Livinglies's Weblog

The simple fact in almost every single foreclosure today is that the entity named as the claimant has absolutely no interest in the success or failure of the litigation. But they are addicted to the revenue that is generated from the permissive use of the claimant’s name.

So the way lawyers work around this basic fatal defect is by creating a false paper trail such that the examiner (or trier of fact) is lulled into believing that the ball exists at least under one of the fast-moving cups.

In plain language, for the past 20+ years, the foreclosure marketplace has been dominated by false claims of nonexistent losses derived from unauthorized declarations of default. When the case finally gets to court, the facial validity of documents makes it appear that there are no gaps, let alone fatal ones.

A case in point is the Lehman Brothers-Aurora Loan Service gambit. As the investment bank bookrunner. Lehman was sponsoring multiple entities to sell highly complex, sophisticated financial products masquerading as “loans.”

The actual structure of the deal required continued control by Lehman, even though it neither acquired nor retained any rights, powers or legally recognized interest in homeowner transactions.

The goal was to escape any regulation under lending, servicing, or securities laws.

The first step in fake paperwork was the appointment of Aurora as the “loan servicer”. The appointment is fatally efficient because it was not granted by a grantor who had any authority to do so. And THAT is the pattern that is replicated for all paperwork, assignments, and endorsement after that point in time.

So when Lehman crashed and burned, nothing happened. No loan account was established anywhere other than a payment history generated by FINTECH companies who secretly operated under the name of a company that was designated and named as a servicer even though the company never received, processed, accounted for, or distributed any money for or on behalf of creditors.

The lawyers would then march into court with a printout of a report that was proffered as a “business record” even though the payment history report was NOT a record of any business conducted by the named, designated “servicer.”

.This gambit enabled the lawyers to establish the existence, status, and ownership of the debt and to “corroborate” a default — which by definition means that someone has suffered some financial injury arising from the behavior of some promisor or maker of a promissory note.

Through scripted argument and audacity the lawyers play into the bias of a judge by establishing that such an injury was sustained, the named claimant has suffered the injury and that declaration of default required under statutes was perfectly accurate, just, and legal.

As to ownership of the promise to pay, lawyers skate over that simply through the creation of false fabricated documents in furtherance of a scheme to gain illicit profits and revenues. They work backward and once the name of a Plaintiff or Beneficiary is selected they created fake documents that raise legal presumptions that the named company actually owns the obligation (loan account).

But as dozens of good trial lawyers have found, the legal presumption arising from the apparent facial validity of the fake documents utterly fails when challenged. The problem is that it is not challenged enough.

So thousands of homeowners have either achieved clear title or otherwise settled on highly favorable terms but they only represent a speck on the map of millions of homes and hundreds of communities that were completely destroyed by the illegal prosecution of foreclosures.

Recently a client asked a series of questions about the Lehman-Aurora fiasco. Here is what I wrote:

You wrote “how  NationStar has walked into court holding a promissory note signed in blank by Aurora who was denied foreclosure..” They didn’t possess the note and they had not received the grant of authority to possess or enforce the note. The lawyers, supposedly speaking for a third party claimant merely said they were a holder which IMPLIES but does not assert physical possession of the note. 

You wrote ” We argue that Aurora can’t transfer something they don’t have. If a previous judge already determined that Aurora failed to prove to be a holder with the right to foreclose, then how can Aurora transfer that same note to Nationstar and bestow enforcement rights it was previously denied  ?.” They can’t. The written conveyance of ownership of a mortgage without transferring the underlying obligation is a legal nullity in all U.S. jurisdictions. As for the holding of the previous judge, the question is what was the exact ruling? If the judge found that Aurora did not have possession and said as much in a court order, that ends it. The matter has already been litigated and is barred by res judicata from renewing such litigation.

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The attorneys will often try anyway and in the absence of a direct response seeking dismissal or judgment based upon res judicata, those lawyers will and do succeed. 

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You have also correctly identified yet another problem for your opposition. You need to realize that foreclosure is strictly a numbers game for the lawyers pursuing foreclosure. Since the money or property obtained from a successful foreclosure is not going to a creditor the entire procedure is all about revenue and profit.

 

You can argue this point when you get to the point where the opposition has steadfastly stonewalled your questions directed at confirming the existence, status, and ownership of the alleged “loan.” 

 

So with footprints in the sand created by a QWR, DVL, and complaints to the CFPB and State AG, plus a refusal to answer those questions in discovery (perhaps in your lawsuit seeking declaratory, injunctive, and supplemental relief based on violation of RESPA, FDCPA, and FCRA, you may then freely argue that there is no loan account nor could there be any authority to administer, collect or enforce it.

In response to whatever argument opposing counsel wishes to make, counsel should not be permitted to argue it. 

 

An objection should be raised to the effect that since they refuse to answer any direct questions about the existence, status, and ownership of the alleged loan, counsel should not be permitted to argue a position that violates statutory law, violates the rules of court, and violates court orders commanding the direct response to those questions.

 

If you don’t object to such arguments at that point in the process of litigation you might be waiving that objection. 

 

This is one of many reasons why I continually say homeowners should have a lawyer familiar with courtroom procedures and antics. In order to be heard, objections must be both proper AND TIMELY.

This means that while opposing counsel is making an argument you interrupt the argument and object and firmly state your grounds and perhaps add some ad hoc comments about how opposing counsel is pretending all those violations did not exist, even if in the face of prior orders for sanctions (if you were able to get the judge to impose such sanctions). 

You wrote: “The DOT follows the note so I’m not sure how the promissory holder status gybes with DOT transfers.”

 

The simple answer is that the law, as it has been written and accepted for centuries (even predating the establishment of the United States of America), makes enforcement of a security instrument (i.e., a foreclosure proceeding) impossible without the claimant having paid value for the alleged underlying obligation. 

 

Although this is somewhat different from the right to enforce a note, it is not as far different as it might appear. In order to enforce a note (i.e., get a judgment for money damages) the enforcer must be (a) in possession or have a right to possession (granted by an existing “holder”) AND (b) the enforcer must have received the grant of authority to enforce (granted by a holder as defined by statute) or the actual creditor who owns the underlying obligation. 

 

People forget the latter issue and focus on just possession. But the FEDEX delivery guy has no right to enforce even a bearer note even if his naked possession raises legal presumptions of his claimed status as “holder” which might get him past a motion to dismiss.

 

The problem with this position is that recent changes in common law look upon the transfer of the note as a transfer of ownership of the underlying obligation — a position that is not supported by any facts but is now almost universally applied. You must rebut such a presumption not just by saying it is wrong, but by asking for corroboration of the transfer of the underlying debt and THEN arguing that the presumption has been rebutted when the opposition refuses to answer simple questions regarding the existence, status, and ownership of the alleged “loan account.” 

You wrote: “The judge stopped us before finishing saying that he had heard enough to make a ruling.” Most homeowners, as ignorant litigants, do not realize that when they use the same language as their opposition to describe a contested transaction, they are admitting to the basic elements of the foreclosure case. There is no reason for the judge to continue although the better practice would be for the judge to specifically ask if you meant to concede those points.” 

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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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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE COMMENTS ON THIS BLOG AND ELSEWHERE ARE BASED ON THE ABILITY OF A HOMEOWNER TO WIN THE CASE NOT MERELY SETTLE IT. OTHER LAWYERS HAVE STRATEGIES DIRECTED AT SETTLEMENT OR MODIFICATION. 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.

But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more. In addition, although currently rare, it can also result in your homestead being free and clear of any mortgage lien that you contested. (No Guarantee).

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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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Filed under: foreclosure | Tagged: Lehman Brothers-Aurora Loan Service gambit. |