What and Who is a Creditor?

Practically everyone thinks they know what is a creditor even if they cannot identify who is the creditor. The reason that this is important is that the lawyers for the banks have created a divergence of the money trial and the paper trail. One is worth every cent claimed and the other is worth nothing, but for the repeated acceptance of a claim as proof in and of itself that a real transaction is referenced in the paper trail. In most cases, it isn’t.

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The problem is very real when you look at it through a semantic lens.


What is a creditor? In court it has come to mean anyone with a claim. What it does not automatically mean is that the so-called creditor owns the debt. In normal situations before claims of securitization, ownership of the debt was presumed to be underlying the claim for money and thus the term creditor and owner of the debt were used interchangeably. That is what the TBTF banks were counting on and that is what they got.


The “creditor” in foreclosures is just a party holding paper. If the paper is fabricated or otherwise does not represent an actual transaction in real life it should be struck since the paper doesn’t prove anything. A note is evidence of the debt. It is not the debt. That is why we have the merger doctrine to prevent double liability. But the merger doctrine only operates if the Payee on the note and the owner of the debt are the same.


If the party seeking the foreclosure cannot produce the proof that the Payee and debt owner are the same, then the note lacks foundation and would be disallowed as evidence. The mortgage being incident to the note would therefore secure nothing and would be equally invalid and subject to being removed from the country records. More than a decade of experience shows that you won’t get anywhere at trial with his knowledge UNLESS you have conducted proper discovery and pursued it through motions to compel.


But what we are left with is entirely counter-intuitive. You end up with a debt owner with no paperwork and the homeowner having two liabilities — one in the form of a debt that arises by operation of law when the debt owner advanced money and the homeowner received it — and one in the form of a potential liability in the form of a note that has no reference point in the real world, but if acquired by value in good faith and with no knowledge of the borrower’s defenses, can nonetheless be enforced leaving the maker (homeowner) to seek remedies from other parties who tricked him. {See Holder in Due Course}


This type of analysis is not well received by courts who come to each situation with a bias toward what they perceive to be “the bank” who wouldn’t be in court if they were not the owner of the debt. But as we have seen in most instances “the bank” is not appearing on its own behalf but merely as a representative of what is most often a nonexistent common law trust. If there is any bank involved at all it must be the underwriter of “securities” that were issued under the name of an alleged REMIC Trust.

Nonetheless we see the courts referring to the case at U.S. Bank adv the homeowner instead of saying XYZ Trust adv the homeowner for the simple reason that in practice styling the case refers to the first name that appears on the pleadings. So invariably the case is referred to as “U.S. Bank. adv John Smith.”


This continually reinforces the erroneous presumption that this is a case of a financial institution versus the homeowner; in fact, however, it is a case of an unlicensed unregistered private entity (the alleged REMIC Trust) outside the world of banking or finance whose existence as a trust entity is problematic at best, especially if the subject loan was never purchased by the Trust (acting  through the Trustee).


Without the debt being entrusted to the Trustee on behalf of the Trust there is no trust. The existence of an assignment, absent evidence of purchase, merely means that the alleged Trust has “ownership” of the paper, not the debt. But in practice owning the paper raises a presumption of ownership of the debt — which is why so much effort must be made toward preventing the application of the presumption through objections to foundation that are themselves founded on prior discovery showing the failure or refusal to provide proof of ownership and in fact, proof the paper chain being congruent with the money trial.


Hence the claim of creditor status may be true as to the paper but untrue as to the debt or any other monetary transaction in the real world.

Wells Fargo, Ocwen and Fake REMIC Trust Crash on Standing

What is surprising about this case is that there was any appeal. The trial court had no choice but to dismiss the foreclosure claim.

  1. A copy of the note without an indorsement was attached to the complaint. This leads to the presumption that the indorsement was attached after the complaint was filed. Standing must be proven to ex isa at the time the suit was filed.
  2. The robo-witness could have testified as to the date the indorsement was affixed but he said he didn’t know.
  3. The robo-witness was unable to testify that the default letter had been sent.
  4. It didn’t help that the foreclosure case had been brought before by two different parties and then dismissed.
  5. Attorneys attempted to admit into evidence an unsigned Pooling and Servicing Agreement that could not be authenticated and was merely “a copy of a printout obtained from the SEC website”. This is an example of how court’s are rejecting the SEC website as a government document subject to judicial notice or even introduction into evidence without competent testimony providing the foundation for introducing the PSA for a fake trust.
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see Wells Fargo, as trustee v Madl

Note that the style of the case shows that Wells Fargo was never the Plaintiff. The purported or implied trust was the named Plaintiff. But as Wells Fargo explained in its own article, the Trust is not the Plaintiff and neither are the certificate holders the Plaintiff because their certificates most often expressly state that the holder of the certificate does NOT have any right, title or interest in the “underlying” loans.

In fact if you read it carefully you will see that no trust is actually named or mentioned. AND the failure of the “trust instrument” (the PSA) shows that the trust was never created and never existed. An unsigned, incomplete document downloaded from a site (SEC.gov) that anyone can access to upload documents is not evidence.

Fact Check: Robo-witness knows nothing

Information is admitted in evidence only after a proper foundation has been laid. If the witness knows nothing about the foundation the evidence should not be admitted as evidence. Appellate courts will usually reverse a trial court’s error in ruling on evidence UNLESS the appellate panel decides that the error would not have made any difference in the outcome. The fundamental fact at the root of all foreclosures is that the homeowner owes a debt to the foreclosing party and has not paid.

In the passage below a witness supposedly employed by US Bank displays a lack of personal knowledge on anything that would contribute to foundation for establishing the standing of the foreclosing party. I have inserted in brackets the significance of each answer of an actual witness in a court proceeding.

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Hat tip Bill Paatalo

Videoconference deposition of JOHN G. RICHARDS,II

Would you please provide your official title for
11 the record.
12 A Yes, I’m the vice president at U.S. Bank within
13 the global corporate trust services group. [The problem that was overlooked here is that his title is not foundation for establishing the existence of a trust that is managed by US Bank as Trustee. Additional questions regarding the existence of any account that is under trust management by US Bank would have revealed lack of knowledge because the witnesses are not given any information that could be used by the homeowner or counsel for the homeowner. In truths I have repeatedly pointed out, if you proceed under the assumption that there is no “account” in existence under which Trust assets are managed for the benefit of beneficiaries, all the pieces fall into place. There is no Trustee because there is nothing that has been entrusted to the trustee for the benefit of beneficiaries. Thus parties claiming authority “from the Trust” to serve as services or master servicers lack any foundation to support the assertion of that authority. This is why no modification is signed by anyone other than the servicer acting as attorney in fact for the purported Trust or other foreclosing party.]


Q I see. Do you know who the beneficiaries are of

10 the WaMu trust?

11 A I do not know the specific beneficiaries — or I

12 would call them certificate holders. I don’t know the

13 identity of those investors or certificate holders. [Here is US Bank whom the attorneys have named as the foreclosing party. The witness is supposedly someone who knows about the USB trust arrangement for a REMIC Trust. Yet on the most basic questions about the existence of a trust — the existence of beneficiaries, he is unable to answer the question regarding their identity. A trust without beneficiaries is not a trust   — i.e., it is not an legal entity. In fact he is saying that there are no beneficiaries but that there are certificate holders. He can’t identify either the beneficiaries or the certificate holders. Note also that he knows nothing about the “certificates, which in most cases expressly state that the holder is NOT entitled to an interest in the loan, debt, note or mortgage. What they have is a promise to pay them money coming from a nonexistent trust.]

14 Q That’s fine. And because you don’t know, do you

15 know who would know or is there a list?

16 A I do not know specifically if there is a list

17 that would have the names of actual individuals or

18 entities who are certificate holders. [This further erodes the foundation for proving that the trust exists, the beneficiaries exist or the certificate holders exist. More importantly it is an admission that even a list of the certificate holders might not exist — thus corroborating a central point on this blog — that the money never went into the trust and that instead it was commingled with the money of other investors in a different entity altogether. I have referred to this scenario as a dark pool or slush fund in which the underwriting banks (who appoint themselves as Master Servicers) take charge of the investor funds instead of the money being administered by a Trust. Remember that in 2008-2009, the banks and servicers were asserting that such Trusts did not exist. That was probably a true statement in that the Trust was never an active trust and the trustee was never an active trustee.] 

19 It is common for many of these certificates to

20 be held. I’m not sure the exact way to hold it, but

21 something that is significant amount to brokerage or some

22 other place for the general holding of investment

23 securities. [He is referring to the practice of holding securities in street name — i.e., in the name of the brokerage house that allegedly completed the transaction on behalf of the investor. This enables the investment banking entity to assert ownership of the certificates for title purposes while supposedly holding the certificates for investors, the only evidence of which would be the end of month brokerage statement telling the investors that they own the rights to certificates even though the certificates are not in their name. Of course the rub here is that most certificates are uncertificated — merely computer entries. But that doesn’t mean that there isn’t a master certificate in electronic or paper form. The witness is saying he doesn’t know where such certificates are held, by whom or for what purpose] It’s a company called DTC that serves that

24 function just generally in the industry. But I don’t

25 have information about the identity of the specific certificate holders.

2 Q So you’re saying that this entity, DTC, holds

3 that information who would know?

4 MS. DARNELL: Objection. Calls for speculation.

5 THE WITNESS: I don’t know. I think I’m using

6 that as an example of sort of how these certificates are

7 commonly held and the entity that might be positioned to

8 communicate with actual certificate holders.

Q So does the trust actually communicate directly

11 with the certificate holders?

12 A I am not familiar with the — with any direct

13 communication between U.S. Bank as trustee for this trust

14 and certificate holders on an individual basis. I’m not

15 familiar with that at all. [This is as close as you will get to the admission that there is no active Trustee and there is no active Trust. If there is no communication or no knowledge of communication between the Trustee and the certificate holders then it is an inescapable conclusion that there is no activity in the alleged REMIC Trust. If there was such activity within the Trust it would need to be disclosed to the “beneficiaries” or “certificate holders.” There isn’t. The master servicer sends out a distribution report with the disclaimer that none of the information on the distribution report has been verified and could be entirely wrong.]


23 Q So with respect to it being vague and

24 ambiguous — and I just want to clarify. Do you manage

25 Chase as the servicer of the trust?

A I would not describe that there is any kind of

2 management or oversight role by the trustee of a servicer

3 in this trust or any other. [So the party claimed to be the servicer is not managed by and need not report to the party named as the Trustee — thus further establishing that the Trustee is inactive and the “trust” is a sham. If there is no “kind of management or oversight role by the trustee of a servicer” then who directs the “servicer” on the distribution of the money collected from homeowners? Some document must exist that is not being produced in court. It would be a document that establishes the duties and responsibilities of the subservicer. It would be executed by the “Servicer” and the Master Servicer but kept secret because the document would establish, once and for all, that for all purposes other than foreclosure the parties conduct business as though the trust did not exist.]

Given the above testimony and commentary, the testimony of the witness should not be admitted into evidence at trial. The reason is lack of foundation. Proper objections on foundation, leading, and hearsay must be repeatedly raised or else the testimony, however riddled with untruth, will be admitted because the objection was” waived” by failing to raise it timely. If the objections are sustained and the witness has managed to spew out an answer as you were objecting then a motion to strike is absolutely required lest the objectionable testimony remain in the record. As Plan B, bring these things out in cross examination and then move to strike the testimony.



Ocwen Boarding Process Was Shot Down Last Year

As foreclosure defense lawyers have been saying for years, the Ocwen Boarding process is a sham. “This boarding process is a legal fiction, and it means something different to every entity,” Butchko ruled from the bench during a March 17 hearing.

Ocwen does not verify any of the data. It downloads it and then “calls it a day.”

“I have done this investigation for a long time,” he said, noting, “The appellate courts are going under this presumption that there is some type of meaningful auditing and verification.” But Jacobs maintained, “You just heard it from a lawyer who knows how to properly phrase the questions that she’s basically testifying to all — all of this is still hearsay.

”Butchko granted an involuntary dismissal in HSBC Bank USA’s suit against Miami homeowner Joseph Buset, whose loan was initially serviced by Litton Loan Servicing LP, which Ocwen acquired in 2011.

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See Home Foreclosure Fails on OCwen Servicing Records

Bruce Jacobs, a Foreclosure defense lawyer won this case. It was in 2016 and was, as usual, under-reported. The case hinged on the prior records of Litton Loan Servicing that Ocwen had acquired. The robo-witness could only testify that Ocwen employees had matched fields and columns on the payment history and had done nothing else. Hence verification was nonexistent.

[Judge] Butchko had to decide how to treat loan documents that became part of Ocwen’s business records but remained subject to hearsay objections unless the company could show it independently verified the data after transferring the loans. She considered evidence on Ocwen’s boarding process — the procedure by which financial services companies transfer account data from one lenders’ management system to another after trading loan portfolios.

Witnesses for lenders in foreclosure cases must show they did independent fact-checking to qualify their files as business records and not hearsay.

All records in  digital or hard copy are hearsay by definition. The only issue is whether a proper foundation has been offered by the robo-witness to claim that the “documents” qualify as an exception to the hearsay rule and that therefore they should be admitted into evidence. This case on Ocwen clearly shows that the testimony by dozens of Ocwen robo-witnesses has been false.

Based upon information I have received from credible sources I think the problem is worse than that. My sources tell me that the records are not uploaded or transferred. The only thing that happens is that the user name and password is changed. That is why the records of the prior servicer are NEVER introduced. It may be that Ocwen changes the fields and columns to make it appear that the records have been processed, but based upon my information the Ocwen records are often taken from the same database. That being the case, the robo-witness should have been an employee of the former Litton servicing.