Applying Common Sense and Law to Assignments of Mortgage

Every time a homeowner wins in foreclosure the investors are actually protected. It’s the sale of the property and/or entry of the foreclosure judgment that cuts investors off from their investment. Weird, right?

An article in the recently published Florida Bar Journal illustrates perfectly the confusion that occurs within the courts and by lawyers when they stray from the simple pronouncement of accepted law in all jurisdictions.

Here is one simple proposition declared by the Florida Supreme Court which is a mirror of similar pronouncements from the Highest courts in all other U.S. Jurisdictions: The case is Johns v Gillian 134 Fla. 575, 184 So. 140 (1938).

“the mere delivery of the note and mortgage, with intention to pass title, upon proper consideration, will vest the equitable interest in the person to whom it is so delivered.”

The obvious implication is that such a person can enforce the mortgage. The other obvious implication is that a claimant who claims to have received possession by delivery of the note and mortgage cannot enforce the mortgage if there was no intent to transfer title to the mortgage, or if there was no payment of consideration.

The obvious takeaways from this simple, basic and completely accepted point of law are

  • delivery of note and mortgage is important and potentially dispositive BUT
  • defects in the instrument of assignment of mortgage are not fatal IF
  • intention to pass title is present AND
  • payment of proper consideration is present
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The jumble occurs when anyone of those points is taken out of order or entirely out of consideration which is what the courts and even some foreclosure defense lawyers are missing.

Delivery of the original note and the recorded mortgage document is important and potentially dispositive. This is true if proper consideration was paid and there was an intent to pass title.

But the banks would have us believe that only the intent to pass title is important, even if the transferor has no title. There is no law and no case decision that agrees with that proposition. And the banks would have us believe that the intent to pass title is the only thing that matters even if no proper consideration was paid. There is no law and no case decision that supports that proposition.

By law, as adopted in the statutes of all 50 states when they adopted the Uniform Commercial Code, consideration must be paid for an effective transfer of the mortgage.  UCC Article 9 section 203. All the case law agrees and there is no case law contrary to that proposition.

BUT there is plenty of case law where the courts ignore it mostly because the pro se homeowners or foreclosure defense attorney didn’t present the issue clearly.

The money proves the intent and the intent justifies the money.  Without the money the transfer is a complete nullity which legally means it never happened.

While there are presumptions about transfer of the debt when the “original” note is supposedly delivered (as though transfer of the note was title to the debt), the only thing that actually transfers the debt under law is payment of money with intent to purchase and sell the debt and the mortgage.

Where’s the money?

In virtually all cases the money is absent, which leads directly to the point of the law to begin with — foreclosure should only be granted in circumstances where the proceeds of foreclosure will go to the party claiming that equitable remedy. Here is the plain truth. Those proceeds are not going to anyone who has value/consideration in the deal.

The investment bank’s legal strategy of claiming that it once paid consideration is defeated entirely by its sale of the “risk of loss” (i.e., the debt) several times over in the shadow banking market.

Dubious? Check the proposed and actual regulations concerning the retention of a share of the risk of loss by investment banks. That is the big dispute. For loans that were created up until around 2010, there was zero retention of risk.

The meaning  of that eludes most people unfamiliar with the terminology of Wall Street. So here it is: if you have no risk you own no debt.

My sources say that is still true and the regulators are powerless to stop it because of the right to enter into contracts that are disguised sales of the risk of loss, which is to say disguised sales of the debt by the one party who is always the one controlling events on the ground in foreclosures — the investment bank.

Do you need to prove all that? Nope. Just demand proof of consideration. And don’t stop demanding it no matter what the opposing lawyer says and even regardless of what the judge says. In the end, you’ll be right. Every time a homeowner wins in foreclosure the investors are actually protected. It’s the sale of the property and/or entry of the foreclosure judgment that cuts investors off from their investment.

6 Responses

  1. Ian — yes. People do not understand that “paid off” is not the same as “paid out.” And, “paid out” is and was by who? And, by what, if any, consideration? And, by who, and how, are fees charged, and modifications (which are bogus) denied?

    In effect, the refinances, or even, sometimes, home purchase from prior owner, was a loan “PAID OUT” by someone- but NOT “PAID OFF” by the borrower. at the stated refinance. Hence – no balance sheet accounting. So where did the borrower money go? Java – are you here? Unsecured.

    This keeps the loan in perpetual default to investors. – who are suspect to begin with. Remember, that the investment banks, whose names are attached to the fake “trusts” – were SERVICERS to GSEs before they were “investment banks.” to the bogus trusts. Their roles “conveniently” changed. From “servicer” to “investment banker?” How did that happen? We should know.

    Where the money went , and goes, is not regulated. We know nothing. So, even if capable of ever “refinancing” these loans again, the loan can never be valid because the fake default is never cured , and never corrected by title. Permanent victims.

    I ask – when will our representatives “cure” the fraud? The fraud will not be cured one case at time across the country, but, rather, by our representatives who will finally speak out. In the meantime, every avenue, including Neil, must be pursued to expose the fraud.

    Thanks, Ian. .

  2. ANON- we have talked about the loans being in default at inception, which is possible and likely, as they were primarily refinances. And if I know that I was current when I refinanced, I have no idea how my loan status was reported by all the people behind the curtain, and for what purpose. In default? Paid off? Current? Who knows?

  3. Intention:
    the resolve or design with which a person does or refrains from doing an act, a necessary ingredient of certain criminal offences.

    A design, resolve, or determination of the mind.
    2. Intention is required in the commission of crimes and injuries, in making contracts, and wills.
    3.-1. Every crime must have necessarily two constituent parts, namely, an act forbidden by law, and an intention. The act is innocent or guilty just as there was or was not an intention to commit a crime; for example, a man embarks on board of a ship, at New York, for the purpose of going to New Orleans; if he went with an intention to perform a lawful act, he is perfectly innocent; but if his intention was to levy war against the United States, he is guilty of an overt act of treason. Cro. Car. 332; Fost. 202, 203; Hale, P. C. 116. The same rule prevails in numerous civil cases; in actions founded on malicious injuries, for instance, it is necessary to prove that the act was accompanied, by a wrongful and malicious intention. 2 Stark. Ev. 739.
    4. The intention is to be proved, or it is inferred by the law. The existence of the intention is usually matter of inference; and proof of external and visible acts and conduct serves to indicate, more or less forcibly, the particular intention. But, in some cases, the inference of intention necessarily arises from the facts. Exteriora acta indicant interiora animi secreta. 8 Co. 146. It is a universal rule, that a man shall be taken to intend that which he does, or which is the necessary and immediate consequence of his act; 3 M. & S. 15; Hale, P. C. 229; in cases of homicide, therefore, malice will generally be inferred by the law. Vide Malice’ and Jacob’s Intr. to the Civ. Law, Reg. 70; Dig. 24, 18.
    5. But a bare intention to commit a crime, without any overt act towards its commission, although punishable in foro, conscientiae, is not a crime or offence for which the party can be indicted; as, for example, an intention to pass counterfeit bank notes, knowing them to be counterfeit. 1 Car. Law Rep. 517.
    6.-2. In order to make a contract, there must, be an intention to make it a person non compos mentis, who has no contracting mind, cannot, therefore, enter into any engagement which requires an intention; for to make a contract the law requires a fair, and serious exercise of the reasoning faculty. Vide Gift; Occupancy.
    7.-3. In wills and testaments, the intention of the testator must be gathered from the whole instrument; 3 Ves. 105; and a codicil ought to be taken as a part of the will; 4 Ves. 610; and when such intention is ascertained, it must prevail, unless it be in opposition to some unbending rule of law. 6 Cruise’s Dig. 295; Rand. on Perp. 121; Cro. Jac. 415. ” It is written,” says Swinb. p. 10, ” that the will or meaning of the testator is the queen or empress of the testament; because the will doth rule the testament, enlarge and restrain it, and in every respect moderate and direct the same, and is, indeed, the very efficient cause. thereof. The will, therefore, and meaning of the testator ought, before all things, to be sought for diligently, and, being found, ought to be observed faithfully.” 6 Pet. R. 68. Vide, generally, Bl. Com. Index, h. t.; 2 Stark. Ev. h. t.; A 1. Pand. 95; Dane’s Ab. Index h. t.; Rob. Fr. Conv. 30. As to intention in changing a residence, see article Inhabitant.

  4. Consideration:
    n. 1) payment or money. 2) a vital element in the law of contracts, consideration is a benefit which must be bargained for between the parties, and is the essential reason for a party entering into a contract. Consideration must be of value (at least to the parties), and is exchanged for the performance or promise of performance by the other party (such performance itself is consideration). In a contract, one consideration (thing given) is exchanged for another consideration. Not doing an act (forbearance) can be consideration, such as “I will pay you $1,000 not to build a road next to my fence.” Sometimes consideration is “nominal,” meaning it is stated for form only, such as “$10 as consideration for conveyance of title,” which is used to hide the true amount being paid. Contracts may become unenforceable or rescindable (undone by rescission) for “failure of consideration” when the intended consideration is found to be worth less than expected, is damaged or destroyed, or performance is not made properly (as when the mechanic does not make the car run properly). Acts which are illegal or so immoral that they are against established public policy cannot serve as consideration for enforceable contracts. Examples: prostitution, gambling where outlawed, hiring someone to break a skater’s knee or inducing someone to breach an agreement (talk someone into backing out of a promise).

  5. Delivery:
    Actual delivery refers to the surrender of control and possession of property by the vendor and the assumption of possession by the vendee. It is the transferring of a deed from the grantor or seller to the grantee or buyer by personally handing the deed to the grantee or sending it by certified mail.

  6. “Where’s the money?” –no “risk of retention” and “no consideration” – Neil is right on all this. But, the regulators “are powerless” is wrong.

    No consideration means the “mortgages/deed of trust” were not really mortgages at all, and the “contracts” that the investment banks claimed to have executed were not contracts related to mortgages which should have been on someone’s balance sheet. Contracts were based on already declared default debt, and never should have been applied if there was no mortgage to begin with. For true sale of mortgages to any entity, even off balance sheet conduits, there must be an original balance sheet, consideration, and there should be no “right to enter into contracts that are disguised sales of the risk of loss,”.

    So the real question is — what did the regulators conceal? Why were these not true mortgages to begin with? Where were the mortgages before the investment banks got involved? That is where the true mortgage still fraudulently remains. .

    Debt can only be transferred by assignment — not the note. The only answer is what courts have tossed down — separation of the note and mortgage. How this occurred is the breakdown of regulation.

    As one in authority once asked me — “How do you know all these loans were not really in default at inception?

    Shocked, I answered – “That is impossible.”. . .

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