How to Distinguish Between Ownership of the Debt, Ownership of the Note and Ownership of the Mortgage (or Deed of Trust)

Amongst the lay people who are researching issues regarding who actually can enforce a mortgage, there is confusion arising from specific terms of art used by lawyers in distinguishing between a debt, a note and a mortgage. This article is intended to clarify the subject for lawyers and pro litigants. The devil is in the details.

Bottom Line: In most cases foreclosures are allowed because of the presumption that the actual original note has been physically delivered to the current claimant from one who owned the debt because they both had paid money for it. In most cases merely denying that fact is insufficient to prevent the foreclosure because the court is erroneously presuming that even if the foreclosure is deficient the proceeds of sale will still go to pay the debt.

In most cases those presumptions are untrue but must be rebutted. And the way to rebut those presumptions is to formulate discovery that asks who paid for the debt, when and who were the parties to the transaction?

The  lawyers from the foreclosure mills will fight tooth and nail to prevent an order from the court directing them to answer the simple question of who actually owns the debt by reason of having paid value for it and thus who will receive the foreclosure sale proceeds as payment for the debt. The answer is almost always the same — the foreclosure mill is unable to identify such a party thus conceding the lack of subject matter jurisdiction and standing to bring the foreclosure action.

Eventually some party will be identified by changes in the law as being the legal owner of the debt. thus cleaning up the jurisdictional issue caused by utilizing parties who have neither suffered any financial injury nor are threatened with any such financial injury. But for now, the banks are stuck with the mess they created.

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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.
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Transfer of debt is by payment for the debt. Payment means you have a legal and equitable right to claim the debt as your own. Payor is the new owner of the debt and the Payee is the prior owner of the debt. There are no exceptions.

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The note is evidence of the debt. It is not the debt.
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Payment of money to a borrower creates a debt or liability regardless of whether or not any document is signed.
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Signing a document promising to pay creates a liability regardless of whether or not there was ny payment of money. In fact, if someone buys the note for value they become a holder in due course and the maker is liable even if they never received any money, value or consideration.
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Enforcement of the debt alone is governed by statutory and common law.
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Enforcement of notes and enforcement of the security instrument (mortgage or deed of trust) is controlled strictly by the adoption of the Uniform Commercial Code (UCC).
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Article 3 UCC governs the negotiation and enforcement of paper instruments containing an unconditional promise to pay a certain sum on a certain date.
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Article 9 governs the transfer and enforcement of security agreements (mortgages and deeds of trust).
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Whereas Article 3 does not require the holder of the note to be the owner of the debt for purposes of enforcement of the note, Article 9 requires the holder of the mortgage to be the owner of the debt as a condition precedent to enforcement of the mortgage. No exceptions.
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Ordinarily the execution of the note causes the debt to be merged with the obligations under the terms of the note. But this is only true if the owner of the debt and payee under the note are the same party. If not, then the execution of the note creates two distinct liabilities — one for payment of the debt and one for payment under the terms of the “contract” (i.e., the note).
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Before securitization it was customary that the owner of the debt had paid money to the borrower as a loan, and the execution of the note formalized the scheme for repayment. Hence under the merger doctrine the borrower who accepted the loan and the maker of the note were the same party and the Lender of the money to the borrower was also the payee named in the note.
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Now this is not always the case and appears to be not the case in most loans, which is why the banks have resorted to fabricated backdated forged and robosigned documents. The Lender in many if not most loan originations was not the party named as payee on the note. And the party named as payee on the note had no authority to represent the interests of the lender. Where this is true, merger cannot apply. And where this is true, enforcement of the note is NOT enforcement of the debt. Rather it is enforcement of a liability created entirely by contract.
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Foreclosure of a mortgage must be for payment of the debt, not just the liability on the note. All states have case law that says that transfer of mortgage without the debt are a nullity. This executing and receiving an assignment of mortgage and even recording it is a legal nullity unless the recipient paid money for the debt and the transferor was conveying ownership of the debt because the transferor had paid money for the debt. If those conditions are not met the executed and recorded assignment of mortgage is a legal nullity and the title record must be viewed by the court as lacking an assignment of mortgage.
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The judiciary has not caught up with these discrepancies in most instances. Hence a judge will ordinarily presume that the delivery and endorsement of the note and the assignment of the mortgage was equivalent to the transfer of title to the debt, with payment being presumed for the debt. So while the law requires ownership of the debt by reason having paid for it, the courts presume that the debt was transferred along with the paper, subject to rebuttal by the maker and borrower.
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The rubber meets the road when in discovery and defenses the borrower raises the issue of who paid for the debt and when. In the current world of securitization the answer will be the same: the banks won’t tell you and they won’t admit that the party named as claimant in the foreclosure never paid for the debt, despite appearances to the contrary. 

How to Use Forensic Auditors During Discovery

Discovery is a process that can be used in litigation. That means you have to be in court. Discovery is the process of asking for information that don’t already have or information that will corroborate information that you do already have. Almost by definition it is a fishing expedition. But the days in which you can throw out a wide net are over. Neither federal nor state judges will permit discovery unless it is specific, and relates directly to the functional narratives of the case proffered by both sides of the lawsuit.

Good forensic examiners are required to frame proper requests for discovery and to focus the narrative that will support those requests for discovery. Failure to do so will most likely result in either no answer from the opposition, or a slew of meaningless objections. The next step, a motion to compel, will only be successful if you can succinctly state why you are requesting this information and how it specifically relates to the defense narrative or the prima facie case of the party seeking foreclosure.

Unless you are successful in obtaining an order granting your motion to compel, any subsequent motion for sanctions or motion in limine will be summarily denied and your opposition will be able to introduce evidence that they refused to give you during discovery.

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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.
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In every case in which you seek discovery against the foreclosing party, that party is seeking to conceal its weaknesses. They will raise objections, whether supportable or not. You should work with an attorney who is familiar with trial practice and a forensic auditor or examiner who can help you pass the following tests. An affidavit from a forensic auditor detailing why you need this information will go a long way toward supporting your argument in favor of an order compelling your opposition to give adequate responses to your request for discovery.

see The Tests You Need to Meet in Order to Get Discovery

If the data in question passes these two tests (yes, it’s relevant to the case, and no, it’s not privileged information) then the courts look at the following six factors laid out in FRCP Rule 26(b)(1) to help determine rulings on proportionality.

  • The importance of the issues at stake

  • The amount of information in controversy

  • The parties’ access to the information in question

  • The parties’ resources to obtain the information

  • The importance of the discovery in resolving the issues

  • Whether the burden or expense of the proposed discovery outweighs its likely benefit

Chase-WAMU: Is it time to Declare Non Judicial Foreclosure Unconstitutional As Applied?

Faced with a notice of foreclosure sale from a company claiming to be the trustee on a deed of trust, homeowners in judicial states are forced to defend using well known facts in the public domain that are not evidence in a court of law. This is particularly evident in scenarios like the Chase WAMU Agreement with the FDIC and the US Bankruptcy Trustee on September 25, 2008.

In my opinion the allowance for nonjudicial foreclosure in circumstances where a new party appears under a lawyer’s claim that the new party is the beneficiary under a deed of trust under parole claims of securitization is an unconstitutional application of an otherwise constitutional  statutory scheme.

All such foreclosures should be converted to judicial and the claimant must prove the essential element under Article 9 §203 UCC that it has a financial interest in the debt because they paid for it. Forcing homeowners to prove that such an interest does not exist is requiring homeowners to have access to knowledge that is unavailable and solely within the control of the party falsely claiming to have the right to enforce the deed of trust and promissory note.

In my opinion this is an unconstitutional application of an otherwise constitutional statutory framework. In plain language it favors expediency and moral hazard over truth or justice.

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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.
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I have received questions, most notably from Bill Paatalo, the famed Private Investigator who has provided so much information to lawyers, homeowners and a=everyone else about the foreclosure crisis relating to non judicial foreclosures and the Chase-WAMU farce in particular. Here is my answer:

If what you’re saying is that the FDIC never became the beneficiary under the deed of trust, that is correct. But the legal question is whether it needed to become the beneficiary under the deed of trust. As merely a receiver for WAMU the question is whether WAMU was a beneficiary under the deed of trust and the answer is no because they had already sold their interest or presold it before origination.

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If WAMU was an actual beneficiary then the FDIC was the receiver for the beneficial interest held by WAMU. If that is the case the FDIC could have been represented to be beneficiary on behalf of the WAMU estate for foreclosures that occurred during the time that FDIC was receiver.
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If WAMU was not an actual beneficiary and could not, as your snippet suggests, sell what it did not own, then the FDIC’s receivership is irrelevant except to show that they had no record of any loans owned by WAMU.
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One key question that arises therefore is what is a beneficiary? In compliance with Article 9 §203 UCC I think all states that a beneficiary is one who has paid value for the debt, owns it and currently would suffer a debit or loss against that asset by reason of nonpayment by the borrower. Anything less and it is not a beneficiary. And if it isn’t beneficiary, it cannot instruct the trustee to send out notices as though it was a beneficiary.
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So any notice of substitution of trustee, which starts the whole foreclosure process is bogus — i.e., void as in a nullity. The newly named trustee does not possess the powers of a trustee under a deed of trust. Hence the notice of default, sale and trustee deed are equally bogus and void. They are all nullities and that means they never happened under out laws even though there are lawyers claiming that they did happen.
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Despite the Ivanova decision in California declaring that such foreclosures can only be attacked after the illegal foreclosure, this is actually contrary to both California law and the due process requirements of the US Constitution.
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With more and more evidence of fake documents referring to nonexistent financial transactions, the time is ripe for some persistent homeowner, with the help of a good lawyer, to challenge not only the entire Chase-WAMU bogus set up, but to get a ruling from a Federal judge that the abr to preemptive lawsuits to stop collection or foreclosure activity is unconstitutional as applied.
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In nonjudicial states it converts a statutory system which is barely within constitutional bounds to an unconstitutional deprivation of property and civil rights without due process, forcing the homeowners to come up with answers and data only available to the malfeasant players seeking to collect revenue instead of paying down the debt.

What to Think About on Appeal From an Unfavorable Trial Court Decision

In response to the rising number of requests for us to write briefs or narrations for briefs I submit this article which is my recent response to such a request. Here is an uncomfortable fact: most appeals arise because of mistakes made by the litigant in trial court, not the judge. All appeals MUST be based upon what did happen in the trial court not what should have happened. 

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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.
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Yes we write briefs or narration for briefs all the time. Costs run from a low of $6500 to a high (so far) of $15,000. It depends upon how much we need to do. Legal research alone is usually around $1500-$2500. You should have local counsel or appellate counsel to advise you on appellate procedure. There are time limits on everything including filing the notice of appeal which must state specifically what order is being appealed and that it is a final order. Sometimes people get kicked out of appellate process because their notice of appeal cited the wrong order and then the time limit for filing the correct notice has expired. It is very technical.

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FACTOID: There are statistics on appeals. Generally only one in 6 appeals are successful by any measure and of those many of them are only partially successful requiring additional proceedings in the trial court. The higher you go in the hierarchy of appellate courts the less your chances your case will even be heard, much less decided in your favor. Neither the State nor the U.S, Supreme Court is under any obligation to hear your case. Of the 15% +/- that are “successful” at least half are criminal cases. That means cases involving a civil matter like foreclosure have about a 1 in 12 chance of being “successful” on appeal.
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EXCEPTION TO THAT GENERAL RULE: It was pointed out to lawyers at a seminar at which bankruptcy judges were presenters, that the typical appeal from the decision of a bankruptcy judge is more susceptible to appeal than the ordinary decisions of courts of general jurisdiction. That is partly because bankruptcy judges) formerly called “magistrates” have limited jurisdiction and they frequently overstep their authority  to make any decision.
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There are three separate and optional avenues for appeal. Most appeals from Bankruptcy court go to  a Bankruptcy Appellate Panel which is the least likely place to get a reversal. Second, many appeals are made direct to the Circuit Court of Appeals in which appellants typically don’t fare any better than the BAP. And lastly the one least used is an appeal to the Federal District Judge of general jurisdiction where the odds of success rise to 50%. The judges who pointed this out were perplexed why more people didn’t take that route.
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When writing a brief, your audience is a clerk for the appellate judges. That is a young lawyer, so assume nothing. If you don’t grab the attention of the reader (clerk) immediately your appeal will be thrown onto the pile of cases that will be affirmed.
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Appellate courts do not try cases — a fundamental fact that is often forgotten by lawyers and unknown to pro se litigants. Even if every judge on the panel thinks they would have decided the case differently they will probably affirm the trial judge’s decision. The principle working here is finality. The courts exist to create finality to disputes, for better or for worse. All decisions are viewed and reviewed in the context of preserving finality. The appellate court will only reverse a decision that is fundamentally wrong on the law. It will almost never reverse a decision that was wrong on the facts.
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Most cases in which an appellate decision results in reversal are set up at trial. That means careful trial preparation such that a resistant judge is boxed into a corner and the issues for appeal are plain and simple. If your contested issue involves the judge’s discretion the trial court decision will be affirmed practically every time.
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That said well crafted appeals that are presented with credibility and persuasion can still be filed with at least some prospect for success. Sloppy work will tank even the best case on appeal. Citations to the actual record on appeal are required — not arguing evidence that did not get into the court record (unless exclusion of evidence is the basis of the appeal). In foreclosure cases this is rare because the borrower lacks the evidence to “prove” a case.
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The foreclosure case is about whether the party seeking the remedy of foreclosure was entitled to do so. Hence the issue in foreclosure cases is more often about the admission of evidence than the exclusion of evidence. Anyone can dash off a brief and “justify” a fee. Only lawyers well versed in the subject and the law surrounding the subject have any chance of producing an effective brief. The brief must be well-written with proper language, punctuation, grammar and context. It must be logical and persuasive. 

How to Use Reports and Affidavits in Foreclosure Litigation: Required Reading for Forensic Audit Seminar Next Friday

Reports and affidavits are helpful but not always useful as evidence. It seems that many people think an affidavit from me will be the magic bullet in their case. It could be but only with proper presentation and following the rules of civil procedure and the laws of evidence.

This is required reading for people attending the forensic audit seminar next Friday. In the end I am seeking your reports to conform to the style and content of what I present at the seminar, in this article and other articles appearing on this blog. The end result for homeowner and their attorneys is to file reports and affidavits that are not only admitted into evidence but also given great weight by the trier of fact.

In plain language I would like to outsource the preparation of the forensic reports on the facts and limit my involvement to what I do best: present the facts with opinion corroborated by those facts. That means learning which facts are likely to give the homeowner’s lawyer some traction and which facts are just surplus accusations that can never be proven in a foreclosure case.

Because in a foreclosure case, the issue is not whether the players are bad players, evil or even thieves. The issue is whether the players can successfully present a case in which it appears that they have satisfied the conditions precedent and the elements of a prima facie case for enforcement of the mortgage through foreclosure.

The answer to that is either yes or no. And walking into any courtroom the presumption, at the very beginning, is that the answer is yes. Our job is turn that around and persuade through logic and facts that the presumption of the existence of the elements for a prima facie case for foreclosure are missing. And while out burden of proof is only a predominance of the evidence, in practice, for homeowners, that translates as something more than “more likely than not.” Where the answer is close, the court will always lean toward the party seeking foreclosure.

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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.
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An affidavit is a sworn statement. It is not evidence unless a judge admits it as evidence. And it get no weight as evidence unless the trier of fact (the judge in most foreclosure cases) decides to give it weight. The judge won’t allow it or give it weight if it is merely opinions that are not persuasively presented by reference to specific facts or absence of facts. So while my affidavit may be helpful, it is not the opinion that counts nearly as much as the credibility and persuasiveness of the affidavit or report. There is also confusion as to how and when to use forensic reports or affidavits from me. So let me put it this way.

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In what I call the case analysis, we ordinarily perform vigorous investigation and analysis and then sum up what we have found in the context of what we think might be the best issues on which you could get traction in court.
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Sometimes we render an opinion and conclusions based upon a forensic report done by others, which we prefer to do. We then issue a report that can be formatted into the form of an affidavit. The issue being addressed in this article is for forensic examiners, homeowners and their lawyers.  An affidavit is frequently requested from me under the mistaken belief that possession of such an affidavit will be crushing blow to the lawyers seeking to enforce the mortgage or deed of trust on behalf of a party who does not ordinarily qualify as a claimant.
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The simple truth is that the affidavit, no matter how strong or how great does nothing by itself. The issue is how and when the affidavit is used and under what circumstances — e.g. will the homeowner seek to have it introduced as fact or opinion. And will my testimony be used to pride adequate foundation for the affidavit to be introduced as evidence in a court proceeding.
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So frequently the affidavit homeowners are seeking is “limited scope.” That code for “on the cheap.” I don’t issue reports or affidavits that I don’t think I can defend easily in court under cross examination.  But even if the scope is limited to one question, to wit: in my opinion is US bank a real party in interest, as you know I have already answered that in the articles I have published, although such articles are not necessarily applicable to any one specific case. The answer was “NO.”
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And you say you want that answer in affidavit form. This is where consultation with local counsel is critical. There are several different ways the affidavit can be phrased and I have some doubts as to whether the answer, in the form of an affidavit, is going to help you. If you don’t know how and when to use the affidavit it won’t do you any good.
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But I concede that it might do some good inasmuch as sometimes the affidavit is accepted in court in connection with a motion for summary judgment. In all other circumstances the affidavit is not admitted into evidence unless I am retained to appear in court or at deposition in lieu of live testimony in which I give live testimony providing the foundation for the admission of the affidavit into evidence.
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The admission of opinion evidence is restricted based upon the court’s acceptance of my credentials, experience, education, training etc. To date no court in any state has rejected me as an expert who could give an opinion on the securitization of residential debt.
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But in all cases where my affidavit or testimony was accepted it wasn’t the opinion that was given weight, it was my report on the facts, revealing an absence of necessary elements to the claim for enforcement of the debt, note or mortgage.
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Opinion evidence is not admissible without a court approval or order. If it is opposed there is a hearing on whether to allow opinion evidence and if so whether it will be allowed from me.
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So an affidavit that for a lay person or their lawyer could be helpful to shore up confidence in the attorney’s presentation of the defense, but not much more. It would look something like this.
Based upon the chain of title revealed in the forensic report and my examination of the actual documents recorded, together with my education, knowledge, my proprietary database, and my experience in the securitization of businesses and assets including debt, it is my firm opinion that US Bank never purchased the debt of the homeowner nor did US Bank ever receive ownership of the debt from any person who had paid value for the debt. 

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Third party claims of possession of the homeowner’s promissory note are attenuated in terms of credibility and lack foundation as to whether such possession by third parties would be possession by US Bank. But such claims are nevertheless taken as true for purposes of this opinion.
 
Based upon Article 9 §203 of the Uniform Commercial Code (UCC) there are two deficiencies in the claim of U.S. Bank to enforce the security instrument (mortgage), to wit: 
a) it does not and never has complied with the condition precedent in the UCC that it paid value and therefore has a direct financial stake in the come of a forced sale through foreclosure (i.e., the sale will not produce money proceeds that are paid to US Bank either in a representative capacity nor on its own behalf and
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b) US Bank does not possess any claim for restitution because it has suffered no loss. Nor is US Bank expecting the receipt of any funds regardless of whether or not the homeowner makes a payment. While foreclosures have been concluded in the name used as claimant in this case, the proceeds of sale of foreclosed property has never been received or deposited by US Bank or on behalf of U.S. Bank.
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The claim to enforce the mortgage like all civil claims must present a legal person that is possessed of a claim for restitution of a legal debt owed to the claimant based upon a duty of the opposing party owed to the claimant that was breached by the opposing party that produced real legally recognized injury to the claimant.
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Failure to own the debt is therefore failure to present a legally recognizable claim to enforce the security instrument. Such failure is generally regarded in case decisions to be construed as a lack of jurisdiction by the trial court to consider any controversy where the real parties in interest are not present in person or by proxy.
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In this case, neither of these conditions is met. The implied trust (and/or US bank as “trustee”), if it/they has any legal existence, has never entered into any financial transaction in which the debt was sold for value or transferred by a person who had paid value. This eliminates compliance with the UCC condition precedent to enforcement and eliminates judicial standing for US Bank to even bring a claim inasmuch as it lacks a legally recognized claim for anything against the homeowner in the case at bar. 

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The affiant concedes that there is confusion in case decisions on this subject in which possession of the original note gives rise to the presumption of a right to enforce it. While it is doubtful that US Bank ever acquired possession of the original note much less rights to enforce the note, even assuming those conditions were met, that would only raise a presumption of title to the debt and the right to enforce it. But that presumption is factually and completely rebutted by the absence of any claim, transaction or instrument indicating that on any certain day the debt was sold to US Bank.
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In fact, my specific knowledge regarding the securitization of debt is that an investment bank (brokerage firm) funded the origination or acquisition of the debt and retained ownership of the debt for usually less than 30 days. Hence no transaction in which the debt was sold could have taken place without the participation of the investment bank who advanced the funds. No such transaction ever occurred between the investment bank and US Bank.

Hence the subject debt was never sold or entrusted to US Bank. Hence possession of the note, at most, entitles the possessor to enforce the note, albeit not as a holder in due course since no value was paid. Such enforcement would be under Article 3 of the UCC and not under Article 9 relating to enforcement of secured transactions. 
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My conclusion is that none of the parties named in connection with the claim against the homeowner have legal standing nor have any of them satisfied the condition precedent to enforcement of the mortgage through foreclosure.

In answer to the specific question posed by the homeowner’s attorney as to the status of US Bank in connection with this loan agreement, US Bank is not a real party in interest with any actual financial stake or risk of loss relating to the loan agreement nor was its purpose ever to serve as an actual trustee for a legal trustee of an actual trust that had any actual financial stake or risk of loss relating to the subject loan agreement.

Although certificates were sold in the name of the trust by the investment bank and other derivative contracts were sold based upon the value of the certificates, none of those contracts transfers any right, title or financial interest, nor any right to enforce, the subject debt, note and mortgage.

Hence any representations that US Bank is serving as authorized representative or trustee on behalf of the holders of such certificates or contracts is not relevant, since none of them have the right to enforce nor any ownership of the debt, even if they did receive the risk of  loss associated with the actual debt. 

So here is where local counsel comes into the picture. Depending upon how he or she wants to present your defense, is the above what they want, or do they want something more, less or different? Are you getting involved in pleading, discovery, preparation for a hearing or trial?

Because my credentials give me credibility and status, and because I would rather review forensic reports than prepare them, I am giving the free forensic law seminar on August 2 which is sold out. It is my hope that the business plans of forensic examiners will be enhanced by associations with established experts like myself in which affidavits are filed not by the examiners whose credentials nearly always in doubt but rather under the signature of someone whose credentials are not in doubt.

How do I Use Article 9 §203 UCC Requiring Value Be Paid for Debt?

Many of you have essentially asked the same question referring to Article 9 §203 UCC as adopted by the laws of your state. There is no known cause of action for breach of that statute although one might be conjured. It is an interesting suggestion.
My reference to it is simple: the statute says that a condition precedent to enforcement of the security instrument (mortgage or deed of trust) is that the party seeking to enforce must have paid value for the security instrument. Translating that, it automatically means that if someone paid for it then they paid for the debt. BUT all law in all states says that if the “seller” or transferor does  not own the debt then the transfer of the mortgage is a nullity.
A condition precedent means you can’t do one thing without first doing the other. We are a nation of laws and personal bias about this is irrelevant.
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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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What many lawyers continue to miss is that there is a difference between the laws entitling someone to enforce a note and the laws entitling someone to enforce a mortgage. There are different public policies behind each one. For Notes, the public policy is to encourage the free flow of negotiable instruments in the marketplace. For mortgages, the public policy is to make sure that the civil equivalent of the death penalty (loss of home) is not imposed by someone who actually has no interest in the debt.
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It is an added protection. As a condition precedent it means that standing to enforce the note is different from standing to enforce the mortgage. It is both factual and jurisdictional.
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The grey area occurs because many states adopt the doctrine that if someone has the right to enforce the note they automatically have the right to enforce the mortgage. Although that seems to contradict the Article 9 §203 provision it actually doesn’t. That is because possession of the note by a person who is entitled to enforce it raises the legal presumption that the value was paid by the person on whose behalf the note and mortgage are enforced.
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This is a fuzzy area of the law. But boiled down to its simplest components, it means that possession of the note is deemed (presumed) to be possession of legal title to the debt which, as we know from Article 9 §203 can only be true if the person has value invested in the deal.
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The point of that policy is that if the forced sale of the house is not going to produce proceeds that will be used to pay down the debt, then the foreclosure should not occur. If the person on whose behalf the foreclosure is brought is not the owner of the actual debt then without evidence from the lawyers representing the party named as Plaintiff or Beneficiary, there is no evidence that the proceeds will go towards paying down the debt and the court is required, with no discretion, to enter judgment for the homeowner.
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So the question comes down to whether the party claiming both possession and entitlement to enforce the note is the owner of the debt. The answer is yes if the homeowner does nothing. This presumption can be rebutted. A simple question as to whether the value was paid and if so, how many times, and demanding the dates and parties involved, would clear up the question if the banks had a factual answer. They don’t. They present a legal argument instead. As virtually all lawyers know, their job is to win however they can do it. So if they can’t dazzle the court with facts they can baffle the courts with bullshit.
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Carefully educating the judge who most probably slept through the UCC classes in law school is key to winning on this basis but it has been done many times. All jurisdictions have case decisions that reflect what I have described above. You must find those decisions and present them as part of your pleadings, memoranda and argument in court. 

Payment History as Exception to Hearsay Rule

A recent decision from the 1st Circuit of the U.S. Court of Appeals applying FRE 803(6) states the current law — whether you like it or not. Pretending these decisions don’t exist or trying to avoid them is both pointless and highly likely to undermine your credibility in any other narrative or argument. Note that SCOTUS Justice Souter not only sat in on this review but wrote the opinion.

Simply stated the transaction history will be admitted into evidence every time — UNLESS the borrower disputes their content and demands a hearing on truthfulness of the foundation testimony in which the magic words are spoken, as set forth in the Federal Rule and virtually all state court rules.

That means that unless you have done the right research, the right investigation and the right discovery you will have no admissible evidence with which to dispel the notion that the transaction history is anything more than an independent reliable summary of events that is admissible as proof of the truth of the transactions that occurred, and which did not occur with respect to the borrower.

see 18-1719P-01A U.S. Bank Trust v Jones, No. 18-1719

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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.
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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.
========================

The lawyers for the servicer are pretending to be the lawyers for US Bank who knows nothing about the foreclosure and doesn’t care as long as it receives its monthly check in exchange for the license it granted for use of its name to make it seem like this is an institutional foreclosure.

Those lawyers are going to throw this case at you when you challenge the payment history on grounds of hearsay or foundation. Tactically that is what you want them to do because then you can quote from the same case as follows:

the business records of loan servicers may not always carry the requisite indicia of reliability. See, e.g., Brief for National Consumer Law Center and Jerome N. Frank Legal Services Organization as Amici Curiae 12-18. It therefore bears repeating: the admission of integrated business records in this context must turn, as it does here, on the particular facts of each case.

So if you have been reading or listening to my work then you know that I have been saying categorically that if you are able to persuade the judge that your case stands alone or is unique in some respect and NOT try to make blanket accusations about industry practices in general as the focus of your claim, then you are much more likely to obtain a favorable result.

Souter emphasizes that this is a case by case decision and admits that servicer records might be neither truthful nor trustworthy. But that is not enough to bar them from evidence. Your defense can’t be equal to “we don’t dispute what is in those records but we dispute whether those records qualify as an exemption.” You have just slammed the door in your own face.

If you are admitting even tacitly that the debt exists, that you have not paid it, and that there is a loss attributable to your failure to make a payment, you have lost the case. If you admit that the record is accurate, even tacitly by not contesting anything within it, that record is coming into evidence.

The Judge will always find a way. And to be perfectly fair, the judge should  find a way to make justice happen. If you owe the money and the party claiming the money or the foreclosure does so in an effort to pay down the actual debt, they should win and you should lose.

There is no law that says that technical deficiencies should preclude an otherwise valid claim. Sounds like I am arguing for the bank, right?

The rejoinder is that through research and discovery and investigation you have uncovered the following documents from the public records, from the claimant’s records and from regulatory authorities and the following witnesses. They will show that the homeowner disputes the content of those records and has consistently done so since discovering erroneous information on them, and that the transaction history is at best unreliable and at worst a pure fabrication, just as this same servicer has done in these cases……

The legal argument is not that the records are permanently barred or that the truth of the matters asserted are permanently barred. It is that the opposing lawyers must produce a witness who can be cross examined and who can reconcile the factual issues that the homeowner has challenged.

The opposing lawyers will then stipulate for purposes of “judicial economy” that they no longer seek to recover based upon the contested transactions, and that they will reduce their demand accordingly. That looks like you are cooked.

But the rejoinder would be that while the homeowner accepts the admission that the records are incorrect (you ARE allowed to recharacterize the statement of opposing counsel) these erroneous statements were made before the notice letters were sent, which were a legal condition precedent to the pursuit of foreclosure. You argue that they have now failed to comply with statutes that are to be strictly construed where someone is threatened with the loss of their home. Both the amount stated as due and the amount required to reinstate were incorrect.

The whole scenario comes down to the fact that you must use facts to persuade the judge that the opposing attorney must prove his case instead of relying upon legal presumptions and exceptions to the hearsay rule. You must push hard on this because you know they cannot prove the facts, they cannot prove authority, they cannot prove ownership because they are all only doing this for fees, not for recovery on the debt. The lawyers have no knowledge as to the identity of the creditor and they don’t care. You don’t need to prove that. But you do need to raise it as a question mark in the head of the judge.

Those transaction histories might have some accurate information in them but they are being produced by a party who has an actual interest in the outcome of litigation, so they are not trustworthy and they contain errors that the servicing company now admits, although candidly there is a real question as to whether the servicing company is not simply a volunteer out for profit, the same as the lawyer and US Bank.

Also remember to attack foundation this way: US Bank or a trust is asserted to be the claimant. Unless someone can provide foundation testimony based upon personal knowledge that these records are the records of the claimant, then the records of the “servicer” may be barred. No representative of US Bank comes to trial. It is always a representative of a servicer.

In  discovery the absence of records showing disbursements  to creditors by the “servicer” might be sufficient to establish that the transaction history is not the whole story even if it is right and they should not be allowed to enter only one part of the transaction record supposedly conducted in the name of the Trustee or Trust. To whom were they forwarding the borrower’s payments? When did they stop? Did they stop because the debt is now owned by someone else or because it was enver owned by the trustee or the trust?

McDonough v Smith: High Court Open Door on Fabrication of Evidence

This decision is extremely important for 2 reasons.

1st, it reaffirms a right under federal law to bring an action for damages for fabrication of evidence.

2nd, and equally important, it establishes that the time to bring such a claim does not start until the conclusion of litigation, whether successful or unsuccessful.

see Article on McDonough v Smith McDonough v. Smith, No. 18-485 (U.S. Jun. 20, 2019)

See U.S. Supreme Court mcdonough-v-smith-5

see 42 U.S.C. § 1983

Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory or the District of Columbia, subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress, except that in any action brought against a judicial officer for an act or omission taken in such officer’s judicial capacity, injunctive relief shall not be granted unless a declaratory decree was violated or declaratory relief was unavailable.

I am uncertain at the time of writing this as to whether or not any attorney has thought to bring an action for damages based upon this statute. but it certainly seems applicable to foreclosure actions in which assignments, endorsements, notices, correspondence, and even deeds are fabricated for the purposes of obtaining a judgment in court.

[Additional Comments: after analyzing the cases, it would appear that this federal statute provides the basis for a cause of action for money damages and injunction.

However, close analysis of the cases involved strongly indicates that a homeowner will be able to use this statute only if he prevails in the prior foreclosure action.

While many attorneys are bringing wrongful foreclosure claims, and claims based upon fraud, this federal statute is probably an important addition for 2 reasons: (1) the statute of limitations does not begin to run until the case and foreclosure is over and is probably tolled by active concealment; (2) it appears as though the burden of proof might be a mere preponderance of the evidence that fabricated instruments and fabricated testimony were used in the pursuit of a wrongful foreclosure.]

If I am right about the SOL, that eliminates a primary defense of the potential defendants. If I am right about the burden of proof, it makes it far easier to prove a case against the defendants than using a cause of action for fraud.

This statute could be used in conjunction with virtually all foreclosure defenses and which claims of securitization are made and documents are fabricated, robo-signed and forged.

At this point, as any foreclosure Defense Attorney and most pro se litigants can tell you, virtually all foreclosures are based upon some chain of title that includes various alleged transfers or apparent transfers of the subject debt, note or mortgage.

Nearly all such alleged transfers do not exist except for the paper on which a reference is made to an assignment, endorsement, power of attorney or some other document that may or may not exist, and in all probability has been fabricated, backdated, forged and/or robosigned. all such documents are only valid if they refer to an actual event in real life. In connection with loans, the only relevant events are transfers of money. And in real life, in nearly all cases, no transfer of money ever occurred in connection with the execution of documents that were fabricated for the sole purpose of obtaining a foreclosure sale.

if I am correct in my interpretation, the statute could be used to include multiple defendants that might otherwise escape liability for actions alleged in a complaint for damages related to the fabrication of evidence and the use of fabricated evidence in furtherance of the scheme to obtain a wrongful foreclosure.

Right in Front of Our Eyes: Black Knight and U.S. Bank

Anyone who knows about foreclosure litigation and securitization of residential debt knows that the only way the banks could succeed is if they had a central repository and central command center from which all documents were fabricated and all instructions were issued.

For nearly all loans the central command was Lender Processing Systems, aided by DOCX. While DOCX is technically defunct and Loraine Brown went to jail taking one for the team, the functions of LPS remained the same.

LPS  changed its name to Black Knight and in a PR coup transformed itself into the publisher of what is largely viewed as comprehensive data on mortgage lending and foreclosures.

Hence it went from the purveyor of false, fraudulent, forged documentation to the purveyor of data perceived as reliable and thence became a trusted source whose data is considered worthy of legal presumptions.

Systems at LPS/Black Knight include data processing on virtually all residential loans subject to claims of securitization many of which are represented by data on the MERS  Platform which is a workaround to hide separate split transfers of the debt, the note and the mortgage or deed of trust.

The systems on LPS/Black Knight are designed for the the express purpose of presenting consistent data in foreclosure claims. As such it also enables the rotation of apparent servicers, none of whom perform bookkeeping functions even if some of them interact with borrowers as if they were actually the servicers.

The rotation of servicers comes with the false representation and illusion of boarding in which the process is falsely represented as meaning that the new servicer inspected, audited, reviewed and input the data into their own system. None of that occurred. Instead the new servicer merely gained access to the same LPS system as the last servicer with a new login and password.

All evidence shows that the functions for fabricated, forging and robosigning documents continue to be performed under the direction of LPS/Black Knight which receives all instructions from various investment banks who have each started their own securitization scheme masking apparent trades in the secondary market for loans and trades in the shadow banking market where “private contracts” are regularly traded without any securities regulation.

Far from dropping their connection with LPS/DOCX the major banks have completely embraced this central repository of all loan data, all of which is subject to manual and algorithmic manipulation to suit the needs of the banks; thus they produce a report that creates the illusion of credibility, reliability and even independence even though none of those things are true.

So now U.S. Bank is further embracing LPS/Black Knight technology in the form of “Empower” for loan originations. U.S. bank is of course the major player whose name is used in foreclosures despite the fact that it has no interest in the loans and does not receive one cent from foreclosure sales of property. It merely receives a royalty for the use of its name as part of a fictitious name of a nonexistent trust which is falsely represented to have engaged in a transaction in which the trust acquired the debt, note and mortgage on multiple loans.

This deal furthers the PR myth. It strengthens Black Knight as having the attributes of a legitimate player when in fact it is a central figure in the greatest economic crime in human history.

see https://www.prnewswire.com/news-releases/us-bank-expands-relationship-with-black-knight-to-correspondent-and-hfa-lending-channels-on-empower-loan-origination-system-300859760.html

US Bank will implement the Empower LOS to manage loans purchased via its correspondent and HFA lending channels. The bank already uses Black Knight’s MSP servicing solution which integrates with the LOS; and its artificial intelligent virtual assistant AIVA.

“Aligning with Black Knight’s Empower for our Correspondent and HFA business serves our forward-looking vision of providing innovative capabilities that advance the lending process and provide a better client experience,” said Tom Wind, executive vice president, US Bank. “Expanding our enterprise relationship with Black Knight allows us to enhance our digital capabilities and customer experience throughout the entire homeownership cycle.”

 

The Big Hoax: Are “Sales” of “Loans” and “Servicing” Real?

References to sales of loans and servicing rights are usually merely false assertions to distract homeowners and lawyers from looking at what is really happened. By accepting the premise that the loan was sold you are accepting that the loan was (a) real and (b) owned by the party who was designated to appear as a “Seller.”

By accepting the premise that the servicing data and documents were transferred you are accepting that the transferor had the correct data and documents and that the designated servicer is actually in position to represent the accounting records of the party whose name was used to initiate the foreclosure.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
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Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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.
========================

As Reynaldo Reyes of Deutsche Bank said in deposition and in recorded interviews, the entire structure and actual events are “counterintuitive.” The banks count on that for good reason. Most lawyers and almost all homeowners assume that at least some of what the banks are saying is true. In fact, nearly everything they say, write or produce as “business records” is a fabrication. But homeowners, lawyers and judges buy it as though it was solid gold.

In defending homeowners from foreclosure, lawyers who win more cases than they lose do so because of their willingness to believe that the entire thing is a hoax. Their withering cross examination and use of discovery reveals the complete absence of any corroborating evidence that would be admissible in court.

Even the most “biased” judges will concede that the case for foreclosure has not been made and they rule for the homeowner. But this only happens if the lawyer takes the opposition to task.

Chase did not acquire loans from WAMU and WAMU did not acquire loans from Long Beach etc. At the time of the claimed “acquisition” those loans were long gone, having been funded or purchased by one of the big 4 investment banks, directly or indirectly (through intermediate investment banks or simple cham conduit fictitious names or entities). In fact the ONLY time that the actual debt was clearly owned by anyone was, at best, a 30 day period during which the investment bank had the debt on its balance sheet as an asset.

So all sales from any seller other than one of the investment banks is a ruse. And there are no references to sales by the investment banks because that would be admitting and accepting potential liability for lending and servicing violations. It would also lead to revelations about how many times and in how many pieces the debt was effectively sold to how many investors who were NOT limited to those who had advanced money to the investment bank for shares in a nonexistent trust that never owned anything and never transacted any business.

Similarly the boarding process is a hoax. There is generally no actual transfer of servicing even with the largest “servicers.” They are all using a central platform on which data is kept, maintained, managed and manipulated by a third party who is kept concealed using employees who are neither bonded nor trained in maintaining accurate records nor protecting private data.

There is no transfer of servicing data. There is no “boarding” and no “audit.” In order to keep up the musical chairs game in which homeowners and lawyers are equally flummoxed, the big investment banks periodically change the designation of servicers and simply rotate the names, giving each one the login and password to enter the central system (usually at a server maintained in Jacksonville, Florida).

BOTTOM LINE: If you accept the premises advanced by the lawyers for the banks you will almost always lose. If you don’t and you aggressively pound on the legal foundation for the evidence they are attempting to use in court the chances of winning arise above 50% and with some lawyers, above 65%.

To be successful there are some attitudes of the defense lawyer that are necessary.

  • The first is that they must believe or be willing to believe that their client deserves to win. A lawyer who thinks that the client is only entitled to his/her time or a delay of the “inevitable” will never, ever win.
  • The second is that they must believe or be willing to believe that the entire scheme of lending, servicing and foreclosure is a hoax. Each word and each document that a lawyer assumes to be valid, authentic and not fabricated is a step toward defeat.
  • The third is that the lawyer must fight to reveal the gaps, consistencies and insufficiencies of the evidence and not to prove that this is the greatest economic crime in human history. All trials are won and lost based on evidence. The burden is always on the foreclosing party or the apparent successors to the foreclosing party to prove that title properly passed.
  • Fourth is arguably the most important and the one that is most overlooked. The lawyer must believe or be willing to believe that the foreclosure was not initiated on behalf of any party who could reasonably described as a creditor or owner of the debt. The existence of the trust, the presence of a real trust in any transaction in which a loan was purchased, sold or settled to a trustee, and the various permutations of strategies employed by the banks are not mere technical points. They are a coverup for the fact that no creditor and no owner of the debt ever receives any benefit from a successful foreclosure of the property.

Yes it is counterintuitive. You are meant to think otherwise and the banks are counting on that with you, your lawyer and the judge. But just because something is counterintuitive doesn’t mean that it isn’t true.

What is the difference between the note and the debt? What difference does it make?

NOTE: This case reads like  law review article. It is well worth reading and studying, piece by piece. Judge Marx has taken a lot of time to research, analyze the documents, and write a very clear opinion on the truth about the documents that were used in this case, and by extension the documents that are used in most foreclosure cases.

Simple answer: if you had a debt to pay would you pay it to the owner of the debt or someone else who says that you should pay them instead? It’s obvious.

Second question: if the owner of the debt is really different than the party claiming to collect it, why hasn’t the owner shown up? This answer is not so obvious nor is it simple. The short version is that the owners of the risk of loss have contracted away their right to collect on the debt, note or mortgage.

Third question: why are the technical requirements of an indorsement, allonge etc so important? This is also simple: it is the only way to provide assurance that the holder of the note is the owner of the note. This is important if the note is going to be treated as evidence of ownership of the debt.

NY Slip Opinion: Judge Paul I Marx carefully analyzed the facts and the law and found that there was a failure to firmly affix the alleged allonge which means that the note possessor must prove, rather than presume, that the possessor is a holder with rights to enforce. U.S. Bank, N.A. as Trustee v Cannella April 15, 2019.

Now the lawyers who claim U.S. Bank, N.A. is their client must prove something that doesn’t exist in the real world. This a problem because U.S. Bank won’t and can’t cooperate and the investment bank won’t and can’t allow their name to be used in foreclosures.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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) 202-838-6345 or 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.
========================
Words actually matter — in the world of of American Justice, under law, without words, nothing matters.
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So it is especially important to presume nothing and actually read words without making any assumptions. Much of what we see in the language of what is presented as a conveyance is essentially the same as a quitclaim deed in which there is no warranty of title and which simply grants any interest that the grantor MIGHT have. It is this type of wording that the banks use to weaponize the justice system against homeowners.
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There is no warranty of title and there is no specific grant of ownership in an assignment of mortgage that merely says the assignor/grantor conveys “all beneficial interest under a certain mortgage.” Banks want courts to assume that means the note and the debt as well. But that specific wording is double-speak.
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It says it is granting rights to the mortgage; but the rest of wording  is making reference only to what is stated in the mortgage, which is not the note, the debt or any other rights. So in effect it is saying it is granting title to the mortgage and then saying the same thing again, without adding anything. That is the essence of double speak.
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In the Cannela Case Judge Marx saw the attempt to mislead the court and dealt with it:

The language in RPAPL § 258, which this Court emphasized—”together with the bond or obligation described in said mortgage“—stands in sharp contrast to the language used here in the Assignment—”all beneficial interest under a certain Mortgage”. If such language is mere surplusage, as Plaintiff seems to believe, the drafters of RPAPL § 258 would not have included it in a statutory form promulgated for general use as best practice.

So here is the real problem. The whole discussion in Canella is about the note, the indorsement and the allonge. But notice the language in the opinion — “The Assignment did not go on to state that the referenced debt “…. So the Judge let it slip (pardon the pun) that when he refers to the note he means the debt.

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The courts are using “the debt” and “the note” as being interchangeable words meaning the same thing. I would admit that before the era of false claims of securitization I used the words, debt, note and mortgage interchangeably because while there were technical  difference in the legal meaning of those terms, they all DID mean the same thing to me and everyone else.
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While a note SHOULD be evidence of the debt and the possession of a note SHOULD be evidence of being a legal note holder and that SHOULD mean that the note holder probably has rights to enforce, and therefore that note “holder” should be the the owner of a debt claiming foreclosure rights under a duly assigned mortgage for which value was paid, none of that is true if the debt actually moved in one or more different directions — different that is from the paper trail fabricated by remote parties with no interest in the loan other than to collect their fees.
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The precise issue is raised because the courts have almost uniformly assumed that the burden shifts to the homeowner to show that the debt moved differently than the paper. This case shows that might not be true. But it will be true if not properly presented and argued. In effect what we are dealing with here is that there is a presumption to use the presumption.
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If Person A buys the debt (for real) for value (money) he is the owner of the debt. But that is only true if he bought it from Person B who also paid value for the debt (funded the origination or acquisition of the loan). If not, the debt obviously could not possibly have moved from B to A.
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It is not legally possible to move the debt without payment of value. It IS possible to appoint agents to enforce it. But for those agents seeking to enforce it the debtor has a right to know why he should pay a stranger without proof that his debt is being collected for his creditor.
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The precise issue identified by the investment banks back in 1983 (when securitization started) is that even debts are made up of component parts. The investment banks saw they could enter into “private contracts” in which the risk of loss and other bets could be made totalling far more than the loan itself. This converted the profit potential on loans from being a few points to several thousand percent of each loan.
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The banks knew that only people with a strong background in accounting and investment banking would realize that the investment bank was a creditor for 30 days or less and that after that it was at most a servicer who was collecting “fees’ in addition to “trading profits” at the expense of everyone involved.
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And by creating contracts in which the investors disclaimed any direct right, title or interest in the collection of the loan, even though the investor assumed the entire risk of loss, the investment banks could claim and did claim that they had not sold off the debt. Any accountant will tell you that selling the entire risk of loss means that you sold off the entire debt.
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* Thus monthly payments, prepayments and foreclosure proceeds are absorbed by the investment bank and its affiliates under various guises but it never goes to reduce a debt owned by the people who have paid value for the debt. In this case, and all similar cases, U.S. Bank, N.A. as trustee (or any trustee) never received nor expected to receive any money from monthly payments, prepayments or foreclosure proceeds; but that didn’t stop the investment banks from naming the claimant as U.S. Bank, N.A. as trustee.
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**So then the note might be sold but the alleged transfer of a mortgage is a nullity because there was no actual transfer of the debt. Transfer of the debt ONLY occurs where value is paid. Transfer of notes occurs regardless of whether value was paid.
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US laws in all 50 states all require that the enforcer of a mortgage be the same party who owns the debt or an agent who is actually authorized  by the owner of the debt to conduct the foreclosure. For that to be properly alleged and proven the identity of the owner of the debt must be disclosed.
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That duty to disclose might need to be enforced in discovery, a QWR, a DVL or a subpoena for deposition, but in all events if the borrower asks there is no legal choice for not answering, notwithstanding arguments that the information is private or proprietary.
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The only way that does not happen is if the borrower does not enforce the duty to disclose the principal. If the borrower does enforce but the court declines that is fertile grounds for appeal, as this case shows. Standing was denied to U.S. Bank, as Trustee, because it failed to prove it was the holder of the note prior to initiating foreclosure.
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It failed because the fabricated allonge was not shown to be have been firmly attached so as to become part of the note itself.
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Thus the facts behind the negotiation of the note came into doubt and the presumptions sought by attorneys for the named claimant were thrown out. Now they must prove through evidence of transactions in the real world that the debt moved, instead of presuming the movement from the movement of the note.
*
But if B then executes an indorsement to Person C you have a problem. Person A owns the debt but Person C owns the note. Both are true statements. Unless the indorsement occurred at the instruction of Person B, it creates an entirely new and separate liability under the UCC, since the note no longer serves as title to the debt but rather serves as presumptive liability of a maker under the UCC with its own set of rules.
*
And notwithstanding the terms of the mortgage to the contrary, the mortgage no longer secures the note, which is no longer evidence of the debt; hence the mortgage can only be enforced by the person who owns the debt, if at all. The note which can only be enforced pursuant to rules governing the enforcement of negotiable instruments, if that applies, is no longer secured by the mortgage because the law requires the mortgage to secure a debt and not just a promissory note. See UCC Article 9-203.
*
This is what the doctrine of merger is intended to avoid — double liability. But merger does not happen when the debt owner and the Payee are different parties and neither one is the acknowledged agent of a common principal.
*
Now if Person B never owned the debt to begin with but was still the payee on the note and the mortgagee on the mortgage you have yet another problem. The note and debt were split at closing. In law cases this is referred to as splitting the note and mortgage which is presumed not to occur unless there is a showing of intent to do so. In this case there was intent to do so. The source of lending did not get a note and mortgage and the broker did get a note and mortgage.
*
Normally that would be fine if there was an agency contract between the originator and the investment bank who funded the loan. But the investment bank doesn’t want to admit such agency as it would be liable for lending and disclosure violations at closing, and for servicing violations after closing.
*
***So when the paperwork is created that creates the illusion of transfer of the mortgage without any real transaction between the remote parties because it is the investment bank who is all times holding all the cards. No real transactions can occur without the investment bank. The mortgage and the note being transferred creates two separate legal events or consequences.
*
Transfer of the note even without the debt creates a potential asset to the transferee whether they paid for it or not. If they paid for it they might even be a holder in due course with more rights than the actual owner of the debt. See UCC Article 3, holder in due course.
*
Transfer of the note without the debt (i.e. transfer without payment of value) would simply transfer rights under the UCC and that would be independent of the debt and therefore the mortgage which, under existing law, can only be enforced by the owner of the debt notwithstanding language in the mortgage that refers to the note. The assignment of mortgage was not enough.
Some quotables from the Slip Opinion:

A plaintiff in an action to foreclose a mortgage “[g]enerally establishes its prima facie case through the production of the mortgage, the unpaid note, and evidence of default”. U.S. Bank Nat. Ass’n v Sabloff, 153 AD3d 879, 880 [2nd Dept 2017] (citing Plaza Equities, LLC v Lamberti, 118 AD3d 688, 689see Deutsche Bank Natl. Trust Co. v Brewton, 142 AD3d 683, 684). However, where a defendant has affirmatively pleaded standing in the Answer,[6] the plaintiff must prove standing in order to prevail. Bank of New York Mellon v Gordon, 2019 NY Slip Op. 02306, 2019 WL 1372075, at *3 [2nd Dept March 27, 2019] (citing HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d 983, 983-984HSBC Bank USA, N.A. v Calderon, 115 AD3d 708, 709Bank of NY v Silverberg, 86 AD3d 274, 279).

A plaintiff establishes its standing in a mortgage foreclosure action by showing that it was the holder of the underlying note at the time the action was commenced. Sabloff, supra at 880 (citing Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361U.S. Bank N.A. v Handler, 140 AD3d 948, 949). Where a plaintiff is not the original lender, it must show that the obligation was transferred to it either by a written assignment of the underlying note or the physical delivery of the note. Id. Because the mortgage automatically passes with the debt as an inseparable incident, a plaintiff must generally prove its standing to foreclose on the mortgage through either of these means, rather than by assignment of the mortgage. Id. (citing U.S. Bank, N.A. v Zwisler, 147 AD3d 804, 805U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754).

Turning to the substantive issue involving UCC § 3-202(2), Defendant contends that the provision requires that an allonge must be “permanently” affixed to the underlying note for the note to be negotiated by delivery. UCC § 3-202(1) states, in pertinent part, that if, as is the case here, “the instrument is payable to order it is negotiated by delivery with any necessary indorsement”. UCC § 3-202(1) (emphasis added). The pertinent language of UCC § 3-202(2) provides that when an indorsement is written on a separate piece of paper from a note, the paper must be “so firmly affixed thereto as to become a part thereof.” UCC § 3-202(2) (emphasis added); Bayview Loan Servicing, LLC v Kelly, 166 AD3d 843 [2nd Dept 2018]; HSBC Bank USA, N.A. v Roumiantseva, supra at 985see also One Westbank FSB v Rodriguez, 161 AD3d 715, 716 [1st Dept 2018]; Slutsky v Blooming Grove Inn, 147 AD2d 208, 212 [2nd Dept 1989] (“The note secured by the mortgage is a negotiable instrument (see, UCC 3-104) which requires indorsement on the instrument itself `or on a paper so firmly affixed thereto as to become a part thereof’ (UCC 3-202[2]) in order to effectuate a valid `assignment’ of the entire instrument (cf., UCC 3-202 [3], [4])”).

[Editor’s note: if it were any other way the free spinning allonge would become a tradable commodity in its own right. ]

The Assignment did not go on to state that the referenced debt was simultaneously being assigned to Plaintiff.

 

Applying Common Sense and Law to Assignments of Mortgage

Every time a homeowner wins in foreclosure the investors are actually protected. It’s the sale of the property and/or entry of the foreclosure judgment that cuts investors off from their investment. Weird, right?

An article in the recently published Florida Bar Journal illustrates perfectly the confusion that occurs within the courts and by lawyers when they stray from the simple pronouncement of accepted law in all jurisdictions.

Here is one simple proposition declared by the Florida Supreme Court which is a mirror of similar pronouncements from the Highest courts in all other U.S. Jurisdictions: The case is Johns v Gillian 134 Fla. 575, 184 So. 140 (1938).

“the mere delivery of the note and mortgage, with intention to pass title, upon proper consideration, will vest the equitable interest in the person to whom it is so delivered.”

The obvious implication is that such a person can enforce the mortgage. The other obvious implication is that a claimant who claims to have received possession by delivery of the note and mortgage cannot enforce the mortgage if there was no intent to transfer title to the mortgage, or if there was no payment of consideration.

The obvious takeaways from this simple, basic and completely accepted point of law are

  • delivery of note and mortgage is important and potentially dispositive BUT
  • defects in the instrument of assignment of mortgage are not fatal IF
  • intention to pass title is present AND
  • payment of proper consideration is present
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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
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Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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.
========================

The jumble occurs when anyone of those points is taken out of order or entirely out of consideration which is what the courts and even some foreclosure defense lawyers are missing.

Delivery of the original note and the recorded mortgage document is important and potentially dispositive. This is true if proper consideration was paid and there was an intent to pass title.

But the banks would have us believe that only the intent to pass title is important, even if the transferor has no title. There is no law and no case decision that agrees with that proposition. And the banks would have us believe that the intent to pass title is the only thing that matters even if no proper consideration was paid. There is no law and no case decision that supports that proposition.

By law, as adopted in the statutes of all 50 states when they adopted the Uniform Commercial Code, consideration must be paid for an effective transfer of the mortgage.  UCC Article 9 section 203. All the case law agrees and there is no case law contrary to that proposition.

BUT there is plenty of case law where the courts ignore it mostly because the pro se homeowners or foreclosure defense attorney didn’t present the issue clearly.

The money proves the intent and the intent justifies the money.  Without the money the transfer is a complete nullity which legally means it never happened.

While there are presumptions about transfer of the debt when the “original” note is supposedly delivered (as though transfer of the note was title to the debt), the only thing that actually transfers the debt under law is payment of money with intent to purchase and sell the debt and the mortgage.

Where’s the money?

In virtually all cases the money is absent, which leads directly to the point of the law to begin with — foreclosure should only be granted in circumstances where the proceeds of foreclosure will go to the party claiming that equitable remedy. Here is the plain truth. Those proceeds are not going to anyone who has value/consideration in the deal.

The investment bank’s legal strategy of claiming that it once paid consideration is defeated entirely by its sale of the “risk of loss” (i.e., the debt) several times over in the shadow banking market.

Dubious? Check the proposed and actual regulations concerning the retention of a share of the risk of loss by investment banks. That is the big dispute. For loans that were created up until around 2010, there was zero retention of risk.

The meaning  of that eludes most people unfamiliar with the terminology of Wall Street. So here it is: if you have no risk you own no debt.

My sources say that is still true and the regulators are powerless to stop it because of the right to enter into contracts that are disguised sales of the risk of loss, which is to say disguised sales of the debt by the one party who is always the one controlling events on the ground in foreclosures — the investment bank.

Do you need to prove all that? Nope. Just demand proof of consideration. And don’t stop demanding it no matter what the opposing lawyer says and even regardless of what the judge says. In the end, you’ll be right. Every time a homeowner wins in foreclosure the investors are actually protected. It’s the sale of the property and/or entry of the foreclosure judgment that cuts investors off from their investment.

C&E Strategy is the beginning of a successful attack on the claimed enforcement of a mortgage or deed of trust.

Attacks on technical deficiencies of assignments of mortgage is a great place to start, but it is not the finish line.

This is a follow up with the radio show we did last week on cancellation of assignments of mortgage, and upon successful cancellation of the assignment(s), the further cancellation of the notice of substitution of trustee, the notice of default, the notice of sale, and/or the lis pendens and foreclosure lawsuit.

The C&E (Cancel and Expunge) strategy has some good and even essential attributes of the defense and counterattack on the would-be enforcer of a mortgage. But here are some potential weak points. If you are not ready for them the strategy will fail.

see https://livinglies.me/2019/04/11/cal-3d-dca-wrongful-foreclosure-you-can-cancel-the-assignment-notice-of-default-notice-of-sale-and-reverse-the-sale/

You are still on the right track — especially where the notary certifies that the person signing had authority to do so. That is simply a lie. The notary has no idea. The problem with the C&E strategy is that it appeals to lay people and not lawyers.

*

The lay people like it because it sounds like a magic bullet that enables them  to avoid litigation over whether the claimant is real and whether the claim is real. The lawyers are reluctant because they know that courts will almost always side with the party who appears to be losing the benefit of an actual bargain in which the claimant paid money. It’s all about money, whether you like it or not.

*

The reality is that they are both right. And the place to start is always at the beginning — when and where and why the offending document was executed.

*
Lay people don’t understand what it means to have a facially valid document. They want to get a court to get rid of the whole document (and the presumed transaction behind it, whether it exists or not) because of some perceived invalid procedure in its execution. The world doesn’t work like that, nor should it.
*
The court looks at the substance. If someone paid for the loan they don’t lose their money because of a signature that is missing or in the wrong place. They are at least given opportunities to correct errors. If the errors are not corrected then that is a different matter. Even a frivolous lawsuit can result in a judgment and levy against property if the defendant failed to answer or appeal. That is the way the system works.
*
The court might temporarily decline to enforce an instrument because it does not comply with statutory requirements for facial validity — but it won’t invalidate the presumed transaction UNLESS the presumed transaction is either proven not to exist or the presumed transaction is not proven to exist. There is a difference between those two. Both involve proof. The difference is in who has the burden of proof.
*
Even with a deed lacking a witness —- the deed is valid as between the grantor and the grantee and anyone who knows about it. There are differences between states but the substance is the same.
*
If Person A executes a deed to Person B and Person B pays Person A then the court, in equity, will not allow person C to exercise the rights of a title owner in fee simple absolute unless Person C also paid Person A (assuming person A had title) AND the state has a race to record statute. If the state is not a “race” state, then the deed is valid against all who have notice of it.
*
At the end of the day courts will not ordinarily issue an order in which they think a party is getting cheated out of the benefits of a legitimate deal. The dominant public policy is preservation of contracts and legitimate transactions first, not the strict adherence to statutory requirements in execution of contracts or conveyances. So the only defense that works with consistency is the one in which either the claim or the claimant’s existence is not supported by sufficient evidence. This is the gray area that lay people don’t want to hear about.
*
But all that said, the attack on the assignments for lack of statutory requirements is correct in its strategy and its goals. The reason that is correct is not that the document is just defective in some technical way. The reason it is effective strategy is (a) the court should not enforce it until the needed correction is effectuated and (b) they can’t correct it without revealing the creditor who owns the debt.
*
The 20 year effort to conceal the identity of anyone who owns the debt is testimony to the fact that the investment banks don’t want anyone to know. The answer would be highly complex and probably involve matters of novel fact patterns and law.
*
By selling off the risk of loss did the investment bank thus sell the debt? If they sold the debt, but did not sell the rights to enforce the debt, note or mortgage, did the investment bank retain the right to enforce?  If so, that probably conflicts with all law in all jurisdictions that requires that the enforcer of a mortgage be the owner of the debt. If the enforcement is allowed what assurances does the court have that the proceeds of foreclosure will go to the benefit of the owner of the debt, however that ownership is defined?
*
While the courts have assiduously avoided addressing such questions they are moving inexorably in the direction of being required to address them and to finally decide what to do with the confusion and chaos created not by borrowers, but by the investment banks who sought to and did in fact create profits that were multiples of the amount loaned without paying the borrower for use of his/her name, signature or reputation.
*
So the attacks on technical deficiencies of assignments of mortgage is a great place to start, but it is not the finish line.

 

Stop Feeling Guilty — Be A Warrior

Shame is the reason why most borrowers don’t contest foreclosures. That shame turns to intense anger when they realize that they were used, screwed, abused and now they are targets in a continuing blitz to embezzle much needed money from their lives and from the financial system generally.

The genius behind companies like Citi is… Deception by Branding.  “Citi” is not a company, it’s a brand of a conglomerate of companies.  Even its subsidiary “Citibank N.A.” is deceptive.  First let’s dispel the myth that subsidiaries are equal to their parents.  Not true, not even when they are wholly-owned subsidiaries.  They are separate companies, albeit owned by a common parent. —- From Anonymous Writer
GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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) 202-838-6345 or 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.
========================

Probably the biggest goof of the court system in foreclosure litigation (and in business litigation) is mistaking a brand for a company and not realizing that there is both a business and legal distinction between even a wholly owned subsidiary and another subsidiary or parent company.

The reason that is such a big goof is that the actual transaction is being ignored while a small part of the transaction is being treated as the entire matter. That is like taking the spark plug out of car and then selling it to someone as though it was the whole car. It doesn’t work that way.

In conglomerates like “Citi” the brand intentionally blurs the factual and legal distinctions. And these distinctions make a difference precisely because the debt, note and mortgage are split and transferred multiple times between subsidiaries wherein each one is either moved off the books entirely or each subsidiary is showing an “asset” that it sells into the shadow banking market.

These practices results in a ten-fold increase in the apparent size of the asset, which is then owned by dozens, perhaps hundreds of different unrelated investors. And that enabled the banks siphon literally trillions of dollars out of the US economy and trillions more out of the world economy.

Through the devices of branding and “off balance sheet transactions” this wealth is controlled by handful of people; but this wealth is directly derived from one simple plan — to market the signature, reputation and identity of borrowers who were led to believe that they were executing loan documents. In fact they were executing the foundation documents for a string of transactions and book entries that would result in profits far beyond the amount of the loan.

These unsuspecting consumers had become ISSUERS without ever knowing it and they still don’t know it or understand it. So they still believe that somehow the investment bank behind the scheme is actually entitled to collect on a debt that the bank sold multiple times through multiple affiliates and subsidiaries in transactions that were often “off balance sheet.” And the fact that in virtually all cases the proceeds of foreclosure sales are not applied to reduce the debt owed to the owner of the debt is completely overlooked.

The clear issue that investment banks have been avoiding is that every one of their originated loans is part of a larger intended transaction, and that the homeowner gets absolutely no clue or disclosure that the bulk of the transaction is actually very different from a loan and actually the antithesis of a loan. Clearly the two were both unrelated and related.

The borrower thought it was a loan and it was a loan but the loan was a part of a larger transaction in which the attributes of a loan were shredded. So the loan was essentially a sham entry to allow the investment banks to profit regardless of the performance of the loan. Hence the transaction was not really a loan anymore. This is true even for loans acquired after origination by an actual lender.

Risk underwriting, the most basic part of lending, was thrown to the winds because it was irrelevant. And legally required disclosures were also thrown to the winds because lending laws (TILA) clearly state that compensation received after the loan closing must be disclosed.

What would have happened if the borrowers knew their signatures, reputation and identity were the real subject of the transaction and that they would be sold in a myriad of way producing compensation far beyond the amount of the loan. How would bargaining have changed? It’s obvious.

Even the most unsophisticated homeowner would have gone shopping for someone who would offer a share of the bounty. And that is why the “free house” PR gimmick is a myth. If the investment banks had not concealed the major attributes of the transaction, the mortgage meltdown would never have occurred.

And if “securitization” had proceeded anyway then homeowners would have received immediate and possibly total reductions in the amount due. Yes I recognize that this is a contradiction because if there is no loan then there are no derivatives to be sold. But that is not a problem created by homeowners or borrowers or consumers. It is a problem created by fraud and deceit by the investment banks.

In the final analysis the investment banks used homeowners and investors to issue unregulated securities and instead of turning the proceeds over to the issuers they kept the money. In any world of law enforcement they should have been jailed for that.

The goal was to get the signature and then sell it. That is not a loan. And the failure to disclose it violated everything about Federal  and State lending laws that require disclosure of identities of the real parties in interest and the amount of money they are getting as compensation for their role in “the transaction.”

The investment banks chose to unilaterally define “the transaction” as just the part dealing with the origination of the debt, note and mortgage. That was a lie. It concealed the fact that the borrower was in fact a real party in interest in a much larger transaction in which at each step profits, fees, and other compensation would be distributed in amounts vastly exceeding the amount that was disclosed to the borrower as the value of the transaction. For each $1 “loaned” there was $20 in profit.

By concealing this information the investment banks took all of the profit, fees and compensation without allowing the homeowner to participate in what amounted to a monetization of their signature, reputation and identity.

Thus the most essential part of the Federal and State lending laws was thwarted: that the “borrower” must know the identity of the parties with whom he/she is dealing and the “borrower” must know the amount of compensation being earned as result of the “borrower” signing documents at loan closing.

Instead the homeowner had become the issuer of unregulated securities, the proceeds of which were largely concealed and withheld from the homeowner. No lawyer would have permitted their client to enter into such a scheme — if the facts were known.

Borrowers get lost in the weeds when they make these allegations because they can’t prove them. Truth be told, even the bank could not prove them because of the number of transactions that occur “off balance sheet.” Abraham Briloff (in his book Unaccountable Accounting) first observed over 50 years ago, the invention of this ploy of “off balance sheet” transactions was an open door to fraud that would likely occur but might never be proven.

We are a nation of laws not opinions. Our laws depend upon findings of fact, not opinions or political views. That is the only control we have to prevent fraud or at least bring fraudsters to justice, or at the very least prevent them from continuing to reap the rewards of their multiple violations of statutory laws, common law  and the duty of good faith, honesty and fair dealing.

So when the robowitness signs affidavits, certifications or other documents or testifies at deposition or in court, be aware that in nearly all cases, he/she is either an independent contractor with absolutely no knowledge or authority concerning the subject transaction (as a have defined it herein) or an employee of a subsidiary with no connection to any transaction involving the homeowner or both.

You can reveal the lack of actual personal knowledge and thus then lack of foundation for evidence proffered in a foreclosure by discovery, motions to enforce discovery, motions in limine and good cross examination which always depends upon one single attribute to be successful: follow-up.

And in many cases the robowitness is not nearly as stupid as his/her script makes him out to be. The  robowintess often knows everything that is contained in this article. Good cross examination can frequently reveal that — that is where the case turns from enforcement of a legitimate debt to a case in which both the claim and the claimant have not been proven by any standard.

That is all you need to win. You don’t need to prove how they did it. You only need to reveal the gaps that exist because the substance is not there — the claiming parties have all long since divested themselves, at a profit,of any interest in the debt, note or mortgage. There is no debt left to pay, at least not to them. Stop feeling guilty and be a warrior.

Tonight! How to use discovery in revealing fraudclosures!

Thursdays LIVE! Click in to the Neil Garfield Show

Tonight’s Show Hosted by Neil F Garfield

Call in at (347) 850-1260, 6pm Eastern Thursdays

Tonight’s Agenda:

  1. Interrogatories
  2. Request to Produce
  3. Request for Admission
  4. Motions to Compel
  5. Motions for Sanctions
  6. Motions in Limine

The devil is in the details. The details in litigation lie basically in discovery — asking and responding. Very few pro se litigants know how to construct good Interrogatories, Requests to Produce, or Requests for Admission. They know even less about how to use the responses, if they get any.

And they know still less about how to use inconsistencies or lack of response as the basis for enforcement and motions for contempt and sanctions and ultimately to limit the evidence that can be introduced by the claimant in foreclosure.

Failure to know about this is fatal because it is failure to understand the nature and procedure of litigation. Most lawyers don’t suffer from that ignorance. But they often do suffer from lack of motivation and thus they head for failure when they could be heading for success.

Judges are getting increasingly irritated by sloppy and bad discovery practices by both sides in litigation.

See Exterro-EDRM Judges Survey 2019 Series-…iscovery Specialists (ACEDS) – JDSupra

UCC: The Internet is no substitute for law school

The way that borrowers lose cases is by picking out one thing from a case or statute and treating it as a magic bullet. If the law were that simple a computer would be deciding all cases. The distinctions between possessors of a note, rights to enforce, status as a holder, owning the debt and the status as holder in due course are extremely detailed and they are fairly rigid. That is because the UCC was designed to effectuate the free flow of commerce and protection of both parties under a set of rules that must be rigid to accomplish the goals of free commerce and protection.

To assist foreclosure defense attorneys and pro se litigants I offer my take on application of UCC rules to residential foreclosures. As to my foundation for doing so I offer the following: I was the winner of the American Jurisprudence book award in law school for bills and notes; I was deeply involved on wall street with the actual trading of bills and notes; I was the original drafter of hundreds of deals involving bills and notes; and I have spent 43 years litigating cases involving bills and notes.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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) 202-838-6345 or 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.
========================

Confusion arises because of references to holder in due course. A holder in due course is one who purchases a note for value in good faith and without knowledge of the borrower’s defenses. If such a transaction actually occurred it would be difficult in this context to say that the buyer was not acting in good faith or knew of the borrower’s defenses.

Here is a key rule to guide all foreclosure litigation: As long as the judge thinks that the sale of the home will be used to pay the down the borrower’s debt to a party who owns the debt the court will find any possible way to rule for the party claiming rights to foreclose.

The converse is equally true — after step by step takedown of the evidence of the claimant — no judge will knowingly allow a claimant to force the sale of a home where the proceeds are more likely than not going to be used for profit rather than paying down the debt.

Most losing attempts are based upon the premise that there is a way to block the remedy. Most winning defenses are based upon the premise that there is no remedy because there is no claim and there is no claimant.

*
So if good faith and knowledge are off the table that leaves payment of value. As a practical matter payment of value would be translated as purchase of the debt, rather than simply purchase of the note. In today’s context there is an actual question about that but for now just consider the purchase of the note to be the purchase of the debt IF the seller of the note owned the debt.
*
That is where the analysis gets dicey. In most cases, but not all, the purchase of the note was not actually a purchase of the debt because the seller may have had ownership of the note but had not paid value or otherwise possess ownership of the debt.
*
You can ONLY acquire the debt by payment of money to the owner of the debt (or an agent authorized to accept payment on behalf of the owner of the debt). The job of defense counsel  is to show that the opposition refuses to disclose the identity of the creditor (owner of the debt) thus blocking the defense and the court from confirming that the authorization is real. That refusal should either be taken as an admission against interest or it should be the basis for a motion in limine (or trial objection) to bar the claimant’s proffer of evidence of authority at trial.
*
The UCC governs how these paper instruments and their enforcement are governed. In all events the mere delivery of the original note is sufficient under most circumstances to raise the legal presumption that the delivery was intended to convey ownership of the note and the rights to enforce it. Exceptions exist but there is case law that even a thief could sue to enforce the note, although  with any defense the thief would lose at trial. Their possession of the note would be sufficient to establish standing to sue, but not, as some courts have done, establish standing at trial.
*
Thus almost anything gives a party claiming possession of the note, the right to sue to enforce the note. That doesn’t mean they have the right to enforce the mortgage because in order to do that they must show that they paid value for the debt, that they paid it to the owner of the debt and that the debt was transferred to them.
*
It also doesn’t mean that they will win at trial because possession is insufficient to establish a prima facie case. They must show the right to enforce and that is where the mythical securitization claims get in the way of truth. The right to enforce means by definition that someone who owns the debt has authorized one or more intermediaries to enforce the note on behalf of the owner of the debt,  and the authorization allows the intermediary to sue in its own name, leaving the question of how to divide the proceeds up to the real parties after the litigation is over.
*
The problem has been that the courts are presuming that such an owner of the debt exists rather than asking for disclosure as part of the prima facie case. So what foreclosure defense lawyers are all complaining about is that they are stuck with an undisclosed creditor suing through intermediaries who claim they are authorized but whose authority cannot be challenged or tested.
*
Without that, neither the court nor the borrower has any way of knowing that if the suit is successful the proceeds will actually go towards paying down the debt. In fact, the reverse is true. Another party could emerge afterwards and claim that he had no knowledge of the previous parties claiming authority, and that those parties had no authority and that they didn’t have the real original note. Such a party could also get a judgment against the maker of the note unless the borrower could show some sort of apparent authority of the thieves who first sued him.
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So since the debt must be owned and in most instances, but not all, the payment of value for the debt and the delivery of the promissory notes makes the buyer a holder in due course, the shorthand way of referring to that is saying that the enforcer of the mortgage or deed of trust must be a holder in due course, even if that is not completely and always accurate. A holder in due course, by law, takes the note free from borrower’s defenses except where outright fraud is involved and can be proven.
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So references to the effect that in order to enforce the note you must be a holder in due course are wrong. You can enforce a note without being the holder in due course.
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And while there are presumptions that enforcement of the note is the same as enforcement of the debt, that is ONLY true if the enforcer owns the debt — i.e., has paid value. It is the legal presumption to the contrary that trips up defense lawyers.
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And references to the effect that only a holder in due course can enforce the mortgage are mostly true; it remains possible for someone to pay value for a note without becoming a holder in due course because the note was already declared in default, because they were not acting in good faith ro because they had knowledge of the borrower’s defenses. So not being a holder in due course is not a total bar to enforcement of the mortgage or deed of trust.
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The wrong turn on the road to justice and truth, was where the courts decided that standing to sue was the same thing as standing in a prima facie case and then the other turn, where they treated the holder of a note under the same rules as a holder in due course. This resulted in discounting or completely ignoring the borrower’s defenses and the judicial recitation echoed across the country that the loan was made, the borrower stopped payment, the rest is bullshit.
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Foreclosure defense attorneys all understand that the deck is stacked against them. Yet they still win cases because they cast considerable doubt by undermining the assumption that the case is brought by an injured party (owner of the debt) who will suffer further financial injury of the property is not sold, and whose collection of the proceeds of sale will go to pay down the debt. They are successful when they reveal the gaps in the prima facie case through discovery and cross examination and properly placed timely objections at trial.
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As a summary of my premise that has been expounded upon throughout this blog for 12 years, here is the reason why foreclosure defense works if properly applied.
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The actual creditors (owners of the debt) change over time. In securitization it starts with the investment banker.
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The sale of certificates is not a sale of any right, title or interest to the debt, note or mortgage, all of which is retained by the investment bank. It is in the sale of “contracts” to subsequent investors who are betting one or or another on the success of the certificates that the rights of ownership of the debt have been sold.
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So by the time foreclosure comes up, the entire chain is missing the actual creditors. Neither the certificate holders nor the owners of contracts have any rights to enforce the note or mortgage.
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So the investment bank controls the paper but cannot enforce the mortgage because it has sold the debt and the investors cannot  enforce the mortgage because they have waived the right, title and interest to enforce the note or mortgage.
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Hence in the many successful foreclosures the proceeds are retained by the investment bank legally in accordance with their contracts, and booked as trading profit rather than as payment on a receivable they hold on their books as reported to the public and regulatory authorities. That is because they do not hold the receivable on their books of account.
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This is not an indictment of securitization. It is a description of how claims of securitization were false. Borrowers have no role in creating this mess.

How to Think About MERS

If you are going to challenge a foreclosure or sue for wrongful foreclosure and fraud, you need to know what you are doing and know what your opposition has been doing. You also must know what to do about it because knowing is not enough. You need to convince a judge who starts from a bias of upholding “contract” because that is what judges are supposed to do in our system.

Bottom Line: You must convince the judge that the claimant has not satisfied its burden of establishing an enforceable contract between itself and the borrower. And in the case of foreclosure the claimant must satisfy the condition precedent of ownership of the debt. That condition is often “met” solely by legal presumption arising from documentation that is proffered without any meaningful objection and without any impeachment of foundation witnesses.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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.
========================
Think about MERS as your next door neighbor. He lets anyone come into his house and play with his computer. You simply are required to pay him a fee every month and he gives you a key, and the login and password to get into his computer.
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So you go in and prepare a report from his computer saying that your loan is all paid up and a release and satisfaction is being filed. Just to be on the safe side you show that the mortgage was transferred to a party that has not made any claim for collection, further confusing the issue of ownership of the debt or mortgage.
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Then you go to court and introduce the report as proof that the mortgage is satisfied. The report says is from John  Smith, your neighbor who is in the business of keeping mortgage records. You don’t show a canceled check or wire transfer receipt because there is no canceled check or wire transfer receipt; you just introduce the report that you created from your own data for your own purposes and published it with the sole purpose of showing it in court.
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You bring in your neighbor who testifies that these records are kept in the ordinary course of his business and that the entries were made at or near the time of a transaction. (Notice he doesn’t say the entries were made at or near the time of THE transaction).
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The court accepts the document that you prepared on your neighbor’s computer as evidence that the loan was entirely paid off and that a satisfaction of mortgage should have been issued. Notice that the evidence is not that YOU paid it off but rather that is was just paid off.
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The response from your opposition would be that they want to see proof that you paid it off. But you have already introduced the report as your neighbor’s report (an independent third party) and the court accepted it as a business record of your neighbor. The court record now has “conclusive” evidence that the the loan was paid off. Further inquiry is not required and you shouldn’t be required to answer such a silly question that invades your private financial information.
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Judgment is entered in your favor and the opposing party is taxed with costs and fees if you had an attorney. Further the court declares the mortgage satisfied and that the final order of the court should be recorded in the public records. Maybe the court orders the party you named in the report as being the new mortgagee to file a satisfaction of mortgage.
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That is how MERS works. It’s simple reason for being in existence is not just to avoid recording fees but to act as a substitute for proof of an actual transaction. MERS is the neighbor of the banks and servicers. It gives them the key, the login and the password. After that they are on their own as to what data is entered into MERS and what reports are issued from MERS and what is in each report issued under the name of MERS.
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So if someone is attempting to rely on a MERS report they are relying on a fiction of their own making. This is somewhat like uploading a fake trust document to SEC.gov and then citing to it as worthy of judicial notice or using it as a government filing. It isn’t. It’s just a fiction of their own making. And it never has the mortgage loan schedule attached which means the trust document is incomplete, subject to some later addition/revision that might or might not have been accepted by someone was authorized to accept it.
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Objections to the MERS report must be about foundation. Discovery and investigation is key to knowing the facts as they apply to your case. Writing and presenting the defense narrative in motions and pleadings is the other key. Here is what you should be thinking about:
  • Establish that nobody employed by MERS entered any data or produced any report.
  • Ask the players for the identity of the individuals who entered data.
  • If they give you the name, question the individual.
  • Ask for the identity of individuals who produced reports.
  • If they give you the name, question the individual.
All this will make opposing counsel very uncomfortable as you are zeroing in on the nub of a fraudulent scheme. The lawyers will start feeling the heat as they approach suborning perjury. The banks will feel the heat because it threatens to expose the reality that nearly all claimed securitizations of residential loans were faked. That is the key to a successful (and confidential) settlement — the value of your case as threat to their  entire scheme or parts of it.
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Spoiler alert: in most cases counsel will abandon the MERS report and use some other fabricated document instead. But you can use inconsistencies between their previous and current position to reveal that there are gaps that cannot be filled by legal presumptions.
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In order to start defending you must know things. But in order to get traction in court you need to convince the judge. Badly drafted pleadings undermine credibility. That is why you need professional assistance.
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The person drafting your defense narrative and the drafting your motions, discovery, and pleadings must know what needs to be said in order for the court to take the defense narrative seriously. And what needs to be said often sounds tame or irrelevant to lay people who want the judge to know that the opposition is a bunch of liars and thieves. Really good legal writers know that such conclusions are best left to the judge, after a process in which he/she gets thoroughly disgusted and exasperated with the lawyers, the servicer and the bank pretending to be a trustee of a dubious trust. 

Beware of Magic Bullets

Departing from my usual format, there are a few things I want to say to people who are looking for relief from foreclosure and are hearing what they want to hear.

  • ONLY A COURT ORDER CAN STOP A FORECLOSURE. THERE ARE NO EXCEPTIONS
  • YOU CAN’T GET A COURT ORDER UNLESS YOU FOLLOW THE RULES AND THE LAW.
  • NOBODY HAS EVER OBTAINED SUCH AN ORDER WITHOUT A PROLONGED COURT BATTLE.
  • If someone tells you “just do this” they are partially or entirely wrong or worse.
  • Like everything life is complicated and that includes litigation. Any thought you are entertaining that you have some magic elixir in which you will summarily get a court order is delusional.
  • Every plan looks good on paper until it is implemented.

I am worried that those who in good faith are trying to find the magic bullet are promoting a misguided set of principles that will continue to make bad law. I admit that I contributed to this initially back in 2008 when I proposed that a quiet title action should wrap things up. I was dead wrong and the people who continue to pursue that strategy are always getting the same result: the homeowner loses and another case is either decided badly or worse, makes bad law with a legal opinion issued by a judge or panel of judges.

The truth is that a successful quiet title action is a rare bird along with similar strategies. And remember that an unenforceable document by one party is no reason to lift an encumbrance from the chain of title. In order to remove an encumbrance from the chain of title, the instrument must be completely void and no voidable. That means it should never have been recorded in the first place or that it is now void by operation of law. That is the ONLY circumstance in which a mortgage or deed of trust or assignment of mortgage can be lifted out of the chain of title.

I do agree with the strategy of attacking the assignments in a lawsuit or motion. The motions don’t get much traction but the lawsuits tend to do better if they are pursued aggressively and persistently, with full recognition that no bank or service is going to roll over and play dead even if you are completely correct on the law. Your opponents and their lawyers will do everything in their power to wear you down, undermine your confidence and the undermine the confidence of the lawyer representing the homeowner. Your strategy must be laser-focussed, supported by substantive law and procedure.

But I don’t agree that any lay person can accomplish an attack on assignments without a lawyer representing them. If the practice of law was just about the contents of a statute we wouldn’t need courts. It’s about procedure, rules of evidence and basic notions and biases of fairness.

It’s true that the substitutions of trustee, the assignments, the indorsements etc. are probably legally void. For the most part they are fabricated. An assignment of mortgage probably lacks any foundation.

But what you’re up against, for example, is the fact that an assignment of mortgage is often assumed to be an assignment of the debt and the note. An indorsement of the note is often assumed to be an assignment of the debt. Possession of the note is often assumed to be possession of the debt. Possession is then assumed to be the result of delivery. Delivery implies authority. Transfer of the note implies a transfer of the debt. Transfer of the debt implies the assignment of mortgage was proper under state statutes. And a proper assignment supports a declaration of default and foreclosure. A proper assignment means that party foreclosing is going to get the proceeds of sale on foreclosed property. End of story.

So that is where you stand when your challenge begins. Don’t kid yourself. The task is daunting.

Those conclusions are all legally valid assumptions and presumptions because that is what the law says should be done with these documents and events. Facial validity is like possession — it’s 9/10 of the law.

If you think you can simply challenge these assumptions and presumptions and events and quickly get an order that completely undermines the parties attempting to foreclose — without going through a grueling court battle — you are simply wrong.

That said, thousands of homeowners have indeed won based upon such challenges. Nearly all of those cases have been buried under seals of confidentiality. The way they won was by educating the judge, one small piece at a time, using persuasive court techniques that nobody other than an experienced trial lawyer knows how to use. By the time the case ended, the court, unwilling to strike all such foreclosures, was careful to detail the specific abuses and gaps in the case against the homeowner.

Bottom Line: If you have the money and the time and the commitment to oppose these illegal foreclosures, by all means do it. And if you must do it pro se, know that the opposition will steamroll you on procedure and the laws of evidence. So you must have some knowledgeable lawyer giving you specific guidance as each point becomes an issue. Don’t pursue any strategy that promises to be a quick fix.

 

PTSD: A Breakdown of Securitization in the Real World

By using the methods of magicians who distract the viewer from what is really happening the banks have managed to hoodwink even the victims and their lawyers into thinking that collection and foreclosure on “securitized” loans are real and proper. Nobody actually stops to ask whether the named claimant is actually going to receive the benefit of the remedy (foreclosure) they are seeking.

When you break it down you can see that in many cases the investment banks, posing as Master Servicers are the parties getting the monetary proceeds of sale of foreclosed property. None of the parties in the chain have lost any money but each of them is participating in a scheme to foreclose on the property for fun and profit.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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.
========================

It is worth distinguishing between four sets of investors which I will call P, T, S and D.

The P group of investors were Pension funds and other stable managed funds. They purchased the first round of derivative contracts sometimes known as asset backed securities or mortgage backed securities. Managers of hedge funds that performed due diligence quickly saw that that the investment was backed only by the good faith and credit of the issuing investment bank and not by collateral, debts or mortgages or even notes from borrowers. Other fund managers, for reasons of their own, chose to overlook the process of due diligence and relied upon the appearance of high ratings from Moody’s, Standard and Poor’s and Fitch combined with the appearance of insurance on the investment. The P group were part of the reason that the Federal reserve and the US Treasury department decided to prop up what was obviously a wrongful and fraudulent scheme. Pulling the plug, in the view of the top regulators, would have destroyed the investment portfolio of many if not most stable managed funds.

The T group of investors were traders. Traders provide market liquidity which is so highly prized and necessary for a capitalist economy to maintain prosperity. The T group, consisting of hedge funds and others with an appetitive for risk purchased derivatives on derivatives, including credit default swaps that were disguised sales of loan portfolios that once sold, no longer existed. Yet the same portfolio was sold multiple time turning a hefty profit but resulted in a huge liability when the loans soured during the process of securitization of the paper (not the debt). The market froze when the loans soured; nobody would buy more certificates. The Ponzi scheme was over. Another example that Lehman pioneered was “minibonds” which were not bonds and they were not small. These were resales of the credit default swaps aggregated into a false portfolio. The traders in this group included the major investment banks. As an example, Goldman Sachs purchased insurance on portfolios of certificates (MBS) that it did not own but under contract law the contract was perfectly legal, even if it was simply a bet. When the market froze and AIG could not pay off the bet, Hank Paulson, former CEO of Goldman Sachs literally begged George W Bush to bail out AIG and “save the banks.” What was saved was Goldman’s profit on the insurance contract in which it reaped tens of billions of dollars in payments for nonexistent losses that could have been attributed to people who actually had money at risk in loans to borrowers, except that no such person existed.

The S group of investors were scavengers who were well connected with the world of finance or part of the world of finance. It was the S group that created OneWest over a weekend, and later members of the S group would be fictitious buyers of “re-securitized” interests in prior loans that were subject to false claims of securitization of the paper. This was an effort to correct obvious irregularities that were thought to expose a vulnerability of the investment banks.

The D group of investors are dummies who purchased securitization certificates entitling them to income indexed on recovery of servicer advances and other dubious claims. The interesting thing about this is that the Master Servicer does appear to have a claim for money that is labeled as a “servicer advance,” even if there was no advance or the servicer did not advance any funds. The claim is contingent upon there being a foreclosure and eventual sale of the property to a third party. Money paid to investors from a fund of investor money to satisfy the promise to pay contained in the “certificate” or “MBS” or “Mortgage Bond,” is labeled, at the discretion of the Master Servicer as a Servicer Advance even though the servicer did not advance any money.

This is important because the timing of foreclosures is often based entirely on when the “Servicer Advances” are equal to or exceed the equity in the property. Hence the only actual recipient of money from the foreclosure is not the P investors, not any investors and not the trust or purported trustee but rather the Master Servicer. In short, the Master servicer is leveraging an unsecured claim and riding on the back of an apparently secured claim in which the named claimant will receive no benefits from the remedy demanded in court or in a non-judicial foreclosure.

NOTE that securitization took place in four parts and in three different directions:

  1. The debt to the T group of investors.
  2. The notes to the T and S group of traders
  3. The mortgage (without the debt) to a nominee — usually a fictitious trust serving as the fictitious name of the investment bank (Lehman in this case).
  4. Securitization of spillover money that guaranteed receipt of money that was probably never due or payable.

Note that the P group of investors is not included because they do not ever collect money from borrowers and their certificates grant no right, title or interest in the debt, note or mortgage. When you read references to “securitization fail” (see Adam Levitin) this is part of what the writers are talking about. The securitization that everyone is talking about never happened. The P investors are not owners or beneficiaries entitled to income, interest or principal from loans to borrowers. They are entitled to an income stream as loans the investment bank chooses to pay it. Bailouts or even borrower payoffs are not credited to the the P group nor any trust. Their income remains the same regardless of whether the borrower is paying or not.

Unworthy Trusts

The simple fact is that the REMIC trusts do not exist in the real world. The parties named as trustees — e.g. US Bank, Deutsch, BONY/Mellon — are trust names that are used by permission through what is essentially a royalty agreement. If you are dealing with a trust then you are dealing with a ghost.

Discovery is the way to reveal the absence of any knowledge, activity or reports ever conducted, issued or published by the named Trustee on behalf of the “trust” or the alleged “beneficiaries.” Take deposition of officers of the named Trustee. Your opposition will try to insert a representative of the servicer. Don’t accept that.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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.
========================
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For purposes of clarity I am using US Bank as an example. It is the most common.
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US Bank has NO information about the trust, the servicer or the account for the borrower. Thus the purpose of any deposition of any officer of US Bank should be solely to establish the absence of events and data that should otherwise be present.
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This is why as counsel for the lender, lawyers will not recommend going forward with the refinancing. Your opposition is asking you to accept their word for the “fact” that they represent a creditor who is entitled to payment not just because there is paperwork indicating that, but because they are really owed the money.
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Knowing the truth is a basis for establishing gaps and revealing it to the trier of fact but should NOT be a basis of making allegations that you will be required to prove. It’s a thin line and the lawyer needs to be aware of this division, or else you will end up with a burden of proof you cannot sustain and unanswered questions that prevent the closing of refinancing — unless the “source” of refinancing is from another player in the world of securitization.
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The fact that securitization players would accept the paperwork is only testament to the willingness of all securitization players to engage in such conduct as to maintain an illusion of legitimacy. Other lenders rely on such conduct at their peril. Other lenders do not receive the reward from multiple resales of the same debt.
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So in your inquiries to officers of US Bank you want to establish the following, in order to force the true creditor to come forward (if there is one):
    1. US Bank has no duties normally attributed to a trustee.
    2. The “US Bank” name is basically a royalty arrangement in which the name can be used but there is no further substance to its “role” as trustee.
    3. There is no bank account established or maintained by US Bank for the alleged Trust.
    4. US Bank has never received any money through any means in connection with the subject debt. The borrower’s payments to the servicer have never been received by US Bank on its own behalf, as conduit or as trustee for any trust.
    5. In prior foreclosures involving the same trust, US Bank did not receive the proceeds of the foreclosure sale.
    6. US Bank has no reason to expect that it would receive the proceeds of a foreclosure sale involving the subject debt.
    7. US Bank has no mechanism in place where the payment of money to satisfy the claimed debt would be actually deposited into a bank account for the trust that is controlled by US Bank.
    8. The beneficiaries of the trust do not receive any money from borrower payments, foreclosure sales, or prepayments, refinancing or any other monetary transactions. US Bank probably does not know if this is true or not. US Bank has nothing to do with what, if anything, the “beneficiaries” of the “trust” receive or don’t receive.
    9. US bank has no information regarding the identity of the beneficiaries of the “trust.”
    10. US Bank has no information regarding whether any party is a beneficiary of the “trust”.
    11. US Bank has no information regarding the existence of the trust other than the documents forwarded to it for purposes of the deposition.
    12. US Bank does not keep or maintain accounting records pertaining to the trust.
    13. US Bank does not keep or maintain any records or documents pertaining to the trust.
    14. US Bank does not issue reports to anyone regarding the trust or the subject debt, note or mortgage.
    15. US Bank does not include information relative to the business activity of the “trust” or the subject debt, note or mortgage in any report to any regulatory authority, Federal or State.
    16. Except for fee income, US Bank does not include information relative to the business activity of the “trust” or the subject debt, note or mortgage in any financial report published to the public or to any regulatory authority, Federal or State.
    17. There is no “trust officer” appointed by US Bank to actively manage the affairs of the “trust.”There is no “trust officer” appointed by US Bank to actively manage the affairs of the subject debt.
    18. US Bank neither accepts nor gives any instructions to anyone regarding the affairs of the “trust.”
    19. US Bank neither accepts not gives any instructions to anyone regarding the subject debt, note or mortgage.
    20. US Bank has no power to either accept or give instructions regarding the trust or the subject debt.


Keep in mind that there are experts who believe that the debt no longer exists, and that you are dealing with the ghost of a creditor and the ghost of a debt. This is because the debt was resold multiple times and redistributed to multiple parties (new investors) under the guise of different instruments in which the value of the instrument was ultimately derived not from the debt, in actuality, but from the marketplace where such isntruments are traded. This is an ornate interpretation that has the ring of truth when you examine what the banks did, but this theory will not likely be accepted by any court.

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That theory explains why when appellate and trial courts asked the direct question of whether the creditor can be identified the answer was no. The response was that the courts stopped asking.
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But the issue at hand is whether, pursuant to state law governing foreclosures, a creditor is before the court possessing a valid claim to collect on a debt. If there is, then that creditor is entitled to payment. If there is not, then the claimed “creditor” is not entitled to either payment or foreclosure. 
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