How Wall Street Changed Lending in Secret Ways

The inability or unwillingness of the legal profession to admit its ignorance of advanced sophisticated financial innovations has produced an age-old problem. In 400 B.C. Socrates was put to death for revealing it. It’s a simple proposition with far-reaching consequences: people who excel in one thing and rise to power tend to believe they understand everything and thus make uninformed decisions. 
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When Wall Street entered the lending business with derivatives and securitization, it changed the basic components of every lending transaction affected. Debts were not securitized or sold. The inability or failure to recognize this fact is what caused the 2008 crash and what is still draining the economy, undermining any recovery.
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Instead, these components were removed from the transaction leaving the homeowner with nothing resembling a conventional loan transaction: the lender, loan account receivable, compliance with lending statutes, disclosure of revenue arising from the transaction, compliance with servicing and collection statutes were all removed. Certainty and confidence in the transactions were replaced by doubt, mistrust, and ignorance.
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Homeowners found themselves trapped under the threat of administration, collection and enforcement of a presumed debt without any evidence it still existed and without any evidence that the claimant had any rights to it. They also found themselves unable to reach anyone with legal authority to settle any claims because no such person existed. Companies claiming to be servicers do not handle or account for receipts or disbursements. They only report on third party reports.
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Homeowners who have successfully challenged enforcement have all succeeded by revealing the unwillingness or inability of the attorney for the named claimant to produce any witness or exhibit or other evidence that establishes the current existence of the debt or the right to administer, enforce or collect. But this only happens after multiple hearings on discovery and motions to compel plus motion for sanctions.
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Thus far, investment banks have succeeded in creating something new without any legislative authority to do so and without any governance or regulation: we are now dealing with virtual debts, virtual evidence, and virtual assertion instead of real debts, real evidence, and real allegations of material facts.
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The inability or unwillingness of the legal profession to admit its ignorance of advanced sophisticated financial innovations has produced an age-old problem. In 400 B.C. Socrates was put to death for revealing it. It’s a simple proposition with far-reaching consequences: people who excel in one thing and rise to power tend to believe they understand everything and thus make uninformed decisions.
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PRACTICE NOTE: This is not about policy. this is about existing law and its application. The presumptions of fact that arise from contrived documents are so pervasive that even homeowners and their lawyers fail to notice that basic elements of the case against them are missing. the creation of virtual debts and virtual creditors is not sanctioned by any law. The debts need to be real and so do the creditors.
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The law in every U.S. jurisdiction requires, as a condition precedent to enforcement, that the claimant has paid value for the underlying obligation. Actual payment assures that in the course of commerce in a free market the underlying obligation is still in existence and that the current claimant is the one to receive payment.
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It is a simple bottom line proposition that the intention of the law is to prevent anyone other than the owner of the underlying obligation from enforcing it. Lawyers often get lost in the weeds. Yes, there are rules governing legal presumption for use in court. And one of them is the fact that value has been paid for the underlying obligation. The presumption is incorrect but nonetheless considered true unless rebutted.
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But the issue of rebutting the presumption becomes irrelevant for winning the case for the homeowner if you can establish the unwillingness of the foreclosure attorney to produce a witness or evidence who can corroborate the presumed fact of payment. After a court order is entered compelling compliance with reasonable discovery demands on the core issues of the case, the court will in most cases turn against the foreclosure lawyer and enter monetary and evidentiary sanctions.
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The bottom line is that if securitization is even remotely involved, do not assume that the lawyer even has a client, much less a claimant. Do not even admit that the action is a foreclosure. It is a scheme for profit masquerading as a foreclosure. It is invoking foreclosure process without any regard to the payment of a bona fide creditor. In nearly all cases the party named as the claimant is (a) nonexistent and (b) not a client of the foreclosure lawyer who has been hired by a self-proclaimed servicer who does not handle or account for receipts and deposits of money. Steadfast, persistent (to the end), and aggressive litigation founded on this knowledge yields positive results most of the time.
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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, 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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One Response

  1. This is all correct. One caveat — make sure you get a good judge. Don’t know how that can be done. But, Neil is correct on all else. Of course, if the government acknowledged what really went on — would not need a “good” judge.” How the government ignores is beyond comprehension. Divert, Divert, Divert attention is the government goal.
    Yes to Summer on this. Why? Politics. Contributions. Reality does not matter. Not for anything. Have a great weekend!!!

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