Partial Transcript from Last Night’s Neil Garfield Show on Attacking Facial Validity of Documents Used in Foreclosure

Hello, Neil Garfield here and this is Thursday May 30, 2019. As everyone knows who is involved in foreclosure litigation, things are not what they appear. And revealing the absence of facts that would constitute legally required foundation for the introduction of key elements of a case is the key to beating back fraudulent foreclosures. Every lawyer should carefully examine the cases on facial validity. They frequently go to the heart of the claim.And revealing the absence of facial validity creates a strong argument against the legal presumptions, without which the banks cannot prevail.
Tonight I talk about the specific ways you can challenge the facial validity of the loan documents, assignments, foreclosure complaint and notice of substitution of trustee, notice of default and notice of sale. Remember this is all being recorded and you can always come back to this recording or any of our other shows by going to and searching for the NeilGarfield Show. 
I’ll be revealing tonight the specific structural analysis I use and which the LivingLies team uses under my direction to analyze the facial validity of documents that are being used to initiate fraudulent, yet legally effective foreclosures and sales of property. If you don’t challenge it the foreclosure becomes legal, valid and enforceable in unlawful detainer or eviction.
And remember despite what you might hear from those who are not regulated licensed professionals ONLY a court order can stop a foreclosure or foreclosure sale; and that order, contrary to what I have seen on the internet, must say that the foreclosure is dismissed, vacated or stayed and not just contain general  rulings about the pendency of the current action.
You can ONLY get a court order by filing a lawsuit or a motion in court depending upon the type of proceeding that has started. There is no letter or notice that stops the foreclosure even if its recorded, although recording it does potentially cloud title for the foreclosing party.
As usual I have two things to talk about relating to this topic and foreclosures in general.
If your lawyer cannot explain a successful defense to you so that you understand it and believe it then it is not likely that the lawyer will have any greater success with the judge. I continually have reminded my associate attorneys and attorneys who come to me for litigation assistance that lawyers must have a clear picture of why their client should win.
Otherwise the lawyer seems disinterested, apathetic, uninteresting and not persuasive even when they are technically right on everything they are saying in court.
The judge falls asleep and rules based upon the more compelling argument inc court which usually involves specific citations to specific law contained ins statutes and cases.
If the lawyer has not explained clearly why you should win such that you understand it and are persuaded that you should win, the appropriate response is to say that you want the lawyer’s argument,ent to be more clear and more persuasive. Firing the lawyer merely sends you down the road of going from lawyer to lawyer.
The second thing that I want to talk about is the new theory of action for compensatory damages or equitable distribution arising from the the original transaction in which the loan contract was only one of several moving parts. I believe I have hit on something here and I continue to invite comments.
Since the sales of certificates and hedge contracts and trading on those instruments and the loan documents were inherently a part of the deal for the investment bank that either originated the loan or acquired the loan, my theory is that all of those transactions were contemplated but not revealed to the borrower when the loan closing supposedly occurred.
Most theories of attack go to negating the foreclosure or decreasing the amount due by offset in defenses or claims. My new theory does the opposite. It reaffirms the loan contract and then goes on to assert that the revenue and compensation derived from the rest of the transaction, taken in its entirety, gives rise to an implied contract in which the borrower is essentially entitled to compensation or royalties arising from the transaction taken as a whole.
The transaction, taken as a whole includes all of the moving parts upon which the investment bank was completely relying, but for which it would never have authorized the loan of money or purchase of a loan.
In the case where the investment bank actually originated the loan using sham conduits, the single transaction doctrine and the step transaction doctrine make it clear that the loan strictly because the investment bank expected windfall profits about of the origination of the loan because it was selling certificates to some investors and hedge product based on those loans and certificates to other investors.
In both the single transaction and step transaction doctrines the essential issue is who are the real parties in interest. In this case it is the investment bank in most cases and the borrower. everything in between represents part of the transaction even if it was not disclosed to the borrower. Both parties are entitled to the benefit of the bargain for both he express written contract and the implied unwritten contract.
TILA requires disclosure of all compensation arising out of the origination of the loan. And compensation is very broadly defined.
Under doctrines that evolved from the term “assumpsit” that now include, for example, quantum merit or unjust enrichment, a claim can be made that the borrower gave his name, signature, credit reputation and his house as his or her part of the bargain and that an implied contract arose that he or she or they would receive the benefit of the implied bargain for the undisclosed portion of the transaction. This is classic assumpsit.
This theory avoids all the pitfalls of attacking securitization and attacking foreclosures. If successful though it results in an award of damages that could be equal to or even exceed the amount demanded as due on the loan. Since the prints and compensation in ,most cases were 10 to 20 times the amount of the loan even a 5% rate of compensation to the only other real party (the borrower) would result in damages, plus interest that would be between 60% and 150% on average of the loan amount. The investors would all be protected because they are not being sued. The investment banks are being sued.
Comments and suggestions are hereby solicited. Write to
 I am broadcasting live from Duval County Florida and this show is brought to you by the livinglies blog, GTC honors, Lendinglies, AMGAR, and the Garfield firm, and this show is specially brought to you because of donations to the livinglies blog from listeners like you. Thank you.
Folks I am trying my best here for the last 5 years on radio and the last 13 years in articles, seminars and appearances one adios’s and television to get the point across that homeowners  can, do and should win most of the foreclosure cases brought against them. Neither the blog nor the radio shows are supported by anything other than donations. AND the seminars cannot occur unless we have a substantial increase in donations to offset the costs of creating and presenting the seminar such that the cost can be brought within an affordable range for homeowners and lawyers.
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The basic premise of all foreclosures is that foreclosure is necessary and legal to compensate and protect a party who is losing money because a borrower homeowner is not paying their legal debt to the party that owns that debt. They must assert the position that they are losing money because they loaned money or bought the debt. One of those two things must be true.
See Article 9 UCC §203 which requires payment of value as a condition precedent to enforcement of a mortgage or deed of trust. Remember this is to be distinguished from Article 3 which enables a non-owner of the debt to enforce the note and get a judgment against the maker of the note.
One of the things that most lawyers and judges forget is that the UCC is not some theoretical treatise on commercial paper. It is law. And it isn’t just common law, it is statutory law adopted in all US jurisdictions. And most efforts to construe the wording of the statute by courts attempting to tilt justice in direction of the bank have been rejected eventually on appeal. The law is clear, it is expressly and explicitly stated.
A condition precedent means by definition that it is something that must occur first before anyone can take the next step. As you might remember that sounds a lot like standing doesn’t it.? That’s because ti is the same thing. All the legislators of all US jurisdictions have decided by adoption of Article 9 203 UCC that while they allow for notes to be enforced more freely, the loss of someone’s property must only be at the hands of someone who has first, before attempting to enforce, has loaned money or purchased the debt.
The essential elements of a defense must, in the end reveal that there are more questions than there is confidence that the proceeds of foreclosure will go to pay down the debt to an owner of that d debt. that will get traction and which has been the focus of the thousands of cases in which homeowners have prevailed with a dismissal of the foreclosure, vacation of the sale, judgment for the homeowner or a settlement to keep the homeowner quiet about basic flaws in the entire scheme of residential mortgage loans and the foreclosures.
And one side note that illustrates and highlights the importance of this work defending homes from foreclosure: I have recently received information from a few homeowners who literally have received notices of two foreclosures from two different services representing two different Trustees — US Bank and Deutsch Bank for the same trust. This is important because it shows that the documents — all of them — are fabricated including the pooling and servicing agreement, assignments, etc. For a successful defense you must accept the reasonable probability that every part of the claim brought against the homeowner is a lie.
So let’s look at an example with six layers which Goldman Sachs investment bank, the mother of all this chaos, calls laddering.
In the fictional example Mary Jones’ name as appears as authorized signor for Ocwen Servicing as attorney in fact for US Bank as trustee as successor to Bank of America, as trustee as successor to LaSalle Bank as trustee for the XYZ trust 2006. This is designed to be intimidating and confusing  because it usually works until some enterprising lawyer starts to pick it apart to reveal there is nobody home.
You have six layers here, which are not readily apparent if you read too quickly. Some layers are susceptible to challenge on facial validity and then facial validity of the foreclosure lawsuit or the notice of default. Other layers are subject to later investigations, discovery cross examination etc.
  1. You have Mary Jones who may or may not exist and whose signature might be forged or robosigned, and whose authority as “Authorized signor” is yet to be tested. This can be attacked during litigation but is generally not a ripe target for attacking facial validity.
  2. You have Ocwen who supposedly is attorney int act as attested to by Mary Jones whose knowledge is unknown and in all probability have no knowledge of Ocwen’s authority just as she probably has no knowledge of the existence of the document on which her name appears. More importantly there is nothing recorded anywhere giving Ocwen as servicer who only operated under servicing agreements, power of attorney to execute anything for anyone. They can still prove they had the power of attorney but it is not apparent from the face of the document nor is it available in public records. And in order to prove the power existed, in the absence of any power of attorney in the public records or attached to the current document, they must allege that Ocwen had a power of attorney that was valid, unrevoked and effective as of the date they filed the instrument — and that is was executed by someone with authority to sign the power of attorney on behalf of a party who had a specific financial interest in the debt. Who signed the power of attorney? does the power of attorney exist? Did it exist at the time of the execution of the complaint, notice of substitution or notice of default? Probably not. But even if it did the notice is defective because it relies on the facial validity of implied but unstated other isntruments.  Failing that the foreclosure complaint must be dismissed with leave to amend alleging the proper elements to prove foundation for the attached documents and a new document must be attached to the complaint, which is the power of attorney; and or notice of default or notice of substitution of trustee must be canceled. If you don’t raise the issue it is waived.
  3. The you have the third level which is the XYZ Trust-2006. Look closely and there are no beneficiaries except the investment bank, no named trustee with any right to know about muchness administer the active affairs of the trust, no active affairs of the trust, no settlor, no trustor, and no thing which has been entrusted to a named trustee for the benefit of named beneficiaries. In all probability the trust doesn’t exist and it certainly has no relevance to the loan if the loan was not acquired by the trust either though a purchase by the trustee LaSalle using trust assets to pay or by convenience by a settlor to the trust where the settlor owned the debt. That didn’t happen in any case that I have ever seen. What is missing from facial validity of any document here is legal and proper and customary identification of the alleged trust by stating its state of organization or under what jurisdiction it exists. Like the power of attorney no trust instrument is referenced or identified and there is no trust instrument in official records. is not official records because it is no more than Dropbox or for uploading self-serving documents. The SEC has nothing to do with the documents other than providing the platform for the uploading of documents. Reference to the trust is facially invalid because it cannot be actually identified. Reference to the Trust is facially irrelevant although the trustee could still prove the existence of the trust and prove that the trust actually owns the debt.
  4. So then you have the fourth level. LaSalle Bank who was in a reverse merger with ABN AMRO which as acquired by Citi. Was the subject loan ever entrusted to LaSalle to own and administer the loan on behalf of beneficiaries of a trust? Did LaSalle Bank ever enter into a transaction where it paid value from the trust to the owner of the debt? Does the trust exist? If the trust is nonexistent in terms of facial analysis that leaves LaSalle Bank who disclaims any right, title or interest in the debt, note or mortgage related to any loan. It’s all smoke and mirrors. LaSalle merely received a fee for allowing its name to be used. It does nothing else.
  5. The fifth level is Bank of America as successor by merger to LaSalle. BOA acquired LaSalle Bank presumably from Citi who had acquired ABN AMRO from the shareholders of ABN AMRO. Who gained a controlling share of LaSalle in a reverse merger. But all questions of fact as to the mergers aside, what interest or right to the subject loan, debt, note or mortgage was transferred in the mortgage. The customary and normal business practice in banking is to have a mortgage loan schedule if a new party is the owner in title or substance. But here we have a different problem. There is nothing on any of the documentation warranting or even asserting title to the debt, note or mortgage by anyone. The documents and claims thereon are therefore facially invalid.
  6. The 6th level is US Bank who is said to have bought the trustee rights from Bank of America. This is facially invalid because there is no law suggesting that the position of trustee of any trust can be bought and sold like a commodity. Nor is there any reference, assertion or even suggestion that any specific loans were transferred to the Bank of America for administration over the loan including receipt of payments and tendering of those payments less expenses, to the owners of the debt. That is because neither US Bank or any servicer actually tenders the borrower’s money to anyone who owns the debt as payment of the debt.

One Response

  1. Neil, I so appreciate the workhorse attitude displayed in your legal epistles. However, it is obvious that someone else is creating your explanatory emails and that your work is NOT being proof-read for errors in typing or errors in logic. I can tell that you are on to some big things, but often your emails are full of needless errors. Starting with this subject on Facial Validity, PLEASE review what was transcribed and sent on your behalf. I think it is fair to say that every such email contains careless errors, something I cannot believe are intentional, but still leave anyone other than maybe an attorney confused. Please re-write this particularly critical article and send it noted as a typo correction edition. I mean, why bother sending anything that is less than perfection?
    Ed Caplinger

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