What’s Good for the Goose is Good for the Gander

Posted on September 18, 2017 by Neil Garfield

In the current judicial bubble, banks and servicers are almost always treated with far more leniency and and given far more leverage than borrowers — through the use of legal presumptions. This case is the exception — with the Maine Supreme Court deciding that Fannie Mae was not a creditor, that the dismissal with prejudice was affirmed, thus permanently barring any further action on a mortgage that was essentially void.

This does not eliminate the debt, but it does render the mortgage void, thus precluding foreclosure as a remedy to collect a debt from the putative borrower. The house is free and clear of the mortgage encumbrance, in this case, but the putative borrower is not free from the debt.

And if a real creditor can be produced (in nearly all cases that is impossible) then the creditor may obtain a judgment against the debtor/borrower that can in many states be enforced with very few homestead protections. Such a scenario is not likely in this or any other case.

As pointed out in our guest article this did NOT result in a “free house” for the borrower; it merely prevented a free house from going to Fannie Mae. The action on the promissory note can still be brought but in order to do that the Plaintiff must have legal standing — i.e., the Plaintiff must assert and prove that it has a financial loss proximately caused by the failure of the Defendant homeowner to repay the loan.

Or, as is the case in most foreclosures, the assertion must be made that the Plaintiff is a holder with the right to enforce. The stumbling block to that assertion has been that in order to show authority to enforce a debt that doesn’t belong to the Plaintiff, it must show that it has received the authority from a party who does own the debt — and not merely another another paper instrument from another party acting as Attorney in Fact, Servicer, agent, or anything else. Courts have almost unformly skipped this part of the proof using factually deficient legal presumptions. The end result is that the court’s legal premise (presumptions and assumptions) is contrary to the actual facts.

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Hat tip to The Gallant Goose for bringing this to my attention

SUPREME COURT OF MAINE SHOVES RES JUDICATA UP FANNIE MAE’S SKIRT AND DECLARES HOMEOWNERS GET CLEAN TITLE TO HOUSE!
ONE-AND-DONE IN MAINE if you didn’t get there already
http://www.courts.maine.gov/opinions_orders/supreme/lawcourt/2017/17me190.pdfMAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 2017 ME 190
Docket: Pen-16-316
Argued: May 12, 2017
Decided: September 7, 2017
Panel: ALEXANDER, MEAD, GORMAN, JABAR, HJELM, and HUMPHREY, JJ.
FEDERAL NATIONAL MORTGAGE ASSOCIATION
v.
PATRICIA W. DESCHAINE et al.III. CONCLUSION
[¶37] In sum, based on the application of the principles articulated in
Johnson to the undisputed facts of this case, Fannie Mae’s 2013 foreclosure
complaint is barred by the judgment dismissing with prejudice its
2011 complaint. The court therefore did not err by granting the Deschaines’
motion for summary judgment on Fannie Mae’s foreclosure complaint.
Additionally, because Fannie Mae is precluded from seeking to recover the
underlying debt on the note, the court did not err by concluding, based on
14 M.R.S. § 6206, that the Deschaines were, as a matter of law, entitled to a
judgment declaring that they hold title to the Lincoln property unencumbered
by the mortgage in favor of Fannie Mae.The entry is: Judgment affirmed.

—————-
by Ken Ditkowsky
The facts of this case are unique.
When Fannie’s original suit was dismissed, the suit was dismissed with prejudice.    Whether the decision was correct or not then became irrelevant when Fannie did not appeal the decision thus leaving every issue in the case determined against them.   The key words were dismissal with prejudice.    Dismissals with prejudice are RARE – ESPECIALLY against semi government agencies.
 *
However, as Fannie, choose to not appeal the dismissal with prejudice all its rights were terminated including the rights under the underlying mortgage – this effectively the entire loan transaction from the chain of title etc.
 *
In the situation wherein the mortgage for some reason is invalid, the underlying mortgage note is still valid and can still be enforced.    It is good to see a Court actually enforcing the law against a quasi government agency.   Do not expect this to happen too often.
 *
The Florida land cases of the year 2005 et al, are cases that should be examined by law enforcement.   (In fact many were, but it was not politically correct to address them honestly and candidly – it exposed not only rampant fraud by lending institutions but by government regulators)
 *
To understand the law, one must read 15 USCA 1701 et seq. and realize that Florida has a long history of INTERSTATE LAND FRAUD.    Indeed, it is legend.
 *
Starting with the Nixon Administration the government became enamored of mass home ownership.   During the Clinton Administration an effort was made by government regulators to obviate any financial criteria for obtaining a loan.  *
Banks were encouraged to make loans to totally unqualified applicants and of course foreclosures were anticipated.    Quasi government agencies recognizing that there was going to be a piper to be paid, cut back on sale of bundled mortgages as the investment community was more astute than the general public and actually read the prospective that was submitted with every investment.
 *
The government regulators put more and more pressure on the Banks to make improper loans reasonably calculated to fail, and offered cash incentives.    In addition clout heavy developers found that with the use of appraisals that were as accurate as three dollar bills they could not only get government funds, but, they could sell condominiums a 300-400% of value.   Banks used various devices to address the worthless loans, but the most common was to bundle the mortgages and sell the bundle to the public.   The Clinton SEC actually wrote me a letter telling me that they had no jurisdiction over these securities.
 *
The hype in the condominium sales, especially in Florida, was incredible and people who should have known better were sucked into the fray with promises of unlimited profits.   It is an embarrassment to indicate or even suggest the names of some of the victims.   Almost zero percent employed attorneys in regard to their condominium investments.
 *
Naturally the market collapsed – in Florida and California long before the rest of the US.   The collapse of the market was not subtle, however, I received a flood of cases.   As every purchase was less than a year old, we sent out mass rescissions as provided for in the act.   The Banks became hysterical as did the developer.   The FBI, the IRS, and FDIC joined in the fray; however, the Political elite became hysterical.    Florida judges were ordered to ignore 15 USCA 1701 and its provisions and foreclosures commenced.    The legal community was very unhappy but the honesty of the FBI, IRS, and FDIC agents made political correctness very difficult and 99% of my clients escaped the high handed collection methods employed by the criminals who populate the lending community, but, stories abound.
 *
The politically correct political elite escaped and more frauds have occurred and are still occurring.    It is nice to know that some judges (such as the judge who entered the dismissal with prejudice) have the integrity to remember the doctrine of UNCLEAN HANDS!   (I spent years fighting these bastards)

Ken Ditkowsky

 

Filed under: foreclosure |

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4 Responses

  1. Stephen Hinkle, on January 19, 2018 at 7:21 am said:

    I think they realized that since they dismissed it with prejudice the first time, the judge ruled that it was illegal to foreclose the second time, which is correct according to the “with prejudice” ruling in the first foreclosure case.

    While the debt still exists, it just means that Fannie Mae will NOT be able to execute foreclosure to collect this debt in the future. Or if they try to, they likely would barred again with the same defense.

    Some real Questions here:

    1) What happens if the Statute of Limitations runs out on this mortgage (as if the borrower never pays another dime) now that the Fannie Mae is barred from Foreclosing? Is the debt dead at this point or become “zombie debt” (in which they can ask for the money all they want but cannot sue for)?

    2) Does this debt become essentially an unsecured loan at this point, since the lender can no longer foreclose on the house to collect it?

    3) If this house is ever sold, would the homeowners be forced to pay back this loan or would the homeowner be able to pocket all the cash of their sale after this ruling?

    4) If this loan were sold to someone else (such as a debt collector or junk debt buyer), could they try foreclosing or would the court likely bar them if this case ruling were brought up in defense?

    5) Could the homeowner sue for Quiet Title at this point? If so,, do they have a good chance of winning after this ruling?

    6) What happens to one’s credit report when a mortgage foreclosure case is dismissed with prejudice? I would think that one would have serious evidence to Experian, Equifax, or Trans Union to support filing a dispute to get the loan take off after this ruling but I am not sure.

    I am not asking for legal advice. Just questions about what happens when a mortgage foreclosure case like this one is dismissed with prejudice.

  2. CementBoots, on September 18, 2017 at 5:20 pm said:

    is this (case precedent below) not just another way to screw people out of their day in court?

    http://caselaw.findlaw.com/us-7th-circuit/1074728.html

    The fact that Whitaker failed to defend her case does not alter this analysis because a default judgment in Illinois is a judgment on the merits and has the same preclusive effect as a judgment resulting from arduous litigation.  Housing Auth. for La Salle County v. Young Men’s Christian Ass’n, 101 Ill.2d 246, 78 Ill.Dec. 125, 129, 461 N.E.2d 959, 963 (1984).

  3. CementBoots, on September 18, 2017 at 1:42 pm said:

    nice

  4. Shadowcat, on September 18, 2017 at 11:52 am said:

    Scratch that one……
    As for the debt…how does a borrower seeking to pay the debt find the proper party to pay?
    If one pays the wrong party the law says they still owe the proper party,

    Short of BK of course.

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