US Bank v. Nelson, 36 N.Y.3d 998, 1000 (N.Y. 2020) (“Whether a plaintiff is a party to a contract – and therefore can sue for breach of contract – is not a question of “standing.” New York law suggests that true standing must be pleaded as an affirmative defense. But whether a plaintiff is a party to a contract and, therefore, can sue for breach, is not a question of standing – it is an essential element of a plaintiff’s claim, which must be pleaded affirmatively in a complaint.”)
Hat tip to one of my favorite contributors.
Consumers need to know that each time they challenge the “servicer” or “creditor” they are not only doing themselves a favor but also helping millions of other consumers who were tricked into being participants in an illegal securities scheme that mostly looks like the Madoff Ponzi scheme on sterioids.
Just because a court discusses an issue based upon its own assumptions and presumptions does not mean that anything it said is true, correct, or consistent with precedent or statutes.
This case is a perfect example of that. Note first that the case is styled “U.S. Bank V Nelson” when U.S Bank has no interest, power, duties, or control over anything relating to the subject transaction that is most likely being mistakenly presumed to be a loan with a loan account receivable on the books of a creditor.
Note also that the designated named creditor is a nonexistent trust. Even if the trust did exist, it has nothing in it except “bare naked title (see my previous post). AND the name of the nonexistent trust starts off with Deutsche bank a supposed competitor of US. Bank. As NY Judge Shack remarked 13 years ago, there must be a very large auditorium somewhere in which all the major banks do business together. I would call that auditorium the shadow banking market.
So this decision states that the homeowner rightfully loses. The reason is that the homeowner failed to file an affirmative defense of lack of standing. Under NY law standing is an affirmative defense. I might add that the standing argument is tenuous at best. Anyone with a document, even if it’s false, has standing. What they lack is a winning case. That’s different.
The concurring opinion in this case specifically addresses that correctly. He says that the issue of whether the named Plaintiff is actually a party to a contract is NOT an issue of standing. I agree. Most legal scholars would agree.
If the designated named claimant is said to be the plaintiff and it has no right to enforce the contract because it is not a party to the contract then the case fails for want of the basic elements of the case — or to put it in legal terms it lacks the basic elements of a prima facie case. In that case, lack of standing need not be alleged nor can it be proven. As long as the endorsement to a note exists, standing is present even if the case is fake.
That is true as long as the contract in dispute is the note. But while Article 3 UCC allows for the enforcement of the note by a person who does not own the underlying obligation, Article 9 allows enforcement only by a person who paid value for the underlying obligation.
It is an extra layer of protection because we are not just talking about a judgment. We are talking about an order, incorporated into the judgment requiring the forced sale of a homestead. This is not up for argument or dispute. That is what NY statutes say and that is what the statutes of every U.S. state say when their legislature adopted, verbatim, the UCC and in particular Article 9 §203.
So Judge Wilson is entirely correct that if you have something that seems to say that you are part of a contract, then you have standing. But if you cannot prove your part of the contract, then you should be denied whatever remedy you’re seeking. This point is considered by judges, lawyers, and consumers to be so fine a line of distinction as to be invisible, but Judge Wilson seeks to put it in relief. And he is right (although he doesn’t need me to say so).
However, there is an entirely different point at stake here in this case which is, like standing, inappropriately presumed away.
The fact that a person may have standing to bring a claim for judgment based on the promissory note, which is one contract, does not mean that they satisfy the condition precedent to enforcing the mortgage, which is another contract.
In this simple explicit requirement in the statutes passed by the legislatures and signed into law by the governors, the condition is stated expressly and unambiguously as requiring the payment of value for the underlying obligation. Because it is express and unambiguous, it is not subject to “interpretation” (i.e. rewriting) by any court. The court is outside the limits of its authority if it fails to apply Article 9 to foreclosure.
You should note that Article 9 §203 does not say pay value for the rights to enforce the debt, or the note or even the mortgage. It specifically identifies a business transaction that MUST take place before anyone can bring a claim to force any security instrument, like a mortgage.
That specifically identified transaction required by statute is “Payment of value for the underlying obligation.”
If that transaction exists, then one might make some reasonable business assumptions and some reasonable legal presumption of fact about the standing and rights to enforce a contract in which the claimant can be inferred to be a party in interest.
Without it, no such presumptions should apply. That means the prima facie case failed in millions of foreclosures or other procedures to collect scheduled payments from consumers. But a judgment was rendered anyway. Sales were conducted anyway. Evictions were conducted anyway. And the proceeds went into ledgers as profit rather than any reduction in any alleged obligation owed by the consumer.
So yes I am making the grandiose statement that virtually none fo the millions of foreclosures, collections or referral to collection agencies were bonafide, correct, moral, legal or justified.
Anyone who had previously paid value has already been paid in full. That is the point of securitization instead of making a loan. If you sell off securities that rely on data reporting rather than ownership of anything, you can keep selling without limitation.
So where the courts got convoluted again was when they presumed some things and then confused the facial transfer of the note with the statutory condition precedent of paying for the underlying obligation. Even in discovery, without careful planning, the judge is likely to consider your demands for proof of payment of value for the underlying obligation to be irrelevant unless the judge is led step by step through the due process and UCC arguments.
If you don’t know what you are talking about you will lose.
The endorsement of the note without transfer of the underlying obligation is merely a transfer of the right to enforce. It is not even that if it comes from someone lacking the authority to enforce. That authority, ultimately, can ONLY come from one person — the one who paid value for the underlying obligation. Otherwise, what is the point of any rules, regulations or laws?
As stated by the Yvanova court in California, the obligation is not owned to ANYONE. It must be owed to SOMEONE that is identified. But bowing to pressure from the financial community, the court refused to allow preemptive challenges to false claims to administer, collect or enforce the scheduled payments from homeowners (or any consumers).
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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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If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
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