In most cases the originator labelled as “lender” was never the lender and never owned the debt — so it could not transfer or convey the loan to anyone

The challenge to homeowners and attorneys who represent homeowners in foreclosure proceedings, is to see the written documents not as presumptively true, but rather as presumptive lie.

It is true that the corut will look at documents that appear to be facially valid and then apply legal presumptions based upon the facial validity of the document. But that only happens when the document’s facial validity is uncontested — and even when the judge applies those presumptions, they are rebuttable. The mistake made by most homeowners and their lawyers is in assuming that the documents are in fact an accurate memorialization of a transction that occured in the real world. They stop their inquiry at “You got the money didn’t you?”

They accept that it was a loan with a lender and a loan account receivable on the accounting ledgers of a lender. In so doing they completely miss the fact that their homeowner client was paid for being inducted into a concealed business plan and not as part of any loan that was recorded as such on the “lender” side. They completely miss that there was no risk of loss, no loss and that everyone in fact was paid even as the foreclosure process is on-going.


MICHAEL B. KAPLAN, Bankruptcy Judge.

“This matter comes before the Court on the motion for summary judgment filed by Defendant, Lion Financial, LLC (“Lion”) and the cross motion for summary judgment filed by Plaintiff, Peggy Stafford, Chapter 7, Trustee (“Plaintiff’ or “Trustee”) for the Debtor, Lancaster Mortgage Bankers, LLC (“Debtor” or “Lancaster”). In this adversary proceeding, Plaintiff asserts an ownership interest in certain mortgage loans originated by the Debtor, a mortgage lender, as well as the proceeds thereof. Lion contends, however, that said mortgages are not property of the estate; rather, Defendant, which purchased the subject mortgage loans from the Debtor, asserts that it is entitled to the loans and all proceeds pursuant to the terms of its pre-petition contractual agreement with the Debtor. [e.s.]The Court heard oral argument on May 19, 2008 and ruled in favor of Lion.[1] This opinion supplements the Court’s bench ruling.”

“3 During the period 2004 through 2007, Lion, pursuant to a purchase agreement (“Purchase Agreement”) dated August, 18, 2004, would purchase from Lancaster individual loans or bulk pools of loans on a regular’basis, often as many as 30 loans per day. Lion paid for each loan in full by means of wire transfer.” [Editors’ Note: Lancaster was a strawman. But nobody, including the court, brought that up. The purchase agreement predated the loans. These were part of the genre of “Purchase and Assumption Agreements” in which third party conduits were acknowledged as owners of the loans even before applications for loan were received. In most cases such orginators were not permitted to receive or disburse the loan proceeds. Closing money arrived FBO (for benefit of) the orignator from investemtn banker controlled entity.]

“4 The original promissory notes associated with each file were then stamped “Pay to the order of [blank], without recourse” by Lancaster and delivered to Lion. In the event that the original of the Note was lost, Lancaster agreed to deliver an affidavit of lost Note or similar attestation to Lion, together with a true copy of the Note.” [Editor’s Note: Why the lost note? Because it was and still is custom and practice to destroy original notes at the time of closing. It was custom and practice and contractually requried for the “Mortgage banker” or “originator” to have a “representative” endorse the note contemproaneously with closing. The ntoe ewas then destroyed after it was imaged. This is part of an ongoing effort to change from original documentation to copies that are recreated and presented in court as though they were original documents. Allowing this change opens the door to print promissory notes (regardless of their status) on a virtually infinite basis creating vast fake money supplies. The current “shadow banking market” has cash equivalent instruments and contracts carrying a nominal value of 20 times the total of all fiat currency in the world.]

“5 Lancaster would generally execute an assignment of mortgage and in some instances the mortgage was recorded. Generally, the mortgage assignment was not recorded; however, Lion was advised by Lancaster that the property transfer would be registered with Mortgage Electronic Registration System (“MERS”) by Lancaster.” [Editor’s Note: So the assignment of mrotgage was executed but often not recorded. That gave the investment bank the flexibility to name ANYONE as the virtual creditor. That would not have been a bad thing had the investment bank not been concealing the fact that it had extinguished the obligation as it was “acquired.” The law does not recognize virtual creditors and there should be no change, but Wall Street banks acting through intermediaries, are seeking to make that change official. In Hawaii, lawyers recently filed a petition for certiorari on a case that was lost twice by them (judgment for homeowner). Their real goal is in their ask for a change in the rules to allow them to name virtual creditors and then be protected by presumptions arising from the apparent facial validity of documents.]

“6 Lion would subsequently resell the loans or have such loans serviced by Specialized Loan Servicing, LLC (“Specialized”). “[So Lion was just an intermediary as well — for an investment bank, who was always the real party in interest. In the entire process, there were no entries on the ledgers of any company reflecting payment for the underlying obligation created by issuance of the promissory note — because there was no underlying obligation. At closing, the payment received by homeowners was disguised as a loan in order to get it back. This left homeowners with risks far exceeding the known parameters of the deal and without a lender or even a loan account receivable from which the homeowner could demand an accounting. It also left homeowners with no payment at all for their services in launching an astronomically profitable business of selling securities that were only discretionary promises to pay and/or that were bets on the future reports of investment banks who referred to the performance data on loans in which they had no interest.]

“In light of the foregoing, the subject loans are not property of the Debtor’s bankruptcy estate pursuant to § 541(d) and the Trustee may not assert an interest in the subject loans having priority over Lion. Likewise, Lion is entitled to the deed tendered in satisfaction of its loan on the Siguencia Property. Accordingly, the Defendant’s motion for summary judgment is granted and the Trustee’s cross motion for summary judgment is denied. “(e.s.)[Editor’s Note: What is good for the goose is good for the gander. If the originator did not own the loans and the intermediary conduit was treated as the owner, then it follows that the originator had no power to endorse the promissory note or assign the mortgage. A homeowner with an expert opinion affidavit that this is what happened in their case, can press the judge for a ruling that the source of assertion that the currently named claimant did not legally transfer or convey the note or the mortgage,  another homeowner victory would be in sight, although not guaranteed.]


Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.

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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.

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