Coming this fall! A new wave of illegal foreclosure claims. Will we get it right this time?

Some have pointed to some articles indicating that the securitization ponzi scheme collapsed already.

It might be more accurate to say that the scheme was reorganized rather than collapsed. But even if it collapsed the Wall Street banks will continue sending servicers and foreclosure mills into the field to file foreclosures. After, all, it’s free money if they win, and there is so far, a statistical certainty that in nearly all cases they will win simply because of the erroneous belief by homeowners that they have done something wrong and that they have a moral obligation to leave the house, once they stop paying.

So homeowner will give their precious house to people who have no right to receive it.

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We are a long way from when homeowners realize that they were flim flammed from the very start and that taking the substance of the homeowner transaction in total and in perspective, the homeowner (a) did not owe any money to anyone claiming it and (b) the homeowner was probably owed more money from the investment bank than he/she could possibly owe under the note and mortgage that was issued.
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It wasn’t a loan and we should stop calling it that. The “lender” side had no lending intent. At the conclusion of the process there was no creditor holding the homeowner obligation as an asset. Therefore they were not lenders or even creditors and accordingly not liable or accountable to act in accordance with lending and servicing statutes.
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The confusion emanates from the fact that all homeowners entered into the transaction with borrower intent. But there was no lending intent from the other side. The other side masked the real transaction as a loan to deceive the homeowner into accepting the label “borrower”.
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The real transaction was payment to the homeowner for issuance of note and mortgage to start the securitization processes. It was in reality a simple commercial transaction, to wit: the investment bank, through intermediaries agrees to pay money to the homeowner in exchange for the homeowner issuing a note and mortgage and putting up their home as collateral for an obligation that offsets the payment received. It could have been a loan, but it wasn’t.
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Because the banks lied about the transaction to the homeowner and to further make it look like a loan, they got the homeowner to issue a note and mortgage in most cases to an entity that never paid any money. This might negate the consideration for the transaction altogether because they were making a payment  but also getting a promise to pay even more to unknown creditors who would be illegally designated later. That part is a close question.
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But in quantum meruit, quasi contract and reformation, the only legal way that their designation system could be made legal is by getting consent from the homeowner to that system of designation of a creditor to act as a lawful creditor even though it wasn’t. That was the real reason for MERS, the use of Originators and the offering of “modifications.” The players on paper are designees or nominees — not real players. They are using the language of the notes and mortgages to imply consent to a “no creditor” transaction.
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But that is not informed consent or real consent, nor is it legal without other language of contract. A binding contract must have offer, acceptance, clear terms and consideration between the parties to the contract. In most cases the homeowner transactions were therefore not binding contracts. The Payee on the note was not a creditor. The doctrine of merger cannot apply when the payee is different from the source of funds unless there is a specific express contractual provision stating that. The mortgagee is usually a nominee which I think is a tacit admission that there is no creditor.
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In order to foreclose, the party asking for foreclosure remedy must be a creditor. A creditor is only one who either (a) owns the debt or (b) represents someone who owns the debt. Ownership of the debt is only accomplished in one way — payment of value in exchange for an instrument conveying title to the debt from an owner of the debt to a new owner of the debt.
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The ONLY time any value was paid was by investors. But they did not get any instrument of conveyance of the debt. Quite the contrary. The intent was to make certain that they would never be considered lenders. What they received was a discretionary promise from the investment bank dba REMIC trust to make payments that were partially indexed on but not dependent upon receipt of payments from homeowners.
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It is therefore impossible for any transaction to have occurred wherein value was paid for ownership of the debt after the investors paid the investment bank. Even if someone wanted to pay value in exchange for an instrument of conveyance of ownership of the debt, there was nobody to pay.
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The only party who paid value was the group of investors or arguably the investment bank. But neither of those entities had ever received any instrument of conveyance of ownership of the debt and in fact they disclaimed any such ownership because it would have made them lenders subject to TILA and other lending and servicing laws.
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BUT in order to foreclose, the papers filed by the foreclosure mill would need to show that a creditor was applying for the remedy of forfeiture. See Article 9 §203 UCC. So that required assignments of mortgage to be prepared, executed and recorded even though there was no financial transaction between the parties. In short, the scheme required the preparation, execution and recording of false utterances in false documents that were forged and illegally recorded.
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Since the homeowner has always assumed the homeowner transaction was a loan agreement, almost nobody has thought to credibly and properly challenge these assignments as legal nullities.
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The credible challenge would be not only that there was no consideration paid for the assignment, but that the payment of consideration was not a commercially reasonable basis for the execution and recording of the instrument, since the only consideration came from parties who did not and do not want ownership of the debt.
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The absence of any valid assignment is not just a fact; it is legally impossible under current securitizations schemes to have a valid legal assignment. The investment banks as intermediaries between investors and homeowners have structured the cash flow such that the investment banks get most of the benefits from the securitization process at the cost to and detriment of investors and homeowners — the only two real parties in interest in the homeowner transaction which is mistakenly called a “loan.”
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The note, payable to a party with whom the homeowner unknowingly conducted no actual business, creates a liability under Article 3 of the Uniform Commercial Code regardless of the lack of consideration. The maker of the note has defenses to be sure, but if someone buys the note for value, without knowledge of the maker’s defenses, and in good faith, then the maker must pay the note and the only remedy available to the maker is by making a claim against the Payee on the note and anyone else that induced him to execute a note in favor of someone who gave him/her nothing.
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The foreclosure mills for claimants in foreclosure do not plead status as a holder in due course because they can’t prove the elements: payment, good faith and lack of knowledge of borrower’s defenses. But they induce both homeowners, their attorneys and the courts to treat the claimant as a holder in due course because of the complexity of legal analysis in distinguishing between an HDC, holder, possessor and anyone with rights to enforce.
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As a result, because the position is not properly challenged, the court then often reduces or even eliminates discovery on the central issue — whether the claimant is a creditor of the homeowner.
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The “rights to enforce” argument almost always leaves out the presumed component that is a condition precedent to any such analysis, to wit: that the creditor has authorized the enforcement. But if there is no creditor — i.e., anyone holding the debt as an asset — then such authority cannot legally exist.
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This explains the appearance of false, fabricated, forged, backdated and robo signed documents that are still regularly used. Since there is no creditor the pursuit of foreclosure is a pursuit of profit rather than restitution for an unpaid debt. It is not recovery on a loan.
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And if the transaction was unraveled from its complex appearance, it is plain as day that the homeowner is entitled to credits and probably payments from the investment bank under quantum meruit and quasi contract for being drafted into a highly profitable securitizations scheme that gave the homeowner nothing for initiating the scheme.
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We are about to be besieged with new foreclosure claims. Let’s get it right this time. The “flood of litigation” argument for rocket dockets is not valid because it presumes that the claimant does have status as a creditor and that the foreclosure is for restitution of an unpaid debt.
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Aggressive and persistent demands for identification of the claimant and for evidence of proof payment for value — along with thoughtful, credible and persuasive presentation might well result in prevention of a flood of foreclosures because there is no entity that actually stands to lose any money arising from the action or inaction of any homeowner.
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They won’t plead injury because there is no injury. They can’t prove any injury. They can only induce the court to presume it based upon erroneous application of legal presumptions arising from the apparent facial validity of documents that are neither facially valid nor true representations of any transaction in the real world. 

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

The first thing to remember about securitization is that it isn’t real. No Investor ever bought any debt, note or mortgage on residential property. That makes all the documents used in foreclosure of “securitized” loans totally fake. And that is why there was a 50 state settlement and hundreds of other settlements with regulators, attorneys general and investors.

What was left out of all those settlements was any means by which illegal foreclosures could be stopped and any credits earned by homeowners or any credit which reduced the amount owed by the homeowners. As it turns out — nothing ever reduces the homeowner’s debt. Not even payment. Not even foreclosure. 

This could only be true if there was no account on any books of account in which the homeowner’s debt was held as  an asset. You cannot reduce what isn’t there. So failure to credit the nonexistent account is somehow treated as a completely legal event. think about it.

There is nothing wrong about hypothecating an asset in service of a financial transaction. As Wall Street has shown us anything could be an asset and therefore subject to a legal transaction. what they didn’t show us is that there was no legal transaction, which means nobody paid money except at the front end. And those who paid — the investors — didn’t buy any debt, note or mortgage.

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If I issue a note to someone who actually did give me money as a loan, and he asks me for collateral, I can conditionally assign my rights to a mortgage I actually own because someone issued me a note and secured it with a mortgage. How “conditional” is the assignment? That depends upon state law and the contents of the assignment.
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And in turn the Payee on the note I issued now has an asset upon which he can borrow. etc. The asset is the receivable from me that he has on his books which got there because he paid out money. So he debited CASH and Credited ACCOUNTS RECEIVABLE. Classic double entry bookkeeping.
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The ONLY question is whether the paperwork is a memorialization of actual events in the real world or if the paperwork is merely an attempt to create fake facts, an illusion that supports the designee of a non creditor to foreclose on property.
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If all the events are real then the law allows it and recognizes it and enforces it. But that enforceability under current law stops at the door of paperwork that does not memorialize an actual financial event in the real world.
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People think that it isn’t so simple. But it is. People say that there would be no foreclosures if I was right. But it is they who are wrong because they don’t understand legal procedure and the banks not only understand it, they were also responsible for writing it.
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So by codifying into law the proposition that the holder of a note is presumed to own the debt until rebutted, they have thus created a vehicle for deceit because judges are not presented with evidence in rebuttal. The truth is that the claimants are not even “holders”. And dig a little deeper they are not even possessors because the original note was destroyed.
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And because judges are sloppy people just like the rest of us, they will often treat a non creditor claiming to possess a note as a holder in due course — thus denying homeowner attempts at discovery. All without any allegation of HDC status or any evidence that the claimant is a party who paid value in good faith without knowledge of the borrower’s defenses.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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How to Use the Real Deal On Securitization to Homeowner’s Advantage

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

My substantive analysis of the transaction is that the homeowner was drafted into a securitization scheme which in my opinion clearly triggers quasi contract and quantum meruit — the only possibility for inquiring into the adequacy of consideration. Lawyers and litigants have shied away from this because of its complexity and because they don’t know how to approach it.
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In simple terms the homeowner transaction was a “”Qualified Financial Contract” (QFC), part of which contained some apparent attributes of a loan, but which went much further and diverged extensively from a “loan” as the term is currently used in custom and practice in the financial industry and society in general.
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The QFC is not some invented term for this article. it is defined in all securitization documents. Investment banks knew they were not creating a loan. The job of litigants and their attorneys is to point out and argue that the documents submitted as a foundation for their claim of legal standing contains language that opens the door to quasi contract and quantum meruit. 
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In logistical terms, the homeowner delivered the only service the investment bank was seeking, to wit: issuance of the note and mortgage. Neither the investment bank nor the originator designee of the investment bank was at all interested in making a loan, collecting revenue from repayment nor assuming any meaningful risk of loss.
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Although the homeowner entered the transaction desiring a loan he/she didn’t receive a loan. If there is no legally responsible lender or creditor at the conclusion of that transaction, it isn’t a loan.
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And since too many bona fide third party transactions have occurred to rescind or unwind the transaction the only possibility remaining is to have a court reframe the agreement to include the basis upon which the investment bank entered into the transaction — i.e., the creation, issuance, selling, trading and hedging of unregulated securities.
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We know the investment bank had no intention of becoming a lender and that there was no intention to make investors lenders.
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And we know that the investment banks funded the origination or acquisition of the loan through originators and aggregators.
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Further we know that investors paid value for the certificates which excluded any right, title or interest in any debt, note or mortgage.
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The result, obviously intended, is that while parties were paying value, none of them ever received a conveyance of ownership of the debt, note or mortgage.
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And we can easily see that anyone who received such a conveyance (a) did not pay value and (b) was not acting as an authorized agent or representative of anyone who paid value in exchange for a conveyance of an ownership interest in the subject debt, note or mortgage.
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It was partly a scheme for avoidance or evasion of lending and securities laws.
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The reason for this is blatantly stated in all of the promotional material for sale of certificates, to wit: no liability for violation of lending or servicing laws using “bankruptcy remote” vehicles  for origination and acquisition of homeowner obligations.
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And scratch the surface and you discover that the only thing that makes the transactions bankruptcy remote is that the underlying obligation, note and mortgage are not included in the schedules of bankruptcy because they were never owned by the originator or aggregator.
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The problem for the last 20 years has been that nobody has been asking the obvious question: “if they don’t own the loan, then who does?” Or at least nobody has followed up on that question in which they truly persisted in aground war to get the answer.
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So any such conveyance was either a legal nullity (mortgage assignment) or did not carry the right to enforce (note). If the conveyance didn’t include the obligation there are very specific rules that apply.
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Authority to enforce the note can only come from one who is entitled to enforce. And the premier person who has the right to enforce is owner of the underlying debt that the note is supposed to memorialize. Under the laws of all jurisdictions nobody gets to own the obligation without paying value.
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This seems to be challenging not only for the courts but for defense lawyers. It is a very simple logical progression. In the end enforcement of the note is intended to pay the debt. If it doesn’t pay the debt the maker of the note is subject to multiple liabilities for the same transaction. And that is what happened. Since the originator did not substantively fund the homeowner transaction the issuing of the note and mortgage in favor of the originator was a legal nullity. The issuance of the note created a new liability that was not merged with the underlying obligation to repay the money, if any, that was received or paid on behalf of the homeowner.
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So the reason I mention all of this is that I have somewhat reluctantly but persistently arrived at the conclusion that the homeowner transaction was not a loan and yet the obligation to make payment survives even in quasi contract or quantum meruit.
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This is an unavoidable conclusion because we know that where money was funded to the homeowner or on his/her behalf and where the homeowner issued a promise to pay money, the obligation to pay arises and can be secured by a lien (mortgage or deed of trust) which in fact is enforceable.
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But note that since there is no lender or creditor at the conclusion of the securitization cycle, the intent of the homeowner is thwarted — i.e., he/she does not have a loan agreement. It is something else. And that is where quasi contract and  quantum meruit come into play.
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The homeowner could have bargained away reasonable compensation or consideration for his/her role in initiating the only documents that made securitization claims possible — i.e., the note and mortgage.
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Our legal system is not designed to correct stupid mistakes in bargaining or negotiation in transactions or agreements.
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Our system is designed to enforce the intent of the parties. So we can’t get away from the intent to create an obligation and the intent to have that obligation enforceable and memorialized by a note and mortgage. In fact, I propose we should embrace it.
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The reason is that the intent to create the enforceable homeowner obligation was not the only intent operating. Since the securitizations cheme — and the homeowner’s vital role in it — was not disclosed (actually actively concealed), the homeowner did not, could not and never did bargain away rights to compensation or consideration for his role and risks in this dangerous risky transaction.
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Thus we enter the realm of quasi contract and quantum meruit. 
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So now the question is how much consideration  did the homeowner actually receive for issuance of the note and mortgage? Since it wasn’t a loan, even though that was what was intended by the homeowner, the receipt of money must be categorized as payment of consideration. And that is a lot of consideration by any standard.
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But now the issuance of the note and mortgage becomes a service rather than the result of an underlying obligation to repay.
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So the consideration of the receipt of benefit from the funding of the homeowner transaction is entirely offset by a promise to pay more than the consideration received in the form of money paid to the homeowner. That might still result in a court finding some consideration, since the money on the front end might not be found by a court to exactly equal the money promised on the back end.
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On the other hand there is good reason to find that the consideration for issuance of the documents required to start securitization claims, securities, selling trading and hedging was entirely negated by the concurrent promise to pay more than the money received. But assuming there was a finding of consideration, was it enough?
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In a court of equity wherein rescission is no longer an option the court must determine what a reasonable homeowner would have bargained for or received through the process of free market forces if disclosure had actually been made regarding the securitizations scheme and the vast profits and revenue generated under the scheme.
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The court would hear testimony from a variety of experts and reach a conclusion as to whether the homeowner had received enough consideration or if the homeowner should have received more as per the quasi contract and not just what was presented as a loan agreement.
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The range of possibilities is nearly infinite. From zero to a majority of the pot because the investment bank secretly tricked the homeowner into a dangerous transaction, the risks of which were unknown to the homeowner. Using the shadow banking marketplace (i.e., where all derivatives are traded for nominal value) as the external reference point for heuristic projection, it may be fairly assumed that the average revenue generated from each securitization cycle was $12 for each $1 transacted with homeowners. Additional securities analysis reveals that the figure could be much higher.
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In a free marketplace where there was no asymmetry of information the fair question could be posed as follows: from the investment bank’s perspective they would be saying that they are going to make $12 on each $1 during the securitization cycle, perhaps more.
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The homeowner and investor sitting at the same fictional but still legal table would inevitably concede that for inventing and managing such an ingenious scheme the investment bank might be entitled to the lion’s share of the profit.
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The investors would say their role as investors is critical to the existence and success of the securitization cycle. And since capital is valued more highly than labor they would claim a greater share than that awarded to homeowners. Homeowners would make the same argument as investors — without them there is no securitization and there are no revenues and there are no transactions claimed as “loans.”
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So looking at the customs and practices of the financial industry the investors would probably initially claim 40% as angels and the homeowners could justify a claim of around half that amount for their indispensable role.
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Or one could look at the money actually spent (commissions, bonuses etc) on getting homeowners to execute the required note and mortgage while concealing the truth about the transaction as a measure of what the homeowners should get. Or a license or royalty arrangement might be adopted.
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All of them in my opinion average around 15%-20% of the total revenue generated by the scheme. this would leave the investment bank with 40% or more of the securitization cycle revenue which is around 1000% of normal revenues for underwriting and sale of debt securities.
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So the court would offset the obligation with whatever it decided was reasonable consideration for the homeowner. It would either order payment to the homeowner of any excess consideration due or order the homeowner to pay the balance of the obligation after offset for the consideration due. And if the homeowner still owed money both the note and mortgage would be enforceable.
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But here is the rub. None of this is possible without creating a contract by decree in which it is possible to designate a party who is not a creditor to act as a creditor — in a transaction to which the homeowner agrees that for all purposes the designee will be a creditor. And that creditor is subject to lending and servicing laws. This is essential because under current law only the owner of the debt can enforce the mortgage and only someone representing the owner of the debt can enforce the note unless they are a holder of the note in due course — which means they purchased it for value in good faith and without knowledge of the  maker’s defenses. 
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So it becomes necessary to plead for this attribute to be made part of the newly minted agreement because without it, you don’t have an enforceable agreement  Without an enforceable agreement you’re left pleading for damages under RICO, wrongful foreclosure, etc. And while the note and mortgage might not be subject to enforcement, they still exist. No lender or buyer will complete a transaction with that hanging over the deal.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
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Are Lawyers Missing the Boat Again on Foreclosure Defense?

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

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

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

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The question you posed is the million-dollar question. I think you are correct in your analysis. I have attempted to enlist attorneys who specialize in those areas but I have failed.
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The only explanation that I can give you that has any truth to it is that lawyers, despite their reputation, are easily intimidated, lazy and greedy. I surveyed hundreds of lawyers over a two-year period In 2008–2009.
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The proposition was simple. assuming a client with sufficient financial resources to pay any reasonable fee, were they willing to represent homeowners in distress?
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The fact that the answer was in the negative was frustrating enough. But the reason most often cited was that they would rather represent “the bank.” And when I pointed out that they did not represent any banks nor did they have any prospects for doing so, that’s when they said that it didn’t matter.
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Some did express reservation about the assumption that the client could pay. I pointed it out that if they were not making a monthly payment for housing, they could easily pay. That made no difference. They saw the entire endeavor as futile and unprofitable — but in reality I could tell, like any trial lawyer could detect, that I was dealing with raw unbridled fear.
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So I attacked it with seminars on foreclosure defense that highlighted business strategies in which the lawyer could become rich, and some of the attendees did. Others made a good living.
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But it was based on lowering of expectations. By adopting a hub-and-spoke strategy some lawyers, adopting the business plan that I proposed, began servicing hundreds of homeowners at a time. But like all such practices, their business success depended upon settlement of the cases, which meant modifications. This resulted in adding to the illusion that the servicer had any right to be in the picture.
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My latest plan is that I am working on potential pleadings for a case in Reformation in which the investment banks are literally drafted into the litigation. The Court decides whether the homeowner received consideration for issuing the documents (note and mortgage) that enabled the securitization plan, and whether the homeowner received or should receive adequate or additional consideration that could offset the claim. (There is a lot more to this but for purposes of this article I simply state in brief form).
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I have no doubt that there is an opportunity to achieve immense wealth simply by pursuing the obvious. But it appears that the General Public, law enforcement, the Judiciary, and most lawyers have succumbed to the party line that enables the Investment Bank to sit in the shadows and designate names of irrelevant parties with no stake and the outcome to administer, collect and enforce obligations that were long ago retired through securitization, proof of which is easy to obtain, to wit: is there any company showing the existence of the debt as an asset on their balance sheet and a loss from nonpayment? 
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I definitely know the answer to that question. Current law therefore does not allow the current scheme of securitization to exist nor should it. It depends entirely upon concealment of the most relevant data in any transaction — the terms and conditions under which each party intends to serve the other and the terms and conditions under which each party might profit from the transaction.
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Most of all under the federal and state lending and securities laws (and general laws requiring fair dealing) the identity of the counterparty must be included in order to make the agreement an enforceable contract.
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This concealment allows investment banks to act illegally and against the idea of free markets or capitalism. It prevents both investors and homeowners from bargaining for adequate consideration based upon the true nature of the transaction. 
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The problem is that while most people think everyone has been bought off, and to a certain extent that is true, the real problem is that the clever plan of securitization is so counter-intuitive that nobody believes the truth that is in plain sight. The reason for fabricated documents is that there were no transactions, so the documents had to be fabricated to fit facially with the requirements of law for administration, collection and enforcement.
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To anyone who is not conversant in the language of finance, that seems impossible, unlikely, or just plain wrong. So rather than keeping an open mind about it, they react to such assertions with aggression and incredulity.
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Some lawyers do get it and they win their cases most of the time. Everyone else seems to argue for their own weaknesses (See Steven Covey’s Book) without looking to actual information or data. They insist that the foreclosure cases are both unwinnable and are morally unconscionable if they give the homeowner a free house.
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I insist that there is no debt because the investment bank was never depending upon the economics of a loan to make money. Foreclosures are gravy. They made all their money creating, selling, issuing, trading, and hedging securities. The labelling of the homeowner transaction as a loan was a false representation. The investment bank, who never appeared on any of the paperwork, was the real party in interest and at the end of the day there was no person or company who owned the so-called debt from the homeowner. 
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If that plan had been disclosed — as it was required to be disclosed under both “lending” laws and “securities” laws — both investors and homeowners would have had the opportunity to bargain for more more compensation and better terms — because they would have known they were taking a much larger risk than the one that was actually presented.
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Indeed, investors that were pension or other types of “stable managed funds” would not have been able to invest at all had they known the true nature of the certificate scheme into which they they were investing the futures of workers and companies that had contributed to the fund.
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Such funds, as investors, were critical to the success of the securitization scheme. Investment banks would have been legally required to present additional safeguards to the fund managers such as participation in the trading profits, hedge contracts and insurance contracts in order to make the sale of certificates to stable managed fund investors. 
The same logic holds true for homeowners.
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They were making the largest investments of their lives based upon their reasonable belief that the apprasial was real and the loan was viable — all resposnibilities imposed on the “lender” by law (see TILA).
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Had they known the true incentives and motives and existence of the investment bank they would have understood that this was no loan. It was a service they were performing and an investment — for which they were being paid to issue documents that required them to pay money over time in order to enable the securitization scheme.
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If the true profits of the securitization scheme were disclosed as as required by law, homeowners and originators would have been able to compete for a greater share of the securitization pie or they would have had the opportunity to choose not to do business in such a hazy scheme. 
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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PennyMac and Other Companies are Making False Claims as “Servicers”: Black Knight, the king of fabricated documents is behind 62% of all “servicing records.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Black Knight vs PennyMac Lawsuit

So why am I saying all this?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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.

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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.

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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.”

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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).

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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.”

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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.

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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.

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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.

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

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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.

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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.

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

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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.

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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.

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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.

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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.

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

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*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.

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

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

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

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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

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

Transactions with Homeowners Are Part of Securitization Scheme: Why don’t homeowners and their lawyers use this fact?

So the “RMBS” industry is pushing for “economic relief” in the Pandemic. If they get it, it will be another windfall for Wall Street and investment bankers will go from laughing to convulsing in the privacy of their board rooms.

The Wall Street Journal published an article yesterday on how the mortgage market is not behaving “as expected.” With interest rates down so low there should be a flood of refinancing. And there is plenty demand to do just that. But, as the article points out, there might be demand but there is no supply. There is no supply because investors are not buying certificates issued as RMBS (Real Estate Mortgage Backed Securities). https://www.wsj.com/articles/mortgage-credit-tightens-creating-drag-on-any-economic-recovery-11590431459

The reason they are not buying RMBS is simple. They don’t trust the economy and all of the investors have growing doubts about the valuation and risk assessment associated with RMBS. Investors see mortgage default risks as being associated with safety of their investment because the certificates state that one of the discretionary reasons why investment banks don’t need to pay them is if there are declared defaults on certain specified loans — whether or not they are owned by the investment bank or anyone else.

And since securitization is in essence a Ponzi scheme, the more difficult it is to sell new certificates, the more difficult it is to pay investors. That part admittedly is counterintuitive but nonetheless true. While homeowner’s payments actually do cover the liability of the investment bank to investors, the reality is that the investment bank continues ot make payments to investors regardless fo receipt of money from homeowners IF they are continuing to make sales of new certificates.

The practical effect of all this for homeowners is to realize that if they sign on any dotted line they are pulling the trigger on a securitization scheme, of which their receipt of money is a tiny fraction. At the end of the day there is no person, company, business entity or trust that maintains any books and records showing the homeowner’s promise to pay as an asset on their balance sheet. In plain words, the role fo the creditor has been eliminated to avoid lender and servicer liability imposed by federal and state laws.

This fact — the absence of a creditor — has been the topic of discussion for two decades. And it is has never been addressed because the investment banks, who have the greatest amount of influence over politicians, don’t want it addressed. They don’t want it addressed because if it was addressed then the role of investment banks AS LENDERS would be revealed along with their gargantuan profits from “securitization” in which the obligations of homeowners are NOT sold to anyone, much less securitized.

In practice this means that homeowners can and probably should dispute their obligation to make payments before, during and after any false declaration of default. A declaration of default is a legal nullity if it isn’t declared by or on behalf of a creditor. If there is no creditor then there can be no default. Yes it is that simple.

So that is why I have been a broken record. Criminal lawyers tell their clients to keep their mouths shut because 80% of all criminal convictions are the direct result of what comes from the mouth of the defendants. That’s why I tell professionals with grievances filed against them the same thing.

And that is why I tell homeowners the same thing —- admit NOTHING. The reason is simple — your opposition is an investment bank regardless of who is named as claimant or plaintiff. If you admit any part of what they are saying they will argue that you admitted all of it. And they may be right under current rules.

Force them to the PROOF and they will fail the test every time.

Nothing they are saying is true and none of their documents are anything more than pure fiction. Don’t admit that the transaction was a loan, that there is an obligation, that the obligation is secured by a mortgage, that the obligation is set forth in the note, that the note or mortgage has been transferred, that the default ever occurred, or that the action is a foreclosure.

Don’t admit the trust or that a bank is a trustee or that the bank has any authority to represent a trust or the holders of certificates. None of it is true. Don’t even think that the action is for the benefit of investors. It isn’t.

And don’t think that you are cheating someone out of money by not making the payments you promised to make. Anyone who was legally entitled to receive a payment from you has already been paid. It is not your doing or your fault they got paid without your money. And it isn’t your responsibility to pay them again.

If investment banks want to change this analysis and return to the world where we are a nation of laws and not a nation where men make up their own rules and go to illegal or extra-legal schemes then they must seek to legally reform (see reformation) their schemes to protect all the stakeholders and not just themselves as intermediaries with the most to gain and the least to lose.

Your position is that you entered into a transaction in which you knew only a small part of the whole transaction and that you were entitled to know about the rest of it. Your intent was to establish a loan transaction. their intent was to start a securitization scheme in which the role of lender was eliminated.

So your intent was a loan and theirs was the creation, issuance, sale, trading and hedging of securities. Without your signature the securitization would not exist. Without securitization your homeowner transaction would not exist.

You got a payment for issuance of the note and mortgage and for a disguised and unintended license to resell personal data. That part of the consideration was offset by your required (see adherence contract) promise to make payments far in excess of the transaction payment received by the homeowner.

So was there any net consideration paid to the homeowner for issuance of the note, issuance of the mortgage and license to resell personal data? Auditors might vary in their opinions on that.

And given the requirements under all lending and securities laws to disclose the whole transaction — and not just the part of it called a “loan” — how much money should the homeowner have received for triggering a profit firestorm?

We won’t know because in a free market the homeowner would have been able to bargain for greater incentives if he/she knew about the entirety of the transaction. We won’t know because in a free market competitors for homeowners’ signatures would have offered more incentives. We won’t know because in a free market, investors would have asked for much greater incentives since, besides the homeowner, they were the only real player in the securitization scheme.

And THAT is what quasi contract law and the law of quantum meruit is all about. Use it or lose it.

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

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*CLICK HERE TO ORDER CASE ANALYSIS (not yet)

*CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)

*FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

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

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

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

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

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

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

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

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

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

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


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

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


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

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

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

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

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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 TERA

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

*CLICK HERE TO ORDER CASE ANALYSIS (not yet)

*CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)

*FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT.  THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

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

BEWARE: MORATORIUM ON FORECLOSURES MAY NOT STOP SALES OF THE PROPERTY

In a nutshell, moratoriums will do very little for homeowners or the courts. First unless a specific moratorium order states that it bars sales and evictions it is only the foreclosure action that is temporarily suspended. At some point in the near future, homelessness will spike because of a new tidal wave of foreclosures.

Second a moratorium does nothing to forgive payments. So when the moratorium expires, all the payments are due unless you ask for and receive some sort of forbearance agreement from servicers (who probably don’t have any authority despite all appearances to the contrary).

Third, don’t rely upon your own interpretation of what you read on the Internet. There is no substitute of a three year legal education and law degree and there is no substitute for decades of experience in and out of the courtroom.

Fourth, DO use this time to prepare for a confrontation with the banks and companies claiming to be servicers. Do not admit to anything —even the existence of your obligation even if that makes you feel uncomfortable.

Fifth start the administrative process by sending out a Qualified Written Request under RESPA and a Debt validation Letter under FDCPA. But stop thinking you know how to do that. Overbroad generalizations and conclusions are a perfect excuse not to answer you or evade your questions.

*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.*

FREE REVIEW:

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 TERA

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

*CLICK HERE TO ORDER CASE ANALYSIS (not yet)

*CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)

*FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT.  IT IS NOT A SHORT PROCESS IF YOU PREVAIL. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.

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

Could IRS Enforcement of REMICs Bring Wall Street Into Line? Yes but they won’t do it. Investors and homeowners continue to suffer as victims of fraud.

The most obvious places to look for correction in the illegal conspiracies masquerading as securitization of residential debt were the IRS , the SEC, the FDIC and the FTC and probably later the CFPB. Qui tam (whistleblower) actions were regularly dismissed because the agency that lost money due to false claims rejected the notion that it was a false claim or that anything bad had occurred. Sheila Bair lost her job as head of the FDIC for protesting policy set by Presidents Bush and Obama that failed to hold the line.

So here is a 2014 article that talks about how we could have regulated the investment banks through IRS examination of the REMICs.

Corruption is the answer. Too many people were making too much money and were “donating” too much money to people in public office. Enforcement was impossible. The real answer is extremely simple — stop all private money in elections. All elections should be publicly funded. No exceptions.

see.. PA Journal of Business Law – REMIC Tax Enforcement

The problem remains that US government agencies refuse to police schemes that are labelled as securitization of debt. If they are securitization of debt then market forces apply and everything COULD even out in the end. The problem is that the debt was never sold into a securitized scheme and nobody cares even though that has eliminated even the possibility of the existence of any creditor.

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REMIC policing by the IRS would be ideal to reveal the fatal deficiencies and fraudulent character of these securitizations schemes. It is why the first 9 lawyers tasked with drafting the documents for securitization all quit with one declaring that she would not be party to or an accessory to a criminal enterprise. There is no entity that qualifies as REMIC in residential loans. AND the reason is very simple:  neither investors nor the trust is buying the loans.
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So all the tests and premises about having an ownership interest, and about the quality of the loans are all false tests designed to cover up the fact that there has never been securitization of any residential loan except is very specific rare circumstances where individual mortgage brokers have sold loans to small groups of investors with repurchase agreements. In most instances those turned out to be scams.
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The way they got away with it is that there was a securitization process — i.e., one in which new securities were issued, even if they were unregulated. But only those schooled in Wall Street finance grasp the fact that they were securitizing bets on data — something that is very ornate and complex.
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Once you DO grasp the idea of what they really were doing and are still doing then you see why all the documents in all the foreclosures had to be fabricated, forged, backdated and robosigned. 
*

You can also see why they have robowitnesses come to court and why they show only the business records of a servicer who has no contact with the so-called principal named in the claim or lawsuit. You can see why there is never a proffer of the business records of a creditor because there is no creditor.

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There cannot be contact between foreclosure mill and trustee of REMIC trust, there cannot be contact between “servicer” and Trustee of REMIC trust, there cannot be direct contact between investment bank and any of the players because any such contact would undermine the essential ingredient of the entire plan — plausible deniability of intent or knowledge of the scope of the illegal plan.

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The job of the litigator is to assume that that the entire thing is fraudulent and to ask for what they cannot give — answers to simple questions about the ownership and authority and status of the “obligation” that in reality is nothing more than a return of the consideration paid for a license to sue the homeowner’s private data and homeownership as mere points of reference for the issuance and trading of complex securities.
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But you must make it look like all of those companies are in actual contact and that payments from consumers or from the forced sale of their property are going to a creditor. You need to do that in order to give a judge cover for ruling in favor of the investment bank who is not even in the courtroom.
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The answer is as simple as simple can be: they are making everything up.
*
Documents are not real unless they memorialize something that happened in the real world. But Wall Street banks put together a plan that made it appear that a sale of the debt occured where there had been no such sale. Or to be even more specific, they made it appear that there had been a purchase by or on behalf of the investors or trusts. Nothing could have been further from the truth. The truth is that investment bankers never looked at homeowner transactions as loans. They saw the money they paid to homeowners as a cost and condition precedent to creating and selling new securities. 
*
Why no creditor? Because that is how you escape liability for lending law violations. 
*
Why call it a loan? Because that is how you keep consumers from bargaining for their share of the very rich pie created by investment banks in the sale and trading of derivatives, insurance contracts, hedge products and just plain bets on fictitious “movement” of data that was completely controlled, in the sole discretion, of the investment banks. 
*
They were printing money for themselves. The losers were and remain investors who buy “certificates” that are nothing more than a cover for underwriting the sale of securities for a company that doesn’t exist. the losers are the homeowners whose issuance of a note and mortgage triggers a vast undisclosed profit scheme in which the wealth of America shifted from the many to the few.

*
BUYING RMBS CERTIFICATES IS LIKE BUYING TULIPS JUST BECAUSE THERE IS A MOB OF PEOPLE WHO FOR COMPLETELY IRRATIONAL AND TEMPORARY REASONS THINK THEY ARE VALUABLE.
*

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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)
*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT.  IT IS NOT A SHORT PROCESS IF YOU PREVAIL. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
*
Please visit www.lendinglies.com for more information.

This will probably get me in plenty of hot water with lawyers. Homeowners should be winning foreclosures most of the time. The reason they don’t? — Ineffective Counsel.

The problem is not the judges. The problem is the lawyers who walk into court believing that the loan is real, claimant is real, the claim is real and that they are only looking for technical ways to get their client out of a valid deal.
The problem is exacerbated by magical thinking — that by pointing out bad acts by the foreclosure mill or servicer they will automatically cancel the mortgage, get quiet title and somehow the “debt” will disappear. Is it any wonder that judges are responding negatively to such assertions?
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Well I am rapidly coming to the conclusion that the primary basis for appeal in capital murder cases — ineffective counsel — is the real reason why homeowners think that the courts are ignoring the obvious. This is most manifest in a phenomenon I refer to as hallway trial lawyers. When they are speaking to their clients in the hallway outside the courtroom they sound great; but once inside the courtroom they are either mute or should be mute.
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Hallway lawyers can be great trial lawyers — if they would only prepare and obsessively roll the issues over in their mind as they approach a hearing or filing of a motion, pleading, or brief. And they would win far more often than they would lose if they did the work. That takes two things that most people lack — other than trial lawyers — commitment and courage. Like any performer you must give it your best and accept a pie in the face occasionally.
*
In 45 years of litigation I have won and lost cases. Most of them I won. In hindsight I would say that virtually every loss is attributable to one factor —- lack of adequate planning, preparation and execution.
*
My own experience is that when I have done my job as a litigator I have consistently successfully defended foreclosure cases because there is no case. That knowledge propels to me to object, challenge and refute basic assumptions in an orderly, timely and effective way. I am clear as to the basis of my objections and challenges and how it it lacks foundation, relevance or relies upon inadmissible statements or documents. And I am relentless. 
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While there are judges who simply refuse to consider any possibility of a homeowner victory, many of such judges can be turned when approached correctly. They are merely starting from assumptions they are required to make. They are not against the homeowner. They are for the rule of law.
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The problem is not the judges. The problem is the lawyers who walk into court believing that the loan is real, the claim is real and that they are only looking for technical ways to get their client out of a valid deal. The problem is exacerbated by magical thinking — that by pointing out bad acts by the foreclosure mill or servicer they will automatically cancel the mortgage, get quiet title and somehow the “debt” will disappear. Is it any wonder that judges are responding negatively to such assertions? 
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Why should any judge relieve a debtor of an obligation because of bad acts by a creditor? The answer is that they should not because if they did they would be destroying the foundation of a nation of laws. If you were owed the money then you would not think that is such a good idea either.
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That is why I strive to show the truth of the transaction between the homeowner and whoever sold the transactional documents for the homeowner to sign or the truth behind the acquisition of what had been a valid loan agreement.
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For the homeowner it was a loan and as soon as you admit that it was a loan, you are already in deep trouble. By admitting the loan you admit the existence of a conventional creditor and a conventional debtor. You also admit the existence of a conventional debt and you can’t contest  the non payment by the homeowner and therefore you are conceding that the homeowner is in breach of a loan agreement without excuse. Fabricating paperwork is no excuse to get out of paying a loan you received. You still owe the money.
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The lawyers and homeowners who complain that this gives them no place to go are missing the essential truth of Wall Street securitization: in nearly all cases the debt was never sold. If you start with the wrong premise you will always end up with the wrong result. 
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The entire enterprise was about selling and reselling private financial data of homeowners who for their part were tricked into thinking they were entering a loan agreement while the other side spared no effort in avoiding the title and liability of a lender under lending laws. That is not a loan and the agreement was not a loan agreement. 
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More importantly, the agreement might not be enforceable at all since (a) there was no meeting of the minds and (b) there was an absence of consideration caused by the payment of consideration together with an obligation to pay it back.
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For the investment banks this was solely about getting consent to sell private data and issuing sand trading securities based on the data not any debt. Anyone who does not understand the significance of that should probably not be litigating these cases. They will lose and thus contribute to the growing body of evidence that most people lose defending actions titled or labelled as foreclosures even though most people could win.
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Mass joinder and mass petitions to change the mandatory requirements for filing foreclosure actions can be done with direction from licensed people who actually understand that there is neither an actual claimant nor a claim in the creation, administration, servicing or enforcement of any transactional documents in which a homeowner is one of the parties.
*
My opinion is that without central direction, preparation, investigation, and strategic and tactical planning by experienced trial lawyers, homeowners will continue to be food for a profitable scheme created and advanced by Wall Street.
*
My opinion is that this is a massive social issue as well. By finally denying Wall Street banks of profit from foreclosures and all the profitable events leading up to foreclosure, the vast inequality of power and wealth can be addressed, at least in part.
*
Neil F Garfield, MBA, JD, 73, is a Florida licensed attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
*

FREE REVIEW:

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)
*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT.  IT IS NOT A SHORT PROCESS IF YOU PREVAIL. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
*
Please visit www.lendinglies.com for more information.

The Problem With those Powers of Attorney

Just because a power of attorney appears to be facially valid doesn’t  mean that it IS facially valid, nor that it is substantively valid.

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

Powers of Attorney are part of the strategy engineered by investment banks on Wall Street. Here is the problem with the POA or LPOA strategy.

In summary it is merely part of a larger strategy that seeks to create the illusion of real claims by real parties when in fact no such claim exists and no claimant exists. the claimant never gets the proceeds of foreclosure sale.

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The reason they do it is to insert an intermediary who can claim plausible deniability and that they were just following orders. It also serves the purpose of creating the illusion of a representative capacity between principal and agent.
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And that serves to create the illusion that the “principal” is somehow relevant to the transactional documents with the homeowner — although they never come right out and say that (because it is untrue).
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So the introduction of a Power of Attorney or Limited Power of Attorney is merely sleight of hand maneuvering to get a judge to believe that nobody would have gone to the trouble of creating and executing these documents unless there was something real going on. Unfortunately most lawyers, including those who represent homeowners in foreclosure, believe that to be true. As a result they completely miss the strategy that works in defeating such actions that are falsely labelled as foreclosures.
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Here is the truth.
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No POA ever gives anyone the right to claim ownership, control, administrative rights or the right to enforce any obligation of any homeowner. Instead it says it gives rights to speak for a label which may or may not be a legal entity — i.e., a “trust” which in fact is either nonexistent or “inchoate” under law.
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No trust, no matter how well written, creates a valid legal trust unless and until something of value is entrusted to the named trustee to hold for the benefit of defined beneficiaries upon certain terms expressly set forth in the trust. If the trustee does not own the alleged obligation, then the trust is irrelevant to any claim or proceeding.
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No named “trustee” has ever been party to a transaction in which the named trustee has ever received something of value from a seller or settlor who conveyed anything to the named trustee much less ownership of any obligation, note or mortgage from any homeowner.
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The existence of a note and mortgage is generally construed to be prima facie evidence of the existence of a loan agreement. But the absence of any “lender” conduct of the counterparties to those transactional documents demonstrates conclusively that there was no meeting of the minds. This leads to the counterintuitive conclusion that the investment banks wanted the transaction to look like a loan but but were completely unwilling to be considered “lenders” for purposes of compliance with lending statutes.
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The homeowner had every reasonable basis to think he/she was getting a loan — which means that there was a lender with a risk of loss and who therefore would not underwrite a transaction that was doomed to fail. Instead the real parties in interest, operating through dummy entities, were intentionally creating agreements that were extremely likely to fail. This enabled them to bet against the viability of those agreements. Therefore the less the quality of the appraisal, the loan terms, the household income etc., the more certain the investment bank could be of making money though failure of the DATA (not the debt) to perform. But since the investment banks and the homeowners had entirely different transactions in mind, there could be no meeting of the minds and there never was.
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None of the counterparties or their representatives ever considered themselves to be lenders. None of them ever purchased any obligation from a homeowner and registered such purchase as an asset receivable from a homeowner nor did they make an entry on the liability side of their balance sheet as a reserve for bad debt. Clearly nobody on the other side wanted to be liable as a lender for violations of lending statutes. None of them wanted to be “lenders.” Hence the transactional documents do not represent  meeting of the minds.
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Therefore, every such Power of Attorney grants nothing. It might be facially valid but it is not substantively valid because the purported grantor owned nothing and therefore could grant no powers over assets that were not owned.
*
Note that I no longer refer to “loan documents.” Instead I refer to transactional documents. That is because I no longer believe that the transaction involving the homeowner should be referred to as a loan, even though that was what was intended by the homeowner. It wasn’t intended as a loan by anyone else who was directly or indirectly a counterparty to the transaction with the homeowner.
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In nearly all cases, the original transactional documents referred to the purchase of the homeowner’s consent and rights to resell personal data. The part of the transaction requiring payments from the homeowner was merely a vehicle for reducing the consideration paid for that consent. And the only place it is obliquely albeit not directly referenced as a loan is in actions that are falsely labelled as foreclosures. In all other transactions and documents the subject is clearly the sale and trading on data, not ownership of any debt owed by anyone.
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In a court of equity (i.e., foreclosure) the payment of consideration concurrent with an obligation to return that consideration should be treated as no consideration.
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Hence the apparent contract is rendered unenforceable for lack of consideration. This construction does not produce any financial loss to any party who paid consideration to the homeowner. All such parties are richly rewarded for procuring the signature of the homeowner far in excess of any claim for repayment of the consideration paid for the homeowner’s consent. This construction merely restricts the profits of the players in “securitization” to a level that is fair and proper after full disclosure.
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Further, in a court of equity, the payment of consideration for the consent of the homeowner to allow sale and resale of his personal  financial data should have been disclosed, was legally required to be disclosed and failure of which disclosure is a basis for the court to use its inherent authority to determine the amount of the compensation to be fairly paid to homeowners.
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That amount would be equal to what homeowners would have demanded in general and what investment banks would have offered as incentives in a free market with full disclosure.

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

FREE REVIEW:

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)
*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
*
Please visit www.lendinglies.com for more information.

You got the loan didn’t you? Maybe not.

STOP ADMITTING THINGS YOU KNOW NOTHING ABOUT. STOP USING WORDS YOU KNOW NOTHING ABOUT.
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OK so let’s address that. It is quite natural to think that in ordinary circumstances that a loan was made and therefore some amount of money is due to somebody. So how do we address that natural bias? Allow me to play with that here.
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The presumption that a loan was made is just that — a presumption. It isn’t a fact unless the alleged borrower agrees he received money and that it was a loan transaction — or it is proven (which never happens). It is a conclusive presumption in the absence of a challenge by the borrower because that is how our system works. It takes the customary experience and makes it into a presumption.
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And clearly the fact that the borrower executed documents that are considered to be part of a loan agreement, raises two presumptions. The first is that there was money paid and the second is that it was a loan. And in the context of what we were all accustomed to seeing in the marketplace and what we were all taught in law school this is reasonable and almost unassailable presumption. Almost. It is still presumption which means that theoretically at least it is subject to rebuttal.
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All presumptions fail if the court finds that the source of documents used as the basis for the presumption of particular facts come from a source that is suspicious or not credible. The fact that documents come from an interested party does not in and of itself result in the failure of a presumption if the documents are otherwise deemed to be trustworthy.
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So on what basis could a homeowner claim there was no loan or even deny that a loan of money was made? The fact that the homeowner believes that in the refinancing no money actually exchanged hands is clearly insufficient to challenge anything. So is there anything to this?
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Well to begin with the homeowner actually has no idea what happend at the “loan closing.” But one thing we know for sure is that no loan closing involves any money until after the closing. The documents are signed in the expectation of consideration not upon the receipt of consideration. And since the homeowner is not party to anything that happens after closing, the homeowner is without knowledge as to whether there was money paid, and if so, to whom or why. So his proper response to any implied or actual representation or allegation of a payment of money is that he is without knowledge and accordingly denies same and demands strict proof thereof.
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This should probably be added to the Answer wherever it is possible to do so such as “Defendant denies knowledge and accordingly denies the implied allegation that money was paid and demand strict proof thereof.”
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This procedurally puts the matter in issue although not plausibly in the eyes of any judge. Thus the door is open for discovery as to payment contemporaneous with closing, by whom to whom and in what amount. Proof of payment will reveal in nearly all cases that the money came by wire transfer from an intermediary for an investment bank and not from any account owned or controlled by the named originator.
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Based on that fact the homeowner could establish that there was no consideration between the homeowner and the originator — unless the originator could establish that it was operating as agent for the investment bank.
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The problem of course is that nobody has ever received an answer to that demand in discovery.  So you need to get an order compelling an answer and then sanctions for failure to comply and then an order in limine preventing the foreclosure mill from introducing any evidence to the effect that value was paid by the originator. You are certainly entitled to an inference, if not a presumption, that no value was paid.
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And at trial, if there was one, failure to object based upon lack of foundation would be fatal to the homeowner who would have given up his hard won gains in one swift fell swoop.
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Assuming money was paid by someone, next is the issue of whether it was a loan. This seems obvious so it is a steep climb to get a judge to think otherwise. But let’s look at this.
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The documentation was presented as a loan but was that presentation a disguise for another different transaction that the homeowner knew nothing about? Who were the parties to that transaction? What was the nature of the transaction? What were the terms of the transaction?
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The only way you can bring this into an issue of fact is by denying (not denying knowledge) the implied allegation that the execution of the note and mortgage was part of a loan transaction. You’ll need an affidavit that says it was something else. That puts the matter in issue and then subject to discovery as stated above but the judge is going to be highly skeptical of what appears to be a slam dunk.
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So it is better practice to not only deny the implied allegation but affirmative assert (affirmative defense) that it was a disguised transaction (violating TILA disclosure, RESPA and alter FDCPA) in which the homeowner’s signature, name, reputation and property were used in a plan that was entirely devoted to selling securities such that the end result was that nobody was holding an asset receivable reflecting the principal or interest due on the alleged “loan.”
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In short the risk of loss was eliminated and nobody suffers financial injury from nonpayment. In fact, all parties on the back end were paid and are getting paid. Again that puts the theory in issue and opens the discovery door which terrifies the banks even though most foreclosure mills are not knowledgeable enough to recognize the danger of such a defense.
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To spice things up, the homeowner should allege that had proper disclosure been made he would have a choice of potential counterparties to such a securities issuer agreement and then bargained (quantum meruit) for more compensation than the mere receipt of a sum of money that had to be repaid. And in fact there is actual evidence out there that this is exactly what is happening — with the offers of payment of closing costs, no interest for 6 months, etc. The homeowner simply doesn’t know why such offers are being made.
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And to further spice things up you seek damages in the affirmative defense for violations of all relevant statutes, including securities statutes because the securities issued included the note and mortgage which were converted into securities. Remember that the statute of limitations does not apply to affirmative defenses which are limited in recovery to the amount sought by the claimant, plus attorney fees. (recoupment)
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Once again you will never get a response to discovery so you need to go through the process of compelling response,, sanctions motion in limine and objections in court. And you argue that you are entitled to an inference that the execution of the note and mortgage was merely a ruse for the commencement of a transaction that the homeowner (never refer to them as “borrower”) knew nothing about.
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And so you arrive at the conclusion that the scheme was about the business of issuing of securities without which no payment would ever have occurred for any purpose by the parties who are supposedly involved in what they called a “loan” and which they want the court to treat as a “loan” even though nobody owns the debt because everyone has already been paid. Nobody who paid value ever received ownership of the debt, note or mortgage. And nobody who received  an instrument of conveyance ever paid value. It was all a ruse to create the appearance of a foreclosure when in fact they were seeking profit.
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The homeowner is not getting a free house. The homeowner is getting what the investment bank deemed was “enough” to compensate the homeowner for his consent to the sale of his name, signature, reputation and home data. Maybe that compensation was enough and maybe it wasn’t.
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But what we do know is that the homeowner never had a chance to bargain for anything different and that the investment banks and all players in the issuance and trading of securities and all players in foreclosure have generated revenue and net income far in excess of what they claim to be a loan and far greater than what they should have disclosed if in fact the execution of the note and mortgage was a loan closing.
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Since they didn’t disclose it and they refused to be identified as lenders, they should not then be allowed to treat the transaction as a loan. Their failure to disclose was an admission that they were not lending money and that their business model did not require repayment from the homeowner. The foreclosure therefore is the continuing pursuit of profit rather than repayment of a debt, which is not owned by anyone as an asset receivable on any books of account. In short it is not a foreclosure nor even a proper cause of action — because there is no cause of action for loss of expected profit unless there is a contract expressly providing for it.
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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.

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

Brilliant Analysis of Securitization Sleight of Hand

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

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

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

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

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

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

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

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

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

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

Hope you find this interesting,

How to Challenge The Credibility of Documents Offered to Support Foreclosure

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

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

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

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

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

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

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

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

see RobosigningAdministrativeOrder

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

PennyMac Laundromat: Is anything real there?

PennyMac appears to be a vehicle of “cleaning” fatal title deficiencies to the debt, note and/or mortgage on loans. It operates on behalf of CitiMortgage and multiple other entities on loans where the selection of a claimant is essentially random.

The basic playbook of the banks is to insert a real business entity with no actual connection or transaction involving payment of value for the debt, note or mortgage and fabricating documents to imply that such transactions exist. My investigation and that of others reveals that PennyMac is one such sham conduit, in order to create documents that give rise to the legal presumptions that are available when a document appears to be facially valid.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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PennyMac is generally used as a vehicle to launder bad title and pursue foreclosures on behalf of entities that have no right, title or interest in the debt, note or mortgage. Generally speaking all of the documents that purport to involve PennyMac and its predecessors are fabricated and false. They are false because they falsely imply the existence of financial transactions in which value was paid for the debt.
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All residential home loans are about money and nothing else. The banks seek to distract you and the courts from looking at the money and instead, direct you into looking to documents. If I produced a document that looked facially valid, a judge might accept it as valid and true even though the matter asserted in the document is actually untrue. So for example if I were to produce a “facially valid” document saying I am your father, it wouldn’t be true but it would still be taken as true until you rebut the presumption arising from the “facially valid document.
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So the first step is really examining a document to determine whether it is facially valid. There are times, strategies and tactics where it might be wise to direct the court’s attention to this issue by simply filing a motion that disputes the facial validity of a particular pleading oir document and asks for an evidentiary hearing on the subject. Some judges grant such motions because a ruling from such a proceeding might propel the case to an early end.
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A facially valid means what is says. If the document recites all the elements required by statute and it is properly signed (and notarized if so required), the document is facially valid and the legal presumptions are available to the proponent of such a document or pleading.
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So the court takes as true all assertions on the face of the document. A document is not facially valid if it is impossible to determine what is asserted as factually true.
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A reference to an external document that is not attached or even identified frequently results in a dispute over the facial validity of the document which may require an evidentiary hearing on the validity and authenticity of the document. But if the opposing party fails to raise such an objection the document will be accepted as facially valid and then the factual assertions contained or implied by the document will generally be taken as true.
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The debt lies at the root of the loan, the servicing, the collection, and the enforcement of the loan. Without the debt, there is no authority. Without the debt the action is not a foreclosure even though the lawyers label it as a foreclosure. The lawsuit or notice of sale is merely a device to generate revenue which is expressly void against public policy and law.
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The problem is that the banks developed a scheme by which investors paid for the debt and never received ownership of the debt, note or mortgage. This means that third parties receive borrower payments, insurance payments, bailout payments and proceeds of foreclosure sales — something which is not allowed under current law, nor should it be allowed.
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None of these third parties ever turn over such money to the investors who paid for value but did not pay value in exchange for ownership of the debt. As a result, any document implying the transfer of the debt through payment of value is substantively invalid because no such transaction ever occurred in the real world.
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There is no reason for a “successor” to pay a “predecessor” if neither of them owned the debt. The only way you get to own a debt is by paying for it with real value which means money. When you ask for a description of such transactions you will be met with a variety of obscure objections whereas if they had it, they would gleefully reveal it. Neither the note nor the mortgage (or deed of trust) can be actually fully separated from the debt because the obligation to make payment on the debt is all that those documents are about.
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I’m not saying the debt doesn’t exist. I’m saying based upon review and analysis of documents, there is nobody in the chain of title relied upon by your opposition who has ever participated in a transaction in which value was paid for the debt. Ownership of the debt can only be accomplished, based upon my research, by payment of value for the debt. See Article 9 §203 of the Uniform Commercial Code as adopted by all U.S. jurisdictions including your own.
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Payment of value for the debt is a condition precedent to enforcement of the debt. This is both common sense and statutory law. If “servicing”, administration, collection or enforcement of the debt is performed on behalf of a claimant that does not own the debt, then the condition precedent is not met. Such actions are illegal and any documents that are created to support such illegal actions are void.
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If the “servicer” or holder of a limited power of attorney, as in many cases, is not the legally authorized representative of a party who possesses ownership of the debt (i.e., they paid for it) then their actions are illegal, unauthorized and probably fraudulent. In a foreclosure the court must know (not hope) that the proceeds of the foreclosure sale will go to a party or group of parties who paid value in exchange for ownership of the debt. If the court does not know that, it isn’t a foreclosure, which is a remedy exclusively designed to provide restitution of an unpaid debt. 
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The issue confronting you is that the documents, at first blush, appear to be facially valid. But the reference to an unidentified unattached external document like a Power of Attorney in lieu of an actual servicing agreement reciting the authority of the parties, makes such documents facially invalid but still subject to proof. Upon proving authority as I have outlined above, the document could be deemed valid, if the proffering party proves the line of succession that starts with an owner of the debt. In virtually all “securitization” cases I don’t think any such line of succession exists.
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