How is a foreclosure rescue scam any worse than a foreclosure theft scam? Or the real question — why is one scam punished and the other is rewarded with government help?
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It is difficult to imagine a scenario in which an attorney could be working for a law firm that prosecutes “Foreclosure” cases, and be ignorant of the fact that the named trustee of a named “REMIC” trust was (a) not the client and (b) had no interest in the outcome of the litigation.
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I say this because foreclosure mill attorneys assiduously avoid making an allegation that the named Plaintiff had ever made or purchased a loan owed by the homeowners. And I will say that in confidential communications, several such attorneys have directly admitted to me that they knew the implied “trust” was empty — and further admitted they had no idea who, if anyone, was a creditor of the homeowner.
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And in all cases, their sole justification for pursuing foreclosure in the name of a disinterested party was that it is unfair and against public policy to let homeowners take loans and then not repay them. The assumption being, of course, that the money paid to or on behalf of the homeowner was a loan and not something else — a topic about which none of the lawyers know anything, factually, legally or even theoretically.
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As a licensed lawyer for nearly 45 years, I can say with certainty that if I filed suit on behalf of a party I did not know, did not have any contact with, and who wasn’t paying me or my firm, I would be subject to sanctions by the court and discipline by the Florida bar. Why? Because I had no attorney-client relationship with them.
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Yet every time a foreclosure mill files suit on behalf of, for example, U.S. Bank, as trustee of XYZ Certificates Trust, there has been no contact between U.S. Bank and the attorney who files the suit or otherwise files a notice of appearance, directly or indirectly.
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No such attorney has performed due diligence to provide a reasonable basis for asserting a claim on behalf of U.S Bank, nor any asserted or implied trust. More importantly, no such attorney has ever seen or asked for the accounting ledger, or copy, on which the loan account receivable was established, along with credit and debits as payments were supposedly received and paid out by the trustee or its agents. I mention this because this is basic record keeping and was universally required for a successful foreclosure action until the securitization era began.
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This all apparent when they draft the lawsuit (or name the beneficiary on a deed of trust). They don’t actually give a name. Starting with a first-year law student and ending with a trial lawyer with 60 years of experience, I defy them to answer the simple question “Who is making this claim?”
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Their answer is going to be what they have been told to say and to repeat — or just to refer to it as, for example, U,S, Bank. They give a long answer like “U.S. Bank, as trustee and not on its own behalf, Structured Asset Securities Corp. Trust Series 2006-1a for the registered holders of certificates series Structured Asset Securities Corp. 2006-1a.” But they know, because they have already said it in the pleading, that U.S. Bank is not the claimant. They know they are implying but not actually stating that U.S. Bank is acting in some representative capacity — and then, strictly for purposes of deception and confusion, they split the choices.
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First, the implication is that the U.S. Bank represents the trust, and not on its own behalf. But that assertion is unauthorized because U.S. Bank will never say that it has representative authority over any trust. In fact, it categorically denies any such role, duty or obligation to the trust or the holders of certificates issued in the name of the trust and has repeatedly succeeded in taking that position in court when certificate holders brought suit. U.S. bank wins and investors lose.
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Note also that U.S. Bank not only has no knowledge of the foreclosure claim, it is not even permitted to ask or receive any information about it. Is that your “client”, Esquire?
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Second, the document used to “prove” the trust is not a trust agreement even if it says it is. All events described in the PSA are future events that have not yet occurred and so neither has the trust. Have you ever read the documents you say support the case you filed, Esquire?
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Third, no transaction has occurred in which U.S. Bank or the trust has paid value for the underlying obligation, note or mortgage. Any claim of ownership of the loan account receivable is therefore completely unfounded. After litigating but a few of these cases every lawyer working for a foreclosure mill knows these things to be true. Esquire, have you ever inquired or read any information about payment for the underlying obligation, note or mortgage as required by Article 9 §203 UCC, as adopted verbatim in all U.S. jurisdictions?
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Fourth, no stable managed or other restricted fund investor has ever become a beneficiary of any REMIC trust nor the owner, directly or indirectly, of any payment, obligation, debt, note or mortgage. So when the complaint or naming of a beneficiary on a deed of trust says “on behalf of the registered holders or certificates” the lawyers know full well they are saying nothing — but they are filling up space on a page where it looks like they are saying something. Who is your client, Esquire?
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So the lawyer knows that he does not even know the identity of the holders of any certificates, he/she knows has no information on the content of such certificates, nor the identity of the “registry”. Esquire, why mention the registry, the unidentified certificates, or the unidentified holders if you don’t present any of them and don’t know anything about them?
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In addition, the lawyer knows that he/she is implying a representative capacity between U.S. Bank “as Trustee”, for example, and the certificate holders. That lawyer is instructed not to affirmatively allege such a relationship because there is no such relationship. That lawyer has been instructed to imply that the action is on behalf of the certificate holders without ever stating it. In other words, the lawyer is instructed to mislead the court. Esquire, are you really unaware that you’re actively misleading the court?
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So the bottom line is that such lawyers are filing claims on behalf of nonexistent entities for nonexistent claims. Further, they do so by implying an attorney-client relationship with the brand name bank that is designated “as trustee” of the “REMIC Trust” that is, in reality, a business name for the investment bank that owns or controls a securities scheme that is definitely and absolutely not tied to ownership of any payment, obligation, debt, note or mortgage.
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But they persist because their employer pays them to do it and the employer is paid to do it under the name of a self-proclaimed servicer that says it has authority because the trustee gave it to them. Even the most naive lawyer recognizes that to be circular reasoning. Esquire, are you familiar with the ethical and disciplinary codes governing an attorney’s conduct?
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All attempts to sue such lawyers have been turned down because of something called “litigation immunity.” But no such doctrine applies when the lawyers is actually part of the scheme to deceive the court and who is participating strictly for fees and not to achieve some legitimate aim. There is no legitimate aim for giving an undecipherable name designated as a “creditor” by some computer program that assigns cases and information from a computer server owned. operated and maintained by concealed parties who are under the control of concealed parties (investment banks) who started the scheme.
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When foreclosure defense lawyers get creative with their defenses of homeowners they get sued, sanctioned and prosecuted for fraudulent foreclosure rescue schemes.
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When foreclosure mills file claims under the deceptive label of “foreclosure” without any legal foundation, they make millions of dollars, are protected by litigation immunity, they are further given disciplinary immunity despite the clear evidence that the people they are dealing with —- I wouldn’t go so far as to call them clients — have already been found guilty in hundreds of administrative proceedings and settlements in all U.S. jurisdictions for allowing the use of their names in connection with using fabricated false documents that are then forged and/or robosigned.
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To be fair, there have been some foreclosure assistance services that schemed and that were scams. And a small number of those scams included licensed lawyers who were justly punished —- if it really was a scam. But how is a foreclosure rescue scam any worse than a foreclosure theft scam? Or the real question — why is one scam punished and the other is rewarded with government help?
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The foreclosure theft scam, which includes nearly all current foreclosures, is a condition precedent to foreclosure rescue scams. If false, unfounded foreclosure process was not being invoked for nonexistent or unowned accounts receivable, there would be no demand for services from people who are desperate to escape the clutches of thieves.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate 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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