Hawaii Supreme Court: Bond on Appeal Should be Based Upon Evidence of Potential Loss Pending Appeal, Not the Value of the Property.

Many thanks again to Attorney Gary Dubin for bringing this to my attention.


The current hodgepodge of decisions that I have always maintained were merely vehicles to discourage appeals is taken to task in this well-reasoned decision.

In Hawaii the rule is now no bond pending appeal or low bond pending appeal.

The Hawaii Supreme Court has merely applied principales that are already stated in all US jurisdictions and applied it to limit the discretion of the trial court or even an appellate court to set an arbitrary amount to stay the effect of an adverse judgement.

But this does not mean that a stay order will always be granted.

see Kelepolo Hawaii decision 2020-scwc-18-0000138

The reason that judges abuse their discretion in setting bond for appeals is that they have already made a decision and they don’t want it reversed. Reversals look bad on a judge’s record and too many reversals can impede their ambitions to be on higher courts or higher political office.

And up until now the court’s have been reluctant to intrude upon the wide discretion allowed to trial courts and appellate courts (either one can grant a stay and set bond).

Finally an element stated but rarely used as the basis for a decision on whether the lower courts based their discretion has been elevated to where it belongs, to wit: courts may not use high bond to discourage appeals.

Just because the property is worth $1 million does not mean that the bond should be set at $1 million — unless there is clear and convincing evidence that the entire value of the property will be lost pending appeal.

In a rising market it is perfectly acceptable to have no bond, particularly where bond causes undue hardship (like bankruptcy) on the appealing party.

While authoritative in Hawaii this case may be cited as persuasive and linked to the state specific decisions of every state in the U.S. It merely states the results of the doctrines already used in all states.

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


If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.
In the meanwhile you can order any of the following:
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
Please visit www.lendinglies.com for more information.

How to Use the Business Records Exception to Hearsay Rule to Keep Out “Servicer” Records in Foreclosure Cases

Fundamentally you must understand that the investment banks want you and everyone else to look only at the payments history — not the debt, who owns it and whether anyone suffered a loss resulting from any lack of payment by the homeowner.
Their strategy is to get the court to presume that in the absence of payments someone must have suffered a financial loss since the debt was clearly established in a transaction in which the homeowner received money and issued a note and mortgage. In the present securitization era that paradigm is wholly untrue but not obvious because the banks turned “lending” on its head. The homeowners took what they thought was a loan but the banks were not lenders and had no intention of becoming lenders.
The problem is that most homeowners believe the myth promulgated by the banks because they don’t understand what really happened in what the banks call “securitization.”
The truth is that nobody has suffered a financial loss from “nonpayment” by the homeowner.
Everyone has already been paid as to the principal obligation.
Collection efforts directed at the extinguished obligation are pure business strategy designed to increase already astonishing profits achieved through “Securitization” which like everything else is not in substance what the label conveys, to wit: the homeowner obligation was never sold to investors and therefore cannot be said to have been securitized. 

One of my most prolific contributors points out how Fannie Mae uses a company who to this day incredibly remains out of the limelight despite being the only company whose division president, Lorraine Brown, went to jail for falsifying documents. It wasn’t really her fault. There were no transactions that fit the mold required to have an enforceable claim in foreclosure. But the banks wanted the money anyway. So they invented the appearance of transactions even though nothing had happened in the real world.


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


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

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

Practitioners would be wise to keep in mind two things:
(1) the “servicers” are not servicers in the sense that anyone thinks of a servicer. They do process payments from homeowners but they do not process anything else. — The “servicer” records do NOT show where payments were forwarded, which would identify and confirm that the claimant or Plaintiff in foreclosure is in fact the owner of the debt.
(2) the payment record from the “servicer” reflects only those payments received by that servicer (and perhaps an unaudited compilation of prior payments reported through LPS Desktop). The payment history might be admissible in evidence but only as to the record of payments, about which the practitioner should object for lack of foundation. — Without testimony or other evidence that (a) the debt was established as owned by a specific creditor anad (b) that the payment history is part of the records of the creditor, not just the servicer, the payment history should be excluded. 
(3) A subpoena issued to Black Knight fka Lender processing Systems, aka LPS, demanding records relating to the subject debt, note or mortgage will be met with a barrage of objections, which if properly litigated will probably result in a favorable decision for the homeowner.
(4) The object of litigation of foreclosure defenses is to show that the debt was removed from the chain. You accomplish this by relentlessly and aggressively pursuing the identity of the creditor. there isn’t one where any REMIC is involved.

(5) Without a creditor there can be no delegated authority to enforce, collect or even administer the loan. “Authority” does not exist in a vacuum. there must be a source of authority. And the source of authority must be someone who legally owns rights to the debt over which he can delegate, as owner, the rights to enforce. 

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

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


If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.
In the meanwhile you can order any of the following:
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
Please visit www.lendinglies.com for more information.

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

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

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


If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.
In the meanwhile you can order any of the following:
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
Please visit www.lendinglies.com for more information.

Moratoriums Extended: That Doesn’t Mean You Won’t Be Out On the Street Or Living With Relatives

Governor Ron DeSantis (R) Florida, issued a new order extending the moratoriums on foreclosures and evictions.


The investment banks on Wall Street like this turn of events because they no longer need to lie orally to homeowners in order to get them to fall behind in payments. Their goal is foreclosure and eviction mostly except for abandoned properties after foreclosure which are called Zombie properties.


Practically everyone who has had an issue with mortgage payments has heard the familiar refrain: “you don’t qualify for a modification because you are not delinquent in your payments. You must be at least 90 days behind in payments before you should submit your application for a modification.”


Since it was oral communication (not written) and either not recorded or the recording is later destroyed, the foreclosure mills, hiding behind litigation immunity are free to deny that the homeowner ever received that information — which by the way is practicing law without a license (a felony in many states).


Judges hearing that story are very skeptical of that story even though it is true. They are skeptical because why would any creditor want a “borrower” or obligor to not pay them? Why would anyone want to lose money in a transaction? It just doesn’t make sense to judges, which is why Mr. Reyes from Deutsche bank got away with it when he said the entire securitization system is “counter-intuitive.”


The Judge’s attitude comes with the assumption that he/she is dealing with an actual creditor. If you drop that assumption everything makes sense. The only way a non-creditor can make money is by pretending to be a creditor and foreclosing on a property in which it has no interest — and of course getting away with it.


The bonus is that once the foreclosure is successful it has a legal presumption of validity which means that all prior illegal acts are subsumed into the foreclosure.


So don’t believe the moratorium any more than you believe the tune that you must stop making payments in order to qualify for a modification. The banks are counting on you spending money that would have otherwise gone to making payments such that when the 90 day period is over or when the moratorium is over you are so far behind that you cannot catch up.


That is exactly what the banks want even though that seems crazy to the casual observer, including judges.


Now if you are already involved in foreclosure there is nothing but confusion as to the effect of the roders on moratoriums. Exactly what do they stop?  We don’t know.


But most judges are interpreting the orders as meaning they can hear nothing on any foreclosure or eviction which is probably correct — or else there will be a landslide of motions seeking to set aside orders granted while the moratorium was in effect.


But I wonder if a motion to compel discovery or demands for discovery are still allowed. I think they might be.


And I repeat for the umteenth time that you can’t prove anything against the foreclosure mill or any supposed client of the foreclosure mill. You don’t have the evidence or data. I issue that reminder because everyone who loses their fight against the foreclosure mill comes to the same erroneous conclusion: they can’t win. They skip the part about having gone down the wrong path.


The winning strategy, every time is based upon the knowledge, not the evidence of wrongdoing on the part of the foreclosure mill and its “clients.”

The winning strategy is simply challenging the assertions, implied references, assumptions of fact, and presumptions at law through the proper and timely use and enforcement of discovery.


That means crafting discovery questions that are simple, easy to understand and that can be defended as being central to the issue of ownership and authority over the underlying obligation. People seem to avoid getting proper help from a knowledgeable source on drafting discovery. It also means that you have a memorandum of law ready with citations to statutes, rules of procedure and cases interpreting those rules in which you should clearly and convincingly that your questions are simply designed to test the basic question that a creditor or representative of a creditor is present in court.


The people that claim they cannot get answers in the discovery process are missing the point. If your opposition could answer those questions without admitting they have no claim they would do so. But they don’t. So when you DON’T get answers, that begins your journey toward revealing and demanding an inference that the foreclosure mill has no basis to assert or imply that the foreclosure will result in payment against a debt on the books of some creditor — i.e., a creditor who is the claimant/beneficiary in a nonjudicial foreclosure or the plaintiff in a judicial foreclosure.


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


If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.



In the meanwhile you can order any of the following:


*CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)





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

The Best Article Yet on Illegal and Immoral Practices by Investment Banks Making False Claims About “Securitization of Debt” by Francesca Mari on Aaron Glantz Book “Homewreckers”

Francesca Mari in the JUNE 11, 2020 ISSUE of The New York Review of Books, has written a truly excellent piece on a book called “Homewreckers” by Aaron Glantz. 

If you ever had any doubt about whether homeowners have the moral high ground and whether the investment bankers have no moral or legal grounds for what they did, you should read the article and buy the book. ( I get nothing from sales of the book and I have not met either author — although I will contact them for interviews on my show).

The only point that I think both Mari and Glantz miss is that the loans were never securitized. Securitization is the process of selling assets in pieces to multiple investors. No residential loan to my knowledge has ever been sold to investors even on paper much less in reality.

Let me put it this way: there has never been a transaction in which investors buying certificates, investment banks or anyone else paid value in exchange for ownership of any debt, note or mortgage. They paid value but not for the loan. And they received the benefit of their bargain.

At the end of the day there is nobody who has paid value in exchange for a conveyance of ownership of the debt, note or mortgage. Claims of ownership of the debt, note or mortgage are all false even though they are documented. Documents are not transactions. They are evidence of transactions. And if there was no such transaction then the documents are false.

And that is why all of the documents in foreclosures are false, fabricated, forged, backdated and robosigned. The documents are false but they are presumptively valid if they conform to statutory requirements. The point missed by most homeowners, lawyers and judges is that just because they are presumed valid doesn’t mean they cannot be tested and rebutted.

Magic Bullet? Maybe this: the foreclosure “team” are all witnesses, not claimants

The fact that the foreclosure players know — or even witnessed — the fact that you refused to make any further payments makes them a witness, not a claimant. 
The investment banks say they are not liable as lenders for noncompliance with lending laws. OK. A good lawyer can make a powerful argument for estoppel — the investment banks cannot take one position — that it wasn’t a loan in terms of regulation of lenders   — and then that it is a loan so they can foreclose without a creditor.
Two wrongs don’t make something right. The fact that they used a shill as the originator doesn’t mean they are allowed or should be allowed to use another shill to falsely invoke foreclosure laws and procedures. You can’t foreclose on a debt that does not exist.
Most homeowners take out their frustration by attacking the judge or the opposing lawyer. This is a mistake on many levels.
My concern here is that you are far too interested in two subjects that have the least probability of you achieving anything. The object of your ire is understandable. But you may be playing into the hand of the banks if you continue.
The Judge, even if he or she is the most reprehensible person on Earth, is simply untouchable without very specific evidence that links the Judge to a corrupt scheme in which the decision of the Judge is directly tied to the scheme and where the Judge receives a  specifically identified reward for a corrupt decision. This does not exist in your case and it rarely exists in any case. So attacks on the Judge’s integrity or intelligence will provoke what they would when you attack anyone for anything. They get defensive and antagonistic — just the opposite of what you need.


The foreclosure mill, even if they too consist of the most reprehensible human beings on the planet, is considered immune from liability for misrepresenting things in court. You don’t need to agree with this for it to be true. And railing against that fact will get you nowhere. I have tried to go after the lawyers and the result has been consistently negative — claim dismissed because of “litigation immunity.”
So going after the Judge and the lawyers is a waste of valuable time, money and energy — something that the banks need you to do because they are sitting on a plan that claims money due when there is no money due to them, if at all. That is foreclosure.
So if you are addressing the Judge for example, you first do what you must do whenever you are attempting to establish rapport with anyone — find common ground. You talk about obvious things about which you all agree so you are perceived as reasonable.
THEN you move on to your argument about how this situation does not lead to the same result as the conventional case of foreclosure where an actual creditor is actually claiming a right to payment of an actual debt that is actually carried on its books as an asset receivable, which means that nonpayment did in fact cause it financial injury.
Under our laws and just plain common sense, if you see someone rob a bank for example, then you, as a witness, have no right to sue the robber for the money they stole; true simply because they didn’t steal it from you. Why should you get any money that was stolen from the bank? And that is your point. The fact that the foreclosure players know — or even witnessed — the fact that you refused to make any further payments makes them a witness, not a claimant. 
And yet…. if you do make the claim against the robber and the bank failed to press its own claim, you could get a judgement especially if the robber failed to raise any defenses. After all he knows he stole the money. [I am not equating homeowners with robbers. I am equitating banks with a unscrupulous version of you, making a claim to which you and  they are not entitled to receive any redress under law or common sense.]
The question is not whether you owed the money or had any reason to pay or not to pay. The question is why are they appearing as claimants instead of witnesses in a claim by someone who actually did suffer some financial loss caused by your alleged nonpayment.
And the question is why isn’t such a person (creditor) present in the foreclosure? Where are they? Who are they? Do they exist? If they don’t exist, was the transaction with the homeowner actually a loan transaction or was it something else entirely that was disguised as a loan transaction? 
So you START with the premise that all legal debts should be paid to the obligee — the person to whom the debt is owed. Everyone agrees with that. And you follow with the premise, under the U.S. Constitution, that only people who have been injured can seek redress in court. You get the judge to agree that everyone agrees that if someone fails to pay a mortgage debt to someone who owns it, they should be subject to foreclosure, forced sale of their home, no matter how long it has been in the family, and evicted if they try to stay anyway.
You talk about it as though you are in favor of foreclosure because that is where every judge starts. You don’t talk about foreclosure as though it is a new scheme that doesn’t have any support in logic or law because foreclosure has existed for centuries. It must exist because if someone parts with their money to give you a loan, they must be able to force repayment if you are unable or unwilling to make repayment. But that does not mean that a witness to nonpayment can make a claim.
And you must take the time to study and understand the true nature of what has been really been going on. Securitization is by definition the issuance of securities. While it can be a source of financing it is just as often a means to distribute risk. The reason why thinly capitalized companies like DiTech and Quicken Loans were given hundreds of millions of dollars to sell trillions of dollars of low interest loans was not because the investment banks had come up with a new formula to squeeze profit out of low interest payments.
It was because the return of principal and interest payments was irrelevant to their plan. The “failure” of such repayment plans was a centerpoint of the plan and they bet on it, making more and more money as each “loan” “failed.” Their plan was to sell securities. And the more securities they sold the more money they made because unlike all other securitization plans, they were not selling securities from an independent legal entity (client) that was going into business and using the proceeds to conduct or grow its business.
Instead they were selling securities for themselves, taking the money and using as little of it as possible to cover the scheme. The money used to create the illusion of loans was a cover for the real scheme.
The money, if any, that was sent to closing agents to close a transaction that was inaccurately described as a loan transaction was not delivered by the banks with the intent of creating a conventional loan product subject to lending laws. That would have made the investment bank a lender and they would have been named as such on the note and mortgage.
Quite the contrary. It was designed to evade lending laws in a scheme that had has its hallmark claims by the investment banks, who were running the show, that the scheme did not subject them to lending laws and was not a loan. 
By designating a false flag “originator” who was contractually unrelated to the investment bank and who received fees and bonuses from acting as though it was a lender, the banks now claim that they are not regulated by lending laws.
My position is take them at their word and stop fighting them.
OK, you are right but the only reason you are not subject to lending laws is that you did not engage in lending. So the money that arrived at the closing table was disguised conditional payment in exchange for a the homeowner’s signature on documents that could be used to fill in data on a spreadsheet.
It was that data (not the loans) that was sold dozens of times thus relieving the investment bank from any risk of loss. The money was a fee paid to homeowners who were lured into transactions that were fraudulently disguised as loans but were in fact part of a plan to steal money and homes.
Foreclosure is sought because it represents still more revenue and because by not foreclosing the banks would be admitting this wasn’t a loan in the first place. The money that went to homeowners or which was paid on their behalf was not a loan — it was only part of payment of a fee to which the homeowner was entitled (under quantum meruit) but knew nothing about and never had any opportunity to engage in free market negotiation.
The reason why (a) there is no creditor and the reason why (b) all the documents are fabricated and (c) all this testimony is pre-scripted for perjury is simply that it wasn’t a loan to begin with — and nobody now is carrying the loan as an asset receivable on their books. NOBODY! The loan does not and never did exist. And that is because the money received was not a loan, it was payment for signature and implied consent to use private data for resale.
The most basic law of contract is that there must be, at the outset, a meeting of the minds. The homeowner went into the transaction believing the false assertions that the money was a loan — instead of consideration for use of his or her private financial information and his or her signature.
The investment bank went into the transaction through a myriad of sham conduits posing as “lenders” for exorbitant fees. The investment banks were not lending money. They were paying money so they could issue and profit from the sale of securities in “securitization.” Without that there would have been transaction at all. Refer to the “Step Transaction Doctrine” and “Single Transaction Doctrine” for support in case decisions and statutes. You’ll find multiple references on this blog from the early days (2007–2008) of this blog.
The investment banks say they are not liable as lenders for noncompliance with lending laws. OK. A good lawyer can make a powerful argument for estoppel — the investment banks cannot take one position — that it wasn’t a loan in terms of regulation of lenders   — and then that it is a loan so they can foreclose without a creditor.
But to get the judge to even consider such an apparently ridiculous assertion you need to demonstrate, step by step, relentlessly, that the foreclosure team has nothing. That doesn’t happen in one pleading or one hearing. It ONLY happens if you know and consistently use and apply the rules and laws relating to court procedure, discovery and trial objections.
This argument can be made directly where the transaction was originated by the investment banks. Don’t get lost in the “warehouse lender” thickets — they were just one of many steps in a the circuitous process by which investment banks gave money to homeowners.
But where a real loan was actually made by a real lender and then acquired by investment banks through what they called “securitization” then the argument shifts to the idea that the debt was extinguished at acquisition. this is because when all was said and done there was no creditor who was holding the debt as an asset receivable on its books.
The fundamental point here, which can be corroborated with any knowledgeable person in the world of finance, is that neither the delivery of money to homeowners nor the acquisition of the debt after a real loan was originated was related to securitization as it had ever been done in the past.
Securitization is simply the process of dividing up an asset into shares and selling them. This was never done in connection with these transactions. Nobody ever received a share of any loan. Securitization in this context consisted solely of the issuance of securities by the securities brokerage firm (investment bank) posing as an underwriter for a “trust name” that was merely a fictitious name of the the underwriter itself. That is not securitization. The job of the litigator is to gently and relentlessly lead the judge to conclude that this might indeed be the case and thus deny the foreclosure.
Neil F Garfield, 73, is a Florida licensed attorney. He has received multiple academic and achievement awards in business and law. He is a former investment banker. securities analyst, and financial analyst.


If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.
In the meanwhile you can order any of the following:
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
Please visit www.lendinglies.com for more information.

Tonight! Don’t stop fighting or thinking about tomorrow! 3pm PDT 6PM EDT

Thursdays LIVE! Click in to the WEST COAST Neil Garfield Show

with Charles Marshall and Bill Paatalo

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


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.


FREE Information, Resources and Help with Your Mortgage Loans – Over 15,000,000 Visitors






The Neil Garfield Show

or prior episodes

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


About Neil F Garfield

Schedule Private Consultation

Purchase Services

Submit Case Interview Form – Receive Customized Recommended Services

Q & A – What can you do for me?

Contact Information:

GTC Honors, Inc.

Phone: 954-451-1230

Email: info@lendinglies.com

Services include: Expert Consultation Services, Strategy, Qualified Written Requests, Case Review and Reports, Forensic Analysis Referrals, Discovery , Motions, Pleadings, Complaints to AF and CFPB, Title and Encumbrance Analysis, and Case Analysis. We coach lawyers and pro se litigants. ALL 50 STATES.

MISSION STATEMENT: The mortgage crisis has produced manifest evil and injustice in our society.  It has hollowed out our economy.

The LendingLies Blog is the vehicle for a collaborative movement to provide homeowners with the tools needed to confront illegal foreclosures.

Free forms, articles and discussion of statutes, case precedent and policy on this site.

On www.lendinglies.com we provide paid crucial analytic and presentation services that enable lawyers and homeowners to confront the lies in attempted foreclosures.

Educate Yourself and Your Lawyer: Read this Blog and Purchase Books & Services from www.lendinglies.com

Dancing with ghosts. The banks have no shame in contradicting themselves

The bottom line is that foreclosures are all about collecting on unpaid debt. The only party who can initiate foreclosure proceedings that will force the sale of title to the home and then forcibly dispossess the homeowner is a party who owns the debt, is injured by nonpayment and who receives the proceeds of foreclosure as restitution for an unpaid debt.

In a pending case the attorneys for the “bank” argue that ownership of the debt is irrelevant.


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.
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).
Article 9, §203 of the Uniform Commercial Code as adopted by the statutes of the State of Hawaii simply says that a condition precedent to enforcement of as security instrument is payment for the debt. Opposing counsel has proposed a daring, inventive argument to avoid producing evidence of something that he should be anxious to demonstrate: this his client is an injured party seeking restitution. Instead opposing counsel has advanced argument intended to divert the court’s attention into Dickensian (see Bleak House, Charles Dickens, serially published March 1852-September 1853 ) meandering in which the point of the proceeding is totally lost on lawyers who no longer remember the reason the matter is in court.
The statute merely states as matter of law what is already axiomatic: in order to bring a case to court the claimant must be an injured party and present an actual controversy wherein some act of the accused has produced such injury. Opposing counsel doesn’t like that apparently because he does not represent an injured party and yet still seeks the remedy which thus will result in the generation of unaccountable revenue to a party simple because they asked for it.
In the case at bar the defendant has been sued in foreclosure, presumably for restitution of an unpaid debt. She asks in discovery whether the Plaintiff is actually the party who has suffered an injury by way of asking for evidence of who paid for the debt and when that occurred. In another decade counsel for the foreclosing party would have happily obliged, thus removing any likelihood of failure of the action. But here, counsel resists, saying that such a request is not warranted since the action is not dependent upon on ownership of the debt. It seems to be the argument that the mere possible existence of the debt is sufficient for anyone to enforce it.
Opposing counsel is essentially objecting as a substitute for filing a motion to dismiss or summary judgment. Despite the convoluted and erroneous arguments proposed by opposing counsel, the fact remains that discovery is allowed on any subject that could lead to the discovery (hence the name “discovery”) of admissible evidence. Since foreclosure is by definition a remedy for the recovery of debt, it is impossible to fathom an argument against requiring the suing party to answer questions about that debt. Yet that is exactly what opposing counsel seeks to do with smoke and mirrors. Defendant is entitled to an order requiring a good faith factual answer because there is no basis to deny her request or sustain any bojection of opposing counsel.
While it therefore is not necessary entertain the “merits” of the supercilious argument advanced by opposing counsel, the following is submitted in an abundance of caution.
Thus the first erroneous element of the argument of opposing counsel is that it ignores a simple fact, to wit: the note is one contract and the mortgage is another separate contract. Opposing counsel is seeking to mislead the court into ignoring the mortgage contract and laws concerning conditions precedent and standing to enforce the mortgage contract which is a security instrument, despite arguments to the contrary offered up by opposing counsel. If a mortgage is not a security instrument then it will come as unwelcome news to the holders of tens of millions of mortgages on real property.
In practice there are some presumptions that arise from possession and rights to enforce the promissory note in residential mortgage transactions; but those presumptions can be rebutted when, for example, the presumption of ownership of the loan is rebutted by evidence or inference or legal presumption — i.e., a showing that the claimant is neither the owner of the debt nor representing any owner of the debt who paid for it — or by undermining the use of the legal presumptions arising from their claims of possession, ownership or rights to enforce the promissory note. Those legal presumptions are those that allow a court tor reasonably conclude that the claimant is the owner of the debt and therefore would be receiving restitution for an unpaid debt to satisfy an unpaid debt due to the claimant.
Opposing counsel seeks to remove the very purpose of such legal presumptions, arguing instead that ownership of the debt is irrelevant and that anyone can initiate proceedings to forcibly divest title and peaceful possession from a homeowner merely by showing possession of the promissory note — thus wholly ignoring the conditions precedent to enforcement of the mortgage. The question of whether the proceeds of a foreclosure sale would go to pay anyone who had suffered actual economic loss from nonpayment is thus rendered irrelevant. Opposing counsel wishes this court to divert from current laws of enforcement of mortgages to new “interpretations” that only require certain conditions that allow for enforcement of the promissory note in residential mortgage transactions while ignoring any laws regarding the actual mortgage.
The fundamental flaw in their argument is that if they were right, then a few other things would also be true. The motive is clear — to provide a legal theory in which ownership of the debt is completely divorced from enforcement of the mortgage. This opens the door to moral hazard and outrage. Foreclosure, which is enforcement of a security instrument, is widely considered to be the most severe penalty under civil law — the equivalent of capital punishment in criminal law. It results in the loss of homestead property. Opposing counsel would have this court believe that no statutory law controls the conditions precedent to initiating a foreclosure proceeding. Such an offering is both absurd and dangerous.

First, the result of their intentionally misleading argument would be that there is no provision in the entire Uniform Commercial Code governing the conditions in which a mortgage could be enforced. This argument, wholly specious, produces the anomalous result of having no statutory authority setting forth standards for foreclosure and leaving it entirely to interpretation of contract law. If this were true, then foreclosure law would be entirely common law doctrine and would lead to wildly inconsistent results.
This is not the case. Foreclosure law is consistent in all U.S. jurisdictions precisely because the standards are the same, to wit: only the owner of the debt can authorize initiation of foreclosure proceedings because only the owner of the debt is an injured party arising from nonpayment. Opposing counsel is attempting to alter this paradigm and  enable virtually anyone with the right information to bring a foreclosure action, pocket the proceeds, and divest the homeowner of ownership and peaceful enjoyment of their home. Foreclosure is not and should not be an opportunity for entrepreneurs to generate revenue. Foreclosure is intended, by statute, to be strictly limited to a remedy (restitution) for an unpaid debt. Opposing counsel seeks to expand the remedy of foreclosure from restitution for an unpaid debt to the owner for the debt to a whole new concept — generation of revenue without regard to the owner of the debt.
Second, their argument is disingenuous. They are trying to get the court the court to assume that there is no UCC provision under Article 9 for enforcement of a security instrument against the owner of real property while at the same time they seek to use the UCC provisions under Article 3 to support legal presumptions that they are in fact owners of the debt and authorized to enforce not only the promissory note, which is governed by Article 3 but the mortgage which they say is not governed by anything. Thus they invoke the UCC for their purpose of invoking foreclosure procedure while at the same time they deny the application of the UCC to the actual enforcement of the mortgage.
Hence they seek to shift the focus from enforcement of the mortgage to enforcement of the note. In other words they want it both ways, to wit: they want the legal presumptions under Article 3 which removes any obligation to prove payment for the debt payment with evidence but they want to remove any possibility of rebutting those presumptions as being irrelevant, because now under their theory they don’t need to be or represent anyone who owns the debt by virtue of having paid for it.
Thus anyone who claims to possess the note and have the status of someone who could enforce it would also automatically be conclusively presumed to be able to enforce the mortgage. According to the argument proposed by opposing counsel, the note should be converted from being considered evidence of the debt to actually being the debt and the facts be damned. If someone else paid for the debt, they are automatically excluded from the foreclosure process — which means that the one party who actually might have suffered from nonpayment by the borrower gets none of the proceeds.
Hence the basic premise behind the argument of opposing counsel is to undermine existing law and replace it with a haphazard set of possible interpretations.
Next look at their convoluted attempt to state that Article 9 does not cover real estate transactions.
First, looking at the simple wording of Article 9, §203 UCC, if there was meant to be an exclusion or exemption, it would be there. No such exclusion or exemption exists. The argument of opposing counsel consists entirely of twisting other provisions of UCC, as adopted by the laws of the State of Hawaii, to mean that the law does not mean what it says when it relates to a residential mortgage. Without ambiguity, the court has no power to “interpret” the statute to mean something other than what is says. Yet opposing counsel seeks to have this court interpret the statute as being irrelevant thus rendering moot the entire concept of a present controversy, legal standing, and public policy.
The rest of opposing counsel’s arguments are rebuffed, rebutted and rejected by his own quotation from Article 9 §308 UCC which states as follows:
“(e) [Lien securing right to payment.]

Perfection of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage, or other lien on personal or real property securing the right.”

In plain language, the statute defining perfection of as security instrument includes the word “mortgage,” which is defined in Article 9 § 102 as “(55) “Mortgage” means a consensual interest in real property, including fixtures, which secures payment or performance of an obligation. “Security Instrument” is defined in Article 9 § 102 as “(74) “Security agreement” means an agreement that creates or provides for a security interest” and “secured Party is defined in Article 9 §102 as

“(73) “Secured party” means:

(A) a person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;

(B) a person that holds an agricultural lien;

(C) a consignor;

(D) a person to which accountschattel paperpayment intangibles, or promissory notes have been sold;

(E) a trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for; or

(F) a person that holds a security interest arising under Section 2-4012-5052-711(3)2A-508(5), 4-210, or 5-118.”

Opposing counsel attempt to thread the needle by pointing to only one of six possible situations in which the rights arise of a “Secured Party.” A mortgage clearly qualifies as a security interest, as banks and attorneys for banks have argued for centuries. Their position on this issue has been constant and it has been codified into state law that is consistent throughout all U.S. jurisdictions. They have always been right, until they said they were not right.

For all of the above reasons the objections of plaintiff should be overruled, the Plaintiff should be directly ordered to answer the queries of the Defendant and failing that, the Defendant is entitled sanctions and the legal presumption that the Plaintiff is not an owner the debt, not a secured party, has not paid value for the debt, and this does not qualify as an injured party.

California Decision for Borrower Post Sale in Eviction Proceeding


This is the latest of a string of decisions from trial judges who took the time to carefully analyze the law and then facts. In this case the issue was whether the Plaintiff in a lawsuit for Unlawful Detainer could be awarded Summary Judgment simply because the sale had been recorded.

This decision, following the law in all jurisdictions, says that recording the sale is interesting but not dispositive. If the actual sale was void because ti was conducted in favor of a party who was not a true beneficiary under the deed of trust, then the sale itself is void.

This judge quote approvingly from otheor case decisions words to the effect that any other decision would produce the absurd result of allowing completely disinterested parties to issue instructions to sell the property and then claim possession of homestead property.

Despite the long line of “bad results” published, this case shows that a case properly presented, properly argued and based upon sound legal reasoning has a good chance of gaining traction even after the foreclosure has been allowed to proceed. That means you need to prepare and be certain as to your facts and that you don’t ask the court to presume facts in your favor.

We don’t know how this case will  be decided at trial, if there is one. In all probability this case, like thousands of others like it, will most likely be buried by settlement with the homeowner and payment to the homeowner for executing a confidentiality agreement.

For those who bother to actually read the decision it looks like I wrote it. I didn’t. My point is that what I have provided in my articles is not theory. It is fact based upon established law and the real facts of most foreclosure cases. The assignments are void.

If the Plaintiff in this Unlawful Detainer case is unable to prove at trial that it is the owner of the debt it will lose because owning the debt is the key component or element of being a beneficiary under a deed of trust and a key component or element of a valid credit bid.

See 2019.07.15 – Minute order for MSJ


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.
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).

Key quotes from this decision:

“To establish that he is a proper plaintiff, one who has purchased property at a trustee’s sale and seeks to evict the occupant in possession must show that he acquired the property at a regularly conducted sale and thereafter “duly perfected” his title.” ((Code Civ. Proc., § 1161 a, subdiv. 3.) (Id.))[California]”

“[W]here the plaintiff in the unlawful detainer action is the purchaser at a trustee’s sale, he or she ‘need only prove a sale in compliance with the statute and deed of trust, followed by the purchase at such sale, and the defendant may raise objections only on that phase of the issue of title.”‘ (Bank of New York Mellon v. Preciado, (2013) 224 Cal. App. 4th Supp. 1, citing, Old Nat’/ Fin. Servs. V. Seibert (1987) 194 Cal.App.3d 460, 465, 239 Cal.Rptr. 728.) “The statute” with which a post-foreclosure plaintiff must prove compliance is Civ. Code, § 2924. (Bank of New York Mellon v. Preciado, supra, citing Seidell v. Anglo-California Trusts Co. (1942) 55 Cal.App.2d 913, 920, 132 P.2d 12.)

The term ‘duly’ implies that all of those elements necessary to a valid sale exist, else there would not be a sale at all.” (Bank of New York Mellon v. Preciado, supra at 9-10, citing Kessler v. Bridge (1958) 161 Cal.App.2d Supp. 837, 841, 327 P .2d 241 [internal citations omitted].) This holding by the court in Preciado makes clear that in Code Civ. Proc., § 1161a post-foreclosure trustee sale cases, a focus on the sale itself (rather than simply the recorded title documentation) is part of the analysis of determining  whether the title was “duly perfected.”

subsequent buyer must also prove that the trustee sale was conducted in accordance with Civ. Code, § 2924 and that title has been duly perfected. (Stephens, Parlain & Cunningham v. Hollis, supra, at p. 242.)

[l]f the borrower defaults on the loan, only the current beneficiary may direct the trustee to undertake the nonjudicial foreclosure process. “[O]nly the ‘true owner’ or ‘beneficial holder’ of a Deed of Trust can bring to completion a nonjudicial foreclosure under California law.” (Barrioneuveo v Chase Bank, N.A. (N.D.Cal.2012) 885 F.Supp.2d 964, 972.” (Id. at pp. 927-928.) Where the nonjudicial post-foreclosure trustee sale is not property initiated, ” … a borrower may base a wrongful foreclosure claim on allegations that the foreclosing party acted without authority because the assignment by which it purportedly became beneficiary under the deed of trust was not merely voidable but void.” (Yvanonova, supra, at pp. 851-852.)

“A void contract is without legal effect. (Rest.2d Contracts,§ 7, com. A.) “It binds no one and is a mere nullity.” (Little v. CFS Service Corp. (1987) 188 Cal.App.3d 1354, 1362, 233 Cal.Rptr. 923.) “Such a contract has no existence whatever. It has no legal entity for any purpose and neither action nor inaction of a party to it can validate it …. ” (Colby v. Title Ins. And Trust Co. (1911) 160 Cal. 632, 644, 117 P. 913.) “If a purported assignment necessary to the chain by which the foreclosing entity claims that power is absolutely void, meaning of no legal force or effect whatsoever, [internal citations omitted] the foreclosing entity has acted without legal authority by pursuing a trustee’s sale, and such an unauthorized sale constitutes a wrongful foreclosure. (Yvanonova, supra, at pp. 855-856; citing Barrionuevo v. Chase Bank, N.A., at pp. 973-974.

it would be an “‘odd result indeed’ were a court to conclude a homeowner had no recourse where anyone, even a stranger to the debt, had declared a default and ordered a trustee’s sale.”

“[w]hen a non-debtholder forecloses, a homeowner is harmed because he or she has lost her home to an entity with no legal right to take it. If not for the void assignment, the incorrect entity would not have pursued a wrongful foreclosure. Therefore, the void assignment is the cause-in-fact of the homeowner’s injury and all he or she is required to allege on the element of prejudice.” (Id. at pp. 555-556.) “A contrary rule would lead to a legally untenable situation – i.e., that anyone can foreclose on a homeowner because someone has the right to foreclose. ‘And since lenders can avoid the court system entirely through nonjudicial foreclosures, there would be no court oversight whatsoever.”‘

If you think foreclosures are a thing of the past, think again

In order to maintain the illusion of legality and an orderly marketplace the banks and their servicers must continue to push foreclosures even if it means going after people who are not actually withholding payments. The legacy of the mortgage meltdown and the brainless government policies that let the banks get away with what they had done, is that the crime not only continues but is being repeated with each new claimed securitization or “resecuritization” of residential loans.

As I predicted in 2006, the  tidal wave of foreclosures was in fact unprecedented, underestimated and continues to this day. With a starting point of around 2002, foreclosures attributed to the mortgage meltdown have continued unabated for 17 years. I said it would 20-30 years and I am sticking with that, although new evidence suggests it will go on much longer. So far more than 40 million people have been displaced from their homes and their lives.

Google Buffalo and New Jersey, for example and see whether they think foreclosures are a thing of the past. They don’t. And the people in Buffalo are echoing sentiments across the nation where the economy seems better, unemployment is down, wages are supposedly increasing but foreclosures are also increasing.

And let’s not forget that back in the early and mid 2000’s foreclosures did not mention trustees or trusts. In fact when the subject was raised by homeowners it was vehemently denied in courts cross the country. The denials were that the trusts even existed. This was not from some homeowner or local lawyer. This was from the banks and their attorneys. It turns out they were telling the truth then.

The trusts didn’t exist and there were no trustees. But in the upside down world of foreclosure here we are with most foreclosures filed in the name of a nonexistent implied trust on behalf of a “trustee” with no trustee powers, obligations or duties to administer any assets much less loans in foreclosure.

In order to understand this you must throw out any ideas of a rational market driven by fundamental economics and accept the fact that the banks  and their servicers continue to be engaged in the largest economic crime in human history. Their objective is foreclosure because that accomplishes two goals: first, it rubber stamps prior illegal practices and theft of borrowers’ identities for purposes of trading profits and second, it gives them a free house and free money.

If they lose a foreclosure case nobody suffers a financial loss. If they win, which they do most of the time (except where homeowners aggressively defend) they get a free house and the proceeds of sale are distributed to the players who are laughing, pardon the pun, all the way to the bank. Investors get ZERO.

As for modifications, look closely. The creditor is being changed along with the principal interest and payments. It might just be a new loan, except for the fact the new “lender” is a servicer like Ocwen who has not advanced any money for the purchase or acquisition the loan. But that’s OK because neither did the lender or the claimant. Modification is a PR stunt to make it look like the banks are doing something for borrowers when in fact they are stealing or reassigning the loan to a totally different party from anyone who previously appeared in the chain of title.

Modification allows the banks to claim that the loan is performing — thus maintaining the false foundation supporting trades and profits amounting to dozens of times the amount of the loan. Watch what happens when you ask for acknowledgement from the named Plaintiff in judicial states or the named beneficiary in nonjudicial states. You won’t get it. If US Bank was really a trustee then acknowledging a settlement on its behalf would not be a problem. As it stands, that is off the table.

The mega banks, with unlimited deep pockets derived from their massive economic crimes, began a campaign of whack-a-mole to create the impression that foreclosures were on the decline and the crisis is over. Their complex plan involves decreasing the number of filed foreclosures where the numbers are climbing and increasing the filed foreclosures where they have allowed the numbers to sink. Add that to their planted articles in Newspapers and Magazines around the country and it all adds up to the impression that foreclosures derived from claimed securitized loans are declining.

Not so fast. There were over 600,000 reported foreclosures last year and the numbers are rising this year. Most of them involve false claims of securitization where the named claimant is simply appointed to pretend to be the injured party. It isn’t and in many cases a close look at the “name” of the claimant reveals that no legal person or entity is actually named.

US Bank is often named but not really present. It says it is not appearing on its own behalf but as Trustee. The trust is not specifically named but is implied without the custom and practice of naming the jurisdiction in which the trust was organized or the jurisdiction in which it maintains a business. That’s because there is no trust and there is no business and US Bank owns no debt, note or mortgage in any capacity. The certificates are held by investors who acknowledge that they have no right, title or interest in the debt, note or mortgage. So who is the claimant? Close inspection reveals that nobody is named.

In fact, those foreclosures proceed often without contest because homeowners mistakenly believe they are in default. In equity, if the facts were allowed in as evidence, the homeowner would be entitled to a share of the bounty that was a windfall to the investment bank and its affiliates by trading on the borrower’s signature. A “free house” only partially compensates the homeowner for the illegal noncensual trading on his name with the intent of screwing him/her later.

Upon liquidation of the property the proceeds of sale are deposited not by an owner of the debt, but by one of the players who just added insult to injury to both the borrower and the original investors who paid real money but failed to get an interest in the fabricated closing documents — i.e., the note and mortgage.

The Banks have succeeded in getting everyone to think about how unfair it is that homeowners would even think of pursuing a “free house”. By doing that they distract from the fact that the homeowners and the investors who put up the origination or acquisition money are both excluded from the huge profits generated by trading on the signature of borrowers and the money of investors who do not get to share in the bounty, which is often 20-40 times the amount of the loan.

The courts don’t want to hear about esoteric arguments about the securitization process. Judges assume that somewhere in the complex moving parts of the securitization scheme there is an owner of the debt who will get compensated as a result of the homeowner’s refusal or failure to make monthly payments of interest and principal. That assumption is untrue.

This is revealed when the money from the sale of property is traced. If you trace the check you will be mislead. Regardless of where the check is mailed, the check is actually cashed by a servicer who deposits it to the account of an investment bank who has already received many times the amount of the loan principal. That money is neither credited to the account of the borrower nor reported, much less distributed to investors who bought certificates (wrongly named “mortgage bonds”).

Neither the investors who bought the original uncertificated certificates nor the investors who purchased contracts based upon the apparent value of the certificates ever see a penny of the proceeds of a foreclosure sale.

In order to maintain the illusion of legality and an orderly marketplace the banks and their servicers must continue to push foreclosures even if it means going after people who are not actually withholding payments. The legacy of the mortgage meltdown and the brainless government policies that let the banks get away with what they had done, is that the crime not only continues but is being repeated with each new claimed securitization or “resecuritization” of residential loans.

When the economy contracts, as it always does, the number of foreclosures will shoot up like a thermometer held over a steam radiator. And instead of actually looking for facts people will presume them. And that will lead to more tragedy and more inequality of income, wealth and opportunity in a country that should be all about a level playing field. This is not the marketplace doing its work. It is the perversion of the marketplace caused by outsized and unchecked power of the banks.

My solution is predicated on the idea that everyone is to blame for this. Everyone involved should share in losses and gains from this illicit scheme. Foreclosures should come to a virtual halt. Current servicers should be barred from any connection with these loan accounts. Risk and loss should be shared based upon an equitable formula. And securitization should be allowed to continue as long as securitization is actually happening — so long as the investors and borrowers are aware that they are the only two principals on opposite sides of a complex transaction in which trading profits are likely as part of the disclosed compensation of the intermediaries in the loans originated or acquired.

Disclosure allows the borrowers and the investors to bargain for better deals — to share in the bounty. And if there is no such bounty with full disclosure it will then be because market forces have decided that there should not be any such rewards.

What is the effect of TILA Rescission on My title? Can I sue for damages?

I have been getting the same questions from multiple attorneys and homeowners. One of them is preparing a brief to the U.S. Supreme Court on rescission, but is wondering, as things stand whether she has any right to sue for damages. When our team prepares a complaint or other pleading for a lawyer or homeowner we concentrate on the elements of what needs to be present and the logic of what we are presenting. It must be very compelling or the judge will regard it as just another attempt to get out of justly due debt.

Let us help you plan your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult


Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).



Combining fact patterns from multiple inquiries we start with a homeowner who actually sent two notices of rescission (2010 and 2017). Questions vary from who do I sue for damages to how do I get my title back?

Note that the biggest and most common error in rescission litigation is that the homeowner attempts to (a) have the court declare the rescission effective contrary to their own argument that it is already effective by operation of law, 15 USC §1635, and (b) seek to enforce the TILA rescission statutory duties beyond one year after rescission.

Whether you can sue for damages is one question. Whether the rescission had the effect of removing the jurisdiction, right or authority to dispossess you of title is another. And whether title ever changed is yet another. Yes you can sue for damages if not barred by a statute of limitations. Yes authority is vitiated by operation of law regardless of the status of litigation. And NO, title never changed and you probably own your house unless state law restricts your right to claim such ownership.

All three questions are related.
Taking the last question (did title actually change?) first, my opinion is that the rescission was effective when mailed. Therefore the note and mortgage were void. The failure of the alleged “lender” to comply with the rescission duties and then pursue repayment within one year from the date of rescission bars them from pursuing the debt. So at this point in time (equally applicable to the 2017 rescission notice) there is no note, mortgage or enforceable debt.
  • Hence any further activities to enforce the note and mortgage were legally void. And that means that any change of title wherein a party received title via any instrument executed by anyone other than you is equally legally void. In fact, that would be the very definition of a wild deed.
  • The grantor did not have any right, title or interest to convey even if it was a Sheriff, Clerk or Trustee in a deed of trust.
  • Any other interpretation offered by the banks would in substance boil down to arguments about why the rescission notice should not be effective upon mailing, like the statute says and like SCOTUS said 9-0 in Jesinoski.
  • CAUSES OF ACTION would definitely include
    • the equitable remedy of mandatory and prohibitive injunctions to prevent anyone from clouding your title or harassing you for an unenforceable debt would apply. But as we have seen, the trial courts and even the appellate courts refuse to concede that the rescission notice is effective upon mailing by operation of law, voiding the note and mortgage.
    • such a petition could also seek supplemental relief (i.e., monetary damages) and could be pursued as long as the statute of limitations does not bar your claim for damages. This is where it gets academically interesting. You are more likely to be barred if you use the 20010 rescission than you are if you use the 2016 rescission.
    • a lawsuit for misrepresentation (intentional and/or negligent) might also produce a verdict for damages — compensatory and punitive. It can be shown that bank lawyers were publishing all over the internet warning the banks to stop ignoring rescission. They knew. And they did it anyway. Add that to the fact that the foreclosing party was most often a nonexistent trust with no substance to its claim as administrator of the loan, and the case becomes stronger and potentially more lucrative.
    • CLASS ACTION: Mass joinder would probably be the better vehicle but the FTC and AG’s (and other agencies) have bowed to bank pressure and made mass joinder a dirty word. It is the one vehicle that cannot be stopped for failure to certify a class because there is not class — just a group of people who have the same cause fo action with varying damages. The rules for class actions have become increasingly restrictive but it certainly appears that technically the legal elements for certification fo the class are present. It is very expensive for the lawyers, often exceeding $1 million in costs and expenses other than fees.
    • Bottom line is that you legally still own your property but it may take a court to legally unwind all of the wrongful actions undertaken by previous courts at the behest of banks misrepresenting the facts. Legally title never changed, in my opinion.

Taking the second question (the right to dispossess your title) my answer would obviously be in the negative (i.e., NO). Since there was no right to even attempt changing title without the homeowner’s consent and signature, petitions to vacate such actions and for damages would most likely apply.

  • This question is added because the courts are almost certainly going to confuse (intentionally or not) the difference between unauthorized actions and void actions.
  • The proper analysis is obviously that the rescission is effective upon mailing by operation of law.
  • Being effective by operation of law means that the action constitutes an event that has already happened at the moment that the law says it is effective. If a court views this simply as “unauthorized” actions then it will most likely slip back into its original “sin”, to wit: treating rescission as a claim rather than an event that has already transpired.

And lastly the issue of claims for damages. There are different elements to each potential cause of action for damages or supplemental relief. I would group them as negligence, fraud, and breach of statutory duty.

  • As to the last you are barred from enforcing statutory duties in the TILA rescission statute if you are seeking such relief more than one year after rescission. But there are other statutes — RESPA, FDCPA and state statutes that are intended to provide for consumer protection or redress when the statutes are violated. There are statutory limits on the amount of damages that can be awarded to a consumer borrower.
  • Fraud requires specific allegations of misrepresentations — not just an argument that the position taken by the banks and servicers was wrong or even wrongful. It also requires knowledge and intent to deceive. It is harder to prove first because fraud must be proven by clear and convincing evidence which is close to beyond a reasonable doubt. Second it is harder to prove because you must go into “state of mind” of a business entity. The reward for proving fraud is that it might open the door to punitive damages and such awards have been in the millions of dollars.
  • Negligence is the easier to prove that it is more likely than not that the Defendant violated a statutory or common law duty — a duty of care. So the elements are simple — duty, breach of that duty, proximate cause of injury, and the actual injury. Negligent misrepresentation and negligent super vision and gross negligence are popular.

Punitive Damages for Violations of Automatic Stay in Bankruptcy §362

Since 2008 I have called out bankruptcy practitioners for their lack of interest in false claims of securitization. The impact on the bankruptcy estate is usually enormous. But without aggressive education of the presiding judge the case will not only go as planned by the banks, it will also lock in the homeowner to “admissions” in bankruptcy schedules and orders that lead to a false conclusion of fact.

Where a pretender lender ignores the automatic stay Bankruptcy judges are and should be very harsh in their penalty. The stay is the bulwark of consumer protection under bankruptcy proceedings which are specifically enabled by the U.S. Constitution. Hence it is as important as free speech, freedom of assembly, freedom of religion and the right to keep and bear arms.

The attached article shown in the link below gives the practitioner a running start on holding the violator responsible and in giving the homeowner a path to punitive damages, given the corrupt nature of the mortgages and foreclosures that arose during the great mortgage meltdown.

This might be the place where a hearing on evidence is conducted as to the true nature of the forecloser and a place where the petitioner/homeowner will be given far greater latitude in discovery to reveal the emptiness behind the presumptions that the foreclosing “party” exists at all or to show that it never acquired the debt but seeks instead to enforce fabricated paper.

Remember that in cases involving securitization claims or which are based upon apparent securitization patterns the named “Trustee” is not the party in interest. The party is the named “Trust.” If the Trust doesn’t exist it doesn’t matter if the Pope is named as the Trustee, there still is no existing party seeking relief from the Court.

see Eviction Can Lead to Sanctions Including Punitive Damages for Violation of Automatic Stay

The challenge here is that most bankruptcy lawyers are not well equipped for litigation. So it is advised that a litigator be introduced into the case to plead and prove the case for sanctions, if the situation arises in which a violation of stay has occurred or if there is an adversary proceeding seeking to prevent the pretender lender from acting on its false claims.

Most of the litigation in bankruptcy court has simply been directed at motions to lift the automatic stay. In such motions, the petitioner is merely saying we want to litigate this in state court. The burden of proof is as light as a puff of smoke. If the court finds any colorable interest in the alleged loan, it will ordinarily grant the motion to lift stay — as it must under the existing rules. Homeowners in bankruptcy find it a virtually impossible uphill climb to defend because they are required to have evidence only in possession of the opposing party who also might not have the information needed to prove the lack of any colorable interest.

But the lifting of the stay applies to the litigation concerning foreclosure. It does not necessarily extend to the eviction or unlawful detainer that occurs afterwards. And where the stay has not been lifted the pretender lender is out of luck because there is no excuse for ignoring the automatic stay.

So further action by the foreclosing party is probably a violation of the automatic stay. And in certain cases the court might apply punitive damages on top of consequential damages, if any. The inability to prove actual damages is relatively unimportant unless the homeowner has such damages. It is the violation of the automatic stay that is paramount.

The article below starts with a premise that the “creditor” has received notice of the BKR and ignored it — sometimes willfully and arrogantly.

Here are some notable quotes from this well-written article by Carlos J. Cuevas.

The imposition of punitive damages for egregious violations of the automatic stay is vital to the function of the consumer bankruptcy system. Most consumer debtors cannot afford to pay their attorneys to prosecute an automatic stay violation. The enforcement of the automatic stay is predicated upon major financial institutions observing the automatic stay.

If there is a doubt as to the applicability of the automatic stay, then a creditor can obtain a comfort order as to the applicability of the automatic stay, or obtain relief from the automatic stay from the Bankruptcy Court.

“Parties may not make their own private determination of the scope of the automatic stay without consequence.”

What would be sufficient to deter one creditor may not even be sufficient to gain notice from another. Punitive damages must be tailored not only based upon the egregiousness of the violation, but also based upon the particular creditor in violation.

In determining whether to impose punitive damages under Bankruptcy Code Section 362(k), several bankruptcy courts have identified five factors to guide their decision. They are the nature of the creditor’s conduct, the creditor’s ability to pay, the motives of the creditor, any provocation by the debtor, and the creditor’s level of sophistication: In re Jean-Francois, 532 B.R. 449, 459 (Bankr. E.D.N.Y. 2015).

The fact that Church Avenue pursued the eviction more than a week after it learned of the debtor’s bankruptcy suggests that Church Avenue either made its own—incorrect—legal conclusion with respect to whether the eviction would be a stay violation, or decided that moving ahead to empty the building quickly and evict the occupants was worth more to it than the risk associated with defending a future § 362(k) motion.

when a creditor acts in arrogant defiance of the automatic stay it is circumventing the authority of the bankruptcy judge to exercise authority over that particular bankruptcy case. A bankruptcy judge is the only entity vested with the authority to determine whether the automatic stay should be lifted.

Egregious violations of the automatic stay can be deleterious to a consumer bankruptcy debtor. For example, a creditor who refuses to return a repossessed vehicle after the commencement of a bankruptcy case can create a significant hardship for a consumer debtor. A debtor whose vehicle has been repossessed may not be able to rent a substitute vehicle. This can create a significant hardship for a debtor who has to commute to work, who has to transport a child to school, or who is a caregiver for a sick relative.

How Do We Know That the Name of the Trustee was Rented?

The practice of paying a fee to a “service provider” to conceal the real nature of a transaction and the real parties in interest has been at the center of all Wall Street schemes that are at variance from conventional loan products.

Virtually all parties who appear in the chain of title or possession in securitization schemes are parties who rent their name to lend credence to the illusion of the loan transaction, loan transfers and foreclosures.

The truth is simply that the debt is never purchased and sold in such circumstances. But paper is created to create the illusion that “the loan” has been purchased and sold. It wasn’t. This illusion is created by simply using the names of the biggest banks in the world.

See Rent-A-Name popular amongst banks

So Payday lenders, the bottom feeders of an already corrupt lending industry, are renting the names of Native American tribes in order to escape rules and laws that apply to lending in general and Payday lenders in particular. They do it because the tribes might be exempt from certain Federal laws and rules. This enables them to charge higher and higher “interest rates” that are in fact gouging American consumers. So the tribal name or jurisdiction is invoked and the lenders pretend that they are not the real parties in interest. More pretender lenders.

This is what happens when we don’t enforce the existing laws and rules in the first place for fear of angering or collapsing the major banks. The prevailing view is that collapsing the TBTF banks — i.e., putting them out of business — is a bad thing no matter how badly they behave.

In the case of REMIC Trusts, big name banks have a tacit and express agreement (which should be pursued in discovery) in which they each will allow their names to be used or rented for a fee. This cross pollination of names, makes it appear that the giant banks are in fact the injured parties in foreclosures. I can say with 100% certainty this is not the case where claims of securitization are involved.

Banks have been quick to point out when faced with judgments for costs, fees or sanctions that they are NOT the foreclosing party and that their name only appears as “Trustee” of a self-proclaimed REMIC Trust. The “party” is the REMIC Trust itself, they say. But when you peek under the hood, the named Trust is just that — only a name. There is no trust and there have been no transactions in which the nonexistent trust’s name has been involved wherein loans have been purchased — or in which anything has been purchased.

Logic dictates and data confirms that the reason for this lack of transactional data is that there were no such transactions. Logic further dictates that the only possible conclusion is that the “investor money” was never entrusted to the falsely named big bank, as trustee and therefore could not have been entrusted to the REMIC Trust. Hence a key element of any valid trust is missing — the active management by a named trustee of assets that were entrusted tot he trustee on behalf of beneficiaries.

So there is no trust and there is court jurisdiction to grant relief in the name of a nonexistent trust. Reading the so-called trust instrument (Pooling and Servicing Agreement) also reveals the absence of trustor/settlor. So not only is the putative trust empty, it also lacks a trustor and trustee. Further inquiry into the PSA and the indenture for the the fake RMBS certificates reveals that the investors are not beneficiaries of a trust because even if the trust existed, the indenture disclaim such an interest in compliance with the buried description in the PSA.

So there is no trust, no trustee, no trustor, and no beneficiary. The investors’ only interest is in the form of a constructive trust, shared with other investors who may or may not be in the same “pool”. The opportunity for commingling money from thousands of investors in multiple pools is just too good for the bank to pass up.

Thus the laws and rules governing the highly complex lending marketplace require only an illusion of compliance instead of the real thing. Court administrators justified their “rocket dockets” by judicial economy and expediency, requiring the courts to hire more judges and personnel. But that is only true if the foreclosure were real. Some courts have required that the original note must be filed with the court upon suit and others require an affidavit describing possession and ownership of the so-called loan documents. Some affidavits must be executed by the lawyers seeking foreclosure on behalf of their clients.

My question is if the trust does not exist except in the minds of certain financiers and there are no trust assets and no active management of them (obviously) then how truthful is it for any lawyer  to execute documents for filing in court on behalf of a client that the lawyer knows or should know does not exist?


Impact of Serial Asset Sales on Investors and Borrowers

The real parties in interest are trying to make money, not recover it.

The Wilmington Trust case illustrates why borrower defenses and investor claims are closely aligned and raises some interesting questions. The big question is what do you do with an empty box at the bottom of an organizational chart or worse an empty box existing off the organizational chart and off balance sheet?

At the base of this is one simple notion. The creation and execution of articles of incorporation does not create the corporation until they are submitted to a regulatory authority that in turn can vouch for the fact that the corporation has in fact been created. But even then that doesn’t mean that the corporation is anything more than a shell. That is why we call them shell corporations.

The same holds true for trusts which must have beneficiaries, a trustor, a trust instrument, and a trustee that is actively engaged in managing the assets of the trust for the benefit of the beneficiaries. Without the elements being satisfied in real life, the trust does not exist and should not be treated as though it did exist.


FREE RESEARCH: Go to our home page and enter subject in search bar.

Let us help you plan and draft your answers, affirmative defenses, discovery requests and defense narrative: Contact us now at info@lendinglies.com

954-451-1230 or 202-838-6345. Ask for a CONSULT.

REGISTRATION FORM: You will make things a lot easier on us and yourself if you fill out the registration form. It’s free without any obligation. No advertisements, no restrictions.

Purchase an audio seminar now, together with seminar materials


About Neil F Garfield, M.B.A., J.D.


The banks have been pulling the wool over our eyes for two decades, pretending that the name of a REMIC Trust invokes and creates its existence. They have done the same with named Trustees and asserted “Master Servicers” of the asserted trust. Without a Trustor passing title to money or property to the named Trustee, there is nothing in trust.

Therefore whatever duties, obligations, powers or restrictions that exist under the asserted trust instrument do not apply to assets that have not been entrusted to the trustee to administer for the benefit of named beneficiaries.

The named Trustee or Servicer has nothing to claim if their claim derives from the existence of a trust. And of course a nonexistent trust has no claim against borrowers in which the beneficiaries of the trust, if they exist, have disclaimed any interest in the debt, note or mortgage.

The serial nature of asserted transfers in which servicing rights, claims for recovery of servicer advances, and purported ownership of note and mortgage is well known and leaves most people, including judges and regulators scratching their heads.

An assignment of mortgage without a a transfer of the indebtedness that is claimed to be secured by a mortgage or deed of trust means nothing. It is a statement by one party, lacking in any authority to another party. It says I hereby transfer to you the power to enforce the mortgage or deed of trust. It does not say you can keep the proceeds of enforcement and it does not identify the party to whom the debt will be paid as proceeds of liquidation of the home at or after the foreclosure sale.

As it turns out, many times the liquidation results in surplus funds — i.e., proceeds in excess of the asserted debt. That should be turned over to the borrower, but it isn’t; and that has spawned a whole new cottage industry of services offering to reclaim the surplus proceeds.

In most cases the proceeds are less than the amount demanded. But there are proceeds. Those are frequently swallowed whole by the real party in interest in the foreclosure — the asserted Master Servicer who claims the proceeds as recovery of servicer advances without the slightest evidence that the asserted Master Servicer ever paid anything nor that the asserted Master Servicer would be out of pocket in the event the “recovery” of “servicer advances” failed.

The foreclosure of the property proceeds with full knowledge that whatever the result, there are no creditors who will receive any money or benefit. The real parties are trying to make money, not recover it. And whatever proceeds or benefits might arise from the foreclosure action are grabbed by a party in a self-proclaimed assertion that while the foreclosure was brought in the name of a trust, the proceeds go to a different third party in derogation of the interests of the asserted trusts and the alleged investors in those trusts who are somehow not beneficiaries.

So investors purchase certificates in which the fine print usually says that for their own protection they disclaim any interest in the underlying debt, note or mortgages. Accordingly we have a trust without beneficiaries.

The existence of those debts, notes or mortgages becomes irrelevant to the investors because they have a promise from a trustee who is indemnified on behalf of a trust that owns nothing. The certificates are backed by assets of any kind. Even if they were “backed” by assets, the supposed beneficiaries have disclaimed such interests.

Thus not only does the trust own nothing even the prospect of security has been traded off to other investors who paid money on the expectation of revenue from the notes and mortgages claimed by the asserted trust through its named trustee.

In the end you have a name of a trust that is unregistered and never asserted to be organized and existing under the laws of any jurisdiction, trustee who has no duties and even if such duties were present the asserted trust instrument strips away all trustee functions, no beneficiaries, and no res, and no active business requiring administration nor any business record of such activity.

Yet the trust is the entity that  is chosen as the named Plaintiff in foreclosures. But the way it reads one is bound to believe that assumption that is not and never was true or even asserted: that the case involves the trustee bank for anything more than window dressing.

It is the serial nature of the falsely asserted transfers that obscures the real parties in interest in both securities transactions with investors and loans with borrowers. The unavoidable conclusion is that nothing asserted by the banks (players in  falsely claimed securitization schemes) is real.

Breaking it Down: What to Say and Do in an Unlawful Detainer or Eviction

Homeowners seem to have more options than they think in an unlawful detainer action based upon my analysis. It is the first time in a nonjudicial foreclosure where the foreclosing party is actually making assertions and representations against which the homeowner may defend. The deciding factor is what to do at trial. And the answer, as usual, is well-timed aggressive objections mostly based upon foundation and hearsay, together with a cross examination that really drills down.

Winning an unlawful detainer action in a nonjudicial foreclosure reveals the open sores contained within the false claims of securitization or transfer.

NEED HELP PREPARING FOR UNLAWFUL DETAINER TRIAL? We can help you with Discovery and Compelling Responses to Discovery Requests with Our Paralegal Team that works directly with Neil Garfield! We provide services directly to attorneys and to pro se litigants.

Get a LendingLies Consult and a LendingLies Chain of Title Analysis! 202-838-6345 or info@lendinglies.com.

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave a message or make payments.

OR fill out our registration form FREE and we will contact you!





Matters affecting the validity of the trust deed or primary obligation itself, or other basic defects in the plaintiffs title, are neither properly raised in this summary proceeding for possession, nor are they concluded by the judgment.” (Emphasis added.) (Cheney v. Trauzettel (1937) 9 Cal.2d 158, 159-160.) My emphasis added

So we can assume that they are specifically preserving your right to sue for damages. But also, if they still have the property you can sue to get it back. If you do that and file a lis pendens they can’t sell it again. If a third party purchaser made the bid or otherwise has “bought” the property you probably can’t touch the third party — unless you can show that said purchaser did in fact know that the sale was defective. Actual knowledge defeats the presumptions of facially valid instruments and recorded instruments.

The principal point behind all this is that the entire nonjudicial scheme and structure becomes unconstitutional if in either the wording of the statutes or the way the statutes are applied deprive the homeowner of due process. Denial of due process includes putting a burden on the homeowner that would not be there if the case was brought as a judicial foreclosure. I’m not sure if any case says exactly that but I am sure it is true and would be upheld if challenged.

It is true that where the purchaser at a trustee’s sale proceeds under section 1161a of the Code of Civil Procedure he must prove his acquisition of title by purchase at the sale; but it is only to this limited extent, as provided by the statute, that the title may be litigated in such a proceeding. Hewitt v. Justice’ Court, 131 Cal.App. 439, 21 P.(2d) 641; Nineteenth Realty Co. v. Diggs, 134 Cal.App. 278, 25 P.(2d) 522; Berkeley Guarantee Building & Loan Ass’n v. Cunnyngham, 218 Cal. 714, 24 P.(2d) 782. — [160] * * * In our opinion, the plaintiff need only prove a sale in compliance with the statute and deed of trust, followed by purchase at such sale, and the defendant may raise objections only on that phase of the issue of title

So the direct elements are laid out here and other objections to title are preserved (see above):

  • The existence of a sale under nonjudicial statutes
  • Acquisition of title by purchase at the sale
  • Compliance with statutes
  • Compliance with deed of trust

The implied elements and issues are therefore as follows:

  • Was it a Trustee who conducted the sale? (i.e., was the substitution of Trustee valid?) If not, then the party who conducted the sale was not a trustee and the “sale” was not a trustee sale. If Substitution of Trustee occurred as the result of the intervention of a party who was not a beneficiary, then no substitution occurred. Thus no right of possession arises. The objection is to lack of foundation. The facial validity of the instrument raises only a rebuttable presumption.
  • Was the “acquisition” of title the result of a purchase — i.e., did someone pay cash or did someone submit a credit bid? If someone paid cash then a sale could only have occurred if the “seller” (i.e., the trustee) had title. This again goes to the issue of whether the substitution of trustee was a valid appointment. A credit bid could only have been submitted by a beneficiary under the deed of trust as defined by applicable statutes. If the party claiming to be a beneficiary was only an intervenor with no real interest in the debt, then the “bid” was neither backed by cash nor a debt owed by the homeowner to the intervenor. According there was no valid sale under the applicable statutes. Thus such a party would have no right to possession. The objection is to lack of foundation. The facial validity of the instrument raises only a rebuttable presumption.

The object is to prevent the burden of proof from falling onto the homeowner. By challenging the existence of a sale and the existence of a valid trustee, the burden stays on the Plaintiff. Thus you avoid the presumption of facial validity by well timed and well placed objections.

” `To establish that he is a proper plaintiff, one who has purchased property at a trustee’s sale and seeks to evict the occupant in possession must show that he acquired the property at a regularly conducted sale and thereafter ‘duly perfected’ his title. [Citation.]’ (Vella v. Hudgins (1977) 20 Cal.3d 251,255, 142 Cal.Rptr. 414,572 P.2d 28; see Cruce v. Stein (1956) 146 Cal.App.2d 688,692,304 P.2d 118; Kelliherv. Kelliher(1950) 101 Cal.App.2d 226,232,225 P.2d 554; Higgins v. Coyne (1946) 75 Cal.App.2d 69, 73, 170 P2d 25; [*953] Nineteenth Realty Co. v. Diggs (1933) 134 Cal.App. 278, 288-289, 25 P2d 522.) One who subsequently purchases property from the party who bought it at a trustee’s sale may bring an action for unlawful detainer under subdivision (b)(3) of section 1161a. (Evans v. Superior Court (1977) 67 Cai.App.3d 162, 169, 136 Cal.Rptr. 596.) However, the subsequent purchaser must prove that the statutory requirements have been satisfied, i.e., that the sale was conducted in accordance with section 2924 of the Civil Code and that title under such sale was duly perfected. {Ibid.) ‘Title is duly perfected when all steps have been taken to make it perfect, i.e. to convey to the purchaser that which he has purchased, valid and good beyond all reasonable doubt (Hocking v. Title Ins. & Trust Co, (1951), 37 Cal.2d 644, 649 [234 P.2d 625,40 A.L.R.2d 1238] ), which includes good record title (Gwin v. Calegaris (1903), 139 Cal. 384 [73 P. 851] ), (Kessler v. Bridge (1958) 161 Cal.App.2d Supp. 837, 841, 327 P.2d 241.) ¶ To the limited extent provided by subdivision (b){3) of section 1161a, title to the property may be litigated in an unlawful detainer proceeding. (Cheney v. Trauzettel (1937) 9 Cal.2d 158, 159, 69 P.2d 832.) While an equitable attack on title is not permitted (Cheney, supra, 9 Cal.2d at p. 160, 69 P.2d 832), issues of law affecting the validity of the foreclosure sale or of title are properly litigated. (Seidel) v. Anglo-California Trust Co. (1942) 55 Cai.App.2d 913, 922, 132 P.2d 12, approved in Vella v. Hudgins, supra, 20 Cal.3d at p. 256, 142 Cal.Rptr. 414, 572 P.2d 28.)’ ” (Stephens, Partain & Cunningham v. Hollis (1987) 196 Cai.App.3d 948, 952-953.)
Here the court goes further in describing the elements. The assumption is that a trustee sale has occurred and that title has been perfected. If you let them prove that, they win.
  • acquisition of property
  • regularly conducted sale
  • duly perfecting title

The burden on the party seeking possession is to prove its case “beyond all reasonable doubt.” That is a high bar. If you raise real questions and issues in your objections, motion to strike testimony and exhibits etc. they would then be deemed to have failed to meet their burden of proof.

Don’t assume that those elements are present “but” you have a counterargument. The purpose of the law on this procedure to gain possession of property is to assure that anyone who follows the rules in a bona fide sale and acquisition will get POSSESSION. The rights of the homeowner to accuse the parties of fraud or anything else are eliminated in an action for possession. But you can challenge whether the sale actually occurred and whether the party who did it was in fact a trustee. 

There is also another factor which is whether the Trustee, if he is a Trustee, was acting in accordance with statutes and the general doctrine of acting in good faith. The alleged Trustee must be able to say that it was in fact the “new” beneficiary who executed the substitution of Trustee, or who gave instructions for issuing a Notice of Default and Notice of sale.

If the “successor” Trustee does not know whether the “successor” party is a beneficiary or not, then the foundation testimony and exhibits must come from someone who can establish beyond all reasonable doubt that the foreclosure proceeding emanated from a party who was in fact the owner of the debt and therefore the beneficiary under the deed of trust. 



Illusion of Confusion: Dealing with Unresponsive “Responses” in Discovery

The bank playbook is very simple: keep it as complicated as possible. That way the court and even the homeowner will come to rely on what the banks and so-called servicer say about names, places, documents and money. That’s how they sold the initial fraudulent MBS and around 10 million foreclosures.

If you had a high success rate and you succeeded in scaring most homeowners off from contesting fraudulent foreclosures, what would you do? You would keep going based upon a strategy of creating the illusion of complexity. The only really complex thing is the fact that the foreclosing parties make inconsistent assertions not only from case to case but from one pleading to another in one case.

What is simple? That the only two real parties in interest in this whole affair have been investors on one side and homeowners on the other side. Everyone else is an intermediary with little or no authority to do anything — a fact that has not stopped them from nearly destroying our financial system.

For reasons that have been discussed elsewhere on this blog, the acceptance of the illusion of confusion by the courts is NOT rooted in law, as it is required to be, but rather in politics. This isn’t the first time the courts made political decisions and it won’t be the last. But through persistence and good litigation techniques homeowners who went all the way to the end have often prevailed — probably because the judge was too uncomfortable once the real nature of the asserted transactions was revealed.

NEED HELP DRAFTING A COURT DOCUMENT? We can help you with Discovery and Compelling Responses to Discovery Requests with Our Paralegal Team that works directly with Neil Garfield! We provide services directly to attorneys and to pro se litigants.

Get a LendingLies Consult and a LendingLies Chain of Title Analysis! 202-838-6345 or info@lendinglies.com.

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave a message or make payments.

OR fill out our registration form FREE and we will contact you!




I was writing an article on discovery when by coincidence Dan Edstrom who has been our senior most forensic analyst since 2008 forwarded some questions and comments about the discovery process. He understands full well that the discovery process does NOT consist of just asking a question or asking for a document and the other side then gives you all you need to win.

No, the response will be framed to confuse, which is generally enough to make the homeowner or the foreclosure defense walk away. The foreclosure goes though even though it is most likely completely fraudulent.

And the message that goes out to the world is the banks are winning a huge percentage of foreclosures when in fact they pretty much don’t win when the foreclosure is ably contested.  The issue is obvious — not enough people are ably contesting foreclosures.

In discovery it usually starts with interrogatories. And the first question is who is answering the interrogatories. So in one example, the answer was Sally Torres. The response was that Torres was “from” Ocwen Financial Corporation (OFC). She is described as a “representative” of OFC, which leaves open the question of the identity of her employer.

Back to basics — A corporation is a legal person. And THAT means it is not the same as another legal person, as for example Ocwen Loan Servicing (OLS).

So you need to read carefully and not skip the parts that nobody pays attention to — like the answer to the question and the verification where Torres signs the response. There she signs as a “representative” of OLS not OFC. That ,eaves open the same question but also adds another — is she a representative of both legal persons (OFC and OLS)? If so what is the nature of her “agency” for either legal person? If she is not an employee is there a contract?

The answers further state that she is a “Senior Loan Analyst” for OFC and a “Senior Loan Analyst” for OLS. Is it both? How does that work? And of course that gives rise to yet another question — What is a Senior Loan Analyst? Google it.

Job Summary. Responsible for analyzing financial and supporting documents on incoming applications consistent with internal and insurer policies. Evaluate property values based on appraised market prices and recommend or deny mortgages to clients after examining financial status.

Hmmmm. This sounds like a made-up title to impress a judge. The industry definition of a loan analyst describes a job that ends with the approval of a loan. What would a loan analyst know about foreclosure — years after the alleged origination of the alleged loan? More specifically, what did Torres actually know or do with regard to the subject loan? It doesn’t take a genius to speculate about a number of questions:

  • Did Torres actually sign the verification?
  • Why was a loan analyst necessary in the litigation of a foreclosure?
  • Is Ocwen a lender? Why need a loan analyst?
  • What as it that Torres analyzed?
  • Did she review the work of a “Junior” Analyst ?
  • Did someone else draft the answers?
  • Was there anyone who had personal knowledge of the loan history involved with answering the interrogatories?

The kicker in the case I reviewed, was that the notice letters were sent not by any Ocwen entity but by Wells Fargo. The problem here is that most lawyers do not wish to confess their ignorance and therefore don’t follow through with obvious questions. Everything they are seeing is incomprehensible and confusing.

Here is another example right out of a hearsay treatise: The “Plaintiff” in an unlawful detainer (eviction) action makes the assertion that the rental value of the subject property is $1,800 per month and that the only way they know that is from a website called “Rentometer.” How this number is calculated by the website is unknown. Nor do we know if any person was involved. But Judges regularly take this representation to be true, even though it comes from a declarant not present in court.

Here is the rub. If the attorney for the homeowner fails to raise an objection and motion to strike that assertion or representation the objection is waived. But on cross examination of the robo-witness it is fairly easy to show that there is no appraisal or opinion rendered by the witness, nor could there be. It is also fairly easy to establish that the witness has no idea who runs, operates, owns or is otherwise involved with Rentometer.

Like Zillow and other sites, Rentometer does not employ people. It employs computer algorithms that may or may not work in any given situation.

For all we know it is a site set up by the banks that looks professional but is used specifically to extract outsize rents from people defending their property. (thus cutting off income that could be used for an attorney).  It looks like it might be useful but no presumption should arise from the projection by Rentometer unless someone from Rentometer can lay the foundation for the estimate. But that would mean putting a person on the witness stand who is not a robo-witness so the foreclosing party is going to fight against that tooth and nail.

And of course any site that leis exclusively on algorithms could not possibly take into consideration whether the subject property is habitable, the school district, and other factors that apply to both marketability and price. In the case presented it appears that the rental value is zero or in fact negative. That is because the property’s condition is such that nobody would move into it without extensive major repairs and because taxes and maintenance of the exterior would still need to be paid.

And then there is this example: You ask for the documents that support the authority of the alleged new beneficiary to substitute the trustee on the deed of trust. You get back an assignment. But it turns out later, in court, that they are relying upon some additional unrecorded assignments. So you ask for the additional unrecorded assignments and the response is essentially “We already gave you the assignments.” In  this case with 1 recorded assignment and 2 unrecorded assignments their answer is exactly 1/3 true and 2/3 untrue. And THAT is why you need to be prepared to compel their response by a specific court order pointing to those documents and any others that pertain the request for production.

The most challenging thing after the foreclosure sale is to prove it should never have taken place. But it is possible and necessary to do that if you want the property or you want leverage for a settlement. You are challenging circular reasoning.

Their argument is that they followed the rules and appointed a substitute trustee who sold the property. Your answer is that the new ‘Beneficiary” was not a beneficiary, had no right to substitute the trustee and thus no right to file a notice of sale (nonjudicial states).

Here is where legal presumptions point the court in the wrong direction. Because the sale took place and it was “facially” valid, the presumption adopted by the court is usually that there was a sale even though you are contesting that narrative. You say that a sale didn’t take place, particularly where there was “credit bid” on behalf of an entity that had no interest in the debt and therefore could not possibly submit a credit bid.

Lastly the sleight of hand trick that is so successful for the banks is the assertion or inference that there is a trust. In this case US Bank is asserted, probably without tis knowledge, as the trustee of certificates which is no trusteeship at all. Even if you slip in “the holders of certificates” they still have not named a beneficiary.

So the common error being made out there is to ask for answers and documents and so forth and accepting the response from the servicer or alleged servicer. Back to basics: the  first question should be “please identify the person or entity that is the [Plaintiff (judicial state or any eviction action) / beneficiary on the deed of trust (nonjudicial states)].

Then the next question should be “Is the party executing the verification of these interrogatories an employee, officer of said Plaintiff/Beneficiary? They will respond with gibberish because the real party in interest is a remote “Master Servicer” of a trust that doesn’t exist.

And of course “Where are the records of the Plaintiff/Beneficiary that relate to the subject alleged loan?” Once again they will respond with gibberish because they want the court to accept the fabricated records of Ocwen as though they were the records of the Plaintiff/Beneficiary whose books and records do not exist. The closer you get the more likely they are to walk away or offer a settlement that includes a seal of confidentiality. And yes I have seen this scenario thousands of times.










Banks Fighting Subpoenas From FHFA Over Access to Loan Files

Whilst researching something else I ran across the following article first published in 2010. Upon reading it, it bears repeating.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.


In a nutshell this is it. The Banks are fighting the subpoenas because if there is actually an audit of the “content” of the pools, they are screwed across the board.

My analysis of dozens of pools has led me to several counter-intuitive but unavoidable factual conclusions. I am certain the following is correct as to all residential securitized loans with very few (2-4%) exceptions:

  1. Most of the pools no longer exist.
  2. The MBS sold to investors and insured by AIG and the purchase and sale of credit default swaps were all premised on a general description of the content of the pool rather than a detailed description with the individual loans attached on a list.
  3. Each Prospectus if it carried any spreadsheet listing loans, contained a caveat that the attached list was by example only and not the real loans.
  4. Each distribution report contained a caveat that the parties who created it and the parties who delivered it did not guarantee either authenticity or reliability of the report. They even had specific admonitions regarding the content of the distribution report.
  5. NO LOAN ACTUALLY MADE IT INTO ANY POOL. The evidence is clear: nothing was done to assign, indorse or deliver the note to the investors directly or indirectly until a case went into litigation AND a hearing was scheduled. By that time the cutoff date had been breached and the loan was non-performing by their own allegation and therefore was not acceptable into the pool.
  6. AT ALL TIMES LEGAL TITLE TO THE PROPERTY WAS MAINTAINED BY THE HOMEOWNER EVEN AFTER FORECLOSURE AND SALE. The actual creditor who submitted a credit bid was not the creditor. The sale is either void or voidable.
  7. AT ALL TIMES LEGAL TITLE TO THE LOAN WAS MAINTAINED BY THE ORIGINATING “LENDER”. Since there was no assignment, indorsement or delivery that could be recognized at law or in fact, the originating lender still owns the loan legally BUT….
  8. AT ALL TIMES THE OBLIGATION WAS BOTH CREATED AND EXTINGUISHED AT, OR CONTEMPORANEOUSLY WITH THE CLOSING OF THE LOAN. Since the originating lender was in fact not the source of funds, and did not book the transaction as a loan on their balance sheet (in most cases), the naming of the originating lender as the Lender and payee on the note, both created a LEGAL obligation from the borrower to the Lender and at the same time, the LEGAL obligation was extinguished because the LEGAL Lender of record was paid in full plus exorbitant fees for pretending to be an actual lender.
  9. Since the Legal obligation was both created and extinguished contemporaneously with each other, any remaining obligation to any OTHER party became unsecured since the security instrument (mortgage or deed of trust) refers only to the promissory note executed by the borrower.
  10. At the time of closing, the investor-lenders were the real parties in interest as lenders, but they were not disclosed nor were the fees of the various intermediaries who brought the investor-lender money and the borrower’s loan together.
  12. Nearly ALL investor-lenders have been paid sums of money to satisfy the promise to pay contained in the bond. These payments always exceeded the borrowers payments and in many cases paid the obligation in full WITHOUT SUBROGATION.
  13. NO LOAN IS IN ACTUAL DEFAULT OR DELINQUENCY. Since payments must first be applied to outstanding payments due, payments received by investor-lenders or their agents from third party sources are allocable to each individual loan and therefore cure the alleged default. A Borrower’s Non-payment is not a default since no payment is due.
  14. ALL NOTICES OF DEFAULT ARE DEFECTIVE: The amount stated, the creditor, and other material misstatements invalidate the effectiveness of such a notice.
  15. NO CREDIT BID AT AUCTION WAS MADE BY A CREDITOR. Hence the sale is void or voidable.
  18. ANY BALANCE DUE FROM THE BORROWER IS SUBJECT TO AN EQUITABLE CLAIM FOR A LIEN TO REFLECT THE INTENTION OF THE INVESTOR-LENDER AND THE INTENTION OF THE BORROWER.  Both the investor-lender and the borrower intended to complete a loan transaction wherein the home was used to collateralize the amount due. The legal satisfaction of the originating lender is not a deduction from the equitable satisfaction of the investor-lender. THUS THE PARTIES SEEKING TO FORECLOSE ARE SUBJECT TO THE LEGAL DEFENSE OF PAYMENT AT CLOSING BUT THE INVESTOR-LENDERS ARE NOT SUBJECT TO THAT DEFENSE.
  19. The investor-lenders ALSO have a claim for damages against the investment banks and the string of intermediaries that caused loans to be originated that did not meet the description contained in the prospectus.
  20. Any claim by investor-lenders may be subject to legal and equitable defenses, offsets and counterclaims from the borrower.
  21. The current modification context in which the securitization intermediaries are involved in settlement of outstanding mortgages is allowing those intermediaries to make even more money at the expense of the investor-lenders.
  22. The failure of courts to recognize that they must apply the rule of law results not only in the foreclosure of the property, but the foreclosure of the borrower’s ability to negotiate a settlement with an undisclosed equitable creditor, or with the legal owner of the loan in the property records.

Loan File Issue Brought to Forefront By FHFA Subpoena
Posted on July 14, 2010 by Foreclosureblues
Wednesday, July 14, 2010


Editor’s Note….Even  U.S. Government Agencies have difficulty getting
discovery, lol…This is another excellent post from attorney Isaac
Gradman, who has the blog here…http://subprimeshakeout.blogspot.com.
He has a real perspective on the legal aspect of the big picture, and
is willing to post publicly about it.  Although one may wonder how
these matters may effect them individually, my point is that every day
that goes by is another day working in favor of those who stick it out
and fight for what is right.

Loan File Issue Brought to Forefront By FHFA Subpoena

The battle being waged by bondholders over access to the loan files
underlying their investments was brought into the national spotlight
earlier this week, when the Federal Housing Finance Agency (FHFA), the
regulator in charge of overseeing Fannie Mae and Freddie Mac, issued
64 subpoenas seeking documents related to the mortgage-backed
securities (MBS) in which Freddie and Fannie had invested.
has been in charge of overseeing Freddie and Fannie since they were
placed into conservatorship in 2008.

Freddie and Fannie are two of the largest investors in privately
issued bonds–those secured by subprime and Alt-A loans that were often
originated by the mortgage arms of Wall St. firms and then packaged
and sold by those same firms to investors–and held nearly $255 billion
of these securities as of the end of May. The FHFA said Monday that it
is seeking to determine whether issuers of these so-called “private
label” MBS misled Freddie and Fannie into making the investments,
which have performed abysmally so far, and are expected to result in
another $46 billion in unrealized losses to the Government Sponsored
Entities (GSE).

Though the FHFA has not disclosed the targets of its subpoenas, the
top issuers of private label MBS include familiar names such as
Countrywide and Merrill Lynch (now part of BofA), Bear Stearns and
Washington Mutual (now part of JP Morgan Chase), Deutsche Bank and
Morgan Stanley. David Reilly of the Wall Street Journal has written an
article urging banks to come forward and disclose whether they have
received subpoenas from the FHFA, but I’m not holding my breath.

The FHFA issued a press release on Monday regarding the subpoenas
(available here). The statement I found most interesting in the
release discusses that, before and after conservatorship, the GSEs had
been attempting to acquire loan files to assess their rights and
determine whether there were misrepresentations and/or breaches of
representations and warranties by the issuers of the private label
MBS, but that, “difficulty in obtaining the loan documents has
presented a challenge to the [GSEs’] efforts. FHFA has therefore
issued these subpoenas for various loan files and transaction
documents pertaining to loans securing the [private label MBS] to
trustees and servicers controlling or holding that documentation.”

The FHFA’s Acting Director, Edward DeMarco, is then quoted as saying
““FHFA is taking this action consistent with our responsibilities as
Conservator of each Enterprise. By obtaining these documents we can
assess whether contractual violations or other breaches have taken
place leading to losses for the Enterprises and thus taxpayers. If so,
we will then make decisions regarding appropriate actions.” Sounds
like these subpoenas are just the precursor to additional legal

The fact that servicers and trustees have been stonewalling even these

powerful agencies on loan files should come as no surprise based on

the legal battles private investors have had to wage thus far to force

banks to produce these documents. And yet, I’m still amazed by the

bald intransigence displayed by these financial institutions. After

all, they generally have clear contractual obligations requiring them

to give investors access to the files (which describe the very assets

backing the securities), not to mention the implicit discovery rights

these private institutions would have should the dispute wind up in

court, as it has in MBIA v. Countrywide and scores of other investor


At this point, it should be clear to everyone–servicers and investors
alike–that the loan files will have to be produced eventually, so the
only purpose I can fathom for the banks’ obduracy is delay. The loan
files should, as I’ve said in the past, reveal the depths of mortgage
originator depravity, demonstrating convincingly that the loans never
should have been issued in the first place. This, in turn, will force
banks to immediately reserve for potential losses associated with
buying back these defective mortgages. Perhaps banks are hoping that
they can ward off this inevitability long enough to spread their
losses out over several years, thereby weathering the storm caused (in
part) by their irresponsible lending practices. But certainly the
FHFA’s announcement will make that more difficult, as the FHFA’s
inherent authority to subpoena these documents (stemming from the
Housing and Economic Recovery Act of 2008) should compel disclosure
without the need for litigation, and potentially provide sufficient
evidence of repurchase obligations to compel the banks to reserve
right away. For more on this issue, see the fascinating recent guest
post by Manal Mehta on The Subprime Shakeout regarding the SEC’s
investigation into banks’ processes for allocating loss reserves.

Meanwhile, the investor lawsuits continue to rain down on banks, with
suits by the Charles Schwab Corp. against Merrill Lynch and UBS, by
the Oregon Public Employee Retirement Fund against Countrywide, and by
Cambridge Place Investment Management against Goldman Sachs, Citigroup
and dozens of other banks and brokerages being announced this week. If
the congealing investor syndicate was looking for political cover
before staging a full frontal attack on banks, this should provide
ample protection. Much more to follow on these and other developments
in the coming days…
Technorati Links • Save to del.icio.us • Digg This! • Stumble It!

Posted by Isaac Gradman at 3:46 PM

BAP Panel Raises the Stakes Against Deutsch et al — Secured Status May be Challenged

Fur Further Information please call 954-495-9867 or 520-405-1688




I have long held and advocated three points:

  1. The filing of false claims in the nonjudicial process of a majority of states should not result in success where the same false claims could never be proven in judicial process. Nonjudicial process was meant as an administrative remedy to foreclosures that were NOT in dispute. Any application of nonjudicial schemes that allows false claims to succeed where they would fail in a judicial action is unconstitutional.
  2. The filing of a bankruptcy petition that shows property to be encumbered by virtue of a deed of trust is admitting a false representation made by a stranger to the transaction. The petition for bankruptcy relief should be filed showing that the property is not encumbered and the adversary or collateral proceeding to nullify the mortgage and the note should accompany each filing where the note and mortgage are subject to claims of securitization or a “new” beneficiary.
  3. The vast majority of decisions against borrowers result from voluntary or involuntary waiver, ignorance and failure to plead or object on the basis of false claims based on false documentation. The issue is not the signature (although that probably is false too); rather it is (a) the actual transaction which is missing and the (b) false documentation of a (i) fictitious transaction and (ii) fictitious transfers of fictitious (and non-fictitious) transactions. The result is often that the homeowner has admitted to the false assertion of being a borrower in relation to the party making the claim, admitting the secured status of the “creditor”, admitting that they are a creditor, admitting that they received a loan from within the chain claimed by the “creditor”, admitting the default, admitting the validity of the note and admitting the validity of the mortgage or deed of trust — thus leaving both the trial and appellate courts with no choice but to rule against the homeowner. Thus procedurally a false claim becomes “true” for purposes of that case.

see 11/24/14 Decision: MEMORANDUM-_-ANTON-ANDREW-RIVERA-DENISE-ANN-RIVERA-Appellants-v.-DEUTSCHE-BANK-NATIONAL-TRUST-COMPANY-Trustee-of-Certificate-Holders-of-the-WAMU-Mortgage-Pass-Through-Certificate-Series-2005-AR6

This decision is breath-taking. What the Panel has done here is fire a warning shot over the bow of the California Supreme Court with respect to the APPLICATION of the non-judicial process. AND it takes dead aim at those who make false claims on false debts in both nonjudicial and judicial process. Amongst the insiders it is well known that your chances on appeal to the BAP are less than 15% whereas an appeal to the District Judge, often ignored as an option, has at least a 50% prospect for success.

So the fact that this decision comes from the BAP Panel which normally rubber stamps decisions of bankruptcy judges is all the more compelling. One word of caution that is not discussed here is the the matter of jurisdiction. I am not so sure the bankruptcy judge had jurisdiction to consider the matters raised in the adversary proceeding. I think there is a possibility that jurisdiction would be present before the District Court Judge, but not the Bankruptcy Judge.

From one of my anonymous sources within a significant government agency I received the following:

This case is going to be a cornucopia of decision material for BK courts nationwide (and others), it directly tackles all the issues regarding standing and assignment (But based on Non-J foreclosure, and this is California of course……) it tackles Glaski and Glaski loses, BUT notes dichotomy on secured creditor status….this case could have been even more , but leave to amend was forfeited by borrower inaction—– it is part huge win, part huge loss as it relates to Glaski, BUT IT IS DIRECTLY APPLICABLE TO CHASE/WAMU CASES……….Note in full case how court refers to transfer of “some of WAMU’s assets”, tacitly inferring that the court WILL NOT second guess what was and was not transferred………… i.e, foreclosing party needs to prove this!!


Even though Siliga, Jenkins and Debrunner may preclude the

Riveras from attacking DBNTC’s foreclosure proceedings by arguing

that Chase’s assignment of the deed of trust was a nullity in

light of the absence of a valid transfer of the underlying debt,

we know of no law precluding the Riveras from challenging DBNTC’s assertion of secured status for purposes of the Riveras’ bankruptcy case. Nor did the bankruptcy court cite to any such law.

We acknowledge that our analysis promotes the existence of two different sets of legal standards – one applicable in nonjudicial foreclosure proceedings and a markedly different one for use in ascertaining creditors’ rights in bankruptcy cases.

But we did not create these divergent standards. The California legislature and the California courts did. We are not the first to point out the divergence of these standards. See CAL. REAL EST., at § 10:41 (noting that the requirements under California law for an effective assignment of a real-estate-secured obligation may differ depending on whether or not the dispute over the assignment arises in a challenge to nonjudicial foreclosure proceedings).
We must accept the truth of the Riveras’ well-pled
allegations indicating that the Hutchinson endorsement on the
note was a sham and, more generally, that neither DBNTC nor Chase
ever obtained any valid interest in the Riveras’ note or the loan
repayment rights evidenced by that note. We also must
acknowledge that at least part of the Riveras’ adversary
proceeding was devoted to challenging DBNTC’s standing to file
its proof of claim and to challenging DBNTC’s assertion of
secured status for purposes of the Riveras’ bankruptcy case. As
a result of these allegations and acknowledgments, we cannot
reconcile our legal analysis, set forth above, with the
bankruptcy court’s rulings on the Riveras’ second amended
complaint. The bankruptcy court did not distinguish between the
Riveras’ claims for relief that at least in part implicated the
parties’ respective rights in the Riveras’ bankruptcy case from
those claims for relief that only implicated the parties’
respective rights in DBNTC’s nonjudicial foreclosure proceedings.


Here, we note that the California Supreme Court recently

granted review from an intermediate appellate court decision
following Jenkins and rejecting Glaski. Yvanova v. New Century
Mortg. Corp., 226 Cal.App.4th 495 (2014), review granted &
opinion de-published, 331 P.3d 1275 (Cal. Aug 27, 2014). Thus,
we eventually will learn how the California Supreme Court views
this issue. Even so, we are tasked with deciding the case before
us, and Ninth Circuit precedent suggests that we should decide
the case now, based on our prediction, rather than wait for the
California Supreme Court to rule. See Hemmings, 285 F.3d at
1203; Lewis v. Telephone Employees Credit Union, 87 F.3d 1537,
1545 (9th Cir. 1996). Because we have no convincing reason to
doubt that the California Supreme Court will follow the weight of
authority among California’s intermediate appellate courts, we
will follow them as well and hold that the Riveras lack standing
to challenge the assignment of their deed of trust based on an
alleged violation of a pooling and servicing agreement to which
they were not a party.


Even though the Riveras’ first claim for relief principally

relies on their allegations regarding the assignment’s violation
of the pooling and servicing agreement, their first claim for
relief also explicitly incorporates their allegations challenging
DBNTC’s proof of claim and disputing the validity of the
Hutchinson endorsement. Those allegations, when combined with
what is set forth in the first claim for relief, are sufficient
on their face to state a claim that DBNTC does not hold a valid
lien against the Riveras’ property because the underlying debt
never was validly transferred to DBNTC. See In re Leisure Time
Sports, Inc., 194 B.R. at 861 (citing Kelly v. Upshaw, 39 Cal.2d
179 (1952) and stating that “a purported assignment of a mortgage
without an assignment of the debt which it secured was a legal
While the Riveras cannot pursue their first claim for relief
for purposes of directly challenging DBNTC’s pending nonjudicial
foreclosure proceedings, Debrunner, 204 Cal.App.4th at 440-42,
the first claim for relief states a cognizable legal theory to
the extent it is aimed at determining DBNTC’s rights, if any, as
a creditor who has filed a proof of secured claim in the Riveras’
bankruptcy case.


Fifth Claim for Relief – for violation of the Federal Truth In Lending Act, 15 U.S.C. § 1641(g)

The Riveras’ TILA Claim alleged, quite simply, that they did
not receive from DBNTC, at the time of Chase’s assignment of the
deed of trust to DBNTC, the notice of change of ownership
required by 15 U.S.C. § 1641(g)(1). That section provides:
In addition to other disclosures required by this
subchapter, not later than 30 days after the date on
which a mortgage loan is sold or otherwise transferred
or assigned to a third party, the creditor that is the
new owner or assignee of the debt shall notify the
borrower in writing of such transfer, including–

(A) the identity, address, telephone number of the new


(B) the date of transfer;


(C) how to reach an agent or party having authority to

act on behalf of the new creditor;

(D) the location of the place where transfer of

ownership of the debt is recorded; and

(E) any other relevant information regarding the new


The bankruptcy court did not explain why it considered this claim as lacking in merit. It refers to the fact that the
Riveras had actual knowledge of the change in ownership within
months of the recordation of the trust deed assignment. But the
bankruptcy court did not explain how or why this actual knowledge
would excuse noncompliance with the requirements of the statute.
Generally, the consumer protections contained in the statute
are liberally interpreted, and creditors must strictly comply
with TILA’s requirements. See McDonald v. Checks–N–Advance, Inc.
(In re Ferrell), 539 F.3d 1186, 1189 (9th Cir. 2008). On its
face, 15 U.S.C. § 1640(a)(2)(A)(iv) imposes upon the assignee of
a deed of trust who violates 15 U.S.C. § 1641(g)(1) statutory
damages of “not less than $400 or greater than $4,000.”
While the Riveras’ TILA claim did not state a plausible
claim for actual damages, it did state a plausible claim for
statutory damages. Consequently, the bankruptcy court erred when
it dismissed the Riveras’ TILA claim.


Here, however, the Riveras did not argue in either the bankruptcy court or in their opening appeal brief that the court should have granted them leave to amend. Having not raised the issue in either place, we may consider it forfeited. See Golden v. Chicago Title Ins. Co. (In re Choo), 273 B.R. 608, 613 (9th Cir. BAP 2002).

Even if we were to consider the issue, we note that the

bankruptcy court gave the Riveras two chances to amend their
complaint to state viable claims for relief, examined the claims
they presented on three occasions and found them legally
deficient each time. Moreover, the Riveras have not provided us
with all of the record materials that would have permitted us a
full view of the analyses and explanations the bankruptcy court
offered them when it reviewed the Riveras’ original complaint and
their first amended complaint. Under these circumstances, we
will not second-guess the bankruptcy court’s decision to deny
leave to amend. See generally In re Nordeen, 495 B.R. at 489-90
(examining multiple opportunities given to the plaintiffs to
amend their complaint and the bankruptcy court’s efforts to
explain to them the deficiencies in their claims, and ultimately
determining that the court did not abuse its discretion in
denying the plaintiffs leave to amend their second amended

It Makes No Sense

For further information and consultations please call 520-405-1688 or 954-495-9867. We offer litigation support to attorneys throughout the country. Consultations outside of Florida require an attorney to be on the line with you.


We received so many calls from my post on Friday asking me to write more on the Burden of Proof that I decided to write a supplement. See The Burden of Proof Must be Changed: BofA Slammed Again


“Your Honor this is a simple foreclosure on an ordinary mortgage.” Those words, uttered by most foreclosure attorneys are very misleading. Because the attorneys don’t have the information I have, the attorney might actually think the words he or she is speaking are true. But they are not true in most cases.

  • If this was an ordinary loan with an ordinary loan closing why did the banks engage in fraudulent behavior in foreclosure cases — robo-signing, forgery, fabrication and even foreclosing on loans that were neither delinquent nor properly declared in default?
  • If it was so ordinary why are the trial and appellate courts dealing with the issue of jurisdictional standing — because the owner of the loan is in doubt, to say the least?

As for securitization they are right — if it was done right. If you start with the proposition that the intent was for the brokers on Wall Street to create residential loans and give their clients a slightly higher yield from a portfolio of loans than the other bonds the investors were buying, and that ordinary underwriting practices had been employed in approving loans, then

  • why are the Banks so reluctant to allege and prove the identity of the lender?
  • Why have so many studies concluded that the foreclosers are mostly “strangers” to the transaction (San Francisco and Baltimore Study) or that at least half the loan documents were destroyed or lost?
  • Why would a lender or purchaser of loans destroy cash equivalent notes unless they had something to hide?
  • Why do they employ professional “testifiers” instead of actual employees or officers of the creditors?
  • Why are so many foreclosures failing because they failed to prove their case (a rising number with each passing month)?

None of it makes sense. These banks have been dealing with paper instruments for hundreds of years. The plan is laid out in the PSA.

  • Why were the loan settlement documents not delivered to the Depository for the alleged REMIC trust? Why is there no evidence of the Trust actually buying the loan within the cutoff period in the PSA?
  • What were the brokers doing with the investors money while the investors thought the money had gone to the trust in exchange for the mortgage bonds issued and sold by the trust?
  • What were the brokers doing with the closing paperwork after using the investor’s money, without disclosure to anyone, to either buy or originate loans without specifically and expressly protecting the bond buyers in written instruments that were properly and timely recorded?

I submit that there are no GOOD reasons or GOOD answers to those questions. I submit that if you start with the premise that the brokers started with the intent to steal the money and steal the loans, then everything DOES make sense.

  • It makes sense that the loans were nearly all table-funded which is predatory per se according to Reg Z. But it doesn’t make sense if the brokers wanted clean loans with total transparency as required by law. It makes sense that they were concealing the actual source of funds (the investors directly instead of through the REMIC trust). And it makes sense that the Wall Street brokers and the web they spun of multiple layers of multiple companies were collecting and keeping undisclosed compensation that was largely an instant loss to the investors.
  • It makes sense that the money was not deposited into a Trust account where a real trustee would have control over the funds and make sure that the terms of the trust were followed. If they had given the money to the trust, then the brokers would not have been able to play with that money as if it were their own.
  • It makes sense that the investors’ money was used directly, instead of the coming from the trust because if it came directly from a trustee for the trust, then the trust would have had to get the settlement documents deposited with the depository and the required documents for instant ownership of the loan for which the investors’ money was used. By using the investors money under the illusion of a REMIC trust it makes it appear as though a trust is involved when in fact it is the broker who is controlling the transaction, not disclosing to the investors the real nature of the loans that were being approved, and leaving the buyers of those bogus mortgage bonds either without any disclosure to alert them that something was wrong or barred from finding out because of restrictions on inquiries contained in the PSA.
  • And if makes sense that they used multiple layers of nominees without the slightest actual interest or risk in the loan to divert ownership of the loan away from the investors to the broker’s trading desk. By diverting the transaction away from the Trust and the Trust Beneficiaries they were able to create the illusion of a sale of the actual loan with an interest rate of 9% as though it was a 5% loan. That makes sense because the brokers were able to claim a “profit” on that Sale” — a 5% loan sells at twenty times earnings. So the broker sold the loan on its proprietary trading desk for nearly twice the loan amount — bequeathing an instant 50%-70% loss to the investors who thought their money was going through a carefully monitored trustee process and scrutiny.
  • And it makes sense that they kept paying the investors even though the loan portfolio was collapsing, reporting loans as performing when the borrowers were not paying. If they didn’t do that — with a reserve created out of the investors money — then bond buyers would stop buying.
  • And it makes sense that they would seek foreclosure as their first goal because that is the only way to create the illusion of clearing title. If they don’t foreclose as many loans as possible, the whole plan blows up because in a workout of the loan terms the brokers would be required to account for the profits and compensation and losses attributable to their plan. They would be required to refund or repurchase all the crazy loans they made that were made to fail.
  • It makes sense that the brokers, controlling the servicers, would engage in a policy of luring the borrowers into “default” by stating that that the borrower would get a modification only if they are at least 3 months behind on their payments. If they didn’t engage in policies and practices designed to cause foreclosures to be filed, then their story about the crisis being related to loan defaults,falls apart. It would become obvious that the crisis occurred because the brokers took 20%-120% out the money flow created by investments from bond buyers.
  • It makes sense that they don’t have a designated person at trial or can actually testify to each step in each transaction and whether the trust exists and what actual figures are shown on the books of account for the real creditors — the bond purchasers — as to the existence of a default and the principal balance due.

I guess I could go on forever. But you get the point. Start with the premise that the brokers set out on an illegal enterprise and everything falls into place. Start with premise that they were just doing their job according to law, and everything falls apart and MAKES NO SENSE.

%d bloggers like this: