Why is “mortgage transaction” bracketed in quotes? Because the transaction is really a draft of homeowners into becoming issuers in a concealed securities scheme. The loan account, part of every traditional loan, is neither created nor transferred. All players are paid off through the sales of certificates that by law are not classified as securities and are not backed by any liens or collateral. So both the “mortgage transaction” and the “Mortgage-backed securities” carry a moniker that denotes the exact opposite of their true intention.
When to act in judicial states? Theoretically, the time to act is before you close, but that never happens because the players have already convinced you that you were applying for a mortgage loan and not signing up for an undisclosed securities scheme in which they take all the profit. You pay back the consideration for issuing the base documents of the securitization scheme with interest (only because they convinced you this was a “loan”).
In judicial states, the first practical time to act pro-actively or defensively is when you receive a statement or notice of default. Homeowners are tricked into believing the default because they stopped making payments. But the payments they were making were never due to the parties receiving those payments. And the parties receiving those payments are unrelated to the name or business of the designated “servicer.”
The attack should be based on the existence, status, and ownership of the implied (but never stated) unpaid loan account. The answer is never the possession of the note.
In non-judicial states, the time to act is when the homeowner receives and usually ignores the Notice of Substitution of Trustee on the deed of trust. Homeowners ignore it because they think it doesn’t matter. But this is when a designated name is used to pretend that that name is the name of an organization that owns the implied (but never stated) unpaid loan account. They don’t. But if you ignore it, it will be legally cloaked in a presumption of validity.
If the party designated is not a qualified beneficiary under state law because it doesn’t own an unpaid loan account due from the homeowner, then they cannot be the source of any authority to change trustees on the deed of trust.
The attack should be based on the existence, status, and ownership of the implied (but never stated) unpaid loan account. The answer is never the possession of the note.
You cannot complete the challenge without using administrative and court procedures to get evidence of the inability or unwillingness of the designated “creditor” to answer the questions about the existence, status, and ownership of the implied (but never stated) unpaid loan account. Never accept such answers from anyone using the name of the designated servicer. Insist on an officer from the organization designated as “creditor,” e.g., U.S. Bank as trustee, etc.
That means sending a QWR and DVL followed by a follow-up QWR and DVL (when they don’t answer your questions). It means filing a complaint with the CFPB and State AG, both of whom should do something but don’t. Then when you file a lawsuit for breach of RESPA and FDCPA, you can confidently state you have exhausted all administrative remedies.
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Neil F Garfield, MBA, JD, 76, 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 14 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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The problem with the crisis loans is that they were claimed funded by non-banks who, correctly stated here, never had the “transaction” on their books. Instead, warehouse bank lenders were used, who also never funded anything. None of this was compliant for MBS under Regulation AB for private label mortgage backed securities. Hence, the collapse of the scheme. The GSEs/Ginnie are not subject to Regulation AB as not private label but rather agency. Never go to a non-bank for a purchase or refinance. A bank must account for it. Unfortunately, GSEs now doing business direct with non-banks. If a “transaction” was never on a balance sheet, and never funded, meaning YOU pay off the prior mortgage with actual money lent to you – then there is is no “mortgage.” It is no more complicated than that. Securitization, valid or not, is not, and should not be, relevant to borrower. That is up to SEC to regulate.