The “Holder” Myth: How Wall Street Baffles the Courts

In a very recent deposition expertly done by a lawyer in an extremely conservative state, the grossly illegal plan to falsely present a scenario of “securitization of loans” was laid bare despite many attempts by an experienced witness who confessed that he was primarily a teacher to other witnesses for Mr. Cooper d/b/a Nationstar. The homeowner had simply asked for confirmation of the identity of the creditor — i.e., the person who had paid for the then alleged underlying obligation. Note that although U.S. bank, as “trustee,” was noticed to present a witness with the most knowledge regarding the accounts held by U.S. Bank, only the robo-witness from Mr. Cooper appeared.

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Here is what happened, along with my commentary.

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The admission that there are no accounting records within the trust in which there is an account receivable as an asset bearing the name of the supposed debtor/homeowner. This means that U.S. bank neither has nor owns any account receivable with the name of the homeowner —which means they do not own the debt and never paid for it. Note the careful use of the words “performance” relating to data reported by Mr. Cooper. This is the admission. By substituting a third-party performance report for an actual general ledger maintained on the books for U.S. Bank as trustee, in accordance with generally accepted accounting principles, they can say anything and pretend it to be true.:
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Admission they are relying on a paper trail and not the money trail. The law requires a money trail. You can use a paper trail to raise rebuttable presumptions about the money trail, but once you ask the right question, and they refuse to answer, like here, they are no longer entitled to the presumption. In the absence of the presumption, they can only proceed if they have proof of payment. But they may not introduce proof of payments without first answering your question.
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The use of the words “mortgage securitization” like a performer of magic tricks says “abracadabra”. There is no magic and there is no securitization — not without multiple investors buying the alleged loan. That never happened.
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This is the nub of their problem. they are attempting to change the law. Note how he is using the word “holder” which conforms with a 2008 telephone conversation I had with one of the law firms that was at the hub of this foreclosure plan. 
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That plan basically was this:
If we allege we are the “holder” the court will assume that we are the holder. And if the court assumes that we are the holder that means by definition that we have the right to enforce. If we convince the court that we have the right to enforce the note, it will only be a small leap to get the judge to assume we must have the authority to enforce the mortgage — despite the law in all jurisdictions that a transfer of the mortgage is a legal nullity unless it is accompanied by transfer of the underlying obligation (which can only occur by purchase, payment, and sale). And we think we can get the court to ignore Article 9 §203 UCC because if we have the right to enforce the note, the presumption is that we are enforcing the underlying obligation even though we did not pay for it, as required by the applicable state statute adopting 9-203. 
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But all of that rests upon the application of rebuttable presumptions. They are, by definition, subject to rebuttal. And the simplest rebuttal is to ask the essential questions relating to that presumption. So when push comes to shove if you ask about existence, ownership, and authority over the underlying obligation — a condition precedent under the UCC 9-203 — they will always default to an explanation presumptive rights arising from supposedly facially valid documents. In other words, they default to circular logic because most of the time it works in court even though it makes no sense. 
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First, saying you have possession of the note does not mean you really have it. Also, it does not mean you got it as a legal transfer from one who was the owner of the note, directly or indirectly through authorized transfers. While a thief or a courier might get possession of a note and presumptively have the right to enforce it, you can ask whether the thief or courier received authority to enforce the note from one who had the legal power to grant the right to enforce. When they can’t answer, their case collapses even though properly framed at the stage of filing the lawsuit.
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Second, possession of the note does not mean ownership of the debt. If you don’t pay for the note or enter into some contemporaneous transaction to buy the underlying obligation and the mortgage rights, then you don’t own it. Possession could raise a presumption of ownership of the debt depending upon the circumstances that are alleged and proven. But if nothing is alleged (and there never is), there is no right to put on the proof. The allegations are legally required to serve as notice to their opposition as to what they are saying about their own claims. If they don’t say anything then their plan to have the court assume the rest falls flat when it is challenged.
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Third, possession of the note does not mean that the possessor has the right to enforce. That can only come from the owner of the underlying obligation. The witnesses for the placeholder “servicing” entities have only one arrow in their quiver on this one. they can only revert to hammering on “holder” status, which does not exist if there is no grant of legal authority to enforce the note by the owner of the underlying obligation, directly or indirectly. And the owner can only be someone who paid for it and maintains an account receivable with the homeowner’s name.
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Fourth, the assumption that there is no payment to take over a failed bank is not correct. The failed bank creates a receivership estate and frequently a bankruptcy estate as well. A buyer must pay the receiver or the US Trustee in bankruptcy for the assets being acquired. That is required by law to protect creditors. Payment is definitely involved for any asset being conveyed. Payment can be in cash or assumption of liabilities. Those assets may or may not include everything previously owned by the failed bank. And under state law, they definitely do not include any loans owned by the failed bank without a recorded assignment of the lien.
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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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2 Responses

  1. And, a debt buyer is NEVER a trust or trustee. NEVER.

  2. Debt buyers report collected payments as income. This is not accounts receivable. They could have paid one dollar for collection rights after charge-off. Does the original “note” survive after charge-off? Does authority pass on after charge-off? If you argue FDCPA on this, most likely, you are out of the statute of limitations. So is there any other law that mandates disclosure of a claimed creditor? Bankruptcy mandates creditor disclosure, but where is a good case? Never see the debt buyer disclosed.

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