Livinglies's Weblog

 Sec.gov is basically used by foreclosure mill lawyers as an ftp site on which documents are stored rather than registered or reviewed for facial validity. But they use it to mislead the court into believing that the document is a public record document when it clearly is not.

A favorite tactic of foreclosure mills for the last 12 years has been to introduce documents that they say were filed with the SEC. The documents are often admitted into evidence by the judge by way of a motion for the court to take “judicial notice.”

Although such documents are technically admitted as proof that they exist and not for their contents, this is a distinction that is often overlooked or proactively ignored by judges who want to get to the “inevitable” end of the case. Since the homeowner has already admitted the existence of the loan and has admitted that there was a default, what harm results from technical error by the Judge?

So let’s look at this ploy and see what is really happening. The foreclosure mill has either filed a complaint naming, for example, “U.S. Bank NA as trustee of Structured Assets Securities Corporation Trust, pass-through certificates series 2007-A1.” So they are implying that there is a trust and that U.S. Bank — but they don’t actually say anything about the trust, where it was formed, or in what state it is operating. They also don’t say how or when the trust was formed or what was entrusted to the trustee on behalf of any beneficiaries.

Instead of filing an allegation that could be subject to charges of perjury they either refer to or introduce a pooling and services agreement (PSA) as though it is the trust agreement appointing U.S. Bank to administer the active affairs of the trust. In most cases, the PSA does not say it is a trust agreement. Instead, it purports to be an agreement in which holders of certificates are going to be paid, but not from the trust or the trustee. And even where the PSA receipts or is titled as “trust Agreement” it isn’t a trust agreement.

A trust agreement has several basic elements, all of which must be included or there is no trust. That means if the elements are not present, the law regards the trust agreement as a nullity — at least with respect to the item claimed to have been held in trust. The elements are (1) a named trustor (2) a named trustee (3) a named beneficiary (4) written terms of administration and distribution to beneficiaries and (5) specified assets described and legally conveyed to the named trustee.

In reviewing thousands of PSA documents I have not seen one that fulfills all of those elements. That is why I have repeatedly said that there is no trust and that the trustee has no power over anything claimed to be in trust. Merely applying logic, if the trust does not legally exist and the trustee has no powers to administer any assets, it follows that any claimed authority from the trustee over those assets is equally void. But the banks are very good at creating illusions. So because several layers of companies are created or hired to act as though the trust exists, the illusion emerges that the trust probably does exist even though it does not.

The real trust agreement (I have seen dozens of them) says that the trust only exists for bare legal title to documents that have no legal effect. The note is endorsed to the trustee but the rust agreement prohibits the trust or the trustee from asserting any financial interest in the scheduled payments. The mortgage is assigned under the same principles.

The beneficiary is the bookrunner brokerage firm that did the fake underwriting of the certificates. I say fake underwriting because the creation, issuance, and sale of the certificates were done in the name of the named trust but the proceeds went to the broker, not the named issuer. It was an offering of unsecured IOUs from the broker and many prospectuses say exactly that.

No PSA or REMIC trust Agreement ever describes a purchase of assets by the trustee or trust because that trust never received the proceeds from the IPO of IOUs issued by the broker. It had no money to make such a purchase. And no PSA or trust agreement ever names a trustor or settlor that owns the underlying obligation or any right, title, or interest in the note or mortgage. It merely names a “seller” implying but not stating that the seller owns the asset. No such ownership exists.

No PSA or trust agreement EVER has Mortgage Loan Schedule attached. Those are all created, as the need arises, in foreclosure actions. The investors don’t care because they don’t own any right, title or interest in any scheduled payment from any homeowner.

So the PSA is part of an illusion. As a trust agreement, it is a complete bust missing most of the elements legally required for the establishment of a legally existing business entity doing business as a trust. It is relevant to some degree between the broker and the investors but it is irrelevant to the homeowner who has promised to make scheduled payments. Note that I no longer refer to any part of the homeowner transaction as a loan, which I am now sure is not the case. Payments to investors are NOT conditioned on receipt of scheduled payments from homeowners. Investors are NEVER beneficiaries of the alleged trust.

All such payments are made subject to the sole discretion of the broker who can vary it at their own instance for virtually any reason. No party ever loses money as a result of a missed scheduled payment.  but plenty of people are making money with each such payment and often receive a windfall in the event of foreclosure.

So given the aforesaid backdrop how do foreclosure mills manage to get past such obvious obstacles to a successful claim for a foreclosure? One of their favorite tools is to take advantage of their ability to upload any document of their choosing to the SEC.GOV website. Unless the offering is a registered offering under SEC regulations nobody ever looks at much less approves of the uploaded document.

The uploaded document is never “filed.” And it is not a government document. Therefore it is a self-serving document that has only been uploaded to get the “SEC.GOV” heading on the download, thus giving it the illusion of a government document subject to judicial notice. It is rank false hearsay masquerading as a document that has been vetted by a trusted government agency. And that is why the judge will most often (especially if the homeowner fails to contest it) accept the document’s authenticity and veracity.

PRACTICE NOTES FOR ATTORNEYS:

Filed under: foreclosure |