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with Charles Marshall and Bill Paatalo

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The 2008 crash may seem like 12 years ago. Yet the conditions persist – victimizing both homeowners and investors. Homeowners still have no frame of reference or education as to how they could receive a loan without anyone owning the debt and why anyone would be party to such a transaction. Arguably investors by this point should know better. The problem is money — stockbrokers get to call themselves investment banks and courtesy of the 2008 crash they created are now commercial banks too. They are making money hand over fist on every sale of a “certificate,” “derivative” and homestead.

Bill Paatalo will discuss on the Show today how he is taking the fight to the Defendants in his Oregon case, previously discussed on the Show, in which the Defendants are now seeking massive attorney’s fees, over six-figures. The same Defendants who managed to secure a judgment based on lack of subject matter jurisdiction, are claiming now this same Court has jurisdiction to bring an attorney’s fee motion never raised in previous pleadings. The game is on. The “banks” are taking the position that they can eat their cake and still have it.

Charles Marshall will discuss how the ongoing institutional bias issues long present in foreclosure law cases is stubbornly creating a messy and patchwork terrain for borrowers to navigate in the COVID-19 era, with a focus on California. He will address this through an update of particularly the latest California-based coronavirus-related developments in court access, foreclosures, and post-auction evictions.

Brilliant Analysis of Securitization Sleight of Hand

A person with whom I am well acquainted and who prefers to remain in the background just sent the following email to me, Bill Paatalo and Charles Marshall.

Thanks to the Virus, I had some free time to catch-up on Neil’s blogs and radio shows; as such, I just listened to your piece with Charles on the Christiana Trust counter-suit.  One thing that took me by surprise is that Rushmore is seemingly linked to that trust (or phantom trust).

While you may recall, one of my cases (my principal mortgage) that began with GreenPoint, then supposedly was taken-over by Capital One, was passed to Rushmore upon Cap-One exiting the mortgage business, but then oddly got repositioned with Carrington.  I discovered that Carrington was the principal player of Christiana Trust and its nesting of it, into Wilmington.  However, that trust tomfoolery now has been superseded by the Stanwich Trust bag of snakes.

Hence, Stanwich is nested into Wilmington.  It seems to me that the real player is Carrington.  I discovered that Stanwich has lots of offshoots, i.e. a list of trusts (A, B, C, etc.) registered in Delaware, but also other entity permutations of “Stanwich” (https://whalewisdom.com/filer/stanwich-mortgage-acquisition-company-llc).

If you prowl around SEC docs, you’ll notice that the signatory of Stanwich Acquisition is Andrew M Taffet.  Mr. Taffet also happens to be the Chief Investment Officer & Head of Asset Management at Carrington Capital Management (i.e. LINKEDIN).

After looking in a bunch of dusty corners, I suspect that my mortgage, originated by GreenPoint in 2005 (then a wholly owned subsidiary of North Fork Bancorp) was likely securitized (I’m thinking either Lehmann or Bear, but could have taken another or other routes).  Since CapOne retained the image datafile, they had access to an image of the Note which they then reconstituted and indorsed the falsified/forged note and presented it as prima facie evidence of ownership.  But piecing together my conjecture, it gets worse…

When CapOne decided to jettison all of these dubious notes and claims in 2018, they handed the box of bullshit to Carrington who poses as the new servicer, saying that Wilmington is the Owner.  But not really Wilmington per se.  “Wilmington as Trustee of Stanwich Mortgage Loan Trust A”. This is a bit of sleight of hand.  Wilmington “as” Trustee “of”.  For this charade let’s turn to Abraham Lincoln’s Gettysburg Address. “of the People, by the people and for the people” – three distinct prepositions (Of, By & For).  Wilmington claims in its moniker to be “of” Stanwich, not “for” Stanwich.  Example if Tom Brady plays some tag football with me and my buddies in the park, he is still Tom Brady “of” the Tampa Bay Buccaneers, but he is not playing with us “for” the Buccaneers – a subtle but profound difference.

Digging deeper, I found that Cap-One seems to own shares/units in Stanwich Acquisition Securities, which causes me to think that there was no money changing hands, CapOne simply exchanged fraudulent mortgages for shares  After all, the (CapOne) had no skin in the game anyway.

The GreenPoint saga is equally as convoluted.  I know that you know that GreenPoint Mortgage Funding, Inc. “surrendered” is California operation back in 2004.   But this tale is very circuitous and dubious.  Without belaboring the details.  GreenPoint Bank evolved in to GreenPonit Financial, with GreenPoint Bank and GreenPoint Mortgage as subs in or around 1998.  Notwithstanding, there was another Corporation registered in NY (Credit Suisse Asset Management, Inc.)  Somehow, in 1999 coinciding with GreenPoint merging with Headlands Mtg of California and folding in a couple of other acquisitions, the company took on the moniker GreenPoint Mortgage Funding Inc nearly simultaneously with Credit Suisse Asset Management Inc. changing its name to GreenPoint Mortgage Funding, Inc.  This also coincided with t a shell company set up in Delaware of the same name.  it’s quite a labyrinth of which I ‘ve unraveled some but not all.

Anyway, I though the Stanwich/Christiana trust thing might be of interest to you, Charles and Neil.  As you likely know, Cristiana Trust is a division of Wilmington Savings Fund… https://www.globenewswire.com/news-release/2017/11/02/1173772/0/en/WSFS-Announces-Formation-of-Christiana-Trust-Company-of-Delaware.html  Anyway, I suspect that the trust game Cristian and Stanwich, are just part of the game to cross state lines for the mortgages being claimed to be in the trust.  However, Delaware statutory trusts (DST), which exist to facilitate 1031 exchanges and REITs, are there to use Wilmington as a disguise to file foreclosure suits across state lines.  But in truth, a DST is likened to a corporation not a traditional trust, and if Wilmington is acting “as” trustee “of” a trust, then the underlying trust has no personal jurisdiction to cross state lines to sue.

Hope you find this interesting,

How to Challenge The Credibility of Documents Offered to Support Foreclosure

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

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

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

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

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

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

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

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

see RobosigningAdministrativeOrder

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. IN FACT, STATISTICS SHOW THAT MOST HOMEOWNERS FAIL TO PRESENT THEIR DEFENSE PROPERLY. EVEN THOSE THAT PRESENT THE DEFENSES PROPERLY LOSE, AT LEAST AT THE TRIAL COURT LEVEL, AT LEAST 1/3 OF THE TIME. IN ADDITION IT IS NOT A SHORT PROCESS IF YOU PREVAIL. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
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Who Can Foreclose?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bank of New York Mellon faces a reckoning from residential foreclosure cases in New York that date back to the subprime mortgage crisis.

The sooner everyone realizes that these foreclosures are merely schemes to generate revenue the closer we will come to justice. The fact that is that anyone who has paid value for the debt is getting paid pursuant to a third party agreement that has very little relationship with the performance or non performance of the borrower. Investors either get paid even if the borrower is not performing or they don’t get paid even if the borrower is performing.

In their efforts to assure the sanctity of contract, judges are routinely delivering revenue — not payment of a debt — to the perpetrators of an illegal scheme labeled by  lawyers as a foreclosure but which is not a foreclosure because foreclosures ONLY serve as remedies for restitution of an unpaid debt. It is not the fault of borrowers that this anomaly as appeared, which incidentally is the mask for multiple sources of revenue greatly exceeding the loan itself.

As usual investment banks having the greatest access to the microphones have convinced most people that this is a question of whether or not homeowners should get a free house. This distracts attention from the fact that they are getting free money based on claims for debts they don’t own.

see https://therealdeal.com/2020/01/16/bny-mellon-faces-suit-over-foreclosures-from-the-housing-crash/

From the article

The bank — along with its debt-collector partners Shellpoint Mortgage Servicing and law firm McCabe, Weisberg & Conway — are accused by a class-action lawsuit of systematically trying to foreclose on mortgages after the state’s six-year statute of limitations had passed.

Mark Anderson, an attorney at the Queens-based law firm Shiryak, Bowman, Anderson, Gill and Kadochnikov, which filed the case, said his firm noticed an uptick in foreclosure cases initially filed in the wake of the subprime crisis more than a decade ago and now being revived, despite the statute of limitations expiring.

“I have over 500 cases that are dealing with this issue — and that’s just my firm,” said Anderson. He believes thousands of homeowners could qualify to be part of the suit if it gets class-action status.

The complaint was filed in the United States District Court for the Southern District of New York in November. The defendants are accused of resurrecting foreclosure actions that have expired and, in doing so, violating the Fair Debt Collection Practices Act, which prevents debt collectors from using false and deceptive representations.

Anderson said his firm filed the suit now because of recent federal court rulings that he believes are favorable to holding to foreclosure firms, servicers and banks liable for violations of the act.

The law awards consumers statutory damages of $1,000 per violation, attorneys’ fees and — in some cases — damages for proven emotional or physical harm.

FDCPA Claims Might Not Be Barred By Statute of Limitations

Here is a powerful argument that SCOTUS acknowledged: nobody should benefit from their own fraudulent conduct. The FDCPA has a one year statute of limitations. And people have tried to litigate on the premise that the one year should run from the date of discovery not when the violation occurred. The courts have disagreed saying that if Congress wanted it to be the date of discovery it would have said so.

But if the date of discovery was delayed because of additional fraudulent conduct by the defendant then the courts, although always leaning heavily toward the banks, are left in a quandary. And SCOTUS acknowledged that issue and refused to rule directly on it because the consumer failed to preserve the issue on appeal — another example of how rules can lead to failure of you don’t follow them.

The wording of the opinion  and the opinion of analysts strongly suggests that if you plead, with specificity, fraudulent representations and conduct that caused the delay your claim is not barred until one year after the discovery of the violation.

Note that his will not help people who discovered or “should have discovered” the violation more than one year before filing suit.

Note also that it is one thing to plead and another to prove. Fraud requires specific pleading and proof regarding detrimental reliance on the fraud and causation of damages. The damage under this part of  the case would be that the consumer was unable to ascertain the violation and thus seek a remedy. Just using the word “fraud” is the surest ticket to failure.

see Fossano Article on Mondaq

See Rotkiske v. Klemm Rotkiske v. Klemm, No. 18-328 (U.S. Dec. 10, 2019)

Rotkiske v. Klemm, — S. Ct. — (2019) left open the question of whether a plaintiff can avoid the one-year statute of limitations by establishing that the delay in bringing the claim was the caused by the defendant’s fraudulent conduct. The answer to that question will have to await a case where the plaintiff properly preserves the argument on appeal. On a related note, the case reminds attorneys to ensure that they preserve all of their clients’ arguments at all stages of a case.

FDCPA violations could expose debt collectors to considerable damages and penalties, as well as legal costs and fees.

From the case:

Rotkiske argued for the application of a “discovery rule” to delay the beginning of the limitations period until the date that he knew or should have known of the alleged FDCPA violation. Relying on the statute’s plain language, the District Court rejected Rotkiske’s approach and dismissed the action. The Third Circuit affirmed. Held: Absent the application of an equitable doctrine, §1692k(d)’s statute of limitations begins to run when the alleged FDCPA violation occurs, not when the violation is discovered. Pp. 4-7.

Rotkiske v. Klemm, No. 18-328, at *1 (U.S. Dec. 10, 2019)

The Fair Debt Collection Practices Act (FDCPA) authorizes private civil actions against debt collectors who engage in certain prohibited practices. 91 Stat. 881, 15 U. S. C. §1692k(a). An action under the FDCPA may be brought “within one year from the date on which the violation occurs.” §1692k(d). This case requires us to determine when the FDCPA’s limitations period begins to run. We hold that, absent the application of an equitable doctrine, the statute of limitations in §1692k(d) begins to run on the date on which the alleged FDCPA violation occurs, not the date on which the violation is discovered.

Rotkiske v. Klemm, No. 18-328, at *3 (U.S. Dec. 10, 2019)

“Rotkiske’s amended complaint alleged that equitable tolling excused his otherwise untimely filing because Klemm purposely served process in a manner that ensured he would not receive service.” Rotkiske v. Klemm, No. 18-328, at *5 (U.S. Dec. 10, 2019)

This Court has noted the existence of decisions applying a discovery rule in “fraud cases” that is distinct from the traditional equitable tolling doctrine. Merck & Co. v. Reynolds559 U. S. 633, 644 (2010); Gabelli v. SEC568 U. S. 442, 450 (2013) (referring to the “fraud discovery rule”). And it has repeatedly characterized these decisions as applying an equity-based doctrineCalifornia Public Employees’ Retirement System v. ANZ SecuritiesInc., 582 U. S. ___, ___-___ (2017) (slip op., at 10-11); Lozano v. Montoya Alvarez572 U. S. 1, 10-11 (2014); Credit Suisse Securities (USA) LLC v. Simmonds566 U. S. 221, 226-227 (2012); Young v. United States535 U. S. 43, 49-50 (2002). Rotkiske failed to preserve this issue before the Third Circuit, 890 F. 3d, at 428, and failed to raise this issue in his petition for certiorari. Accordingly, Rotkiske cannot rely on this doctrine to excuse his otherwise untimely filing. (e.s.)

* * *

Rotkiske v. Klemm, No. 18-328, at *9 (U.S. Dec. 10, 2019)

Practice Note: I would suggest that practitioners take a close look at modifications as falling within two different doctrines and maybe more. 

First, modification offer from one who is not authorized to make the offer is a violation of the FDCPA. The acceptance and enforcement of payments under a modification agreement might also be a violation of the FDCPA. It is procured under duress.  It is a fraudulent misrepresentation designed to induce the borrower to waive defenses, change lenders (without realizing it) and essentially create an entirely new contract that may or may not incorporate the original note or mortgage. 

Second, the modification has many earmarks of a new financing subject to disclosures required for the origination of any loan. It makes the “new” claimed servicer the lender or the agent of a lender who is not disclosed and who probably has no claim within the chain of title relied upon by the servicer when it made the offer to modify. AND it might well be that it reflects an actual payment in the case where the loan was securitized after a bona fide loan. AND it has entirely new terms with new principal, new interests and frequently a new term.

That sounds like a refinancing to me. If I am right, then the modification is subject to rescission, to wit: (1) 3 day TILA rescission, (2) 3 year TILA rescission and (3) common law rescission. In addition there are claims under RESPA and FDCPA that would appear to arise anew. The specific disclosures required are contained in Federal lending law (TILA) and state deceptive lending laws. ALl such laws are incorporated into contracts for lending by operation of law. So it is not only fraud it is a violation of statute. 

The fraud in such situations is that an interloper falsely poses as a lender or agent of lender. The borrower is in financial emotional distress is induced to enter an agreement that the borrower reasonably believes is for (a) the benefit of the borrower and the (b) creditor who has paid for his debt and owns it — because that is the representation of the servicer who offered it. That is  false. The borrower is injured because while seeking settlement or at least communication with the actual party who has paid for and owns his debt he was prevented from doing so and the borrower had no way of knowing that the servicer’s representations were untrue.

As always discovery is key to proving these allegations and without follow up motions to compel and motions for sanctions discovery won’t do you any good. They won’t answer because they can’t answer. 

Investors Were Not Injured By Non Payment from Homeowners. They Were Injured by Non Payment from Investment Banks

The trap door is thinking that investors were hurt by borrowers failing to make payments when in fact they were injured by brokerage companies not paying them regardless of how much money was being received and created. This trap door inevitably leads one into thinking that the money proceeds from a forced sale of property in foreclosure are being paid to investors. That is just not true.

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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.
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Exchange between me and fairly knowledgeable client:

Client: “But if investors put up the money then they would be the injured party if borrowers don’t pay, or at least if things were normal.”

From me:

Incorrect. Investors were injured by  the failure of brokerage firms to make payments to them that were purely optional. Investors were not injured by failure of borrowers to pay their mortgage payments as defined in the promissory note.

At the option of the investment bank, the investors who paid value for the certificates issued by the investment bank, continue to receive payments. Those payments come from a reserve pool of money funded entirely by the investors initial purchase of certificates (but they are labeled “Servicer advances”).

You are falling through the trap door that the banks and their lawyers have created. Investors did not put up money to purchase your loan or acquire it or originate your loan. They had no legal part in that unless a judge were to enter an order stating that while the form of the transaction says they had nothing to do with your loan, the investors were nonetheless substantively the “lenders.” The banks and the investors would argue against that since it would make investors liable for lending and servicing violations.

You are presuming something that the banks want you to presume. The truth is that the investors were told that they would be paid by the brokerage firm that set up the plan of what they called “securitization.”

The promise received by investors was from the brokerage firm not the borrower. The money on deposit with the brokerage firm was used to originate or acquire loans as a cost of doing business, to wit: the business of issuing and trading in derivative securities to which neither the investors nor “borrowers” were parties and therefore received no compensation despite the fact that without them none of those trades could have taken place.

The promise (certificate or mortgage bond) was issued in the name of a “trust” that at best was inchoate” under law (i.e., “sleeping”). The trust name was merely a business name under which the brokerage firm was doing business. The promise was not secured by any interest in the debt, note or mortgage on any loan. In fact, at the time of investment there were no loans in any portfolio that were the subject of the investment. There was a promise to aggregate such a portfolio and the list of loans attached to the prospectus is subject to the disclaimer that it is not the real list but rather an example of the kind of data the investors will see when the offering of certificates is complete.

The certificates themselves do not convey and right, title or interest to the debt, note or mortgage on any loan. The investors merely hold an unsecured promise to pay where the promissor is the brokerage firm (Investment bank) and the amount of payments to be received by investors are indexed on the data for an aggregate of loans; but such payments are entirely dependent upon the sole discretion of the investment bank (Brokerage firm) and the performance of the index — i.e., the performance of borrowers.

Investors thus receive money as long as the investment bank wants them to receive money regardless of actual performance of loans. The non performance of borrowers represents an excuse for the investment bank to stop paying the entire amount of their promise, if the managers of the investment bank so choose.

But since the investment bank (brokerage firm) was using money deposited on account the net result is that the investors paid value for the origination or acquisition of the debt but never got to own it under current law.

And the investment bank briefly became the “owner” of the debt without having actually paid for it, and then created a “sale” at its trading desk in which the loans were “sold” to the “trust” at an enormous premium (second tier yield spread premium) from the amount that was actually loaned to borrowers at much higher interest rates than the amount demanded by the investors. 

Bottom Line: Under current law in all jurisdictions nobody qualifies as the owner of the debt by reason of having paid for it because those two functions were split by the investment bank.

The value was paid by investors who did not receive ownership of the debt. The ownership of the debt as in the hands of the brokerage firm that started the securitization scheme and then transferred to itself using the name of the fictional trust. Hence the brokerage firm, directly or indirectly continued to “own” the debt without having actually paid for it. This is legally impossible under current law.

Under current law, nobody can claim to own or enforce a debt without having paid value for it. A transfer of rights to a mortgage is a legal nullity unless there is a concurrent payment of value for the debt. The only possible claimant in a court of equity is the investment bank, but they continue to hide behind multiple layers of sham conduits who actually have no contractual or other relationship with the investment bank. All such “securitized” loans are therefore orphans under current law where the debt, note and mortgage cannot be legally enforced.

The only way they have been enforced has the acceptance by the courts of erroneous presumptions that effectively reconstitute the debt, note and mortgage out of the prior transactions that split it all up. This produced the opportunity for profits that were far in excess of the loan itself which was viewed by the investment bank as simply a cost of doing business rather than an actual loan. Besides violating current law under the Uniform Commercial Code it also violates public policy as explicitly enunciated under the Federal Truth in Lending Act and public policy stated in various state laws prohibiting deceptive lending and servicing practices.

Those excessive profits should, in my opinion, be the subject of reallocation that includes the investors and borrowers without whom those profits could not exist. These are the actions for disgorgement and recoupment to which I have referred elsewhere on this blog. But in order to have real teeth I believe it is necessary to join the investment banks who had a role in the claimed “securitization.”

In affirmative defenses you can name a third party but you must express the defense as something for which the actual named claimant is vicariously accountable. Otherwise you need to file a counterclaim, the downside of which is that many such claims are barred by the statute of limitations whereas affirmative defenses are not usually subject to the statute of limitations.

The reason you can’t get a straight answer to discovery is that ownership and payment have been split between two entirely different parties. Yet current law demands that the enforcing party be (a) the owner of the debt, note and mortgage and (b) the party who paid value for the loan. In most situations involving claims of securitization that requirement cannot and is not meant to be fulfilled.

Clearly  changes in the law are required to allow for securitizations as practiced. But in order to do that the laws regarding disclosures to investors and borrowers must get far more specific and rigorous so that freer market forces can apply. With transparency market corrections for excessive or even unconscionable transactions are possible — allowing both borrowers and investors to bargain for a share of the bounty created by securitization arising from the investment of investors and borrowers.

Current law supports disgorgement of such profits because they were not disclosed. But current law fails to identify such “trading profits” as arising from the the actual transaction with investors, on one hand, and the borrowers on the other hand. This might be accomplished in the courts.

But a far better alternative is to level the playing field with clearly worded statutes that prevent what had been merely intermediaries from draining of money and other value from the only two real parties in interest as defined by both the single transaction doctrine and the step transaction doctrine.

Interesting NY Decision on Acceleration: U.S. Bank N.A. v. Gordon, 176 A.D.3d 1006 (2d Dept. 2019)

 “failure to pay this delinquency, plus additional payments and fees that may become due, will result in the acceleration of your Mortgage Note. Once acceleration has occurred, a foreclosure action . . . may be initiated.”

the Notice of Default stated that “[t]o avoid the possibility of acceleration,” Defendants were required to make certain payments by a specific time, or ASC “will proceed to automatically accelerate your loan.” (Emphasis added).

see https://www.jdsupra.com/legalnews/ny-appellate-court-holds-default-letter-29981/

So it seems that in New York a notice of intention to accelerate or any notice that says that the supposed “lender” will accelerate is not the same as an actual acceleration. Actually that makes sense because any other interpretation would defy the intent of the notice of default. the notice of default is for the purpose of giving the borrower notice that unless they bring their payments up to date, the entire loan will become due.

The inherent logical and legal problem with this decision is that it is inconsistent with Florida (see Bartram case) and other states who made decisions as to implied “deceleration” for purposes of evading the effects of the statute of limitation. In fact, this very decision uses such “logic” to arrive at the conclusion that the “lender” is not barred because there was no acceleration. There was only an expression of an intent to do so. therefore any claims arising from acceleration could not arise.

In short the courts are speaking out multiple sides of their mouths.

On the one hand they say that deceleration which has never been claimed or noticed occurs upon the rendition of an order dismissing a defective foreclosure action and that the statute of limitations does not run on the balance where the “lender” has  given “notice” that it is intending to accelerate. The courts have thus “interpreted” a legal fiction into practical existence contrary to the rules of law. The acceleration is rendered void upon losing in court. There are various possible criticisms of such doctrine but the best one I think is “nuts.”

On another hand (or mouth) they are approving of “interpretation” of a notice of default declaring an intent to accelerate as actual being the acceleration for purposes of foreclosure. This is also crazy. If the notice of intention to accelerate was the actual acceleration then the notice would be fatally defective pursuant to paragraph 22 — which requires notice of default and an opportunity to cure it without paying the whole balance. So “intent to accelerate” cannot be the same as declaring acceleration since it would violate both law and contact. yet there it is in most courts where the “intent” is sufficient (according to most judges) to be an actual declaration of acceleration.

And still on another hand (or mouth) they are saying that acceleration does not occur where the lender declares only an intent to accelerate. This again is insane in the context of the foregoing “doctrines” imposed by the courts.

And of course the declaration of intent is contained in a “notice of default” that is a complete legal nullity, to wit: it is declared on behalf of U.S. Bank and a trust neither of which have any interest in the loan.

In short, the courts are willing to bend every rule, break any logical flow, and divert every rule in order to rule in favor of nonentities just like this case. U.S. Bank had no right, title or interest in the loan, debt, note or mortgage and neither suffered any financial loss for nor was it exposed to any default  declared or otherwise. And neither did any entity supposedly or presumably represented by U.S. Bank.

Note that acceleration can be accomplished through filing of a lawsuit where acceleration is declared. But in nonjudicial states, this is not possible if nonjudicial foreclosure is pursued.

The danger of submitting a hardship letter. See a lawyer!!!

It is strongly advised by most attorneys that when submitting any statement or reply to any company posing as a mortgage servicer or lender that where it is appropropriate to do so you should state that you are making the statement for purposes of compromise and settlement only and not for use in court, trial or any other legal proceeding.

Otherwise what you say can and no doubt will be used against you in a court of law as admissions against interest which tend to be given great weight in any contested proceeding or trial.

Don’t admit, acknowledge or assume anything unless you absolutely know something is a fact. Even then, admitting it or acknowledging it without protecting yourself could lead to your statement being used against you.

For example, “Yes I stopped paying because ….”. Yes you were paying and yes you stopped BUT….

Such a statement implies that the receiving party was entitled to collect money from you in the first place. Do you really know this to be a fact? Are an expert is the securitization of debt or the sale of loans into the secondary market? Aren’t you relying on representations made to you by the same party who is demanding payment? 

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

Submitting a hardship statement will almost certainly lead you to make damaging admissions. It’s like unprotected sex — a lot of things could go wrong. The only way to protect yourself against that is by either not submitting anything or by submitting a statement under cover of “for Settlement and Compromise Only.”

In addition, it is highly unlikely that your hardship statement will result in any remedy or relief since the great majority of such requests are denied — by parties who had no right to even receive them, much less process them, in the first place. Statements like “investor rejected” are pure fabrications, lies. No investor is ever contacted nor do they care because they are not counting on your payment. Investors are counting on the promise of a stockbroker (investment bank) to make the payments, which they continue to receive even if you stop paying.

Stop thinking you know what is going on. Stop believing anything that is said or written to you. By suspending your belief you are far more likely to gain traction than by admitting that anyone has a right to collect, process or enforce any loans. they probably don’t have any financial interest nor any rights. But they will say otherwise because if they are successful whatever they get will be used as revenue and not to pay down your debt.

Any modification or other agreement to which you affix your signature will undoubtedly contain representations or implied representations that are false. Thus when you sign the agreement and acknowledge its contents you are admitting that the representations are true even though they are false.

So for example if you execute an agreement with Ocwen you are either directly or indirectly agreeing that it is Ocwen Loan Servicing with whom you are doing business despite the fact that they are not a lender and never paid a dime for your loan. Your signature is at least a tacit admission that either Ocwen will be treated as a lender or as an authorized representative of the owner of the debt who paid value for your debt. In fact, most of the time they have no such ownership or authorization.

*

The solicitation of a hardship statement is a ruse. It gets you to say you made payments, admit that you owe them, admit that the payments are owed to the company receiving the hardship statement, admit that you are in breach, admit that you are in default, admitting that the receiving company has the authority to grant or deny or loan modification request. In most cases none of those things are true. But they become true if you admit them.
*
But one of the objectives of laws and courts who enforce them is to create finality to any issue that comes up. Once you admit something you can’t say it isn’t so unless you give a really good explanation  about why you admitted a fact that was in error and how that admission is somehow the fault of your adversary.
*
You probably will need to deliver a persuasive argument that shows how reversing your prior error will not impede justice. But it will impede justice because you’re forcing the courts to revisit an issue that was legally settled when you made your admissions.
*
Also a hardship statement will often concede that you can’t pay. That alone may be reason to deny your request for modification or any other relief. It is all a scam. 

While We Were Sleeping: Remote Online Notarization is Becoming a Reality in Florida effective 1/1/2020

see https://www.floridabar.org/the-florida-bar-journal/danger-will-robinson-the-new-frontier-of-remote-online-notarization-and-electronic-wills/

I knew this was planned. But frankly I didn’t pay close attention. When the initial plans for electronic signatures were announced 10 years ago, we collectively convinced President Obama that the law as written made it too easy to fabricate documents and then have them be declared facially valid — thus raising legal presumptions about the document and its contents.

Under the new law in Florida and I presume in other states, notarization of documents for recording in county records can be accomplished electronically. The banks have lobbied hard for this and have done a lot of PR to pave the way for this law as reflecting “progress.”

The problem is that this greases the slippery slope on which the banks unleash a torrent of fabricated documents creating legal presumptions of fictitious facts — leaving homeowners to defend nonsensical allegations without the benefit of requiring the claimant to prove actual facts for its prima facie case.

Dean Wigmore — the man whose name is equated with the law of evidence — said that legal presumptions were like bats that fly around and then disappear in the light of actual facts. For nearly 20 years homeowners have been fighting bats in the belfry.

Those that persisted and had the money to contest illegal foreclosures mostly won simply because the legal presumptions were rebutted, leaving the foreclosure mill with no actual facts to present because there were not actual facts that favored their position. None of the foreclosures in which a supposedly REMIC trust was involved ever involved any party who had paid value for the debt as required by state statutes adopting Article 9 § 203 of the Uniform Commercial Code making it a condition precedent to filing a foreclosure.

The assumption or presumption has always been that the named Plaintiff existed, and that it must have paid value for the debt. But they never did.

Most homeowners (96%+) were required to walk away because they lacked the resources of time, money and energy to contest the forced sale of their homestead by actors in a fraudulent scheme for revenue instead of any actor would could obtain restitution of an unpaid debt through a real foreclosure.

The simple answer is that the investors were the only ones who paid value but they never got title to the debt, note, or mortgage. This created a vacuum in which the investment bank pretended to own the debt and then act through surrogates to claim foreclosure without turning over the proceeds of foreclosure to the investors. It was a plain fraudulent revenue scheme.

The Florida legislature has now made it far easier for the banks to continue making money on actions that are simply labelled as foreclosures. This act enables the foreclosure mills and document fabricators to not only speed up the notarization process but also create a gap in accountability for errors, omissions and fraudulent content. It’s all happening online.

Judges are going to be required to treat notarization as presumptively valid when in fact the notary was a robo notary and the online process is fully automated behind the scenes. Thus the Florida legislature has continued and expedited the current process by which investment banks, acting through conduits or surrogates, sell the house, take the money and run. Not a penny is returned to investors who bought “certificates”.

Update on MERS

Just assume that everything is a fiction and none of it is real. Then set out to create the inference against the use of key legal presumptions necessary for the foreclosure mill to establish a prima facie case. Those presumptions lead to conclusions that are contrary to facts in the real world.

The answer is always the same. MERS is a data storage  company that has no ownership of the data, or any documents that contain references to data, events, payments, assets or liabilities. The MERS database in intentionally unsecured — anyone can get access with a login and password which are easy to obtain.

The first reason for the looseness of data entry, maintenance and reporting is that the only real purpose for MERS is foreclosure. It is not used by anyone for any other purpose.  The second reason for the looseness of data handling is that even its members and users know that it is not admissible in court. As far as I know, nobody has ever tried to foreclose using data from MERS.

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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.
========================
MERS. it is merely a naked nominee. In some states it is banned. The holder of a mortgage or the holder of a beneficial interest in a deed of trust is required to be the owner of the debt, which is somebody who has paid value for the debt. Check state law.
*
But the assignment from MERS has more problems than that. MERS is basically an agent. The principal is defined as the party who has been labeled as the “lender.”
*
The designation of MERS usually includes “its successors and assigns.”
*
That is the place where the Foreclosure Mills and the banks try to stuff in third parties who have no connection with the loan. Since MERS is merely a naked nominee, the only party that could issue instructions to MERS is the “lender” or its successors and assigns.
*
Why would they do that? Revenue! The foreclosure process in most instances is a revenue scheme and has no relation to any plan, scheme or process by which the result is restitution for an unpaid debt.
*
In most cases, by  the time the foreclosure process is started, the “lender” is dead and nobody has acquired its assets, liabilities or  business. There is no successor. So there have been many cases in which a judge has decided that a document supposedly executed on behalf of MERS by someone on behalf of a company that is labeled as “attorney in fact” is void in the absence of foundation testimony or documents showing that the interest of the “lender” has actually been transferred by way of payment to a transferee.
*
MERS is not a servicer and MERS is not the owner of the debt. It has bare naked legal title to mortgages.
*
There are no successors in interest or assigns with respect to either MERS or the “lender.” Since MERS does not possess and even disclaims any financial interest in the debt, note or mortgage, it may not execute any document of transfer except on behalf of the “lender” on the mortgage deed or deed of trust, or on behalf of a genuine successor to the “lender,” the document signed on behalf of MERS must be void, and not voidable.
*
This is where many attorneys and pro se litigants miss the mark. they fail to parse the words and thus fail to recognize the Achilles heel in any chain of title which is dependent upon the transfer of any interest in any mortgage by or on behalf of MERS.
*
The label of “authorized signer” is a lie on many levels. The signer has no corporate resolution from the Board of Directors, appointment by an actual officer with administrative duties at MERS, nor any employment by MERSas employee or as independent contractor. The person who signs is not paid by MERS.
*
The person who signs is the employee of one of three entities — (a) the foreclosure mill (see David Stern), (b) the party claiming to be an authorized servicer of an entity who also does not own the debt or (c) an outside vendor who specializes in fabricating documents to “clear up” (read that as falsify) the title chain.
*
In most cases there is no power of attorney executed by any employee, officer or director of MERS. But even in the rare instances where such a document has actually been properly executed and dated, the Power of Attorney cannot create any right, title or interest to any debt, note or mortgage.
*
You need to keep their feet to the fire. If you don’t successfully attack such issues the presumption will prevail — i.e., that the chain of title is perfect. If you do attack those issues the presumptions fail and in addition to MERS being naked so is the foreclosure mill and the claimed labeled servicer.
*
As always you will do well if you presume the entire foreclosure is a fake process in which the foreclosure process is weaponized to obtain revenue instead of restitution for an unpaid debt. Just assume that everything is a fiction and none of it is real. Then set out to create the inference against the use of key legal presumptions necessary for the foreclosure mill to establish a prima facie case. Those presumptions lead to conclusions that are contrary to facts in the real world.

Servicers: More Than One Set of Books

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

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

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

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

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

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

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

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

Comment posted on my blog:

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

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

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

Frustrated with Your Lawyer’s Attitude?

PRESUMPTIONS VERSUS FACTS

The bottom line is that lawyers want to do the best possible job for their client and get the best possible result. They like winning. But sometimes they must protect clients against themselves. It’s true there are lazy lawyers out there who take money and don’t do the work. But most of them want to win because their livelihood depends upon a good reputation in the courtroom which includes respect as a winner.

There is a  huge difference between what is written in statutes and case decisions and how and when they are applied. The fact that a court fails to apply the law that you think or even know should have been applied is not a failure of the lawyer so much as it is a failure of the courts to escape their bias. The simple fact is that I agree that most foreclosure cases should be decided in favor of the borrower but getting a court to agree is a daunting challenge to the skills of the lawyer representing a client who is largely seen as food for the system.

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

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

So in a recent email exchange here is what I said some things about legal presumptions. I should have added the following:

Another legal presumption or factual assumption employed by the courts and often overlooked by foreclosure defense lawyers arises from the naming of the alleged claimant. A typical naming convention used by lawyers for the “claimant” is “ABC Bank, as trustee for the certificate holders of the DEF, Inc. Trust pass through certificates series XYZ-YY-Z.

Several things are happening here.

  1. The case is being styled with the name of a bank creating a misleading impression that the bank has any involvement with the foreclosure.
  2. The reference to the bank as trustee is never supported by any assertion or allegation that it is indeed a trustee and under what trust agreement. The court erroneously presumes that the bank is a trustee for a valid trust who owns the claim.
  3. The reference to the certificate holders makes the certificate holders the claimant. But the pleading does not state the nature of the claim possessed by the certificate holders nor does it identify the certificate holder. In fact, the certificate holders have no right, title or interest to the debt, note or mortgage and are due nothing from the borrower. The court erroneously presumes that the reference to certificate holders is just a long way of referencing the trust.
  4. The reference to the corporation creates ambiguity as to the name of the trust or the party whom the lawyers are saying is represented in the foreclosure proceedings. The court presumes that the naming of the corporation is irrelevant.
  5. The reference to the certificate series falsely implies the certificates convey an interest in the subject debt, note or mortgage. By erroneously presuming this to be a fact the court is not only wrong factually but it is also accepting a presumption that i factually in conflict with the presumption that the claimant is a trust.

 

Here is what I wrote to the client:

I have no doubt that existing law, if properly applied, would be on your side. The problem is that the courts are bending over backwards to find false presumptions that create the illusion of applying existing law.

For example, the only claimant that can bring a foreclosure action as one who owns the debt and who has paid for it. Article 9 § 203 of the Uniform Commercial Code as adopted by state statute.

But the banks have convinced many courts that they comply with that statute. The way they do it is through the use of legal presumptions leading to false conclusions of fact.

So even though the named claimant has not paid value for the debt and doesn’t own the debt the courts end up concluding that the claimant does own the debt and has paid value for it. This is done through a circuitous application of legal presumptions.
*
By merely alleging that they have possession of the original note, it raises the assumption or presumption that they have the original note. This is probably false because most notes were destroyed and the banks were relying upon images.
*
By arriving at the conclusion of fact that the claimant is in possession of the original note (even though it is only a representative of the claimant that asserts possession) the courts then apply a legal presumption that the possessor of the original note has the authority to enforce it. There may be circumstances under which that is true, but that doesn’t mean that have the authority to enforce the mortgage.
*
By arriving at the conclusion that the claimant has the authority to enforce the note and has possession of the note, courts then take the leap that the claimant owns the note because they have alleged it. This is improper but it is nevertheless done because the court is looking for ways to justify a decision for the claimant.
*
By arriving at the conclusion that the claimant owns the note, and is not acting in a representative capacity (which is barred by Article 9 § 203 is of the Uniform Commercial Code) the court applies a legal presumption that the claimant has paid for the note (why else would they own it?). [NOTE: Many times the lawyers will say that the claimant is the holder of the note without saying that the claimant is the owner of the note. In such cases it could be argued that they are admitting to not owning the note but are merely claiming the right to enforce the note; by doing that they are admitting to not having paid value for the debt thus undermining their compliance with Article 9 §203 UCC as adopted by state statute. Hence while they might be able to enforce the note they cannot enforce the mortgage. The courts often erroneously presume that enforcement of the note (Article 3 UCC) is the same as enforcement of the mortgage (Article 9 UCC) — which should be addressed early and frequently by the defender of foreclosures.] 
*
By arriving at the conclusion that the claimant has paid for the note, the court applies a legal presumption that this is equivalent to payment of value for the debt. In this case the note is treated as a title document for the debt. This would only be true if the original payee on the note was also the source of funds for the debt.( In most cases the source of funding for the debt is an investment bank acting on its own behalf. But the investment bank never appears in the title chain nor as claimant in foreclosure).
*
Without the above assumptions and presumptions the claimant could never win at trial. The simple reason for that is that there’s never been a transaction in which the claimant paid value for the debt. It is only through the use of commonplace assumptions and legal presumptions that the court can arrive at the conclusion that the statutory condition precedent to initiating foreclosure has been satisfied.
*
In truth neither the court nor most lawyers actually go through the process of analysis that I have described above. If they did they would find multiple instances in which the presumptions should not be applied to a contested fact.
*
But the truth is that there is a bias to preserve the sanctity of contract and a belief that if the claimant is not allowed to succeed in foreclosure, the homeowner will receive a windfall benefit through the application of technical legal Doctrine.
*
The truth is that the court is granting Revenue to a fake party with a fake claim. The court is not preserving contract, since the contract has already been destroyed through securitization. There was no contract for revenue. There was only a contract for debt. 
*
And while the borrower might appear to be getting a windfall, the success of the borrower merely reflects the larger implied contract that included securitization and should have included payment to the borrower for use of the borrower’s name reputation and collateral. The windfall already occurred when the Investment Bank sold the parts of the debt for 12 times the amount of the actual debt.
*
So I mention all of this because I think it applies to your case. However you have an attorney and I don’t believe that a telephone conference with me is necessary or even appropriate. There is nothing in this email that your lawyer does not fully understand.
*
But the practice of law involves much more than written statutes or case decisions. The practical realities are that the courts are not inclined to give borrowers relief despite the fact that they are clearly entitled to it by any objective standard. The trial lawyer or appellate lawyer must make practical decisions on tactics and strategy based upon knowledge of local practice and the specific judges that will hear evidence or argument.
*
I understand your frustration. The situation seems clear to you and objectively speaking it is clear. but it has always been a daunting challenge to get the courts to agree. If your attorney wants a telephone conference with me, she can call me. But my knowledge of your attorney is that she has full command of the procedural options to oppose eviction or do anything else that might assist you. The only reason she might resist doing so is her belief that the action would be futile or potentially even result in adverse consequences to you.

Ocwen Stock Is Riskier Than Investors Know

the truth is there for anyone who wants to see it, which means that the entire prospect for Ocwen is that of an actor with only one foot on the edge of a cliff.

This article represents the analysis and opinion of the writer. Take no action with consulting a legal and financial adviser. 

The common stock of Ocwen Loan Servicing is traded actively. The company is backed by the largest banks in the world and its reported income is generally rising. BUT Ocwen has also been positioned by its backers (Goldman, BofA, Citi, etc.) to be thrown under the bus if the going gets rough.

The stock is currently valued based upon the presumption of economic viability because all the mortgages claimed to be servicing are generating revenue and Ocwen is receiving revenue and making a profit.

But another scenario is emerging from the shadows even if it appears unlikely. The number and percentage of homeowner successes in foreclosure is increasing. Those successes are all based upon one single fact, whether explicitly stated in court findings or not — that the named creditor on whose behalf Ocwen says it is collecting was not the owner of the debt. Hence Ocwen’s claims, notices, and testimony are not based upon its relationship with such named creditors or claimants.

If it is further revealed that Ocwen was in fact acting at the behest of an investment bank rather than a trustee of a named REMIC trust, the result could be catastrophic for both Ocwen and the investment bank. That scenario occurs if the investment bank was giving instructions on loan administration and foreclosure while it had no financial interest in the underlying debt.

That would mean that Ocwen never had any nexus to the debt owner. And that in turn would mean that Ocwen, in many and perhaps most cases, does not have any right to administer or service the loan “portfolio” it claims to be managing. And it would mean that all “modification” applications were improperly directed and processed. It could also mean that Ocwen is being paid to pretend it possesses such rights.

Ocwen could be the target of even more lawsuits alleging fraud and other intentional torts. On a more granular level the absence of any agency relationship with an identified creditor who owned the debt by reason of having paid for it would disqualify an Ocwen representative from testifying as the robowitness and would fail the exception test to hearsay objections as to their records, since they would not be records of either the named claimant nor of the actual owner of the debt.

If the facts are revealed and finally accepted by American courts, most foreclosures would grind to a halt. American law requires that paper title and actual payment of value for the debt must be combined into one party before any foreclosure action is filed. Under the weird securitization scheme adopted by the major investment banks no such party exists. The whole point of what they were doing was to sell parts of the debt for amounts vastly exceeding the market value of the actual debt.

By using Ocwen as the front for enforcing foreclosure actions, Ocwen is primed to be the one thrown under the bus wherein the inevitable finger pointing from investment banks will be directed at Ocwen and other servicing entities like it. Acting without authority and knowingly contributing to windfall illicit gains from foreclosures also places Ocwen at risk for actions by Attorneys General of all 50 states and several regulatory authorities.

The combined administrative and legal risks vastly exceeds the market valuation of the entire company. If and when these facts are finally accepted in the courts, Ocwen would be forced into bankruptcy and would most likely file under Chapter 7 or Chapter 11 as a liquidation in bankruptcy. Either way, the outlook for  the valuation of Ocwen shares would be bleak at best.

If somehow the investment banks are either able to maintain the ruse or continue the current governmental attitude of wink and nod, none of those scenarios are applicable. But the truth is there for anyone who wants to see it, which means that the entire prospect for Ocwen is that of an actor with only one foot on the edge of a cliff.

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

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

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

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

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

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

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

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

Keep the Envelopes! Attention Forensic Auditors! How to Show They Are Lying About Everything

The devil is in the details and it is in the details that actions don’t add up if one party is faking their status. 

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

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

Hat tip to Summer Chic

I have long described the practice of sending out correspondence and notices from, say for example PennyMac, from an address that has never been PennyMac. Summer Chic discovered with some snooping that the letter she received from “PennyMac” was sent from a Bank of America location. Bank of America claims no connection with PennyMac. In many such scenarios Bank of America claims no connection with the loan.

Of course that might very well be true. Because in the securitization game the real records are kept at the investment bank (who at least WAS the real party in interest when the loan was originated or acquired)  and a central repository from which documents, notices and other instruments are created, signed, sent and filed. In most cases this central repository is Black Knight, which is the new name of Lender Processing Systems, (LPS) who had a subsidiary or division called DOCX.

This is why the claims of a “Boarding process” are pure fiction, because the records are always kept in the same place and never move.

DOCX you might remember is the place where most of not all document fabrications took place including signatures that were forged or robosigned. Fabrication as you know means that they were creating documents that did not previously exist. Those documents did not exist for only one reason, to wit: there was no transaction  to document so the document was never prepared until it was necessary to fake it for the purposes of foreclosures.

Incredibly Black Knight is now used as a trusted source of information about mortgages and foreclosures despite being the central entity (operating through third party contractors) from which false documents are created and used in foreclosures.

It was necessary to fake it because under the law, it isn’t enough to allege or assert that a borrower failed to pay. Failure to pay is only a breach as to the owner of the debt who is entitled to receive the payment because he/she/it paid money for the debt and the rights to enforce. But no such payment ever occurred. If there is no rebach there is no claim.

So in order to cover-up the illusions created by fabrications of documents, it was necessary to fake the sending, filing and serving of process of documents. While this was accomplished in some corrupt courts (one right here in Florida), ordinarily it was accomplished by sending the notices not from the central repository, Black Knight, which would make it obvious that it was all coming from one place, but from different locations around the country — hundreds of them.

So in our example, PennyMac agrees to let Black Knight use its name for notices, and Bank of America agrees to have the notice sent from one of its thousands of locations. In reality the notice came from Black Knight and neither PennyMac nor Bank of America know what is contained in the notice, nor do they care.

In court, as I have repeatedly said, it is unwise to try and allege and prove all of that, because you will never get access to the real records of Black Knight, Pennymac or Bank of America. If you could you would would have one big class action lawsuit against all three of those entities. It is well hidden under agreements that might never see the light of day.

BUT, you can use discovery and cross examination to gradually educate a reluctant judge so that he/she gets increasingly uncomfortable with what they are hearing. By using discovery effectively you could even bar the introduction of certain evidence and legal presumptions because you never received an acceptable response to your requests for discovery.

The questions are quite simple: using the envelope as evidence (after proper foundation testimony or as a exhibit for ID to be later admitted into evidence) you elicit the fact that either the entity does not maintain any address at that location and never did or that the witness doesn’t know and that the employer refuses to answer.

You are asking the question “Who sent this notice?” knowing full well it wasn’t the witness or his employer or anyone else in the chain of title. If the witness slips and answers truthfully (which happens occasionally) that it was Black Knight then you’re off to the races with questions about what Black Knight is doing sending out notices on a loan with which they supposedly have no connection and on whose behalf the notices were actually sent.

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.

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

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

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.

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

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

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.

*
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.
*
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.
*
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.
*
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.
*
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.
*
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.
*
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 is Fair?

The question should not be the bipolar question of who gets a “free house,” with the answer being the borrower or a party claiming entitlement to enforce. The question should be how to create a new equitable and legal infrastructure to clean up the mess that the banks created without unnecessarily penalizing either the investors who put up the money in the first place and the borrowers who put up their lives.

This is a question that BOTH the courts and the legislatures must face for failure to do so compounds the already compounding chaos and tragedy that befell our nation when the scheme initially collapsed in 2008.

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The borrower was lured into a loan contract in which she thought that the named lender had a financial interest in the outcome of the contract. The actual lender was a remote investment bank about whom she had received no disclosure and, as an average person of ordinary knowledge and means, had no access to information that would revealed the true nature of the contract.
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Rather than seeking to conform to law in selling such loan products the real lender sought to avoid the law.
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Rather than making money through the receipt of interest payments, the real lender intended and quickly divested itself of any interest or expectation of receiving interest or principal payments. The real lender also divested itself all of all risk of loss associated with payments. In short, the real purpose of the loan was to create multiple vehicles that could be sold as private contracts, resulting in the receipt of money that far exceeded the principal amount of the loan made to the borrower.
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While ordinary residential homeowners normally rely on the premise that the loan’s purpose was to generate revenue and profit for the lender through the receipt of interest payments, her named lender would not and did not receive interest payments and had no profit except from fees paid by the remote investment bank through conduits.
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Thus the actual lender entered into a loan arrangement without contract for the sole purpose of selling various attributes of the loan to as many investors as possible using as many complex financial instruments as they could conjure. The borrower had entered the arrangement believing that the named lender was the actual lender and that all compensation arising from the consummation of the loan was disclosed.
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The actual lender retained no direct interest in the performance or outcome of the loan. The borrower was unaware that they had signed up for an arrangement in which the other side of the equation would create millions of dollars in “trading profits” arising from the declared existence of the loan, along with her name, reputation, signature and the collateral of her home.
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Hence the goal of the lender was to create such loans regardless of quality. In fact, the lower the quality the more profit they made. And foreclosures became the vehicle by which the actual lender (investment bank) covered up the violation of federal and state lending statutes and common law doctrines of fair dealing and public policy.
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Since judges thought that the proceeds of a foreclosure sale would go to the owner of the debt, and thus pay down the debt, they thought that there was little harm in granting foreclosures even if the paperwork was somewhat “dodgy.” But an increasing number of judges are questioning two main issues.
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The first issue, which has been repeatedly voiced by hundreds of judges since 2008, is why there have been so many changes in the name of the servicer who supposedly was authorized to administer the loan and whether the servicer was actually administering the loan for or on behalf of an owner of the debt as required by law. Because without that its records would not  be allowed in as an exception to the hearsay rule. (The claimed “servicer” would just be a company that had intervened for its own financial interest which included fees for enabling a successful foreclosure. Hence their records would not have intrinsic credibility of a third party who had no interest in the outcome of litigation).
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The second issue which is being raised with increasing frequency is why it was necessary to create documents of dubious origin and authenticity? In an industry that created virtually all the paperwork required for closing loan transactions, and created the industry standards for maintenance of such documents how and why did they manage to lose or destroy the original promissory note so often? (And why was it necessary to fabricate any documents?)
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And a third issue which is only now being discussed with some earnest, is whether the right to resell the loan automatically includes the the right to use the personal data of the borrower for many sales of many of the loan attributes that were not contemplated by the borrower because they were hidden from the borrower.
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Europe is ahead of the U.S. in understanding that personal data is a property right. But laws in the U.S. do answer the question. Where the contract in known by only one side to have attributes that are withheld from the other side it is subject to the doctrine of implied contract (assumpsit) in which the party discovering the true nature of the contract may enforce a right to receive compensation for the attributes that were previously unknown.
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There can be little doubt that nearly all loan arrangements for residential property as collateral since 1996 have all the elements of an implied contract that is far beyond the scope of the written contract. Hence there can be no doubt that the borrowers are entitled to some form of compensation or damages arising from the implied contract and/or the violation of disclosure requirements in the Truth in Lending Act and state lending laws.
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The scope of this issue is a fact. In 1983 there was zero in nominal or actual value of instruments deriving their value from debt. Today there is over 1 quadrillion ($1,000,000,000,000,000) dollars in the shadow banking market. The total amount of fiat (actual) currency in the world is only 85 trillion ($85,000,000,000,000) dollars.
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The meaning is clear: for every dollar ($1.00) in real transactions of fiat currency there is, on average, $11.75 in trading profits for the banks and investors who trade in that market. That means that for the average of loan of $200,000 it is almost certain that the profits generated from the origination or acquisitions that loans was on average $2,352,941. In other words, payoff on the loan was incidental to the loan transaction — not the point of the loan arrangement.
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The current claim by the banks is that this enormous profit from lending is the result of separate contracts and transactions that should not be included as part of the original contract with borrowers.
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The claim by borrowers, while phrased in different ways, is that somehow the borrowers should be receiving some compensation or allowance as part of the package since the base transactions from which all value was derived for further instruments or agreements was their own signature, name, reputation and home as at least apparent collateral. Borrowers consider the non disclosure of the actual intention of the actual lender to be base violations of TILA and state lending laws.
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In addition, with the proceeds of foreclosure sale being distributed as revenue rather than the payoff of a loan receivable, existing law is insufficient to deal with the crisis of nonpayment by borrowers most of whom have been paying servicers who have been feeding such payments into large pools of cash from which payments are made to the holders of “certificates” who only have a right to receive payments from the investment banker who was doing  business under the name of a nonexistent trust.
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In some sense the holders of such certificates are the ones most likely to be considered owners of the debt. But the certificates themselves and the accompanying contracts (prospectus) clearly state that the certificates convey no right, title or interest in the borrower’s debt, note or mortgage.
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There is no right of investors to enforce the certificates against borrowers and the certificates are not “mortgage backed” despite claims to the contrary. This has already been decided in several tax cases. Their exemption from securities regulation is therefore unfounded.
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This has resulted in various parties posing as authorized enforcers of the debt and the security instrument ( mortgage or deed of trust). Regardless of their claimed title or status, all such entities share one controlling characteristic: they all initially or eventually claim to be acting in a representative capacity even when they present themselves as the “holder” of the note or any other claim to rights to enforce the note or mortgage.
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The evolution of such claims lends some perspective. Initially foreclosures were brought in the name of “servicers” and when challenged the servicing claims were then accompanied by an denial of securitization or the existence of any trust that owned the debt, note or mortgage. As it turned out the lawyers for such entities were telling the truth — there was no such trust nor would it have been the owner of the debt, note or mortgage even it had existed.
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In addition foreclosures were brought in the name of Mortgage Electronic Registration Systems, Inc. (MERS).
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Neither the servicers nor MERS ever could assert or allege that they had any right, title or interest in debt, note or mortgage. In the case of MERS it could not even alleged possession of the note or mortgage and had handled no money whatsoever in relation to any loan.
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And in all cases the proceeds of foreclosure sales permitted by the courts were distributed as revenue to several participant claiming authority to act, including the lawyers, servicers, master servicers, and the investment bank. In no case were such proceeds distributed to the owners of certificates issued in the name of a “trust.” Several forensic analysts tracked the “credit bids” and quickly discovered that those bids were not submitted by a creditor.
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The existence of the actual debt from the borrower has been converted from actual to theoretical; this explains the lack of any identified party who is the owner of the debt. This is not a problem created by borrowers who knew nothing of this scheme nor do they now understand it.
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This all results in the posing of three issues that need to be addressed head on if this crisis is to end.
  • The first which everyone has voiced since the beginning of the crisis is whether the homeowner should get a “free house” merely because the paperwork is now out of order.
  • The second is whether the current parties receiving revenue from the sale of foreclosed homes should be allowed to receive a “free house.”
  • The third is whether the borrowers have always been entitled to receive compensation for the larger implied contract in which compensation and revenue was generated from the origination or acquisition of their loan.
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Since this is a pervasive issue occurring through tens of millions of loan contracts, the best possible vehicle for addressing a remedy is through government action that goes far beyond the nominal settlements that have been announced thus far.
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All stakeholders should be given a voice at this table. Any approach that is punitive only to one particular class of stakeholders should be rejected. Laws need to be changed to reflect the modernization of financial instruments, only after consideration of the effects of such changes. Any law that simply makes it easier to foreclose or to merely cover up the title and legal errors that have been occurring for 20 years should also be rejected.
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If we are to make sense out of this chaos that was in fact conjured and created by investment banks, then we need changes in our property laws, contract laws, securities laws, lending laws, laws of civil procedure and due process, and laws of evidence. If the banks have put themselves in a position where they cannot foreclose on mortgages, that should not be the end of the inquiry.
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The question should not be the bipolar question of who gets a “free house,” with the answer being the borrower or a party claiming entitlement to enforce. The question should be how to create a new equitable and legal infrastructure to clean up the mess that the banks created without unnecessarily penalizing either the investors who put up the money in the first place and the borrowers who put up their lives. 
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