Did you get the loan? Did you Pay? Circular reasoning produces circular responses.

It’s not like anyone can make any claim. To get in court you must own the claim and the claim must be real. If there is a hole in a parking lot that the supermarket should have fixed, that doesn’t mean YOU fell in it and got hurt. Maybe someone else did and they have a potential claim that they have not filed. Or maybe nobody got hurt and there is no claim.

In mortgage foreclosures, the parties coming to court have knowledge of a “hole” in payments but none as to who fell in it or whether anyone got hurt. There is an assumption that someone must have gotten hurt but no evidence of that. As a result of circular logic accepted and perpetuated by most courts, the claimant gets awarded money for nonexistent damages. The fear of undermining the financial system has overcome common sense.

If the truth is acknowledged, it’s not the financial system that will fall, it is some of the players in the financial system. Borrowers did not create this anomaly or the 2008 crash. It was the same players who are now announcing record “earnings.”


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The only thing relevant to the court is whether there is a legitimate claim brought by the owner of that claim. That’s not an opinion. It is the law, starting with the constitution of the United States.  The courts are skipping over that and generally start from this point: Did you get the loan? Did you pay?

The unfounded assumption is that the reason this claimant is demanding payment is that you did not pay and that your failure to pay this claimant is a default. It is a presumed to be a default because this claimant is presumed to be entitled to receive payment. Since the claimant is presumed to be entitled to receive payment it is presumed to have suffered financial injury as a result of nonpayment. The “hole” in payments is reason enough to grant the foreclosure.
The hole in this “logic” is gaping. When pushed to name a party who actually suffered any financial damage as a result of the hole in payments, the claimant is unable to respond. Instead the lawyers argue that no response is required.
It is circular reasoning to be sure but nonetheless very popular among judges. In the background, the absence of a real party in interest making a claim leads the judge to presume that even if the claimant has no direct right to make the claim (making it illegal) the court will nonetheless allow the foreclosure under the theory that the proceeds are somehow going to repay a debt. So from the court’s perspective there might be a foul but here is no harm in allowing the foreclosure. This is based on unfounded hope rather than sound reasoning, solid evidence or underlying truth.
The fact that the actual person who fell in the hole outside the supermarket is either not hurt or not making a claim makes no difference in this scenario. The court awards damages to the first person who comes through the courthouse doors making the claim.  The existence of the hole is enough evidence to take the most drastic draconian action that is available under American civil law — forced sale and eviction and loss of lifestyle for the owners and residents.
Up until about 20 years ago judges would toss out foreclosures in which the paperwork and the numbers didn’t add up, even without the homeowner contesting the foreclosure. They just wouldn’t toss out a family unless they were very sure that the right party was bringing the right claim. That doctrine has been discarded by the courts who are hell bent to “process” foreclosures instead of actually trying them.
So it is the task of the homeowner to gradually bring into high relief the likelihood that the proceeds will not ever be used to repay the debt — OR that there is no evidence to support that assumption. This is doubly difficult because any pleading that says that is treated as conspiracy theory.
And yet, through the process of discovery, motions to  compel and motions for sanctions, plus timely objections and motion in limine, many judges that ordinarily rubber stamp foreclosure sales will pivot and rule in favor of the homeowner — perhaps merely to establish a record of sometimes ruling for the homeowner. Most of those end up under a settlement agreement with a seal of confidentiality.
The letters and complaints and responses must be woven together with your defenses such as to create a credible narrative that the allegations and proof of this claimant don’t add up and that therefore the claim should be dismissed with or without prejudice. Always keep in mind that the claimant has the burden of showing that it in fact has a claim. And always remind a court of that as they like to ignore that basic black letter law component of due process.
PRACTICE NOTE: The real answer to the question of getting the loan and making the payments is that you did sign loan papers with someone other than the claimant. The reality is that you don’t know if they are producing an actual original or some re-created “original.” Don’t admit what you don’t know.
In cases involving claims of securitization, reality has taken a series of bizarre turns:
  • You don’t know how the money was handled or who, if anyone, actually received money after the “closing” in which loans documents were signed — except for any money that you actually received from the “loan.”
  • You don’t know whose money was used to fund or create the illusion of funding the loan.
  • So you don’t know any of the facts governing consideration for the alleged loan contract — which is the key component for enforcement of any contract.
  • But you DO know that nobody will give you those facts. This is something that can lead to a legal inference. NOTE: If a party takes the 5th in a civil proceeding it is completely permissible for the trier of fact to draw negative inferences from the refusal to answer basic questions. Thus refusal to answer can be converted to an admission. That can happen in the discovery process.
  • You don’t know who paid for your loan.
  • You don’t know whether your debt still exists or if so, to whom it is owed.
  • You don’t know if this claimant has been financially injured by the hole in your payment record.
  • You don’t know if any of your payments were ever forwarded to someone who had paid value for your debt.
  • You don’t even know if there is a hole in payment record because you don’t know whether the claimed debt exists on the books and records of any business entity that is carrying it as a loan receivable. NOTE: Ask any accountant. If there is no loan receivable there is no loan payable.

AND KEEP IN MIND: The reason for all these counterintuitive twists and turns is simple: When investors paid for the certificates (issued in the name of implied trust entities) they were supplying the money to investment banks for the purpose of funding the origination and acquisition of the loan data arising from the execution of the note, mortgage and and other documents at the “loan closing.” The investors were NOT purchasing any debt, not or mortgage. In fact the certificates (most of them) expressly disclaim any interest in any debt, note or mortgage.

In American law, the only way you can own a debt is by paying value for it. Wall Street figured out that the converse might not be recognized by the courts and they were right.  By twisting principles of securitization beyond recognition they split the payment for the debt from the ownership of the debt.

In the new paradigm everyone gets paid but the investors get paid according to a promise made to them by the Wall Street underwriter of the certificates they bought from the underwriter. Investors do not get paid by the borrower so a “hole” in borrower payments does not affect whether or how much investors get paid. And nobody else is actually the owner of the debt by reason of having paid for it — because the investors supplied the money.

Meanwhile the intermediaries are all making a fortune receiving fees, commissions, compensation and profits far exceeding anything that was previously available for brokers and other intermediaries in the lending process.

The completely counterintuitive result is that nobody loses money when the “borrower” stops paying, but that is only half of it. Everyone (except the investors) gets extra revenue every time the “borrower” does pay voluntarily through monthly payments or involuntarily through foreclosure. Nobody is carrying a loan receivable on their books so the money never gets credited to the debt.

The debt is never reduced and probably doesn’t exist, regardless of whether the homeowner pays or whether the house is sold. When payment is received from a homeowner or the sale of the house it is received as revenue. Foreclosures are thus great business. every time a home is sold, various parties get more revenue and more profit.

ARGUMENT: OK I know, what about the loan, right? Take a step back and look at the broader picture. If $12 was being generated in revenue for every $1 “loaned” then it follows that the act or illusion of actually “loaning” money was in fact merely a cost of doing business — i.e., the sale and trading of unregulated securities.

The risk component was not just diversified, which is the hallmark of securitization. The risk of loss was eliminated. AND if the truth had been disclosed to investors and borrowers, both of them would have bargained and received better terms from the investment banks who originated the scheme.

The securities would have been forced to be safer investments and the loans would have been forced to actually be viable. And if business entities were going to profit from foreclosure it could only be with informed consent from investors and borrowers, and through a basic change in the law that permitted a non-owner of the debt to foreclose and that such a foreclosure would by law actually reduce the debt, if any. Changes in the law would also be required as to who would be authorized to issue a negative credit report (changing the current system allowing anyone who knows about the hole to report it).

see https://law.justia.com/cases/new-york/other-courts/2007/2007-50978.html

See Castellanos 2007 2300223752006100sciv

See Castellanos 2008

That case was a prescient predictor of things to come. Although dubious, J Schack was willing to assume there was a loan and that there might be a claim to foreclose — if only the lawyers would substitute a party who actually possessed the claim. In this case the judge even theorized who that party might be and asserted he would grant the motion to substitute plaintiffs. Answer: crickets. Nobody filed anything. The reason: even the foreclosure mill lawyers are unwilling to file anything that could only be filed after due diligence performed by the lawyer.

7 Responses

  1. Ian — I keep paying, like a dodo head — and I have no idea where money is going. I do know — past payoffs, and past payments – VANISHED — despite my proof of all. Happen to have a “clutter” house. UGH. Everything saved. Have all cancelled checks for decades. And you know what authorities said when I told them and sent them what I have? Refused to talk to me. Shut me down.

    So – what happened to money? Who knows? They all fight me like hell to shut me up.

    Clueless as to money path. I simply do not know. Summer –money path is unknown.

  2. ANON- yes I had the semi-bogus double-dipped mortgage also, with payout to cc cos which didn’t happen. That led me to believe that the cc companies were in on the scam also, at least the cc cos owned by the large banks who were issuing their own cards. I’ve never seen this particular aspect of this crime spree addressed.
    And Summer, as far as laundering drug money, HSBC( with James Comey on the board) was a predominant launderer of drug money. At the same time on the same day that HSBC activities were under investigation by the FCIC , televised on CSpan2, HSBC was opening yet another branch in Mexico for such purposes. I have this as indisputable fact. Also, the % paid by the drug cartels to launder cash in the hundreds of billions of dollars is/was 20%.

  3. I have Ian. I have proof. But, so far, that has not mattered to judges who rely upon adversaries attack on pleadings. There was supposed to be some cash out to pay credit cards — but, I never saw that cash. Mortgage company paid directly — and it was never reported as paid by me. The mortgage itself was never internally recorded as paid by me – even though a fake discharge was recorded.

    Poppy — even though loan was presented to me as a “refinance” — document I got years later shows a “modification” – which I never saw or signed.

    Judges do not want to decide my case on merits, which has left me in eternal litigation with no valid title to property – all while I keep paying high interest rate. Rates are so low today, but not for these loans whose adjustable terms, tied to LIBOR, keep rates high. Modification has never been an option to me (they claim equity in home prevents). Not that I would ever want a modification – at least not without clear title.

    I have been everywhere for help. Litigation prevents. Many tell me my case is too complicated – simplify it. It cannot be simplified, and “details” keep getting even more complex. .

    Little that I have was produced in discovery, but discovered on my own by going back to prior loan, and actual last closing, and endless perseverance by me. . I did get in discovery some important documents here — but, that was quite some time ago. Today, adversaries would never allow certain documents to produced. I got “Lucky” at some points to find what I found. However, being in court for as long as I have been, is certainly not “Lucky.” I have no resolution.

    Bottom line – it does not matter whether you pay or not. Courts don’t like us. I wish I knew that a long time ago.

    Agree with Neil – that the financial system would not have collapsed even if all had been handled truthfully. And culprits – they went on to record profits by monetary policy that has benefited , largely the “top.” At this juncture, it is doubtful that victims can be made whole, but, regardless, the truth must ultimately be told.


  4. Presumptions create assumptions.

    Americans deal with someone who pretends to be a “Lender” who purportedly sell them a LOAN.

    But that do we know about this LOAN?

    Why we think is was a LOAN and not a part of illegal drug sales profits given to us as a LOAN to be laundered through our “mortgage payments”????

    What do we know about the SOURCE from where these money came from?

    For example, just after 2001 WTC attack, on US housing market was dumped unprecedented amount of money which came from some very questionable still secretive funds – and these money were lent non-stop to Americans as “mortgages”, take as much as you can, no questions asked

    In 2007 Bank of New York was sued by Russian Government for $22.5 Billion – which was the exact amount of funds disappeared from the Country after Communists regime collapsed The case was related to 1990th money laundering scheme.

    Wondering where these money were hiding all that time?

    In your LOANS!

    So, when a Judge would ask another prey whom they prepare to mercilessly execute if they got the LOAN, the good answer would be – since the real investors who funded my transaction were never disclosed to me, I suspect it was not the loan but merely a vehicle to launder very questionable funds through my mortgage payments.

  5. I got a refinance under the guise of a modification. Does that count?

  6. I could not find out if there was or was not a payoff of our original loan, which was a fixed rate VA loan. We were conned into refinancing with the idea we could get some money out, or have smaller payments. We owed around $ 66,000 on it when we refinanced. We were talked into taking a loan for $ 100,000 and thought we would be able to make a couple of improvements to the house, like update the kitchen. When it was all done we found that old out of statute debts were wrapped into the refinance and paid off by direct to the creditor checks from the lender (or so the lender said and listed in the closing documents in the loan closing), and the total cash we got out of it was around $ 2,300. We think the servicer, SPS, paid off our VA loan in the refinance, because that same $ 66,000 figure was the offer to us by SPS in the foreclosure back and forth correspondence that if we came up with that $ 66,000 and paid it to SPS, we could save the house from foreclosure. It was a written offer to us from SPS, our servicer, that our lawyer said he could enforce on them if we could get the money or a loan elsewhere. The house had appraised at $ 126,000, the loan balance was up to $ 180,000+ with all the bogus “fees” and accrued interest by that time. And we could have made the payments on a loan of only that $ 66,000 and gladly would have, but of course we did not have it in savings, and NO ONE would finance us for it!

  7. With this article in mind, it’s a good time to ask (again): if almost all of the securitized loans were refinances, has anyone here ever found that , apart from a small payout sum received at the closing, I had anyone ever found out that there was no payoff of the “existing” mortgage?

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