Foreclosure Defense and Complaint for Abuse of Process or Worngul Foreclosure: Almost nobody understands the concept of splitting the note and mortgage.

The reason that certain words are used separately in legal forums is that the legal system has created separate definitions and functions for each such term. The following terms, usually used interchangeably in and out of court has caused most of the confusion and the opportunity to create and pursue false claims:

  1. Obligation
  2. Underlying obligation
  3. Note
  4. Mortgage
  5. Deed of trust
  6. Assignment
  7. Endorsement
  8. Transfer
  9. Sale

The fact that the public cannot rely on government institutions and the courts to master the distinctions among these terms has resulted in a lack of confidence in the system and to social unrest. 

To blame hoemowners for not recognized these disstinctions that were actively (maliciously?) concealed by investment banks who were only pretending to enter the lendign marketplace, only adds more injury to the hapless homeowners who made the tragic mistake of not going to law school and practicing a few years before they signed their first alleged “mortgage loan.”

Wall Street banks have figured out a way to parse every potential attribute of every actual and implied transaction. This has resulted in innumerable ways in which the documents are not only fabricated but inconsistent.


But because of normal biases held by most everyone, the assumption is that only one transaction has been memorialized. In fact, no transaction has been memorialized, and the apparent and falsely implied transfer of the note conflicts with the apparent and falsely asserted transfer of the mortgage are actually in conflict.

It is for this reason that virtually all assignments of mortgage executed by MERS are void. MERS is only an agent and it is only an agent for a lender or a successor lender. All documents executed on behalf of MERS should announce, and sometimes do an ounce, that they are executed on behalf of a specific principle, as successor to the previous principal who could issue instructions to MERS.
  • It is widely known and fully understood that MERS is nothing more than a nominee and therefore a potential agent if a principal has a contractual relationship with MERS. It disclaims any rights to payments, notes, mortgages, debts, or obligations. It has no interests of its own since it neither was involved in the lending or servicing of any transaction that was labeled as a loan.
  • This it can only serve as a potential agent to a master or principal who legally possesses some legal right, title, or interest to something (asset, loan etc.) and issues instructions to the agent to perform such acts as the master or principal has instructed.
  • No such instructions are ever issued because no such set of instructions can claim, much less warrant, any right, title, or interest to any debt, obligation, note, or mortgage lien.
“Succession” as to ownership and authority over an alleged mortgage loan can only occur if one of two things occurs. A third party bona fide purchaser for value buys the loan account and assumes liability for any violations or problems or losses in the future OR third party bona fide purchaser for value buys the company who owns the loan account and assumes liability for any violations or problems or losses in the future. This has never been alleged or proven in any court of law or equity.
This is exacerbated by ignorant lawyers and judges who don’t understand the differences between mergers, acquisitions, and legally effective purchases of mortgages that must be memorialized by an assignment of mortgage that is attendant or contemporaneous with the purchase of the underlying alleged unpaid obligation due from the homeowner.
Accordingly, lawyers misinform their clients and judges make erroneous rulings, orders, and judgments predicated on the presumed existence of a valid transfer of ownership and rights to administer, collect and enforce the alleged underlying obligation, which we already know has ceased to exist and is not reported as a loan account receivable on the accounting ledger of any person or business entity — whether the entity actually has achieved legal existence or not.
The presented arguments usually rely on one of two erroneous assumptions regarding claims of rights or ownership for administration, collection, and enforcement of an alleged obligation owed by homeowners. One is that only the written (endorsement) transfer of the note effectuated the right to enforce both the mortgage and the note, and the other is that only the transfer (assignment) of the mortgage effectuated the right to enforce both the mortgage and the note.
It is universally true that a transfer of rights to the mortgage is a legal nullity (i.e., it never happened, ab initio) if the “debt” is not also transferred between the same parties — either directly or on behalf (i.e., legal agency). Thus BEFORE you get to the argument about the mortgage being unenforceable you can first present the argument that the mortgage was never transferred and that therefore the current claimant has no right to claim a case in controversy or a remedy.
So neither one of those erroneous theories and assumptions are true. The execution of the note, at the very least, creates a potential liability against make maker (i.e., the homeowner) and the endorsement of the original note (not a copy) represents an effective transfer of the rights to claim collection and enforcement of the note.
There are only two legally recognizable ways that an unpaid obligation can be transferred: (1) purchase for value and (2) gift. Since nobody is saying there as a gift and nobody is admitting they are merely acting as limited power agents for remote conduits who are controlled by investment banks, the concept of the gift does not apply.
While the note does create some legally enforceable foundation (as evidence) the note itself is not the debt and it does not transfer title to the underlying obligation.
The reason for that is that the underlying obligation can ONLY be the original transaction that induced the homeowner to issue a note and mortgage.
The underlying obligation, if one exists, is NOT the note itself — although it creates rights of administration, collection, and enforcement that can be pursued out of court but generally not in court because of the requirements of pleading and proving a prima facie case. This is another area of confusion with the legal profession and the judges who sit on the bench in courts.
All of that can be defeated if there was no consideration for the original issuance of the note UNLESS a bona fide purchaser for value without notice of the maker’s (homeowner’s defenses) and acting in good faith purchases the original (not a copy) note from the prior bona fide owner. That is the highest and most protected level of the owner of a negotiable instrument.
NOTE: You will never see the allegation or proof that any claimant named in a judicial or nonjudicial foreclosure that the claimant is a holder in due course. But you will always see the lawyers argue as though they are entitled to the presumptions that attend the status of a holder in due course.
The principal reason or this is (a) if they made such an allegation they would be required to prove it and in the absence of such proof the prima facie case would fail because there was no purchase for value, (b) that transferee had plenty of notice regarding the maker’s defenses, and (c) the transferee was not acting in good faith but rather was acting at the behest of an investment bank in an illegal scheme violating RESPA, FDCPA, SEC, FCRA etc. 
You also are not likely to see many references to actual loan money given by the named lender to the named borrower (maker/debtor). Instead, the allegations are made that the “plaintiff” or “beneficiary” is the holder of the note and you might possibly see the allegation that it owns the note and mortgage. They don’t say they owned the loan account. They don’t say that they paid value for the underlying obligation. And they don’t even say that they own an unpaid underlying obligation due from the homeowner.
In fact, you will never see any allegation or any proof that anyone suffered a default as a result of not receiving a payment from the homeowner. the reason is simple. If they were never entitled to receive the money there was no default. And if the default status has been transferred to third undisclosed parties then those parties must nevertheless be identified and satisfy the conditions precedent to making any claims to administer, collect or enforce.
Something for bar discipline to consider is whether lawyers are allowed to parse false claims in this way. Since there is no allegation of financial harm, and no allegation of purchase of an existing unpaid underlying obligation, the constitutional requirements for a case in controversy are probably violated — but more than that, the lawyer turns out to be the key figure in advancing an illegal scheme for profit.
The question for the FTC which prosecutes foreclosure rescue schemes is whether they will also prosecute foreclosure fraud schemes. The question for bar disciplinary panels fr lawyers is whether they will continue o target lawyers who are successful in defending false claims of foreclosure or whether they will start enforcing the rented use of the law license to create a pervading moral hazard in which false claims are awarded remedies.

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, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.

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2 Responses

  1. And a clown in the robe in the Circus Court will not even allow you to speak in your defense and criminally conceal “original” note from case records, so a bundle of Clowns in robes in the Higher Circus rule in favor for someone who is not even filed this case. And when you come back to the lower Circus, clown in the robe invite another clown from AG office to pose as “criminal prosecutor” because you try to enformce the law and Due Process rights.

  2. 1. You will be told by a clown in a robe that you are a 3rd party to any AOM and cannot object.
    2. How do the courts allow Security Connections & NTC to continue to have their high school dropouts signing millions of AOMs as Vice Presidents of BOA, JP Morgan, Wells Fargo, etc.

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