Why Are All the Documents Fake in foreclosures?

The problem that most pro se litigants  and foreclosure defense lawyers have, as will be discussed in part on Thursday’s radio show with Patrick Giunta, is that most people fail to understand and therefore fail to plead and prove the nuanced difference between “the debt doesn’t exist” and “this foreclosure proceeding is a sham.”
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But pleading the sham without understanding that the reason for the sham is that it is no mere technicality that the debt does not exist and that fact drives the the reason for all the fabricated, false, fraudulent, forged, backdated and robosigned documents. The players MUST use fake documents because they have no real transactions that could be memorialized.
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As a practical matter if there really was a sale of the debt, the purveyors of foreclosure would be very quick to show that — the same way that lenders have done for hundreds of years.

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A client is asking me the “what now?” question. Here is my response.

So here is my perception of the problem.

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You are stuck in a procedural bind. The essential, primary and riving purpose of any court action is to bring finality to any dispute. This doctrine of finality often gets in the way of justice but the cost of finality is generally believed to far outweigh the loss of justice that occurs when it is employed.
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Legally it is entirely possible that you actually still own your property or that you could get back title and possession and be done with it. Let me explain.
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Title is not subject to any statute of limitation. There is no requirement to renew a deed. If you own title then you own it forever — fee simple absolute. The only exception is in boundary disputes where a fence, for example, overlaps onto a neighbor’s land as described in their deed. After 20 years of such incursion, given the right elements, adverse possession applies, which is a statute of limitation on your claim to force the neighbor to remove the offending fence.
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Thus if there was no change in record title, you still own the property. Bill Paatalo, with assistance of counsel, is using this to file actions for ejectment in cases where the homeowner is still the record title owner or has been deemed to still be the record title owner because a sale and foreclosure deed were vacated or otherwise deemed void. As the owner of title you can forcibly remove anyone on the property or who claims the right to possess the property.
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But the only way this can be used is if you are indeed still the record title owner of property. If your argument is that title should not have been changed then you are admitting that record title has changed. So that might be a first step in getting the coveted order declaring the foreclosure process, judgment, sale and possession vacated or void. THEN you can once again claim to be the owner and seek ejectment (which is a step often overlooked by both pro se litigants and attorneys).
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If your argument is that title should not have been changed because the foreclosure was fraudulent, you must plead and prove that regardless of whether it is a motion to vacate or an entirely new lawsuit for declaratory, injunctive and supplemental relief.
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Pleading and proving that is a serious challenge for most pro se litigants and attorneys. Most people make the mistake of “raising questions.” Because of the doctrine of finality the time for raising questions or inferences is long past. You must state your case with specificity and particularity and prove it by clear and convincing evidence or you won’t get to first base.
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Based upon my experience over the last 13 years with this issue my opinion is that the only clear path to victory is to address the elephant in the living room. In lay language you must refrain but being coy and state affirmatively what you can prove and that those facts qualify as a cause of action for which there is a legal (money damages) or equitable (injunction or declaration) remedy. Nothing less will do.
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If you are looking for the court to do the work for you, think again. During the primary case the court might give you a little help; but after judgment is rendered and events have happened the court will offer nothing other than resistance which is exactly what every judge is required to do. That isn’t bias. That is a judge following the rules.
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The elephant in the living room is that the debt simply does not exist and the money advanced has already paid for itself many times over — even if that money was never turned over to the investors who put up the money paying the initial value for the debt (i.e. the origination or acquisition of the loan).  If you are not willing to make this assumption my opinion is that you should not bother trying to seek any remedy unless you can spot some scrivener errors that temporarily suspend the effect of the foreclosure.
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The problem that most pro se litigants  and foreclosure defense lawyers have, as will be discussed in part on Thursday’s radio show with Patrick Giunta, is that most people fail to understand and therefore fail to plead and prove the nuanced difference between “the debt doesn’t exist” and “this foreclosure proceeding is a sham.”
*
But pleading the sham without understanding that the reason for the sham is that it is no mere technicality that the debt does not exist and that fact drives the reason for all the fabricated, false, fraudulent, forged, backdated and robosigned documents. The players MUST use fake documents because they have no real transactions that could be memorialized.
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The law requires that the foreclosure be invoked solely for the purpose of restitution of an unpaid debt owed to the claimant. Judges have played fast and loose with this requirement believing that the end result of the foreclosure is that the owner of the debt is going to paid with the proceeds of the forced sale of the home.
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While Judges recognize irregularities in the documents and procedures invoked in foreclosures, they are proceeding under the doctrine  of “damnum absque injuria.” The judges are saying that there might be a violation but there is no injury because you owe the money and didn’t pay it therefore you should lose your home and the interests of justice are thereby served. 
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So THAT is what you must attack headon — not by alleging that there is no debt (even though that is true, it is counterintuitive and not believable) but by alleging that the the foreclosure was not intended to, and did not result in payment to anyone who had ever paid value for the debt.
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In  short, foreclosure is about restitution but no restitution occurred, nor will it ever occur because the foreclosure was a scheme to obtain revenue instead of restitution. It was a scheme to produce revenue BECAUSE it was not a proceeding to pay a debt. 
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So you want to allege that while the foreclosure documents were facially valid, it was a fraud upon the court and the borrower in which the property would be sold to satisfy revenue objectives and would never be used to pay anything to reduce the debt. Notice what I am saying — you want to tacitly admit the debt exists even though it doesn’t.
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Your attack is on the premise that the claimant owns the debt by reason that is paid for the debt and the underlying premise or bias of the judge that even if the claimant doesn’t own the debt the proceeds of foreclosure will be paid to the parties who paid for the origination and/or acquisition of the debt. Those proceeds are not ordinarily paid to anyone other than those who collude to steal homes through foreclosure. Most people skirt around this issue and therefore fail as early as the pleading stage. If you’re not willing to address it, go home (your new home).
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Crafting a pleading that addresses the nuances of what I have outlined here is the first step. But such a pleading must have more than legal conclusions, It must plead facts that you faithfully believe to be true. that is where you need some expert to come in and give you the facts that they have uncovered.
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By stating overtly that the foreclosure was not invoked to create a vehicle for restitution of an unpaid debt but was rather a revenue scheme for the interlopers who started it, that allegation MUST be taken as true for purposes of pleading. I think it is the only thing that will help you avoid dismissal of the claim.
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And don’t refer to the interlopers as intermediaries; if you do that you will be tacitly admitting that they had authority from the party who actually paid value for the debt and who actually had financial injury from non-payment even though no such party exists. 
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Assuming you have crafted such a complaint or motion and you have asked for an evidentiary hearing or trial, your next and most crucial step is discovery. Since you have overtly stated the basis of your attack (assuming you survive a motion to dismiss), any Discovery question relating to ownership and payment of value for the debt, the parties involved and dates will be, as we have already repeatedly seen in courts across the country, the subject of an order to compel answers after they fail to answer. You are very likely to win that argument.
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And then in a motion for sanctions and motion in limine, you are entitled to draw an inference from their willingness to answer and you are entitled to an order that either dismisses their claims or defenses or an order restricting them from putting on any evidence at all regarding ownership and payment of value for the debt.
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It is a circuitous path, but it is the only one possible, in my opinion, based upon the statistics of who wins and who loses. In the end you and and your lawyer must remember that foreclosure is not about paperwork; it is about money. Reminding the court of that fact is central to educating any judge as to why you should win.

9 Responses

  1. And Ian – courts are under instruction – or, either, very stupid.

  2. Ian — the repercussions of the financial crisis are massive. One of the most important “comments” after crisis was exposed – came from Bernanke — who said – “We do not have the money to help the people.” I recall it well. And, I recall that he stated — these trusts were only for pass-through of cash flows — no title was EVER passed through.

    Now — with each representative for office – they want good “backing” to win. They don’t care about the people. They don’t care what went wrong. They care about winning. All of them. If the truth were ever exposed – we would have a collapse that our country has never seen before. We escaped that in 2008 — by the “TBTF” philosophy that permeated the media, and government “manipulating.” I agree — exposure would collapse the economy. I do not believe that the people who are victims should take the “hit.” There has to be some avenue to cease the fraud, and return victims to whole. It is not happening. Too much at stake for others in the economy. They will not allow.

    I don’t “buy” it. Not good enough for the people. We shall not be victims – for the sake of others.

    I have been a capitalist – instructor of economics and finance for many years. I have stood by it. But, something went very wrong. We no longer have capitalism. We have a system that has gone haywire. This is not to say I support Dems or Reps. Neither is attuned to reality.

    Thanks.

  3. ANON- I know that, and you know that, and the judge may or may not know that, but wouldn’t it seem like a plausible defense or assertion? If the foreclosing person has no right, interest, or claim on the mortgage, note or debt, how do the judges rule? “Well, even though this claim is brought by a fake creditor with no standing, and you’ve shown that they don’t have any legal claims here, I’m going to rule in their favor, as I’m sure the real party in interest will never show up to get their money back”?
    I know this is an oversimplification, but you know what I mean- and thanks for the on-the-mark reply-

  4. Ian — that is not what happens. Another creditor will rarely show up because all is internally coordinated. What happened is that when the true creditor (actually investor – (likely originally a GSE)) was not paid BY THE BORROWER, the debt stays permanently distressed and in default. . Refinances just become a transfer of debt, and not an actual refinance. This is why the government pushed modifications — title cannot be fixed.

    And, you will see this process ongoing even with new purchases that assume the internal reporting of prior owner.

    If you happen to find out that the prior creditor was not paid by you, which you will likely find if you have a crisis loan, a title company will not cover you because owner’s policy ceased at purchase of home. If you try to refinance, you will either be denied due to title issues, or someone will continue the bogus title record.

    It is out of hand. Some banks will not even accept any application if the loan is assigned to a trustee to a trust name. (a crisis loan). If a loan is legitimate, only the bank that financed the loan stands for title. If they are gone – need a successor. This is all that matters for title. Trusts finance nothing. That is why there was no consideration. They are never direct lenders, and borrowers should never be concerned with how a loan is invested. However, when actual default occurs — the “right to enforce” became an issue. If the trust (the trustee) acquired loan because the prior loan was falsely reported in default to investors — there is NO RIGHT TO ENFORCE anything.

    “Legacy loans” title cannot be fixed.

  5. I never see any mention of a homeowner stating that if they pay the _wrong person, and the true owner of the debt shows up later, they have to pay the true owner also.
    And as the entire foreclosure process is rife with fraud, due to lack of standing, backdated documents, forged signatures , bogus POAs, MERS assignsments purporting to assign the mortgage, “together with the note”, etcetera, then the whole process is obviously a scheme to defraud the homeowner.

  6. It would seem that if the true (if there is one) creditor, lender, mortgagee , holder in due course or whatever they are, hasn’t been paid, either prior to or after foreclosure , then any claims to legal title remain void.
    And there is no state of limitation for fraud. Regardless of the court ruling. Please correct me if I’m mistaken.

  7. The is in the end is not about title but about the title being clean of all liens and debts. In Chapter 7 BK all your debt is discharged. It is gone forever. Yet how can an alleged creditor be allowed to foreclose on a debt that has been discharged by a court order? First resolve this and we will discuss if someone is owed money or not. https://www.facebook.com/groups/aafhelpus/

  8. Title is complicated. There is a difference between “marketable title” and “insurable title.” This is why we see foreclosures go for sale dirt cheap – there is no marketable title, and buyer takes as is. Note – insurable title is only for the Lender. Borrowers cannot get owner’s title because when one purchased the house that owner’s title only covered up to that date (minus any exclusions). So, you must go further and get marketable title – that must be clean – in order to sell the house.

    Thanks.

  9. I see it every day…..

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