “I’ll buy your car for $5,000.” Under contract law, A has given consideration: the promise is enough. But this executory (not yet performed) promise given by A is not giving “value” to support the HDC status because the promise has not been performed.



One morning, the husband returns the boat to their lakeside
cottage after several hours of fishing and decides to take a nap.
Although not familiar with the lake, the wife decides to take the boat
out. She motors out a short distance, anchors, puts her feet up,
and begins to read her book. The peace and solitude are magnificent.
Along comes a Fish and Game Warden in his boat. He pulls up alongside
the woman and says, ‘Good morning, Ma’am. What are you doing?’

‘Reading a book,’ she replies, (thinking, ‘Isn’t that obvious?’)

‘You’re in a Restricted Fishing Area,’ he informs her.

‘I’m sorry, officer, but I’m not fishing. I’m reading.’
‘Yes, but I see you have all the equipment. For all I know you could
start at any moment. I’ll have to take you in and write you up.’

‘If you do that, I’ll have to charge you with sexual assault,’ says the woman.

‘But I haven’t even touched you,’ says the Game Warden.

‘That’s true, but you have all the equipment..
For all I know you could start at any moment.’

‘Have a nice day ma’am” and he left.


6 Responses

  1. Reblogged this on California Freelance Paralegal.

  2. My comment mainly pertains to the part of your post which states that even if a note has been proven to be void, if an innocent third party buys the note in good faith, the loss must be borne by the person who signed the note. Shouldn’t that depend upon WHY the note is void? Suppose that there was never a loan in the first place. Suppose the the note was actually what funded the note. Suppose that it was actually an exchange, of equal value for equal value, and the banks lied when they called it a loan. Suppose that the “borrower” was never told this, and full disclosure never occurred. Suppose the note was even altered after it was signed. Suppose all of this, and more, is supported and documented in the Federal Reserve policy, and even in the banks own bookkepping entries–assuming that you can gain access through discovery, of BOTH of the banks sets of books.What if the banks are required to follow Federal Reserve policy, and generally accepted accounting principles, and can get in big trouble if they don’t. Suppose they can’t get into trouble if the loan agreement does not coincide with those policies and prinicples–unless the homeowner figures it out, and proves it. So, in the above case—wouldn’t the law be the same, as it would be for anyone else caught receiving stolen property? It is my understanding that the law does not care whether the buyer knew property was stolen or not. An innocent person receiving stolen goods, would probably not go to jail or anything, but they would still lose the item purchased and the money they paid for it. If there was never a loan, if it was really an exchange which the bank called a loan, but the borrower thought it was a loan, because the borrower was intentionally deceived, and the bank charged the borrower principal and interest on this exchange being falsely called a loan, and then if the borrower gets into trouble and can no longer make the payments, the bank literally steals his home. Why wouldn’t the purchaser of this stolen home, suffer the same loss as any other person receiving stolen goods?

  3. Neil is agreeing with us that the judges in these courts are in error because they are wrongfully attempting to set public policy from the bench ..and getting away with it. Nobody above them is stopping it.

    Neil seems to be admitting that we will not prevail ..until these errors by the courts are addressed …specifically, the rebuttals presumptions being ignored by the courts in favor of the banks.

    Obviously the appellate courts are guilty and allowing this too.

    Neil has pinned the entire problem down to this single reversible error.

    It represents the weak point in their game that could be the turning point and difference maker in these cases.

    Now …how do we convince the courts that they are wrong ?

    The entire court system seems to be in on this ..all the way up.

    What branch of government oversees the courts? Who has the authority to stop a runaway corrupt court system?

  4. Ims53 … Well that is exactly what is happening to me, and I did try to argue their holder status was just a presumption of the court, I did try to argue that since there are conflicting issues of material fact regarding different entities all claiming they owned the loan, etc., etc.

    In my initial answer … I did deny that there was a valid, legal loan contract at the origination and objected to the plaintiffs documents.

    I guess what we’re all asking Neil is …how do we present his argument in a way that it can prevail….from the language in the answer …to the motion to dismiss ….to the opposition to plaintiffs motion for SJ

  5. Question: Can a mere “Holder” foreclose on your property?

    Isn’t there a loophole in the UCC-3 that gives a mere holder the right to enforce?

    Many or most servicer file the foreclosure complaint as holders, they show in their exhibits that the are in possession of the note, tthey include a copy of the mortgage as an exhibit, they have an assignment of mortgage as an exhibit and as servicer they show a default by including a simple payment history showing when the default occurred.

    So, just to be clear on Neil Garfields point … The servicer is attempting to foreclose as holder? And we are all in agreement that the law does allow a mere holder to foreclose?

    Neil is saying we should challenge their holder status by denying that they can prove they have a real true creditor in their chain?

    Or that they, the servicer, paid value to aquire the loan?

    Does a mere holder need to show that they acquired the loan for a sum of money?

    Does the assignment lead one to believe that they paid for it?

  6. bottomline Neil is if we cannot get justice in the lower and appellate courts and we cant then all of this fraudulent paperwork and the stealing of homes will continue. the courts are a BIG part of the problem. As Mr. Weidner has inferred that the banks are the ones that brought back these retired judges( the miserable old man) to aid and abet in the banks fraudulent scheme. The homeowner and the investors are the victims. The banks are settling everyday for money for their evil acts when they should be going to jail. As long as it is “business as usual” for the banksters and courts keep allowing it nothing will change. Most attorneys don’t really have a legitimate strategy to help the homeowner. This foreclosure mess has been a meal ticket for most as there are a rare few that actually do their due diligence for the homesowner. Its a rigged system and what I would tell anyone just going into foreclosure is get out early. Don’t get sucked in about all the phony paperwork because in the end, it will not matter and you will forfeit the home to the bank, one way or another.

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