Mortgage Madness at Wells Fargo and Bank of America
http://www.cnbc.com/2016/05/26/wells-fargo-launches-3-down-payment-mortgage.html
By William Hudson
Wells Fargo and Bank of America have announced that they will be offering 3% down loans that are proven to be as high risk as no-money-down mortgages. These loans will be offered to people with poor credit. If 3% is too much to put down, the banks are offering insane “incentives” to entice borrowers to reignite a stalling real estate market.
Wells Fargo claims that borrowers can qualify for an even lower interest rate if they agree to go to a ridiculous and ineffective “government-sponsored” class on finance (think “Mortgages for Dummies”). Wells Fargo offers a 3.75% interest rate if you put the 3% down or 40% down on the loan- it hardly matters to them since they are selling the paper. Attending the finance class reduces your rate by a mere .08% of the interest rate. The class is a perfect example of a government incentive that costs more to implement than the revenue it will save or generate.
Thus, borrowers with strong credit scores, who put down significant down payments, are actually penalized by paying a higher interest rate- even if it is only a mere .08%. The borrowers with low credit scores can also provide documentation of credit worthiness by providing evidence from “nontraditional” sources- whatever that means.
Bank of America has an even more bizarre twist. The subprime loan program at BOA requires that homeowners prove that their income is below average in order to qualify for a loan! The bank is offering mortgages at 3% down (because housing costs have soared) to borrowers with poor credit who must prove their income is below average. The program requires NO private mortgage insurance.
Banks have apparently become so desperate, that they are now competing for high-risk borrowers who will likely over-leverage themselves, so the banks can swoop in when the bubble bursts and steal the homes of the poor and vulnerable. Obviously, the Too Big to Fail’s last business model was so financially lucrative, and the market of subprime borrowers has grown so dramatically over the past eight years- that it is time to take advantage of the economic conditions they contributed to.
While the general public was buying into the bubble, lured in by low interest rates, the wealthy sat back and watched the sheep lead themselves to slaughter. The wealthy and their advisors knew what consumers would do, they knew they would over-leverage themselves, and they knew the housing market would fail- it was only a matter of time. Here we are eight years later, and the majority of Americans who are buying homes are once again lured in by artificially low interest rates and predatory lending programs, while ignoring that they are paying more than they can likely afford and more than the home would be worth if it wasn’t for loose lending programs.
The banks have no incentive to stop their current predatory lending patterns. They know that no government entity is going to put an end to their modus operandi, they know they can create a system so complex that plausible deniability will protect them, and they know by the time they move the funds off shore and invest their profits in land, minerals and commodities that they will be home free. But most of all- they know that the American public will do nothing because the public has been stripped of their wealth, possess few assets (no land, no gold, no silver, no investments) and the majority lack the resources to combat the fraudulent scheme of the big banks.
At any point in history, people would have been sharpening up their pitch forks and lighting their torches. We have only ourselves to blame because until Americans rise up- the status quo goes unchanged. Where is the tipping point? Obviously we are not there yet.
Filed under: foreclosure | Tagged: bank of america 3% down, loan mortgage fraud, mortgage madness, Wells Fargo 3% down |
Wednesday Evening 22 June 2016
David Belanger:
Thank you for your time and effort in tearing apart the Illinois Bassman
case. That was my next project, knowing the appellates in that case
relied upon personal trusts only and made half-arguments because
Bassman failed to make the right argument, unfortunately, and judges
are quite adept at turning wrongly made or incomplete arguments on
their head.
You just demonstrated how such matters can be made right.
Your efforts are very much appreciated.
Cheers…
Wednesday Evening 22 June 2016
David Belanger:
Thank you for your time and effort in tearing apart the Illinois Bassman
case. That was my next project, knowing the appellates in that case
relied upon personal trusts only and made half-arguments because
Bassman failed to make the right argument, unfortunately, and judges
are quite adept at turning wrongly made or incomplete arguments on
their head.
You just demonstrated how such matters can be made right.
Your efforts are very much appreciated.
Cheers…
Wednesday Evening 22 June 2016
David Belanger:
Thank you for your time and effort in tearing apart the Illinois Bassman
case. That was my next project, knowing the appellates in that case
relied upon personal trusts only and made half-arguments because
Bassman failed to make the right argument, unfortunately, and judges
are quite adept at turning wrongly made or incomplete arguments on
their head.
You just demonstrated how such matters can be made right.
Your efforts are very much appreciated.
Cheers…
hey kal, get this out to all that need help, anyone in media you might know
@ david belanger
posted re US Bank v. Bolling (2015), Mass. opinion
A homeowner’s standing and duty to defend title, by challenge to a void assignment, is affirmed.
Appears that the Kalifornia and Mass. courts are in alignment.
Term 2011), the Court was queried to interpret the Trust document but could not determine the ultra vires issue because of insufficient facts: “defendant’s submissions did not demonstrate as a matter of law that Sherry lacked actual or apparent authority to bind the Trust to the note.” This decision did not go to the voidability of ultra vires acts but the inability to determine if the acts were ultra vires. In two cases, the Court after fact finding applied EPTL § 7-2.4 and declared the acts void.
Mooney v. Madden, 193 A.D.2d 933, 597 N.Y.S.2d 775, 776 (1993) decision ordered a review of a fact basis for whether an agreement by the trustees … “is binding upon the trustees and enforceable so that votes cast in violation of that agreement may be … declared a nullity”. The Court then sought an equitable resolution given the impact of the void act with ratification by all the beneficiaries.
Similarly, In re Pepi, 268 A.D.2d 477, 701
N.Y.S.2d 915, 916 (2000) fulfills the purpose of EPTL § 7-2.4 and voids ultra vires acts of the Trustee showing the evolution of Trust Law in NY so that an ultra vires act would be assumed void based on the
Trust Document itself. From In re Pepi:
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“It was the duty of the appellants to inquire as to whether the proceeds obtained through the use of a trust asset were to be used for the ultimate benefit of the trust (see, Dye v Lewis, 40 AD2d 582, affd sub nom. Dye v Lincoln Rochester Trust
Co., 31 NY2d 1012). Since the appellants had reason to know that the conveyance was made in contravention of the trust, the transaction is void (see, EPTL 7-2.4; see also, National Sur. Co. v Manhattan Mtge. Co., 185 App Div 733, 736-
737, affd 230 NY 545; Boskowitz v Held, 15 App
Div 306, 310-311, affd 153 NY 666).”
In re Birnbaum, 117 A.D.2d 409, 503 N.Y.S.2d 451, 456 (1986) the beneficiaries sued the Trust to clarify and if needed, re-write Trust documents. Again the Court was not imposing the voidness of ultra vires acts, it was need to interpret the Trust Document itself. A Court must rule when Trustees themselves disagree as to their enabling document15.
However, PSAs do not contemplate all beneficiaries being able to ratify together a Trustee’s acts; see explicit standard language in the instant PSA at sections 11.03 and 11.04. When these Trusts run afoul of the law, they become party to lawsuits and a court must decide. Just as stealing is
15 New York’s has an apparent 3-prong test of circumstances in which courts have to play a role even though EPTL section 7-2.4 voids acts in contravention with the “Trust document”. These are cases where acts require: (1) interpretation of the Trust Documents; (2) an equitable resolution; (3) if restitution is owed to the beneficiaries, ratification of resolution by all beneficiaries.
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illegal, when a Trust document is violated, a Court still has a role in fact finding, enforcement, and restitution.
The litany of ten NY decisions supposedly determining ultra vires acts voidable in contradiction to NY EPTL § 7-2.4, trotted out in the Bassman decision in fact yielded: 6 completely inapplicable; two upholding the voidness of ultra vires acts; and two needing the Court’s assistance in interpreting the Trust Document itself. This hardly a sterling basis of jurisprudential analysis for Dernier and the other Bassman progeny to root themselves in. Even Rajamin which drew on only some of the Bassman citations did not stand on an accurate analysis of New York’s highest court’s actual consistency of decisions.
Ultra Vires attempted transfers where there exists a founding Trust Document are void not voidable under Trust Law as historically and uniquely developed in the state of NY, the Housing Court’s correctly identified governing law of the instant Securitized
Trust.
VI. CONCLUSION
For all of the foregoing reasons, and ratio decidendi cited to herein, the Defendant Bolling
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respectfully request that this court Affirm the
Housing Court Judge’s well reasoned ruling
In the review to follow of the 10 cases cited by Bassman, (an Illinois Court attempting to interpret N.Y. Law) incorrectly claimed documented NY Courts’ interpretation of ultra vires transfers by Trustees as
voidable. Bassman argued given NY Courts’
inconsistency, that without a party voiding illegal transfers into NY Securitized Trusts, the Court cannot
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determine that a break in the chain of title to the mortgage exists. However, 6 cases were simply inapposite; none upheld a “voidability” interpretation of attempted ultra vires transfers; and two actually upheld NY EPTL 7-2.4 after Court scrutiny.
In fact, even Bassman first admits the long lineage of NY rulings voiding ultra vires transfers into express trusts under EPTL 7-2.4.
“If this statute controls, the transfer of the mortgages to the trust would appear to be a nullity (we note that this statute has been in effect in New York in some form since at least 1870 (see Anderson v. Mather, 44 N.Y. 249 (N.Y.1870))). Moreover, this is the sort of defense — namely, that the transaction is void under the statute — that defendants would be permitted to raise. Livonia Property Holdings, 717 F.Supp.2d at 735. Indeed, several New York courts have applied the statute, or its predecessors, in such a manner. See, e.g., In re Application of Dana, 119 Misc.2d 815, 465 N.Y.S.2d 102, 105 (N.Y.Sup.Ct. 1982); Dye v. Lewis, 67 Misc.2d 426, 324 N.Y.S.2d 172, 175
(N.Y.Sup.Ct.1971).”
For EPTL § 7-2.4 to apply, a Trust must have a controlling instrument12. The Defendant Trust indisputably has a “controlling instrument” by which it was purportedly established; the PSA.
Six of the decisions Bassman cited did not address express Trusts at all and are inapposite.
Three involved sections of NY Law unrelated to trusts:
12 Footnote EPTL 7-2.4 again
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National Black Theatre Workshop Inc. v. Nubian
Properties LLC, 89 A.D.3d 518, 932 N.Y.S.2d 466, 467 (2011) does not involve a Trust; Conservative Party of the State of New York v. New York State Board of
Elections, 170 Misc.2d 885, 652 N.Y.S.2d 463, 465
(N.Y.Sup.Ct.1996) revolved around interpretation of NY Const, art I, § 1 related to the Trust of voters in elections; Aronoff v. Albanese, 446 N.Y.S.2d 368, 370
(App. Div. 1982) is based on NY corporate law to which EPTL 7-2.4 cannot apply as business common law trusts do not exist in NY13.
Three cases involved implied trusts. Greagan v. Buchanan, 15 Misc. 580, 37 N.Y.S. 83, 85 (N.Y.Sup.Ct. 1896) involved the acts of a court appointed administrator after a man died intestate. Hine v. Huntington, 118 A.D. 585, 103 N.Y.S. 535, 540 (1907) has to do with the disposition of a remaining piece of property from an estate foreclosed by the executors in trust for the remaining heirs, themselves and their sister. Washburn v. Rainier, 149 A.D. 800, 134 N.Y.S. 301, 304 (1912) involves an unfulfilled debt and the transfer of assets and liabilities through a contract
13 The only place in NY law where business trusts are referenced is in tax statutes created to cover such out of state trusts since other states allow them.
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before that debt was fulfilled by the adjudicated debtor.
4. Courts have a Role Even When Ultra Vires
Actions are Void
The remaining 4 cases that Bassman analyzed do involve “express trusts” that is trusts with founding documents that are covered by NY EPTL § 7-2.4 which makes ultra vires attempts to transfer assets void. In two of these four cases, the Court after analysis declared the ultra vires acts void. But even though transfers into an express trust are covered under NY EPTL § 7-2.4, there is a role for the Courts when there is disagreement on the interpretation of the Trust documents or for fact-finding. An act may be outside the scope of the Trust document and require judicial interpretation14. After fact-finding, questionable acts may be found to be ultra vires and void but have had such impact that the Court needs to determine additional equitable resolution.
In Feldman v. Torres, 939 N.Y.S.2d 221, 224 (App.
14 In these remaining Bassman citations, the Trust Documents may allow beneficiaries to ratify otherwise ultra vires acts by the Trustee rendering them no longer ultra vires. With no access to case documents see if such ratification is included, Defendant addresses the legitimate judicial role of the Court without undermining NY EPTL 7-2.4 regardless of the Trust documents’ specifics.
trust according to the PSA. The assignment was void under New York state law, N.Y. Est. Powers & Trusts Law § 7-2.4. Also, the plaintiff failed to provide any evidence that the Howe mortgage was on the schedule of loans in an exhibit for the PSA as required in U.S. National Association v. Ibanez, 458 Mass. at 650-51.”
In U.S. Bank v. Hoynoski, Western Housing Court,
No. 11-SP-3965 (Nov. 8, 2012), the court determined:
“If, as alleged by Hoynoski “upon information and belief,” the mortgage at issue here was subject to a pooling and servicing agreement that involved a trust formed under New York law, the terms of which were contravened by the assignment of the subject mortgage into the trust such that the assignment was void ab initio under New York law, NY CLS EPTL §7-2.4, the Bank arguably would not have acquired good title and would have no superior right to possession herein. This analysis does not implicate third party beneficiary status; rather it involves a direct challenge to a prima facie element of the Bank’s case, namely that it holds good title.”
And in Deutsche Bank as Trustee v. Collins, et al, Worcester Housing Court, 1185-SP-5095 (July 18,
2013), Judge upheld Defendants’ Motion for Summary Judgment “for reasons set forth”. These included:
“This assignment which the plaintiff offers as part of their prima facie proof of standing does not comply with the Pooling and Servicing agreement…. the PSA says that for loans – both the note and the mortgage – to get into the trust they would have to have been assigned to Sheffield Receivables Corporation, Sutton Funding, LLC, Securitized Assets Backed Receivables, LLC before being transferred into the trust. This assignment … goes from MERS to Deutsche Bank … as Trustee…. It only mentions New Century Mortgage Corporation. Neither MERS
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nor New Century Mortgage Corporation are any of the parties required to transfer a mortgage into the Trust….
“the closing date for the Trust was on or about June 14, 2007; the PSA allows only an additional 90 days beyond June 14, 2007 for any loan to have been reviewed and rejected. This assignment … happened on July 28, 2009. The trust was already closed … no evidence of the transfer of the Note. …
“As NY Trust law explicitly voids any transfer of assets in contravention of the Trust’s instrument, this assignment is void as a matter of law. Deutsche Bank … as Trustee … did not, therefore, own the mortgage and therefore, did not have the power to exercise the power of sale in the mortgage. The foreclosure is therefore void. Plaintiff lacks standing to bring this eviction action.”
Glaski v. Bank of America, No. F064556 (7/31/13,
Cal. 5th App. Dist.), Saldivar v. JPMorgan Chase, 2013 WL 2452699 (Bky. S.D. Texas 6/5/13) and HSBC Bank USA,
National Association, et al. v. Marra, No. 2008 CA 000630 NC (Aug. 14, 2013) give weight to the clear language of New York EPTL § 7-2.4; they voided these foreclosures because of ultra vires acts. From
Saldivar:
“Under 28 U.S.C. § 1652, this Court has the duty to apply New York law in accordance with the controlling decision of the highest state court. Royal Bank of Canada v. Trentham Corp., 665 F.2d 515, 516 (5th Cir. 1981). While the Court finds no applicable New York Court of Appeals decision… See Wells Fargo Bank, N.A. v. Erobobo, et al., 2013 WL 1831799 (N.Y. Sup. Ct. April 29, 2013). In Erobobo, defendants argued that plaintiff (a REMIC trust) was not the owner of the note because plaintiff obtained the note and mortgage after the trust had closed in
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violation of the terms of the PSA governing the trust, rendering plaintiff’s acquisition of the note void. Id. at *2. The Erobobo court held that under § 7-2.4, any conveyance in contravention of the PSA is void… Based on the Erobobo decision and the plain language of N.Y. Est. Powers & Trusts Law § 7-2.4, the Court finds that under New York law, assignment of the Saldivars’ Note after the start up day is void ab initio.”
Once a Trust is created under NY Common Law Trust statute as specified in Plaintiff’s PSA, it is controlled by EPTL § 7-2.4 for all the world not just the investors for whom the Trust complied with REMIC code3 (A000417)
See Mendenhall the most recent decision from NY above:
“Defendants allege, inter alia, that the acceptance of the asset, viz. the note and mortgage at issue, by the Trustee was actually accomplished in a manner other than that either prescribed or permitted by the … PSA, which is the controlling instrument for the REMIC…. it inexorably follows that the acts taken by the Trustee were clearly ultra vires and therefore would necessarily be void ab initio.
“For well over one hundred years, it has been the law in New York that where the transfer of a mortgage to a third party is effectuated in a manner that contravenes the express terms of a governing trust, the transfer is ultra vires and is void, Kirsch v. Tozier 143 NY 390 (1894)…, all successors and subsequent assignees are charged with constructive knowledge of the express terms of the trust and hence cannot claim to be bona fide purchasers thereafter inasmuch as they would either know or would have reason to know that any interest transferred would be subject to the operative terms of the trust, Smith v. Kidd 68 NY 130 (1877), McPherson v.
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Rollins 107 NY 316 (1887).”
As the Massachusetts decision in HSBC as Trustee
v. Howe, et al, Malden Court District, No. 1350-SU-0237 (Sept. 18, 2014) stated:
“For well over one hundred years, it has been the law in New York that where the transfer of a mortgage to a third party is effectuated in a manner that contravenes the express terms of a governing trust, the transfer is ultra vires and is void, Kirsch v. Tozier, 143 N.Y. 390, 38 N.E.
375 (1894)….
None of these cases mentioned or distinguished Kirsch v. Tozier, 143 N.Y. 390, 38 N.E. 375 (1894), in which the Court of Appeals stated: “[A]ny act thereafter done by [the trustee] in contravention of the trust was by the common law and by the statute void. (St. Uses and Trusts, 1 Rev. St. §65.)”.
The second set of decisions Plaintiff-Appellant relies heavily upon are Rajamin v. Deutsche Bank Nat. Trust Co., 757 F. 3d 79 (2nd Cir. 2014) and its progeny or Dernier v. Mortgage Network, Inc. 87 A.3d
465 (Vt. 2013) out of Vermont; to argue that “most” Courts have found violations of Pooling and Servicing Agreements voidable not void. However, both the citations to Bank of American Nat’l Assoc. v. Bassman
FBT, L.L.C., et al. 981 N.E.2d 1, 7 (Ill. App. Ct.
2012)’s flawed survey of New York jurisprudence in Dernier and the specific cases from Bassman that
Rajamin rely upon do not reflect decisions of only
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express NY Common Law Trusts. In fact, Rajamin does not address NY EPTL 7-2.4, the specifically applicable statute to express Trusts with founding documents, nor addresses Erobobo to distinguish it.
The basis for claiming dissension among NY decisions is an assessment by the Illinois Bassman Court (given their “exhaustive search” of NY decisions) that the NY record was inconsistent in the application of EPTL 7-2.4 voiding acts by Trustees that contravene the “trust” documents.
The high court decisions across the US that claim that NY courts are inconsistent in voiding ultra vires actions of express trusts depend upon the Bassman case review. The Vermont SJC in Dernier did decide for the mortgagor but did not rely on NY EPTL § 7-2.4; they felt based on Bassman that the NY courts were split on the void or voidability of ultra vires acts.
Plaintiff Trust’s citations to Wilson, Butler or other matters advancing distinctly different allegation are inapplicable to the Bolling decision. Tracing the above referenced, Plaintiff Trust’s attempt to undermine the Housing Court’s decision based on an inapplicable “voidable PSA issue”. Indeed, the “precedent” that asserts that a borrower “lacks standing to challenge the PSA”, apparently has its genesis from the above passage in Samuels, at p. 22 where that litigant borrower flatly pled that;
“A failure to follow this protocol—such as by direct assignment of the mortgage from the loan originator to the pool trustee, bypassing the depositor— would, the Debtor contends, constitute a breach of the PSA, a breach of fiduciary obligations under the PSA to investors, a breach of federal regulations, and an act giving rise to unfavorable tax consequences for the investor.”
Clearly Samuel’s particularized pleadings above,
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sought to enforce obligations that he as a borrower was not in privity with, and therefore lacked standing “to enforce”, making those particular claims not redressable and inapplicable here. The Samuels Court also made no analysis as to the borrower Samuels ability to challenge an assignment that was void. Unlike Samuels, the Housing Court nowhere relied upon any of these facially deficient claims as advanced by Samuels. The Housing Court relied upon the failure to convey the Bolling note and mortgage as an asset to the Plaintiff Trust, under the requirements of the terms of its Governing Instrument PSA, creating a void assignment. The Housing Court correctly found that this precluded the Plaintiff Trustee from utilizing the statutory remedy against Bolling. This failure to transfer in compliance with the PSA indisputably renders the assignment void ab initio by operation of law, not voidable.11
11 Indeed, state law matters have relied upon these same line of cases, without apparently examining those particular borrower’s pleadings, see Hoyt v. BAC Home Loans, 14-P-517, (2013) [unpublished R. 1:28 Opinion], at p. 5; “See Woods v. Wells Fargo Bank, N.A., 733 F.3d 349, 354 (1st Cir. 2013) (holding that “claims that merely assert procedural infirmities in the assignment of a mortgage, such as a failure to abide by the terms of a governing trust agreement, are barred for lack of standing”)……Because “a mortgagor does not have standing to challenge shortcomings in an
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Thus, to recapitulate, unlike Samuels [and its progeny], Wilson, and Butler, the Housing Court relied upon violations of the Trust’s governing document and governing law to which, as in the Ibanez and LaRace analysis, the homeowner need not be a party as the assignments are void by operation of law ab initio.
Bolling is not aware of any authority sounding in trust law, that would stand for the proposition that an improperly conveyed asset to a trust at the time of its creation, would be “voidable” by the recipient assignee Trustee, such that existing “voidability” would somehow magically render the Plaintiff Trustee’s reliance upon void recorded assignments, representing
assignment that render it merely voidable at the election of one party but otherwise effective to pass legal title[,]” Culhane v. Aurora Loan Servs., 708 F.3d 282, 291 (1st Cir. 2013) (applying Massachusetts law), the judge properly concluded that the plaintiffs’ complaint failed to state a claim. See also Boulanger v. Wells Fargo Bank, N.A., 14-P-1438 [Unpublished r. 1:28 Opinion] (2015), “Finally, the plaintiffs allege that the third assignment to the Plaintiff failed to comply with the terms of the governing documents (commonly referred to as the pooling and service agreement, or the PSA) of the RMAC REMIC Trust Series 2009-9, the organization for which the Plaintiff holds the mortgage as trustee. Providing no documentation to support their claim, the plaintiffs contend, inter alia, that the assignments should have been executed prior to the closing date dictated by the PSA. Whatever the merit of this contention, as third-party beneficiaries, the plaintiffs lack enforceable rights under the PSA. The plaintiffs do not assert that the purported defects render the assignment void.”
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an existing improper conveyance of an asset to a trust, now legally valid, and/or able to be later “ratified”, especially where there is a specific temporal limitation (“Closing Date”) for a legally valid conveyance of assets to the Plaintiff Trust, and where the specific Governing Instrument precludes the beneficial owners from so ratifying. Indeed, it is to be remembered that the Plaintiff is a New York common law express Trust, not an ongoing corporation, or ongoing business concern.
Indeed, in the few Massachusetts state law matters examining this issue, also all involved defective allegations as specifically advanced by those borrowers. For instance, see Springer v.
Deutsche Bank National Trust Co.,
“Plaintiff alleges in Count II that: “Defendant knew or should have known that it was required under the terms of the pooling and servicing agreement under which it receives its authority to act as Trustee, that the mortgage for the Plaintiff’s property had not been properly assigned to the REMIC [Note 21] within the time period allowed by law” and that therefore Defendant lacked standing to foreclose on the plaintiff’s property. More specifically, the plaintiff alleges as follows:B. REMIC ISSUES:11. The Defendant…is a trustee for a Real Estate Mortgage Investment Conduit (REMIC).12. Under the Internal Revenue Code regulations relative to REMIC’s, all mortgage assets must be transferred into the Trust at the start date of the Trust, in
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order for it to maintain [its] tax-exempt status. 26 USC 860 (G)(a)(3). 13. As the REMIC for which the Defendant is Trustee was formed September 1, 2006 and the mortgage was not assigned to the Defendant until June 12, 2009, the Defendant cannot be the valid holder of the mortgage without being in violation of the Internal Revenue Code.” Springer, at 21 LCR 22, (2013).
Also see Sullivan v. Kondaur Capital, 85 Mass.App.Ct. 202, 206 n. 8, 7 N.E.3d 1113, 1116, n. 8 (2014). See also Bank of New York Mellon Corp, as Trustee v. Wain,
11 N.E.3d. 633.
3. Plaintiff-Appellant’s Reliance on chains of decisions flowing from Bassman’s misrepresentation of NY jurisprudence as divided on Void and Voidability of Ultra
Vires Attempted Transfers of Express Trusts.
a. The Trust’s Lack of Chain to Exercise the Power of Sale Rests in its Void Transfer of the Boyers Mortgage
The remaining question, then, is whether the assignment to a trust itself is void or voidable if it is in contravention of the PSA. All of the courts agree that this hinges on the New York courts’ interpretation of ultra vires actions as “void” or “voidable”. Several lower Massachusetts Courts have decided upon a shared understanding that NY State law is explicit and consistent that such ultra vires transfers in express Trusts is void.
In addition to the Bolling decision upholding the
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purportedly post-foreclosure homeowner’s right to superior possession based on its determination that the Trust’s ultra vires actions voided its legal claim to the homeowner’s mortgagee and so the prior foreclosure, four other Massachusetts lower court decisions concur.
U.S. Bank v. Wright, et al, Quincy District
Court, No. 1156-SU-1214 (Oct. 21, 2013):
“At issue is the chain of title from MERS to US Bank. On April 16, 2006, MERS assigned the mortgage to Wachovia Bank, N.A. as trustee of the Aegis Asset Back Security Trust, Mortgage Pass-through Certificates, Series 2004-2. … it cannot be demonstrated that Aegis Lending Corporation ever assigned or transferred the mortgage which defendants had granted to it to the Aegis Asset Back Security Trust … Series 2004-2. … the defect in title… exists on the evidence introduced by the Plaintiff…
Exhibits… are only probative on the plaintiff’s right to possession upon acceptance of the representation that the mortgage at issue is one which is part of Aegis Asset Back Security Trust,
Mortgage Pass-through Certificates, Series 2004-2.” [Emphasis added]
HSBC as Trustee v. Howe, et al, Malden Court
District, No. 1350-SU-0237 (Sept. 18, 2014) looked to NY Law (EPTL § 7-2.4):
“In Aurora Loans Services, LLC v. Mendenhall, the New York Supreme Court stated: it inexorably follows that the acts taken by the Trustee were clearly ultra vires and therefore would necessarily be void ab initio. …
The assignment was over three years after the cutoff date, July 1, 2007, to be included in the
Unlike Wilson’s allegations above, Bolling’s allegation regarding the Governing Instrument for the Plaintiff Express Trust; clearly does not
speculatively attack any signatory authority on an assignment to support its voidness, but rather the specific trust law legal theory that Bolling relies upon a void, not voidable, assignment.
In re Sheedy, 801 F.3d 12 (1st Cir. 2015) involved an appeal of a bankruptcy matter challenging a “proof of claim”, the particular allegations regarding the “PSA” made by Sheedy, unlike Plaintiff’s allegation, merely involved Sheedy’s allegation that flatly pled that “the assignment violated the PSA”, with no apparent plausible argumentation as to why this was
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so, and also failed to even allege that the assignment was void.6:
“Sheedy’s standing challenge is that Deutsche Bank cannot enforce the Mortgage against her because it was transferred into the Securitized Trust in violation of the PSA, six years after the trust was created. Sheedy cannot question Deutsche Bank’s status as her creditor unless she “challenge[s] a mortgage assignment as invalid, ineffective, or void[,]” rather than as an assignment that is only “voidable.” Culhane v. Aurora Loan Services of Nebraska, 708 F.3d 282, 291 (1st Cir. 2013). Yet a valid challenge for violations of the terms of a PSA would result in the assignment being voidable and not void. Butler v. Deutsche Bank Tr. Co. Americas, 748 F.3d 28, 37 (1st Cir. 2014) (“Under Massachusetts law, it is clear that claims alleging disregard of a trust’s PSA are considered voidable, not void.”).” Sheedy, at 26.
Unlike Wilson, the Housing Court here, relied on the specific legal grounds for Bolling’s possession, that the Plaintiff Trustee relies upon void recorded assignments. Unlike Wilson, Bolling’s Note and Mortgage, this asset, clearing outside any claim by the Plaintiff Trustee that the same is a current legally held corpus asset of the Plaintiff Trust.
The Housing Court’s decision rest upon these well-reasoned examination of undisputable facts that preclude the Plaintiff Trustee from exercising
6 Thus, mirroring the type of defective pleadings described in Ashcroft v. Iqbal, 556 U.S. 662 (2009), as referenced by Twombly. Sheedy’s specific allegation involved third party rights, which were clearly not redressable to any injury to him/her.
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contractual rights in the Plaintiff’s mortgage, and therefore, left the Plaintiff Trustee unable to utilize the statutory remedy given that the
Assignments that the Plaintiff Trustee relies upon are void.7 Plaintiff Trust fails by ignoring the fact that the Plaintiff Trustee is, in fact, not in current contractual privity with her.
The apparent foundational basis for the
historical “voidable” PSA argument Plaintiff Trust trots out can be traced back to citation of pleadings alleged by a specific borrower in an appeal of a bankruptcy matter before the Bankruptcy Appellate Panel, where that borrower specifically alleged claims related to third party(s) rights, that he was not a party to.8 It directly cited to Wilson [which advanced different allegation than Bolling], and Butler v.
Deutsche Bank Tr. Co. Americas, 748 F.3d 28 (1st Cir.
2014) for authority. Butler also involved a Motion to
Dismiss, under Fed. R. Civ. P., R. 12(b)(6), and which
7 Indeed, please reference G.L. c. 183, §21, requiring that the foreclosing entity comply with the terms of the mortgage first, then with all statutes related to foreclosure, see also G.L. c. 244, §14, last paragraph.
8 Indeed, there may be questions whether a Bankruptcy Appellate Panel even had subject matter jurisdiction to reach this issue at all, see In re Correia, 452 B.R. 319, at n. 3, (1st Cir. BAP 2011).
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also involved Butler’s particular allegation, this Court noted:
“Under Massachusetts law, it is clear that claims alleging disregard of a trust’s PSA are considered voidable, not void. See Woods, 733 F.3d at 354 (“[C]laims that merely assert procedural infirmities in the assignment of a mortgage, such as a failure to abide by the terms of a governing trust agreement, are barred for lack of standing.”); Wilson, 744 F.3d at 10 (“[W]hen a corporate officer acts beyond the scope of his authority, his acts in excess of [that] authority, although voidable by the corporation, legally could be ratified and adopted by it.”) (alterations and quotation marks omitted) (quoting Comm’r of Banks v. Tremont Trust Co., 259 Mass. 162, 179–80, 156 N.E. 7, 14–15 (1927)); cf. Culhane, 708 F.3d at 291 (allowing for standing where claims are predicated on the theory that “the assignor had nothing to assign or had no authority to make an assignment to a particular assignee”). Thus, having only presented facts sufficient to show the assignment was voidable under Massachusetts law, Butler lacks standing to challenge Deutsche Bank’s possession of the mortgage on this ground. Culhane, 708 F.3d at 291. Absent such standing, this theory as to the invalidity of Deutsche Bank’s possession cannot form the basis for relief.” Butler, at 37
Again, the foundational basis for Plaintiff Trust’s citation to Butler, related to claims regarding the PSA are “voidable” above, was predicated upon Woods v. Wells Fargo Bank, N.A., 733 F.3d. 349, at n. 4. In Woods, which matter also involved a Motion to Dismiss Woods’s particularized
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pleadings9:
“Insofar as Wood’s amended complaint also suggests that the assignments were in violation of the trust’s Pooling and Servicing Agreement, we find that no standing exists as to these alternate claims, which would render the assignment only voidable. See, e.g., Koufos v. U.S. Bank, N.A.,
415 B.R. 8, 22 (Bankr. D. Mass. 2009)..”
Thus the foundational basis for Plaintiff Trust’s citation to Woods v. Wells Fargo Bank, N.A., 733 F.3d. 349, at n. 4 was predicated citation to 415 B.R. 8,
[being incorrectly titled as Koufos v. U.S. Bank, N.A.]10. In fact, reviewing the particular pleadings of the borrower in this bankruptcy matter, [Gifty Samuels], at p. 22, this borrower specifically alleged the following, with regard to the PSA:
“Second, the Debtor argues that the PSA required that all mortgages acquired thereunder to be funneled to Deutsche Bank, as pool trustee, through the entity designated by the PSA as “depositor,” ARSI. A failure to follow this protocol—such as by direct assignment of the mortgage from the loan originator to the pool trustee, bypassing the depositor— would, the Debtor contends, constitute a breach of the PSA, a
9 Additionally, case citation related to a corporate officers “ultra vires” acts being later ratified, has no application to the Housing Court’s determination under trust law theory, and where Plaintiff Trust’s Governing Instrument precludes the beneficial owners of the Trust from later ratifying any act of the Trustee.
10 The Woods opinion errs in its caption to the citation at “415 B.R. 8”, as being titled “Koufos v. U.S. Bank N.A”, as this citation indisputably references a bankruptcy matter captioned “In re Gifty Samuels”,
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breach of fiduciary obligations under the PSA to investors, a breach of federal regulations, and an act giving rise to unfavorable tax consequences for the investors. The Debtor argues that because the Confirmatory Assignment is a direct assignment from Argent to Deutsche Bank that bypasses the depositor, it must be invalid. This argument falls far short of its goal. Even if this direct assignment were somehow violative of the PSA, giving rise to unfavorable tax, regulatory, contractual, and tort consequences, neither the PSA nor those consequences would render the assignment itself invalid. In fact, under the Debtor’s own argument, the unfavorable consequences could and would arise only if, and precisely because, the assignment were valid and effective.” In re Samuels, at p. 22.
actually owned the loan that was purportedly being transferred thereunder, and Ibanez at 650-651.4
The SJC affirmed that a transfer of interest in property, whether deed or assignment, occurs on the date it occurs and only upon that date. A later assignment cannot be made effective on a previous date whether by “back-dating” or later ratification.
The Housing Court correctly decided that under the particular terms of the instant Plaintiff common law express trust, the beneficial Certificateholder owners have no legal right to “ratify” any act of the Plaintiff Trustee:
“Section 11.03… Limitation on Certificateholders… (b) No certificateholder shall have any right to vote (except as expressly provided herein) or in any manner otherwise control the operation and management of the Trust Fund, or the obligations of the parties hereto,…
Certificateholders from time to time as partners or members of an association; nor shall any Certificateholder be under any liability to any third person by reason of any action taken by the parties to this Agreement pursuant to any provision hereof.”
It is indisputable that the purported recorded “assignments that Plaintiff purports to rely upon, facially contravene the controlling term requirements
4 Such prescient finding by the SJC, clearly comports with the requirements as set out under the Plaintiff Trust’s Governing Instrument above.
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for there to have been any legal conveyance of the Bolling note and mortgage as assets.
As Defendant-Appellee is not aware of any controlling authority sounding in Trust Law that would stand for the proposition that where an asset was not conveyed to a trust under the controlling terms of the trust’s governing document, that this would witness a “voidable” assignment, especially where such
conveyance purportedly took place to create the trust, and where here under the peculiar dictates of the individual Governing Instrument in question, the beneficial owners lacked any legal authority to
“ratify” any such act,.
2. The Historical Decisions From The Appellant Trust Regarding Borrowers Reliance Upon The “PSA” Indisputably Advanced Different Legal
Theory And Claims For Relief, Nowhere Alleged
By Defendant
Plaintiff-Appellant’s case law decisions that it relies upon claiming to refute the Housing Court’s decision, include; Woods v. Wells Fargo Bank, N.A.,
733 F.3d.349, 354 (1st. Cir. 2013), Wilson v. HSBC
Mortgage Servcs., Inc., 744 F.3d, 1, 10 (1st. Cir.
2014), Culhane v. Aurora Loan Servcs of Neb., 708 F.3d. 282, 291 (2013), Butler v. Deutsche Bank Trust co. Americas, 748 F.3d. 28, 37 (1st cir. 2014).
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These cases are founded upon legal theory and allegation raised by other borrowers in these cited matters, which are completely distinct from the basis of the Housing Court’s decision. The genesis of the Securitized Trusts’ citations have held that a borrower “lacks standing” to “enforce” the PSA, is from the citation in Woods, at n. 4, which cites to solely to In re Gifty Samuels, 415 B.R. 8, 22 (B.A.P. 2009), [incorrectly captioned as Koufos v. U.S. Bank, N.A.].
The Plaintiff Trustee’s attempts to discredit the Housing Court’s finding in favor of Bolling, are mistakenly based upon arguing that these other cases stood for the proposition that borrowers lacked the legal standing to attack a mortgage foreclosure based upon claimed deficiencies under a PSA, regarding an assignment of mortgage and that based upon these case law citations, any issue with the assignment would render it merely voidable at the election of the parties to the transaction as opposed to being void. Rather, these other case law citations, involved completely different allegations and claims [as they sought relief based upon injury to third parties, see
Samuels, at p. 22]. However, unlike Samuels [and its
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progeny], Bolling never made these same allegations regarding the PSA. Indeed, none of these matters cited to by Plaintiff, ever considered, discussed, or even examined pleadings making the precise argument as advanced by Defendant.
In particular, Plaintiff Trust’s citations are based upon other borrower allegations and attempt to erase clearly distinguishable claims and to treat all borrowers as advancing precisely the same legal theory and allegation regarding the PSA.
For example in Wilson v. HSBC Mortg. Servs., Inc., 744 F.3d 1, 7-14 (1st Cir. 2014), the first circuit made a specific examination of the
plausibility of Wilson’s pleadings in particular5:
“The reasoning behind the Wilsons’ argument that the 2009 Assignment is void runs as follows: Strauss is an employee of HSBC; Strauss executed the 2009 Assignment; when Strauss executed the assignment, she did so as an employee of HSBC; therefore, MERS never assigned the mortgage to HSBC. The Wilsons’ own Complaint, however, flatly contradicts this position, as it explicitly alleges that “[t]he March 19, 2009 assignment from MERS to [HSBC] was executed by Shelene Strauss, as Vice President of MERS.” Thus, the Complaint actually alleges that Strauss wore multiple hats, serving both as an employee of HSBC and an officer of MERS. Significantly, the Complaint does not allege that such dual agency violates the common
.5 See Wilson also at pp. 10-11; “The parties, having taken standing for granted with respect to the 2009 Assignment, have not presented any extensive argument with respect to that issue”.
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law or any statute or applicable regulation. Accordingly, the facts set forth in the Complaint actually describe a valid assignment from MERS to HSBC. While this defective pleading is likely enough on its own to doom the Wilsons’ first six counts, it is not the only thing we have to go on. We also have available for consideration the text of the 2009 Assignment. According to the Wilsons, “there is no indication that Ms. Straus[s] executed the assignment with purported authority from MERS.” This statement is simply incorrect: the 2009 Assignment clearly identifies MERS as the assignor and HSBC as the assignee.”
Unlike Wilson’s allegations above, Bolling’s allegation regarding the Governing Instrument for the Plaintiff Express Trust; clearly does not
speculatively attack any signatory authority on an assignment to support its voidness, but rather the specific trust law legal theory that Bolling relies upon a void, not voidable, assignment.
Additionally, the controlling terms of the Governing Instrument PSA, clearly identify that it was the title of Depositor to the mortgage loans that was sold to the Defendant Trustee that would become the legally held corpus assets of the Trust, see at Section 2.01(a) [SA051]. The Depositor is indisputably defined as Residential Asset Securities Corporation [SA007, at para. Above “Preliminary Statement”]. Thus, the Pooling and Servicing Agreement provides indisputable evidence of the strictly-required,
3 Even pre-Eaton, the SJC found that a mortgage holder singly could not undertake any affirmative autonomous act, nas such purported entity would only act in a reversionary trust capacity, see Eaton, at n. 10.
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purported intermediate transfers of the title to the Plaintiff’s mortgage, which never took place on or by the temporal date certain the date “Closing Date”, as correctly identified by the Housing Court Judge.
Specifically, where utilizing the statutory remedy under G.L. c. 244, §14, where Defendant proffered no legally tangible indicia that the Trust was ever legally possessed of any legal ownership of Defendant’s mortgage and note, as legally held corpus assets of the “Trust Fund”, the Plaintiff Trustee is indisputably left in want of being in contractual privity with Defendant, and therefore precluded from utilizing the statutory remedy under G.L. c. 244, §14, and G.L.
c. 183, §21. Should the Plaintiff Trustee seek to rely upon decisional case law indicating that the “beneficial owners of the Trust could always later “ratify” and Ultra Vires act by the Trustee, Section 11.03(b); unlike previous PSA examinations before other judicial tribunals, the particular and peculiar PSA before the Housing Court contains specific controlling terms affirmatively stating there is a “Limitation of Rights of the Certificateholder” beneficial owners, precluding them from engaging in or; “in any manner otherwise control the operation or management of the Trust Fund, or the obligations of the parties thereto” [SA 101]. Thus, the Plaintiff Trustee cannot rely upon previous decisional case law opining that the “beneficial owners could always later “ratify” any act of the Trustee, is not applicable to the instant PSA, under the above referenced limitation terms. Further, Section 11.04, indisputably avers that the Governing Law to be applied to the Governing Instrument controlling terms is indisputably New York Law, [SA101], To drive the point home that in fact this is a Governing Instrument of a Trust, and not a “contract among the parties thereto, please reference the PSA at Article X, at (a)(2)
“provided however that in no event shall the trust created hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late
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ambassador of the United States to the Court of St. James, living on the date hereof…” [SA094].
Thus, the Housing Court Judge’s findings in this matter indisputably does not make any finding that the Plaintiff seeks to “enforce the PSA”, and arguments otherwise made by Defendant otherwise are disingenuous at best
Thus, where it was the title of the Depositor to the mortgage loans that was to form the legally held corpus assets of the Plaintiff Trust, this would make the Depositor the “Settlor” of the Trust. The PSA requires a temporal date certain for a legal conveyance of assets to the Trust, such that the same would become legally held corpus assets constituting part of the “Trust Fund”. Pursuant to the terms of the Governing Instrument,
The controlling terms of the Trust’s Governing
Instrument defines the “Closing Date”, as October 27, 2006.
The SJC has definitively stated that where a foreclosing claimant relies upon a PSA to have “assigned” title, it must be shown that the entity purporting to “assign” such title [the “Depositor”]
the Court specifically references the following:
“Where a pool of mortgages is assigned to a securitized trust, the executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder. However, there must be proof that the assignment was made by a party that itself held the mortgage. See In re Samuels, 415 B.R. 8, 20 (Bankr. D. Mass. 2009).”
As the basis for the above referenced statement, the SJC stated that with regard to the Ibanez loan, that even if the Bank Trustee had provided a “Mortgage
Loan Schedule”, with the required information
[notating those borrowers names and addresses], the Bank Trustee failed to produce any document that supported the fact that the Depositor ever held the mortgage to be assigned;
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“Finally, even if there were an executed trust agreement with the required schedule, U.S. Bank failed to furnish any evidence that the entity assigning the mortgage — Structured Asset Securities Corporation — ever held the mortgage to be assigned.” Ibanez, at 650.
With respect to the LaRace mortgage, the SJC stated:
“Turning to the LaRace mortgage, Wells Fargo claims that, before it issued the foreclosure notice, it was assigned the LaRace mortgage under the PSA.. Moreover, Wells Fargo provided the judge with no document that reflected that the ABFC (depositor) held the LaRace mortgage that it was purportedly assigning in the PSA.” Ibanez, at 650
In the matter before this Court, Plaintiff
Trustee failed to provide any evidence that Residential Asset Securities Corporation (Depositor) ever held the mortgage that it purported to convey under the Governing Instrument of the Plaintiff Trust, which the Housing Court properly recognized. Unlike Plaintiff-Appellant’s incorrect argument otherwise; the Housing Court wisely did not rely upon the mere fact that assignments were recorded to establish their legal sufficiency. Such sole reliance upon the recordation of a purported “assignment” establishes no legal validity as the recorded assignments indisputably facially contradict the requirements of the Plaintiff Trust’s Governing
Instrument related to a legal conveyance of assets to
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the Trust. Further, the SJC has definitively opined that recordation upon a registry of deeds is for notice purposes only, and cannot in any manner establish the legal validity of the document in question, see Bevilacqua v. Rodriguez, 460 Mass. 762,
771 (2011)
“there is nothing magical in the act of recording an instrument with the registry that invests an otherwise meaningless document with legal effect. See S & H Petroleum Corp. v. Register of Deeds for the County of Bristol, 46 Mass. App. Ct. 535 , 537 (1999) (“The function of a registry of deeds is to record documents. It is essentially a ministerial function . . .”). Recording may be necessary to place the world on notice of certain transactions. See, e.g., G. L. c. 183, § 4 (leases and deed); G. L. c. 203, §§ 2-3 (trust documents). Recording is not sufficient in and of itself, however, to render an invalid document legally significant. See Arnold v. Reed, 162 Mass. 438 , 440 (1894); Nickerson v. Loud, 115 Mass. 94 , 97-98 (1874) (“mere assertions . . . whether recorded or unrecorded, do not constitute a cloud upon title, against which equity will grant relief”). As a result, it is the effectiveness of a document that is controlling rather than its mere existence. See Bongaards v. Millen, 440 Mass. 10 , 15 (2003) (where grantor lacks title “a mutual intent to convey and receive title to the property is beside the point”). The effectiveness of the quitclaim deed to Bevilacqua thus turns, in part, on the validity of his grantor’s title. Accordingly, a single deed considered without reference to its chain of title is insufficient to show “record title” as required by G. L. c. 240, § 1.” Bevilacqua at 771
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As the SJC established in Ibanez; a purported “assignment” on the Registry of Deeds that is recorded and executed before a notary public, therefore appearing facially valid, – can still be found to be a legally inoperative document, due of non-compliance with the terms of the PSA, and therefore be void by operation ab initio, see Ibanez, at p. 650:
Turning to the LaRace mortgage, Wells Fargo claims that, before it issued the foreclosure notice, it was assigned the LaRace mortgage under the PSA. The PSA, in contrast with U.S. Bank’s PPM, uses the language of a present assignment (“does hereby . . . assign” and “does hereby deliver”) rather than an intent to assign in the future. But the mortgage loan schedule Wells Fargo submitted failed to identify with adequate specificity the LaRace mortgage as one of the mortgages assigned in the PSA. Moreover, Wells Fargo provided the judge with no document that reflected that the ABFC (depositor) held the LaRace mortgage that it was purportedly assigning in the PSA
In the context of a post foreclosure challenge to the exercise of the statutory remedy by a foreclosing claimant, Ibanez established that the foreclosing entity bore the burden to demonstrate the validity of the foreclosure auction sale upon which its purported claim to superior title rested, see Ibanez, at p. 645. The First Circuit stated that a borrower such as Bolling has “standing” to challenge an assignment that is void, and that
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“a Massachusetts mortgagor would be deprived of a means to assert her legal protections without having standing to sue.” See Culhane at p. 290
Additionally, Bolling as a party to our Commonwealth’s constitution has a declared right to the protection of her rights to life, liberty and property under such laws under articles I, and X, and the protection of those rights through our Courts under articles XI and XII, as well as her protections under the United
States Constitution.
1. In Addition To The Housing Court’s Findings
Related To New York Law, Long Standing And Well
Established General Trust Law Theory Supports
Bolling’s Allegation That The Recorded
Assignments That The Plaintiff Trustee Relies Upon Are Indisputably Void As Bolling Did Not
Allege That She Sought To “Enforce” The PSA
The Plaintiff Trust’s Governing Instrument PSA controlling terms clearly recite that the term
“Closing Date” is defined as October 27, 2006 [SA022]. At Section 2.03(b) of the PSA Governing Instrument, the controlling terms clearly state that the “Depositor” [Residential had good title to, and was the sole owner of, each mortgage loan [including Plaintiff’s] [SA054]. The Controlling terms also state that there is only a two year exception period
“following the Closing Date” (defined as October 27,
2006), to transfer any additional mortgage loan not
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conveyed to the Defendant Trustee at the “Closing Date”, see {SA054-SA055], SEE ALSO AT Section 2.04 [SA055]. See Article X, AT Section 10.01 (m)(iv), which specifically states that the Trustee cannot purchase any Mortgage Loan under Article II or Article III of the PSA, after the “Closing Date”, unless it would not adversely affect the Status of any REMIC created under the PSA, see [SA099]. Further, at “Section 2.03, the controlling terms of the Trust clearly identify that “on or prior to the Closing Date the Custodian shall deliver to the Trustee and Initial
Certification in the form annexed hereto at Exhibit One evidencing receipt of each Custodial file for each Mortgage Loan” [SA123]. Custodial File is defined under the controlling terms as “Any Mortgage Loan document in the Mortgage File that is required to be delivered to the Trustee or the Custodian pursuant to Section 2.01(b) of this Agreement”, [SA022]. Section 2.01(b) states that the required documents required thereunder consist of; 1) the original Mortgage Note,
2) the original Mortgage, 3) the assignment, (v)(c)(b) “if MERS is identified on the mortgage or on a properly recorded assignment of the mortgage, as applicable, as the mortgagee of record solely as
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nominee for Residential Funding, its successors and Asigns. The Assignment that Defendant purport to rely upon, indisputably avers that MERS [autonomously]
“assigned” the Plaintiff’s Mortgage [singly] to the Defendant Trustee on April 22, 2010.3 There can be no dispute that such purported transfer contravened the above temporal limitations set forth by the
controlling terms as to “Closing Date” of October 27, 2006, and such purported “assignment” also does not fall within the two year exception date for such addition to the Trust corpus, making the assignment indisputably void, not “voidable”.
Indeed, in U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637 (2011), the Supreme Judicial Court specifically addressed requirements that must be established for an entity that is claiming as a “securitized trust” and seeks to utilize the statutory remedy under G.L. c. 244, §14. At p. 649 of Ibanez the SJC makes the prescient observation:
“Like a sale of land itself, the assignment of a mortgage is a conveyance of an interest in land that requires a writing signed by the grantor. See G. L. c. 183, § 3; Saint Patrick’s Religious, Educ. & Charitable Ass’n v. Hale, 227 Mass. 175 , 177 (1917). In a “title theory state” like Massachusetts, a mortgage is a transfer of legal title in a property to secure a debt. See Faneuil Investors Group, Ltd. Partnership v. Selectmen of Dennis, 458 Mass. 1 , 6 (2010). ….. Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.” Ibanez at p. 649
Further, while Ibanez involved Plaintiff Bank Trustees seeking to Quiet Title, the SJC clearly stated that
“There is no question that the relief the plaintiffs sought required them to establish the validity of the foreclosure sales on which their claim to clear title rested.”
Ibanez, at 645
The above standard is precisely what the Plaintiff
Trustee’s burden was before the Housing Court
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It is also beyond dispute that the statutory foreclosure process in this Commonwealth is deemed “initiated” at the time of the first publication of auction sale, and therefore whereas here the Plaintiffs published the auction [and have now subsequently held the auction sale], the Defendant therefore had to establish that it had at that point the “jurisdiction and authority” to foreclose by the power of sale. In Ibanez at p. 651 of that holding, the Court specifically references the following:
“Where a pool of mortgages is assigned to a securitized trust, the executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder. However, there must be proof that the assignment was made by a party that itself held the mortgage. See In re Samuels, 415 B.R. 8, 20 (Bankr. D. Mass. 2009).”
As the basis for the above referenced statement, the SJC stated that with regard to the Ibanez loan, that even if the Bank Trustee had provided a “Mortgage
Loan Schedule”, with the required information
[notating those borrowers names and addresses], the Bank Trustee failed to produce any document that supported the fact that the Depositor ever held the mortgage to be assigned;
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“Finally, even if there were an executed trust agreement with the required schedule, U.S. Bank failed to furnish any evidence that the entity assigning the mortgage — Structured Asset Securities Corporation — ever held the mortgage to be assigned.” Ibanez, at 650.
With respect to the LaRace mortgage, the SJC stated:
“Turning to the LaRace mortgage, Wells Fargo claims that, before it issued the foreclosure notice, it was assigned the LaRace mortgage under the PSA.. Moreover, Wells Fargo provided the judge with no document that reflected that the ABFC (depositor) held the LaRace mortgage that it was purportedly assigning in the PSA.” Ibanez, at 650
In the matter before this Court, Plaintiff
Trustee failed to provide any evidence that Residential Asset Securities Corporation (Depositor) ever held the mortgage that it purported to convey under the Governing Instrument of the Plaintiff Trust, which the Housing Court properly recognized. Unlike Plaintiff-Appellant’s incorrect argument otherwise; the Housing Court wisely did not rely upon the mere fact that assignments were recorded to establish their legal sufficiency. Such sole reliance upon the recordation of a purported “assignment” establishes no legal validity as the recorded assignments indisputably facially contradict the requirements of the Plaintiff Trust’s Governing
Instrument related to a legal conveyance of assets to
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24
the Trust. Further, the SJC has definitively opined that recordation upon a registry of deeds is for notice purposes only, and cannot in any manner establish the legal validity of the document in question, see Bevilacqua v. Rodriguez, 460 Mass. 762,
771 (2011)
“there is nothing magical in the act of recording an instrument with the registry that invests an otherwise meaningless document with legal effect. See S & H Petroleum Corp. v. Register of Deeds for the County of Bristol, 46 Mass. App. Ct. 535 , 537 (1999) (“The function of a registry of deeds is to record documents. It is essentially a ministerial function . . .”). Recording may be necessary to place the world on notice of certain transactions. See, e.g., G. L. c. 183, § 4 (leases and deed); G. L. c. 203, §§ 2-3 (trust documents). Recording is not sufficient in and of itself, however, to render an invalid document legally significant. See Arnold v. Reed, 162 Mass. 438 , 440 (1894); Nickerson v. Loud, 115 Mass. 94 , 97-98 (1874) (“mere assertions . . . whether recorded or unrecorded, do not constitute a cloud upon title, against which equity will grant relief”). As a result, it is the effectiveness of a document that is controlling rather than its mere existence. See Bongaards v. Millen, 440 Mass. 10 , 15 (2003) (where grantor lacks title “a mutual intent to convey and receive title to the property is beside the point”). The effectiveness of the quitclaim deed to Bevilacqua thus turns, in part, on the validity of his grantor’s title. Accordingly, a single deed considered without reference to its chain of title is insufficient to show “record title” as required by G. L. c. 240, § 1.” Bevilacqua at 771
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As the SJC established in Ibanez; a purported “assignment” on the Registry of Deeds that is recorded and executed before a notary public, therefore appearing facially valid, – can still be found to be a legally inoperative document, due of non-compliance with the terms of the PSA, and therefore be void by operation ab initio, see Ibanez, at p. 650:
Turning to the LaRace mortgage, Wells Fargo claims that, before it issued the foreclosure notice, it was assigned the LaRace mortgage under the PSA. The PSA, in contrast with U.S. Bank’s PPM, uses the language of a present assignment (“does hereby . . . assign” and “does hereby deliver”) rather than an intent to assign in the future. But the mortgage loan schedule Wells Fargo submitted failed to identify with adequate specificity the LaRace mortgage as one of the mortgages assigned in the PSA. Moreover, Wells Fargo provided the judge with no document that reflected that the ABFC (depositor) held the LaRace mortgage that it was purportedly assigning in the PSA
In the context of a post foreclosure challenge to the exercise of the statutory remedy by a foreclosing claimant, Ibanez established that the foreclosing entity bore the burden to demonstrate the validity of the foreclosure auction sale upon which its purported claim to superior title rested, see Ibanez, at p. 645. The First Circuit stated that a borrower such as Bolling has “standing” to challenge an assignment that is void, and that
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“a Massachusetts mortgagor would be deprived of a means to assert her legal protections without having standing to sue.” See Culhane at p. 290
Additionally, Bolling as a party to our Commonwealth’s constitution has a declared right to the protection of her rights to life, liberty and property under such laws under articles I, and X, and the protection of those rights through our Courts under articles XI and XII, as well as her protections under the United
States Constitution.
1. In Addition To The Housing Court’s Findings
Related To New York Law, Long Standing And Well
Established General Trust Law Theory Supports
Bolling’s Allegation That The Recorded
Assignments That The Plaintiff Trustee Relies Upon Are Indisputably Void As Bolling Did Not
Allege That She Sought To “Enforce” The PSA
The Plaintiff Trust’s Governing Instrument PSA controlling terms clearly recite that the term
“Closing Date” is defined as October 27, 2006 [SA022]. At Section 2.03(b) of the PSA Governing Instrument, the controlling terms clearly state that the “Depositor” [Residential had good title to, and was the sole owner of, each mortgage loan [including Plaintiff’s] [SA054]. The Controlling terms also state that there is only a two year exception period
“following the Closing Date” (defined as October 27,
2006), to transfer any additional mortgage loan not
27
27
conveyed to the Defendant Trustee at the “Closing Date”, see {SA054-SA055], SEE ALSO AT Section 2.04 [SA055]. See Article X, AT Section 10.01 (m)(iv), which specifically states that the Trustee cannot purchase any Mortgage Loan under Article II or Article III of the PSA, after the “Closing Date”, unless it would not adversely affect the Status of any REMIC created under the PSA, see [SA099]. Further, at “Section 2.03, the controlling terms of the Trust clearly identify that “on or prior to the Closing Date the Custodian shall deliver to the Trustee and Initial
Certification in the form annexed hereto at Exhibit One evidencing receipt of each Custodial file for each Mortgage Loan” [SA123]. Custodial File is defined under the controlling terms as “Any Mortgage Loan document in the Mortgage File that is required to be delivered to the Trustee or the Custodian pursuant to Section 2.01(b) of this Agreement”, [SA022]. Section 2.01(b) states that the required documents required thereunder consist of; 1) the original Mortgage Note,
2) the original Mortgage, 3) the assignment, (v)(c)(b) “if MERS is identified on the mortgage or on a properly recorded assignment of the mortgage, as applicable, as the mortgagee of record solely as
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28
nominee for Residential Funding, its successors and Asigns. The Assignment that Defendant purport to rely upon, indisputably avers that MERS [autonomously]
“assigned” the Plaintiff’s Mortgage [singly] to the Defendant Trustee on April 22, 2010.3 There can be no dispute that such purported transfer contravened the above temporal limitations set forth by the
controlling terms as to “Closing Date” of October 27, 2006, and such purported “assignment” also does not fall within the two year exception date for such addition to the Trust corpus, making the assignment indisputably void, not “voidable”.
Additionally, the controlling terms of the Governing Instrument PSA, clearly identify that it was the title of Depositor to the mortgage loans that was sold to the Defendant Trustee that would become the legally held corpus assets of the Trust, see at Section 2.01(a) [SA051]. The Depositor is indisputably defined as Residential Asset Securities Corporation [SA007, at para. Above “Preliminary Statement”]. Thus, the Pooling and Servicing Agreement provides indisputable evidence of the strictly-required,
3 Even pre-Eaton, the SJC found that a mortgage holder singly could not undertake any affirmative autonomous act, nas such purported entity would only act in a reversionary trust capacity, see Eaton, at n. 10.
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purported intermediate transfers of the title to the Plaintiff’s mortgage, which never took place on or by the temporal date certain the date “Closing Date”, as correctly identified by the Housing Court Judge.
Specifically, where utilizing the statutory remedy under G.L. c. 244, §14, where Defendant proffered no legally tangible indicia that the Trust was ever legally possessed of any legal ownership of Defendant’s mortgage and note, as legally held corpus assets of the “Trust Fund”, the Plaintiff Trustee is indisputably left in want of being in contractual privity with Defendant, and therefore precluded from utilizing the statutory remedy under G.L. c. 244, §14, and G.L.
c. 183, §21. Should the Plaintiff Trustee seek to rely upon decisional case law indicating that the “beneficial owners of the Trust could always later “ratify” and Ultra Vires act by the Trustee, Section 11.03(b); unlike previous PSA examinations before other judicial tribunals, the particular and peculiar PSA before the Housing Court contains specific controlling terms affirmatively stating there is a “Limitation of Rights of the Certificateholder” beneficial owners, precluding them from engaging in or; “in any manner otherwise control the operation or management of the Trust Fund, or the obligations of the parties thereto” [SA 101]. Thus, the Plaintiff Trustee cannot rely upon previous decisional case law opining that the “beneficial owners could always later “ratify” any act of the Trustee, is not applicable to the instant PSA, under the above referenced limitation terms. Further, Section 11.04, indisputably avers that the Governing Law to be applied to the Governing Instrument controlling terms is indisputably New York Law, [SA101], To drive the point home that in fact this is a Governing Instrument of a Trust, and not a “contract among the parties thereto, please reference the PSA at Article X, at (a)(2)
“provided however that in no event shall the trust created hereby continue beyond the expiration of 21 years from the death of the last survivor of the descendants of Joseph P. Kennedy, the late
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ambassador of the United States to the Court of St. James, living on the date hereof…” [SA094].
Thus, the Housing Court Judge’s findings in this matter indisputably does not make any finding that the Plaintiff seeks to “enforce the PSA”, and arguments otherwise made by Defendant otherwise are disingenuous at best
Thus, where it was the title of the Depositor to the mortgage loans that was to form the legally held corpus assets of the Plaintiff Trust, this would make the Depositor the “Settlor” of the Trust. The PSA requires a temporal date certain for a legal conveyance of assets to the Trust, such that the same would become legally held corpus assets constituting part of the “Trust Fund”. Pursuant to the terms of the Governing Instrument,
The controlling terms of the Trust’s Governing
Instrument defines the “Closing Date”, as October 27, 2006.
The SJC has definitively stated that where a foreclosing claimant relies upon a PSA to have “assigned” title, it must be shown that the entity purporting to “assign” such title [the “Depositor”]
the SJC found that the historical ratio decidendi, and legislative intent was that to meet the statutory definition of the term “mortgagee” there must be a connection to the note and mortgage. Another incorrect “theory” advanced by the financial bar for the better part of a decade was that a borrower “lack standing to challenge an assignment of mortgage”. However, when this issue was squarely presented to the U.S. Court of Appeals for the First Circuit, that Court found that this “theory” could not stand muster where an assignment was “void”, as a Massachusetts mortgagor finds herself in a unique position, that would leave her without any ability to defend the title to her home, if not able to question an entity without contractual standing to utilize an extra judicial remedy,
“As applied here, these considerations raise a potential question as to whether the plaintiff’s standing is jeopardized by the prudential concern that a litigant should not normally be permitted to assert the rights and interests of a third party. With this in mind, several courts have ruled that mortgagors lack standing to challenge mortgage assignments because they are neither parties to nor third-party beneficiaries of the assignments. See, e.g., Oum, 842 F.Supp.2d at 413 (citing Edelkind v. Fairmont Funding, Ltd., 539 F.Supp.2d 449, 453-54 (D.Mass.2008)); Wenzel v. Sand Canyon Corp., 841 F.Supp.2d 463, 477-78 (D.Mass.2012). We think that these cases paint with too broad a brush. It is true that a nonparty who does not benefit from a contract generally
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lacks standing to assert rights under that contract. See, e.g., Almond v. Capital Props., Inc., 212 F.3d 20, 24 & n. 4 (1st Cir.2000); Cumis
Ins. Soc’y, Inc. v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 918 N.E.2d 36, 44 (2009). But a Massachusetts real property mortgagor finds herself in an unusual position because of two key facts. First, as explained below, a Massachusetts mortgagor has a legally cognizable right under state law to ensure that any attempted foreclosure on her home is conducted lawfully. See G.L. c. 183, §21; id. G.L. c. 244, § 14. Second, where (as here) a mortgage contains a power of sale, Massachusetts law permits foreclosure without prior judicial authorization. See Eaton, 969 N.E.2d at 1127. Thus — unlike an ordinary debtor who could challenge an assignment as a defense upon being hauled into court by the assignee seeking to collect on her debt, see 6A C.J.S. Assignments § 132 (2012) — a Massachusetts mortgagor would be deprived of a means to assert her legal protections without having standing to sue. As such, we hold only that Massachusetts mortgagors, under circumstances comparable to those in this case, have standing to challenge a mortgage assignment. Culhane v. Aurora Laon
Services of Nebraska, 708 F. 3d. 282, 290 (2013)
The above reasoning applies with equal force to claims made under a PSA, where the failure to transfer assets under the controlling terms of this Trust Governing Instrument creates a void [not ”voidable”] assignment, and thus represents a challenge “qua mortgagee”. Indeed, Culhane was correctly cited to and relied upon by the Housing Court Judge, where formulating his well reasoned and legally sound decision, related to the
PSA
A. THE SJC IN IBANEZ CLEARLY SPOKE TO THE PRECISE
ISSUE PRESENTED TO THIS COURT REGARDING THE PSA
COMMONWEALTH OF MASSACHUSETTS
COURT OF APPEALS
NO. 2015-P-1259
U.S. BANK, N.A., AS TRUSTEE FOR RASC 2006KS9
Plaintiff-Appellant
V.
WENDY BOLLING
Defendant – Appellee
ON APPEAL FROM A FINAL JUDGMENT OF
THE WESTERN HOUSING COURT
APPELLEE’S OPENING BRIEF
______________________________________________________
every one go and read this case, homeowners have right to challenge th epsa and assignments, to it being void on a securited mortgage trust.
Administrators of the LIVING ESTATES .
The Secured Party Creditors Bond
Administrators of the Estates.
People are Waking Up……
Many Blessings to All
Come on then Organize and be willing to take to the streets,if it wasnt for the occupy folks the phony settlement would have never even been thought about.
If you have trouble clicking on the radio blog – just call the telephone number and put it on speaker. So worth it.
Tuesday 21 June 2016
Is anyone else unable to listen to the last Garfield radio show? Clicking
on the radio blog does not start the program for me.
tia…
I use to think they 3 percent down was just nuts. I have changed my mind. The way banks operate these days, stealing homes by putting people into lians they can’t afford . …..why in heck should they put any money in the game until the Government puts a stop to the Big Bsn KS evil ways. Tired of people losing their life savings over Big Bank fraud.
Obviously I’m going to need a new career because I’m just not comfortable anymore or leading the Lambs to slaughter. I too wish we would rise up and stop this insanity but it’s even more frustrating knowing we could we just choose not to.
No help will be forthcoming from the alleged government. The DoJ does not do its job and neither does the SEC. I hope the currency reset kicks them in the butt.
Reblogged this on Deadly Clear and commented:
Amen. And they won’t change until the computer software and patents have been seized and destroyed.
Amen to all this and just how crazy our world has become. They have every incentive they need, knowing they are too big to fail, that the CFPB is a complete joke, most congress people are bought off and turning a deaf ear, the USDOJ is totally inept and detached from all this now that they got a minimal settlement out of nasty old B of A in late 2014 that money NOT going to help property owners, but special projects in bad neighborhoods that the current administration wants to sink money into for more votes, and we all know, far too well, the corrupt court systems across the US and really terrible states like Colorado where Democrats passed the Rule 120 to take away ALL of us property owners rights for any kind of standing- yes they are indeed again on a roll and look where all the blame will fall!!
My question (s) are where is all the money they got in bailouts (help) at our expense, and all the supposed settlements that were supposed to help all us property owners- indeed they have quite a scam that appears (emphasis on appears) to be bullet proof because of our very corrupt political system. Sure a terrible thing to sit on the sidelines and watch, while also being a giant victim. We must ALL bank together and get all the help we can to gain momentum. Semper FI.