Many of you have essentially asked the same question referring to Article 9 §203 UCC as adopted by the laws of your state. There is no known cause of action for breach of that statute although one might be conjured. It is an interesting suggestion.My reference to it is simple: the statute says that a condition precedent to enforcement of the security instrument (mortgage or deed of trust) is that the party seeking to enforce must have paid value for the security instrument. Translating that, it automatically means that if someone paid for it then they paid for the debt. BUT all law in all states says that if the “seller” or transferor does not own the debt then the transfer of the mortgage is a nullity.A condition precedent means you can’t do one thing without first doing the other. We are a nation of laws and personal bias about this is irrelevant.
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What many lawyers continue to miss is that there is a difference between the laws entitling someone to enforce a note and the laws entitling someone to enforce a mortgage. There are different public policies behind each one. For Notes, the public policy is to encourage the free flow of negotiable instruments in the marketplace. For mortgages, the public policy is to make sure that the civil equivalent of the death penalty (loss of home) is not imposed by someone who actually has no interest in the debt.
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It is an added protection. As a condition precedent it means that standing to enforce the note is different from standing to enforce the mortgage. It is both factual and jurisdictional.
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The grey area occurs because many states adopt the doctrine that if someone has the right to enforce the note they automatically have the right to enforce the mortgage. Although that seems to contradict the Article 9 §203 provision it actually doesn’t. That is because possession of the note by a person who is entitled to enforce it raises the legal presumption that the value was paid by the person on whose behalf the note and mortgage are enforced.
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This is a fuzzy area of the law. But boiled down to its simplest components, it means that possession of the note is deemed (presumed) to be possession of legal title to the debt which, as we know from Article 9 §203 can only be true if the person has value invested in the deal.
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The point of that policy is that if the forced sale of the house is not going to produce proceeds that will be used to pay down the debt, then the foreclosure should not occur. If the person on whose behalf the foreclosure is brought is not the owner of the actual debt then without evidence from the lawyers representing the party named as Plaintiff or Beneficiary, there is no evidence that the proceeds will go towards paying down the debt and the court is required, with no discretion, to enter judgment for the homeowner.
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So the question comes down to whether the party claiming both possession and entitlement to enforce the note is the owner of the debt. The answer is yes if the homeowner does nothing. This presumption can be rebutted. A simple question as to whether the value was paid and if so, how many times, and demanding the dates and parties involved, would clear up the question if the banks had a factual answer. They don’t. They present a legal argument instead. As virtually all lawyers know, their job is to win however they can do it. So if they can’t dazzle the court with facts they can baffle the courts with bullshit.
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Carefully educating the judge who most probably slept through the UCC classes in law school is key to winning on this basis but it has been done many times. All jurisdictions have case decisions that reflect what I have described above. You must find those decisions and present them as part of your pleadings, memoranda and argument in court.
Filed under: appeals, burden of persuasion, burden of pleading, BURDEN OF PROOF, CASES, discovery, Discovery -Subpoena, evidence, expert witness, foreclosure, foreclosure defenses, forensic investigation, legal standing, Mortgage, Pleading, standing, Trail Objections |
I’ll post this for the benefit of anyone in a nonjudicial foreclosure state.
In my State of California, there is a comprehensive statutory scheme governing nonjudicial foreclosures, which supplants all of the Article 9 UCC law, since the nonjudicial foreclosure scheme in California was deemed legislated to provide all of the statutory rules regarding the subject of nonjudicial foreclosures. While it is true that Article 9 says what it says and that can be used in judicial foreclosure states, those concepts are useless in fighting a nonjudicial foreclosure in California, at least based on the current state of the law. See the DeBrunner case if you need confirmation of this (and yes, I am aware many are arguing DeBrunner should be overruled in light of Yvanova, but it hasn’t happened yet).
Kali and Poppy — anything done after the financial crisis, unfortunately, does not apply to us. While some may benefit by new rules in place – we remain the victims and scapegoats of the fraud.
Anyone on this site have the insight, where with all, and grit to align and file a suit challenging the sale(s) of our mortgages to Trusts for the benefit of investors/certificate holders from our payments? This is an egregious deception, no one signed on for…thoughts anyone?
…,
“Dodd-Frank Title X (see Part I.B.10 above)
introduced the “federal floor principle” under which
states can promulgate consumer financial protection
laws that are more protective of consumers than the
analogous federal standard. Nonetheless, the
Comptroller may, pursuant to the standard set forth
in Barnett Bank v. Nelson, 517 U.S. 25 (1996)
(“Barnett”), preempt any state consumer financial
protection law that “prevents or significantly
interferes with the exercise” by a national bank of
any power granted under federal law.
See 76 Fed. Reg. 43549 (July 21, 2011) (final rule)
(the “2011 Preemption Release”),
76 Fed. Reg. 30557 (May 26, 2011) (solicitation of
public comments) (the “2011 Preemption
Proposal”).
i) Federal preemption will not apply to a
subsidiary or affiliate of a national bank if
such subsidiary or affiliate is not itself a bank
or thrift. This provision overturns
Wachovia-Watters, and is significant because
many banks conduct consumer lending
businesses through non-bank subsidiaries.”
[CAPACITIES MATTER, particularly in the context of acknowledged NON-BANKING ACTIVITIES.]
[One of the core escalating issues is: STATE CONSUMER PROTECTION(s) vs. federal preemption presumption; a rebuttable presumption — at law.
…, to wit:
“The FDIC adopted regulations regarding insurance
coverage for custodial and fiduciary mortgage servicing
accounts that hold payments of principal and interest to
provide that the funds in such accounts will be insured
up to the applicable limit for each underlying mortgagor.
See 74 Fed. Reg. 47711 (Sept. 17, 2009) (final rule);
73 Fed. Reg. 61658 (Oct. 17, 2008) (interim rule with
solicitation of public comment).”
“CFPB rules define the types of non-bank companies
the CFPB will supervise for compliance with
consumer protection laws and set forth the
procedures the CFPB will follow to assert authority
over other non-bank consumer financial market
participants.”
“12 C.F.R. § 7.4009 (1) affirms the
authority of a national bank to exercise
all powers authorized under federal law,
including conducting any activity that is
part of, or incidental to, the business of
banking; and (2) provides that, except
for state laws dealing with
Non-Preempted Matters or otherwise
made applicable by federal law, state
laws that obstruct or condition a bank’s
exercise of powers granted under federal
law do not apply to national banks.”
“12 C.F.R. § 34.4 provides that a national
bank may make real estate loans without
regard to state law limitations
concerning Preempted Lending
Requirements or such other matters as
(1) the aggregate amount of funds that
may be loaned upon the security of real
estate; (2) processing, origination,
servicing, sale or purchase of, or
investment or participation in,
mortgages; (3) due-on-sale clauses; and
(4) covenants and restrictions required
in a lease to qualify the leasehold as
security for a real estate loan.”
“No. 1005 (June 10, 2004),
CCH Fed. Banking L. Rep. ¶ 81-534 (UCC
not preempted)”
“Under the Op Sub Rule a national bank that is
“well capitalized” and “well managed” may
acquire or establish an operating subsidiary, or
perform a new activity in an existing
subsidiary, by providing notice to the
Comptroller within 10 days after acquiring or
establishing the subsidiary or commencing the
activity, so long as the activity is enumerated
in 12 C.F.R. § 5.34(e)(5)(v) (an “Op Sub
Notice Activity”). Op Sub Notice Activities
include the following securities-related
services:
Making, purchasing, selling, servicing
and warehousing loans.”
“Comptroller Conditional Approval
No. 767 (Oct. 18, 2006): cash
management, including money order
processing; and purchasing, selling,
servicing and warehousing loans or
other extensions of credit.”
“In response to REPO 105, FASB amended the
accounting standards that determine whether repos
qualify for sale accounting. That determination
continues to be based, in part, on whether the entity
has maintained effective control over the transferred
financial assets. See FASB Accounting Standards
Update No. 2011-03, Transfers and Servicing (Topic
860) (Apr. 2011). FASB has issued new standards
to improve the financial reporting of repos and other
similar transactions. The new standards change the
accounting for repurchase-to-maturity transactions
and repo financing arrangements and require
enhanced disclosures. See FASB Accounting
Standards Update No. 2014-11, Transfers and
Servicing (Topic 860) (June 2014).”
“Regulation W (12 C.F.R. § 223.14(c)) clarifies that
intangible assets (including mortgage servicing
rights), guarantees, letters of credit, equity securities
issued by the bank (and debt securities issued by the
bank that constitute regulatory capital), low quality
assets and securities issued by an affiliate may not
be used as collateral.”
“Dodd-Frank expanded this exclusion to prohibit a
bank’s acceptance as collateral for a covered
transaction any debt obligation of an affiliate — such
as a loan or receivable — rather than simply debt
securities. However, as of September 15, 2016, the
Board had not yet proposed revisions to Regulation
W to implement this expanded prohibition on
ineligible collateral.”
“Corporate bond and commercial loan markets are converging. In
particular, the secondary market for commercial loans has
assumed many of the characteristics of the corporate bond
market as depository institutions have moved to originating loans
and collecting fees for structuring, distributing and servicing
loan assets. The increased participation of institutional investors
in the loan market makes the pricing of syndicated loan
instruments more market-based, and “covenant-lite” loan
issuances have nearly quadrupled since 2007 (to more than $380
billion in 2013). Loan and bond markets for distressed debt have,
in particular, become closely integrated.”
“For purposes of the Volcker Rule restrictions on investments in
hedge funds and private equity funds, “loan securitizations” are
excluded from such restrictions if the assets or holdings of the issuer
are solely comprised of (a) loans; (b) rights or other assets designed
to assure the servicing or timely distribution of proceeds to holders
of the issuer’s ABS and rights or other assets that are related or
incidental to purchasing or otherwise acquiring and holding loans;
(c) interest rate or FX derivatives that reduce interest rate or FX risks
related to the loans (or other permissible assets) or the ABS, the
terms of which derivatives directly relate to the loans (or other
permissible assets) or the ABS; and (d) certain special units of
beneficial interest and collateral certificates representing interests in
assets the issuer is otherwise permitted to hold under the exclusion.
Further, excluded loan securitizations are permitted to hold securities
if such securities are cash equivalents or received in lieu of DPC
(e.g., in a workout of a loan owned by the issuer). Certain covered
bond structures and qualifying ABCP conduits are also exempt from
coverage under the Volcker Rule fund investment restrictions.”
“Bank Holding Companies
a. BHC subsidiaries may conduct a wide range of mortgage
banking activities (see 12 C.F.R. § 225.28(b)(1)), including:
(i) Originating consumer finance/home equity loans and
securitizing such loans for sale. See, e.g., Barnett
Banks, 59 Fed. Reg. 55119 (Nov. 3, 1994) (solicitation
of public comments) (approved Dec. 7, 1994).
(ii) Making, acquiring, selling and servicing residential and
commercial mortgage loans. See, e.g., First Midwest
Bancorp, 58 Fed. Reg. 61912 (Nov. 23, 1993)
(solicitation of public comments) (approved Dec. 17,
1993); Central State Bancorp, 57 Fed. Reg. 39686
(Sept. 1, 1992) (solicitation of public comments)
(approved Feb. 22, 1993); MHC, 56 Fed. Reg. 46323
(Sept. 11, 1991) (solicitation of public comments)
(approved Sept. 27, 1991) (the “MHC Mortgage
Approval”); Hudson Valley Holding Co.,
53 Fed. Reg. 49924 (Dec. 12, 1988) (solicitation of
public comments) (approved Dec. 28, 1988); Midwest
Financial Group, 53 Fed. Reg. 5042 (Feb. 19, 1988)
(solicitation of public comments) (approved Feb. 20,
1988); Trust Corp., 53 Fed. Reg. 759 (Jan. 12, 1988)
(solicitation of public comments) (approved Jan. 30,
1988).
(iii) Providing asset management services, including
developing and implementing strategies for the
packaging and sale of whole or securitized loan
portfolios. See, e.g., Asset Management Orders.
(iv) Making, acquiring or servicing loans or other extensions
of credit for its own account or the account of others
secured by mortgages or deeds of trust on real property
or condominia, and participating in the secondary
mortgage market. See, e.g., First Maryland Bancorp,
53 Fed. Reg. 49924 (Dec. 12, 1988) (solicitation of
public comments) (approved Dec. 29, 1988).
(v) Negotiating, originating, making, acquiring, buying,
selling, pooling and exchanging, for its own account and
for the account of others, mortgage loans, notes secured
by liens on real property and such extensions of credit as
would be made or arranged by a mortgage company;
second mortgage financing; and acting as an adviser in
mortgage loan transactions. See, e.g., NatWest,
52 Fed. Reg. 42342, 45246 (Nov. 4, 25, 1987)
(solicitation of public comments) (approved Dec. 11,
1987); SDNB Financial Corp., 49 Fed. Reg. 45068
(Nov. 14, 1984) (solicitation of public comments)
(approved Dec. 5, 1984); Norstar Bancorp,
48 Fed. Reg. 1113 (Jan. 10, 1983) (solicitation of public
comments) (approved Feb. 4, 1983).
(vi) Originating, selling and servicing residential mortgages,
including selling mortgages to investors in the form of
government agency pass-through certificates or
certificates evidencing interests in pools of mortgages.
See, e.g., Texas Commerce Bancshares,
72 Fed. Res. Bull. 803 (1986); Texas Commerce Letter
to Board Legal Division, May 9, 1986; Midlantic Banks,
48 Fed. Reg. 32866 (July 19, 1983) (solicitation of
public comments) (approved Aug. 22, 1983).
(vii) Originating and servicing residential mortgage loans,
including “participat[ion] in the development of an
active secondary market in conventional mortgagebacked
pass-through securities with institutional
investors”. See, e.g., Citicorp, 65 Fed. Res. Bull. 587
(1980).”
https://www.clearygottlieb.com/-/media/organize-archive/cgsh/files/publication-pdfs/guide-to-bank-underwriting-dealing-and-brokerage-activities-2016.pdf
Reposting:
@ ANON & ALL
PAY ATTENTION, and do the research on the implication of NON-BANKING CAPACITY by purported “banks” (in name only) <– [This is pulling the curtain away to reveal the Wizard of OZ.]
12 CFR § 225.28 List of permissible nonbanking activities.
(a)Closely related nonbanking activities. The activities listed in paragraph (b) of this section are so closely related to banking or managing or controlling banks as to be a proper incident thereto, and may be engaged in by a bank holding company or its subsidiary in accordance with the requirements of this regulation.
(b)Activities determined by regulation to be permissible –
(1)Extending credit and servicing loans. Making, acquiring, brokering, or servicing loans or other extensions of credit (including factoring, issuing letters of credit and accepting drafts) for the company's account or for the account of others.
https://www.govinfo.gov/content/pkg/CFR-2012-title12-vol3/pdf/CFR-2012-title12-vol3-sec225-28.pdf
…
In Kalifornia, the implication is Financial Code §22750.
Research other state's as relevant.
Thank you Mr Garfield
Everyone — investors are not the Lender, not the mortgagee, and have no rights to property. They may have right to claimed cash flows from the security underwriter — but, that is between investors and the security underwriter.
A security underwriter is not a Lender, They do NOT give mortgages to borrowers.
A trust is not a Lender — they are a “shell” for the benefit of security investors and do not give mortgages to borrowers. .
Security investors are NOT Lenders, they invest in (current) cash flows only and do not give mortgaes. .
A trustee is NOT a Lender – they are the legal holder for benefit of securities for security investors in claimed trust. They do not give mortgages.
A servicer is not a Lender — they service for the trustee.
So – Poppy you are right. This “holder” business does not wash.
And, that is because none of these loans were actual mortgages to begin with. All unsecured already declared default debt. The “Note” was long ago charged off.
Charles – you are right, but more than Ginnie Mae. All this “Default debt” came from one of the GSEs.
Now, Barney Frank knew this. He knew exactly what happened. And he asked Congress to change bankruptcy laws to address it. Congress refused.
No one is saying money is not owed somewhere, but if you signed a mortgage contract, with the stated Lender (now likely long gone) – by which the money borrowed was supposed to pay off the prior loan by YOU, and this did not occur – the contract is breached. I am still paying, but unless Title is cleared – the property will never be mine. No matter what.
This is what happened — The banks were upset with the Community Reinvestment Act which mandated that they fund the loans, and then sell the loans to the GSEs. There was nothing in that for the banks!!!!
The banks want profit. So they went to Congress and complained. Suddenly, the complaining stopped. The bank figured out a way around the CRA — get the loans out of the GSEs, by reporting, as servicers (remember the banks were servicers) whatever they wanted to report – including default. Minorities was targeted first, but this quickly spread to all. But the servicer banks to the GSEs were also credit enhancers — ready to purchase collection rights via credit default swaps. All they had to do is say — not collectible. Then what did the banks do? They put on a different hat and became security underwriters. They concocted fake shell trusts with restructured default charged off debt (which cannot be securitized – no asset on anyone’s balance sheet), and made a bundle selling “security” interests in the trusts to any duped investor — including the GSE themselves (didn’t they check their books first??)
Now, when the whole scheme collapsed – so did any “LENDER.” Without one — there is no contract. Title is the issue. And, the problems go way back. While investors MAY have a right to cash flows — it is not from you. You owe them nothing. And, they have no right to title to your property.
Unless this is addressed – spinning in circles.
I may have to eat humble pie here, which is fine, but I am so sick of these perjurer lawyers. This “holder” business too…thoughts? Huge difference between a holder in due course, protections, with warranties and representations, no liability. A “holder” carries a bearer instrument and has liabilities, “they are not innocent purchasers”…FTC Rule 16…A Federal claim. This and citizenship diversity cannot be heard non-judicially, in any state court. They have not the jurisdiction or competency. ANON-yes, all they have gotten is collection rights, of “a debt” not your note. They have beat me again and again on procedure…I’m working on that. 100% of every document tells my story. In Federal Appeals Court and state court-again…federal judge says she’s barred by Rooker-Feldman. I got her Rooker-Feldman. Their duplicitous behavior and malignant intent to deceive is the issue. State court judgments have been acquired by willful deception, bad faith and out right lying, by the lawyers. Not the same as the court erring, because they are restricted by Statute and many defenses are not allowed. Just saying…
Thank you Neil for sharing some of the options that come to your mind. You have been a great help to me over the last decade. “Value” seems to be a rather ambiguous word in legalese. Therefore the banks attorneys seem to be more than able to baffle a court with BS even IF the court is there with an open mind.
As I said before that Fed Gov loans are placed into the bank’s Ginnie Mae MBS having only the single mortgage loan created from the initial property closing which must perform the UCC3 procedure and the Note is relinquished to Ginnie!
There are no Trust and no purchase of the debt as Ginnie is not authorized by the US Congress to ever purchase or sell a mortgage loan.
I just send to the Dept of VA a complaint that they were not legally authorized to purchase my property as I did not owe Wells Fargo Bank (mortgage servicer) or Ginnie Mae as Washington Mutual Bank (WAMU) was the lender who had stop existing on Sept 25, 2008, which meant that after the date it was impossible for WAMU to ever call the debt due.
Wells as the servicer after Sept 25, 2008, is not working for a defunct bank and Ginnie having not purchased the debt but having physical possession of the blank endorsed Note cannot act on the Note or Deed of Trust which they are not listed on either document as the “holder in due course”.
Ginnie openly admits to not owning the debt but accepts most of the proceeds from the foreclosure sale and VA Guaranty Fund insurance claim. The MERS system cannot transfer from a non-existing failed bank, that cannot operate into MERS as its does not exist. Action in MERS are only for current members of the non-binding electronic registry. The chain of ownership is not even valid in the MERS system because Ginnie is not a financial investor of any of the debt!
Poppy — AGREE.Completely. If the prior mortgage note was NOT paid off by the borrower at a refinance (or even purchase) transaction, then the transaction should be VOID. In the case of these REMICs all that was securitized was collection rights of a “default” debt wrongly classified as such. How do we know this? Because, even as Neil has said, these loans never went onto anyone financial balance sheet as an asset.
If any “note” is procured with fraud (given the refinance transaction did not do what it should do –pay off the prior loan by YOU – — should it still be negotiable? Not an attorney, can an attorney answer that please?
Regrettably, you’re wrong on two points.
First, one doesn’t have to “own” the note in order to foreclose: “the holder of a promissory note—as the party entitled to enforce the note—is the beneficiary, regardless of whether the holder is also the owner of the note.” Brown v. Dep’t of Commerce, 184 Wn.2d 509, 359 P.3d 771 (2015).
Second, the mortgage follows the note, which the Permanent Editorial Board for the UCC stated, in part, that “… the assignment of the interest of the seller or other grantor of a security interest in the note automatically transfers a corresponding interest in the mortgage to the assignee[.]”
Sec. 9-203(g), a sale of a note complying with Article 9 will automatically transfer or assign the mortgage that secures it. From Article 9’s viewpoint, no separate assignment of the mortgage is needed. Moreover, any discussion about whether the note and mortgage have been severed or separated from one another is completely off-base. They literally can’t be severed if the note transfer complies with Article 9. This is, of course, entirely consistent with traditional mortgage law, which has always held to the same principle: the mortgage follows the note. See, e.g., Restatement (Third) of Property (Mortgages) Sec. 5.4.
There’s no substitute for knowing the law!
A REMIC, which is what’s before most courts, is not a bearer instrument. If it is, then is not in the Trust, as they say. Wrong party, assignments are not payments. Just saying…