Good Foreclosure Defense Gets Down to Basics: No Default

All successful defenses to foreclosure attempts basically come down to one fact: When tested, the claim cannot be supported because it is untrue.


I see in threads of emails that are shared with me considerable discussion and debate over whether the “loan” was sold. The parties who have trouble even conceiving of a scenario in which the original homeowner transaction was not sold are those who are looking at documents. In securitization today, virtually NONE of the documents are real, true, or authentic.

But it is true that if you’re willing to take the risk of jail or civil penalties, you can create fake documents and use them in court. If the documents conform to custom and practice and follow some statute as to form, then they are initially presumed to be true and valid. And if the homeowner fails to contest it, there will be a judgment in favor of the bad actor. Case over. Foreclosure judgment entered or sale approved, then the auction and sale of the property followed by eviction.

What I am telling you in this blog, my lectures, and radio shows is that none of that means foreclosure is inevitable. The fact that a homeowner stops making scheduled payments is not a default unless the creditor declares it as a default — not when some company claiming to be a servicer declares it. But if the homeowner admits being in default then he/she is admitting that the right creditor is making the right claim.

This issue arises because of confusion as to when and whether to use the fabricated documents for anything. If you don’t believe a single word on any document, you are left with the obligation, which might exist, and a claimant who either did or did not pay for it. No loan was ever sold because that was the point of securitization. If the loan was sold then they could have only sold it once. But by selling data ABOUT the loan they could sell it as many times as they wanted.

The lawyers and other parties that participate in illegal foreclosure schemes are depending upon your lack of knowledge as to what constitutes a sale of the loan. First they want you to assume that a loan account exists, which in the context of securitization, it does not. Second, they want you to think that since money might have been paid to somebody that it must have been a purchase of the obligation by the party named in the fake documents.

When tested, this assumption fails. If a sale had occurred there would be a record of payment of money from Party A to Party B. that record would be both a money trail (canceled checks, wire transfer receipts, etc) and accounting entries on the books of each company. Even at origination in most cases, the money trail that is represented to the homeowner does not exist. And all attempts to see the money trail and to see the accounting entries will be met with a refusal to comply with the request regardless of the consequences to the lawyer or other parties.

All successful defenses to foreclosure attempts basically come down to one fact: When tested, the claim cannot be supported because it is untrue.

The essence of what we call “securitization” is actually breaking up the homeowner transaction into atomized legal pieces. The investment bank —acting through various intermediaries — is actually purchasing the right to make a claim against the homeowner even though it is not a creditor. It’s not a servicing right or even a legitimate claim. The homeowner agrees because the homeowner never receives any information about the structure of his/her transaction and thus never has any opportunity to ability to assess the deal or bargain for better terms or go to some other source of capital. The inserted parties are merely renting out their names to the investment bank in exchange for a fee. The originator, the servicer in whose name payment histories are published, the REMIC trustee, the trust, are all fictitious or sham conduits for the scheme of the investment banker. 

The investment bank is selling information or data about the transaction with the homeowner and can sell as many pieces of information as the market will bear. Substantively the entire transaction with the homeowner is paid off many times over but never recorded as such. But the law requires any claimant in any lawsuit to have suffered a loss due to a breach of duty by the homeowner. There is no such party because all parties have been paid. The fact that it was not recorded as such or disclosed as such merely means that the investment bank succeeded in maintaining an illusion — not that the loan was sold or that anyone owns it. 

There is not a single REMIC trust case in which a loss to any owner of a loan account or other obligation due from a homeowner can be traced to any action or inaction by the homeowner. None of them expect or need any action from the homeowner. they just need to sell more securities and in order to do that, they need more signatures on more documents. And that is why the use of attorneys at real estate closings has been discouraged in subtle and not so subtle ways. Some sharp attorney might have caused trouble when his questions were not answered.



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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7 Responses

  1. Loans liquidated and coded ZERO VALUE to prior trust — are NOT required to be repurchased under settlements and law. So, the first thing to determine is — why was loan coded ZERO value and reported liquidated to PRIOR “trust” prior to last transaction in question? And, why do claimed servicers have this prior liquidation (ZERO value reported) in “collection” records in addition to LAST transaction – by which last transaction started out in DEBT COLLECTION? I can stand that this is so simple, and no one addresses. It is the Pandora’s box.

  2. Charles — there is NO originator. Ginnie and friends Freddie/Fannie purchased PLMBS fake securities for their REMIC trusts. They falsely claim to be “Investor” with right to enforce. There is no right to enforce, and the “securities” they purchased are fake. Zero value and liquidated before claimed origination. This is complex and still not addressed.

  3. Let that Ginnie Mae who congress does not allow to buy or sell any mortgage loan but through the required UCC3 procedure owns all the Note of all the pooled loans. Now what happen is nobody outside of the agency had a need to know how all this worked until the Financial Crisis. The lenders turned issuers and are servicers plus custodian or records get around title issues as because the originator mostly maintains physical possession of the Note, and when it come to foreclosing the Notes are never required a the local register office, so they don’t see the blank endorsements.

    UCC9 does not require the originator to provide proof of ownership, as it assumes that the originator is till the owner when foreclosing and does not ask about loan being in securities. Ginnie wants these loans foreclosed and who be the one to complain about ownership, but the bank forecloses and provide the proceeds to Ginnie.

    You see Freddie and Fannie in title when these loans are being foreclose but you will never see Ginnie in title!

  4. Stillfighting — That is a GREAT question. I think money the root of all evil. Very often these cases are assigned to young attorneys — who are trying to make their way in the firm. They are aggressive, but they don’t understand the law firm using them as their pawns. Eventually someone will get in trouble – and it will be the pawns. .

  5. Why do large and reputable law firms knowingly conspire to commit fraud against the Court, by submitting fake, fraudulent, falsified documents? They are criminals…

    I can understand some small podunk lawyer falling for it 10 years ago, chasing some easy fees. However, now that a decade has passed, and everyone knows that chains of tile have been purposely broken, how does a legitimate law firm put themselves at risk by submitting dozens of fake documents in fraudulent foreclosures?

    Why does an A+ law firm play the same games as a firm like Albertelli Law?

    Is it “the love of money is the root of all evil”? Or something else?

  6. Good question Java. Many moons ago, Freddie directly owned loans through sale to them or assignment by participation certificates. Nothing, however, was recorded because the Lender remained homeowners creditor. But then the REMICs came along. These REMICs are shared endeavors between Freddie/Fannie/Ginnie and Wall Street. What is put in those REMICs is fake certificates to fake private label trusts. How Freddie removes those fake certificates from REMICs and claims rights to sell collection rights is the question. Loans are not sold — only debt collection rights are transferred – for decades. All done before claimed origination is even executed. There is no LENDER anymore. We are dealing with non-friendly debt collectors. AND, there is no note — debt is transferred by assignment only.


    1. Please Explain the above link …

    2. How does FreddieMac sell any loan if they are NEVER in any Chain of Title or Assignments of Mortgage ?????

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