Labels Lie: Everything They Say is a Lie

The moral of the story is don’t admit anything, not even the default. There is no default if the party demanding payment has no right to do so.

Everything they are saying is a lie. Just because they use a label doesn’t mean it is accurate.


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With some editing, here is a response to one of my clients who is battling with a fictitious trust and a fictitious trustee. The first step out of the playbook of the banks and foreclosure mills is to put a label on something that invites you to use it — thus creating the illusion that you admit to the accuracy of the label. This is the biggest trapdoor that lawyers and pro se litigants fall through.
The biggest example of this phenomenon is the style of foreclosure cases both judicial and nonjudicial. One such example is Bank of New York Mellon, as trustee on behalf of the certificateholders of the CHL-2007-1 series certificates. This “label” says absolutely nothing. It creates a vehicle for plausible deniability for all concerned — the lawyers, Bank of New York the servicers and the investors. If a lawsuit was filed and a judgment was entered against that label, nobody would be liable to satisfy the judgment. 
So first thing you are invited to refer to the case as Bank of New York Mellon versus the borrower. It isn’t. It is the certificate owners versus the borrower suing through Bank of New York Mellon. But even that is a lie. The certificates don’t convey any right, title or interest to any debt, note or mortgage. So the owner of the certificate has no right, title or interest in the loan and cannot collect, process or enforce the loan.
But it is even more insidious. They label Bank of New York Mellon as “Trustee.” Yet there is no reference to a trust and there is no explanation as to the authority of the Bank of New York to represent the certificate holders who have no rights against the borrower anyway. 
“Trustee” is  misrepresentation of the role of BONY Mellon. It is not a trustee in the sense that your loan has been entrusted to BONY to hold in trust. No trustor or settlor has ever transferred the debt to BONY Mellon. No transfer of the mortgage is legally effective under the laws of any U.S. jurisdiction without transfer of the debt. It is referred to as a legal nullity. If you ever get a copy of the actual trust agreement you will see that the trustee is like MERS — holding barenaked title to the mortgage without owning the debt or the note. BONY has absolutely no right to even inquire much less know or manage the affairs of any “portfolio” of loans. That is what the documents actually say.
Don’t fall through the trap doors of their paper instruments. Follow the money. In your case you find that the ONLY parties that paid value were the investors who purchased certificates and then the securities brokerage firm that used only part of that money to buy or originated loans.
And that is where the essential problem lies. The only parties who actually paid their own money did NOT get any right, title or interest to the debt, note or mortgage and in fact expressly waived such interest. The only intermediary that funded the origination or acquisition of the loan did not retain any possible risk of loss for more than 30 days and usually had no risk of loss because they had presold the loans before they existed.
Therefore under current law which states that a claimant must have paid value for the loan before it can enforced through foreclosure, there is nobody who can enforce. Argue that though and the judge will throw you out of court even though it is true.
So you must stay away from saying that while harping on the fact that the claimant (a) never paid value for the debt as required by Article 9 §203 UCC as adopted by state law and (b) that the claimant is not an agent for anyone who paid value for ownership of the debt. You want to leave open the idea that there is someone out there who owns the debt and that these people seeking to enforce are not connected to such a person or party — even though there is no such person or party.
It is a fundamental maxim of equity that “equity looks to substance rather than form.” See Applestein v. United Bd. Carton Corp., 60 N.J.Super. 333, 348, 159 A.2d 146 (Ch.Div.) aff’d o.b., 33 N.J. 72, 161 A.2d 474 (1960). The courts have applied that principle in dealing with mortgages in a variety of contexts. So it is that an assignment of a bond or note evidencing a secured obligation will operate as an assignment of the mortgage “in equity.” See 29 New Jersey Practice, Law of Mortgages § 11.2, at 748 (Myron C. Weinstein) (2d ed. 2001) (citing Stevenson v. Black 1 N.J.Eq. 338, 343 (Ch. 1831) and other cases). Conversely, commentators have noted the propriety of treating the assignment of a mortgage, without a specific reference to the underlying obligation, as effectively transferring both interests.
PAGE 348
The assignment from MERS was executed and recorded a short time after the complaint was filed. That document is dated February 18, 2009. It is captioned “Assignment of Mortgage.” It recites that MERS, as nominee for American Home, transfers and assigns the mortgage at issue to Bank of New York, as Trustee. The assignment refers to the mortgage as securing the note at issue. It recites the transfer of the mortgage “together with all rights therein and thereto, all liens created or secured thereby, all obligations therein described, the money due and to become due with interest, and all rights accrued or to accrue under such mortgage.” The assignment was executed by Linda Green, as Vice President of MERS, as nominee for American Home Acceptance. Green’s signature was notarized. The assignment was recorded with the Atlantic County Clerk on February 24, 2009. It does appear the assignment was intended to indicate that the debt in question had been transferred to the Bank of New York as Indenture Trustee in February 2009. It is now apparent that is not what occurred. (e.s.)
Legislative note: There are multiple possibilities for making such securitization legal but they all require high transparency which means disclosure to investors and borrowers alike as to the actual role of the intermediaries and the money they are generating from the investment by investors and the execution of loan documents by borrowers. The continuing struggle by U.S. State and Federal Courts to give life to loans that are functionally and actually illegal and unenforceable must yield to the express directions contained in the U.S. Constitution. It is entirely up to the legislative branches, not the judicial branches of government, to make changes in the law.
Right now it is not possible under existing law to securitize in the manner used by Wall Street since the mid 1990’s. Wall Street knows it. The current methods split the payment of value for the debt from ownership of the debt. This is impossible under current law. And fundamentally this is the achilles heal of the entire scheme of securitization – and why persistent lawyers and homeowners win most of the time.
A change in the law is possible only if there is informed consent by the participants — that the owner of the debt and thus the party entitled to collect, process and enforce the debt is be clearly identified and accepted. It is only through such disclosure that the implied contract becomes actual and the parties are able to bargain for their share of the true transaction and business plan which is the issuance and trading of securities, which should fall back under the rubric of securities regulation.
And probably the most fundamental change in disclosure requirements should be the  identification of the party who is responsible for compliance with state and federal lending laws — something that is well hidden by what the industry calls “remote vehicles.” At the moment the use of disingenuous labels creates the illusion of bridging the gap but  American jurisprudence has always favored substance over form. The day of reckoning is coming and it is going to hurt. Plausible deniability works but only at the beginning. Eventually the chickens come home to roost.

8 Responses

  1. Yes – Ian – good suggestion, and I agree. We must act. My emphasis is – unless we all start writing letters, we will get nothing done. See post under last Neil post – U.S. Fed at odds with bank regulators on community lending standards. We need to contact not only Neil Barofsky but also Lael Brainard at the Federal Reserve. Anyone have contact info – please post here.

    Thanks Ian, Thanks All.

  2. ANON- I posted a response last night, somehow it is t here. In a nutshell, I agree. I mentioned Barofsky to help anyone interested in the CS settlement to find a link.

  3. I know you know Ian. And, you know I have been everywhere. What you are doing is RIGHT. I just wish everyone would do. We need help in numbers.

    People who know me, and are not involved in any of this, tell me to just worry about myself. I cannot do that. But we can’t do anything alone.

  4. ANON- I Know that Neil Barofsky did nothing ,and no one else did anything either. I already emailed him well iver a month ago, and I got no response to the email. I played sort of dumb, with just enough correct information and a few questions sprinkled with double negatives.
    Perhaps I should have given him and his staff both barrels, and told them that there is a growing segment of the citizenry who know that they are lying through their teeth, handing out meaningless fines and ineffective settlements, and that the fraud is just as bad (worse actually) than the fraud which brought the global financial system to its knees in ‘08.
    Maybe I’ll send a certified letter next and poke holes in their settlement. The reason I responded to Ivan was because the settlement is in effect right now, and SPS (credit Susie) appears to be doing the same things all
    Over again, like Ocwen and others.

  5. Ian – Neil Barofsky (TARP) does nothing – even though they know all went very wrong. Look at the structure of the “Trusts” set up during financial crisis. All in violation of Regulation AB “pilot program” set up a long time ago. Nothing ever “Passed-Through” to security investors. Check out structure of REMICs in the prospectus. Violation of Regulation AB shut down the market – not the loans themselves.

    But, the government and courts do not care because we are percentage of people who do not matter. As long as others and “economy” doing well by manufactured low interest rates — the hell with us is the answer.

    I will tell you this — check the legal representation. It is NOT was it says it is, and the Courts do not care.

    Java — I know what state you are in — not good. Not good at all.

    Ivan – there are no authorities to help – especially if you are in litigation.
    It will be blocked. That is what we need to do something about. .From Java to across the country. People need to unite. Said this ten years ago. . .

  6. Ivan- I had SN Servicing , and currently have SPS. SPS ( Credit Suisse) settled a 5.2 billion investigation for multiple fraudulent issues dealing primarily with investors. The settlement was in 2017 and runs through 2021. Neil Barofsky ( SIGTARP) is the monitor for the settlement.

  7. Good topic Neil I got Nationstar assigning/Transferring the deed of trust of one f my properties to another investor being as Servicer, I disputed such transfer when I received its notice of transfer since July 2019. Its my understanding servicer can only transfer “servicing rights” to another servicer under the same investor. Since august they keep sending the same documentation and in the past they have confused and misrepresented the facts to State and Federal agencies when I did reported its fraudulent business practices, They keep relying and saying under article 20 of the deed of trust: “The note can be sold and servicers can be change several times” Nationstar/Mr. Cooper made them look as they were the investor, reason enough to the State and Federal agencies closed my inquires in the past. But this time I was able to challenge the new alleged servicer too SPS and put them in notice and demanding standing to service my Deed of trust documents, instead to answer me properly they provided the same Deed of trust’s Copy Nationstar did in the past and transfer the Deed of Trust documents in less than a month to a different servicer SN Corporation Servicing, I did put them in notice let them know I wont pay a single dime until they proof me standing by the Investor. I already have the evidence in this complex scheme so I will take to the authorities to let them know they lie and cheat Homeowners as myself, I’m not yet in foreclosure in that property, I’ll take different approach this time, this month I have appointments with some authorities and my Law maker congressman Brad Sherman.

  8. I denied everything. Deny. Deny Deny.

    The judge denied my objection to MSJ and denied my request for oral arguments.

    The judges Deny seems to be stronger than the pro se Deny !!!!

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