Trust is not a negotiable commodity. And there is nothing in statuory or common law that says otherwise.*If a named trustee does not wish to h ave any fiduciary responsiblity to manage the active affirs ofa trust for benefit of teh beneifciaries, the trustee should resign. Or, the trustee can replaced by written agreement of teh trustor and beenficaires or a court order after a lawsuit seeking reformation of the trust is filed.*When Bank of AMerica supposedly “sold” or “transferred” the position of trustee to U.S. Bank, the only reason it didn’t matter is that is was trasnferring the right to be named as trustee — not the duties of performing as trustee.*Every claim agaisnt any homeowner that relies upon the right of U.S. Bank to act as trustee in such circumstances is therefore false.
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I am raising a basic factual point and basic legal conclusion supported by statute and case law.
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A trust is a very restrictive covenant designed to protect the trustor and the beneficiaries. The whole point is that the trustor wants to appoint somebody in whom the trustor reposes trust. This is not something that can be delegated.
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You can’t delegate trust and statutes say exactly that. Anything that is entrusted to a trustee must be managed by the trustee and any instrument executed on behalf of the trust must be executed by the trustee. In fact, statutes often say (e.g. Florida) that anything executed by a party claiming to be an agent is void without acknowledgment and signoff by the trustee. That is what the Ft Myers case is all about.
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So the issue is twofold.
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First, is there a difference between naming a person or entity as trustee and appointing the person to have trustee powers over property entrusted to the trustee for the benefit of beneficiaries? I think the answer is a resounding YES. And under trust law, a “trust” without a trustee is not a trust. This is like my other thread that a loan without a lender is not a loan.
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There is no trustee if the person or entity named as trustee does not have the power to manage the active affairs of the trust — including the right to manage specific property that is in dispute. If the trustee lacks such authority — and in REMIC Trusts that is always true — then the trust is empty because the named trustee was never entrusted or empowered to take control of any assets.
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And if the trustee has no power over the asset claimed to exist and be in control of the “trust” then it can’t delegate or create such powers unless the “trust” is reformed to say that the Master Servicer is the trustee. [It is not the job of the homeowner to form the trust. And it isn’t the job of the court to do that unless a repetition fro reformation is properly served with allegations that include all the required elements for reformation.
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But that isn’t true either if neither the Master Servicer nor the named trustee has ever purchased the underlying obligation of a “loan” (as required as a condition precedent in Article 9 §203 of the UCC adopted by all U.S. jurisdictions verbatim.), then there is no right, power or even obligation to attempt to administer, collect or enforce the claimed obligation — even if it presumed to exist at the time of the claimed enforcement.
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Second, given the above which is completely congruent with all treatises and cases on the subject, the question arises as to the largest “delegation” of trustee powers in the history of the world — the one by which U.S. Bank became the new trustee by virtue of a transfer from Bank of America and other banks.
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Even if we assume, for sake of argument, that the trusts did have “loans” entrusted to the trustee, the transfer of trustee duties to U.S. Bank is an illegal delegation unless the terms of the trust agreement for that trust allow for such a transfer thus stating empowerment by the trustee and giving notice to the beneficiaries that such a transfer might happen.
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I think that any court considering the issue will be loathe to allow the transfer.— because such an allowance would be contrary to law, public policy and the intent of that trustor (if there is one). but I also think that unless it is challenged it will be preemptively allowed.
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So in the U.S. Bank analysis, here is how that breaks down: This example is taken from a common paper trail where the initial “trust” agreement names La Salle Bank as trustee and allows for succession in the event of merger.
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First you need to look at the merger documents to determine whether the counterparty, Bank of America in this case, ever agreed to accept the trust responsibilities and duties. This is important because Bank of America would then be accepting the fact that it is bound by fiduciary duties to the beneficiaries which do not include the investors who bought certificates (See below).
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Anyone who has followed this particular tack knows that when investors sued the U.S. Bank or Deutsch or BONY Mellon, they were rebuffed by the court who declared that no duty was owed to them, since they were only creditors of the trust at best. (In actuality they were creditors of the investment bank who was only using the trust name as a fictitious name for the investment bank).
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But the payment “due” from the investment bank is completely discretionary and NOT based upon actual receipts of money from payments by homeowners. Instead, it was based upon the publication of reports about payments by homeowners. those reports were issued by the investment bank whose reporting cannot be questioned). The money received from homeowners was used as either off-balance-sheet, offshore transactions producing revenue or was mislabeled as return of capital — capital that had already ben recouped from the sale of multiple layers of securities.
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Second, you need to determine whether LaSalle warranted what it held in trust and that it was transferring those assets to be entrusted with Bank of America.
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Third, you need to know if Bank of America ever took any action in which it was managing the active affairs of the trust including, in our usual example, the ownership of a loan and the right to administer, collect and enforce such loan. The usual answer will be NO, they don’t because they can’t according to the terms of the trust agreement — which by the way does NOT name investors as beneficiaries.
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The Pooling and Services Agreement refers to investors and implies they are beneficiaries but the trust agreement makes it clear that the beneficiaries are the bookrunner investment banks. The Pooling and Services Agreement refers to loan portfolios but not the ownership of loans. There is no statement or warranty of title to the loans.
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Payments to investors are based upon a formula based upon data about — not ownership of — the “loans.” The trust agreement, if you can get it, will say that the trust, if it exists at all, is merely a naked title trust for the receipt of documentation that could be used as evidence of ownership of loans but does not include any right, title or interest to ownership of the underlying obligation or payments, nor any right to administer, collect or enforce the obligation in said “loans.”
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PRACTICE HINT: DO NOT TRY TO ALLEGE OR PROVE THE CONTENT OF THIS ARTICLE. IF YOU ALLEGE IT YOU ACCEPT THE BURDEN OF PROVING IT AND YOU DON’T HAVE THE PROOF. THE POINT OF THIS ARTICLE IS TO INCENTIVIZE YOU INTO DEFENDING ON BASIC PRINCIPLES OF COLLECTION AND FORECLOSURE. THE DEFENSE NARRATIVE SHOULD ALWAYS BE THE TESTING AND CHALLENGING OF EVERY ALLEGATION, ASSERTION, OR IMPLICATION AGAINST THE HOMEOWNER BECAUSE NONE OF THE PRESUMED FACTS ARE TRUE. THE GOAL MUST BE DEMONSTRATING TO THE COURT THAT THE FORECLOSURE MILL IS UNWILLING OR UNABLE TO PRODUCE CORROBORATING EVIDENCE OF THE TRUTH OF THE MATTERS IT WISHES THE COURT TO PRESUME.
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This requires a strategy that roughly follows these steps:
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Admit nothing. That includes whether the copy of the note proffered is a copy of the original, whether this is actually a foreclosure procedure (as opposed to abuse of process for profit) etc.
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Challenge early: In non-judicial states this means challenging the notice of substitution of trustee. In judicial states it means challenging the pleadings by motion to dismiss or a motion for more definite statement because they failed to identify the Plaintiff, allege ownership of the debt and allege damages. It could also be a motion to strike the affidavits or certifications. In all cases it requires use of QWR and DVL to set the stage for a separate action for violation of statute.
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Timely and proper service of demands for discovery.
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Timely and proper motions for enforcement of demand for discovery. This means motions to compel, motions for sanctions and motions in limine.
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Timely and proper objections if the matter goes to trial.
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Neil F Garfield, MBA, JD, 74, 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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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
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But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
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Yes you DO need a lawyer.
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How can a defendant pursue
a remedy for a foreclosure in July 2022?
Hello, US BANK tell me they are the trustee for the 2006 Greenpoint AR7 trust and have provided purported assignments dated 2013…..The trust failed and dissolved as per the SEC in 2007……..Do they have a time machine? Also in 2018 they said the loan balance was $1.1 million, now it’s up to $2.2 million but no documentation…….
Just testing here.
Are you telling me that US Bank Trustee for Truman Trust is a sham ????
They even sent me a letter on their letterhead saying as much so !!!!!