How Does the Debt Get Transferred?

Basic Black Letter law: A debt can only be transferred by the owner of the debt. The owner of the debt may use agents or intermediaries to accomplish the transfer of the debt. If an intermediary executes a document of transfer without reference and identification of the owner of the debt, the document has potentially fatal defects.

Parole evidence may be admitted, upon discretion of a court of competent jurisdiction. But in the end, the party claiming authority to enforce the debt in a foreclosure of the mortgage or deed of trust must prove that it is doing so on behalf of the owner of the debt.

The simplest way of doing this is by alleging or asserting the name of the owner of the debt and the fact that the enforcer is representing the owner of the debt. In the absence of such allegation or assertion it is more likely than not that the enforcer is not representing the owner of the debt and therefore has no authority to enforce the foreclosure.

Promissory notes may be enforced without ownership of the debt. Mortgages and deeds of trust cannot. Article 9 of the UCC as adopted by all 50 states as their state law requires that the debt be owned or purchased for value as a condition precedent to the right of the claimant to enforce a mortgage through foreclosure.

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The courts are hiding the issue but there is full consensus on the fact that a mortgage without ownership of the debt is useless. If you analyze the decisions it is always there. But the courts are creative in coming to the conclusion that the transfer of ownership of the debt MUST have occurred (even if it didn’t).

They are bridging that divide by making some legal presumptions like “why execute the assignment of mortgage if you were not transferring the debt?” This of course ignores the question of whether (1) the assignor owned the debt (2) the assignor also specifically referenced transfer of the debt either in the assignment of mortgage or in an indorsement on the note.

I have already explained in many different ways that the ownership of the debt is completely dependent upon actual payment of value and the assumption of the risk of nonpayment.  And I have often explained that the last person in the fictitious chain used by enforcers is virtually never the owner of the debt nor an authorized representative of the owner of the debt.

The rule is this: At some point in the fictitious chain, payment was not made because the loan was already sold. This could be as early as before the loan “Closing” to as late as the most recent assignment of mortgage. Note as well that where assignment of mortgage is abandoned at trial the case ceases to become a foreclosure case and converts solely to an action for damages for nonpayment on the note.

Transfer of the note is evidence of transfer of the debt. The matter asserted is that the debt was transferred. If the transferor of the note actually owned the debt, the evidence of transfer of the debt becomes fairly conclusive. But without evidence showing that the transferor owned the debt, no legal presumption should arise. And if the maker of the note challenges (denies) the transfer of the debt, the burden is on the enforcer to establish a chain of evidence starting with the owner of the debt. One way to put this in contention is simply denying that the note is held or owned by the enforcer which makes them prove it. In many cases the enforcer ahs been successful at fabricating a new “original.”

There is also an issue that is more grounded in law: the delivery of the note signals transfer of the debt because the note is like the title to a car. You become the legal owner when you get it. When you receive the note the presumption arises that the only evidence of the debt has been transferred to the recipient. Whether the note really is the only evidence of the debt is of course subject to dispute and normally not true. Dozens of documents at closing reflect the existence of the debt but not necessarily the owner of the debt. The only real conclusive evidence of the debt is evidence of actual payment by the Payee on the note to or on behalf of the Maker.
The creative courts dodge (1) the question about whether the prior possessor owned the note or debt and (2) whether the original note was actually physically delivered. In most cases only an image was delivered electronically, the original most likely having been destroyed or “lost.” Other sales of the image of the original note have almost always occurred. However, up to this point in time, the payoff to the underwriter/investment bank is not counted as reducing the receivable from the borrower to zero, even if the amount received is a multiple of the original note. If the investment bank was acting in the interest of investors to whom it sold Trust certificates, then the first money would have been return of capital to the investors and subsequent payoffs would have been shared between the underwriter and the investors.
The problem of course is that there would be no subsequent sales without the illusion that the loan still exists. So the investment banks created a convoluted trail to make it appear that the receivable (debt) existed while at the same time not titling it as such in the name of anyone. It was a brilliant act of deception. And THAT is the reason why they won’t identify the creditor. And it is the reason why no bank has ever challenged a TILA rescission by filing a suit to vacate the rescission. THERE IS NO CREDITOR, DESIGNATED OR OTHERWISE. Hence all such enforcement claims lack legal standing. TILA rescission strips away the veneer. If the banks actually had a creditor they would have buried anyone using rescission with a simple lawsuit vacating the rescission. They don’t because they can’t.

14 Responses

  1. Wednesday 26 September 2018

    Just noticed this from one of the comments re standing:

    “Some states mandate proof at the time the case is filed. Check your state’s requirements. Each case is unique.”

    Almost every foreclosure takes place in state court, and for judicial
    states, if standing is not [properly] challenged in the initial response,
    it is waived and can no longer be raised as a defense.

  2. Wednesday 26 September 2018

    From the article above:

    “They are bridging that divide by making some legal presumptions like “why execute the assignment of mortgage if you were not transferring the debt?” This of course ignores the question of whether (1) the assignor owned the debt (2) the assignor also specifically referenced transfer of the debt either in the assignment of mortgage or in an indorsement on the note.”

    Argue law and back it up with case cites, preferably those from state
    supreme courts. Requires going to a law library and/or having access
    to all your state specific cases.

    Each state has passed Article 9 UCC as law. In it, one finds that the
    note MUST be transferred by delivery. It CANNOT be assigned. State
    this and eliminate any/all legal presumptions by chancery courts.
    Almost every assignment throws in near the bottom that the note and
    all moneys due were also transferred with the mortgage. Put 2 and 2
    together and make your case for a void assignment.

    In searching state specific supreme court cases, one will find that the
    courts are required to follow the law and cannot use discretion. Use
    this kind of argument, supported with state supreme court case law, and
    one adds strength to their cause.

    Most often, there is no evidence of authority from the original lender
    allowing the current plaintiff to claim it has the note. Really? How?
    Keep it simple and focused, and base it on law which cannot be

    That said, chancery courts still ignore law, but your arguments are
    really established for the appeals process where there is a stronger
    likelihood for reversal based on the fact that the lower court failed to
    follow established law as was argued in the case.

    Making the right argument is critical.

  3. VOID – is correct. Go back to the prior loan before last refinance. And, if a purchase — go to prior owner records.

    Doesn’t matter whether paying or in foreclosure — no right to challenge assignment is precedent law across the country.

    TILA — and rescission DOES apply to residential mortgages BUT only if a refinance — not a “purchase money” for new home. Guess what?
    credit reports may still deem the refinance a “purchase money first.”

    And, why may that be I ask? We know.

  4. Wednesday 26 September 2018

    “Unfortunately, when a homeowner facing foreclosure attempts to raise the issue that the debt was not transferred or properly transferred, the Courts assert that the debtor cannot raise an issue regarding the assignment as the debtor is not a party to that assignment…”

    Make the wrong argument and the answer does not matter. The above,
    as stated, is true. Instead, argue that the assignment is void, not that
    the assignment was improper/invalid/whatever. A void assignment can
    be attacked by a debtor. It matters not what the assignment says or is
    trying to accomplish because it is a void instrument, and a defendant
    has the right to attack a void assignment against him/her.

  5. From CRD at 818.453.3585: “NOT SO FAST PEOPLE.”
    We see many appellate decisions in which the debtor CAN challenge ownership of the right to enforce the debt so the arguments contrary are not completely correct. [e.g., Calif, NY] First, to simply accept a plaintiff as having standing, [regardless of the underlying Note ownership issue] is not jurisprudentially correct as it presumes [rebuttably] the plaintiff does have such status. This cannot be simply glossed over at the early stages of litigation for foreclosure. Many courts [usually upon having to rule on Motions to dismiss or 12b6 motions] require the plaintiff to show they hold this right. Some states mandate proof at the time the case is filed. Check your state’s requirements. Each case is unique.

    Even if you are denied an early dismissal, you can re-raise the issue after some robust discovery [which banks NEVER RESPOND PROPERLY TO] and compel them to answer this inquiry under oath and prove same by producing documents showing such standing. If they don’t, you can bring a motion for summary judgment against the plaintiff and likely win. REPEAT, you MUST get an order to compel further responses if the banks fail to answer discovery or simply object.

    Free consultation call Consumer Rights Defenders – 818.453.3585

  6. This sound my situation toward the end of modification process w @WellsFargo they transferred my loan to BSI the foreclosure sound premeditated my residence auctioned I tried to bid on it put $ more & more I gave up then it sold again may construction!
    @WellsFargo called me recently they still doing research
    Recently I filled out your registration form I haven’t heard anything yet

  7. Reblogged this on Deadly Clear.

  8. With respect to TILA rescission. Neil is beating a dead horse with this one. After 3 years, he still doesn’t get it. So here it is folks.

    TILA rescission doesn’t apply to residential real estate loans. Read the statute. So what about Jesinoski, you say?

    The ONLY (read that again) issue before SCOTUS was not whether the statute of repose had expired (it hadn’t by one day), nor was it about whether TILA rescission applied to residential real estate loans. The SOLE issue before SCOTUS was whether rescission could be effected by the borrower solely by dropping the rescission notice in the mail, or whether the borrower needed to bring suit to rescind. THAT WAS IT, FOLKS. Read the case and read the statue. Why in hell do you think it was a unanimous decision? It was a simple construction and interpretation of black letter law…nothing more, nothing less.

  9. Hammertime — need someone to stand up for us. If you can get in Ohio — I will help you even though I am not in Ohio. Other states having great difficulty getting help. Representatives heads are elsewhere.

    Javagold — Freddie/Fannie were either direct investors OR indirect by their investment in the private bank fake trusts. But, since the investment was bailed out — should have nothing to do with it.

  10. In OH. homeowners should raise the issue w Cordray who is running for governor. CA acknowledges homeowner as 3rd party and homeowner bill of rights require valid transactions and chain of title. Other states need to challenge their elected officials and not just be manipulated by “culture” wars.

  11. Bank of America. Originator. Fake Lender.
    Fannie Mae. Somehow was investor/owner of loan, note,mortgage,or whatever other names they made up since the closing. Yet Fannie Mae name never shows up on Any documents at clerks office, fraudclosure papers or assignment of mortgage, which jumped from BOA to debt collectors scumbag servicers SLS.
    And now SLS thinks they can try and fraudclose with this fraud against the court. Going on 10years and still the government does nothing to put an end to these thefts !!!

  12. Not only are homeowners and investors deceived but we need to raise false claims on settlements, local government and by local government on continuing money laundering and corruption of fake and counterfeit notes, “loans”.

  13. Distressed debt can only be assigned. There is no note. Since none of the notes for financial crisis refinances were on any balance sheet, they were distressed debt to begin with.

    Bruce is correct. The courts continue to state that a borrower has no right to challenge PSA or the assignment.

  14. Unfortunately, when a homeowner facing foreclosure attempts to raise the issue that the debt was not transferred or properly transferred in Ohio, the Courts assert that the debtor cannot raise an issue regarding the assignment as the debtor is not a party to that assignment. The Courts cite to UNGER, which misapplies federal 6th Circuit law. The Courts continue to apply UNGER even though the 6th Circuit has expressly stated that its decisions are being misinterpreted in SLORP.

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