Mr Cooper: Now You See It Now You Don’t — Maybe They Own Debt and then Again Maybe Not: 10Q report to SEC

READ SLOWLY, Breathe, repeat

Mr Cooper 10Q

Finally a Judge Asks the right Questions about TILA Rescission and Invites Briefs

The time may now be coming where the court systems and Federal and State legislatures must come to terms with two inescapable legal facts:

(1) That borrowers who sent TILA rescission notices — and particularly those who sent them within 3 years of consummation of the mortgage — still own the land that was deemed “lost” in foreclosure.

(2) That such borrowers possess valid claims to recover title. possession and money damages. 

It was bound to happen and now it has. In one case, a judge is asking the following questions and inviting briefs on the following subjects:

  1. What is the effect of the failure to return consideration upon an attempt to exercise the right of TILA Rescission?  
  2. What is the effect on rescission if the borrower continues to pay? 
  3. Does TILA pertain to refinancing?

See HOW TO FRAME TILA RESCISSION IN YOUR PLEADINGS

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

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================
The Tila Rescission Statute 15 USC §1635 requires, as a condition precedent to demanding payment of the borrower’s debt, that the parties who received money from the borrower arising out of the loan agreement return all such money to the borrower first before anyone can make a claim for repayment. This is why bank lawyers have long advised their arrogant bank clients that failure to follow the rules set forth in the TILA Rescission statute could not only result in loss of enforcement of the mortgage which is automatic, but also loss of the right to enforce the debt.
*
The investment houses, who were the real parties in interest behind the origination or acquisition of residential loans, have long been bullying their way through the TILA Rescission statute since it undermines the value of the derivative infrastructure built and sold over every loan. Thus far they have succeeded in getting virtually all courts. except the Supreme Court of the United States, to go along with the bank narrative regarding 15 USC §1635. In plain terms they got what they wanted: judges ignored TILA rescission and entered orders as though it didn’t exist. But it did exist by operation of law and the US SUpreme Court said so.
*
Failure to return consideration bars collection of the debt. And there are two other things that the “lenders” are required to do as conditions precedent (return cancelled original note, which we all know they don’t have, and file a satisfaction and release of the mortgage in the county records so that the world will know that rescission has occurred. This is the replacement for cancellation of the loan agreement. The new “agreement” is set forth by the statute.
*
The judge doesn’t ask “effect on what?” The mortgage in all events is void, by operation of law. Neither the borrower nor the  creditor can effectively take any out of court action that changes that.
*
There is no unilateral or bilateral action that can be taken by either or both parties to change something that is effective “by operation of law.” The only exception MIGHT be (and probably WILL be) that rescissions sent outside the 3 year period of expiration could conceivably be ignored, but if they are recorded in county records only a party with legal standing could have the rescission notice removed from the chain of title with a court order.
*
And the problem for the banks is that they have no party who could be defined as a creditor — a party who had paid value for the debt and owns the debt, to wit: a party to whom the debt is currently owed. Another way of saying it, if you were listening to to the forensic auditor seminar last Friday, is that only a party who was carrying the borrower’s debt as an asset on its balance sheet as a loan receivable could claim the status of owner of the debt i.e., creditor.
*
The genius of the way securitization has been practiced with respect to residential loans, is that there is nobody who takes a loss from nonpayment of any debt. Nobody is entitled to actually receives the borrower’s payments or the proceeds from a foreclosure or other sale. The money that is received therefore, is revenue upon which they pay no tax because they report it as repayment of debt rather than income. This explains why you can’t get a straight answer on “who owns my debt.” The answer is nobody. But that answer is counter intuitive which is another way of saying nobody wants to actually believe that.
*
The issue is whether the borrower’s should forfeit their homes on a scheme that was based upon receipt of revenue rather than repayment of debt?
*
TILA Rescission highlights this problem because it cuts down the veil or curtain behind which the banks hide. There is no more loan agreement and there is no more note or mortgage from which all sorts of legal presumptions can arise. While I would have thought this day would come sooner we finally have our first judge asking the right questions. Thus the hard “talk” begins.
*
  • What is worrisome is the Judge’s use of the word “attempt.” He phrases the questions in the context of an “attempt at rescission” rather than the event of rescission. Either the rescission was sent or it wasn’t. In Jesinoski v Countrywide that is the end of the issue. If it was sent then TILA rescission is effective by operation of law. There is no attempt which insinuates that TILA rescission is a claim rather than an action with legal consequence. There is no attempt and there is no claim.
*
Paying on the mortgage is only to protect the borrower’s credit rating and prevent action to foreclose on the mortgage that does not exist but will obviously be treated as existing in the current judicial climate. It does nothing to effect what has already occurred by operation of law. The loan agreement is cancelled and with it the note and mortgage became void. The only consequence, rather than effect, is such payments increase the amount of money due back from the parties to whom the money was given or from  parties who originated the loan agreement under TILA or unjust enrichment. No person, whether borrower or lender, can “waive” a legal event that occurred by operation of law any more than they can ignore a court order without being in contempt of court.
*
TILA does pertain to refinancing. I don’t know what is meant by instant “circumstances.” Many “modifications” are actually refinancing. The creditor has changed and remains concealed. The entire purpose of the banks in modification is to validate what is otherwise a void or unenforceable loan agreement using undue duress or even extortion to get the borrower to sign away rights.

US Bank and Deutsch Agree That They Should NOT be named as Plaintiffs in Foreclosures

see US bank Brochure

 

People forget that Deutsch issued a directive to all servicers to cease using its name when initiating foreclosures. The investment banks fought back and apparently paid Deutsch more money in fees for the use of its name. That was around 2011. You might find the article on this blog about it.

In the above link US Bank in a brochure produced by US Bank pretty much says the same thing. Keep in mind that this is a compromise of language to provide cover both the investment bank that sells the certificates and creates other derivative investment products on the one hand, and US Bank who is merely renting out its name. US Bank is trying to thread the needle. They want no liability from any of the potentially illegal transactions conducted while using its name, nominally, in foreclosures and even Pooling and Servicing Agreements.

This is how they write and publish it:

U.S. Bank as Trustee: As Trustee, U.S. Bank Global Corporate Trust Services performs the following responsibilities:

• Holds an interest in the mortgage loans for the benefit of investors [Editor’s note: Not really true. It holds a claim to bare legal title to loan agreement for the benefit of the investment bank]

• Maintains investors/securities holder records [Editor’s Note: Also not true. Only the investment bank maintains such records. US Bank has no access to the names of investors nor any transactions ever conducted with them in the name of any trust in which US Bank is named as trustee.]

• Collects payments from the Servicer [Editor’s note: also not true. US Bank handles no money in connection with any account or any borrower or any servicer and does not disburse them. That is done by the party named as Master Servicer although that term is probably also a misrepresentation.]

• Distributes payments to the investors/ securities holder [Editor’s note: Not true see above.]

Does not initiate, nor has any discretion or authority in the foreclosure process [Editor’s note: True but it does allow its name to be sued as though it was initiating the foreclosure action. This is why I keep bringing up the issue of whether the lawyer who asserts that he or she represents US Bank actually does represent US Bank since US Bank has no interest in the outcome of litigation, receives no foreclosure proceeds, and the lawyer is taking directions strictly from the servicer or in turn is getting instructions from the investment bank.]

• Does not have responsibility for overseeing mortgage servicers [Editor’s note: Thus it is not a trustee in the legal or traditional sense. It has no duties.]

Does not mediate between the servicer(s) and investors in securitization deals  [Editor’s note: True but they are still a co-conspirator in misrepresenting their role in the securitization deals because they are being paid for the use of their name to make the deal look institutional even though it is strictly a private sham]

Does not manage or maintain properties in foreclosure [Editor’s note: True and another example of how US Bank does nothing in connection with any activity relating to any loan claimed to be part of the “trust.”]

Is not responsible for the approval of any loan modifications [Editor’s note: True and an admission that it has no control, which means it is not a trustee even if it is named as a trustee].

All trustees for MBS transactions, including U.S. Bank, have no advance knowledge of when a mortgage loan has defaulted. Trustees on MBS transactions, while named on the mortgage and on legal foreclosure documents, are not involved in the foreclosure process. [Editor’s note: True and they have no knowledge afterwards. In short, they have no knowledge unless requested to say they do because of successful discovery during litigation and an order from the court that US Bank must respond].

 

7 spots now open for Forensic Auditor Seminar Tomorrow

I had saved a few spots and now there are a handful people who have not responded to the invitation. If you want to participate in the seminar write to neilfgarfield@hotmail.com. I will look for those emails once around 9am EDT tomorrow morning, whoever responds will be admitted in order of the emails received until the remaining spots are filled.

I am also going to try and record the presentation using Quicktime which I have never used before. Looks simple enough. If it works then I will make the recorded seminar available.

Also for the lawyers, I meant to apply for CLE credits and completely forgot. I know there is a procedure for getting CLE accreditation after presentation. I’m already an accredited CLE presenter. If you want the credits then write to me at neilfgarfield@hotmail.com and ask. I’ll do it. I can apply for 2 credits. 1/2 credit can be used toward ethics.

 

Free Forensic Loan Seminar Starts at 1:30PM Tomorrow

I may have said 1PM to some people.

Tonight! How to Use TILA Rescission in Court! The Neil Garfield Show 6PM EDT

FORENSIC AUDITORS TAKE NOTE

Thursdays LIVE!

The Neil Garfield Show

or prior episodes

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

*******************************

There are many potential claims arising out of attempted foreclosure after TILA rescission is effective.
*
But one of them is not a violation of your rescission rights. By pleading that you are putting into play the burden of proving the effectiveness of rescission which has already occurred by operation of law.
*
By pleading or arguing such a notion you are inviting interpretation form a court that is only too happy to reject your claim. In most cases your right to enforce the duties of a lender under the TILA Rescission statute, 15 USC §1635 has long since expired under TILA so you have no claim to violation of your rescission rights. You are making a claim that does not exist.
*
Nearly all successful foreclosure defenses are based upon the defense narrative that the party bringing the foreclosure action has no right to bring it. In the case where rescission has been effected, there is no claim for foreclosure anymore. The debt remains but there is a new way to collect it under the TILA Rescission statute.
*
You do have claims for violations of other statutes that protect consumers against fraudulent or wrongful claims and provide damages and the basis for declaratory, injunctive and supplemental relief. So you probably have a claim under the FDCPA in addition to other statutes. And you have claims under common law.

How to Frame TILA Rescission in Your Pleadings

In many cases it is the homeowner or their attorney that is confused about the effects of TILA rescission. It is much simpler than what I am seeing. It is an error to present it as a claim. The simple fact about TILA rescission is generally that you are still the owner of the property, free and clear of any legal encumbrance on the title. The debt still exists but the method of collection has changed because of 15 U.S.C. §1635.

Foreclosure is impossible because foreclosure is the exercise of rights under a mortgage or deed of trust that no longer legally exists.

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

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

The job of the forensic auditor in the context of TILA rescission, is simply to determine whether a notice of rescission was ever sent, when it was sent, when the loan agreement was consummated, and whether the notice of rescission was recorded in the county records. The report from a forensic auditor could quote 15 U.S.C. §1635 and then report on whether the notice of rescission complies with the facial elements of the statute.

If so, assuming the forensic reporter is not a title expert, the report could refer to the Jesinoski decision and opinions delivered by outside counsel that the property is owned by the homeowner, free and clear of the encumbrance. I do not believe the report should argue that the debt is uncollectible because enforcement is barred by a statute of limitations. That is a legal argument outside the purview of a forensic auditor.

The same instructions would apply to pleading by a homeowner or their attorney. The situation should be presented as the property is no longer encumbered by a mortgage or deed of trust that no longer legally exists. If the foreclosure is based upon enforcement of the mortgage or deed of trust legal standing does not exist by definition. Neither a court nor any claimant possesses any legal right or even argument to take any action in or out of court if that action is based upon the enforcement of a document that legally does not exist anymore.

In a lawsuit against the many parties who seek to enforce void encumbrances, the homeowner should seek declaratory, injunctive and supplemental relief based on the simple fact pattern that the mortgage or deed of trust has no legal existence but the defendants are using it anyway. Therefore the homeowner needs a judgment from the court declaring that the defendants have no right to enforce a document that has no legal existence, issuing an injunction against the defendants preventing them from taking any action in or out of court based upon rights that no longer exist, and granting the homeowner money damages, if applicable.

The prima facie case for the homeowner is simply that the notice of rescission was sent, and that the statute makes rescission effective by operation of law, and that the defendants are proceeding as though they still have a right to foreclose or to collect the debt contrary to the method for collection described in 15 U.S.C. §1635.

I think the problem could be that lawyer’s favor pleading a violation of statute and therefore present TILA rescission as a claim. This is a mistake. It is an event. The pursuit of a foreclosure is not, in my opinion, a violation of the TILA rescission statute. It is the pursuit of a claim that does not exist. The claimant does not exist is the right to foreclose. The claim that still exists is the right to collect on the debt.

There is only one party category that possesses the right to collect on the debt under the TILA rescission statute, to wit: it is a party who has paid value for the debt and therefore owns it. Theoretically the party to brought the foreclosure could be owners of the debt, but usually that is not the case. Usually they are concealing any information about the identity of the owners of the debt. The can only get away with that if a notice of rescission has not been sent. It is only the notice of rescission that removes and cancels the original loan agreement containing the right to foreclose.

Therefore any pleading, motion or argument from a party whose legal standing was dependent upon the existence of the mortgage or deed of trust must be ignored unless they first establish that they still have legal standing because they paid value for the debt and they own the debt, or because they are authorized representatives of an identified owner of the debt.

While I have stated on these pages that any facially valid notice of rescission triggers the effects of 15 USC Section 1635, it is evident that the courts, including the US Supreme Court, will take the position that only notices sent within the three year period of expiration stated in the statute have any chance of being considered. But that is the ONLY occasion in which a notice of rescission can be ignored.

As stated by many bank lawyers, ignoring notices of rescission that are properly sent within the three year expiration period will likely eventually produce a result where the parties seeking to enforce the mortgage or deed of trust can neither enforce the encumbrance nor the debt. Those bank lawyers have warned about negative effects on the derivative infrastructure that is built over such loans if the debt can no longer be enforced because it is barred by statutes of limitation. The banks chose to bully their way through this.

In my opinion the outcome of all this doubt and uncertainty is clear. Eventually the investment banks will pay a very heavy price for ignoring lawfully sent notices of TILA Rescission sent within three years from the date that the loan documents were signed.

 

Instructions to Participants at Forensic Audit Seminar this Friday at 1PM

We are full with 100 participants.

You have already received your invitation from www.freeconference.com. Please RSVP.

The invitation contains instructions on how to attend. Follow the instructions.

The seminar consists mostly of a 90 minute visual and video PowerPoint presentation with my lecture followed by 30 minutes of questions and answers.

You will not see the presentation unless you log in with your computer. The link is provided in the invitation.

If you call in by telephone that will only give you the audio presentation not the visual presentation.

You can do both — log in by computer for the visual presentation and call in for the audio. Or you can simply log in on your computer and get both.

Make sure your phone and computer are on MUTE as to the phone or microphone on your computer. 

Be in a safe, quiet place with no background noise especially if you are going to ask a question. If you are asking a question by telephone keep your computer on mute to avoid echo and feedback.

Questions can also submitted via chat function.

THINK ABOUT YOUR QUESTION. Describe the issue in one or two sentences. Do not use the program as a platform to describe an entire case. Be clear as to what answer you are seeking. 

In two weeks on Thursday, August 15, 2019, the Neil Garfield Show will devoted to additional comments, questions and answer arising from the content of this seminar. In addition questions can be submitted to neilfgarfield@hotmail.com from seminar participants.

AFTER THE SEMINAR IS OVER PLEASE SUBMIT YOUR EVALUATION ON THE FOLLOWING FORM

EVALUATION OF FORENSIC AUDITOR SEMINAR

 

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

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

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

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

*

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

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

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

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

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

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

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

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

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

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

*

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

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

*

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

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

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

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

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

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

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

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

Tonight! Why the Bankruptcies of DiTech and Aurora Matters! Neil Garfield Show 6PM EDT

Thursdays LIVE!

The Neil Garfield Show — WEST COAST

with CHARLES MARSHALL AND BILL PAATALO

or prior episodes

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

*******************************

I get that the complexity of securitization and foreclosure litigation can be mind-numbing even to an experienced litigator. But once you start winning you get a rush. Tonight we talk about making some of the more tedious aspects of examination of the case productive for the lawyer and for the homeowner.

The continued appearance of DiTech and or Aurora is actually a sparkling example of arrogance emanating from the investment banks that too often control the narrative. If either DiTech or Aurora ever owned a single debt, it was probably one in a million.

With the bankruptcy petitions involving several entities bearing the name of DiTech or Aurora and additional bankruptcies involving closely related entities like GMAC and Lehman Brothers, somehow we have been led to believe that the investment banks were so negligent that they actually left the loans in the entities that filed petitions for relief in bankruptcy with schedules that were devoid of virtually any loans.

On the Show tonight Charles and Bill address the following:

How MERS misused the transfer of Aurora servicing rights to Nationstar, all starting out of the Lehman Brothers BK following the Mortgage Meltdown.

How borrowers can use these servicer bankruptcies, particularly the one of Ditech, to advance the following:

– Using notices (of the Ditech) of stay to manage litigation options;

– Ditech’s non-judicial foreclosure auctions are apparently on hold, due to the automatic stay rules and restrictions on recording documents, in their BK. Judicial actions by Ditech should be on hold too. These restrictions even limit Ditech’s ability to direct the removal of Lis Pendens in lawsuits in which they received a judgment.

How Ocwen may be using a recent merger with PHH to shore up their book of business, to ameliorate credit issues or avoid bankruptcy.

How to Understand Debt and Money in Foreclosures Today

Everything is summed up in the words of Reynaldo Reyes from Deutsche Bank: It’s all very counterintuitive, which means that the truth runs against basic assumptions that once worked. The assumptions are not true and the truth seems to be untrue.

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

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

For 13 years I have been trying to distill into words a description of securitization as practiced by the investment banks. In theory securitization is neither a dirty word nor an immoral practice. And to be fair, the illegality of today’s foreclosures is partially the responsibility of legislators and regulators who failed to keep up with financial innovation.

I’ve hit upon an analogy that might prove helpful to many people.

After centuries of scientific theory and investigation, physicists came up with a hypothetical particle called an atom. Later I use the atom as an analogy to an actual cash debt owned by a borrower to some legal person who has suffered a risk of loss relating to nonpayment of the debt.

Eventually the atom was proven to be an actual particle. Then scientists fairly quickly discovered that atoms were in turn composed of even smaller attributes or particles — electrons, protons and neutrons.

With debts, financial analysts and innovators discovered that a debt can be broken up into different attributes — interest, principal, monthly payments, fees etc. And they found that each of these attributes could be separately sold. But this created a monetary split which the law did not recognize. Nevertheless it occurred. The law requires the presence of a specific legal person who possesses a claim based upon actual loss from nonpayment. With the split the potential claimants immediately broadened to everyone who had purchased any attribute of the debt.

This makes it  difficult if not impossible to present or even identify one legal person who actually has the legal standing to bring a claim for nonpayment. Hence no creditor is alleged or identified and no ownership of the debt is alleged or proven.

After parsing out the main attributes of atoms, scientists discovered many hypothetical particles that were not completely or directly observable but whose existence could be determined by reference to certain behavior of the some of the known attributes. Some particles were not only difficult to observe, their presence at any location was based upon calculations of probability rather than any actual observation of real world events. Other particles came into existence and then disappeared in microseconds. Some eventually have been proven. Others are still subject to scientific investigation. That is particle physics. And of course we all know that this knowledge developed into a theory for producing a bomb of heretofore unimaginable power to destroy — or power the planet depending upon how it was used.

Careful analysis shows that atomic theory closely correlates with securitization of debt.

Securitization, to be clear, is the process of distributing the risk of any investment to many people. There is nothing wrong with it. It has been done for centuries and it is the basis for capitalism which is our system and seems, by general agreement, to be the best economic system humans have yet to devise, despite its obvious shortcomings.

“Securitization” since 1983 has taken on a more particular meaning, i.e., the distribution of risk on consumer debt, and in particular residential loans because those are the biggest debts. All paper instruments that declare ownership of a particular asset derive their value from that asset. So all such paper instruments are by definition derivatives whether the paper is certificate of common stock, a bond, car title or anything else. “Derivatives” has taken on a more particular meaning, i.e., instruments that derive their value from debt.

In theory securitization of debt can be accomplished on one of two ways: either many people invest in one debt or many people invest in many debts. The obvious answer is that diversification of investment diminishes the risk of a total loss. So securitization became the investment by many people into many debts.

So far, so good.

In the ordinary way of doing business on Wall Street, brokerage houses are fee-based intermediaries who facilitate the purchase of investments in various types of paper instruments including regulated securities. So for example an initial public offering of securities by a company, the brokerage house underwrites the offering by taking on some risk and receiving a fee for its role in creating and selling the securities offered to the public.

And that is how it worked in all legal transactions. People who were or said they were licensed brokers and sold nonexistent shares of nonexistent companies or who took a position in the ownership of equity (stock) of a bankrupt company and then sold them to the public making outlandish claims were routinely closed down, jailed, fined and subject to asset seizure.

Three things happened that changed Wall Street.

First accounting rules starting  changing in the 1960’s that allowed for something called “off balance sheet” transactions. This enabled management of a company or a brokerage company to manipulate the economic and financial reports relating to securities trading on Wall Street. Despite outcries from conservative members of the American Institute of Certified Public Accountants, the practice  was institutionalized and continually widened in its application ever since. This prompted the publication of Unaccountable Accounting by Abraham Briloff in the 1960’s.

Second, brokerage houses were allowed to convert from partnerships in which the managers had personal risk in everything that was performed in the name of the brokerage house to corporations that could actually issue their own stock. This produced capital for the brokerage house, but it also eliminated management’s personal responsibility for the losses or illegality of actions undertaken by the brokerage house which had been mounting campaigns to call themselves “investment banks.”

So Wall Street continued to be largely governed by its members when they were no longer actually accountable for anything that happened. After that they pursued strategies that would never have been undertaken when they were personally liable. Junk bonds emerged out of the undervalued bond market. And then “mortgage bonds” (derivative certificates) emerged in which the junk was massaged into triple AAA rated investments.

Knowing that the investments were junk, the brokerage houses used their extensive influence and leverage in Washington DC and managed to convince Congress and President Clinton that it was good idea to repeal the Glass-Steagal act and deregulate the “mortgage bonds” and all other instruments deriving their value from mortgage bonds. This eliminated government oversight except for the Federal Reserve at which Alan Greenspan admits now that he had 100 PhD’s working for him a Chairman of the Fed, none of whom understood the complex derivative agreements. Greenspan admits that he erroneously decided that market forces would make any needed correction in whatever  Wall Street was doing. What he now understands is that market forces could not operate in the environment that Wall Street created and controlled.

Third once upon a time when you bought a stock you received a certificate. In the 1960’s a new practice evolved — encouraging investors to keep their stocks in “street name.” That simply meant that the brokerage house would have its own name put on the certificate and would simply issue statements to the investor confirming they were holding the certificates for the investor. That seemingly simple event opened the door to a level of moral hazard that eventually resulted in the great recession of 2008. That risk manifested in the “paper crash” of the late 1960’s where some brokerage houses went out of business reportedly because they couldn’t properly account for the location or ownership of stock certificates.

The explanation I learned while I was counting certificates in the back office of one brokerage, turned out to be simple and simply horrifying — the brokerage houses — nearly all of them — were using street name securities on which they borrowed money and traded securities, covered short sales, options etc. Today if you want the certificate you might need to pay several hundred dollars — a distinctive bar to accountability for investments supposedly held at brokerage houses/ “investment banks”

Back to the atom. Each debt is like an atom with its own unique properties. The component parts of the debt, unlike the component parts of an atom, were turned into commodities in which brokerage houses were converted from being intermediaries into principals and assets were converted into revenue. The practice of selling unregulated securities issued in the name of nonexistent legal person or companies became institutionalized rather than illegal.

So among the things that Wall Street brokerage houses sold were cash flow derived from a promise by the investment bank to make the payment through intermediaries, interest rates, hedge contracts, credit default swaps, risk of loss, principal, servicer advances, and options in which various investors took various positions as a bet on whether the value of a certificate would go up or down, whether the rates would go up or down, etc.

In plain language it was the investment bank that issued loans, always through conduits. The borrower was never aware that the sale of that loan product purchased by the consumer was part of a much larger scheme in which his loan would be immediately converted into revenue for the investment bank and its affiliates.

Theoretically there would be nothing wrong with this infrastructure except for one thing. The value of the certificates was largely determined by an index derived from the value of the collateral pledged by borrowers when they took the loan. That index was and remains mostly a lie, but not entirely. The holder of certificates has no relationship to any debt, note or mortgage and is therefore not “mortgage backed” as advertised.

But the more basic problem is that under our current laws, the ONLY claim  allowed by law in foreclosure is one in which a actual legal person claims that it suffered an actual financial loss and that the loss occurred as a result of the borrower’s failure to pay. There is no such loss and there is no such person. The investment bank cannot show its face (1) because it no longer has any interest in the debt and can’t make the required claims and (2) because it can’t admit to a pattern of violating disclosure rules under federal and state lending laws.

So instead, the brokerage or investment banks created an elaborate evolving structure in which a central repository stored all known information about the loans. This repository today is mostly Black Knight. The task of the central repository was to collect data and arbitrarily fill in gaps with data that supported claims to enforce the debt.

In turn, the investment banks used companies that were dubbed “Servicers” that were routinely rotated and appointed to assume the role of administrator over the loans, ownership of which had been parsed and disbursed to thousands of investors most of whom were unrelated to any REMIC Trust name used by the investment bank.

These servicers were given IT platforms that accessed the central repository, but their central  role was to help create the illusion that the records were based upon original notations made at or near the time of transactions that had been transferred to each Servicer. In fact, the only thing that changed was the login and password for each “new servicer.” They would use the term “boarding process” when none was needed nor was any performed. But the use of that term enabled the introduction in court of “business records” that were neither original nor accurate nor audited in any way by anyone. Those records were only reviewed and edited for their value to enforce the debt.

The debt meanwhile had been converted from actual to theoretical like the particles that physicists investigate now. It started out as an asset but evolved into revenue to the players who were involved. The illusion of the debt’s continued existence is maintained solely to enforce it to create additional revenue. In truth, the amount of revenue received from each loan average 11.75 times the the amount of the loan.

Thus the issue of repayment is far less significant than an ordinary loan. And that is the center of what is counterintuitive. Everything is relative in physics and finance. From the borrower’s point of view he must have a debt because he still has not paid it back. And yet there is nobody to whom he can make payment that will take the money, deposit it into an account and record the transaction as a deduction from an asset on its balance sheet showing a loan receivable. In plain language no payment from such  borrowers ever goes to pay down then debt on the books of any player. And that includes the proceeds of a foreclosure sale.

The last element required for any valid court claim is that the remedy sought will fix something that has been broken. Our system of laws requires that. But no such party exists in virtually all cases.

And just to editorialize, fixing the law to provide that any disinterested party could be nominated to enforce the debt does not solve the deeper problem.

The removal of risk from underwriting residential loans fundamentally changed the loan transaction in myriad of ways — each contrary to federal and state lending laws. It virtually guaranteed that the brokerage house would support any effort to get people to sign their names to new and ever more complex loan products that could be parsed and sold within 30 days of creation. It virtually guaranteed a complete disregard for whether the loan, if it can still be called that, would ever be repaid. The risk of loss was not diminished. It was eliminated.

Hence the market forces that ordinarily would bring lenders into line because of risk factors that would produce losses are no longer present, thus completely changing the apparent contract with the borrower into something much larger and broader.

A bright lawyer who can handle complex legal theory can easily make a case and most likely prove a case for implied contract — one that does not negate the loan agreement but rather expands it to include the borrower’s entitlement to share in the unexpected bounty of profits that were generated as a result of this elaborate scheme.

If that concept gets traction THEN it might be possible for a court in equity or a legislature to change the statutory and common law schemes to allow for the appointment of a representative who does not own the debt but nevertheless seeks enforcement so that the derivative infrastructure based upon that loan does not collapse. But first there would need to be an accounting for the profits generated from the origination or acquisition of the loan and then an allocation to the borrower thus reducing the amount he owes.

Then and only then will all the cards be on the table.

Ambac v US Bank Dismissed in SDNY BUT Lots of Interesting Facts and Corroboration Contained in Order

When you look at the pleadings and orders entered in these cases between investors, insurers, trustees and investment banks, you see things that actually corroborate the defense narrative in foreclosure cases. But more than anything there is confusion about the true roles of any  of the players and the true trail that the money follows.

The players litigate only what they feel comfortable alleging and arguing leaving the bigger  picture out of the context of their lawsuit. The result is straight out of Bleak House by Charles Dickens where there are pleadings and motions a generation after the whole thing started on issues taken out of context and the adjudged by a clueless judge.

The choice of words in this decision clearly reveals the fact that neither the judge or the parties wanted to get into the ownership of debt. But the opinion speaks to that issue anyway. And then you also have money being paid to satisfy the investment banks’ promise to pay investors, which they have already received.

But none of that gets credited against the account receivable due from borrowers because the investors are not entitled to payment from the borrowers nor are the investors entitled to enforce payment from the borrowers. And still the investors paid the investment bank who  funded the origination or acquisition of the loan. AMBAC does not reserve any rights of subrogation meaning they have no rights to enforce the loan either.

The investment bank ends up flush with cash, no risk of loss, but apparent owner or bare legal  title to the debt without any injury regardless of whether the debt gets paid or not. That risk falls on certificate holders even though they don’t own the debt. That risk also falls on the insurance company who uncharacteristically gave up any right of subrogation against the borrowers debt, note or mortgage.

The question then is how do these payments and settlements get disbursed and how do the players account for their disbursement and receipt?  AMBAC clearly was entitled to recover money that was paid in settlement by Bank of America as successor to Countrywide who made false representations about thousands of loans. That is because AMBAC insured the certificates and not the residential loans.

But either way — through insurance or settlement the owners of certificates received payment — or at least US Bank (or its surrogate) received them for distribution to the certificate holders. AMBAC said US Bank was not accounting for those receipts properly and was not distributing those receipts properly. That is probably because US Bank doesn’t get any money and has no control. The investment bank retains all control. The certificate holders only had a receivable from the investment bank  who had sold the borrowers’ debts into the secondary market where investors bought certificates, and contracts based upon those certificates.

This is the confusion that results when an actual debt is picked apart like an atom into its component parts, each being sold separately to different types of investors. The end result is that the investment bank is left with nothing relating to the borrower’s debt but it has received windfall profits from the sale and trading of unregulated securities, each deriving value from some single attribute of the residential loans.

The investors who bought certificates, have only the promise of payment from the investment bank, the trustee never actually handles any money except through surrogates, and nobody is carrying borrower debt on their books as an asset-receivable.

see Ambac v US bank 18cv5182

In short, nobody owns the debt and nobody has any legal right to enforce the mortgage.

And THAT is why all the foreclosure litigation was not simply closed out with the production of a creditor who owned the debt. There isn’t one.

The debt, now only hypothetical, was converted from an asset into income. And as long as that continues to happen, the debt will never be paid and investment banks will continue to further line their cash drawers with the proceeds of the sale of foreclosed homes taken as revenue for bookkeeping purposes and payback of loan for tax purposes.

All this is not for presentation in court. It is for you to know that you have the upper hand when you ask for discovery and when you cross examine the robowitness. You can be confident that the gaps cannot be filled.

Stop Wall Street Looting Act of 2019 Introduced in Congress

When it comes to losing one’s homestead the legislature, the executive branch and the courts insist on knowing that in all events the proceeds of foreclosure sales go to pay down the debt. A party having no risk of loss has no injury thus depriving the court of jurisdiction. A party who has no money at risk fails to satisfy the condition precedent clearly stated in the UCC. 

Long overdue, many politicians are starting to understand the real nature of securitization as it is being practiced in Wall Street. This has produced a heightened awareness of the risks of not dealing with Wall Street practices and the risk of what many are calling the coming economic crash.

see Congress Tackles Looting by Wall Street

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

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

The most salient part of the bill, in my opinion, is the part about retaining risk. It is an official acknowledgement, in addition to other governmental findings that the investment banks and hedge funds who played the unregulated securitizations scheme simply retained no risk or so little risk of loss as to be just a cost of doing business.

This bill seeks to take that issue head-on and prevent “lenders” from (a) hiding their identities and (b) creating junk loan products for the purpose of selling and trading unregulated securities.

I don’t think there is anything more important than the recognition that all or most of the risk of loss has been parsed out into many attributes each of which was sold to different classes of investors using different classes of unregulated security instruments.

None of the buyers or traders in such securities ever purchased the debt of a borrower even they paid money equivalent to a purchase of the debt. No legal title or right to enforce any debt, note or mortgage was ever conveyed to the holders of “REMIC” certificates nor any other class of investors.

Without having technically sold the debt, the investment bank retains bare legal title to the debt, which is an outcome anticipated by the framers of the Uniform Commercial Code Article 9 §203, adopted in all 50 states as law of each state. Bare legal title might be enough to enforce a note that qualifies as a negotiable instrument (article 3) but it is not sufficient to enforce a mortgage in foreclosure.

The reason is obvious and contained in the minutes of committees who created this section and the states who adopted it.

When it comes to losing one’s homestead the legislature, the executive branch and the courts insist on knowing that in all events the proceeds of foreclosure sales go to pay down the debt. A party having no risk of loss has no injury thus depriving the court of jurisdiction. A party who has no money at risk fails to satisfy the condition precedent clearly stated in the UCC. 

 

 

How to Put Leverage Back Into the Hands of Homeowners

You had the ultimate leverage when they needed your signature to start the loan agreement. Now you have the ultimate leverage if you can properly plead and become a credible threat based upon wrongful foreclosure. If a trust is named or implied as mortgagee or beneficiary you are not just threatening the one case of foreclosure filed against you, but all foreclosures initiated in the name of that trust.

Once faced with that threat the rule, contrary to general misconceptions, is that the homeowner will always receive offers of settlement that grant favorable terms. How beneficial? It depends upon the guts and determination of the homeowner and the lawyer for the homeowner.

see Homeowner Reverses Sale to Third Party Bidder Based on Wrongful Foreclosure and Get Modification

See https://livinglies.me/2019/07/19/california-decision-for-borrower-post-sale-in-eviction-proceeding/

See 2019.07.15 – Minute order for MSJ

See http://docplayer.net/37847883-The-exceptions-to-the-anti-injunction-act-a-federal-injunction-may-be-the-shortest-route-to-success-in-a-state-court-suit.html

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

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

The overwhelming majority of lawyers, judges and homeowners believe that they cannot stop a state from allowing the forced sale of the property, even though the the parties who initiate the forced sale are not creditors nor otherwise empowered to to conduct such a sale. Existing statutory and case law shows that is premise is wrong.

Further the existing consensus is that you cannot get a Federal Court to issue injunctions in either nonjudicial or judicial foreclosures. That too is wrong.

The simplest answer to the differentiation between consensus and reality is that not enough people are trying. In the real world of judicial warfare you can always find decisions that support bad applications of law and fact. The fact that this happens is no reason to abandon one’s rights, especially if it involves giving up title to your home and your lifestyle to companies who are merely seeking revenue from destroying your rights and interests.

An additional answer lies in the successful manipulation of news by the investment banks. Since 98% of all foreclosures happen by default (no opposition) banks are able to create the false notion that therefore the foreclosures were all solidly based in fact and law when nobody has ever decided that. By merely putting paper documents in front of judge that at a glance appear to be facially valid, the foreclosure is granted in judicial states and in nonjudicial states the parties initiating foreclosure don’t even need to do that.

Further upon losing cases, the banks almost always reach a settlement with homeowners where the homeowners are paid off to keep silent about their success. This has occurred in tens of thousands of cases that I know about and probably there are many more.

And finally, the banks have succeeded in mastering the psychology of litigation. The first thing they do when confronted by any credible threat in pleading is offer something that is worthless, indicating to the lawyer and the homeowner that their defense must be worthless. Unfortunately, most lawyers and most homeowners give up at his point because they are still trusting in the word of banks that engaged in the largest economic crime in human history. Homeowners hoping for an early end to the nightmare thus reach the false conclusion that any defense is hopeless.

Adding to that is the playbook that insurance companies use. They make it a long and tortuous process to get relief. They use ridicule and anything else at their disposal to delay litigation of your defense and just plain wear you out. That works a lot of the time.

So of all foreclosures initiated in the United States, less than 1/2% are resolved in favor of the homeowner upon reasonable economic terms. In simple numbers that means that a fair result was achieved in about 65,000 cases. In another 350,000+ cases, homeowners were able to hang onto their homes have been able to hang onto their homes on better terms than the original loan agreement. And in another 500,000 cases permanent loan “modifications” occurred wherein homeowners were able to renew payments on a loan agreement that was economically unsound.

For the banks it is “good business.” They get the revenue or cash flow from 98% of all foreclosures and the revenue from “modifications” in which the creditor is still not identified (because the debt has been reduced from actual to theoretical). When they lose they are losing revenue, not suffering any economic loss due to nonpayment.

Of the 65,000 cases reaching a fair result the banks manage to “save” approximately 60% of their revenue from foreclosures by offering deep discounts on loans they do not own. And in only 15,000-20,000 cases were homeowners brave enough and persistent enough to see it through to the end, where they defeated the foreclosure attempt on its merits. Because they had resolved to do that. In all such cases it required a level of perseverance bordering on obsession to get a just result.

Meanwhile in more than 12 million foreclosure cases thus far and climbing, investment banks are walking away with an average of $225,000 per case for a grand total thus far of more than two trillion seven hundred million ($2,700,000,000,000) dollars in revenue upon which they pay no tax because they falsely report it as repayment of debt. This deprived the US government and the economy of more than eight hundred ten billion ($810,000,000,000) dollars in tax revenue.

Why isn’t anyone doing something about that? Simple answer: because the banks control more of our governance than they have ever controlled in the past. The foxes are guarding the henhouse. And if you want to read an exposition of this problem and some methods to address it I strongly recommend reading and studying this plan from Elizabeth Warren whom I have followed with admiration since 2007 before she ever entered politics.

See End-wall-streets-stranglehold-on-our-economy

See the-coming-economic-crash-and-how-to-stop-it

Disclosure: While I do specifically endorse candidates I have donated money to the current and previous campaigns of Senator Warren.

 

California Decision for Borrower Post Sale in Eviction Proceeding

BIG HAT TIP TO STEPHEN LOPEZ, ESQUIRE FOR THIS SAN DIEGO WIN!!

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

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

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

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

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

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

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

See 2019.07.15 – Minute order for MSJ

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

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

Key quotes from this decision:

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

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

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

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

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

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

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

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

Tonight! Word Salad Claimants Hiding in Plain Sight — The Neil Garfield Show 6PM EDT

Thursdays LIVE!

The Neil Garfield Show 

or prior episodes

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

*******************************

The more I research and analyze the issue, the more convinced I am that the fundamental deficiency of the case against homeowners is hiding in plain sight. And I think it is jurisdictional so it might be possible to raise it at any stage.

Close analysis of the actual wording used in the style of judicial and nonjudicial foreclosures shows that if there is a direct or indirect reference to an alleged REMIC Trust there is no Plaintiff and there is no Beneficiary asserted or alleged.

Who is the claimant if they lose? Whose assets will be used to satisfy an award of costs, damages, or sanctions. Who could be found in contempt of court?

Is it Bony Mellon who will say they are only named in order to allow a third party to be the claimant because a trust cannot appear except through a trustee?

Is it an implied trust that is not identified except by name?

Is it certificate holders who have no right, title or interest in the debt, note or mortgage?

Forensic Seminar August 2: Truman Trust

A number of homeowners who are registered to attend the seminar are requesting that a use specific examples that are relevant to their own case. This is not possible in a 90 minute lecture that gives an overview of what is expected from forensic loan audits. I will be using some examples, but only in general terms.

 

One person specifically asked that I address what appears to be a new variation of U.S. Bank appearing as trustee, e.g., US BANK, NA as Legal Title Trustee FOR TRUMAN 2012 SC2 TITLE TRUST.

 

This is a variation in wording more than it is anything else. Based upon my review of the actual trust agreements involving U.S. Bank it has always been merely a legal title trustee for a single beneficiary, to wit: the investment bank who was the underwriter and seller of certificates to investors. In the case of the word salad described above, attorneys are once again shifting the wording to make it seem more credible.

 

But upon close analysis, you can easily see that U.S. Bank NA is not saying that it has been entrusted with the debt or the note, or that it purchased by the one for value, as required by article 9 section 203 of the Uniform Commercial Code.

 

Further, the attorneys continue to withhold a description that identifies the alleged trust or its existence. This is a facial deficiency which should affect any examination of pleadings and documents, whether recorded or not. If the trust actually exists, the normal wording would be, for example, “a common-law trust organized in the State of New York and currently existing in the State of Michigan.” Or it can simply say “a Michigan trust.” But the absence of any such description leaves the reader with no information at all about the existence of the trust.

 

In addition, stating that U.S. Bank is merely a legal title trustee is an admission that U.S. Bank is not the owner of the debt or the note and quite possibly not the mortgage either. This is a further attempt to avoid the requirements and conditions precedent imposed by law in all US jurisdictions. If the beneficiary under the alleged trust is the actual owner of the debt, then I would concede that having U.S. Bank as legal title trustee for the actual debt owner would not invalidate any action to collect or enforce the debt, note or mortgage.

 

But the investment bank who was the underwriter who sold certificates to investors never retained ownership of the debt beyond 30 days after funding the origination or acquisition of the debt. Thus the illusion of a legal title trustee for a dubious trust with a beneficiary who no longer holds an interest in the debt is both a facial and substantive deficiency.

 

This is yet another example of how the investment bank’s or using new special-purpose vehicles to hide their involvement in the origination and acquisition of loans. Remember that investment banks are actually brokers. They are not principals in transactions. Any temporary ownership that they might have had with respect to the debt and any temporary claims that they might have had with respect to the note and mortgage were extinguished when they divested themselves of any interest in the flow of interest payments, principal payments, or sale proceeds to satisfy the debt.

 

Finally I should make one last note on this topic. Some of the special-purpose vehicles are being used as conduits for elaborate schemes to launder money and debts arising from nonperforming loans. The banks believe, with good reason, that the more layers they present to a court, the more the court will tend to accept the authenticity of the transactions that are referenced and fabricated documents. As most trial lawyers know, the “greater weight of the evidence” is frequently interpreted literally. By presenting an ever larger stack of documents, involving multiple business names, even if they are not actual entities, the illusion is complete.

 

The job of the forensic analyst in the context of foreclosure litigation is actually to reveal the facts that cannot be known by mere reference to the documents. In addition to revealing discrepancies and inconsistencies, the forensic analyst should be identifying gaps in what would otherwise be the prima facie case of a claimant seeking foreclosure.

 

I’ve spoken with many attorneys who have been successful in defending homeowners in foreclosure actions. They all say basically the same thing. While discovery is important and enforcement of discovery is even more important, nearly all cases are won because the lawyer was able to break the robo-witness and successfully object to exhibits introduced by the attorneys who assert that they represent U.S. Bank, when in fact they have had no contact with U.S. Bank, nor have they had any contact with the investment bank. The investment bank so far has successfully shielded itself from liability for instigating false claims by false claimants.

Reference sheet for Forensic Examiners Seminar —“Lenders” that Died.

DON’T TELL THE CLIENT WHAT THEY WANT TO HEAR. TELL THEM WHAT THEY NEED TO HEAR.

see reference sheet for dead lenders

Homeowners come to loan examiners for one purpose: to find a way to get relief from a deal that was probably not viable when it was made and is certainly not viable now. They are usually “behind” in their payments. Their accounts have been declared delinquent and notices of default have been sent and received. Phone calls, letters and even statutory requests under RESPA and FDCPA are routinely ignored.

So the homeowner is asking you “who am I really dealing with here and what can I do to get through to the real people who own my debt?” You probably can never answer that question because the answer is more theoretical than actual. But your investigation can arm them with the information they need to undercut the case against them. And THAT is how homeowners win cases against false claimants making false claims.

The inability of the loan examiner to to answer those questions is not a failure of the analyst or of the homeowner’s proof. It is evidence of gaps in the case against the homeowner. In the weird world of foreclosure defense you can always prove violations of lending laws and servicing laws but you can only win when you expose the absence of essential elements in establishing the existence and rights of the claimants and the existence of an actual claim.

The answer lies in the details, and what they want from you as a forensic auditor or examiner are details that matter. Things that matter fall into two distinct categories.

First there are facts that actually get traction in court (as distinguished from facts that you think ought to get traction in court).

Second there are facts that undermine the credibility of the prima facie case for foreclosure.

The list of dead lenders is one place to start. Any “transfer” of a debt, note or mortgage after the alleged “lender” is dead is easy to attack. That is what you want to give your clients.

The fact that all the documents in all the loans are fabricated, forged and robosigned as distractions from the real facts does little to advance the position of your client. But you are not an advocate. You are a fact finder. And with a few exceptions, most people who signed up for the Free Seminar lack the necessary credentials, knowledge, training and experience to give an opinion.

Everyone is entitled to their own opinion but nobody is entitled to their own facts. Your job is keep track of what is working as well as who is developing new approaches that could work. The homeowner doesn’t know how to narrow the focus. They are depending upon you to do so.

Every forensic loan auditor or examiner is qualified to testify or sign an affidavit on facts they found. In so doing they should be prepared to describe the actual work they did, how they went about it,  what facts were revealed — but no conclusion on what that means. An opinion from a fact witness reveals bias of the witness thus undermining their own credibility.

Don’t tell the client what they want to hear. Tell them what they need to hear.

Free Forensic Audit Seminar Has Closed Registration

Seminar starts Friday, August 2 at 1:30PM. Instructions on how to attend are in your email inbox. Please use email for questions. neilfgarfield@hotmail.com.

All invitations have been sent via www.freeconference.com. Anyone who did not receive an invitation was cutoff when we exceeded 100 prospective participants. Or, they were cutoff because they did not supply a correct email address. Look in your email folders for the invitation if you signed up.

Registration is closed.

When you attend, please make sure that you are in a quiet place with no background noise.

You should be at your computer to see what I share on screen. Attendance by phone will likely not be as productive as attendance with computer. You can still listen to audio by dialing in by phone as well as connecting by computer.

Questions will held until we reach 90 minutes. Make sure your phone is on mute except for the brief period in which you are asking a question.

QUESTIONS: We don’t have time to listen to your narrative. Boil your question down to a yes or no answer from me. If I want to elaborate I will.

%d bloggers like this: