TONIGHT! How to distinguish between legal presumptions of facts and the facts themselves

A client of our internet services store asked a simple question. He had asked the opposing side if they were a holder in due course. What he received was evasive and misleading and essentially never answered the question. Now what? Below is my answer to his question and what we will be discussing tonight on the The Neil Garfield Show

How the banks confuse judges, foreclosure defense lawyers and homeowners by wrongfully inoking legal presumptions.

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You have already achieved the intermediate goal. At this point you can argue that you asked for the identity of the holder in due course and they were unable or unwilling to provide the information. The confusion emanates from the fact that a holder can sue on the note if it has the right to enforce the note, which right must come from the creditor.
But the apparent rebuttable legal presumptions run against you. In every case the success of the foreclosure is entirely dependent upon the success of the foreclosure mill attorneys in invoking legal presumptions of fact because the actual facts differ from what is presumed by the Judge.
But the one legal presumption that would wipe out virtually all borrower defenses is NEVER invoked — the status of holder in due course. Because that would mean proving that a purchase of the debt, note and mortgage occurred in which the foreclosing party is or was the purchaser in good faith and without knowledge of the borrower’s defenses. Instead the crafty lawyers get judges to presume that the foreclosing party should be treated as a holder in due course, thereby evading their true burden of proof.
It’s no mystery why they don’t use the holder in due course allegation. But the absence of such an allegation simply and logically leads to a conclusion. One or more of the elements is missing. Which part? Is it the purchase, the good faith or knowledge?

36 Responses

  1. @ ALL


    “American Home Mortgage Servicing, now known as Homeward, appeals the denial of a new trial concerning an award of punitive damages arising from a wrongful foreclosure. Jane McGinnis, the owner of several rental properties, brought suit against Homeward, the servicer of seven of her residential properties’ mortgages, alleging wrongful foreclosure, conversion, interference with property, and intentional infliction of emotional distress. The jury found against Homeward on all claims and awarded McGinnis $3,506,000 in damages ($6,000 for economic injury, $500,000 for emotional distress, and $3,000,000 in punitive damages). Homeward appeals the district court’s denial of a motion for a new trial, arguing (1) that the punitive damages award was unconstitutionally excessive under the Due Process Clause of the Fourteenth Amendment and (2) that the punitive damages award unlawfully exceeded Georgia’s $250,000 cap on punitive damages under O.C.G.A. § 51-12-5.1(f), (g).
    Because we conclude that the award violates neither the U.S. Constitution nor Georgia law, we affirm the judgment of the district court.”

  2. Pittman v Experian and Servis One et al is the case. And if a loan was during the financial crisis Freddie Fannie were indirect investors by investing in the banks private trusts. I keep saying – there can be no securitization if the loans were never on balance sheet. They were not. By bail out government purchased the toxic securities and sold off to distressed debt buyers. They did not purchase the loans themselves because the loans never had a home. Literally – and because they were never on a balance sheet.

  3. Kali, Anon.
    To maybe answer Anon and my thought process… Are all the banks just one central with all originators as tributaries and thus the Treasury? This allows GSE’s to fake guarantee, like the FDIC.

  4. Kali, I thought Fannie or Freddie grouped the mortgages and then securitized. Where does a originator get authority to group as an investment package, when most aren’t even banks, The originator still is not the end receiver of the mortgage payment and therefore not HDC.

    Fannie’s docs do not disclose they are taking prepared groups for guarantee to investors. Where are the proof docs of guarantee to non exitant trusts?

    Can Sciaratta v. US Bank be used in NJ?

    Thank you for your interest.

  5. Kali, it is a case I am helping on…not answered yet.

  6. @ don st clair

    Please post a link and name of the case excerpted in the previous comment.

    The correlating analysis of the serial transfer(s) is reflected in Sciaratta v. US Bank National Assn. (2016) 247 Cal.App.4th 552, which the reviewing courts are contemporaneously and regularly referencing.,5

  7. Does someone know — according to a case decision from Sixth Circuit — just filed. – why a loan modification is reported to the Treasury Department? QUOTE — except I put in the xxx’s

    ” a member of xXXXX Loss Mitigation Department] that the reason the modification [*4] did not transfer over is that [iServe] did not properly report the modification to the Treasury Department.”

  8. Countrywide did not sell directly to Freddie/Fannie. They, and other, sold bogus RMBS to Freddie/Fannie.

  9. Kali, please forgive me, but if Countrywide (a defunct company in 2009) “in a true sale” as per their documents already sold the loan to Fannie with no value in 2008, (verified on their search page), in what universe do they think that they can take the loan out of a fake Remic sell again by assignment (mortgage only), without value to Green Tree Servicing, LLC( who became (Ditech Financial LLC) in 2913 for foreclosure?

    (from case)
    Because Countrywide, as habitually an “approved straw-man lender / issuer / accommodation party,” transferred the defendant’s Title/Mortgage/Note to FNMA (Fannie Mae) and by trust definition, en-route to FNMA’s investors and true holders-in-due-course for securitization (evidenced by their own documents (EXHIBIT B)letter/mort and(EXHIBIT C) shortly after closing on February 19, 2008) (or within 180 days as an IRC 1031 Exchange after closing). Countrywide, therefore could not have transferred the same property to Green Tree Servicing LLC by Assignment of Mortgage (only) dated May 18, 2013 (5 years and 3 months later).(EXHIBIT D) assignment.

    And then the fun begins, as it wass assigned to the wrong company in BOA with a chain ou title…but there’s more…lol

  10. @ ALL

    Brian Taylor Goldman, The Indefinite Conservatorship of Fannie Mae and Freddie Mac is State-Action, 17 J. Bus. & Sec. L. 11, 23 (2016)

  11. Kali and All,”The transfer to the servicers of the right to enforce the promissory note is only for administrative purposes. Upon completion of the foreclosure sale, the servicer ensures that the GSE is named transferee in the foreclosure deed. The GSE at all times controls the foreclosure.” from your link.

    Again, why does this not apply?especially (2)

    Title 15, Chapter 41, § I, Part B › § 1641
    (f)Treatment of servicer
    (1) In general
    A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as an assignee of such obligation for purposes of this section unless the servicer is or was the owner of the obligation.
    (2)Servicer not treated as owner on basis of assignment for administrative convenience
    A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as the owner of the obligation for purposes of this section on the basis of an assignment of the obligation from the creditor or another assignee to the servicer solely for the administrative convenience of the servicer in servicing the obligation. Upon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation or the master.

    also: I read in that link (which I can’t seem to find again) GSE’s cannot award profits to it’s investors. why would anyone invest in Fannie/Freddie if not and also why doesn’t if apply for trust investors?

    Thank you all for your insiteful and inciteful input.

  12. Kali — this is good. Will the servicer still be able to conceal Freddie and Fannie?

    Today, 95% of mortgages are Freddie Fannie. But Freddie Fannie were always involved even in the private label crisis trusts.

  13. @ ALL

    A federal court’s August ruling in Sisti v. Federal Housing Finance Agency, 2018 WL 3655578 (D.R.I. Aug. 2, 2018), has the potential to revolutionize Fannie Mae and Freddie Mac foreclosure procedures in the majority of states that allow nonjudicial foreclosures. By finding Fannie and Freddie to be state actors, those entities’ foreclosure practices must meet constitutional due process standards. If followed by other courts, this may radically change Fannie and Freddie foreclosure practices in nonjudicial foreclosure states.

  14. @ ALL

    BIG NEWS!!!!

    Fannie and Freddie Foreclosures Must Meet Constitutional Due Process Standards

  15. Kali — you are correct.

    Because there was confusion as to the law, the federal reserve was asked to interpret “covered persons,” and other issues. Their interpretation is now codified as part of the law.

    Whether this means anything to judges is highly questionable. There has been so much bad case law that judges just cite the bad case law over and over without question. It is a major problem.

  16. @ Brother or Sister ANON

    Although I am NOT contesting your proposition, the LAW is an open terrain, always subject to shifting changes in the footholds without notice to either us, or the unwary. Incrementally … slowly …, the courts are making the degree-by-degree turn away from the purported propositions and presumptions that the shadow banking industry has been afforded.

    Nonetheless, procedural minefields abound that will atomize us in an instant.

    EVERYONE should proceed with an abundance of caution, and be hyper-vigilant in drilling down on an issue before asserting same.

    Thus, the clear and plain language that my eyes see in the 2018 iteration of CFR Title 12, section 223.39(2) shows the present non-existence of the “Acquisition of legal title” provision that previously existed and was indeed interpreted in 2010; so a gap exists.

    As in Kalifornia, consistent seismic activity causes gaps and fissures in the landscape that are either temporarily bridged across, traveled around the long way, or entirely avoided.

    Subjectively, I do not avoid, but rather embrace, the fatal securitization model as the ground to collaterally attack the non-existent evidence of a servicer’s assertion(s).

  17. Kali. Look up Federal Register. Vol. 75 no. 185 September 24, 2010. That is the opinion of the Federal Reserve that was codified as an explanation of the law. This Register is the codification Go to Section by Sectiom Analysis. If been following long enough – the Fed was asked back then to interpret the new law. This was it!! And yes – CA is a lien state. There are more of them then title states. The worst.

  18. All. I am not an attorney. Not in the “practice”. Kali – the law has not changed. What I referenced was the Federal Reserve’s opinion and interpretation of the law. That opinion became codified as part of the law and has not changed. If you can’t find – I will sent to you by email if you want. Leave your email address But look under Federal Register.

  19. @ don st clair & Ian

    I reviewed only the 2018 iteration of Title 12, section 223.39(2), which did not eliminate a “covered person”; but no longer includes the “Acquisition of legal title” language that ANON referred to. Whether that provision was simply omitted in the current iteration, and still applies, is, without drilling down on the research, an unknown variable.

    I have not researched the reverse chronology at to when the Code of Federal Regulations (CFR) changed the foregoing, but it appears to be sometime between 2010 to present.

    15 U.S. Code § 1641 – Liability of assignees does apply — but in what context other than by operation of law to rebut the presumption that a servicer is or was NOT the owner of the obligation (debt)?

  20. Kali, eliminated or not repeated? I am not sure if they rewrite older regulations or just add on new ones in their system.

  21. Anon, In response to your decades long de facto practice, I have found that the whole Remic Trust concept is a fraud for the appearance to the courts. Both the originator and the “Fannie, Freddie Trust concept never happend. They would all be only accomidation parties for a imaginary trust. Apparently, they use the money from investors as a “slush fund” at their own discretion. The investors , thinking their money was safe were also defrauded.(Pension fund class actions)

    google: Nye Lavelle (his affidavits are accepted in major courts.)

    and then there is :

    Dale Whitman, Professor at Pepperdine University states that:
    “While delivery of the note might seem a simple matter of compliance, experience during the past several years has shown that, probably in countless thousands of cases, promissory notes were never delivered to secondary market investors or securitizers, and, in many cases, cannot presently be located at all. The issue is extremely widespread, and, in many cases, appears to have been the result of a conscious policy on the part of mortgage sellers to retain, rather than transfer, the notes representing the loans they were selling.”
Whitman nails it- the notes were not delivered to the trusts in millions of mortgages. That would explain why the notes are created on-demand when a loan goes into default and must be recreated to provide the illusion that Fannie or Freddie has the note. They don’t.!” Error! Hyperlink reference not valid.” 37 Pepp. L. Rev 738, 757-758 (2012)
    The policy of Fannie and Freddie clouds the title and makes it nearly impossible to determine who has legal title to the property (mortgagee) and who “owns” the note. (ibid.)

    and to contradict the theory of the servicers for the Fannie or Freddie trusts, how does it work when a servicer is foreclosing when Fannie says the transfer to them is a “true sale?”

    Related Announcements A2-1-02, Nature of Mortgage Transaction True Sale
    Every delivery of mortgages and/or participation interests, whether whole loan or for securitization, is expressly intended, by both Fannie Mae and the lender, to be the lender’s true, absolute, and unconditional sale to Fannie Mae of the mortgages and/or participation interests, and not the lender’s pledge thereof to secure a debt or other obligation owed to Fannie Mae. LENDER CONTRACT (EXHIBIT E) Part A, Doing Business with Fannie Mae Subpart 2, Lender Contract Chapter 1, Contractual Obligations for Fannie Mae–Approved Lenders.

    Did Fannie give by a new contract authority back to servicer?… which makes full circle back to my original post that started these incredible conversations.

    Title 15, Chapter 41, § I, Part B › § 1641
    (f)Treatment of servicer

  22. don st Claire/kali-
    As I haven’t read this in years, I had no idea that the “covered person” provision had been eliminated.
    Although when I first read it around 2009, I actually wondered why it was inserted in the first place. It pulls the rug out from under the banks’ feet. Or the services, or the foreclosure mills or whomever.
    And now you say it’s gone? Huh….

  23. Kali, thank you for the info, but I want to be straight on what they are saying. Have they eliminated the entire statement in the new version and if so, how could it affect previous contracts as opposed to those from when it was changed forward. I could not find a date of the change or elimination.

    thank you

  24. That reference to the Code of Federal Regulations, Title 12, section 223.39(2) “Acquisition of legal title” (“persons who acquire only a beneficial interest in the loan or a security interest in the loan” are not the “covered” creditor/Lender), has been eliminated in the present iteration:

  25. @ ANON

    There can only be state-based clarifications (e.g., New Jersey) to your posted comment(s) re: lien theory vs title theory; to wit;

    “It is settled law that California is a “lien” and not a “legal title” theory state when imposing encumbrances/liens against the title of real property.”

    It is an undisputed fact that for the past several decades the de facto practice was/is to immediately securitize debt through REMICs to bond purchasers, thereby eliminating the originator’s exposure to risk, and moving the debt/asset off its balance sheet, which was likely never there from the inception.

  26. In CA the statute of frauds seems to require a signature for any title-affecting documents. It might be interesting to discuss using this to request evidence of signed instructions from the creditor to the trustee to elect to foreclose the default. I lost appeal when judges ruled that the agent of the beneficiary was entitled to foreclose, but I had presented at least 2 agents of the beneficiary acting on the foreclosure, and the agent referred to in my court decision did not distinguish which one.

  27. ANON- thanks for the clarifications, I’ll save this for future reference. I
    Often “shoot from the hip” , as I remember the gist of things but am often a bit off on the details.

  28. Kali — Tell me if you agree —

    “In a Title State, the lending institution holds title to the property in the name of the borrower through a Deed of Trust. In a Lien State, the deed stays with the borrower , and the lender places a lien on the property using the mortgage instrument. Generally, foreclosure in Title States occurs through a non-judicial proceeding, while Lien States are conducted via judicial methods; it varies with each state. In real estate in the United States, a deed of trust or trust deed is a deed wherein legal title in real property is transferred to a trustee, which holds it as security for a loan debt between a borrower and lender. The equitable title remains with the borrower.”

    NJ is a hybrid state,in which title passes to the lender upon default by the borrower, even without foreclosure.

    in title states it is the Deed of Trust trustee that holds legal title. But, the TILA deals with creditor/lender. First, A creditor is the entity to whom the debt is owed. All these bogus trust loans were likely in internal default before a refinance was signed. So there is no note holder — or holder in due course. The “Note” debt has been charged off. No note can be derived from charged off debt. In order to not be charged off – the debt must first lye on balance sheet. There was never any recording on a balance sheet – only off balance sheet conduits. All we have is a debt and the note should no longer be negotiable. Second,those bogus trusts, and their servicers, were never the lender, They never lent directly to borrowers. As the Fed Res opinion states — “persons who acquire only a beneficial interest in the loan or a security interest in the loan” are not the “covered” creditor/Lender. Mr. Bernanke made this clear in 2008 — these trusts were set up for pass through of cash flows only. They should not be relevant as creditor/lender or title.

  29. @ ALL

    In Kalifornia, it is Evidence Code 664 that the courts point at & thereby rely, which MUST BE REBUTTED, to wit:

    ARTICLE 4. Presumptions Affecting the Burden of Proof [Evidence code 660 – 670]

  30. And yes — servicer is NEVER the creditor.

  31. Ian — I always seem to forget about it, but you are referring to the Federal Register — Federal Reserve Opinion, which became codified, – an interpretation of TILA new law by Dodd Frank – identification of creditor. A “covered person,” as defined by Section 226.39, is a person that becomes the owner of an existing mortgage loan by acquiring LEGAL TITLE to the debt obligation. Quote — “Consequently, Section 226.39 does NOT apply to persons who acquire only a beneficial interest in the loan or a security interest in the loan…. Section 226.39 also does not apply to a party that assumes the credit risk without acquiring legal title to the loans. Accordingly, an investor who purchases an interest in a pool of loans (such as mortgage-backed securities, pass-through certificates, participation interests, or real estate mortgage investment conduits) but does not directly acquire legal title in the underlying mortgage loan, is not covered by Section 226.39.

    That is, the “investors” are NOT the creditors.

    The big problem is that servicers are now representing the “Trustee to the bogus trust” and treating it as ONE entity. Trustee and trusts are SEPARATE ENTITIES. Ant the trust itself, and beneficiary investors, are NOT the creditor. So then — when is legal title acquired? After foreclosure???????

    Thanks, Ian — for reminding me!!!!!

  32. don st Clair- good find- I’ve never seen that before.
    Additionally, if your read the the 2008 FRB TILA amendment,now codified law. It is stated “the services is never the creditor”.

    Also from memory there is a peculiar explanation or allusion to “covered person(s)”.
    I’m going to dig this up and read through it again. All I remember is that there was some good material in it. Rather than being gutted like most consumer protection laws.

  33. All true but judges just allow the criminality

    Sent from my iPhone


  34. More detail on email looks like or for podcast? Seems to suggest questions raised stand alone rather than interrelated. So can server claim they are working in good faith and not aware of invalid transactions in chain?

  35. especially under The Rules ofv Decisioon Act

  36. Why is this not applicable ??

    Title 15, Chapter 41, § I, Part B › § 1641

    (f)Treatment of servicer
    (1) In general
    A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as an assignee of such obligation for purposes of this section unless the servicer is or was the owner of the obligation.
    (2)Servicer not treated as owner on basis of assignment for administrative convenience
    A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as the owner of the obligation for purposes of this section on the basis of an assignment of the obligation from the creditor or another assignee to the servicer solely for the administrative convenience of the servicer in servicing the obligation. Upon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation or the master.

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