How to Make Your Point That Borrowers Only Owe Money to Parties That Actually Own the Debt

“First, as explained by the court in Bank of Miami Beach v. Fidelity Casualty Co. of New York (Fla. 1970) 239 So.2d 97, 99: “[A] mortgage lien and a mortgage debt are two entirely different legal concepts or `species.’ ” First Amer. Title Ins. v. Xwarehouse Lending, 177 Cal.App.4th 106, 118 (Cal. Ct. App. 2009)

If the foreclosure mill can’t come up with a party who actually owns the debt by reason of having paid for it then netiehr the law firm nor its presumed client has any claim to collect the obligation much less foreclose and force the sale of real property based upon the claimed existence of a default.

There is no default and none can be “declared” by a designee who has no financial stake in the outcome of the claim — other than the expectation of profit.

Too many lawyers are missing the obvious. And they are not performing their jobs if they advise clients wrongly based upon lack of knowledge and competence in the areas of foreclosure law and the factual predicate of securitization of debt.

As the California Supreme Court admitted in the Ivanova decision, the debt is not “just owed to anyone.” It must be owed to someone. That someone must be a legal person readily identified and confirmed. And that someone must have the authority to enforce. the banks have been getting away with creating the illusion of authority — even though that authority does not come from anyone who owns the debt  by reason of having paid for it, nor anyone representing the debt owner.

So people start asking me “How do we prove that? Do you have any case law on that? Because the court is just assuming that there is a creditor instead of asking about it.

So the answer is that it is your job to bring up the issue. The judge is there to call balls and strikes without regard to outcome. The judge calls balls and strikes based upon established laws, rules and custom and practice.

And all of that comes down to this: if you make a claim the first thing any court is going to do is assume you have a claim even if you don’t. If a claim is made against you and you don’t timely raise issues like the claim doesn’t exist, then the claim does exist and you lose even though there is no claim.

But in answer to that question here is an appellate court decision in California which merely recites obvious common sense logical argument as the basis for its decision:

We reject Access’s argument that the word “indebtedness” as used in the title insurance policy should be read as simply referring to the act of money changing hands, which would include Access’s transfer of funds through the escrows to CHL. The word “indebtedness” cannot be read in isolation as referring to any indebtedness. It must be construed in light of the surrounding words, namely, “the owner of the indebtedness secured by the insured mortgage,” or “the successor in ownership of the indebtedness,”

First Amer. Title Ins. v. Xwarehouse Lending, 177 Cal.App.4th 106, 115 (Cal. Ct. App. 2009)

First American’s title insurance policies insure only against losses “sustained or incurred by the insured by reason of . . . [t]he invalidity or unenforceability of the lien of the insured mortgage upon the title.” Access argues that it is the defects in the lien instruments which give rise to coverage in this case, and not the forged promissory notes. We disagree. Any losses suffered by Access are not due to defects in the title or mortgage liens, but are entirely due to the failure of an existing indebtedness between the named borrowers and CHL. (See Blackhawk Production Credit v. Chicago Title (1988) 144 Wis.2d 68 [ 423 N.W.2d 521, 526] [“If the interest held by [the insured mortgagee] was valueless without the superior lien, it cannot claim any lost value because the lien existed.”].) [e.s.]

First Amer. Title Ins. v. Xwarehouse Lending, 177 Cal.App.4th 106, 117 (Cal. Ct. App. 2009)

There are no negative references to this 2009 decision in any other case. And across the country there are many cases like it in the appellate decisions of every state. The fact that investment banks took advantage of loopholes to sell the loan data over and over again without ever transferring the debt is not the problem of the homeowner.

The law states that only those who own the debt can enforce it. And if the possessor of a note is not authorized by the owner of the debt, then the possessor is not a holder nor is it entitled to enforce the debt or the note or the mortgage by any other means.

Under all modern law there is only one way to own a debt: pay for it.


9 Responses

  1. Bob G — good advice. Setting up — no one responding to anything now. I am sure the lawyers are there. They hide when they want to.

    Junior has the same as me — fees on day one. How could that be??
    I even have recorded that I did not pay first payment. I have proof I did. FEES FOR WHAT? They much later tell me — “allowable under foreclosure.” WHAT FORECLOSURE? I have never been in foreclosure.

    And Junior is right — they change the claimed “holder” at whim. Now know sitting in the servicer’s attorney office.

    Have to work together after this pandemic calms down. But the stock market is relentless in their power. Seems everything is about the stock market. We need power behind us. No where to go.

  2. @ JUNIOR…if it were me, i would start dropping subpoenas on these guys, not discovery requests. when they oppose, i would move to preclude. i would also be moving for a formal evidentiary hearing before the judge.

    of the 5 elements necessary to prove fraud, in the context of a contested foreclosure case, one element invariably is missing…justifiable reliance. hard to claim that one justifiably relied upon the false material representations of the plaintiff, when one opposed.

  3. junior – good post. I have said over and over. 1) A trust cannot be a holder 2) certificate investors cannot be the holder 3) A servicer cannot be a holder. 4) The servicer IS likely holding the note. We don’t even need to ask if consideration is paid. And if you skirt around this – you will go in circles.

    How they have gotten away with this is beyond me. But we have an economy to save – anything goes. Even deaths if need be.

    In my opinion, attorneys for the servicer are the holders. Just saying. And, sometimes they don’t even know who they are holding for – or how anyone gave them the authority to hold.

    Just Saying.

  4. Bob G.–

    Yes, you are correct, but PETE can only come from a very limited number of avenues. And those avenues need to be pursued.

    Example, in my own case, a party has claimed to be “the holder” of a certain note. It has not identified the actual note, because it never had the note in its possession. It instead tried to identify the note by identifying the mortgage. At the same time, the party claimed by the attorney to be this “holder” has actually stated to me in writing that they not only do not hold any such note, but have zero knowledge of the matter as a whole.

    This brings us to the so-called servicer. The servicer is actually the client of the attorney opposing me. But this servicer has claimed several different parties as the “holder”. Most recently, the servicer claims to be the holder itself, and claims that even though they named a trustee for a trust as the “real plaintiff”, the servicer now claims that IT is the “holder” and has been for the last 6 years. This is admission of fraud, because during that time, this same servicer claimed both to me and to the court that the trustee for the trust was the holder.

    So, sorry for that end around, but back to the point. The trust has been challenged to show how it became the holder of the note in question. Radio silence. Literally, even through the discovery that’s ongoing now, there is zero evidence or even an attempt on their part to support that claim with anything. So, I turned to the servicer, and through discovery again, requested evidence that THEY are the holder. Asked them to identify and produce the evidence of their status as holder. Asked them to admit that they did not pay value for anything remotely related to this case….denied, but provided zero when I requested proof. And in my case, before you try to say they don’t have to produce it, they DO have to produce it for two reasons.

    One, because I challenged their standing, and their claim cannot be assumed in the face of a lawful challenge.

    Two, because they keep changing the identity of the party that THEY claim to be the holder. You cannot create the doubt yourself by providing so many conflicting answers and then expect the presumption to stand.

    In order to be the holder, legally, one of two things must have happened. You must either have paid value for the note to be in your possession, or you must have been granted authority to enforce as a holder by the one true party which DID pay value for the note. If you did not pay value for the note, and you are not acting on authority of the party that did pay value for the note, then your status is at best in doubt. But in my case, like so many others, the party claiming to be a holder does not hold anything and never did. In fact, when I challenged their status in my case, they produced a “complete payment history”, supposedly as proof of their status. OOPS….they doctored this thing up from thin air and it is too obvious. On the very first day of the loan history, when the very first payment would have come due, their “complete loan history” assessed hundreds of dollars in late fees and over a thousand dollars in ancillary fees. On the very first day of the loan’s supposed life.

  5. Is a note still negotiable if it did not do what it was supposed to do– pay off the prior “note” holder? Does UCC say anything about that? I don’t know.

    Does it matter if say — Joey tells me he will give me a loan, and Joey claims he will pay off the prior note holder, with the money Joey gives me, but Joey never pays off prior owner at least not on my behalf. But Joey claims I still owe him, and Joey wants a high rate of interest. Is that note valid?

    As to consideration — Joey may have paid pennies on dollar for right to collect. It is not about whether any consideration was paid, but how much was paid and by who — and I don’t think anyone will get that.information.

    Why did Joey get the right to collect so cheap? Even at origination of the so called refinance that was not a refinance? Because Joey knew how to work the game. Joey repackages the Note or debt – whatever you want to call it, and sells “certificates” to the GSEs – from where the note or debt originally came.

    Modification if you can no longer pay the high rate? Joey said NO — what good is that to Joey? No good to borrower either as we don’t know anything about “Joey.” Joey has now flown the coup. Nobody was regulating or watching Joey. He was too shrewd. Title is gone just like Joey. .

    And no one cares because if we punish Joey and accomplices we would have had a financial collapse – or so we were told.

    You just have to pay we are told or else. And, WSJ said yesterday — in effect, these were all “liar” loans. We got what we deserved. I don’t know about anyone else — but, I lied about nothing.

  6. Brian Tracey

    I disagree. In order for you to be correct, the UCC and thousands of decisions and orders applying UCC law to the facts in a foreclosure case, as well as dozens of scholarly articles on who is a PETE, would have to be wrong.

    As much as you may want it to be about the debt, it’s not about the debt…it’s about who is entitled to enforce the note under the UCC. NG in my opinion is mistaken on this point, because he ignores the UCC rights of Holders, continuing to focus instead on debt owners. And as I’ve recently posted, the word “debt” does not appear in the UCC. If you want to find “debt” law, you need to go to your state’s Debtor & Creditor law.

    If you have some case cites where his argument has prevailed, please share them with us.


  7. Bob G. ,

    Your argument is self defeating. Sure you can sell the right to enforce the mortgage to accelerate/foreclose but without owning the debt and being harmed you have no cause of action… you as x cannot fc on someone (y) because z wasn’t paid … if z sold the right to enforce to x then they’re both screwed as one has harm with no rights and the other has rights but no harm. It really is that simple…

    You are asking for everything to be spelled out in 3rd grade English and then for that explanation to be further spelled out and so on and so on… eventually you get to the point of absurdity, how many steps down the rabbit hole do you insist we travel before you realize that it’s a rabbit hole?

  8. In my case, the players “never owned the debt”…the originator listed as – [New Century Mortgage Corporation, “NCMC”; the lender is RBC Bank [per HUD, then the note states: NCMC also as the “lender”], the original servicer is also “NCMC”…then SPS-or Carrington-later down the road Ocwen [all listed].

    Deutsche Bank wiring instruction from the closing attorney-NCMC files bankruptcy 02 April 2007 …Credit Suisse seizes the Konar Note 12 March 2007, from default of warehouse LOC by NCMC, [my payment not due until 01 April 2007] …I’m noticed of late payments, un-applied payments all the way into November 2007….then in 2009, when F/C action is filed a lost note affidavit surfaces…from US Bank-Ocwen.

    No one is ever in possession, none of the players. Note seized 12 March 2007 illegally [from what I can see]…Credit Suisse did not pay for the debt, [verified by Delaware Bankruptcy Court]….not until 2018 did a “blue ink note surface”…my signature does not match my file and defaulted amounts are all over the place…oh and Ocwen’s paperwork states: after a “completed foreclosure”, with no note-no possession-my debt is in Ocwen’s REO Department…then in 2015 a F/C action is filed again.

    If possession is the key ingredient…why is no one ruling on this, cluster?

  9. once again, i have to respectfully disagree. there is nothing in the ucc that says anything about owning the debt. in order to enforce the note and foreclose, all that is necessary is to be in possession of the note and mortgage at the time the action is filed, and proof of default. the claimant has to show that it paid value for the note under the ucc. the note memorializes the debt, but is not the debt. that’s it folks. nothing more, nothing less. the first american case cited herein is between two big commercial players, not between a bankster and a homeowner in a foreclosure action.

    i have asked NG in a priv email to cite me cases where this argument about owning the debt carried the day, so that i could see for myself. his response was “every case where the bank settled.” just that…no case cites.

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