Recusal of Judge in Foreclosure Cases is Tricky

Any judge who has his/her investments or retirement funds tied up in bank shares or worse, certificates from securitizations chemes — directly or indirectly — should not hear such cases. Our analysis and experience in the US shows that when the cases are drilled down to their essential facts, the debt has been retired by the securitization process — a highly counterintuitive result for lawyers and borrowers but not so for investment bankers.

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Until the judiciary is willing to recognize the existence, in the real world, of two agreements, there can be no final resolution of the mess that nearly toppled the world economies. By strictly focusing on the loan agreement they are relying upon an agreement to which the claimant is neither a party nor much less an injured party. They are warding  foreclosures as unwitting accomplices in a scheme for profit since the proceeds never go to anyone who paid value.
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The other contract is the securitization contract which exists in many details but never disclosed to the borrower. The borrower is involuntarily conscripted into both the securitization contract and tricked into the loan contract, which contains elements and terms that are never disclosed to the borrower or the courts.
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Since current “securitization” results in the creation, issuance, sale and trading of securities  that derive their value from data ABOUT the debt (instead of ownership of the debt) the debt is never sold even at origination. This securitization of data and performance of the data results in revenues that are at least 12 times the amount of any transaction with the homeowner.
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And since the investment banks don’t want to be liable for lending violations, they assiduously avoid being the owner of any debt.
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And the certificates they issue to investors convey no ownership of the debt. In fact, in the end, incredibly there is no company or person who maintains the debt on tehri books as  an asset and therefore no person or company who can claim ownership. Accordingly there is no person who can claim injury and therefore no person who can claim a remedy for nonpayment from a borrower who does not owe them any money.
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The real remedy is reformation of the two contracts — loan and securitization — into one which incorporates the unsavory truths about the arrangements without rescinding the whole thing and causing injury to dozens of third parties who bought derivatives based upon the existence of an enforceable loan that produces reliable data.
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In reformation, using quantum meruit and quasi contract doctrines the two fatally deficient contracts would be preserved and revived — with two major differences.
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First, the contract would allow for a certain person to designate a party who could act as a creditor even though they lacked ownership of the debt and even though the designee or nominee did not represent anyone who did own the debt.
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Second, the contract would assure that adequate consideration was paid to the borrower for the additional risks imposed on the borrower that had been concealed. Among other things the absence of any risk of loss to the “lender” removes a component that most borrowers believe is an essential part of their lending agreement.
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In the absence of such reformation the courts must continue with their wink and nod attitude and enforce all but those cases in which the borrower persistently and aggressively litigates the issue. But in all such cases, if they award judgment to the claimants, they are giving profit to the claimants for the sole purpose of propping up the banks and their securitizations schemes.
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Thus for any judge who hears the cases, a negative decision could either eliminate or reduce their investments and retirement benefits significantly.
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A negative decision against the claimant would inevitably result in a conclusion, in the marketplace, that the certificates and derivatives issued by the investment banks were worthless and need to be marked down accordingly.
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It is difficult to imagine any judge tolerating their own financial ruin by making such a decision. Thus whether the above scenario is credible to the reader or not, the consideration of competing issues by a judge whose retirement or investment funds are tied up with the large banks and/or any of their securitization schemes violates both the prohibition against the appearance of impropriety and the actuality of it.

4 Responses

  1. Yes – we were here Ian!!! And recall everything. Actually, read this morning that Wall Street sighed a sign of relief with the Harris nomination. Trump boxed in — he can’t attack Harris on this because he appointed Mnuchin!!!

    If only the media did their job.

  2. ANON- you and I were here when Kamala Harris signed off on a non-prosecution decision with Mnuchin. She was given the evidence and urged to bring charges but it was mysteriously “dropped”. When he and others formed OneWest Bank out of the ruins of IndyMac, it was reported that out of over 100,000 requests for modifications, OneWest granted exactly 0 (zero) modifications to struggling homeowners. And their reverse mortgage subsidiary foreclosed something like 30-40% of borrowers loans.
    The news blurbs hold her up as some type of hardass who hammered out a tough settlement with the nations largest banks. When in actuality, most of it was credits for non-enforceable debt with a few principal reductions thrown in for window dressing.
    I would think that the Dems are hitching their horse to her for other reasons. Maybe she can act as an interpreter for Biden..

  3. Okay – so Harris is the Democrat V.P. pick. Will anyone go after her for her poor history on the BANK financial crisis mortgage fraud? Of course not. She let Mnuchin walk free, and then Trump appoints him. Will we hear anything on this? Doubtful. Perhaps, if they did go into all this it would wake up the judges.

    https://theintercept.com/2019/03/13/kamala-harris-mortage-crisis/

  4. So, we can do a production of docs to propound discovery on the Judge? lol Is that in bounds or out?

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