Should I Withhold Payment and Place the Money in Escrow

Posted on May 17, 2022 by Neil Garfield

Wall Street is quietly shifting pieces around on a chess board that the homeowner does not know exists and cannot see. There are several examples of this. A shift from U.S. Bank to U.S. Bank Trust, alleged transfers (without payment) of alleged “accounts” from one named trust to another, the rise of “Legal Title Trustee” instead of just trustee, and the list goes on.

I recently answered a fairly simple question about whether the payments should be withheld until the actual creditor acknowledged with its own officer or employee that it did in fact acquire the subject unpaid loan account. The law requires the actual creditor to sign off on some legally recognizable event. The banks have ignored that requirement and give notice from new entities having no right, title, or justification for doing so.

The answer to the withholding question is that there is split opinion. On the one hand, you don’t want to be paying anyone who is not entitled to receive it. On the other hand, you don’t want to put yourself in a worse position than you have in the current status quo. If you are going to withhold the payments it would be wise to hold them in escrow. Either way, I highly recommend that you have a strategic plan in place before you decide one way or the other.

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The way I would do it, is to make the payment(s) to the escrow agent with written instructions to deliver the money to the creditor who owns and paid for the alleged underlying obligation — or a representative or agent authorized by a party who is a creditor as I defined it above. Then I would have the escrow agent send a letter (certified return receipt requested) to all the people that you are sending the QWR and DVL to — in which he or she says that he or she has received the payment and that the agent now wants to pay the creditor as instructed by the homeowner.
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[Practice Note: This almost surely misleading to an interpleader lawsuit in court. The escrow agent would say that he doesn’t know what to do with the money and that he doesn’t care who gets it].
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In fact, the newest notices being received could be referenced. Conveyance of a mortgage without a concurrent conveyance of the underlying debt is a legal nullity. Enforcement of the security agreement by a party who has not paid value in exchange for receiving ownership (not merely evidence of ownership) of the underlying obligation (see UCC9-203, adopted verbatim as State law).
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In reference to the latest notice of transfer, it is not accompanied by a written document transferring ownership of the alleged unpaid loan account from one owner to another. The document needs to be signed by an officer or employee of the company or other business entity that is purportedly making the transfer. Such documents normally contain a warranty of title.
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Prior notices have referenced the owner of an alleged unpaid loan account due from the homeowner as Bank of New York Mellon fka Bank of New York as agent or trustee for JP Morgan Chase Bank, N.A. as Trustee for Certificate Holders of “CWHEQ Revolving Home Equity Loan Trust 2005-D” as claimed successor to U.S. Bank N.A., as Trustee for the LSF9 Master Participation Trust.
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The new notice sent under the letterhead of GS Mortgage-Backed Securities Trust 2022-RPL2 (GSM Trust) appears to assert the third transfer from one trust to another. It is unsigned and provides no guidance as to finding or communicating with anyone at Bank of New York Mellon, JP Morgan Chase Bank, N.A.,“CWHEQ Revolving Home Equity Loan Trust 2005-D”, U.S. Bank N.A., U.S. Bank Trust N.A or the LSF9 Master Participation Trust. The “GS” refers to Goldman Sachs, which is almost certainly the party with contractual control over all activities relating to the Peterson loan — even though it has no ownership interest in any payment, demand for payment, underlying obligation, legal debt, note or mortgage (deed of trust). 
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The escrow agent would go on to say that having received the foregoing notice, the homeowner is in an untenable position. Having received notice of the transfer it is obvious that efforts will be made to administer, collect or enforce payments that are now claimed to be owed to GS Mortgage-Backed Securities Trust 2022-RPL2 (GSM Trust).
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But the notice contains ambiguous language. It asserts that the subject alleged unpaid loan account has been “sold, assigned or transferred.” But the absence of any reference to a prior “owner” or creditor leaves the homeowner in doubt as to the existence, status, and ownership of the alleged unpaid loan account.
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The notice does not assert the name of the seller (if sold), nor an attachment of a formal assignment recorded in county records. In addition, the language leaves the homeowner in doubt as to whether the Notice itself is intended to be an assignment, in which case it is missing an assignor.
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“As the escrow agent for the homeowner, I request that you produce a copy of the genuine instrument in which some person or entity has conveyed ownership of an unpaid obligation due from the homeowner to U.S. Bank Trust, N.A., as trustee for the GSM Trust.”
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“Upon receipt of such instrument, signed by authorized persons in the employ of U.S. Bank Trust, N.A. and the grantor of any instrument(s) transferring ownership of the security instrument and the underlying obligation, I am authorized to deliver payment.”
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The obvious question here is whether you want to add the above narrative to the QWR and DVL or do you want these questions to come from perhaps a real estate attorney who is demanding current answers to current questions.
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One of the subtle changes they are attempting to make is from U.S. Bank to U.S. Bank Trust, which would be an entirely separate entity from U.S. Bank. I have no doubt that the legal department at U.S. Bank insisted on those changes. They are well aware that securitization infrastructures might blow up or collapse and that there might be liability attached to renting their name out to third parties to imply the existence of a trust owning a loan that is managed by the trustee. By switching the name of the trustee from the bank itself to a business entity that has little or no assets, they are engaged in asset protection strategies.
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This means that U.S. Bank has reviewed the questions raised by the analysis contained in forensic reports or other documents and concluded that there is a current risk that U.S. Bank could be the target of a substantial class action or government agency enforcement.
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The question is whether you want to include a revised narrative in your QWR had DVL or you want an escrow agent to raise the current issues with U.S. Bank Trust without going backward in time to when the securitization infrastructure was first created under the LSF9 Trust with U.S. Bank as trustee.
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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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3 Responses

  1. Foreclosureweb, on May 17, 2022 at 10:06 pm said:

    Java, I thought it was just more sloppy paperwork filed by the Mill. It never occurred to me that it is a deliberate strategical move (as Neil suggests) to protect US Bank, NA assets. As Neil says, US Bank and US Bank Trust are two separate entities. Plaintiff has not yet “amended” their case caption to the recorded AOM entity, US Bank, Trust. How does one just “amend” the name of the Plaintiff? Is that even legal? My attorney thinks they have painted themselves into a corner. Stay tuned.

  2. Javagold, on May 17, 2022 at 5:33 pm said:

    So is US Bank NA worried they are the substitute Plaintiff in a Fraudclosure – US Bank NA legal Title Trustee for XYZ Trust 2016 SC6 Title Trust ?????

  3. Foreclosureweb, on May 17, 2022 at 1:01 pm said:

    This exact scenario recently happened in my foreclosure case. The recorded Mortgage “Assignment” is to US Bank Trust, (alleged Plaintiff) but the case itself is captioned US Bank, NA. Two separate entities. The Court made note of it, but what happens next is anyone’s guess….Any ideas? MINUTE ORDER (VK): 10/26/2021**** THE COURT HAVING REVIEWED THE SUBJECT MOTION AND BEING DULY ADVISED OF THE RECORD AND FILE HEREIN AND FOR GOOD CAUSE APPEARING THEREFORE, HEREBY GRANTS MOVANTS NON-HEARING MOTION. U.S. BANK TRUST NATIONAL ASSOCIATION, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS OWNER TRUSTEE OF NEW RESIDENTIAL MORTGAGE LOAN TRUST 2020-NPL2 SHALL BE SUBSTITUTED IN AS PLAINTIFF AN REAL PARTY IN INTEREST. COUNSEL FOR PLAINTIFF IS INSTRUCTED TO READ AND REVIEW THE ASSIGNMENT OF MORTGAGE ATTACHED AS EXHIBIT A TO THE MOTION WHICH REFLECTS THE MORTGAGEES NAME INCLUDES TRUST IN ITS FORMAL NAME AND AS SUCH, THE SUBSTITUTION IS BASED ON THE ASSIGNMENT OF MORTGAGE. THE CASE CAPTION SHALL BE AMENDED ACCORDINGLY. THE COURT MAKES NO FINDING AS TO WHETHER PLAINTIFF IS THE HOLDER OF THE SUBJECT NOTE FOR PURPOSES OF STANDING AND ENTITLEMENT TO ENFORCE THE SUBJECT NOTE.

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