The Navarro case clearly explains the difference between a naked trustee who cannot sue or be sued in their own name and a real trustee who can. The answer is common sense — the trustee is naked if it is there in name only, like all REMIC Trustees where control, knowledge and accountability are removed from their “position” as trustee.

Quote from Deposition of John G Richards II, as corporate representative of US Bank [vice president at U.S. Bank within
13 the global corporate trust services group

Q: Do you manage Chase as the servicer of the trust?

A: I would not describe that there is any kind of management or oversight role by the trustee of a servicer in this trust or any other.

Hat tip to Bill Paatalo for depo transcript

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Hat tip Dan Edstrom

see Role-of-Trustee-Sept2013OCC_Letter_

Trustees_Do_NOT_own_Loans – Int1016

Navarro v Lee – Trust Type and Person Status 1980 US Supreme Crt

We conclude that these respondents are active trustees whose control over the assets held in their names is real and substantial. That the trust may depart from conventional forms in other respects has no bearing upon this determination. Nor does Fidelity’s resemblance to a business enterprise alter the distinctive rights and duties of the trustees.[15] There is no allegation of sham or collusion. [e.s.]See 28 U. S. C. § 1359; Bullard v. Cisco, supra, at 187-188, and n. 5. The respondents are not “naked trustees” who act as “mere conduits” for a remedy flowing to others. McNutt v. Bland, 2 How., at 13-14; see Browne v. Strode, 5 Cranch 303 (1809). They have legal title; they manage the assets; they control the litigation. In short, they are real parties to the controversy. [e.s.] For more than 150 years, the law has permitted trustees who meet this standard to sue in their own right, 466*466 without regard to the citizenship of the trust beneficiaries. We find no reason to forsake that principle today.
This 1980 US Supreme Court case gives us a checklist:
  1.  Does the Trustee have legal title? Grey area when it takes title on behalf of the trust rather than simply in its own name when it is supposedly operating as Trustee.  Better to assume that courts will say they have passed the test of legal title.
  2. Does the Trustee manage the assets? The answer is no. In fact every PSA I have read specifically cuts the Trustee off from any right or duty to manage the alleged “assets” or any right to even know the status of the “assets” — including knowing whether the assets are actually in the trust (i.e., that the assets have been entrusted to the trustee). In other words if US Bank is named as Trustee it has not opened up a Trust account in the name of the trust nor does it even know, much less manage, the assets or status of the assets.
  3. Does the Trustee manage the litigation? The answer is no. Hundreds of foreclosure defense attorneys and hundreds of thousands of pro se litigants learned quickly that they were distracted and diverted to the alleged “servicer” rather than the Trustee who disclaims any interest or knowledge in the litigation.
  4. [Editor note: Does the Trustee have any accountability for what happens in the “trust” and in particular with respect to the subject loan? The answer is no. In fact the PSA (Trust Instrument) specifically indemnifies the Trustee from all accountability for any actions within the “Trust” or any actions ostensibly taken in the name of the “Trust” or “Trustee.” The absence of such accountabiliity corroborates that the existence of a Naked Trustee.]

Thus with numbers 2 and 3 (and 4) off the table, the use of the Trustee’s name becomes merely a veil for the real parties in interest.  When I am negotiating settlement I always demand that the Trustee sign off on the settlement or modification. It NEVER happens. The opposition lawyers get very squirrily when I demand that because they know that their client is an alleged servicer and NOT the named foreclosing party (“Trustee”) with whom they have had no contact. The servicer signs modification agreements as attorney in fact for the named Trustee. Thus the Trustee has not directly or indirectly managed the settlement.

It may seem nuts to make a deal with someone with whom you have no legal relationship regarding a loan they neither own nor legally control through an intermediary (“servicer”) whose right to manage and litigate is derived from a trust instrument (PSA) for a trust that does not exist (no assets). I allow it and advise my clients accordingly in the hope that one day a legislative reset button might be pushed to make certain what is now not only uncertain but unknowable.

Practice Note: If you think about it, reseearch it and analyze it, you will have an aha! moment when you consider an assignment from one naked title holder (like MERS, with no authority —  and public disclaimer of any interest in the loan —  over the alleged loan) to another naked title holder (like a REMIC Trustee, as Trustee, and not on its own behalf —  and public disclaimer of any interest in the loan — for a REMIC Trust that doesn’t exist.) That entire exercise is meant to provide cover for the fact that the original loan documents were false. The loan wasn’t made by any of the parties on the loan documents but rather was funded by diverting money from investors’ expectation of the creation of a trust to the funding of an origination of a residential loan.

11 Responses

  1. Wilmington Christiana nothing Christian about Christiana

  2. Judges tough all over the country. The fraud has been hidden by meaningless “settlements.” Need to take the good and use it. Supreme Court and NY second circuit cases are good.

  3. So in Americold the Supreme Court decision came from the 10th circuit. Whereby the Supreme Court states:

    ““Then as now we reaffirm that it is up to Congress if it wishes to incorporate other entities into 28 U.S.C. §1332(c)’s special jurisdictional.”

    Supreme Court also cites Carden, 494 U.S., at 190, 110 S. Ct. 1015, 1018, 108 L. Ed. 2d 157, 164. Which talks about artificial entities.

    Is the 9th Circuit paying attention?

    GEORGE GEHRON; CHERYL L. GEHRON, Plaintiffs-Appellants, v. CHRISTIANA TRUST, as Trustee of ALRP Trust 4, Erroneously Sued As Wilmington Trust National Association, not in its individual capacity but as Trustee of ARLP Securitization Trust Series 2014-2; OCWEN LOAN SERVICING LLP, Erroneously Sued As Ocwen Loan Servicing LLC, Defendants-Appellees.

    No. 16-55660


    2017 U.S. App. LEXIS 15571

    August 17, 2017, Filed

    The Ninth Circuit states:

    “We have jurisdiction under 28 U.S.C. § 1291”.

    1291 simply states the Court has jurisdiction over final decisions from District Court.

    Second Circuit in case posted by Neil — challenges jurisdiction based on lack of proven diversity. And, cites Americold.

    Do we have more conflict among Circuit Courts even after Americold — or are some judges just not paying attention? Or, maybe just law clerks not reviewing fully. Others things on youngster clerk minds.

    Also when did Ocwen become LLP?? .

    How does a court determine “erroneously sued as”???

  4. And the question is — how artificial is the trust? I think Neil establishes that. The Supreme Court does not acknowledge artificial trusts as a corporation, and, therefore, diversity jurisdiction is in question.

  5. The problem is that loans are assigned to trustee – both in mortgage loan purchase agreements ( which are always just an intent to sell and not a final schedule) , and in individual cases If trustee has no role , the assignment is void. If the trustee cannot establish its role – then there should be diversity jurisdiction challenges to move from or to federal court. This pushes courts against a wall.

  6. Settlements between lenders, trustees and government acknowledging irregularities while covering up naked trusts and working together to continue with unlawful foreclosures then are part of the scam.

  7. @ Neidermeyer

    Explain the facts in a declaration cited to in support of a dispositive motion on the issue, e.g., “a valid sign-off on a deal.”

    You’re in FL, so follow its procedural requirements in order to create an evidentiary record on same.

  8. I SECOND the request for:

    the Deposition of John G Richards II, as corporate representative of US Bank [vice president at U.S. Bank within
    13 the global corporate trust services group]

  9. So, logically applied to a REMIC Trust’s presence as the Beneficiary &/or Real Party in Interest…

    …Any REMIC “trustee” is acting in a post-origination role in the securitization CONDUIT scheme; and generally having no enumerated responsibilities, thus no rights, it CAN NOT claim to have an interest in, nor control of, the REM: The undocumented post-securitzation asset(s) purportedly “owned” by a REMIC Trust’s beneficial investors — following the REMIC “trustee’s” role in the pre-securitization CONDUIT scheme.

    A REMIC “trustee” held no enumerated responsibility beyond a role as a required link in the pre-securitization CONDUIT scheme.

    In all other respects a REMIC “trustee” is acting nekked…


  10. Can we see the Richards transcript?

  11. How do you introduce the inability to get a valid sign-off on a deal to the judge where they will enforce reality on the banks.

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