The thousands of trial court and appellate decisions that have hung their hat on illegal assignments being “voidable” demonstrates either a lack of understanding of common law business trusts or an adherence to a faulty doctrine in which homeowners pay the price for fraudulent bank activities.
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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Some of the problems might be in the presentation of evidence, failures to object and failure to move to strike evidence or testimony. But most of it deals with the inability of lawyers and the Courts to pierce the veil of uncertainty and complexity with which the banks have covered their fraudulent tracks.
Here are the reasons the assignment might be void. No self-serving newly invented doctrine can overcome the failure of an illegal assignment.
- Common Law Trusts are almost always formed under New York State law that allows unregistered trusts to be created for business purposes. Any act in contravention of the express provisions of the trust instrument (usually the Pooling and Servicing Agreement) is void, not voidable. It cannot be revived through ratification — especially when there is nobody around to change the trust instrument, thus ratifying the void act.
- Many if not most assignments are fabricated for foreclosure and either nonexistent or backdated to avoid the fact that the assignment is void when it is fabricated — years after the so-called trust was described in a trust instrument that is rarely complete because no mortgage loan schedule at the time of the drafting of what is in most cases an incomplete trust instrument.
- Assignments are clearly void and not entitled to any presumptions under the UCC if they are dated after the loan was declared in default (albeit by a party who had no right to declare a default much less enforce the debt or obtain a forced sale of homestead and other residential properties) schedule existed at the time of the drafting of the trust instrument. The application of UCC presumptions after the alleged date of default is simply wrong.
- The fact that an instrument COULD be ratified does not mean that it WAS ratified. What is before the court is an illegal act that has not been ratified. The possibility that the parties to the trust instrument (trustor, trustee, beneficiaries) could change the instrument to allow the illegal act AND apply it retroactively is merely speculative — and against all legal doctrine and common sense. These courts are ruling on the possibility of a nonexistent act that without analysis of the trust instrument, is declared to be possibly subject to “ratification.”
- Assuming the trust even exists on paper does not mean that it ever entered into an actual transaction in which it acquired the “loan” which means the debt, note and mortgage.
- Any “waiver” or “ratification” would result in the loss of REMIC status under the terms of the Internal Revenue Code. No rational beneficiary would ratify the act of accepting even a performing loan after the cutoff period. To do so would change the nature of the trust from a REMIC vehicle entitled to pass through tax treatment. Hence even if the beneficiaries were entitled to change, alter, amend or modify the trust instrument they would be firing a tax bullet into their own heads. Every penny received by a beneficiary would be then be taxed as ordinary income including return of principal.
- No rational beneficiary would be willing to change the trust instrument from accepting only properly underwritten performing loans to loans already declared in default.
- No Trustee, or beneficiary has the power to change the terms of the trust or to ratify an illegal act.
- In fact the trust instrument specifically prohibits the trustee and beneficiaries from knowing or even asking about the status of loans in the trust. Under what reasonable scenario could anyone even know that they were getting a non-performing loan outside the 90 day cutoff period.
- The very act of introducing the possibility of ratification where none exists under the trust instrument is the adjudication of rights of senior investors who are not present in court nor given notice of its proceeding. Such decisions are precedent for other defenses and claims in which the trust instrument could be changed to the detriment of the beneficiaries.
Filed under: foreclosure | Tagged: assignments, common law trusts, IRC, IRS, New York LAw, ratification, REMIC TRUST, VOID, VOIDABLE |
On June 16th, 2017, the Tenth Circuit issued in a published opinion, in case no. No. 16-1144, Stanley and Zenaida Pohl a remarkably bad decision on rescission of a predatory, adjustable rate mortgage, which was made appropriately by the plaintiffs under the Guidelines of Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790, 791 (2015).
The Pohls rescinded the agreement within the statutory 3 years required, and Countrywide did not respond within the twenty days to either return the monies that the Pohls gave them, and thereafter reclaim the property, or take the Pohls to court to defend its claim that all the disclosure had been given by the bank.
The reality is that lenders never give all the disclosures in an adjustable rate mortgage. The only good faith estimate of how much the loan cost is made on the initial rate and not on the adjust cost of the loan.
Be that as it may, the Pohls made a perfect rescission would make the deed of trust and promissory note void by operation of law.
In August 2012 the Pohls and a third party filed in Colorado state court a “Complaint to Quiet Title Under C.R.C.P. §105, and Complaint for Reconveyance of Deed of Trust under C.R.S. § 38-39-102 et seq.” Aplt. App., Vol. 3 at 353. They alleged that they had tendered a valid instrument in payment of the note, which U.S. Bank had rejected. U.S. Bank moved for dismissal of that action for failure to state a claim upon which relief could be granted. The state district court granted the motion and dismissed the action.
The Pohls’ bankruptcy case was closed in December 2012. The property was sold in a foreclosure sale in January 2013, with U.S. Bank the highest bidder. The Pohls commenced this action with a pro se complaint in August 2014.
After obtaining counsel, they filed an amended complaint with eight claims. As relevant to this appeal, the first claim sought to rescind the 2013 foreclosure in light of the 2010 notice of intent to rescind the loan transaction. The parties both moved for summary judgment. The district court denied the Pohls’ motion and granted U.S. Bank’s motion. With regard to the first claim, it relied on claim preclusion (res judicata), concluding that the Pohls could have raised in their 2012 Colorado state action their contention that the deed of trust was void due to the 2010 notice of rescission. The Pohls now appeal the judgment on that first claim for relief.
The Tenth Circuit claimed that the Pohls did not raise the issue in the Rule 105 while they were seeking Quiet title. What they forget is that the deed of trust and promissory note were void by operation of the law rendering the state court without subject matter to determine anything other than the quiet title action and validating the Pohl’s claim that the rescission was effective.
The courts cannot make valid what is already void.
Deadly Clear — well put. This case is indicative of the failure of the previous administration to investigate. The 9th Circuit makes assumptions that would be disproved had the mortgage “crisis” been investigated. It was not.
Reblogged this on Deadly Clear and commented:
Assignments are used to hide rehypothecation and other unauthorized actions. Clearly, another episode in unclean hands. KEYSTONE CO. v. EXCAVATOR CO. 290 U.S. 240 (1933):
“The meaning and proper application of the maxim are to be considered. As authoritatively expounded, the words and the reasons upon which it rests extend to the party seeking relief in equity. “It is one of the fundamental principles upon which equity jurisprudence is founded, that before a complainant can have a standing in court he must first show that not only has he a good and meritorious cause of action, but he must come into court with clean hands. He must be frank and fair with the court, nothing about the case under consideration should be guarded, but everything that tends to a full and fair determination of the matters in controversy should be placed before the court.” Story’s Equity Jurisprudence, 14th ed., § 98. 3The governing principle is “that whenever a party who, as actor, seeks to set the judicial machinery in motion and obtain some remedy, has violated conscience, or good faith, or other equitable principle, in his prior conduct, then the doors of the court will be shut against him in limine; the court will refuse to interfere on his behalf, to acknowledge his right, or to award him any remedy.” Pomeroy, Equity Jurisprudence, 4th ed., § 397. This Court has declared: “It is a principle in chancery, that he who asks relief must have acted in good faith. 2The equitable powers of this court can never be exerted in behalf of one who has acted fraudulently or who by deceit or any unfair means has gained an advantage. To aid a party in such a case would make this court the abetter of iniquity.” Bein v. Heath, 6 How. 228, 247. And again: “A court of equity acts only when and as conscience commands, and if the conduct of the plaintiff be offensive to the dictates of natural justice, then, whatever may be the rights he possesses and whatever use he may make of them in a court of law, he will be held remediless in a court of equity.” Deweese v. Reinhard, 165 U.S. 386, 390.
Who is the contract with? If one is not a party to the securitization (PSA) – who is the contract with? Who do you have a contract with? No contract — should be VOID.
After battling for a simple hardship modification with HELLS FARGO as my husband of 30 years was dx’ed w/ appendix cancer In 2009 – my child was just aboded EVICTION PAPERS !
Reblogged this on California freelance paralegal.
This may not be the proper place to leave this question, but maybe someone who reads this blog can assist in answering it anyway. While reviewing available documents… in particular, an Asset-Backed Issuer Distribution Report –Form 10-D –filed with the SEC ,I found oodles of New Century Mortgage Corporation account numbers and loan characteristics. Every single one of these loans (despite not maturing for 30 years) had a status of “paid in full”. What does this entry actually signify?