It’s time to reassess the role of investment banks, originators, servicers and other players claiming “securitization” before the next foreclosure tidal wave.

Since foreclosures are about to start another meteoric rise, this would be a good time to write a new article on what went wrong the last time, what is going on now, and what is still likely to go wrong this time.
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I know that some of the rantings on the internet seem like the spillage of conspiracy theorists and some of them are just that. But overall they are right.
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The bottom line is that back in 1993, investment banks latched onto a scheme that had been partially developed by Michael Milken, who went to prison. The new scheme was patently illegal, which made it one step over the line that Milken actually didn’t cross. His junk bonds were perfectly legal. Drexel Burnham disclosed the real risks. But Michael had bigger plans. The plan was to raise the perception of junk bonds to investment grade.
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But then he went to jail. But upon release he was immediately paid $50 million and then hundreds of millions more to help devise the scheme. His actual role is subject to conjecture.
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The goal was to tap the largest market for debt in the world — home lending. It required all the major investment banks (Citi, Goldman, JPM, Credit Suisse) to “cooperate” (i.e., conspire).
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They had to each support the “securitization” schemes of each other, entice other lesser investment banks into playing (Lehman, Bear Stearns) and then influence or buy off fund managers (pension funds) to purchase the junk bonds they were issuing as “Certificates.”
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It as the “holy grail” of investment banking. Issuing trash securities as though it was for a third party issuer when in fact the issuer was the investment bank itself.
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To justify the purchases by stable managed funds, the investment banks paid off and coerced the insurers into issuing insurance contracts and the rating agencies to issue highest quality ratings based upon false assumptions about diversification of risk. The error is simple: diversification is irrelevant if the entire group of loans is (a) not owned and (b) tainted by bad underwriting.
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And the insurance contracts were payable not to the investors nor even for their benefit but rather for the profit of the investment bank who purchased it. The contracts were based upon index performance not actual losses.
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The same is true for the bailouts that occurred. No losses were paid off because the parties receiving the benefits of insurance or bailout had no loss. See the evolution of the definition of TARP from something covering loan losses, to something covering losses on certificates issued by investment banks, to an undefined toxic asset category.
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The now infamous AIG bailout was primarily for the benefit of Goldman Sachs. Having installed their former CEO as US Treasury Secretary, a very reluctant President Bush was convinced to bailout AIG on the false premise that the financial markets would collapse if he didn’t. But the proceeds went to Goldman Sachs as pure profit.
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AIG took the money to pay off Goldman for its bet that the certificates would decline in value. The decline in value was based upon a contractual provision that gave Goldman the sole right in its sole discretion to declare the event. The money covered no losses because Goldman had no losses. It was pure profit. And when the money was received (around $50 billion from the bailout, bonuses, parties and lavish spending ensued.
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Meanwhile the only two real parties to the scheme — investors and homeowners — were left out in the cold.
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At the end of each securitization cycle, the goal was to avoid liability for violations of lending and securities laws. Avoiding lending laws was easy. They used sham entities to act as “originators” who served for a fee and who appeared on the note and mortgage as a lender.
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Avoiding violations of securities was also easy. they disclosed enough to be able to say they told investors what they were doing, the investors were sophisticated and should have been able to ascertain the risks, and through leveraging the typical herd mentality on Wall Street they created a stampede in all securities brokerage firms to buy and sell the certificates. The world was hooked on a financial weapon of mass destruction.
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Eliminating the liability of a lender in form and substance meant that the role of creditor or lender had to be eliminated. That was accomplished by actually eliminating the homeowner’s debt without notice to the homeowner. Hence the “boarding process” asserted in court is fake. There can be no boarding of a debt that does not exist and a history of payments on the nonexistent debt is irrelevant.
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Each party other than the investor got paid in full. But the homeowner never received any notice of reduction due to receipt of payment because nobody maintained an accounting entry on any books of record that showed that the debt was owed or owned.
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The debt could not be owned without a corresponding entry that showed value being paid for the debt. No such transaction had never occurred since the only actual value was paid by investors, who didn’t own the debt.
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The investor never purchased any debt, note or mortgage. At the end of the day there was no person or entity that legally owned any debt, note or mortgage and therefore no lender or lender successor who could be liable for violations of Federal and State lending laws.
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The scheme then required foreclosure on debts that had already been fully paid several times over. To do this the investment banks had to again resort to using sham entities who would fake their roles using fabricated, false, forged and backdated instruments literally manufactured out of thin air. Despite numerous settlements in all US jurisdictions for such practices, they continue unabated.
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And the proceeds of foreclosure are ultimately received by the investment banks who pay out lavish compensation for the players who contributed to the foreclosure process. *
Since no loss is covered or paid or recorded on any books of account, the money is literally free money in which for tax purposes, is falsely reported as payment on loans. So the foreclosure proceeds are pure profit which is untaxed, at least up until this point in time. Investors never see a penny and homeowners are never the wiser that their debt does not exist anywhere.
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In order to accomplish all this the banks needed to coordinate their activities. enter Black Knight who is literally a  successor to DOCX, which was acquired by Lender Processing Systems (LPS). Lorraine Browne took one for the team when she became the only person in the scheme to go to jail for fabrication of documents.
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Somehow the courts continue to apply presumptions that are supposed to only raise from inherent credibility of documents that are patently false. This results in foreclosure on the erroneous assumption that even if the paperwork is somehow false or even fabricated the proceeds will find their way to the investors. That presumption is wrong.
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Black Knight is the hub in which all things are centralized to prevent foreclosure of the same homeowner transaction by more than one entity — something that would expose the false nature of all of the foreclosures.
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By getting a foreclosure judgment the investment banks succeeded in getting a legal stamp of approval on everything that had transpired before the foreclosure was initiated and the grounds on which they could report the proceeds as return of loan. Basically all fabricated false documentation emanates by or at the direction of Black Knight.
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Judges of all stripes have always been curious about the muscle chairs strategy of presenting several servicers, plaintiffs and other parties. Maybe this time, with a little help from the press, they might be open to considering the fact that the investment banks are not saving the economy, they are stealing from investors and homeowners alike. And if they start asking for fake bailouts again they are stealing from the government and taxpayers. 

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New foreclosure rocket dockets will emerge unless these practices are controlled or stopped. If the claimant is not the owner of the debt, present, existing, black letter law, does not allow foreclosure. In fact, enforcement of the note or separately, the debt, is not allowed unless the right to enforce comes from the owner of the debt. The law is clear, unless someone pays value, they can’t own the debt. Assignments of mortgage without the debt are a legal nullity.
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To “save” the economy the only legal option available is to reassess the homeowner transaction using the equitable powers of the court. It might be true that the homeowner obligation can be enforced after such a reassessment — but only after the facts are all exposed and all stakeholders are brought to the table.
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This would require that the court hear a properly filed pleading requesting equitable reformation of the contract to allow for maintaining the homeowner obligation because without that, the entire securitization infrastructure is in danger of collapse — even though nobody in the securitization infrastructure actually ever owns the debt or suffers a loss from nonpayment.
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To make the homeowner obligation enforceable the court must allow a designee or nominee to pose as creditor. Further the court must adopt procedures that allow a party to act as the designator, even though neither the designee nor the designator own the debt and will suffer no loss from any payment or nonpayment by a homeowner. The current practice of allowing such designees to reap such rewards is  not legally sustainable and probably unjust and unfair.
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The legal analysis requires a beginning point of analysis the contracting intent of the contracting parties. And that in turn requires an analysis of the identity of the contracting parties.
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That analysis results in an indisputable truth: taken separately there was no meeting of the minds — because the homeowner wanted a loan and the investment bank , acting through the originator, wanted the issuance of securities — the note and mortgage — without anyone assuming the substantive role of a lender.
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But taken together a contract can be fashioned in which the homeowner transaction can be treated as a loan contract and the absence of any creditor can be adjusted to insert a designee or creditor who can enforce. but ti do that, the entire contract must be taken into consideration.
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If the homeowner was seeking an actual loan under lending laws but didn’t get it, what is the consideration for entering into a deal that was so profitable for the other contracting parties, whether they were stated or concealed?
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If the answer is nothing, then the court must determine the proper amount of consideration that the homeowner should have received for being drafted into a risky securities scheme — a scheme in which his rights as a consumer, borrower or customer were virtually eviscerated by the substance of the deal.
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The only other legal option is common law rescission. That will result in dismantling the entire securitization scheme.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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Does the REMIC Trust Exist?

In all jurisdictions, even if the trust has some assets, and therefore legal existence as a legal person, if the asset in question has not been entrusted to the trustee on behalf of beneficiaries, the existence of the trust is completely irrelevant. And all claims arising from the supposed existence of the trust are also irrelevant and lack Foundation.

I agree that the existence of the Trust might be a subject for debate.

However, the fact that a trust exists on paper does not mean that it exists relative to any loan or debt or note or mortgage.

In fact, the fact that it exists on paper does not mean that it exists at all in many states.

In those jurisdictions in which a trust is drafted on paper and recognized as a business entity, the trust is considered inchoate, which means sleeping. The failure to recognize this fact has led to the failure of many family trusts and the payment of high taxes.

In all jurisdictions a trust that does not have any assets, liabilities, income, expenses or business is not treated as a legal entity.

In all jurisdictions, even if the trust has some assets, and therefore legal existence as a legal person, if the asset in question has not been entrusted to the trustee on behalf of beneficiaries, the existence of the trust is completely irrelevant. And all claims arising from the supposed existence of the trust are also irrelevant and lack Foundation.

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An asset cannot be entrusted to the trust or trustee unless title to the asset has been conveyed to the trustee to hold in trust according to the terms of the trust agreement. And there can be no conveyance from someone who doesn’t own the asset. The only way you get to own a debt is payment of consideration to someone who paid consideration for the asset. That is the law and it is not up for debate.
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It is the payment of consideration that determines ownership of an asset or debt or note or mortgage. 
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Note that the PSA  often cited as the trust agreement often is not the trust agreement and that even if it says it is the trust agreement there is another instrument in which the named trustee acknowledges that its purpose is to receive bare legal title to security instruments and notes on behalf of the investment bank who often also serves as Master servicer. I have never seen such a conveyance to the trust or trustee from anyone who owned the debt note or mortgage.
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And without conveying the debt, there can be no conveyance of the mortgage. therefore all assignments (without a concurrent sale and purchase of the debt from someone who owned it) avoid.
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But if you don’t raise this issue you might waive it. and by waiving it you are giving a windfall to the participants in a business venture that has the title of a foreclosure action. That business venture os for profit and has nothing to do with recovering losses from an unpaid loan or debt.

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This is important because when the Foreclosure Mills pursue foreclosure they have only one witness. The witness is a robo witness who is employed as an employee or independent contractor of a self-proclaimed servicer. the witness provides testimony that the records introduced by the servicer are the records for the trust.
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This testimony is either direct testimony or it raises the inference or presumption that the records are the records of the trust, because the servicer is supposedly working for the trust. But if the trust has nothing to do with the “loan,” then the servicer is working for an entity that has no legal relationship with the debt note or mortgage.
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That is the point at which the defense and raised a motion to strike, once it has been established that this fact pattern is the only one before the court. Assuming defense Counsel has raised the appropriate objections along the way, the record submitted by the self-proclaimed servicer should be stricken from the record as not being the records of a creditor. The case collapses because no evidence is legally before the court.
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Even if the servicer was actually collecting payments or actually doing anything, which is clearly debatable since most of these activities are probably actually conducted by Black Knight, the appearance of the servicer would not be the appearance of the Creditor, who is therefore not the named claimant or plaintiff.
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The servicer becomes a witness at best and not a very credible one. If discovery has been conducted properly, the defense can clearly raise the inference that the servicer has an interest in the outcome of the litigation. This means that the attempt to get the servicer’s records into evidence as an exception to the hearsay rule can be defeated. This is especially true if the servicer is not actually processing any business transactions. This dovetails with the evidence that the lockbox system is actually controlled by Black Knight.
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And THAT is important because it undercuts the claim of a “boarding process” which in most cases has never existed. It is only through the fictitious boarding process that the records of prior self–proclaimed servicers are able to come into evidence. The truth is that all of those records are mere projections and estimates and the foreclosure mills depend upon the failure of the homeowner and their counsel to actually compute whether the records are even true.
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One last comment is that one of the big failures in foreclosure defense is the failure to question who is receiving payments from the self-proclaimed servicer. An inquiry into this subject would reveal that the servicer is not receiving any payments and is not making any payments to anyone else. This would undercut the foundation for the inference or presumption that the self-proclaimed servicer is actually performing servicer functions.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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From the Horse’s Mouth: WAMU Originated “Loans” Are not Assets of Chase or Even Any trust If the Sale was to a “Depositor”

Many thanks to Bill Paatalo for bringing this to my attention.

This article brings to the forefront a central issue that Wall Street cannot escape unless we let them: in the context of securitization, the paper transfers to the “depositor” is not a sale even if it is treated as a sale by the “Seller.” That means that the homeowner transactions that were falsely labeled as loans were never securitized. In other words, the whole thing is a lie. A LivingLie, which is why I named named this blog as such.

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I would suggest that practitioners take note of this. As many judges have specifically declared in their finding of facts, the “sale” to the   “depositor” in a securitization scheme is a sale to a legal entity.

Take special note that the filings with the SEC admit that the issue of whether and when any sale has actually taken place is subject to “argument.” That is a peculiar statement when you’re dealing with paperwork that “memorializes” the sale of trillions of dollars worth of transactions.

This means that when feeders like Long Beach Mortgage originated homeowner transactions on behalf of WAMU, the most likely cash flow (i.e. real transactions) included a fee paid to Long Beach to act as Lender (so everyone else could avoid lender liability for violations of lending laws). It also means that WAMU was only the servicer. And it means that the homeowner transacted was actually funded by a third party (investment bank) — and what THAT means is that no actual sale ever took place of any debt, note or mortgage. 

And THAT brings to the central issue — on what basis can a non-creditor appoint a designee or nominee to collect on a debt that they don’t own?

And without a sale to the trustee of the REMIC “trust” it is the Depositor who owns the homeowner obligation. That means under black letter law that neither the trustee nor the trust can be named as claimant or beneficiary or plaintiff in a foreclosure proceeding because they are not a creditor.

see WaMu’s securitized mortgages were “legally isolated” and out of the reach of the FDIC’s Receivership. Hence, “Nemo dat quod non habet” (One cannot give what one does not have).

“For transactions in which WMB is a mortgage loan seller, investors should consider the following:
WMB sells mortgage loans to the depositor. WMB is a federal savings association, and its deposits are insured by the FDIC. If certain events occur relating to WMB’s financial condition or the propriety of its actions, the FDIC may be appointed as conservator or receiver for WMB.

WMB will treat its transfer of mortgage loans to the depositor as a sale. Arguments may be made, however, that the transfer of the mortgage loans constitutes only the grant of a security interest under applicable law.
Nevertheless, the FDIC has issued a regulation surrendering certain rights to reclaim, recover, or recharacterize a financial institution’s transfer of financial assets such as the mortgage loans if:
the transfer involved a securitization of the financial assets and meets specified conditions for treatment as a sale under relevant accounting principles;
the financial institution received adequate consideration for the transfer;
the parties intended that the transfer constitute a sale for accounting purposes; and
the financial assets were not transferred fraudulently, in contemplation of the financial institution’s insolvency, or with the intent to hinder, delay, or defraud the financial institution or its creditors.
WMB’s transfer of the mortgage loans will be intended to satisfy all of these conditions.
If a condition required under the FDIC’s regulation were found not to have been met, however, the FDIC could seek to reclaim, recover, or recharacterize WMB’s transfer of the related mortgage loans. The FDIC may not be subject to an express time limit in deciding whether to take these actions, and a delay by the FDIC in making a decision could result in delays or reductions in distributions on the certificates. If the FDIC were successful in any of these actions, moreover, holders of the certificates may not be entitled under applicable law to the full amount of their damages.
Even if the conditions set forth in the regulation were satisfied and the FDIC did not reclaim, recover, or recharacterize WMB’s transfer of the related mortgage loans, distributions to holders of the certificates could be delayed or reduced if WMB entered conservatorship or receivership.
The FDIC may be able to obtain a stay of any action by the trust, the trustee, the servicer, or any holder of certificates to enforce any obligations of WMB under any transaction document or to collect any amount owing by WMB under any transaction document. The FDIC also may require that its claims process be followed before payments
For transactions in which WMMSC is a mortgage loan seller, investors should consider the following:
WMMSC sells mortgage loans to the depositor. WMMSC will represent and warrant in the mortgage loan sale agreement that the transfer of the mortgage loans to the depositor is an absolute sale, so that the depositor is the sole owner of each mortgage loan. WMMSC is eligible to be the debtor in a bankruptcy case. If WMMSC were to become a debtor in a bankruptcy case, and a party in interest (including WMMSC itself) were to take the position that the transfer of the mortgage loans to the depositor is not a sale, but rather should be recharacterized as the grant of a security interest in the mortgage loans to secure a borrowing of WMMSC, delays in distributions on the certificates could result. If a court were to adopt such a position, then delays or reductions in distributions on the certificates could result.
  WMMSC and the depositor have taken steps to minimize the risk that in the event WMMSC were to become the debtor in a bankruptcy case, a court would order that the assets and liabilities of the depositor be substantively consolidated with those of WMMSC. The depositor is a separate special purpose corporation.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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How to Use the Business Records Exception to Hearsay Rule to Keep Out “Servicer” Records in Foreclosure Cases

Fundamentally you must understand that the investment banks want you and everyone else to look only at the payments history — not the debt, who owns it and whether anyone suffered a loss resulting from any lack of payment by the homeowner.
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Their strategy is to get the court to presume that in the absence of payments someone must have suffered a financial loss since the debt was clearly established in a transaction in which the homeowner received money and issued a note and mortgage. In the present securitization era that paradigm is wholly untrue but not obvious because the banks turned “lending” on its head. The homeowners took what they thought was a loan but the banks were not lenders and had no intention of becoming lenders.
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The problem is that most homeowners believe the myth promulgated by the banks because they don’t understand what really happened in what the banks call “securitization.”
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The truth is that nobody has suffered a financial loss from “nonpayment” by the homeowner.
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Everyone has already been paid as to the principal obligation.
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Collection efforts directed at the extinguished obligation are pure business strategy designed to increase already astonishing profits achieved through “Securitization” which like everything else is not in substance what the label conveys, to wit: the homeowner obligation was never sold to investors and therefore cannot be said to have been securitized. 
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One of my most prolific contributors points out how Fannie Mae uses a company who to this day incredibly remains out of the limelight despite being the only company whose division president, Lorraine Brown, went to jail for falsifying documents. It wasn’t really her fault. There were no transactions that fit the mold required to have an enforceable claim in foreclosure. But the banks wanted the money anyway. So they invented the appearance of transactions even though nothing had happened in the real world.

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It isn’t just Fannie Mae. Most homeowner transactions are established on LPSDesktop.

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The banks, in their never ending quest to send us down rabbit holes only present the “servicers” and their “business records”.

They do that to (a) avoid the hearsay rule because someone comes in without knowledge and says he has knowledge that these records were created in the ordinary course of business and they were created at or near the time of the transactions — which is only partially true and (b) to avoid the pesky problem of presenting details about the transaction that could show that the debt and the role of the creditor were extinguished in the process they’re calling “Securitization.”

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Practitioners would be wise to keep in mind two things:
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(1) the “servicers” are not servicers in the sense that anyone thinks of a servicer. They do process payments from homeowners but they do not process anything else. — The “servicer” records do NOT show where payments were forwarded, which would identify and confirm that the claimant or Plaintiff in foreclosure is in fact the owner of the debt.
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(2) the payment record from the “servicer” reflects only those payments received by that servicer (and perhaps an unaudited compilation of prior payments reported through LPS Desktop). The payment history might be admissible in evidence but only as to the record of payments, about which the practitioner should object for lack of foundation. — Without testimony or other evidence that (a) the debt was established as owned by a specific creditor anad (b) that the payment history is part of the records of the creditor, not just the servicer, the payment history should be excluded. 
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(3) A subpoena issued to Black Knight fka Lender processing Systems, aka LPS, demanding records relating to the subject debt, note or mortgage will be met with a barrage of objections, which if properly litigated will probably result in a favorable decision for the homeowner.
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(4) The object of litigation of foreclosure defenses is to show that the debt was removed from the chain. You accomplish this by relentlessly and aggressively pursuing the identity of the creditor. there isn’t one where any REMIC is involved.
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(5) Without a creditor there can be no delegated authority to enforce, collect or even administer the loan. “Authority” does not exist in a vacuum. there must be a source of authority. And the source of authority must be someone who legally owns rights to the debt over which he can delegate, as owner, the rights to enforce. 

see Black KnightÕ latest innovation: LoanSphere supports entire loan lifecycle – HousingWire

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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business 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 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.
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HELOC Securitization Analysis — Why Are There Two “wet ink” Signatures? What Rights Does MERS Possess?

“a transfer of the mortgage without the debt is a nullity, and no interest is acquired by it”

“because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose.”

The writer of this article shall remain anonymous. He sent me the following. I concur with his analysis:

I came across your June 17th post about the mortgage exec that double-pledged some notes.  This is a subject I’ve been looking into for a while, thanks to Nye Lavalle’s writings – damn him for sending me down that rabbit-hole.  You might also look at:

https://www.justice.gov/usao-sdny/pr/former-comptroller-mortgage-lender-charged-bank-fraud-and-wire-fraud and the incitement at https://www.justice.gov/usao-sdny/press-release/file/1017921/download

As I came to realize that this isn’t a one-off scam…  I got to thinking about why do all closings require two wet-ink originals?  Not only for “sum certain” mortgages but for HELOC’s too.  So, I darned my tinfoil hat and let my mind wander into the conspiracy abyss.  I’ve always been uncomfortable with the double-document signing at closings.

As I carefully nit-pick through my own documents, I can’t help noticing that, often is the case that the County recording uses one set of the wet-inks, while the bank uses the other.  Is this just a matter of convenience, whereby the closing title/abstract company sends one set to the county clerk and the other to the lender, for its MERS recording.  Of course, the counties don’t record notes, only mortgages, so that’s a bit of a chink in the armor there.

Then I realized that the Clerk set isn’t indorsed because that process comes later (albeit not much later, actually depending on the county’s back-log it could be sooner than later) – OK, no big deal – BUT WAIT – it’s not like they wait to get the recorded set back and then indorse it – no – they just indorse the other set.  So, the secondary-market set is not the recorded set.  Hmmm, Ok, a bit nefarious, but is it a non-starter for foreclosure –  probably not.

But then I realized that my HELOC had the same slipperiness.  In HELOC foreclosures (at least mine with Citibank), the bank presents the endorsed HELOC (HELOC-CEMA because it’s NY) as its prima facie evidence for standing, swearing that it’s the “indorsed note”; while sometimes also swearing that it’s not securitized it never left the bank’s hands (holding), which in-and-of itself is curious, because if it never transferred, then why is it indorsed?

TIME OUT:  No Neil, I didn’t make a spelling mistake (indorsed vs endorsed), but I am messing with you, because so are the banks.  Of course, you know (but your readers probably don’t, and many judges probably miss the subtlety too).  “Endorse” means accredit by bestowing recognition; whereas “Indorse” means to sign a negotiable instrument for transfer as per the UCC.  Sadly, many dictionaries, especially software and web-based lexicons make these two words synonymous, which they are not.  Some lexicons don’t sanction“indorse” as a correct spelling, which it is, but as a different word, not just an alternate British/American spelling choice.

OK, back to the bank’s slip & slide of portending that they are presenting an indorsed note.  Nope, a revolving line of credit agreement (HELOC or Reverse mortgage) is not a note.  It’s not a “sum certain” so it can’t be a note, because a “note” is a negotiable instrument (as per article 3 — but even article 9 provides the same definition albet enables transfer by assignment because it may not be indorsed, hence non-negotiable).

This lack of “sum certainty” restricting “note” status was adjudicated in NY Appellate 2nd Dept. in 2018 (i.e. it’s not a note)

But it’s rarely cited – probably best, since most lawyers would mess-up the citing and blow it for those of us who know how to use it – i.e. hand judges opportunities to make bad precedential decisions.

An observing-eye reminds us that a note is a one-sided promise, whereas an agreement is a two-sided contract (signed and countersigned – regardless of adhesion); thus, not really assignable, carte blanche, it requires a blessing by both parties but that step never transpires – imagine that…

Anywho: This is just the jumping-off point, the next part is the fun stuff.

So, the bank provides affidavits and exhibitions swearing (a/k/a perjuring) up-and-down that the indorsed note is right there in front of the judge.  Sure, it may look like a HELOC agreement, but the plaintiff’s attorney assures the judge, it’s a note – pointing to the prima facie doc – look right there, there’s the indorsement, so it must be a note – Right?  WRONG!  i.e. your long-standing argument about “presumption”.

Well, first of all, we (you and I) believe that the HELOC was securitized, so they don’t, or shouldn’t really, have a copy of the document anyway.  But we haven’t really dug much deeper, because we believe it’s impossible to get anywhere  with the dastardly banks in discovery.  So, I did some digging…. albeit without the help of formal discovery.

HELOCs (revolving lines of credit) can’t be securitized, because securitizations require fixed assets for valuations, and a revolving line of credit isn’t a fixed asset, it can’t be valued “sum certain” from its “four corners.”  But wait, that’s ridiculous, because we all know that HELOCS, Reverse mortgages, Credit Cards, etc. ARE securitized; perhaps not as RMBSs but rather as ABSs or other permutations.  So, what the hell am I talking about, saying they can’t, it’s impossible, bla bla bla…

You guessed it, there’s a work-around; and it’s documented.  The bank (the originator) transfers the HELOCs to a flimflam trust.  To do this they “endorse” the Agreement in-blank, which looks exactly like an “indorsement-in-blank” but the endorsement is an accreditation, not a negotiation.  Now the trustee (a/k/a “the Issuer”) does his sorting and stacking of the pool and – and this is the magic part – then, he (or she) makes notes against the HELOCs.  Yes, of course, it’s a legal fiction, and they have a name for it,  – “HELOC-backed notes” and it is those notes (the HELOC-backed notes) that are securitized.

The originator (who is often the servicer) retains the HELOC agreement & mortgage (a/k/a “lien”) since it is supposedly the “PETE”, but is it?  Is it really?  Does it matter?  Well, not until the servicer has the enviable task of foreclosure of a HELOC that has been pledged elsewhere, likely to an ABS that’s vaporized into the secondary market either-zone.  Hence, the foreclosing bank has nowhere to send the proceeds from the foreclosure – oh well – that’s a shame.

There’s more, but I sense you’re getting bored.  HELOC-backed notes – interesting.  Think about the Article 9 maxim “the mortgage follows the note;” A maxim laid down over a-hundred years ago by Justice Noah Swayne (Appointed to SCOTUS by Abraham Lincoln – a republican – LOL)

“The note and mortgage are inseparable; the former as essential, the latter as an incident.  An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”  Carpenter v. Longan (USA 1872)

Words that still carry-the-day in such recent stare decisis cases as Bank of NY v. Silverberg (NY 2nd Dept. 2011).

Ironically, this HELOC-backed note means that the note follows the mortgage(a/k/a HELOC Agreement, with a mortgage nested inside it).

“The issue presented on this appeal is whether a party has standing to commence a foreclosure action when that party’s assignor — in this case, Mortgage Electronic Registration Systems, Inc. (hereinafter MERS) — was listed in the underlying mortgage instruments as a nominee and mortgagee for the purpose of recording, but was never the actual holder or assignee of the underlying notes. We answer this question in the negative.

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 275 (N.Y. App. Div. 2011)”

because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose.

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 283 (N.Y. App. Div. 2011)

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 280 (N.Y. App. Div. 2011) (“ “a transfer of the mortgage without the debt is a nullity, and no interest is acquired by it” ( Merritt v Bartholick36 NY 44, 45 [1867]; see Carpenter v Longan83 US 271, 274 [an assignment of the mortgage without the note is a nullity]; US Bank N.A. v Madero80 AD3d 751, 752US Bank, N.A. v Collymore68 AD3d at 754Kluge v Fugazy145 AD2d 537, 538 [plaintiff, the assignee of a mortgage without the underlying note, could not bring a foreclosure action]; Flyer v Sullivan284 App Div 697, 698 [mortgagee’s assignment of the mortgage lien, without assignment of the debt, is a nullity]; Beak v Walts266 App Div 900). A “mortgage is merely security for a debt or other obligation and cannot exist independently of the debt or obligation” ( FGB Realty Advisors v Parisi265 AD2d 297, 298). Consequently, the foreclosure of a mortgage cannot be pursued by one who has no demonstrated right to the debt ( id.; see 1 Bergman on New York Mortgage Foreclosures § 12.05 [1] [a] [1991]).”)

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 281-82 (N.Y. App. Div. 2011) (“as “nominee,” MERS’s authority was limited to only those powers which were specifically conferred to it and authorized by the lender ( see Black’s Law Dictionary 1076 [8th ed 2004] [defining a nominee as “(a) person designated to act in place of another, (usually) in a very limited way”]). Hence, although the consolidation agreement gave MERS the right to assign the mortgages themselves, it did not specifically give MERS the right to assign the underlying notes, and the assignment of the notes was thus beyond MERS’s authority as nominee or agent of the lendersee Aurora Loan Servs., LLC v Weisblum85 AD3d 95, 108 [2d Dept 2011]; HSBC Bank USA v Squitieri29 Misc 3d 1225[A], 2010 NY Slip Op 52000[U]; LNV Corp. v Madison Real Estate, LLC2010 NY Slip Op 33376[U]; LPP Mtge. Ltd. v Sabine Props., LLC2010 NY Slip Op 32367[U]; Bank of N.Y. v Mulligan, 28 Misc 3d 1226[A], 2010 NY Slip Op 51509[U]; OneWest Bank, F.S.B. v Drayton29 Misc 3d 1021Bank of N.Y. v Alderazi28 Misc 3d 376, 379-380 [the “party who claims to be the agent of another bears the burden of proving the agency relationship by a preponderance of the evidence”]; HSBC Bank USA, NA. v Yeasmin27 Misc 3d 1227[A], 2010 NY Slip Op 50927[U]; HSBC Bank USA, N.A. v Vasquez24 Misc 3d 1239[A], 2009 NY Slip Op 51814[U]; Bank of NY. v Trezza14 Misc 3d 1201[A], 2006 NY Slip Op 52367[U]; LaSalle Bank Nat’l. Assn. v Lamy12 Misc 3d 1191[A], 2006 NY Slip Op 51534[U]; In re Agard, 444 BR 231; but see US Bank N.A. u Flynn, 27 Misc 3d 802).”)

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 278 (N.Y. App. Div. 2011) (“”Mortgage lenders and other entities, known as MERS members, subscribe to the MERS system and pay annual fees for the electronic processing and tracking of ownership and transfers of mortgages. Members contractually agree to appoint MERS to act as their common agent on all mortgages they register in the MERS system” ( Matter of MERSCORP, Inc. v Romaine8 NY3d at 96 [footnotes omitted]).”)

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 278-79 (N.Y. App. Div. 2011) (“This leaves borrowers and the local county or municipal recording offices unaware of the identity of the true owner of the note, and extinguishes a source of revenue to the localities. According to MERS, any loan registered in its system is “inoculated against future assignments because MERS remains the mortgagee no matter how many times servicing is traded.” Moreover, MERS does not lend money, does not receive payments on promissory notes, and does not service loans by collecting loan payments.”)

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 279-80 (N.Y. App. Div. 2011) (“Where, as here, the issue of standing is raised by a defendant, a plaintiff must prove its standing in order to be entitled to relief ( see U.S. Bank, N.A. v Collymore68 AD3d 752, 753Wells Fargo Bank Minn., N.A. v Mastropaolo42 AD3d at 242). In a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced ( seeU.S. Bank, NA. v Collymore68 AD3d at 753Countrywide Home Loans, Inc. v Gress68 AD3d 709, 709Wells Fargo Bank, N.A. v Marchione69 AD3d 204, 207-208Mortgage Elec. Registration Sys., Inc. v Coakley41 AD3d 674, 674Federal Nat’l. Mtge. Assn. v Youkelsone303 AD2d 546, 546-547First Trust Nat’l. Assn. v Meisels, 234 AD2d 414).”)

How to Use the Real Deal On Securitization to Homeowner’s Advantage

Like citizenship in this country litigation is not easy. We keep banging our heads against the same wall expecting a different result. We need a strategy that directly addresses the inescapable realities of every homeowner transaction and every securitization cycle.

My substantive analysis of the transaction is that the homeowner was drafted into a securitization scheme which in my opinion clearly triggers quasi contract and quantum meruit — the only possibility for inquiring into the adequacy of consideration. Lawyers and litigants have shied away from this because of its complexity and because they don’t know how to approach it.
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In simple terms the homeowner transaction was a “”Qualified Financial Contract” (QFC), part of which contained some apparent attributes of a loan, but which went much further and diverged extensively from a “loan” as the term is currently used in custom and practice in the financial industry and society in general.
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The QFC is not some invented term for this article. it is defined in all securitization documents. Investment banks knew they were not creating a loan. The job of litigants and their attorneys is to point out and argue that the documents submitted as a foundation for their claim of legal standing contains language that opens the door to quasi contract and quantum meruit. 
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In logistical terms, the homeowner delivered the only service the investment bank was seeking, to wit: issuance of the note and mortgage. Neither the investment bank nor the originator designee of the investment bank was at all interested in making a loan, collecting revenue from repayment nor assuming any meaningful risk of loss.
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Although the homeowner entered the transaction desiring a loan he/she didn’t receive a loan. If there is no legally responsible lender or creditor at the conclusion of that transaction, it isn’t a loan.
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And since too many bona fide third party transactions have occurred to rescind or unwind the transaction the only possibility remaining is to have a court reframe the agreement to include the basis upon which the investment bank entered into the transaction — i.e., the creation, issuance, selling, trading and hedging of unregulated securities.
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We know the investment bank had no intention of becoming a lender and that there was no intention to make investors lenders.
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And we know that the investment banks funded the origination or acquisition of the loan through originators and aggregators.
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Further we know that investors paid value for the certificates which excluded any right, title or interest in any debt, note or mortgage.
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The result, obviously intended, is that while parties were paying value, none of them ever received a conveyance of ownership of the debt, note or mortgage.
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And we can easily see that anyone who received such a conveyance (a) did not pay value and (b) was not acting as an authorized agent or representative of anyone who paid value in exchange for a conveyance of an ownership interest in the subject debt, note or mortgage.
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It was partly a scheme for avoidance or evasion of lending and securities laws.
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The reason for this is blatantly stated in all of the promotional material for sale of certificates, to wit: no liability for violation of lending or servicing laws using “bankruptcy remote” vehicles  for origination and acquisition of homeowner obligations.
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And scratch the surface and you discover that the only thing that makes the transactions bankruptcy remote is that the underlying obligation, note and mortgage are not included in the schedules of bankruptcy because they were never owned by the originator or aggregator.
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The problem for the last 20 years has been that nobody has been asking the obvious question: “if they don’t own the loan, then who does?” Or at least nobody has followed up on that question in which they truly persisted in aground war to get the answer.
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So any such conveyance was either a legal nullity (mortgage assignment) or did not carry the right to enforce (note). If the conveyance didn’t include the obligation there are very specific rules that apply.
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Authority to enforce the note can only come from one who is entitled to enforce. And the premier person who has the right to enforce is owner of the underlying debt that the note is supposed to memorialize. Under the laws of all jurisdictions nobody gets to own the obligation without paying value.
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This seems to be challenging not only for the courts but for defense lawyers. It is a very simple logical progression. In the end enforcement of the note is intended to pay the debt. If it doesn’t pay the debt the maker of the note is subject to multiple liabilities for the same transaction. And that is what happened. Since the originator did not substantively fund the homeowner transaction the issuing of the note and mortgage in favor of the originator was a legal nullity. The issuance of the note created a new liability that was not merged with the underlying obligation to repay the money, if any, that was received or paid on behalf of the homeowner.
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So the reason I mention all of this is that I have somewhat reluctantly but persistently arrived at the conclusion that the homeowner transaction was not a loan and yet the obligation to make payment survives even in quasi contract or quantum meruit.
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This is an unavoidable conclusion because we know that where money was funded to the homeowner or on his/her behalf and where the homeowner issued a promise to pay money, the obligation to pay arises and can be secured by a lien (mortgage or deed of trust) which in fact is enforceable.
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But note that since there is no lender or creditor at the conclusion of the securitization cycle, the intent of the homeowner is thwarted — i.e., he/she does not have a loan agreement. It is something else. And that is where quasi contract and  quantum meruit come into play.
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The homeowner could have bargained away reasonable compensation or consideration for his/her role in initiating the only documents that made securitization claims possible — i.e., the note and mortgage.
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Our legal system is not designed to correct stupid mistakes in bargaining or negotiation in transactions or agreements.
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Our system is designed to enforce the intent of the parties. So we can’t get away from the intent to create an obligation and the intent to have that obligation enforceable and memorialized by a note and mortgage. In fact, I propose we should embrace it.
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The reason is that the intent to create the enforceable homeowner obligation was not the only intent operating. Since the securitizations cheme — and the homeowner’s vital role in it — was not disclosed (actually actively concealed), the homeowner did not, could not and never did bargain away rights to compensation or consideration for his role and risks in this dangerous risky transaction.
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Thus we enter the realm of quasi contract and quantum meruit. 
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So now the question is how much consideration  did the homeowner actually receive for issuance of the note and mortgage? Since it wasn’t a loan, even though that was what was intended by the homeowner, the receipt of money must be categorized as payment of consideration. And that is a lot of consideration by any standard.
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But now the issuance of the note and mortgage becomes a service rather than the result of an underlying obligation to repay.
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So the consideration of the receipt of benefit from the funding of the homeowner transaction is entirely offset by a promise to pay more than the consideration received in the form of money paid to the homeowner. That might still result in a court finding some consideration, since the money on the front end might not be found by a court to exactly equal the money promised on the back end.
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On the other hand there is good reason to find that the consideration for issuance of the documents required to start securitization claims, securities, selling trading and hedging was entirely negated by the concurrent promise to pay more than the money received. But assuming there was a finding of consideration, was it enough?
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In a court of equity wherein rescission is no longer an option the court must determine what a reasonable homeowner would have bargained for or received through the process of free market forces if disclosure had actually been made regarding the securitizations scheme and the vast profits and revenue generated under the scheme.
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The court would hear testimony from a variety of experts and reach a conclusion as to whether the homeowner had received enough consideration or if the homeowner should have received more as per the quasi contract and not just what was presented as a loan agreement.
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The range of possibilities is nearly infinite. From zero to a majority of the pot because the investment bank secretly tricked the homeowner into a dangerous transaction, the risks of which were unknown to the homeowner. Using the shadow banking marketplace (i.e., where all derivatives are traded for nominal value) as the external reference point for heuristic projection, it may be fairly assumed that the average revenue generated from each securitization cycle was $12 for each $1 transacted with homeowners. Additional securities analysis reveals that the figure could be much higher.
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In a free marketplace where there was no asymmetry of information the fair question could be posed as follows: from the investment bank’s perspective they would be saying that they are going to make $12 on each $1 during the securitization cycle, perhaps more.
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The homeowner and investor sitting at the same fictional but still legal table would inevitably concede that for inventing and managing such an ingenious scheme the investment bank might be entitled to the lion’s share of the profit.
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The investors would say their role as investors is critical to the existence and success of the securitization cycle. And since capital is valued more highly than labor they would claim a greater share than that awarded to homeowners. Homeowners would make the same argument as investors — without them there is no securitization and there are no revenues and there are no transactions claimed as “loans.”
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So looking at the customs and practices of the financial industry the investors would probably initially claim 40% as angels and the homeowners could justify a claim of around half that amount for their indispensable role.
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Or one could look at the money actually spent (commissions, bonuses etc) on getting homeowners to execute the required note and mortgage while concealing the truth about the transaction as a measure of what the homeowners should get. Or a license or royalty arrangement might be adopted.
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All of them in my opinion average around 15%-20% of the total revenue generated by the scheme. this would leave the investment bank with 40% or more of the securitization cycle revenue which is around 1000% of normal revenues for underwriting and sale of debt securities.
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So the court would offset the obligation with whatever it decided was reasonable consideration for the homeowner. It would either order payment to the homeowner of any excess consideration due or order the homeowner to pay the balance of the obligation after offset for the consideration due. And if the homeowner still owed money both the note and mortgage would be enforceable.
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But here is the rub. None of this is possible without creating a contract by decree in which it is possible to designate a party who is not a creditor to act as a creditor — in a transaction to which the homeowner agrees that for all purposes the designee will be a creditor. And that creditor is subject to lending and servicing laws. This is essential because under current law only the owner of the debt can enforce the mortgage and only someone representing the owner of the debt can enforce the note unless they are a holder of the note in due course — which means they purchased it for value in good faith and without knowledge of the  maker’s defenses. 
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So it becomes necessary to plead for this attribute to be made part of the newly minted agreement because without it, you don’t have an enforceable agreement  Without an enforceable agreement you’re left pleading for damages under RICO, wrongful foreclosure, etc. And while the note and mortgage might not be subject to enforcement, they still exist. No lender or buyer will complete a transaction with that hanging over the deal.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business 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 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.
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Are Lawyers Missing the Boat Again on Foreclosure Defense?

The problem is that while most people think everyone has been bought off, and to a certain extent that is true, the real problem is that the clever plan of securitization is so counter-intuitive that nobody believes the truth that is in plain sight. The reason for fabricated documents is that there were no transactions, so the documents had to be fabricated to fit facially with the requirements of law for administration, collection and enforcement.
To anyone who is not conversant in the language of finance, that seems impossible, unlikely, or just plain wrong. So rather than keeping an open mind about it, they react to such assertions with aggression and incredulity.

I recently received a question from a fairly knowledgeable reader. Why are lawyers dropping the ball on foreclosure defense? His specific question, along with similar questions from other readers is where are the trust lawyers, the securities lawyers, the property lawyers, the civil litigations lawyers, the personal injury lawyers (emotional distress etc), etc.?

Here was my answer with some edits for typos which all of you know I am prone to make and miss on edits.

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The question you posed is the million-dollar question. I think you are correct in your analysis. I have attempted to enlist attorneys who specialize in those areas but I have failed.
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The only explanation that I can give you that has any truth to it is that lawyers, despite their reputation, are easily intimidated, lazy and greedy. I surveyed hundreds of lawyers over a two-year period In 2008–2009.
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The proposition was simple. assuming a client with sufficient financial resources to pay any reasonable fee, were they willing to represent homeowners in distress?
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The fact that the answer was in the negative was frustrating enough. But the reason most often cited was that they would rather represent “the bank.” And when I pointed out that they did not represent any banks nor did they have any prospects for doing so, that’s when they said that it didn’t matter.
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Some did express reservation about the assumption that the client could pay. I pointed it out that if they were not making a monthly payment for housing, they could easily pay. That made no difference. They saw the entire endeavor as futile and unprofitable — but in reality I could tell, like any trial lawyer could detect, that I was dealing with raw unbridled fear.
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So I attacked it with seminars on foreclosure defense that highlighted business strategies in which the lawyer could become rich, and some of the attendees did. Others made a good living.
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But it was based on lowering of expectations. By adopting a hub-and-spoke strategy some lawyers, adopting the business plan that I proposed, began servicing hundreds of homeowners at a time. But like all such practices, their business success depended upon settlement of the cases, which meant modifications. This resulted in adding to the illusion that the servicer had any right to be in the picture.
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My latest plan is that I am working on potential pleadings for a case in Reformation in which the investment banks are literally drafted into the litigation. The Court decides whether the homeowner received consideration for issuing the documents (note and mortgage) that enabled the securitization plan, and whether the homeowner received or should receive adequate or additional consideration that could offset the claim. (There is a lot more to this but for purposes of this article I simply state in brief form).
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I have no doubt that there is an opportunity to achieve immense wealth simply by pursuing the obvious. But it appears that the General Public, law enforcement, the Judiciary, and most lawyers have succumbed to the party line that enables the Investment Bank to sit in the shadows and designate names of irrelevant parties with no stake and the outcome to administer, collect and enforce obligations that were long ago retired through securitization, proof of which is easy to obtain, to wit: is there any company showing the existence of the debt as an asset on their balance sheet and a loss from nonpayment? 
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I definitely know the answer to that question. Current law therefore does not allow the current scheme of securitization to exist nor should it. It depends entirely upon concealment of the most relevant data in any transaction — the terms and conditions under which each party intends to serve the other and the terms and conditions under which each party might profit from the transaction.
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Most of all under the federal and state lending and securities laws (and general laws requiring fair dealing) the identity of the counterparty must be included in order to make the agreement an enforceable contract.
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This concealment allows investment banks to act illegally and against the idea of free markets or capitalism. It prevents both investors and homeowners from bargaining for adequate consideration based upon the true nature of the transaction. 
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The problem is that while most people think everyone has been bought off, and to a certain extent that is true, the real problem is that the clever plan of securitization is so counter-intuitive that nobody believes the truth that is in plain sight. The reason for fabricated documents is that there were no transactions, so the documents had to be fabricated to fit facially with the requirements of law for administration, collection and enforcement.
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To anyone who is not conversant in the language of finance, that seems impossible, unlikely, or just plain wrong. So rather than keeping an open mind about it, they react to such assertions with aggression and incredulity.
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Some lawyers do get it and they win their cases most of the time. Everyone else seems to argue for their own weaknesses (See Steven Covey’s Book) without looking to actual information or data. They insist that the foreclosure cases are both unwinnable and are morally unconscionable if they give the homeowner a free house.
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I insist that there is no debt because the investment bank was never depending upon the economics of a loan to make money. Foreclosures are gravy. They made all their money creating, selling, issuing, trading, and hedging securities. The labelling of the homeowner transaction as a loan was a false representation. The investment bank, who never appeared on any of the paperwork, was the real party in interest and at the end of the day there was no person or company who owned the so-called debt from the homeowner. 
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If that plan had been disclosed — as it was required to be disclosed under both “lending” laws and “securities” laws — both investors and homeowners would have had the opportunity to bargain for more more compensation and better terms — because they would have known they were taking a much larger risk than the one that was actually presented.
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Indeed, investors that were pension or other types of “stable managed funds” would not have been able to invest at all had they known the true nature of the certificate scheme into which they they were investing the futures of workers and companies that had contributed to the fund.
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Such funds, as investors, were critical to the success of the securitization scheme. Investment banks would have been legally required to present additional safeguards to the fund managers such as participation in the trading profits, hedge contracts and insurance contracts in order to make the sale of certificates to stable managed fund investors. 
The same logic holds true for homeowners.
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They were making the largest investments of their lives based upon their reasonable belief that the apprasial was real and the loan was viable — all resposnibilities imposed on the “lender” by law (see TILA).
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Had they known the true incentives and motives and existence of the investment bank they would have understood that this was no loan. It was a service they were performing and an investment — for which they were being paid to issue documents that required them to pay money over time in order to enable the securitization scheme.
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If the true profits of the securitization scheme were disclosed as as required by law, homeowners and originators would have been able to compete for a greater share of the securitization pie or they would have had the opportunity to choose not to do business in such a hazy scheme. 
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business 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 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.
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Please visit www.lendinglies.com for more information.

PennyMac and Other Companies are Making False Claims as “Servicers”: Black Knight, the king of fabricated documents is behind 62% of all “servicing records.”

The bottom line is that companies claiming to be servicers are not servicers although they perform some servicing functions as “clients” of Black Knight.

This provides a veil of plausible deniability for lying in court about testimony and documents. Hiding behind litigation immunity foreclosures are being pursued and granted resulting in windfall payments to intermediaries who never had any stake in the financial stake of any homeowner transaction. 

Examination of the facts shows that the “boarding process” is nonsense i.e., a lie). “New Servicers” simply log on to the Black Knight system. There is no boarding required. It is a total lie to fool courts into believing that the records were tested when they were not. 

Black Knight is not mentioned in part because of its prior record of criminal conduct. That record gives rise to inferences of lack of credibility or questions or credibility — either one of which is enough to prevent the employment of legal presumptions arising from what appear to be facially valid documentation. Without those presumptions there is no case because none of the claimants can offer proof of transactions in which actual ownership and control over the underyling obligation can be established. 

There is nothing like an admission that can change the course of thinking by a judge, lawyer, homeowner or law maker. Except for one thing: when the party not only admits the truth of the matter asserted but affirmatively alleges it in a lawsuit against someone else.

Exhibit A, brought to my attention by multiple sources and contributors to my blog. It is a lawsuit by someone who professes to have no connection with the alleged “servicing” of any transactions that are referred to as residential mortgage loans. It is never named in any lawsuit as a servicer. It does not show up in court as the source of servicing records. It does not send any robowitness to court to say that he/she is familiar with the books and records of this company. And yet, here is Black Knight, formerly Lender Processing Services and DOCX infamy (Lorraine Brown, President went to jail).

In a lawsuit against PennyMac, Black Knight asserts that PennyMac infringed upon its proprietary system that supplies the servicing records for 62% of all “servicing” performed in the U.S., — and that means that in 62% of all foreclosures, the companies that were proffered as servicers were not the servicers or at least did not perform all servicing functions — especially, as you read the complaint, as to payment histories and relevant documents for foreclosure.

So we have the only company that was ever caught red handed with fabricating, falsifying, recording, forging, robosigning false transaction documents. They changed their name but not their business model. Their business model is being the central repository of all the data that is created, stored, and manipulated with respect to 62% of all alleged “loans.”

That makes Ocwen and other loan servicers liars. And I have successfully pointed that out in trial. When you look at the copies submitted to qualify for an exception to the hearsay rule as a “business record” you can see that this did not come off of any particular system. And upon questioning of the witness they will profess ignorance as to the location of the server on which documents and records are created, maintained and manipulated.

No document is ever produced showing that Black Knight was named as servicer for any trust. That is because the trust has nothing and Black Knight is not working for nothing. Black Knight is working for investment banks who are the prime and only drivers of all trading, administration, collection and enforcing of contracts relating to securities and homeowner transactions. The transaction data (38%) not controlled by Black Knight is primarily controlled by a Chase controlled entity in the same way.

So the bottom line is that when the servicer representative comes into court to testify as to the foundation of the payment history, there are two things to remember for cross examination.

First, the copies he/she is attesting to are not from any system owned or controlled by his company and are not the records of the trustee or trust of any REMIC Trust.

Second those records are always missing any references to what goes out. Without entries showing disbursements to creditors, the records are incomplete. Without records showing establishment of the debt as an asset of some creditor, the records are incomplete. And THAT is what undermines the foundation for the admission of the records and can lead to objection and a motion to strike the exhibit during trial.

Failure to object and failure to attack in this way leads inevitably to a finding that the documents are real and that the information is true which then proves a default because the payment history says so.

But it doesn’t prove a default and the litigator must be able to show that. A default is established ONLY when proof of ownership of the asset (Loan) is established in the name of the claimant or Plaintiff. This never happens because there is no creditor showing the loan as an asset on its financial statements.

In current securitization practices, there is no creditor that actually claims ownership under generally accepted accounting principles that require a financial transaction (payment) in exchange for a conveyance of ownership of the underlying debt as a required by Article 9 §203 UCC as adopted by all U.S. jurisdictions. And if they are not creditors then they can’t be considered lenders and therefore can claim that lender liability does not attach to them. 

And without any officer of the trustee or trust testifying that those are there records of test rust, the copies preferred by the foreclosure mill and the robowitness are just props and not evidence and do not qualify as exceptions as business records. Accordingly they are barred by the hearsay rule which stands in the way of any evidence that lacks credibility.

Black Knight vs PennyMac Lawsuit

So why am I saying all this?

Here are some quotes from a complaint filed by high end lawyers representing Black Knight against PennyMac who they say falsely and illegally used the Black Knight systems, namely MSP© and Navigator©. Here is what Black Knight says, which corroborates, word for word what I have been saying for 14 years:

“Black Knight’s proprietary MSP® System, including its interdependent NavigatorTM electronic reference and procedural library, is the mortgage industry’s leading mortgage servicing software [e.s.] package. The result of years of research, complex coding, and continuous improvement, the MSP® System is used to service over 62% of the first lien mortgage loans in the United States, providing its users – the country’s largest and most successful lending institutions – with the ability to manage their portfolios in compliance with a broad set of laws and regulations. Black Knight protects its proprietary system through secrecy, and users of the MSP® System are granted access only under strict nondisclosure agreements with individual access controls.”

Now to be sure, they will claim that they are only providing software that “servicers” use. But that is not the way it actually happens. Black Knight owns, operates, maintains all servers with an iron hand as directed by the investment banks who like Black Knight want to be out of sight and therefore out of mind of any court.

The facts that every litigator should know is that the two parties who are not mentioned — the investment bank who started ands till controls the securitization scheme and Black Knight who is the central repository for all data to make sure that there is no public competition for claiming the same loan, are the only ones that actually out as real parties real witnesses.

So then we come to the fact that claims of servicing by PennyMac are completely false. If you read carefully and make appropriate inquiries one fact stands out: PennyMac is acting under Black Knight. PennyMac may get to make certain entries which in turn are tested by Black Knight and PennyMac may get to print out copies of reports that are produced by certain algorithms at Black Knight but PennyMac has no role in creation or maintenance of business records on Black Knight, who in turn does not do anything for trusts because it has no contracts with trusts. it has contracts with investment banks.

Notice how they are keeping the agreement between PennyMac and Black Knight a secret. Also note that the agreement names Fidelity Information Services, Inc. an Arkansas corporation as the principal and PennyMac is referred to as “client”.

“Pursuant to that certain Master Agreement entered into as of April 30, 2008, together with any addenda thereto (the “Master Agreement”), PennyMac became a registered user of the MSP® System and was granted a limited right to access and use the MSP® System in order to process PennyMac mortgage transactions.[e.s.] The Master Agreement includes clear and comprehensive restrictions against misuse of the MSP® System and associated confidential materials. Due to a confidentiality requirement in the Master Agreement, as well as the volume of documents, Black Knight attaches hereto as Exhibit “A” the cover page of the Master Agreement. A complete copy of the Master Agreement is in the possession of PennyMac, but a duplicate copy will be provided upon request.”

So the lawsuit is couched as a copyright infringement case. But the real purpose is that of the investment banks — to prevent the decentralization of data records that could reveal the fact that loans were sold multiple times in multiple ways. Of course there is also the monopolistic position that Black Knight enjoyed and wanted to protect. But without the support of the investment banks it would never have filed this lawsuit,.

“The MSP® System is made of a number of interdependent “modules,” with each performing a different function in the process of servicing a mortgage loan. These modules work together synergistically to produce the familiar experience and end product that is critical to the system’s success.”

“For example, the following specific aspects of the MSP® System contribute to its unique value: data schema and fields; user experiences and interfaces; files and records; transaction-type codes and sequence codes; input, processing and output transactions; workstation guides; technical support services; and documentation of the foregoing. Data collected are organized in specific files incorporated in a table that includes multiple records, each of which is a row that also includes a series of fields or cells, each of which has a specific name and position range. The confidential logic and business rules that drive the collection and manipulation of the data provide Black Knight a competitive advantage.” [e.s.]

“The NavigatorTM application is a critical component of the MSP® System. Acting in effect as an extremely detailed electronic reference and procedural user manual, it provides authorized users of the MSP® System with comprehensive information regarding each MSP® System module and workstation necessary to understand and use the MSP® System to service mortgage loans. This includes confidential details of MSP®-specific files; data dictionaries; data schema, records, and fields; MSP®-specific transaction-type and sequence codes; processing operations associated with MSP®-specific files; and MSP®-specific input and output transactions. It also contains confidential workstation guides and other user materials explaining how to work with MSP®-specific files and initiate execution of MSP®-specific operations. The NavigatorTM application and its related documentation are made available only to authorized users of the MSP® System for limited uses and are specifically designated by Black Knight as confidential proprietary, and trade secret information.

An authorized MSP® System user can also access data from the MSP® System in real-time using MSP® Mortgage Web Services. Like the NavigatorTM application, MSP® Mortgage Web Services contains detailed confidential documentation explaining its functionality and unique and proprietary data formatting structures and request codes, among other topics. And like the NavigatorTM application, MSP® Mortgage Web Services and its related confidential documentation”

One of our prolific readers and contributors “summer chic” has offered the following information that I consider useful in framing complaints:

On June 8, 2020 Black Knight announced that former OneWest CEO (aka OCC) Joseph Otting joined Black Knight’s  Board of Directors…..
 
 Black Knight is a renamed Lenders Processing Services/DocX who forged millions of assignments which were filed in Courts around the Nations to steal homes from American families.
 
 Bill Foley (FNF) , owner of LPS, DocX, Black Knight, ect. continues its illegal practices as of today while deceive borrowers with bogus Title Insurances. 
 
Speaking about monopoly, Mr. Foley owns majority of US Title Companies.
 
PennyMac is a renamed Countrywide Financial 
 
Caliber Home Loan is a renamed Countrywide Financial
 
HomeXMortgage is a renamed Fremont Loan and Investments
 
Matrix Private Capital is a renamed Lehman Brothers
 
New OCC Mr. Brooks is also a former OneWest CEO….
 
Former BlackRock CEO Michael Bright was CEO of Ginnie Mae….
 
VA Appraisal system is controlled by Bank of America via Core Logic LoanSafe program which is  renamed Countrywide’s LandSafe Appraisal system which BOA sold to VA in 2014….
 
Ginnie Mae’s Senior VP Michael Drayne is a seasoned  fraudster from Chevy Chase bank who was sued by investors and insurers for over $5.2 Billion securities fraud. Drayne was never charged for any damages.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

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*Please visit www.lendinglies.com for more information.

Sham Affidavit Rule in Federal Courts Might Apply to State Court Actions in Foreclosure

A sham affidavit is one that asserts facts that are inconsistent with facts alleged in pleadings or previously proffered in discovery, prior affidavit or proffered documents. This happens a lot in foreclosure cases when foreclosure mills file motions for summary judgment. They often casually change the claimant by reference or name adding some power of attorney or other claim that is not attached or explained. The sham affidavit rule bars the affidavit in its entirety if it asserts facts or positions that are not consistent with prior assertions.
The sham affidavit rule can apply to attempts to contradict not only prior deposition testimony, but prior written discovery as well. We’ve blogged about the sham affidavit rule a number of times. Briefly, the rule is that:
[A] party cannot create a genuine issue of fact sufficient to survive summary judgment simply by contradicting his or her own previous sworn statement (by, say, filing a later affidavit that flatly contradicts that party’s earlier sworn deposition) without explaining the contradiction or attempting to resolve the disparity.
Cleveland v. Policy Management Systems Corp., 526 U.S. 795, 805-06 (1999) (string citation omitted). See also Perma Research & Development Co. v. Singer Co., 410 F.2d 572, 578 (2d Cir. 1969) (generally viewed as the seminal case on sham affidavits). https://www.lexology.com/library/detail.aspx?g=60c7a1e1-4d34-4916-9a12-f41ab8fc5bf6
If a sham affidavit is filed, it is therefore barred unless the affidavit itself refers to the prior assertions and explains the differences that appear in the current affidavit. This explanation is not something that anyone in the foreclosure mill or servicer can do since they don’t have access to any of the facts causing the issuance of a default letter or foreclosure in the first place. They are just following orders.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business 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 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.

*Please visit www.lendinglies.com for more information.

Homeowner debt is never sold to investors. Either you get it or you don’t.

It’s more complicated than just a Ponzi scheme.

In its simplest form the obligation of the homeowner was purchased by the Investment Bank through intermediaries. So the originator never touched the money. It was often masked by something called a warehouse lending agreement.

So the paperwork showing series of sales of the loan starting with the originator is completely fabricated and demonstrably untrue. It can be demonstrated through discovery. The absence of a meaningful response to simple discovery demands can be used to raise the inference that there is no ownership or authority over the loan. 

This also undercuts the false claims of a “boarding process” or “audit.” No such thing exists. Unfortunately the people who argue or testify that such practices exist are protected by litigation immunity doctrines that are far too broad.

But you must be persistent and aggressive in court. Merely demanding discovery is worthless. You must seek orders from the court compelling the response to Discovery. And when you still don’t get the answer you must seek orders of sanctions, including limiting the ability of your opposition to proffer any evidence of ownership or authority over the debt.

Once you know how to do that in litigation and you raised timely proper objections if the case ever gets to trial, the homeowner wins most of the time.


Many paper transactions that are shown as a refinancing of the original home owner transaction are equally fabricated. This is true when the originating Investment Bank is the same in both the original homeowner transaction and the new one. No money exchanges hands. It is all on paper. If the homeowner is getting cash out of the deal, then the Investment Bank advances only that amount of money. 

The Investment Bank in turn maintains the original securitization claims of the original homeowner transaction while at the same time starting a new one. And often there is a third securitizations scheme in which the original scheme is “resecuritized.” This allows the investment bank to make far more money than anything involved in the homeowner transaction. (And by the way I suggest you stop calling it a loan).

Where the Investment Bank for the original homeowner transaction is different from the Investment Bank in the new homeowner transaction that is called a “refinancing” then in most cases money actually changes hands. 

But in no case does the investment bank or the investors ever receive any conveyance of any right, title or interest in any homeowner debt, obligation, note or mortgage. This is intentional. If they did receive such a conveyance then they would be lenders under the lending statutes like TILA, and securities statutes, rules and regulations under the SEC.

The plan calls for evading or avoiding liability for violations of those laws. So they define the originator as a lender even though the originator is not loaning or even paying any money to the homeowner.

When foreclosure Mills come to court they argue the contrary. They’re able to do that because they are protected by litigation immunity.

Possession of a note does not automatically mean that the possessor has the right to enforce. 

And even if the right to enforce the note that exists, that does not mean that the possessor of the note paid value for the debt as required by article 9 §203 of the Uniform Commercial Code. 

That is why a paper transfer of a mortgage or deed of trust is a legal nullity without an actual transfer of the debt. All jurisdictions have case decisions that say exactly that. It’s the law.

The common error by lawyers and judges is that they presume that the note is evidence of ownership of the debt. That presumption does no harm when one is only enforcing the note for a money judgment. But when seeks forfeiture, especially of a homestead, that presumption defeats all the protections that were designed into lending and foreclosure statutes. Unless legal merger has occurred and the court specifically makes that factual conclusion, the execution of the note is not evidence of the debt.

The doctrine of merger is the only things that prevents the homeowner from creating two liabilities for the one payment. But merger only applies if the person paying consideration or value to the homeowner is the same person as the one designated as “payee” on the note. If those two are not the same, then merger cannot occur.

You have two legal events then. One being the payment to the homeowner which gives rise to a liability simply because the homeowner received it, and the other being the execution of the note that under the laws governing negotiable instruments gives rise to a separate liability that can be deadly to the homeowner if someone purchases the note for value (holder in due course), in which case they will be presumed to have acquired the debt. But the debt is not transferred unless the person selling the note owned the debt.

It is possible to enforce a note without the claimant having any actual Financial loss. This is an exception to the usual constitutional rule that in order to get into court you must be able to allege and prove some injury. But in foreclosure, the condition proceeding to filing the action for foreclosure is that the claimant must have paid value for the underlined obligation. In other words the requirement that the claimant has actually suffered Financial injury as a result of some failure on the part of the homeowner is not waived just because someone possesses the note. 

Lawyers who get it win their cases. Most lawyers don’t get it and they lose.
While it’s true that the securitization scheme has many of the elements of a Ponzi scheme, it is not that simple. It’s completely true that the investment Banks would not be paying any money to homeowners in the absence of security sales and that the proceeds of security sales are the main contributor to the revenue of the investment bank and its Affiliates and Co Venturers (see RICO). 

But much of the money that is paid to investors does in fact come from payments from homeowners. Or perhaps that is not the right way of saying it. The money received by investors comes from the Investment Bank who actually does not have much of a liability to the investors or to anyone else as a result of the sale of unregulated securities. The investors who purchase certificates are not purchasing payments from homeowners. They may think they are but they are not. No document says they are.

They purchased a conditional promise within the sole discretion of the Investment Bank. The Investment Bank is acting through a fictitious name of a special purpose vehicle whose only legal existence is technical and not legally real. The certificates are issued in the name of the trust, but the trust has no assets, no business, no liabilities, no income and no expenses.

The Investment Bank maintains the right, in its sole discretion, to continue making payments to investors despite the failure to receive payments from homeowners. Those payments are labelled “servicer advances” even though the money comes from a reserve fund established when investors purchased certificates. This is actually all spelled out in the prospectus and the offering circular to investors. All servicer advances come from investor funds and never from the “the master servicer” which is actually the Investment Bank in disguise. 


So the bottom line is that the money paid to homeowners comes from the Investment Bank at the very beginning. Therefore none of the intermediaries ever touches any money except that which is paid to them as fees. My point is that homeowners are entitled to a bigger piece of the pie than they received only because the Investment banks hid the pie.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business 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 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.

*Please visit www.lendinglies.com for more information.

How to Deal with Claims of Mortgage Selling and “Successors”

I received a question regarding Lehman along with information that the old Lehman crowd regrouped under the name of Matrix Private Capital Group in New York. Fuld is there and in any case involving Lehman engineered “loans” I would encourage the taking of his deposition.

The simple but counterintuitive answer is that Lehman wasn’t buying anything, but it did pay. It paid for the funding of the origination of loans.

Since the payment was already made, the originator did not have to be paid again in order to acquire the note and mortgage. Since the originator had never paid anything, it had nothing to sell.

So the originator never received any payment. 

Lehman was following the business plan that was invented at Goldman Sachs. The business plan was for the issuance of multiple levels of securities based upon the appearance of the creation of loan transactions and loan obligations. The trick of the plan was to do so without ever becoming a lender that was subject to federal and state lending laws regarding disclosure of compensation and profits.

So this is why all of the documents had to be fabricated after the origination of the illusion of a loan transaction without a creditor or lender. they had to create the appearance of a sale through documentation that was completely fabricated, false, and more often than not forged and backdated. but lawyers and judges all come from law schools in which their training is directed at the written instrument as though it was the Bible. 

In this case virtually all written instruments are part of a scam. 

This is part of the reason why the “boarding process” is completely false. The records, in most cases, of the payment history are solely in the care, custody, and control of central repositories like Black Knight who, like their investment bank bosses, remain out of sight. And the records of who receives payments made to the servicers are a closely guarded secret — something that is both illegal and extra-legal. Of course you’re entitled to that information since it shows clearly who is intended to receive payments on the homeowner obligation — i.e., the so-called creditor.

Whose Lien is it Anyway? Neil F Garfield, published by GTC Honors, Inc. f/k/a General Transfer Corporation (2008)


So if you really want to manage your expectations regarding these issues, the first thing you need to do is stop believing anything you read in the documents that are prepared by or on behalf of the investment Banks. —- And you need to get comfortable with ambiguity — yes you have an obligation but no you don’t have and probably never did have a lender.

The only legal way to enforce the obligation is for some party to step up and say they paid for the obligation and that they therefore own the debt, note and mortgage. But for anyone to do so they would be asserting an interest adverse to those of investors who think that they “own” the loans without any of the responsibilities that go along with ownership of loans or their administration. So the only thing for them to do legally is seek to reform the instruments to allow for designation of a creditor even when there is none.

The law firms representing the investment banks have long understood that taking the legal route would diminish the profitability of securitization schemes since it would necessarily result in the disclosure of all manner of profits from the scheme.

So they went the illegal route with great success. It worked because they managed to get everyone focussed on the “benefit” received by homeowners and the “windfall” they would receive if the home were not foreclosed.

Here is what they don’t want anyone to seriously consider: that the payment to the homeowner or on his/her behalf was just that — payment, not a loan. And the consideration for the payment was the issuance of a note and mortgage without which there could be no securitization. Further consideration was the grant of authority to resell private loan data.

Under normal legal analysis this results in a failure of consideration because the payment was illusory. At the same time as the homeowner receives it he issues the note and mortgage in which it is pledged out again.

But the securitizations scheme went forward anyway which is why the homeowner is entitled to receive payment in quantum meruit either as a direct claim or as a defense (affirmative defense) for set off or claim of disgorgement.

This is entirely dependent upon two things — (1) the amount of money generated as revenue that can be allocated to the origination of the homeowner transaction and (2) the reasonable amount of money, in a free market economy, that would normally be paid to a person for playing the critical role in allowing the securitization scheme to proceed.

A review of such cases shows that the percentage of compensation due to homeowners is between 5% and 15% of the revenue generated. In a typical securitization scheme the amount of revenue is on average $12 for each $1 of the homeowner transaction. So that translates to the homeowner being entitled in quantum meruit to between $0.60 and $1.80 for each $1 of the nominal amount of the homeowner transaction. So the bottom line is that the homeowner owes the $1 in quantum meruit but is also owed between $0.60 and $1.80 PLUS interest.

And that is the rest of the story. I dare anyone from the financial community to say I am wrong. That is anyone who has a license at risk and who can produce contrary data proving that this calculation is incorrect.

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business 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 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.

*Please visit www.lendinglies.com for more information.

How to Deal with Motion for Substitution of Plaintiff in Foreclosure Actions

The single basic tool of the investment banks, who are secretly running the whole foreclosure show, is musical chairs. By rotating the players they can successfully bar the courts and the litigants from knowing or pinning down who is real and what is real. All of that ends if you sue the investment bank.

Look at any foreclosure in which claims of securitization are known or suspected and you will find “rotation”.

In nonjudicial states it starts with “Substitution of Trustee” on the deed of trust which can be done without any motion.

Before or after that there is a change in the name of the servicer, which has perplexed judges since I first entered the picture in 2006.

Then there was a change in the credit bid after the foreclosure was complete or during the foreclosure sale where a new party mysteriously ended up “owning” the property.

And now we see with increasing frequency, the substitution of a new claimant or plaintiff during the foreclosure proceedings.

Motion for substitution of Plaintiff are becoming the rage simply because most state courts require a wrongful foreclosure action to be against the party who initiated the action. So the investment banks simply took their cue from that. They designate a new Plaintiff or a new claimant during the proceeding. Presto there is no wrongful foreclosure action. But there still may be the normal abuse of process claim.

Either way, they have no right to designate the first or the new Plaintiff or claimant. 


I would say that the likelihood of successful opposition to the motion for substitution of plaintiff is very low, as long as some explanation is offered. But this should trigger aggressive discovery where you go after the transaction by which the new plaintiff became the designee.

In a nutshell no such transaction exists because there was also no transaction by which the first Plaintiff became a creditor. It is all smoke and mirror. 


I am not saying that you shouldn’t oppose the motion for substitution of plaintiff. What I am saying is that the judge will regard it as merely a housekeeping chore until you raise the central issues of your defense narrative.

The moral of the story is that if you are going to sue for wrongful foreclosure you should be naming the investment bank that was calling the shots. Everyone else is a moving target with plausible deniability. That may not always be so easy to determine, but it isn’t impossible. We can help with that.

If you go after the investment bank you will be able to overcome the plausible deniability and technical requirements of claims based upon wrongful foreclosure. You can say that the action was brought by them using the name of a sham conduit. The change in “Plaintiff” therefore changes nothing.

Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business 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 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.

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About those tax statements you have seen or received on home “loans”

Answering your question requires tracing the convoluted strategy of the investment banks. 


Start with the proposition that each player is one of the separate business entities involved in the securities plan that claimed to “have” your loan in some manner, shape or form.

Next go to the fact that the creditor role was extinguished in the plan. That leaves the debt with nobody to pay (no creditor). Nobody has an asset on their balance sheet corresponding to your transaction that was originated as a “loan.” 


BUT you are making payments as directed by people whom you think are actually authorized to tell you where to make your payments. Those payments are sent to a company claiming to be a servicer. I’ll simply call them a receiver. So the receiver accepts the payments and then forwards money to someone (Investment Bank) who is the party from whom they accept instructions (although the instructions are actually received semi-anonymously from a third party intermediary). It’s like organized crime. The receiver keeps a portion of the payment as fees and turns over the balance. 


So the investment bank has received a payment from the receiver. It does not book the receipt of money from the servicer as interest income, return of principal or anything like that because the investment bank has no asset against which it could post such entries. So it posts it to a suspense account (with the label of the implied trust, which actually does not exist and therefore has no tax liability) that is neither income nor a reported asset, although it should be reporting the asset and an equal liability to pay it out if that was the case. This is simple double entry bookkeeping. But because of changes in GAAP that started in the 1960’s (See Unaccountable Accounting by Abraham Briloff) and were then accepted by both the Financial Accounting Standards Board and the SEC and therefore  by the IRS, these transactions are considered “off balance sheet” which is a fancy way of saying that they don’t actually report it even though it happened. 


Since there is no  bookkeeping entry as to income or expense there is no taxable event and nothing is reported to the IRS. And while payments are being made to investors (holders of certificates) by the investment bank (as “Master Servicer” on behalf of the implied “trust”) all of those payments are discretionary. 


And here is another place where it gets really complicated. Payments received from the servicer do account for most of the payments made to investors who bought certificates. But factually and legally those payments continue only as long as the investment bank wants to make them. The investment bank wants to make them only as long as it is selling certificates. (See Ponzi scheme). And in actuality the investment banks DO continue to make payments without regard to payments received from homeowners as long as they are keeping up the pretense that those payments are actually tied to the receipt of payments from “borrowers.” The goal is to sell more certificates. 


And in fact the structure of securitization in practice is such that if all homeowners stopped making payments, the investment banks would and do continue making payments — if they were still selling certificates. This actually happens where most of the loans were toxic assets. But in reality the investment banks could not continue to sell certificates if homeowners refused to pay. That would break the illusion of loan portfolios and it would be easy to see that the transactions with homeowners were not really loans because nobody ended up being a “lender” as defined under Federal and State lending laws. 


So what happens when a debt is discharged by bankruptcy? Answer nothing because nobody has it as an asset. It continues to get reported as if nothing had happened. the goal is maintain the pretense that the “loan portfolio” is operating and that “borrowers”. 
What happens when the trustee sale occurs? Answer nothing because nobody has it as an asset. It continues to get reported as if nothing had happened. the goal is maintain the pretense that the “loan portfolio” is operating and that “borrowers”. 


What happens when they sell the property using third party names? Answer nothing because nobody has it as an asset. It continues to get reported as if nothing had happened. the goal is maintain the pretense that the “loan portfolio” is operating and that “borrowers”. 

What happens with payments from homeowners that are reported as “interest” by the receiver/servicer? Answer nothing because nobody has it as an asset. It continues to get reported as if nothing had happened. the goal is maintain the pretense that the “loan portfolio” is operating and that “borrowers”. 


What happens with payments from homeowners that are reported as “principal” by the receiver/servicer? Answer nothing because nobody has it as an asset. It continues to get reported as if nothing had happened. the goal is maintain the pretense that the “loan portfolio” is operating and that “borrowers”. 


Having created a complex design that to most people is impenetrable the investment banks are now able to report anything they want for their own purposes. 


It doesn’t matter what the homeowner pays or doesn’t pay.
But they have algorithms to keep up appearances. Since those programs do not have access to any actual database, they create one what assumes, from the face value and terms of the origination loan documents, that you are paying and they send out a statement that says you paid interest on your loan. This provides the foot prints for tax evasion or avoidance. Having established nonexistent transactions as at least “reported” they can now write off the loan, take a loss and reduce their taxes. 


The interesting academic question that rises from all of this is that the whole thing is “tubular,” in my view. From the perspective the homeowner intended to make payments of interest when the homeowner was actually making payments on what the homeowner thought was a loan. It was certainly an obligation even if it wasn’t a loan, even if it might have been an unenforceable obligation for lack of consideration.

[More legal analysis: If it wasn’t a loan then the payment was in exchange for something from the homeowner — i.e., initiating and issuing instruments that started (or completed) the securitization process. If that was the consideration then was the consideration cancelled out by the homeowner/issuer’s required promise to make a payment that was more (with “interest”) than what the homeowner received?]


So from the homeowner’s perspective the payment was interest on an obligation and was not deductible unless it was an obligation arising from a homeowner “loan.” But from the investment bank’s perspective there is no interest, there is no principal. There is only cash flow to which they attach any label they want. It is my opinion that this is a major potential source of revenue for Federal and state governments who have income taxes. Because the investment banks are taking deductions without reporting the income. 


So all of this adds up to a very solid qui tam action under state and federal false claims act that cost governments money. The problem is political. Under direction from the executive branches, most dominated by politicians who have received vast amounts of money from investment banks who received vast amounts of money from investors and homeowners, so when qui tam actions are filed, the agency steps in and says “it’s ok, we were not defrauded. This is public policy to allow this.” End of Qui Tam. 

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business 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.  IT IS NOT A SHORT PROCESS IF YOU PREVAIL. 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

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.*Please visit www.lendinglies.com for more information.

Three Card Monty: Why is Pandemic Relief Going to Servicers? Why are they not claiming relief for REMIC Trusts? Will homeowner debts be reduced by Federal payments to “Servicers?”

https://www.nytimes.com/2020/04/21/business/mortgage-investors-coronavirus.html?referringSource=articleShare

By failing to require a credit to homeowners when the Federal government makes payments on claimed obligations, the bailout is simply adding to profit of investment banks, servicers and foreclosure mills. They are eating their cake and having it too. Obligations are paid off but their claim against homeowners remains unchanged.

Sign Petition to Change the rules to Protect Homeowners from Fraudclosure.

Foreclosures are filed in the name of a named Trustee for a collection of words that is then treated as an entity. More specifically it is treated as a trust. Sometimes the foreclosure mill goes further and says it is filed for the holders of certificates.

  • If a “trust” is the claimant in a foreclosure, why isn’t it a claimant in a plea for relief due to nonpayments from homeowners?
  • If the holders of certificates are suffering economic loss from nonpayment by homeowners why are they not the direct recipients of Federal relief?
  • Who is really going to get Federal bailout money and will it cover a loss or will it be profit?
  • If the ultimate result is that obligations are being paid, why isn’t the homeowner getting notice of a corresponding reduction in the amount of payments claimed as due?
  • Who is the real party collecting money and why?

The answers are obvious. Wall Street is again playing fast and loose with its labels to suit its own ends. If investors fail to receive payments promised them by the investment banks they have only the rights set forth in their contract with an investment bank —- the “underwriter” that underwrote the offering of certificates that were false labelled as “mortgage backed” and again falsely labeled as “bonds.” But the underwriter was actually the issuer. So the entire proceeds of sale of certificates went to the investment bank instead of a “REMIC Trust.”

And that is why there is no trust getting a Federal bailout and there was no trust getting a Federal bailout in 2008-2009. No trust has any claim to any money. So why are they Plaintiffs in judicial foreclosures and beneficiaries in nonjudicial foreclosures? Because the Wall Street banks are inserting a jumble of words to escape liability for making false claims.

Investors have no right to receive the payments from homeowners. So the relief package proposed by Fannie and Freddie is designed to shore up the value and liquidity of holding unregulated securities (certificates) in a market that is wholly controlled by investment banks (not a free market) and completely dependent on continued sales of certificates that are neither worthy of the high ratings conferred upon them by rating agencies nor worthy of being insured (unless the insurance contract is a ruse backed up by the expectation of a Federal bailout, again).

Hidden beneath the waves of economic loss and relief packages is an essential truth about what Wall Street has most people believing was the securitization of loans. But the loans were never sold, much less divided into pieces that were sold off as securities. It was personal data that was securitized and then there were complex instruments indexed on that personal homeowner data that was securitized. None of it had anything to do with the sale of any loan nor the collection of any money from homeowners.

While the foreclosure judgment and a sale of property  results in money proceeds, as I have reported here, it never goes to any Trustee, trust, or even investor. The money is sent to companies that have claimed to be servicers although they never say they are servicing on behalf of owners of the loans. that’s because the loans were never sold.

Those self-proclaimed “servicers” are actually collecting money for the investment banks who have labelled themselves “Master Servicers.” The investment banks receive money from multiple sources — continued sales of “certificates” (falsely  dubbed mortgage backed bonds), homeowner payments, and most importantly trading profits on various derivative and hedge contracts.

The obligation of the investment bank to make any payment to any investor who paid for a certificate is limited to their agreement when they purchased the certificate from the investment bank.

That obligation is in large part discretionary — i.e., it is based upon the sole discretion of the investment bank as to whether money paid to investors can be recovered and is further restricted by a discretionary determination s to whether there have been “events” based on indexing to certain data that is called “loan data.”

The servicing companies mentioned in the article cited above have no obligation to make any payments to the investors. Their function is to distribute money to investors by access to funds made available by the investment bank. And the assumption that their thin capitalization puts them in danger of extinction is a misapprehension of the true facts.

“Servicers” have no obligation to make payments to investors. None. Investors will get paid as long as investment banks see a reason to pay them. And the investment banks will see a reason to pay them as long as they can sell more certificates.

The proof is in the pudding. After the payments are made, homeowners are never given notice that the money claimed as due from them has been reduced. The game is on — get money from homeowners, force the sale of their homes even though everyone is getting paid. 

Neil F Garfield, MBA, JD, 73, is a Florida licensed attorney since 1977. He has received multiple academic and achievement awards in business 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.  IT IS NOT A SHORT PROCESS IF YOU PREVAIL. 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.
*
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Why Homeowners Lose Their Homes to Crooked Banks

The first and foremost thing about this is that where any loan is subject to claims of securitization, that claim is false. So no investor ever  bought any loan, debt, note or mortgage. Not ever. All documents claiming to memorialize such transactions are false. So the designated claimant has no claim.

To win these cases you must be realistic about what you are up against. The justice system doesn’t care about the merits of any claim, defense or denial unless it is properly and timely presented in accordance with the established rules of procedure and laws of evidence. It is not really an oversimplification to say that noncompliance with the rules means you lose even if you are right.

I can file a lawsuit against you, the reader, for anything right now even though I have no claim and I can win — and maybe claim your property to satisfy the judgement. The fact that I never had a claim is irrelevant to the system. Once the judgment or order is entered that is the law of the case. This is what crooked banks are using as their means to gain more profit through foreclosures.

[Practice Note: there is a very real privacy issue that has not been adequately explored in connection with homeowner transactions. If the true nature of the homeowner transaction was to obtain consent to sell private data then the consideration might be zero — because the money given to homeowners was offset entirely by a duty to pay it back with interest. So in addition to a lack of informed consent, the failure of consideration might negate all consent. This might augment a claim for quantum meruit for the real plan: the issuance and trading of securities.] 

The presence of questions does not mean that there is an absence of evidence. While the burden of proof is on the claimant to establish the necessary elements for a prima facie case, procedural law favors the claimant, especially in foreclosure cases. Homeowners can and should win, but they often lose because they think that being right is enough.

The apparent facial validity of the documents presented means that even if the documents were fabricated and the plaintiff was misrepresented as having legal existence, for purposes of the case, the judge is required to presume that the claim is true and that the claimant is real. the perpetrators of such a fraud get to enjoy the fruits of their labor. the property is sold and the proceeds are distributed as revenue without any accountability.

*
Merely denying those facts is insufficient. You must be able to produce evidence to the contrary, to wit: either facts that show that the presumption is untrue or, more likely, the fact that the Foreclosure Mill was unable to or unwilling to answer basic questions about the ownership and authority over the debt.

*
Many lawyers and pro se litigants make a common error. They think that by denying the existence of the plaintiff or the claim that they have shifted the burden back to the claimant or at least the Foreclosure Mill.  This assumption is misplaced particularly in foreclosure litigation. theoretically the denial of a fact that has been alleged is sufficient to force the claimant to prove the allegation of fact. But in foreclosures, thanks to form pleading, very few facts actually need to be alleged in order for a Judicial or non-judicial foreclosure to proceed.
*
The denial from the homeowner is therefore a denial of facts that have not been alleged. It gets worse. The presumption arising from documents that appear to have facial validity ends the matter unless the court is faced with credible and persuasive evidence to the contrary.
*
And the Foreclosure mill is never going to admit that it doesn’t have a client who is a claimant, and it is never going to admit that the claim doesn’t exist.
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The only avenue open to the homeowner is the exhaustion of all procedures and remedies under the rules of discovery. At the conclusion of that process, the homeowner will be in a position to argue that the failure of the opposition to answer the most basic questions about the claim that they have submitted, combined with their refusal to even follow court orders, should result in sanctions and further, should result in an inference that the claimant doesn’t exist and that the claim is without merit.
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This would not automatically mean that the homeowner wins the case. While sanctions under these circumstances could include striking the pleadings or the claim or the proof of claim in bankruptcy court, the judge is probably going to be more inclined to grant a motion in limine by the homeowner that prevent the Foreclosure Mill from introducing any evidence of ownership or authority over the debt, note or mortgage.
*
That SHOULD end it but often doesn’t. Even then many courts will leave open the possibility of producing actual proof of ownership or authority over the debt. Appellate courts have been inconsistent in reversing or affirming such orders.

*
The fact that they did not prove the claim independently of the legal presumptions merely means that the judge was satisfied that the prima facie case had been established.

*
So the way homeowners are often presenting their position is basically that the judge should not have assumed that the elements of a prima facie case had in fact been established. But that means that you had introduced sufficient evidence to cast doubt on the validity of the documents relied upon in the foreclosure. By that point, the judge has already decided that you didn’t. You raised questions and denied things but you proved nothing.
*
So you are now so far down the road in the Foreclosure action that it is probably impossible to reopen any form of discovery. This is why I recommend in such cases that you file an independent lawsuit that could survive a motion to dismiss. By filing lawsuit you raise issues that can be subject of inquiry in discovery, depositions, and subpoenas duces tecum.

*

I think pro se litigants in particular also might be confusing the difference between a void judgment and an erroneous judgment. Arguments often appear to be directed to an erroneous judgment, although they contain good arguments against jurisdiction, which could be directed to characterizing the judgment as void. You need to be more specific that the judgment is void and why and not confuse your arguments of error with your argument of lack of jurisdiction.
*
This is not something you’re going to be able to do on your own. You need to hire an attorney.
*
SECURITIZATION NOTES: All securitizations I have reviewed have one thing in common: the sale of certificates that do not convey any right, title or interest to any debt, note or mortgage. No other financial transaction takes place after that point — except payment of some of the investor money to homeowners. Tax court cases make this abundantly clear: holders of certificates have no secured interest in anything and no interest at all in the performance or enforcement of any obligation.
*
The transaction with homeowners was simply acquiring consent from the homeowner to sell private data multiple times to multiple buyers.
*
No payments from homeowners — either voluntary or involuntary — are ever forwarded to anyone who has paid money. No proceeds from foreclosure are ever paid to reduce any debt because there is no asset receivable on any balance sheet in which the debt is claimed.
*
Thus the presentation of a payment history in court is a distraction from the fact that there is no evidence of any records of any company that claims a loss from nonpayment on a debt.
*
A proper objection to the introduction of such a document could be lack of foundation and lack of relevance — unless there is testimony or other evidence linking the payment history with the books of account of the claimant, there is no claim. But like all objections, if not timely raised it is waived. 
Neil F Garfield, MBA, JD, 73, is a Florida licensed attorney since 1977. He has received multiple academic and achievement awards in business 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. IN FACT, STATISTICS SHOW THAT MOST HOMEOWNERS FAIL TO PRESENT THEIR DEFENSE PROPERLY. 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.
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Please visit www.lendinglies.com for more information.

How to Challenge The Credibility of Documents Offered to Support Foreclosure

Legal presumptions are not meant to be used as a means for achieving an illegal or unjust result. But they do exactly that when apparently facially valid documents are left unchallenged.

A successful challenge to the credibility of the source of documents initially filed in foreclosure will end the case in favor of the homeowner. the reason is simple: with legal presumptions operating in favor of the foreclosure mill they have no case to offer or prove.

If you start at the beginning and challenge the narrative immediately it can and should lead to excellent results for homeowners under siege by profiteers seeking to force the sale of the subject property.

The plain truth is that all documents from securitization schemes seeking to foreclose are false. But at first glance they appear to be facially valid, which only raises legal presumptions if the deems the document to come from a credible source. This is true in all jurisdictions.

It’s high time for lawyers and pro se litigants to challenge the presentation of initial documents as coming from a source that (1) has a stake in the outcome and is therefore biased and (2) not credible based upon administrative findings in all 50 states in which the documents were not merely found to be defective but also untrue.

In all cases based upon securitization schemes, not even the named Plaintiff knows who owns the debt, note or mortgage. Ask anyone. Even in appellate proceedings the foreclosure mills had to admit they had no idea about the identity or existence of a creditor.

In other cases, attorneys were forced to admit that they never had any contract or or even CONTACT with their “client.” Cases whose style beings with the words “US Bank. Deutsche Bank, or Bank of New York Mellon” are sham cases with sham clients. The lawyer is neither instructed by nor paid by the bank nor is to processing the foreclosure on behalf of either the bank or any trust.

The same lack of knowledge is true for the foreclosure mill who operates under the protection of litigation immunity, the servicer who is receiving instructions from an investment bank posing as Master Servicer, a trustee who has no knowledge or administrative powers over the loan, a trust that has never been party to negotiation or sale of the debt or note or mortgage.

see RobosigningAdministrativeOrder

In all 50 states you have administrative orders in the courts, and administrative findings by the Departments of Justice and Attorneys general and even county clerks that point out with specificity the fact that the documents used by foreclosure mills were faked. That is fact, not opinion.

In hundreds of cases including some where I was lead counsel, there are specific recorded findings from trial judges as to how the foreclosure was faked.

It should not be that hard for lawyers to argue to the court that given the amount of work done (thousands of man hours) investigating the mortgage lending and foreclosure practices, some credence should be given to the now universal view that the documents were faked.

There can be no dispute that the documents all come from parties who have a unique and essential interest in the outcome of the foreclosure claim — i.e., preservation of revenue and achievement of additional revenue arising from the proceeds of a forced sale, none of which will be directed to anyone who paid value for the debt, note or mortgage.

The indicia of credibility and reliability are simply not there. And the indicia of lack of credibility and reliability are all there. Legal presumptions therefore are not legally available. 

It is not a big leap to also argue that the documents contained data that was also also untrue because in every case where the documents were faked, there was no follow up of actual evidence or proof of the claim.

It never happened that the investment banks said “ok, just to make everyone feel better here is the actual proof that the loan was owned by XYZ Corp, who suffered an actual (rather than hypothetical) financial loss arising from nonpayment of the debt. So the foreclosure although based upon false documentation did not produce an unjust result.”

That didn’t happen because there was no such evidence. In every case the foreclosure resulted in a windfall profit to all the participants in the foreclosure.

Remember you are simply challenging the presumption, thus allowing the claimant to prove its claim without the presumption. that is exactly  what the rules require. The fact that you defeat a presumption and that the claimant’s attorneys are forced to actually prove the truth of the matters asserted on the documents is not a stand alone reason for entry of judgment in favor of the homeowner.

THIS IS NOT A PUNISHMENT WHERE THE CLAIMANT IS DEPRIVED OF ITS CLAIM BECAUSE IT DID  SOMETHING ILLEGAL. IF THEY CAN STILL PROVE THE CLAIM, THEY WIN.

If indeed the homeowner does owe money to the claimant and they are both parties to a loan  agreement that the homeowner has breached then the claimant is entitled to foreclosure.

Legal presumptions are not meant to be used as a means for achieving an illegal or unjust result. But they do exactly that when apparently facially valid documents are left unchallenged.

In virtually all cases, such documents are not even facially valid, once you examine the contents and the signature block. Look at it. Study it. And then create your defense narrative. 

These cases are winnable because they should be won by homeowners not because of some technical argument.

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*
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. IN FACT, STATISTICS SHOW THAT MOST HOMEOWNERS FAIL TO PRESENT THEIR DEFENSE PROPERLY. EVEN THOSE THAT PRESENT THE DEFENSES PROPERLY LOSE, AT LEAST AT THE TRIAL COURT LEVEL, AT LEAST 1/3 OF THE TIME. IN ADDITION IT IS NOT A SHORT PROCESS IF YOU PREVAIL. 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.
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Who Can Foreclose?

The plain truth of SAP — Securitization in Practice — is that nobody who paid value received ownership of the debt and nobody who received an instrument of ownership of the mortgage paid value. 

Thus SAP — securitization in practice — splits payment of value from ownership of the debt which produces an extra legal situation because all US law requires that transfer of a mortgage or beneficial interest under the deed of trust is a legal nullity unless accompanied by a transfer of the debt. All US law requires that transfer of the debt can only be accomplished by payment for the debt.

The bottom line is only a claimant who paid value in exchange for ownership of the debt can satisfy the condition precedent in Article 9 §203 of the UCC as adopted in all US jurisdictions. Everything else is just an attempt at justification or rationalization for how the claimant has satisfied that condition.

Understanding the above explains completely why all documents after the loan closing are fabricated, false, forged, backdated and supported by  perjurious testimony. Foreclosure mills are bridging a gap created by investment banks through false statements.

So don’t get lost in the weeds. Most courts and therefore most attorneys get irretrievably confused when the discussion turns to possession, holding or rights to enforce a note. And lawyers fail to object when legal presumptions are applied to situations where possession of the note does NOT imply ownership of the note or the debt.

Note that there is huge difference between standing in the pleading and standing in the proof. In pleading the mere allegation of facts is sufficient to establish standing to proceed. But at trial the claimant is required to actually prove standing, not merely assert it. In practice this means the use of presumptions to arrive at the factual conclusion that the claimant paid for the debt when in fact that never happened.

Point #1: In situations where there is a claim of securitization, there is no case (not ever) in which the claimant (trust, trustee, certificates, certificate holder etc.) is ever alleged to be or ever proven to be the holder in due course (HDC). HDC status means that the claimant can avoid nearly all potential defenses of the borrower. Securitization claimants don’t have this status because they did not purchase the debt for value without knowledge of the borrower’s defenses. Very simple. The object of foreclosure mills is to be treated as HDC without asking for it. The defense narrative is to reveal that HDC status does not apply — not  necessarily because they didn’t pay for it but because the foreclosure mill has never asked for HDC status. Thus the court has no business applying HDC rules.

Point #2: The claimant must own the debt as a creditor — i.e., as a party who paid value in exchange for receiving evidence of ownership of the debt. This is the only party who can claim injury from non performance of the obligation and therefore the only party with standing to bring the claim.

Point #3: Standing to seek judgement on a promissory note does not equal standing to foreclose unless the claimant owns the debt. This is the beginning point of where lawyers, judges, borrowers and everyone else gets confused. In the mind of the public debt=note=mortgage. Legally, equitably and morally the debt, note and mortgage are separate and distinct each carrying its own legal rights that are not necessarily consistent. Receipt of money creates a demand debt (liability) unless there is a clear indication of a gift. Execution of a promissory note creates a liability even if there is no debt — hence mere possession or even rights to enforce a note is not necessarily sufficient to establish standing to enforce the debt or mortgage.  The mortgage, regardless of what it says, can only be used to secure payment of a debt, the terms of which might be contained in a promissory note. Since foreclosure is a process of forfeiture the rules allowing for foreclosure are much more stringent than the rules of getting a judgment on the liability created by a note. A holder in due course may get judgment on the note, and a judgment of foreclosure on the debt. Nobody else can do so. If they have not paid value in exchange for ownership of the debt, they are not legally allowed to foreclose.

Point #4: In practice claiming possession of the note is treated as claiming title to the debt and thence incidentally a claim as holder in due course. It may not be logical or legal but there it is. So the presumption arises as though the claimant was a holder in due course which effectively destroys any defense — if not challenged. The borrower should deny that the claimant has any right to foreclose because it has not in fact paid value in exchange for ownership of the debt. Any purported transfer of a mortgage is a legal nullity without transfer of the debt also. Then the borrower should simply ask a contention interrogatory as to whether the claimant contends that is has paid value for the debt in exchange for ownership of the debt. And a request  for production should ask for evidence of such payment. The refusal to answer or respond is sufficient, after the foreclosure mill has been given several chances to respond, to raise an inference in favor of the borrower. That inference defeats the presumption that the claimant has paid value for the debt in exchange for ownership, which means that any paper transfer of the mortgage is void — unless proven otherwise at trial with evidence instead of presumptions. In actuality, all the borrower is doing is forcing the foreclosure mill to stop using legal presumptions and actually prove their standing,  right to collect, ownership and right to enforce the debt. If they had evidence of payment they would do so. But they can’t because nobody who paid value received ownership of the debt and nobody who received an instrument of ownership paid value.

Here are some quotes from a case in Florida that might help:

At trial, a litigation manager for Bayview testified. He was not a records custodian for RCS or for Bayview. He was not familiar with the computer systems that either of the prior servicers, CitiMortgage and RCS, used for compiling information on the loan or how it was inputted into the systems. He had no information as to whether the information on the loans was inputted into the prior servicers’ systems correctly. He could not testify to the truth or accuracy of RCS’s records, just that they were provided to Bayview.

Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 124 (Fla. Dist. Ct. App. 2015)

He testified that Bayview was the servicer and holder of the note. He believed that Bayview had acquired the note through a purchase agreement with RCS, but he had not seen the agreement, nor did he have a copy of it. His belief that Bayview was the owner of the note under the purchase agreement was based on “a screen shot of our capital assets systems, which has information in regards to the status of the loan with us.” This screen shot was not produced at trial.

Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 124 (Fla. Dist. Ct. App. 2015)

As to the allonge with the blank endorsement from ABN, he did not know when it was executed or whether the signature on it was a “wet ink” signature or a stamp. He did not know whether the allonge was affixed to the note prior to it being filed in the court file. He did not know if the vice president who signed the allonge on ABN’s behalf was in the employ of ABN in November 2009, when Bayview’s records showed that servicing of the loan had been transferred from ABN to Franklin Bank.

Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 124 (Fla. Dist. Ct. App. 2015)

we agree that it presented no competent evidence that RCS was the holder of the note at the time it filed suit or that it was a nonholder in possession and entitled to enforce the note. Therefore, Bayview failed to prove standing.

If the note does not name the plaintiff as the payee, the note must bear a special endorsement in favor of the plaintiff or a blank endorsement…. Alternatively, the plaintiff may submit evidence of an assignment from the payee to the plaintiff …

Even in the absence of a valid written assignment, the mere delivery of a note and mortgage, with intention to pass the title, upon a proper consideration, will vest the equitable interest in the person to whom it is so delivered.

Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 125 (Fla. Dist. Ct. App. 2015)

“Because a promissory note is a negotiable instrument and because a mortgage provides the security for the repayment of the note, the person having standing to foreclose a note secured by a mortgage may be … a nonholder in possession of the note who has the rights of a holder.” Mazine v. M & I Bank, 67 So.3d 1129, 1130 (Fla. 1st DCA 2011).

A “person entitled to enforce” an instrument is: “(1) [t]he holder of the instrument; (2)[a] nonholder in possession of the instrument who has the rights of a holder; or (3)[a] person not in possession of the instrument who is entitled to enforce the instrument pursuant to s[ection] 673.3091 or s [ection] 673.4181(4).” § 673.3011, Fla. Stat. (2013). A “holder” is defined as “[t]he person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” § 671.201(21)(a), Fla. Stat. (2013). Thus, to be a holder, the instrument must be payable to the person in possession or indorsed in blank. See§ 671.201(5), Fla. Stat. (2013).

Seffar v. Residential Credit Solutions, Inc., 160 So. 3d 122, 125 (Fla. Dist. Ct. App. 2015)

Servicers: More Than One Set of Books

Since we know that most documents presented in foreclosure are inconsistent with other “securitization” documents it is only natural to suspect, assume and then corroborate that there are inconsistent sets of accounting records that are maintained to report different outcomes to the courts, the borrowers, the investors and the holders of contracts between the investment bank and the investors.

Lawyers and pro se litigants are probably overlooking this and should not simply notice the “Plaintiff” to produce a corporate representative at deposition. They should subpoena duces tecum all the documents, accounting records and correspondence relating to the subject loan. And they should subpoena duces tecum the servicer to produce the director, officer and employees with the most knowledge about each document.

As I have previously stated on these pages, this will reveal the “rest of the story.” The party claiming to be servicer is stating that they are a representative of the claimant in foreclosure. But is that who they pay after they receive borrower payments? Is that who they pay when they receive foreclosure proceeds? Is that who they pay then they do a short-sale or “modification”?

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GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

Lawyers know and understand the law. Unfortunately they are not so knowledgeable about finance, bookkeeping or accounting, nor of reporting requirements. The players in securitizations schemes are all reporting different data to different government entities and agencies that are inconsistent with each other. I have been saying for 13 years that this entire foreclosure problem is related to accounting and not just law. The absence of an accountant in these cases, at least as consultant for discovery, is in my opinion a mistake.

Simply understanding double entry bookkeeping may  give you a much broader and better understanding enabling you to sink your teeth into the false and fraudulent case of foreclosure being presented.

  1. The receipt of payments from the borrower is one entry. In every bookkeeping system there is a required second entry.
  2. Lawyers should pursue the second entry.
  3. The first entry is posted to general ledger as an increase to cash on the balance sheet.
  4. It is not revenue.
  5. The second entry is posted to liabilities since the payment is being held, subject to withholding fees, for payment to third parties.
    1. This entry will tell you who gets the payment from the servicer — a vital clue as to who is really directing things (and thus who the client is for the foreclosure mill).
    2. It also rebuts the presumption that the holder of the note, as alleged by the foreclosure mill, is the party who will get paid by the foreclosure. Once that is exposed, there is no foreclosure case.
    3. The party(ies) getting paid are not the owners of the debt by reason of having paid value for the debt.

Comment posted on my blog:

Ocwen has been using defaulted loans to divert trust funds to its own master servicing fund. It maintains two sets of books: one reported to the trusts with paid down balance using servicer advances even though defaulted loans no longer in the trusts; other set of books with accrued interests billed to the to-be foreclosed on homeowners. The difference is to be realised at foreclosure. I have proof with my own mortgage. My loan was reported by Bloomberg had balance of $239K while they are trying to collect $450K from me. The difference is to be pocketed by Ocwen.

My only additional comment is that the writer was only partially right. The difference is distributed between Ocwen, the Master Servicer (Investment Bank) and other players.

PRACTICE HINT: The alleged “boarding process” (which does not really exist) is merely another fiction to create the illusion of confirmation of false data. You should ask for the accounting entries on the books of the alleged “successor” servicer. You might not find any entries because the new servicer only replaced the former party with a new login name and password and did not actually receive any money from the prior servicer.

Don’t Admit Anything About the Servicers Either — It’s All a Lie

Want to know why this site is called LivingLies? Read on

Homeowners often challenged the authority of the named claimant while skipping over the actual party who is supporting the claim — the alleged servicer.

You might also want to challenge or at least question their authority to be a servicer. The fact that someone appointed them to be a servicer does not make them a servicer.

Calling themselves a “servicer” does not constitute authority to administer or even meddle in your loan account. As you will see below the entire purpose of subservicers is to create the illusion of a “Business records” exception to the hearsay rule without which the loan could not be enforced. The truth here is stranger than fiction. But it opens the door to understanding how to engage the enemy in trial combat.

That “payment history” is inadmissible hearsay because it was not created by the actual owner of the record at or near the time of a transaction and the actual input of data is neither secure mor even known as to author or source. Likewise escrow and insurance payment functions are not authorized unless the party is an actual servicer. The fact that a homeowner reasonably believed and relied upon representations of servicing authority is a basis for disgorgement — not an admission that the party collecting money or imposing fees and insurance premiums was authorized to do so.

PRACTICE NOTE: However, in order to do this effectively you must be very aggressive in the discovery stage of litigation. (1) ASK QUESTIONS, (2) MOVE TO COMPEL, (3) MOVE FOR SANCTIONS, (4) RENEW MOTION FOR SANCTIONS, (5) MOTION IN LIMINE AND (6) TIMELY OBJECTION AT TRIAL.

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GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================
*
To be a “servicer” the company must received the appointment to administer the loan account from someone who is authorized to make the appointment. A power of attorney is only sufficient if the grantor is the owner of the debt — or had been given authority to make such appointment from the owner of the debt.
*
A person who is authorized to make the appointment is either the owner of the debt by virtue of having paid for the debt or an authorized representative of the owner of the debt by virtue of having paid for the debt. This is a key point that is frequently overlooked. By accepting the entity as a servicer, you are impliedly admitting that they have authorization and that a true creditor is in the chain upon which your opposition is placing reliance. In short, you are admitting to a false statement of facts that will undermine your defense narrative.
*
If the servicer is really authorized to act as such then your attempt to defeat foreclosure most likely fails because the case is about a real debt owed to a real owner of the debt.
*
The fact that they allege that they maintain records may be a true or false representation. But whether it is true or false, it does not mean that they had authorization to maintain those records or to take any other action in connection with the administration of the loan. Of course we know now that any such records are composed of both accurate and fabricated data.
*
We also know that the data is kept in a central repository much the same as MERS is used as a central repository for title.
*
The representations in your case about and intensive audit and boarding process most likely consist of fabricated documents and perjury. There was no audit and there was no boarding process. The data in most cases, and this probably applies to your case, was originated and maintained and manipulated at Black Knight formerly known as Lender Processing Systems.
*
Contrary to the requirements of law, the central repository does not ever handle any money or payments or disbursements and therefore does not create “business records” that could be used as an exception to the hearsay rule. The same thing applies MERS. These central repositories of data do not have any actual role in real life in connection with any financial transaction. Their purpose is the fabrication of data to support various purposes of their members.
*
All of this is very counterintuitive and difficult to wrap one’s mind around. but there is a reason for all of this subterfuge.
*
From a legal, accounting and finance perspective the debt was actually destroyed in the process of securitization. This was an intentional act to avoid potential risk of laws and liability. But for purposes of enforcement, the banks had to maintain the illusion of the existence of the debt. Since they had already destroyed the debt they had to fabricate evidence of its existence. This was done by the fabrication of documents, recording false utterances in title records, perjury in court and disingenuous argument in court.
*
The banks had to maintain the illusion of the existence of the debt because that is what is required under our current system of statutory laws. In all 50 states and U.S. territories, along with centuries of common law, it is a condition precedent to the enforcement of a foreclosure that the party claiming the remedy of foreclosure must be the owner of the debt by reason of having paid value for it.
*
The logic behind that is irrefutable. Foreclosure is an equitable remedy for restitution of an unpaid debt. It is the most severe remedy under civil law. Therefore, unlike a promissory note which only results in the rendition of a judgment for money damages, the Foreclosure must be for the sole purpose of paying down the debt. No exceptions.
*
The problem we constantly face in the courtroom is that there is an assumption that there is a party present in the courtroom who is seeking restitution for an unpaid debt, when in fact that party, along with others, is seeking revenue on its own behalf and on behalf of other participants.
*
The problem we face in court is that we must overcome the presumption that there was an actual legal claim on behalf of an actual legal claimant. Anything else must be viewed through the prism of skepticism about a borrower attempting to escape a debt. The nuance here is that the end result might indeed be let the borrower escapes the debt. But that is not because of anything that the borrower has done. In fact, the end result could be a remedy devised in court or by Statute in which the debt is reconstituted for purposes of enforcement, but for the benefit of the only parties who actually advance money and connection with that debt.
*
More importantly is that nonpayment of the debt does not directly result in any financial loss to any party. The loss is really the loss of an expectation of further profit after having generated revenue equal to 12 times the principal amount of the loan.
*
While there are many people who would argue to the contrary, they are arguing against faithful execution of our existing laws. There simply is no logic, common sense or legal analysis that supports using foreclosure processes as a means to obtain Revenue at the expense of both the borrower and the investor. And despite all appearances to the contrary, carefully created by the banks, that is exactly what  is happening.

Consent Order Contains Admission of False Affidavits and False Chains of Title

A lot of student loan debt ends up being claimed by “Trusts” that are exactly like REMIC trusts except they are not about residential mortgages. And as I have previously pointed out on these pages, the enforcement of those debts has gone through the same process of removing the risk of loss from those who made the loan and the creation of a scheme where it is perhaps impossible to find or identify any creditor who owns the debt by reason of having paid for it (as opposed to “owning the debt” by reason of having the promissory note or a copy of it).

As a side note, to the extent that debtors are prevented from discharging such debt because of government guarantees, I argue that such exclusion is inapplicable. Students should be able to discharge most student debt in bankruptcy. The risk has already been eliminated if the loans are subject to claims in securitization. The purpose of the guarantee has thus been eliminated.

=======================================

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

Hat tip to summer chic

In this case, the CFPB filed suit essentially asserting its own administrative findings that mirror the defenses of homeowners in foreclosure, to wit: that the affidavits filed are false, and they are falsely signed and notarized, containing false information about title to the loan and false information about the business records.

What is interesting about this case is that the parties are submitting a consent order which includes as those findings of the court in paragraph 4 of the proposed consent order which states as follows:

See https://files.consumerfinance.gov/f/documents/201709_cfpb_national-collegiate-student-loan-trusts_proposed-consent-judgment.pdf

4. Since at least November 1, 2012, in order to collect on defaulted private student loans, Defendants’ Servicers filed Collections Lawsuits on behalf of Defendants in state courts across the country. In support of these lawsuits, Subservicers on behalf of Defendants executed and filed affidavits that falsely claimed personal knowledge of the account records and the consumer’s debt, and in many cases, personal knowledge of the chain of assignments establishing ownership of the loans.In addition, Defendants’ Servicers on behalf of Defendants filed more than 2,000 debt collections lawsuits without the documentation necessary to prove Trust ownership of the loans or on debt that was time-barred. Finally, notaries for Defendants’ Servicers notarized over 25,000 affidavits even though they did not witness the affiants’ signatures.[e.s.]

PRACTICE NOTE: HOW TO USE THIS INFORMATION. Sometimes I erroneously assume that people know what to do with this type of information. So let’s be clear.

  • This information means that servicers, subservicers and lawyers claims regarding chain of title, business records, and their use of affidavits or even testimony is not entitled to the same presumption of credibility that might otherwise apply.
  • That means that the presumptions on the use of business records are not entitled to a presumption of credibility and that additional foundation testimony must be offered in order to assure the court that what is contained in the document is authorized, properly signed, properly notarized and most importantly accurate.
  • The entire case against debtors in these situations is entirely dependent upon the use of legal presumptions  that can be rebutted. Rebuttal of presumptions takes place under two general categories.
  • The first is that that the presumed fact can be shown to be untrue.
  • The second ius that the process of presumption should not apply because the proponent of the document clearly has a stake in the outcome of litigation and has a history of falsifying such documents.
  • Once you rebut the presumption, the case against the debot (homeowner, student) is gone.
  • The opposition has no evidence of proof of payment for the debt, and this has no foundation for claiming authority of the servicer, trustee or even the lawyer.
  • Such authority must come from the owner of a debt who has paid value for it.

Dan Edstrom senior forensic loan examiner writes the following:

This is similar to what is in the foreclosure review consent orders (from US Bank Consent Order dated April 13, 2011):
(2) In connection with certain foreclosures of loans in its residential mortgage servicing portfolio, the Bank:​
(a)​ filed or caused to be filed in state and federal courts affidavits executed by its employees making various assertions, such as the amount of the principal and interest due or the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such personal knowledge or review of the relevant books and records;
(b) filed or caused to be filed in state and federal courts, or in local land records offices, numerous affidavits that were not properly notarized, including those not signed or affirmed in the presence of a notary;​
(c)​ failed to devote to its foreclosure processes adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training; and​
(d)​ failed to sufficiently oversee outside counsel and other third-party providers handling foreclosure-related services.​
(3)​ By reason of the conduct set forth above, the Bank engaged in unsafe or unsound banking practices.
And what about this quote from the student loan consent order:
In addition, Defendants’ Servicers on behalf of Defendants filed more than 2,000 debt collections​ lawsuits without the documentation necessary to prove Trust ownership of​ the loans or on debt that was time-barred.
So wait a minute. They allege the debt cannot be discharged in BKR, but (alleged) student loan debt that hasn’t been paid on in years – isn’t it time barred?  How does collection action work after decades where they took affirmative debt collection steps after the debt was time barred?  In the instance I am thinking about, a dentist was BARRED from taking patients with some type of federally covered insurance and this forced them out of their occupation.  The student loan debt hadn’t been paid in 2 or 3 decades (in California).
So in a related case (time-barred debt) in BKR in CA, a debtor filed a lawsuit against a creditor for filing a proof of claim on a time-barred debt. He lost, the court ruled that if the proof of claim was not objected to (with the relevant objection being that the debt was time-barred), the debtor waived the affirmative defense.
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