The missing second witness —Attacking the Business Records of A Servicer: Start with the fact that the company is self-proclaimed servicer with no proof of authority and then pivot to the absence of records establishing the debt as an asset.

Excellent article written by attorneys at Blank Rome on the issue of Business Record exceptions to the hearsay rule. The hearsay rule is simple. It excludes from evidence any statement that is uttered out of court — whether that statement is in writing or was made orally.

see https://www.jdsupra.com/legalnews/florida-supreme-court-resolves-conflict-20649/

So here is what it looks like in a typical old-fashioned foreclosure trial.

The witness testifies that he or she is the records custodian of a bank. He/she says she has the records of the homeowner/borrower from the bank and he/she testifies that he/she knows from his/her own personal knowledge that those records were made at or near  the time of every transaction between the borrower and the bank.

The witness testifies that he/she has the actual records with handwritten entries showing the establishment of the loan as an asset through purchase of the promissory note in a transaction in which the borrower received money or in which money was paid on behalf of the borrower.

The written record is admitted into evidence as proof of two matters asserted: (1) establishment of the debt or underlying obligation and (2) the borrower’s payment history.

The witness goes on to testify that he/she holds in his/her hand the original promissory note and mortgage executed by the borrower and that is ahs been under lock and key, under his/her supervision since the time of origination of the loan.

The note and mortgage are accepted into evidence as proof of the terms of repayment and the establishment of a lien.

The Judge compares the obligation (promise to pay) as set forth on the note with the payment history and arrives at a factual conclusion as to whether the homeowner is in breach of the agreement and renders a final judgment for the bank, assuming the homeowner has not made payments that were promised by the homeowner to the bank.

Now let’s look at the modern day nontraditional foreclosure. First of all nobody from the bank or “lender” makes any appearance.

My point is that a foundation objection should be made and preserved if this is the case.

If a witness is a person other than the employee or officer of the named claimant or plaintiff in the foreclosure case, he/she cannot testify about records, payment history or anything else relating to the foreclosure claim without someone else first testifying that the witness is authorized to do so and that the company for whom the witness works maintains the records that establish the debt as owned by the claimant and that said company is in fact the servicer of the account.

That second witness must be an authorized employee or officer of the named claimant/plaintiff. In plain language if BONY/Mellon is named as trustee of a trust, and that they are filing on behalf of certificate holders of the trust, no evidence should be admitted without first establishing the foundation for the inferences that the foreclosure mill wishes to raise.

And frankly the court should on its own reject any attempt to work around this requirement. But as a practical matter, the way it is currently working, if you don’t object continuously to the absence of such foundation then you will be treated as having waived the issue and with that, you will effectively be treated as though you had waived your defenses.

So if securitization was real, the witness would come in and say that they are the authorized representative of BONY Mellon and that they are the trust officer in charge of record keeping for BONY Mellon in relation to this named trust and the certificate holder.

The witness would produce the trust agreement authorizing BONY/Mellon to act as trustee and a certificate indenture in which the holders of the certificates have been granted ownership shares of a pool of mortgages owned by the trust and which explicitly grant to BONY/Mellon the right to represent the certificate holders in connection with the enforcement of loans owned by teht rust for their benefit. The witness would establish that the certificate holders are beneficiaries.

The bank trustee witness would produce business records of BONY/Mellon that show the transaction in which the loans were established, having acquired same from the originator in a specific transaction in which value was paid for ownership of the debt, note and mortgage.

Or, the witness would testify that pursuant to some agreement, BONY/Mellon had outsourced functions to some other company that is acting as servicer. And the witness would testify that the servicer was operating in compliance with the servicing agreement by tendering the required payments in the certificate indenture to BONY/Mellon as trustee who in turn makes payments to the certificate holders.

You will never see such testimony because none of these things happen in what is loosely described as “Securitization.” Certificate holders own nothing but an unsecured IOU from an investment bank doing business under the name of a nonexistent trust. No servicer even has access to any information, data or entries on any record establishing the debt as an asset of anyone. In fact, no “servicer” knows or pays any money to anyone in a transaction that would even imply they are working for the owner of the debt. That is where aggressive discovery will tip the scales.

In reality the “records” submitted by the servicer are proffered as the payment history but there is never any direct testimony that the payment history constitutes business records of the claimant. That is because they are not business records of the claimant. They are only reports issued for the purpose of foreclosure. And that is not allowed. Such reports are not admissible in evidence and if excluded, the case fails.

In one form or another, every case I have won for homeowners and every case I know that was won for a homeowner has turned on the absence of foundation for the evidence sought to be admitted into evidence — without which no legal presumptions can arise or be used in the case against the homeowner.

Bottom Line: In virtually all foreclosure cases there is an absence of the required second witness because there is no such witness — i.e., a person with personal knowledge that the facts assumed or presumed are true.

Here are some important quotes from the above cited article:

On July 2, 2020, the Florida Supreme Court issued its written opinion[i] in Jackson v. Household Finance Corporation, III, 236 So. 3d 1170 (Fla. 2d DCA 2016) to resolve a conflict with a case decided by the Fourth District Court of Appeal (Maslak v. Wells Fargo Bank, N.A., 190 So. 3d 656 (Fla. 4th DCA 2016). Specifically, the issue concerned whether the predicates were met for admissions of records into evidence under the business records exception to the hearsay rule during the course of a bench trial in a residential foreclosure case. The Florida Supreme Court held that the proper predicate for admission can be laid by a qualified witness testifying to the foundation elements of the exception set forth in Section 90.803(6) of the Florida Evidence Code.

a party has three options to lay the foundation to meet that exception: (1) offering testimony of a records custodian, (2) presenting a certification that or declaration that the elements have been established, or (3) obtaining a stipulation of admissibility. If the party elects to present testimony, the applicable case law explains that it does not need to be the person who created the business records. The witness may be any qualified person with knowledge of each of the elements.

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

FREE REVIEW:

If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.
In the meanwhile you can order any of the following:
*
CLICK HERE TO ORDER TERA – not necessary if you order PDR PREMIUM.
*
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR) (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
*
Please visit www.lendinglies.com for more information.

 

How did Wall Street make all that money on “securitization.”

Servicers did not make any advances. They never did and they never will. They said they did but they didn’t. If you read the prospectus carefully you will see that the money from investors is divided into three parts.

*
The first part is the purchase of a certificate that promises payments to the investor based upon a formula that is independent of any homeowner debt, note or mortgage. It does not commit the Investment Bank to using the funds in any particular way. But the payments are partially indexed on the performance of an arbitrarily chosen group of loans that are not owned by anyone.
*
The second part is the establishment of a pool of funds controlled by the Investment Bank which also does not have any restrictions as to its use. The prospectus reveals that investors may be receiving payments out of the pool of funds, which obviously comes from their own money. This is the source of what is labeled as servicer advances.
*
By labeling these payments as servicer advances, and by providing that servicer advances will be paid to the master servicer (i.e., the Investment Bank) the so-called securitization scheme creates another Profit Center.
*
Investment Banks can claim return of servicer advances that they never advanced. By doing that they not only create the profit Center but they also able to claim that it was not Revenue for tax purposes.  A lot of the bookkeeping, financial reporting and tax reporting is based on this strategy.
*
In my opinion it is not legal. But I am certain that it is not legal from the perspective of the homeowner, who gets no credit for any payments or profits made in the scheme because nobody maintains an account in which the homeowners debt is claimed as an asset; this results in literally no place to credit the homeowners debt for incoming payments and profits that actually offset any potential liability of the homeowner.
*
The third part exists by implication. The normal agreement (prospectus) would provide for a specific use of proceeds from the proceeds of an offering of any Securities or certificates for mortgage bonds. This is absent.
*
The reason that it is absent is because the balance of the funds are pure profit to the Investment Bank. this is because of the second tier of a yield spread premium that is not widely understood in legal circles because in legal circles they mostly have no experience or knowledge of Finance. I do. As a former investment banker who actually practiced literally on Wall Street I understand exactly how this happened.
*
The investment bank has complete discretion as to what to do with the money that investors have paid them — something that never exists in the offering of securities to investors but does exist in so-called securitization plans. This is the holy grail for investment banks — issuing securities in the name of nonexistent entities. Instead of getting their normal fee of at most 15% of the proceeds, they get it all. 100%.
*
They issue certificates in the name of a trust that does not exist. The actual Trust Agreement (NOT THE PSA) corroborates this by stating that the trustee has only one function: to hold legal title to loan documents. The beneficiary is the Investment Bank.
*
And of course the role of a trustor or settlor is completely absent because there is nobody who has paid value in exchange for receiving a convenience of ownership of the underlying debt of any homeowner. *
So the Investment Bank, to simplify for this article, is promising to pay the investor at a rate which appears to the investor to be in excess of market rate but is far below the amount charged to homeowners. This strategy enables the Investment Bank to profit on several different levels.
  • first, the yield spread premium is the difference between the amount of money that needs to be paid to homeowners for issuance of what is labeled as loan documents, versus the amount of money the investment bank received from investors.
    • So if an investor paid $1,000 expecting a 5% return, the investor was expecting $50 per year.
    • But the Investment Bank funded a loan at 7.5%.
    • This means that in order to satisfy what they had to pay to the $1,000 investor they only needed to to pay the homeowner around $666 leaving a $334 pure untaxed profit.
    • Right there for every $1 they paid the owner the investment bank received $0.50.
    • In addition, by placing themselves in the position of Master servicer, they were the ultimate recipient of payments received from homeowners which in many cases exceeded any planned payments to investors.
    • NOTE THAT THIS IS WHY SUBSERVICERS LIKE OCWEN ET AL REFUSE TO TELL YOU WHERE PAYMENTS FROM HOMEOWNERS ARE SENT. FIRST THEY DON’T ACTUALLY RECEIVE THE MONEY AND SECOND THE MONEY IS NOT BEING SENT TO THE CLAIMANT IN FORECLOSURE, CORROBORATING THE DEFENSE NARRATIVE THAT THE NAMED PLAINTIFF OR BENEFICIARY IS NOT THE PROPER CLAIMANT NOR DOES IT POSSESS ANY CLAIM AGAINST THE HOMEOWNER.
*
The fourth aspect is that under current systems and processes that are generally accepted on Wall Street, most Investments are held in street name. Investors do not receive any written document like a stock certificate or a bond when they buy it. Holding a security in street name means that for all practical purposes the Securities firm owns it for the benefit of an investor. THE ONLY EVIDENCE OF OWNERSHIP THE INVESTOR GETS IS A STATEMENT FROM THE SECURITIES FIRM IN WHOSE NAME THE SECURITY IS REGISTERED.
*

And while it is true that the law says that an investor is the beneficiary of an arrangement wherein the securities firm holds title in trust for the investor, there’s nothing to stop the Securities firm from trading on the existence of the certificate as if it were their own. This Is how they are able to obtain insurance contracts and hedge contracts that are payable to the investment bank rather than the investors who put up the money.

*
Note that this sleight of hand maneuver lies at the center of what is falsely labelled as the securitization of residential mortgage debt. The designation of a competing bank to serve as trustee of a nonexistent trust gives the scheme an institutional appearance, which in turn causes lawyers and judges, who know nothing of finance, to assume that they are dealing with an institution versus a lowly homeowner.
*
They further assume that XYZ law firm represents U.S. Bank as trustee blah blah blah. But U.S. Bank has no retainer agreement with XYZ law firm and never heard of them. U.S. bank neither directs the lawyers nor will it allow its name to be used on any settlement or modification agreement that in the ordinary course of business would be legally signed by U.S. Bank. Any insistence that U.S. Bank sign, even though it is named as beneficiary or Plaintiff, is simply a deal killer.
*
And don’t forget that U.S. Bank is not a trustee. That is another label used to misdirect homeowners, lawyers and judges. A trustee is someone who actively manages the active affairs of trust property. there is no trust property. There is no trust business. ANd the party named as “trustee” doesn’t even have the power to inquire as to any matter that might be called the business, assets, liabilities, income or expenses of the so-called trust.
*
By naming U.S. Bank as the legal title owner for the benefit of the investment bank they are saying nothing. U.S. Bank did not receive legal title to anything. In order to get legal title it had to be the recipient of a conveyance. That is where the banks want the court to stop. But the conveyance, under all current law going back centuries can ONLY be issued by one who possesses rights to the asset conveyed to the trustee to hold in trust for the beneficiary of the trust.
*
Note also that investors are not and never have been beneficiaries and that claims or arguments or implications that they are somehow, as creditors, represented by a nonexistent trust or nonexistent trustee are preposterous.
*
In fact, there is no claimant, the foreclosure mill has no client that is in litigation and the named Plaintiff usually does not exist.
*
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.

FREE REVIEW:

If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.
In the meanwhile you can order any of the following:
*
CLICK HERE TO ORDER TERA – not necessary if you order PDR PREMIUM.
*
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR) (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
*
Please visit www.lendinglies.com for more information.

Does the REMIC Trust Exist?

In all jurisdictions, even if the trust has some assets, and therefore legal existence as a legal person, if the asset in question has not been entrusted to the trustee on behalf of beneficiaries, the existence of the trust is completely irrelevant. And all claims arising from the supposed existence of the trust are also irrelevant and lack Foundation.

I agree that the existence of the Trust might be a subject for debate.

However, the fact that a trust exists on paper does not mean that it exists relative to any loan or debt or note or mortgage.

In fact, the fact that it exists on paper does not mean that it exists at all in many states.

In those jurisdictions in which a trust is drafted on paper and recognized as a business entity, the trust is considered inchoate, which means sleeping. The failure to recognize this fact has led to the failure of many family trusts and the payment of high taxes.

In all jurisdictions a trust that does not have any assets, liabilities, income, expenses or business is not treated as a legal entity.

In all jurisdictions, even if the trust has some assets, and therefore legal existence as a legal person, if the asset in question has not been entrusted to the trustee on behalf of beneficiaries, the existence of the trust is completely irrelevant. And all claims arising from the supposed existence of the trust are also irrelevant and lack Foundation.

*
An asset cannot be entrusted to the trust or trustee unless title to the asset has been conveyed to the trustee to hold in trust according to the terms of the trust agreement. And there can be no conveyance from someone who doesn’t own the asset. The only way you get to own a debt is payment of consideration to someone who paid consideration for the asset. That is the law and it is not up for debate.
*
It is the payment of consideration that determines ownership of an asset or debt or note or mortgage. 
*
Note that the PSA  often cited as the trust agreement often is not the trust agreement and that even if it says it is the trust agreement there is another instrument in which the named trustee acknowledges that its purpose is to receive bare legal title to security instruments and notes on behalf of the investment bank who often also serves as Master servicer. I have never seen such a conveyance to the trust or trustee from anyone who owned the debt note or mortgage.
*
And without conveying the debt, there can be no conveyance of the mortgage. therefore all assignments (without a concurrent sale and purchase of the debt from someone who owned it) avoid.
*
But if you don’t raise this issue you might waive it. and by waiving it you are giving a windfall to the participants in a business venture that has the title of a foreclosure action. That business venture os for profit and has nothing to do with recovering losses from an unpaid loan or debt.

*
This is important because when the Foreclosure Mills pursue foreclosure they have only one witness. The witness is a robo witness who is employed as an employee or independent contractor of a self-proclaimed servicer. the witness provides testimony that the records introduced by the servicer are the records for the trust.
*
This testimony is either direct testimony or it raises the inference or presumption that the records are the records of the trust, because the servicer is supposedly working for the trust. But if the trust has nothing to do with the “loan,” then the servicer is working for an entity that has no legal relationship with the debt note or mortgage.
*
That is the point at which the defense and raised a motion to strike, once it has been established that this fact pattern is the only one before the court. Assuming defense Counsel has raised the appropriate objections along the way, the record submitted by the self-proclaimed servicer should be stricken from the record as not being the records of a creditor. The case collapses because no evidence is legally before the court.
*
Even if the servicer was actually collecting payments or actually doing anything, which is clearly debatable since most of these activities are probably actually conducted by Black Knight, the appearance of the servicer would not be the appearance of the Creditor, who is therefore not the named claimant or plaintiff.
*
The servicer becomes a witness at best and not a very credible one. If discovery has been conducted properly, the defense can clearly raise the inference that the servicer has an interest in the outcome of the litigation. This means that the attempt to get the servicer’s records into evidence as an exception to the hearsay rule can be defeated. This is especially true if the servicer is not actually processing any business transactions. This dovetails with the evidence that the lockbox system is actually controlled by Black Knight.
*
And THAT is important because it undercuts the claim of a “boarding process” which in most cases has never existed. It is only through the fictitious boarding process that the records of prior self–proclaimed servicers are able to come into evidence. The truth is that all of those records are mere projections and estimates and the foreclosure mills depend upon the failure of the homeowner and their counsel to actually compute whether the records are even true.
*
One last comment is that one of the big failures in foreclosure defense is the failure to question who is receiving payments from the self-proclaimed servicer. An inquiry into this subject would reveal that the servicer is not receiving any payments and is not making any payments to anyone else. This would undercut the foundation for the inference or presumption that the self-proclaimed servicer is actually performing servicer functions.
*
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
*

FREE REVIEW:

If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.
In the meanwhile you can order any of the following:
*
*
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
*
Please visit www.lendinglies.com for more information.

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

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

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

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

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

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

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

How to Stop the Court from Speculating About the Identity of Claimants in Foreclosure Cases

As long as you continually attack the sub silentio assumptions of the court, you will be weakening the case against you for foreclosure. Failure to do so means almost certain failure.

Foreclosure is considered a draconian remedy equivalent to capital punishment. All US jurisdictions have adopted as a matter of law and public policy (Article 9 §203 UCC) that the remedy will only be granted to one who paid value for the underlying obligation.

If you don’t challenge the sub silentio assumptions of the court, then the judge is free is assume that the granting of foreclosure is a remedy for restitution of unpaid debt and that he/she has granted it under the assumption that the owner of the debt is going to get the money when the property is sold to a third party.

THE FIRST MISTAKE YOU MAKE IS IN ASSUMING THAT THE OBLIGATION STILL EXISTS AND HAS NOT BEEN EXTINGUISHED IN THE PROCESS OF SECURITIZATION BY PAYMENT OUT OF HIGHLY PROFITABLE SECURITIZATION SCHEMES THAT WERE PART OF THE ISSUANCE OF THE MORTGAGE AND NOTE.

None of the court assumptions are true. But you can make them true by failure to challenge the assumptions and misleading arguments presented by the foreclosure mill. It is through no doing of the homeowner that the obligation has been retired without payment from the homeowner. And the homeowner has no legal or moral reason to pay it again. BOTTOM LINE: IF NOBODY HAS AN ASSET ON THEIR BOOKS SHOWING THEY PAID FOR THE DEBT, THEY HAVE NO RIGHT TO ENFORCE IT. THEY ARE JUST A WITNESS — NOT A PARTY.

This is a procedural problem. Technically speaking, a motion to dismiss has very strict rules — taking all allegations and exhibits of the complaint, does the complaint does state a potential cause of action upon which relief could be granted. Once you introduce something outside of the allegations of only the complaint you are in the realm of Motion for Judgment on the Pleadings, Motion for Summary Judgment etc.

 
Opposing counsel is attempting to mislead the court into speculating about the identity and nature of the claim, and the identity of the parties who are named as Plaintiff. The essence of the position of opposing counsel is a sub silentio argument: i.e., presume that somebody, somewhere is going to get the benefit of payment on a debt they own owed by the homeowner. The complaint and exhibits filed do not contain allegations of ultimate facts upon which relief could or should be granted. Such relief can only be granted if the court rejects basic jurisdictional and procedural requirements. Neither the Defendant nor the court has any basis for actually knowing the identity of the claimant(s) in this action. Relief cannot be granted to the world at large. 


The issue here is that opposing counsel now admitted certain things and their own complaint basically says the opposite of their current position in court. Inconsistent statements, some of which must logically and of necessity be false, are protected by litigation immunity behind which both opposing counsel and the participants in the instant lawsuit are hiding. But just because they cannot be held accountable for misleading the court doesn’t mean that they should be permitted to do it. 


Since the complaint is clearly filed, in its own words, on behalf of certificate holders, their current position that the bank is somehow the actual party is without foundation. The complaint lacks an allegation stating that the bank is the legal representative of certificate holders and further lacks any allegation that the bank is trustee for the certificate holders who are beneficiaries of a trust. Further the complaint fails to allege that the trust exists or was organized under the laws of any jurisdiction. 


They appear to be taking the position that the bank is a plaintiff, not on its own behalf but on behalf of some third party. If it is a trust, they have failed to identify the trust or any transaction in which the subject loan was entrusted to the trustee under the terms of a trust instrument which is also not alleged. 


Accordingly, based upon the argument of counsel, the complaint fails to state the cause of action that opposing counsel is currently pursuing. This court lacks jurisdiction to hear any matter in which the Plaintiff is not identified or in which the named Plaintiff is not alleged to have suffered some injury caused by the Defendant or someone through whom the Defendant claims an interest in the subject matter. 


As it stands the complaint must be dismissed because it lacks both basic requirements for authority of the court to hear any dispute, to wit:  The identity of the Plaintiffs is concealed, withheld or otherwise not alleged and the ultimate facts upon which relief could be granted as the basis of their claim is not alleged.

The current action is based upon the implied conveyance contained within unidentified certificates, the contents of which are neither described nor attached as exhibits. And the claim is alleged to be brought on behalf of undefined holders of those certificates, who are not alleged to have any interest in the subject obligation. On the contrary, opposing counsel continues to assert the position that the plaintiff is a bank acting as trustee for an implied trust. 


Opposing counsel is attempting to have it both ways and to distract the court from the obvious conflict presented in this case. Either the claim is brought on behalf of an actual or implied trust or it is brought on behalf of holders of certificates. In either case neither the “trust” nor the “certificates” or “holders” are identified. Defendant is forced to litigate with a ghost. This court is being guided into a final judgment that grants to relief to unknown legal persons based upon assumed injury that is never alleged. 


Defendant is entitled to know exactly who she is litigating against and why. that is basic pleading practice as required by the most basic constitutional standards, statutes and rules of civil procedure. As it stands, opposing counsel is promoting a case that has not been alleged. 


Defendant asserts that the case must be dismissed without prejudice or that judgment must be entered for the Defendants. The opposition filed by opposing counsel actually corroborates every basis for the motion to dismiss that was filed. This court should refuse to consider an unspecified case with unspecified plaintiffs on an unspecified claim. To do otherwise opens the door to new doctrine in which anyone can file a lawsuits based upon facts known to them as a witness instead of a party. 

The court should reject the sub silentio argument presented by opposing counsel — that even if the the trustee, trust and holders have no right, title or interest in the mortgage, the action should proceed because they know that the homeowner did not make a payment.

The protections enunciated by the state legislature in their adoption of Article 9 §203 of the Uniform Commercial Code are not optional. Only the owner of the underlying obligation can force forfeiture of property to pay a debt. Black letter law in all jurisdictions is crystal clear: debt is not acquired without paying value for it. Black letter law is in all jurisdiction is clear: assignment of mortgage without a sale of the underlying obligation is a legal nullity. 


“even if we could entertain the argument we would reject it. The complaint alleges that US Bank claims to hold the beneficial interest and the right to foreclose, which is fully consistent with defendants’ representations in their brief as well as the judicially noticeable documents in the record. The issue is not Chase’s role as the loan servicer, but the proper identification “of the party enforcing [the] debt.” (Yvanova, supra, 62 Cal.4th at p. 937.) Yvanova makes clear that “􏰀􏰁􏰂he borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.” (Id. at p. 938, italics added.)”

Masoud v JP Morgan Chase, Cal. 4DCA, May 26, 2020, Case #D075582.

Yvanova v. New Century Mortg. Corp., 62 Cal.4th 919, 937 (Cal. 2016) (“Defendants argue a borrower who is in default on his or her loan suffers no prejudice from foreclosure by an unauthorized party, since the actual holder of the beneficial interest on the deed of trust could equally well have foreclosed on the property. As the Jenkins court put it, when an invalid transfer of a note and deed of trust leads to foreclosure by an unauthorized party, the “victim” is not the borrower, whose obligations under the note are unaffected by the transfer, but “an individual or entity that believes it has a present beneficial interest in the promissory note and may suffer the unauthorized loss of its interest in the note.” (Jenkins, supra, 216 Cal.App.4th at p. 515156 Cal.Rptr.3d 912; see also Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 85161 Cal.Rptr.3d 500 ”)

Yvanova v. New Century Mortg. Corp., 62 Cal.4th 919, 937-38 (Cal. 2016) (“Nor is it correct that the borrower has no cognizable interest in the identity of the party enforcing his or her debt. Though the borrower is not entitled to object to an assignment of the promissory note, he or she is obligated to pay the debt, or suffer loss of the security, only to a person or entity that has actually been assigned the debt. (See Cockerell v. Title Ins. & Trust Co., supra, 42 Cal.2d at p. 292267 P.2d 16 [party claiming under an assignment must prove fact of assignment].) The borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.”)

In any valid case for foreclosure, the complaining party must plead and prove the current existence of the debt, the current ownership of the debt being in the claimant or plaintiff, and the default of the homeowner as to the claimant (not someone else, about whom the court could only speculate as to their existence or their interest in the proceedings).

If they fail to make such allegations or prove that case, foreclosure must be rejected. And if the reason they failed to make such allegations is that they are pursuing a profit motive in lieu of an attempt to collect on an existing debt held as an asset by some creditor then all parties involved should be held accountable for abusing or weaponizing foreclosure process in an extra-legal and therefore illegal manner, all claims of litigation privilege notwithstanding.

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

FREE REVIEW:

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

*CLICK HERE TO ORDER TERA

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

*CLICK HERE TO ORDER CASE ANALYSIS

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

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

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

The Problem With those Powers of Attorney

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

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

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

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

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

That amount would be equal to what homeowners would have demanded in general and what investment banks would have offered as incentives in a free market with full disclosure.

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

FREE REVIEW:

If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.
In the meanwhile you can order any of the following:
*
*
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
*
Please visit www.lendinglies.com for more information.

Answering the Shell Game

Most of the questions I get come from lawyers and homeowners who are totally confused by the array of names of companies that appear, disappeared and replaced by lawyers operating under instructions from command central — a group of lawyers who oversee the foreclosures of loans claimed to be securitized. They are the ones who give the orders to “servicers” and “foreclosure mills.”

The goal is to force the sale of homes and obtain the proceeds of sale for the benefit and account of a stockbroker who initiated a scheme of “securitization.”

Everything that happens in correspondence, statements and enforcement actions is specifically designed to make lawyers, homeowners and judges think that is not the case. Everything is designed to create the false impression that the parties involved have every legal right to originate, process and enforce residential loans when in fact no such authority exists.

The foreclosure process is just one step in many that results in unconscionable profits, fees and commissions distributed to a multitude of players whose livelihood depends upon successfully duping the courts into allowing foreclosure despite the fact that the money from the forced sale will never be paid to the investors who paid for the debt.

One such question came in from a reader regarding BONY Mellon as trustee of a supposedly REMIC trust. As with all things in the era of securitization fail (see Adam Levitin) even that is false. An entity that does not serve as a pass through vehicle for payment of principal and interest on residential loans is not a Real Estate Mortgage Investment Conduit — so it isn’t a REMIC. A name that includes the word “trust” in it without a trust agreement in which something is entrusted to the “trustee” is not a trust.

So BONY Mellon is simply renting its name out for use by stockbrokers who call themselves “investment banks” in order to create the illusion of an institutional loan when nothing could be further from the truth. With only a few exceptions the same statement applies to all entities named as “trustees” of “REMIC” “trusts”.

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

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.
========================

Here is my reply to the reader:

They are playing a shell game and that is  what you should say:

  • None of the BONY Mellon entities ever owned or paid for the debt, note or mortgage.
  • None of the BONY Mellon entities ever served as trustee for the benefit of certificate holders
  • None of the certificate holders ever received a conveyance of ownership in the debt, note or mortgage. The assignment is always void (see below).
  • None of the certificate holders hold any equitable interest in the debt, note or mortgage because they expressly waived any such interest.
  • None of the BONY Mellon entities ever received your loan to hold in trust for anyone.
  • The assignment of bare naked title without the debt is a legal nullity. The trust agreement says that BONY holds bare naked legal title for the investment bank, but it does not have legal title because the debt was not also transferred.
  • The appearance and disappearance of technical legal entities occurs for the sole purpose of creating the illusion of business transactions that never occurred.
  • None of the BONY Mellon entities will ever receive the proceeds of a forced sale of property in this case.
  • None of the BONY Mellon entities have ever received the proceeds of forced sale of any property related to the subject “trust” or trust name.

The Truth about US Bank

Lawyers and pro se litigants continue to ignore the basics when mounting a challenge to foreclosures in which US Bank is asserted to be a trustee of a name that is then treated as though it was trust or REMIC Trust. If you look closely, the name is word salad, containing references or names to several named entities and other categories of entities.
*
 A typical presentation asserts no presence of US Bank in its individual capacity, so the institutional implication is false. It is appearing strictly in a representative capacity and an court award of costs against the “claimant” would not, according to US Bank, attach liability to US Bank but to rather whoever was being represented by US Bank “as trustee.” On that we have word salad presenting many options such as
  1. US Bank, as trustee
  2. as successor to Bank of America, as trustee
  3. as successor by merger to LaSalle Bank, as trustee
  4. for the holders of certificates entitled
  5. XYZ Corp.
  6. Mortgage pass through Certificates series 200x-a1

If anyone can tell me  from that description who would be liable for costs I applaud them. But I can tell you who would pay the costs regardless of actual legal liability. It would be a company claiming to be an authorized servicer who in fact is getting the money from the investment bank through conduits.

The issue of what if anything was transferred between LaSalle Bank and Bank of AMerica and thus what if anything was transferred between Bank of America and US Bank has actually not been litigated.

My answer is that LaSalle Bank had no duties as trustee, was subjected to the impact of three mergers — ABN AMRO, Citi and Bank of America — and that a trustee only exists for a legally existing trust in which the subject matter (Loan) was entrusted to the trustee for administration of the active affairs of the “trust.” With none of those elements present, nothing could have been transferred.

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.
========================
As to U.S. Bank, Deutsch, BONY etc. there are two categories that must be considered. If US Bank is named in a Pooling and Servicing agreement then the reasons for its non existence (or more specifically lack of legal presence in court or any other foreclosure proceeding) in fact and at law remain as previously stated in prior articles —- but exclude one central issue that has not been litigated.
*
If US Bank has been asserted as successor to another alleged trustee then all sorts of other issues pop up. The main one that has not been litigated is whether the position of trustee can be transferred or sold like a commodity without consent of the beneficiaries or some other authorized party.
*
In truth the only real “beneficiary” would be the investment bank — if only the trust legally existed. And in truth the investment bank indemnified US Bank from liability in exchange for the use of the US Bank name to create the illusion of institutional involvement.
*
And in truth the only real party in interest is the investment bank, and if the trust actually existed the investment bank would be the only real beneficiary in an arrangement in which the trust name is used as a shield or sham conduit to hold bare naked legal title to paper that fabricates the illusion of debt ownership, much like MERS.
*
And of course the whole use of the term “successor” is constantly used to distract lawyers, judges and homeowners from the fact that the previous party had no interest or right to administer, own, or enforce the subject debt, note or mortgage — unless they are able to produce authorization from the investment bank.
*
But the investment banks have been loath to even hint that they could or would issues such authorization because that would be an admission that they were or are the real party in interest — an admission which probably would subject them to many levels of liability for fraud and statutory violations.
*
It may well be that the pursuit of court costs and discovery available to do that might be the achilles heel of this house of imaginary cards. It would reveal the absence of any party to pay them, which would reveal the absence of a claimant, which would reveal the absence of a claim which would reveal the absence of a client, which would reveal false representations by the foreclosure mill.

No the Mortgages Are Not Securities, But the “Certificates” Do Not Qualify for Exemption As “Mortgaged Backed”

For those straining to find a way to categorize mortgage loans as securities I offer this based upon my licensing, training and experience as a Wall Street Broker and Investment Banker and as an attorney who has practiced law, including securities law for over 42 years.

You are climbing the right tree but you are on the wrong branch, in my opinion. Despite possible legal and logical arguments for your point of view there is no way any court is going to take the common mortgage loan and say it is a security, and therefore was subject to regulation, registration, disclosure and sales restrictions. And the secondary market does not rise to the level of a free exchange. While loans appear to be traded under the guise of securitization they are not actually traded.

BUT
I like your reasoning when applied to (a) certificates issued by investment banks in which the investment bank makes promises to pay a passive income stream and (b) derivative and hedge contracts issued on the basis of deriving their value from the certificates.
*
The specific challenge I think should be on the status of the certificates or “bonds” issued by the investment banks. If securitization in theory were a reality then under the 1998 exemption they would not be treated as securities and could not be regulated.
*
That would mean that the fictitious name used by the investment bank was a real entity, an existing Trust (or special purpose vehicle) (a) organized and existing under the laws of some jurisdiction and (b) the trust actually acquired loans through (i) purchase for value or (ii) through  conveyance from a trustor/settlor who owned the loans, debts, notes and mortgages.
*
But that isn’t what happened in practice. The entire business plan of the investment banks who participated in this scheme was predicated on their ability to sell the loans multiple times in multiple ways to multiple layers and classes of investors, thus creating profits far in excess of the amount of  the loan.
*
Right now each of those sales is considered a separate private contract that is (a) separate and apart from the loan agreement and (b) not subject to securities regulation due to exemption under the 1998 law that does not allow securities regulation of mortgage-backed instruments.
*
So the goal should be to show that
*
(a) the securitization scheme was entirely based on the loan agreement under the single transaction and step transaction doctrines and therefore was not separate from the loan transactions
*
(b) the certificates or bonds were not mortgage-backed because the holders have no right, title or interest to the loan agreements, debts, notes or mortgages and
*
(c) the derivative and hedge contracts deriving their value from the certificates were securities based upon the certificates (“bonds”) that are more in the nature of warrants and options on the value of the certificates rather than any direct interest in the debt, note or mortgage of any borrower.
*
Hence both the certificates and hedge contracts and all other derivatives of the certificates would be subject to regulation as securities. Based upon information I have that is very suggestive although not conclusive, it appears that the Internal Revenue Service has already arrived at the conclusion that the certificates are not mortgage-backed and the trusts are not viable entities because in order to have a valid trust it must have assets and active affairs. It must also have identifiable beneficiaries, a trustor etc.
*
None of those elements are present or even alleged or asserted by the lawyers for the foreclosure mills. The only “beneficiary” is the investment bank, not the certificate holders who all expressly or impliedly disclaim any right, title or interest in the loans, debts, notes or mortgages and have no right to enforce. This has already been decided in tax court. The owners of certificates are not the holders of secured debt.
*
There is no “res” or “thing” that is entrusted to the named Trustee of the so-called REMIC Trust for the benefit of identifiable beneficiaries. There is no settlor who conveyed loans to the Trustee to hold in trust for identifiable beneficiary except that as a catch-all the investment bank is named as beneficiary of any title to anything that might be attributed to the trust, if only the trust existed.
*
Attacking this from the top down is the job of regulators who refuse to do so. But the attack can occur from the bottom up in courts. As shown above, in any case where a trust is referenced in a foreclosure there is no legal standing. That is there is no existing entity that owns the debt. The investment bank funded the origination or acquisition of the loan but contemporaneously sold off the value of the debt, the risk of loss, the cash flow and other attributes of the loan.
*
The notes had to be destroyed and a new culture based upon images had to be put in place even if it violated law. The problem with the courts is not that they don;t get it; I think a lot of judges get it but don’t like the outcome of applying the law as it currently exists. So they wink and nod at fabricated notes, assignments and endorsements.
But those same judges, when confronted with unexplained deficiencies are forced to rule in favor of borrowers. And they do. This would best be done in mass joinder, class action or some other vehicle where resources could be pooled, but the procedural deck is stacked against such efforts.

===============================
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.
========================

C&E Strategy is the beginning of a successful attack on the claimed enforcement of a mortgage or deed of trust.

Attacks on technical deficiencies of assignments of mortgage is a great place to start, but it is not the finish line.

This is a follow up with the radio show we did last week on cancellation of assignments of mortgage, and upon successful cancellation of the assignment(s), the further cancellation of the notice of substitution of trustee, the notice of default, the notice of sale, and/or the lis pendens and foreclosure lawsuit.

The C&E (Cancel and Expunge) strategy has some good and even essential attributes of the defense and counterattack on the would-be enforcer of a mortgage. But here are some potential weak points. If you are not ready for them the strategy will fail.

see https://livinglies.me/2019/04/11/cal-3d-dca-wrongful-foreclosure-you-can-cancel-the-assignment-notice-of-default-notice-of-sale-and-reverse-the-sale/

You are still on the right track — especially where the notary certifies that the person signing had authority to do so. That is simply a lie. The notary has no idea. The problem with the C&E strategy is that it appeals to lay people and not lawyers.

*

The lay people like it because it sounds like a magic bullet that enables them  to avoid litigation over whether the claimant is real and whether the claim is real. The lawyers are reluctant because they know that courts will almost always side with the party who appears to be losing the benefit of an actual bargain in which the claimant paid money. It’s all about money, whether you like it or not.

*

The reality is that they are both right. And the place to start is always at the beginning — when and where and why the offending document was executed.

*
Lay people don’t understand what it means to have a facially valid document. They want to get a court to get rid of the whole document (and the presumed transaction behind it, whether it exists or not) because of some perceived invalid procedure in its execution. The world doesn’t work like that, nor should it.
*
The court looks at the substance. If someone paid for the loan they don’t lose their money because of a signature that is missing or in the wrong place. They are at least given opportunities to correct errors. If the errors are not corrected then that is a different matter. Even a frivolous lawsuit can result in a judgment and levy against property if the defendant failed to answer or appeal. That is the way the system works.
*
The court might temporarily decline to enforce an instrument because it does not comply with statutory requirements for facial validity — but it won’t invalidate the presumed transaction UNLESS the presumed transaction is either proven not to exist or the presumed transaction is not proven to exist. There is a difference between those two. Both involve proof. The difference is in who has the burden of proof.
*
Even with a deed lacking a witness —- the deed is valid as between the grantor and the grantee and anyone who knows about it. There are differences between states but the substance is the same.
*
If Person A executes a deed to Person B and Person B pays Person A then the court, in equity, will not allow person C to exercise the rights of a title owner in fee simple absolute unless Person C also paid Person A (assuming person A had title) AND the state has a race to record statute. If the state is not a “race” state, then the deed is valid against all who have notice of it.
*
At the end of the day courts will not ordinarily issue an order in which they think a party is getting cheated out of the benefits of a legitimate deal. The dominant public policy is preservation of contracts and legitimate transactions first, not the strict adherence to statutory requirements in execution of contracts or conveyances. So the only defense that works with consistency is the one in which either the claim or the claimant’s existence is not supported by sufficient evidence. This is the gray area that lay people don’t want to hear about.
*
But all that said, the attack on the assignments for lack of statutory requirements is correct in its strategy and its goals. The reason that is correct is not that the document is just defective in some technical way. The reason it is effective strategy is (a) the court should not enforce it until the needed correction is effectuated and (b) they can’t correct it without revealing the creditor who owns the debt.
*
The 20 year effort to conceal the identity of anyone who owns the debt is testimony to the fact that the investment banks don’t want anyone to know. The answer would be highly complex and probably involve matters of novel fact patterns and law.
*
By selling off the risk of loss did the investment bank thus sell the debt? If they sold the debt, but did not sell the rights to enforce the debt, note or mortgage, did the investment bank retain the right to enforce?  If so, that probably conflicts with all law in all jurisdictions that requires that the enforcer of a mortgage be the owner of the debt. If the enforcement is allowed what assurances does the court have that the proceeds of foreclosure will go to the benefit of the owner of the debt, however that ownership is defined?
*
While the courts have assiduously avoided addressing such questions they are moving inexorably in the direction of being required to address them and to finally decide what to do with the confusion and chaos created not by borrowers, but by the investment banks who sought to and did in fact create profits that were multiples of the amount loaned without paying the borrower for use of his/her name, signature or reputation.
*
So the attacks on technical deficiencies of assignments of mortgage is a great place to start, but it is not the finish line.

 

Discovery from REMIC Rules

I have added to my templates for discovery questions  and requests relating to a claimant that is named “XYZ Bank, N.A. as trustee for the ABCDE Corp. Trust Series 12345-4321A Certificates” and where, as in most cases, there is a PSA and/or a Trust Instrument that identifies the “trust” (if ti exists) as a REMIC — Real Estate Mortgage Investment Conduit. It turns out that the Internal Revenue Code provides some guidance that might get you through objections to your discovery.

Keep in mind that there is very often a “Trust Agreement” that is different from the PSA and that there is very often a “Servicing  Agreement” that is different from the PSA.  It’s somewhat like saying “Do as I say not as I do.”

Also keep in mind that the only trust relationship I can decipher out of the so called trust instruments and associated documents is that the Trustee is basically a naked nominee (like MERS) for the investment bank, for which it is paid a monthly fee with no rights of administration nor any duties or obligations.

Thus the investors as beneficiaries is a red herring distraction from the truth. Hence any power of attorney executed in the name of the named Trustee is worthless because you cannot create a right by purporting to transfer it. The trick in litigation is revealing that the named Trustee is not a legal trustee and should not be so named because it lacks all indices of power attributed to a trustee.

Thus a “trust” might indeed exist even if it is not anything like what is being presented in court. And the res of the trust is the nominal title to documents like a note and mortgage to hold at the direction of but necessarily for the benefit of the investment bank. But since the nominal  title is without value there still is probably no res and hence no trust nor anything to administer.

While the investment bank once had a claim as owner of the debt, it has long since divested itself of any right, title interest or obligation with respect to the debt, note or mortgage.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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) 202-838-6345 or 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.
========================
IRC § 301.7701(i)-1 Definition of a taxable mortgage pool.

(a)Purpose. This section provides rules for applying section 7701(i), which defines taxable mortgage pools. The purpose of section 7701(i) is to prevent income generated by a pool of real estate mortgages from escaping Federal income taxation when the pool is used to issue multiple class mortgage-backed securities. The regulations in this section and in §§ 301.7701(i)-2 through 301.7701(i)-4 are to be applied in accordance with this purpose. The taxable mortgage pool provisions apply to entities or portions of entities that qualify for REMIC status but do not elect to be taxed as REMICs as well as to certain entities or portions of entities that do not qualify for REMIC status.

(b)In general.

(1) A taxable mortgage pool is any entity or portion of an entity (as defined in § 301.7701(i)-2) that satisfies the requirements of section 7701(i)(2)(A) and this section as of any testing day (as defined in § 301.7701(i)-3(c)(2)). An entity or portion of an entity satisfies the requirements of section 7701(i)(2)(A) and this section if substantially all of its assets are debt obligations, more than 50 percent of those debt obligations are real estate mortgages, the entity is the obligor under debt obligations with two or more maturities, and payments on the debt obligations under which the entity is obligor bear a relationship to payments on the debt obligations that the entity holds as assets.

Subject to considerable editing and fine tuning, this gives rise the the following recitations and questions:

  1. Contention Interrogatory: Do you contend that the claimant is a REMIC?
  2. Do you contend that the subject REMIC is subject to IRC §301.7701(i)-1 Definition of a taxable mortgage pool?
  3. Contention Interrogatory: Do you contend that the subject REMIC is the actual and legal owner of the subject debt, note and mortgage?
    1. If Yes, please describe the manner in which the subject debt, note and mortgage were acquired or became entrusted to XYZ Bank as Trustee of the named REMIC.
  4. Does the subject REMIC maintain books of account and business records relating to the ownership, transfer and management of REMIC assets?
    1. Please describe how the books and records are maintained, along with the description of the persons or entities who are authorized to keep or maintain or make entries in those books and records.
  5. Does the named REMIC make payments to any party as an obligor (the REMIC)?
    1. Do those payments bear a relationship to payments to payments received by the REMIC on debt obligations that the entity holds as assets?
      1. Please Describe such payments including the categories of recipients as referenced on the books of account maintained by the REMIC.
      2. Please describe the relationship between the debt obligations that the REMIC holds as assets and the obligation of the REMIC as obligor to third parties.
  6. If yes, please answer the following
    1. Is the Pooling and Servicing Agreement (PSA) as found at url _________ the document upon which the REMIC was organized and still exists.
      1. If not, please describe the document upon which or by which the REMIC was created, organized and still exists.
    2. Is the identity of the claimant in foreclosure the same as the identity of the named Trust in the PSA.
    3. As stated in §301.7701(i)-1 Definition of a taxable mortgage pool, does the named REMIC qualify as a legal entity?
    4. Does the named REMIC own assets?
      1. If yes, please describe the assets.
      2. Are substantially all the claimed assets categorized as debt obligations?
      3. Is the debt in the subject disputed loan one of the assets owned by the named REMIC?
        1. If yes please describe the date, parties and location of the transaction in which the named REMIC became the owner of the subject debt.
        2. If yes please list and describe the date and parties involved (as Payors or Payees) in the distribution of any money by or on behalf of XYZ Bank relating in any way to the subject REMIC and relating in any way to the subject contested loan.
        3. Please list all other foreclosure proceedings initiated under the name of this subject REMIC as the claimant.
          1. Please list which of the previous cases have been concluded with a foreclosure sale and subsequent liquidation (sale) of the property.
            1. Please list the cases in which the property was sold where the named REMIC herein received the sale proceeds.
            2. Please list the cases in which XYZ Bank received money from the sale proceeds in any capacity.
            3. Out of those cases please describe the manner in which XYZ Bank received the money and the manner in which the money was distributed.

Be prepared for objections and long memoranda of law.

Comments welcome

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

How to Think About MERS

If you are going to challenge a foreclosure or sue for wrongful foreclosure and fraud, you need to know what you are doing and know what your opposition has been doing. You also must know what to do about it because knowing is not enough. You need to convince a judge who starts from a bias of upholding “contract” because that is what judges are supposed to do in our system.

Bottom Line: You must convince the judge that the claimant has not satisfied its burden of establishing an enforceable contract between itself and the borrower. And in the case of foreclosure the claimant must satisfy the condition precedent of ownership of the debt. That condition is often “met” solely by legal presumption arising from documentation that is proffered without any meaningful objection and without any impeachment of foundation witnesses.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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.
========================
Think about MERS as your next door neighbor. He lets anyone come into his house and play with his computer. You simply are required to pay him a fee every month and he gives you a key, and the login and password to get into his computer.
*
So you go in and prepare a report from his computer saying that your loan is all paid up and a release and satisfaction is being filed. Just to be on the safe side you show that the mortgage was transferred to a party that has not made any claim for collection, further confusing the issue of ownership of the debt or mortgage.
*
Then you go to court and introduce the report as proof that the mortgage is satisfied. The report says is from John  Smith, your neighbor who is in the business of keeping mortgage records. You don’t show a canceled check or wire transfer receipt because there is no canceled check or wire transfer receipt; you just introduce the report that you created from your own data for your own purposes and published it with the sole purpose of showing it in court.
*
You bring in your neighbor who testifies that these records are kept in the ordinary course of his business and that the entries were made at or near the time of a transaction. (Notice he doesn’t say the entries were made at or near the time of THE transaction).
*
The court accepts the document that you prepared on your neighbor’s computer as evidence that the loan was entirely paid off and that a satisfaction of mortgage should have been issued. Notice that the evidence is not that YOU paid it off but rather that is was just paid off.
*
The response from your opposition would be that they want to see proof that you paid it off. But you have already introduced the report as your neighbor’s report (an independent third party) and the court accepted it as a business record of your neighbor. The court record now has “conclusive” evidence that the the loan was paid off. Further inquiry is not required and you shouldn’t be required to answer such a silly question that invades your private financial information.
*
Judgment is entered in your favor and the opposing party is taxed with costs and fees if you had an attorney. Further the court declares the mortgage satisfied and that the final order of the court should be recorded in the public records. Maybe the court orders the party you named in the report as being the new mortgagee to file a satisfaction of mortgage.
*
That is how MERS works. It’s simple reason for being in existence is not just to avoid recording fees but to act as a substitute for proof of an actual transaction. MERS is the neighbor of the banks and servicers. It gives them the key, the login and the password. After that they are on their own as to what data is entered into MERS and what reports are issued from MERS and what is in each report issued under the name of MERS.
*
So if someone is attempting to rely on a MERS report they are relying on a fiction of their own making. This is somewhat like uploading a fake trust document to SEC.gov and then citing to it as worthy of judicial notice or using it as a government filing. It isn’t. It’s just a fiction of their own making. And it never has the mortgage loan schedule attached which means the trust document is incomplete, subject to some later addition/revision that might or might not have been accepted by someone was authorized to accept it.
*
Objections to the MERS report must be about foundation. Discovery and investigation is key to knowing the facts as they apply to your case. Writing and presenting the defense narrative in motions and pleadings is the other key. Here is what you should be thinking about:
  • Establish that nobody employed by MERS entered any data or produced any report.
  • Ask the players for the identity of the individuals who entered data.
  • If they give you the name, question the individual.
  • Ask for the identity of individuals who produced reports.
  • If they give you the name, question the individual.
All this will make opposing counsel very uncomfortable as you are zeroing in on the nub of a fraudulent scheme. The lawyers will start feeling the heat as they approach suborning perjury. The banks will feel the heat because it threatens to expose the reality that nearly all claimed securitizations of residential loans were faked. That is the key to a successful (and confidential) settlement — the value of your case as threat to their  entire scheme or parts of it.
*
Spoiler alert: in most cases counsel will abandon the MERS report and use some other fabricated document instead. But you can use inconsistencies between their previous and current position to reveal that there are gaps that cannot be filled by legal presumptions.
*
In order to start defending you must know things. But in order to get traction in court you need to convince the judge. Badly drafted pleadings undermine credibility. That is why you need professional assistance.
*
The person drafting your defense narrative and the drafting your motions, discovery, and pleadings must know what needs to be said in order for the court to take the defense narrative seriously. And what needs to be said often sounds tame or irrelevant to lay people who want the judge to know that the opposition is a bunch of liars and thieves. Really good legal writers know that such conclusions are best left to the judge, after a process in which he/she gets thoroughly disgusted and exasperated with the lawyers, the servicer and the bank pretending to be a trustee of a dubious trust. 

PTSD: A Breakdown of Securitization in the Real World

By using the methods of magicians who distract the viewer from what is really happening the banks have managed to hoodwink even the victims and their lawyers into thinking that collection and foreclosure on “securitized” loans are real and proper. Nobody actually stops to ask whether the named claimant is actually going to receive the benefit of the remedy (foreclosure) they are seeking.

When you break it down you can see that in many cases the investment banks, posing as Master Servicers are the parties getting the monetary proceeds of sale of foreclosed property. None of the parties in the chain have lost any money but each of them is participating in a scheme to foreclose on the property for fun and profit.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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.
========================

It is worth distinguishing between four sets of investors which I will call P, T, S and D.

The P group of investors were Pension funds and other stable managed funds. They purchased the first round of derivative contracts sometimes known as asset backed securities or mortgage backed securities. Managers of hedge funds that performed due diligence quickly saw that that the investment was backed only by the good faith and credit of the issuing investment bank and not by collateral, debts or mortgages or even notes from borrowers. Other fund managers, for reasons of their own, chose to overlook the process of due diligence and relied upon the appearance of high ratings from Moody’s, Standard and Poor’s and Fitch combined with the appearance of insurance on the investment. The P group were part of the reason that the Federal reserve and the US Treasury department decided to prop up what was obviously a wrongful and fraudulent scheme. Pulling the plug, in the view of the top regulators, would have destroyed the investment portfolio of many if not most stable managed funds.

The T group of investors were traders. Traders provide market liquidity which is so highly prized and necessary for a capitalist economy to maintain prosperity. The T group, consisting of hedge funds and others with an appetitive for risk purchased derivatives on derivatives, including credit default swaps that were disguised sales of loan portfolios that once sold, no longer existed. Yet the same portfolio was sold multiple time turning a hefty profit but resulted in a huge liability when the loans soured during the process of securitization of the paper (not the debt). The market froze when the loans soured; nobody would buy more certificates. The Ponzi scheme was over. Another example that Lehman pioneered was “minibonds” which were not bonds and they were not small. These were resales of the credit default swaps aggregated into a false portfolio. The traders in this group included the major investment banks. As an example, Goldman Sachs purchased insurance on portfolios of certificates (MBS) that it did not own but under contract law the contract was perfectly legal, even if it was simply a bet. When the market froze and AIG could not pay off the bet, Hank Paulson, former CEO of Goldman Sachs literally begged George W Bush to bail out AIG and “save the banks.” What was saved was Goldman’s profit on the insurance contract in which it reaped tens of billions of dollars in payments for nonexistent losses that could have been attributed to people who actually had money at risk in loans to borrowers, except that no such person existed.

The S group of investors were scavengers who were well connected with the world of finance or part of the world of finance. It was the S group that created OneWest over a weekend, and later members of the S group would be fictitious buyers of “re-securitized” interests in prior loans that were subject to false claims of securitization of the paper. This was an effort to correct obvious irregularities that were thought to expose a vulnerability of the investment banks.

The D group of investors are dummies who purchased securitization certificates entitling them to income indexed on recovery of servicer advances and other dubious claims. The interesting thing about this is that the Master Servicer does appear to have a claim for money that is labeled as a “servicer advance,” even if there was no advance or the servicer did not advance any funds. The claim is contingent upon there being a foreclosure and eventual sale of the property to a third party. Money paid to investors from a fund of investor money to satisfy the promise to pay contained in the “certificate” or “MBS” or “Mortgage Bond,” is labeled, at the discretion of the Master Servicer as a Servicer Advance even though the servicer did not advance any money.

This is important because the timing of foreclosures is often based entirely on when the “Servicer Advances” are equal to or exceed the equity in the property. Hence the only actual recipient of money from the foreclosure is not the P investors, not any investors and not the trust or purported trustee but rather the Master Servicer. In short, the Master servicer is leveraging an unsecured claim and riding on the back of an apparently secured claim in which the named claimant will receive no benefits from the remedy demanded in court or in a non-judicial foreclosure.

NOTE that securitization took place in four parts and in three different directions:

  1. The debt to the T group of investors.
  2. The notes to the T and S group of traders
  3. The mortgage (without the debt) to a nominee — usually a fictitious trust serving as the fictitious name of the investment bank (Lehman in this case).
  4. Securitization of spillover money that guaranteed receipt of money that was probably never due or payable.

Note that the P group of investors is not included because they do not ever collect money from borrowers and their certificates grant no right, title or interest in the debt, note or mortgage. When you read references to “securitization fail” (see Adam Levitin) this is part of what the writers are talking about. The securitization that everyone is talking about never happened. The P investors are not owners or beneficiaries entitled to income, interest or principal from loans to borrowers. They are entitled to an income stream as loans the investment bank chooses to pay it. Bailouts or even borrower payoffs are not credited to the the P group nor any trust. Their income remains the same regardless of whether the borrower is paying or not.

Unworthy Trusts

The simple fact is that the REMIC trusts do not exist in the real world. The parties named as trustees — e.g. US Bank, Deutsch, BONY/Mellon — are trust names that are used by permission through what is essentially a royalty agreement. If you are dealing with a trust then you are dealing with a ghost.

Discovery is the way to reveal the absence of any knowledge, activity or reports ever conducted, issued or published by the named Trustee on behalf of the “trust” or the alleged “beneficiaries.” Take deposition of officers of the named Trustee. Your opposition will try to insert a representative of the servicer. Don’t accept that.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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 purposes of clarity I am using US Bank as an example. It is the most common.
*
US Bank has NO information about the trust, the servicer or the account for the borrower. Thus the purpose of any deposition of any officer of US Bank should be solely to establish the absence of events and data that should otherwise be present.
*
This is why as counsel for the lender, lawyers will not recommend going forward with the refinancing. Your opposition is asking you to accept their word for the “fact” that they represent a creditor who is entitled to payment not just because there is paperwork indicating that, but because they are really owed the money.
*
Knowing the truth is a basis for establishing gaps and revealing it to the trier of fact but should NOT be a basis of making allegations that you will be required to prove. It’s a thin line and the lawyer needs to be aware of this division, or else you will end up with a burden of proof you cannot sustain and unanswered questions that prevent the closing of refinancing — unless the “source” of refinancing is from another player in the world of securitization.
*
The fact that securitization players would accept the paperwork is only testament to the willingness of all securitization players to engage in such conduct as to maintain an illusion of legitimacy. Other lenders rely on such conduct at their peril. Other lenders do not receive the reward from multiple resales of the same debt.
*
So in your inquiries to officers of US Bank you want to establish the following, in order to force the true creditor to come forward (if there is one):
    1. US Bank has no duties normally attributed to a trustee.
    2. The “US Bank” name is basically a royalty arrangement in which the name can be used but there is no further substance to its “role” as trustee.
    3. There is no bank account established or maintained by US Bank for the alleged Trust.
    4. US Bank has never received any money through any means in connection with the subject debt. The borrower’s payments to the servicer have never been received by US Bank on its own behalf, as conduit or as trustee for any trust.
    5. In prior foreclosures involving the same trust, US Bank did not receive the proceeds of the foreclosure sale.
    6. US Bank has no reason to expect that it would receive the proceeds of a foreclosure sale involving the subject debt.
    7. US Bank has no mechanism in place where the payment of money to satisfy the claimed debt would be actually deposited into a bank account for the trust that is controlled by US Bank.
    8. The beneficiaries of the trust do not receive any money from borrower payments, foreclosure sales, or prepayments, refinancing or any other monetary transactions. US Bank probably does not know if this is true or not. US Bank has nothing to do with what, if anything, the “beneficiaries” of the “trust” receive or don’t receive.
    9. US bank has no information regarding the identity of the beneficiaries of the “trust.”
    10. US Bank has no information regarding whether any party is a beneficiary of the “trust”.
    11. US Bank has no information regarding the existence of the trust other than the documents forwarded to it for purposes of the deposition.
    12. US Bank does not keep or maintain accounting records pertaining to the trust.
    13. US Bank does not keep or maintain any records or documents pertaining to the trust.
    14. US Bank does not issue reports to anyone regarding the trust or the subject debt, note or mortgage.
    15. US Bank does not include information relative to the business activity of the “trust” or the subject debt, note or mortgage in any report to any regulatory authority, Federal or State.
    16. Except for fee income, US Bank does not include information relative to the business activity of the “trust” or the subject debt, note or mortgage in any financial report published to the public or to any regulatory authority, Federal or State.
    17. There is no “trust officer” appointed by US Bank to actively manage the affairs of the “trust.”There is no “trust officer” appointed by US Bank to actively manage the affairs of the subject debt.
    18. US Bank neither accepts nor gives any instructions to anyone regarding the affairs of the “trust.”
    19. US Bank neither accepts not gives any instructions to anyone regarding the subject debt, note or mortgage.
    20. US Bank has no power to either accept or give instructions regarding the trust or the subject debt.


Keep in mind that there are experts who believe that the debt no longer exists, and that you are dealing with the ghost of a creditor and the ghost of a debt. This is because the debt was resold multiple times and redistributed to multiple parties (new investors) under the guise of different instruments in which the value of the instrument was ultimately derived not from the debt, in actuality, but from the marketplace where such isntruments are traded. This is an ornate interpretation that has the ring of truth when you examine what the banks did, but this theory will not likely be accepted by any court.

*
That theory explains why when appellate and trial courts asked the direct question of whether the creditor can be identified the answer was no. The response was that the courts stopped asking.
*
But the issue at hand is whether, pursuant to state law governing foreclosures, a creditor is before the court possessing a valid claim to collect on a debt. If there is, then that creditor is entitled to payment. If there is not, then the claimed “creditor” is not entitled to either payment or foreclosure. 

Stop Referring to Defaults as Something Real

Referring to the default as real, but with an explanation of how it is subject to rationalization or argument, completely undermines your argument that they have no  right to be in court, to collect, to issue notices or initiate foreclosure. 

…when you refer to the default, you should refer to it as a false claim of default because at no time was Deutsch or any trust or any group of investors ever receiving payments from you as borrower. Nor did they have any contractual right to expect such payments from you as borrower. So Deutsch didn’t suffer any default and neither did the investors who own certificates that are not ownership interests in the debt, note or mortgage. And Deutsch won’t get any proceeds if the property is subjected to a foreclosure sale.

Questions to the servicer about how, when and where they made payments to Deutsch, or Deutsch as Trustee, or any trust, or any group of investors holding certificates will reveal their absence from the money trail. No such payments exist nor will they ever exist.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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.
========================
I take issue with the practice of referring to “the default.” When someone refuses or stops paying another person that does not automatically mean that a default exists. A default only exists if the the payment was due to a specifically identified party and they didn’t get it. Failure to pay a servicer is not a default. Failure to pay a servicer who is sending your payments to a creditor IS a default.
Since the fundamental defense for borrowers that wins cases is that the claimant has no right to be in court, it seems wrong to refer to”the default.” It should be “the claimed default.”
If your refusal to make payment was in fact a default as to Deutsch as Trustee of a real trust or as authorized representative of the certificate holders (they never make that clear), then all of your arguments come off as technical arguments to get out of a legitimate debt. You will lose.
On the other hand if your position (i.e., your denial and affirmative defenses) is that Deutsch is not a party on its own behalf and that it is being named by attorneys as being in a representative capacity for (a) a trust that does not exist or (b) for holder of certificates that do not convey title to the debt, note or mortgage and are specifically disclaimed, then you have a coherent narrative for your defense.
And if you further that argument by asserting that Deutsch has never received any payments and does not receive the proceeds of foreclosure on its own behalf nor as trustee for any trust or group of investors and will not receive those proceeds in this case then you push the knife in deeper.
So if Deutsch is not appearing on its own behalf and the parties that the lawyers say it is representing either don’t exist or are not identified, then the action is actually being filed in the name of Deutsch but for and on behalf of some other unidentified party who may or may not have any right to payment.
What is certain is that Deutsch is being represented as the owner of the loan when it is not.  The owner of a loan receives payments. Deutsch never receives payment from anyone and the investors never receive payment from the borrowers. If they did the servicer would have records of that. 
So when you refer to the default, you should refer to it as a false claim of default because at no time was Deutsch or any trust or any group of investors ever receiving payments from the homeowner as borrower. Nor did they have any contractual right to expect such payments from you as borrower. So Deutsch didn’t suffer any default and neither did the investors who own certificates that are not ownership interests in the debt, note or mortgage. And Deutsch won’t get any proceeds if the property is subjected to a foreclosure sale. 
If Deutsch didn’t suffer any default it could not legally declare one. If the declaration of default was void, then there is no default declared. In fact, there is no default until a  creditor steps forward and says I own the debt that I paid for and I suffered a default here. But there is no such party/creditor because the investment bank who funded the origination or acquisition of the loan has long since sold its interest in the loan multiple times.
Thus when lawyers or as servicer or both sent notices of delinquency or default they did so knowing that the party on whose behalf they said they were sending those notices had not suffered any delinquency or default.
When homeowners refer to the default as real, but with an explanation of how it is subject to rationalization or argument, they completely undermine their argument that they have no  right to be in court, to collect, to issue notices or initiate foreclosure. 
And remember that the sole reason for foreclosures in which REMIC claims are present is not repayment, because that has occurred already. The sole reason is to maintain the illusion of securitization which is the cover for a PONZI scheme. The banks are seeking to protect “profits” they already have collected not to obtain repayment. That is why a “Master Servicer” is allowed to collect the proceeds of a foreclosure sale rather than anyone owning the debt.
Also remember that while it might be that investors could be construed as beneficiaries of a trust, if it existed, they actually are merely holders of uncertificated certificates in which they disclaim any interest in the debt, note or mortgage.  Hence  they have no claim, direct or indirect, against any individual borrower. 

PRACTICE NOTE: Don’t assert anything you cannot prove. Leave the burden of proof on the lawyers who have named an alleged claimant who they say or imply possesses a claim. Deny everything and force them to prove everything. Discovery should be aimed at revealing the gaps not facts that will prove some assertion about securitization in general. Judges don’t want to hear that.
Appropriate questions to ask in one form or another are as follows:
  1. Who is the Claimant/Plaintiff/Beneficiary?
  2. Who will receive the proceeds of foreclosure sale?
  3. Before the default, who received the proceeds of payment from the subject borrower? [They will  fight this tooth and nail]
  4. Did the trustee ever receive payments from the borrower?
  5. Does the trustee in this alleged trust have any contractual right to receive borrower payments?
  6. Do holders of certificates receive payments from the borrower through a servicer?

Facially Invalid Recorded Documents

The view proffered by the banks would require them to accept declarations of fact from potential borrowers without any indicia of truth or reliability. It is opposite to the manner in which they do business. Currently they have it both ways, to wit: for purposes of borrowing you must submit documents that are facially valid without reference to external evidence and which can be easily confirmed but for purposes of foreclosure, none of those conditions apply. 

As part of the the scheme of “securitization fail” (see Adam Levitin) banks, servicers and third party vendors have been creating, fabricating and executing documents that are not facially valid nor do they comply with industry standards or even common sense. But once recorded judges take them “at face value” by assuming that somehow the document makes sense, when it clearly does not comport with law or logic. Defenders of foreclosure act at their peril when they fail to attack the facial validity of the documents upon which the foreclosure claims rely.

In a recent article written by Dale Whitman for the ABA he states the following “Conclusion. The recording system is archaic and fraught with the potential for yielding wrong conclusions. Conversion by many recording jurisdictions to computer-based electronic indexes has been helpful, but most of the legally problematic flaws continue to exist. Title insurance has been invaluable in making the weight of the recording system bearable, but it adds a further layer of complexity as buyers try to understand the limitations of their title policies. It seems unlikely that major changes will occur, so it is essential that real estate lawyers understand the peculiarities and limitations of our present system.” (e.s.)

As he points out recording is not required to make a document valid, but once it is recorded the document takes on a life of its own. It also presents numerous trapdoors and pitfalls that should be analyzed before answering the initiation of a foreclosure proceeding with any action on behalf of the homeowner including the motion to dismiss in judicial states, the answer, affirmative defenses and the Petition for TRO or lawsuit for wrongful foreclosure.

see what you didn_t know about recording acts_whitman (2).authcheckdam

==============================
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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.
==========================

Common sense tells you that for a document to mean anything it must say enough that a reasonable person would be able to confidently draw meaning from it. Analyzing the facial validity of documents used in foreclosure reveals a pattern of misrepresenting the facial validity and misdirecting judges into NOT looking closely at the documents from which they are making assumptions and thence to legal conclusions that bind homeowners into proving matters beyond their control.

I proffer here an analysis that I just completed (our TERA report) as an example.

  1. We have already seen documentary proof that BONY Mellon does not receive the proceeds of the sale of property subject to the power of sale in a nonjudicial state or the forced sale in a judicial state. There are many reasons for this.
  2. Analysis of the facial validity of the use of various names and descriptions reveals the absence of an actual party, unless extrinsic “parole) evidence is added. Hence the documents upon which the above language relies does not support facial validity.
  3. BONY Mellon is said to be the “successor to JP Morgan Chase.” It is not and never has been a successor to JPMorgan Chase. There is nothing in the public domain to support that assertion. There is no instrument attached and no description of any transaction in which, as to this subject property and loan, we can ascertain how BONY Mellon became the successor to JPM Morgan Chase. Hence the documents in which BONY Mellon appears are not facially valid and are defective in terms of proof of title. This could be corrected by affidavit or any process that is allowed in the state where the property is located but it hasn’t been done on record, and there is no evidence to suggest that it has been done but is not recorded. The usual and acceptable manner of phrasing such a succession, if it were true, would be “as successor to JP Morgan Chase pursuant to that certain agreement of transfer by and between JPMorgan Chase (and /or other parties) and BONY Mellon dated July 6, 200X.” The absence of such description leaves the reader to pursue extrinsic or parole evidence to determine if the succession is documented and if so whether that documentation is facially valid. This is all absent.
  4. The succession suggests that it is in the role of trustee. There is no instrument attached and no description of any transaction in which, as to this subject property and loan, we can ascertain how BONY Mellon became the successor Trustee to JPM Morgan Chase. Hence the documents in which BONY Mellon appears as trustee are not facially valid and are defective in terms of proof of title. This could be corrected by affidavit or any process that is allowed in the state where the property is located but it hasn’t been done on record, and there is no evidence to suggest that it has been done but is not recorded. The usual and acceptable manner of phrasing such a succession, if it were true, would be “as successor to JP Morgan Chase, trustee pursuant to that certain agreement of transfer by and between JPMorgan Chase (and /or other parties) and BONY Mellon dated July 6, 200X.” The absence of such description leaves the reader to pursue extrinsic or parole evidence to determine if the succession is documented and if so whether the documentation is facially valid. This is all absent. The absence of a description of a specific trust and trust instrument is yet another factor that renders the instrument facially invalid, but theoretically correctible.
  5. This leads to a further question of extrinsic evidence being required. Other than by the use of parole evidence (outside the information contained on the document itself) the reader cannot ascertain the existence or description of a specific trust organized and existing under the laws of any jurisdiction. In addition, the issue of a transfer or change of trustees of a trust, if one can be found, is not supported by language such as “pursuant to the provisions of the trust agreement dated the 3rd day of May, 200Y in which the trust named ‘Structured Asset Mortgage Investment II, Inc. Bear Stearns ALT-A Trust’ was created under the laws of the State of New York”. Without such reference the facial validity of the instruments remains invalid although theoretically correctible. Without the knowledge of the legal existence of the trust being confirmable by public record, there is no support for the implied trust. Without support for the implied trust and the trust agreement creating it, there is no obvious support for how trustees could exist or be changed. Without support on the face of the instruments for how trustees of a trust could be changed, the description of the change of trustees is merely a declaration that is not supported by anything on the face of the document.
  6. JPMorgan is implied to have been the trustee of the potentially nonexistent trust. Once again the implied assertion leaves the reader to determine if the trust was created pursuant to the laws of any jurisdiction, and if JPMorgan was named as trustee for the trust.
  7. In either event both BONY Mellon and JPMorgan are described to be acting in a representative capacity on behalf of “holders… of pass through certificates” and not as “trustees” of any “trust.” The certificates are identified as Mortgage Pass Through Certificates Series 2004-12. The reference to being a “trustee” and the implied representation of the holders of certificates would be acceptable if the “holders” were described as beneficiaries. The extrinsic evidence often shows that such holders are not beneficiaries. This leads to the question of how and why there is representation of the holders, apart from the alleged trust, Is the representation implied from the trust agreement that is not described? Is the representation the result of some other trust or agency agreement? It is not possible to ascertain the answers to these vital questions without resort to extrinsic evidence, thus making the instruments relying upon such language, facially invalid.

Every state has statutory requirements for an instrument to be facially valid. A deed between Donald Duck and Mickey Mouse as Grantor and Grantee respectively would not be facially valid because both the grantor nor the grantee are fictitious names of cartoon characters and unless used as a egla fictitious name for an actual entity doing business under that name the document could not be corrected to become a valid document suitable for recording.

Yet county recorders are allowing the recordation of millions of documents across the country with exactly that defect. By allowing such documents to be recorded they are lending support to the legal presumption that Donald and Mickey are real people with rights to transfer interests in real property and even foreclose on real property. At the end of the chain of written documents someone holds paper that is recorded but based upon a chain of title with two large gaps in it — Donald and Mickey, and by the time the foreclosure occurs probably Minnie Mouse as well (or maybe Fannie or Freddie whose names are being used, just like the “REMIC trustees”, but who have no part in any transaction involving the subject loan).

Back to Real Property 101.

  1. Who is the grantor? If that cannot be readily determined from the face of the instrument the instrument is facially invalid.
  2. Who is the grantee? If that cannot be readily determined from the face of the instrument the instrument is facially invalid.
  3. What is the effective date of transfer? If that cannot be readily determined from the face of the instrument the instrument is facially invalid.
  4. What is being transferred? If that cannot be readily determined from the face of the instrument the instrument is facially invalid — or, in the case of a mortgage or beneficial interest in a deed of trust if the instrument declares a transfer but without the underlying debt, the instrument is facially invalid and unenforceable both because of state statutes regarding facial validity and the UCC Article 9 requiring value to be paid (see above linked article).
  5. What is the legal description of the property affected? If that cannot be readily determined from the face of the instrument the instrument is facially invalid.

An instrument that is not facially valid should be returned by the recording office with notes specifying what needs to be corrected. This vital step is being overlooked on all documents relating to foreclosures. If rules, laws and procedures were followed with regard to such documents there would not be any foreclosure or, if the corrections could actually be made, there would be no defense. It is in the valley between those two notions that all foreclosures based on “successors” are based.

By overlooking the obvious lack of clarity on the face of the documents county recorders keep creating a vacuum that the banks are only too happy to fill with MERS — an IT platform that is the opposite of tamper-proof allowing virtually anyone with a login and password to create the illusion of authority where none existed before. Hence the use of MERS and other systems to give depth to the illusion of facial validity.

The conclusion is that documents containing the language described above should not have been recorded.  The county recorder should have rejected such documents as being facially invalid, requiring additional documents to be attached, if they existed.

Such language is a substantial deviation from custom and practice as well as common sense and logic.  Custom and practice of the same banks that are listed in the language described above requires that they not accept such language without the additional documentation and confirmation of facts that are declared on the face of the instrument.  Common sense dictates that the reason why such custom and practice exists is that most fraudulent schemes involve written instruments in which various declarations are made that are untrue or lack support.  For purposes of recording, any declaration on the face of the instrument that requires the attachment or description of documents that are readily available in the public domain would be unacceptable, much as, for example, a deed without a signature.  The property must be described with precision (or later corrected by affidavit), the grantor must be described with precision (or later corrected) and the grantee must be described with precision (or later corrected).  Without the required corrections, the documents are facially invalid.

For purposes of case analysis, the absence of facially valid documents, even though they were improperly recorded, negates the potential use of legal presumptions arising from the facial validity of documents.  Therefore such documents should be rejected without proper foundation in connection with the use of such documents for any purpose, and the attempt to introduce such documents into evidence in any court or administrative proceeding.

In the case currently under analysis, this means that the proceedings in which the property was allegedly foreclosed, were themselves all improper and based upon invalid terms.  Whether this renders the proceedings void or voidable depends upon case law and interpretations of constitutional due process.

However it is safe to say that based upon the above analysis, it is obvious that all such documents including the deed upon foreclosure are defective in several material respects.  Therefore, our conclusion is that the current title chain in the county records regarding this property is at best clouded.  The procedures for correcting clouded title vary from state to state and are subject to both federal and state laws.  Individual research on each case in each state is required before taking any action.

The view proffered by the banks would require them to accept declarations of fact from potential borrowers without any indicia of truth or reliability. It is opposite to the manner in which they do business. Currently they have it both ways, to wit: for purposes of borrowing you must submit documents that are facially valid without reference to external evidence and which can be easily confirmed but for purposes of foreclosure, none of those conditions apply. 

 

Rogue REMICs? 2016 Study Reveals Lack of Standing

I read a lot. I came across this article today published in 2016. Nobody has paid attention to it but as far as I can tell on first skim, the author has both coined the name “rogue REMIC” and described it well enough to come to a conclusion, to wit: everything about them is a scam and no legal standing exists with respect to them. I would only add that the author is incorrectly assuming that any securitization took place or if it was, as Adam Levitin coined the phrase, “Securitization Fail.”

see campbell – capstone inquiry into rogue remics

Significant quote from the abstract of the article:

The business of privatized mortgage loan securitization (Real Estate Mortgage Investment Conduits or “REMICS”) is so arcane and specialized that few people outside of that realm of investment knowledge understand, or even care to understand how loan securitization functions. However, if the difference between a legitimate REMIC and a Rogue REMIC is adequately explained, one can begin to understand why Rogue REMICs must be exposed as unlawful enterprises whose affiliates are not only able to disregard existing federal securities and tax laws, but are also able to circumvent state and local foreclosure laws at will. [e.s.] These ongoing violations result from the intentional and commonplace shortcutting of the proper mortgage loan securitization processes during the several years preceding the 2008 financial crisis. This Inquiry will not focus primarily on how and why Rogue REMICS violate federal tax and securities laws [e.s.]; although those aspects are part of the discussion by necessity. I will argue that all Rogues lack the perquisite legal standing to prosecute both judicial and non-judicial foreclosures. I will present compelling evidence that, in the aftermath of the 2008 financial crisis, foreclosures by Rogues may have exceeded 10% of all foreclosures. I will further argue that county officials may be violating state laws by recording the documents that impart false legal standing to the Rogues. I will conclude with a suggestion to homeowners on how to proceed if a mortgage assignment to a Rogue turns up in the local County public records. [e.s.]

And then there is this:

federal government regulators have no will to criminally prosecute the Rogues for financial crimes against individual homeowners even though the crimes are being committed by nationally-chartered investment banks. And so individual homeowners are left to fend for themselves against these behemoths. As a result, a hodge-podge of civil cases in State courts have created such a plethora of conflicting decisions that, in the aggregate, only serve to obfuscate the overriding principle of standing.

and this:

If a borrower’s loan did not leave the “warehouse” timely (if ever) to be incorporated into any REMIC, which includes memorializing that transfer in the local county, the REMIC trustee cannot create standing years later by filing a bogus assignment. As Levitin (2010) explains that “Securitization is the legal apotheosis of form over substance, and if securitization is to work it must adhere to its proper, prescribed form punctiliously” (p. 3).

and finally diagrams of a Rogue REMIC which is an empty pool (something I have been railing about for 12 years). The author describes it as

“A REMIC in name only. A shell of financial instrument. It never had any mortgages assigned to it when it was created and, years later, it is now closed to the introduction of new loans.”

Reaching the conclusion

homeowners were unwitting participants in an elaborate pump and dump scheme to deceive and profit from unwitting REMIC investors. By failing to record assignments during the warehouse phase of REMIC creation, the big investment banks created REMICs that existed in name only; then sold shares of them to the public as if they were the real thing.

And then they foreclosed on homeowners using the fake trusts as the name of the claimant, never revealing the true parties in interest because that would expose them to investigation aid discovery in which their lies would be obvious.

“True Lender” Lawsuits Causing Business and Legal Headaches for Banks

hat tip Bill Paatalo

You can’t pick up one end of the stick without picking up the other end as well. Or, if you like, you can’t eat your cake and still have it.

Banks used third party intermediaries all the time, and in non-mortgage loans they are considered as the real lender for purposes of being able to charge the interest rate stated in the consumer loan agreement.

But the situation is quite different and maybe the reverse in most alleged mortgage loans for the past 20 years. Usually a non-bank funding source was using a third party intermediary to originate the loan. Hence the term “originator” which in reality means nothing more than “salesman.”

The actual party funding the loan is not disclosed at all, ever. In most cases it is an investment bank which is different from a commercial bank, but the investment bank is not funding the loan with its own money but rather using money diverted from the advances of investors who thought they were purchasing mortgage backed securities.

In other words the investors think they are getting certificates that are backed by mortgage loans when in fact, in most cases, the certificate holders have no claim on any debt, note or mortgage executed or incurred by a borrower.

Since the loans are mostly originated rather than purchased by a Trust as advertised to investors, the actual ledner is neither disclosed nor shown on any of the closing documents possibly because it is impossible to determine the identity of a “Lender” whose money was  used from an undifferentiated slush fund in which money from investors is intermingled. Information ascertained thus far indicates that the slush fund includes money from the sale of certificates in the name of multiple nonexistent trusts.

Hence the issue of who is the “true lender.” But the Bank’s position in court in unsecured loans may be its undoing when it pretends to litigate a loan in which it was never actually a party to the loan transaction or the loan documents.

==============================
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. 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.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 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.
==========================

see https://www.americanbanker.com/opinion/a-remedy-for-true-lender-lawsuits-already-exists

So if you think about it, you can explain why most documents in foreclosures are pure fabrications reflecting nonexistent transactions. If you look closely at these documents you will nearly always be able to ascertain a gap which makes the documents NOT FACIALLY VALID. Or, in the alternative, if the documents are facially valid, it is because of forgery, robosigning and fabrication.

Such a gap might be the oft-used “attorney-in-fact” designation. Without reference to a specific power of attorney and a warranty that it has not been revoked and that it covers the execution of the proffered document, the reference to “attorney-in-fact” is meaningless. Hence the document signed by Ocwen as attorney in fact, is really just a signature by Ocwen who is not in the chain of title, making the document facially invalid. In most cases Ocwen (or whoever is the claimed “servicer” is executing as attorney in fact for a real entity (like US Bank) with a nonexistent role — trustee of a nonexistent trust. Remember that US Bank is a real bank but is not acting in a real role. 

By attacking the facial validity of such false documents you are also attacking jurisdiction, which is a deal killer for the banks. Bank lawyers are coming to their own conclusions — independently of their arrogant bank clients and independently of the foreclosure mills who blindly follow whatever instructions they receive electronically. Bank lawyers see trouble on the horizon coming from TILA REscission, and the lack of REAL facial validity of the documents being used in foreclosure which are at odds with the documents used to sell derivatives, synthetic derivatives and hedge products all based upon the same loans.

Here is a quote from the above-referenced article on “true lender lawsuits” brought by borrowers who seek to avoid interest from a non-bank as being  contrary to state law:

As a general rule, the fact that a bank subcontracts marketing, loan servicing or other “ministerial,” or nonessential, lending activities to third-party service providers has no effect on the bank’s ability to export its home state’s interest rate under federal law. To this end, the Bank Service Company Act expressly authorizes banks to utilize the services of third-parties. In short, under the federal banking laws, there is no “tipping point” beyond which a servicer becomes the lender in lieu of the bank — so long as the bank remains the party that is performing the primary, or “non-ministerial,” lending activities laid out in the three-part test, the bank is the only lender.

Yet federal bank agency guidance is silent regarding true lender risk, despite the growing number of states in which such lawsuits have arisen. The FDIC published draft third-party lending guidance in July 2016 that had the potential to provide some clarity, but it is still pending. Moreover, the guidance merely observes in a footnote that “courts are divided on whether third-parties may avail themselves of such preemption.”

As to whether a bank’s status as the lender could be undermined by its use of agents, the guidance says nothing. This silence is problematic because, as things stand, one could evaluate the facts of the same loan program and reach opposite conclusions with respect to the program’s status under usury laws depending on whether federal interest rate preemption rules or judge-made, state true lender rules are applied.

Older Forensic Title Analyses Need Updating — Even Ours

 A recent request from an old client brought to mind the changes that have occurred, as in her case, since 2011 — more than 7 years ago.
A quick review indicates that the facts were correct but the conclusions need tweaking. And the title record should be updated. Many new laws and case decisions have occurred since that report was finished and many new facts have been revealed about these older transactions.

For example it now appears that our assumption about the flow of payments was incorrect.
  1. Your payments were being made to a subservicer who was forwarding money on a separate contract to a Master Servicer.
  2. The Master Servicer then authorized, in its sole discretion, third parties to make certain payments to investors who had purchased certificates issued in the name of a trust, which turns out to not exist.
  3. The trust name was being used as a fictitious name for the named underwriter of the certificate offering. But the actual transaction was not an underwriting; it was simply a sale by the party posing as underwriter (implying it was working for a third party, presumably the nonexistent trust).
  4. By contract, the investors purchased their right to receive money arising out of a promise to pay issued by the named underwriter (i.e., seller) that was unrelated to the terms of repayment on any note.
  5. And most importantly the investors waived any right, title or interest to the loans, debts, notes or mortgages.
  6. Thus you can see that actions undertaken in the name of the holders of certificates or a REMIC Trust or the Trustee of a REMIC trust are all fabricated, to hide the fact that the obligation of the borrower has been transformed into an unsecured obligation to pay intermediaries who converted the investors’ money and thus claim to be principals entitled to enforce a debt in which they had no investment.
  7. Most of the documents uploaded to SEC.gov, if at all, are either unsigned or incomplete (or both) lacking a mortgage loan schedule or any reference to a particular loan. Such documents are ONLY uploaded to SEC.GOV which has no power to charter or approve any entities nor their filings, as long as they have been granted access to upload documents. Their existence on SEC.GOV means nothing.
  8. An assignment without actual transfer of the debt is without effect. In virtually all cases involving false claims of securitization no payment of any kind was ever made by any party in the chain for the origination or purchase of the loan. Our Case Analysis examines the issues arising from transfer of a promissory note which can cause legal presumptions to arise concerning ownership of the debt and transfers thereof.
  9. Analysis of the fictitious “trust” documents reveals the absence of essential elements of a trust hence leading to the conclusion that no actual trust was intended notwithstanding the illusions and implications contained in the documents themselves and the representations of attorneys and representatives of “servicers” to the contrary. Upon case analysis (apart from title analysis contained in our TERA report) the following basic elements of a trust are usually absent.
    1. Complete signed trust instrument
    2. Trustee with powers to administer the affairs of the trust and the trust assets
    3. Trustor/settlor creating the trust.
    4. Beneficiaries of the trust
    5. RES: anything that has been entrusted to the named trustee to manage on behalf of the beneficiaries
My suggestion, if the issues are still pending, is that you order the current TERA and the PDR PLUS, which includes a recorded CONSULT.
CLICK HERE TO ORDER CONSULT (not if you order PDR)
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR BASIC or more probably the PDR PLUS, in your case — includes CONSULT)
%d bloggers like this: