Livinglies's Weblog

In May, 2022 to the CFPB finally corroborated what I have been saying for 16 years. The actors who are named as “servicers” are not performing servicing functions.

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Those are performed by third parties who are the actual servicers, in terms of receipt, collection, depositing, and disbursement of funds. The actor might still be labeled as a servicer since its name is permissively used as a front for the parties performing and controlling such functions as are normally attributed to “servicers.” These third-party (FINTECH) servicers do not work for the actor who has been named as the servicer. They work for an investment bank.

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The actor named as “servicer” is just that – an actor. This is just one example of the misdirection practiced by Wall Street, which has contributed to the mythology of what they call “securitization” but does not involve the sale of a single loan account.

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The problem is that both pro se litigants and lawyers typically accept the reference to the actor as a “servicer.” By doing that they are creating a legal admission that binds the court and all further proceedings. If the actor is performing servicing functions in connection with the receipt, collection, accounting, processing and distribution of funds, then it must be true that a loan account exists I am the “servicer” is “serving” a principal who is the owner of the underlying obligation (unpaid loan account).

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Once the “servicer” has been named and accepted by both sides, the litigation outcome is mostly inevitable. If the “servicer” is really a servicer, then having it name a new actor as the owner of the loan account is perfectly within reason. The problem of course is that none of that is true.

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Correspondence from the designated actor who has been named by third parties as the “servicer” – using a fake letterhead of the named “servicer,” is entirely meant to mislead the reader, including a judge who might see the correspondence or notice that has actually been produced by third-party services who are not employed by the designated actor that has been given the label of “servicer.”

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Here is an example of some recent correspondence between me and a former and prospective client that illustrates the misleading nature of all communication between the actor portrayed as “servicer” and the unsuspecting homeowner:

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Keep in mind that Statements like the one [in your most recent correspodnece in which you questioned the authority of SPS] often sound good but are factually incorrect and legally misleading.

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1st “note holder” means a person in possession of the original note or who has a right to such possession. But they are still not a holder unless they have been granted the authority to enforce it. That grant must come from someone who possesses the authority to enforce it and ultimately derived from ownership of the underlying obligation.

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The statement that SPS is responsible for enforcement of the deed of trust and the note on behalf of the note holder is also wrong.

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First, it assumes that SPS is actually performing servicing functions and has been granted the authority to enforce the lien right by the owner of the underlying obligation. They are invoking theories derived from article 3 of the uniform commercial code which governs the enforcement of notes.

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But the enforcement of lien rights is governed by article 9, which requires that the enforcer of paid value for the underlying obligation.

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[At this point the misdirection is accomplished by going to caselaw instead of statute. If a statute is clear and unambiguous, the courts have no power to do anything other than enforce the statute. The statute in question is the adoption in each US jurisdiction of §9-203 of the uniform commercial code, requiring that the enforcer have paid value for the underlying obligation. Some people get confused by the term “underlying obligation.” It simply means the unpaid loan account and reported on the books and records of the alleged creditor.]

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As such, the fact that an actor might be in physical possession of the note does not empower that actor to grant authority to anyone to enforce the note or the lien.

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Transfer of the servicing rights does not create any new rights. This is a mistake made by many pro se litigant and even many lawyers. Goldman Sachs calls this “laddering.” It gives the impression that the grantor was the owner of the note, the lien or the implied loan account (underlying obligation).

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Lastly, having the actor who is designated as “servicer” give you the name of the “note holder” give you no information at all upon which you can or should legally act. That information should come from the party claiming to be the the note holder, which should include information as to whether or not they are the owner of the note or have merely been authorized to enforce it.

Filed under: foreclosure |