Interesting NY Decision on Acceleration: U.S. Bank N.A. v. Gordon, 176 A.D.3d 1006 (2d Dept. 2019)

 “failure to pay this delinquency, plus additional payments and fees that may become due, will result in the acceleration of your Mortgage Note. Once acceleration has occurred, a foreclosure action . . . may be initiated.”

the Notice of Default stated that “[t]o avoid the possibility of acceleration,” Defendants were required to make certain payments by a specific time, or ASC “will proceed to automatically accelerate your loan.” (Emphasis added).

see https://www.jdsupra.com/legalnews/ny-appellate-court-holds-default-letter-29981/

So it seems that in New York a notice of intention to accelerate or any notice that says that the supposed “lender” will accelerate is not the same as an actual acceleration. Actually that makes sense because any other interpretation would defy the intent of the notice of default. the notice of default is for the purpose of giving the borrower notice that unless they bring their payments up to date, the entire loan will become due.

The inherent logical and legal problem with this decision is that it is inconsistent with Florida (see Bartram case) and other states who made decisions as to implied “deceleration” for purposes of evading the effects of the statute of limitation. In fact, this very decision uses such “logic” to arrive at the conclusion that the “lender” is not barred because there was no acceleration. There was only an expression of an intent to do so. therefore any claims arising from acceleration could not arise.

In short the courts are speaking out multiple sides of their mouths.

On the one hand they say that deceleration which has never been claimed or noticed occurs upon the rendition of an order dismissing a defective foreclosure action and that the statute of limitations does not run on the balance where the “lender” has  given “notice” that it is intending to accelerate. The courts have thus “interpreted” a legal fiction into practical existence contrary to the rules of law. The acceleration is rendered void upon losing in court. There are various possible criticisms of such doctrine but the best one I think is “nuts.”

On another hand (or mouth) they are approving of “interpretation” of a notice of default declaring an intent to accelerate as actual being the acceleration for purposes of foreclosure. This is also crazy. If the notice of intention to accelerate was the actual acceleration then the notice would be fatally defective pursuant to paragraph 22 — which requires notice of default and an opportunity to cure it without paying the whole balance. So “intent to accelerate” cannot be the same as declaring acceleration since it would violate both law and contact. yet there it is in most courts where the “intent” is sufficient (according to most judges) to be an actual declaration of acceleration.

And still on another hand (or mouth) they are saying that acceleration does not occur where the lender declares only an intent to accelerate. This again is insane in the context of the foregoing “doctrines” imposed by the courts.

And of course the declaration of intent is contained in a “notice of default” that is a complete legal nullity, to wit: it is declared on behalf of U.S. Bank and a trust neither of which have any interest in the loan.

In short, the courts are willing to bend every rule, break any logical flow, and divert every rule in order to rule in favor of nonentities just like this case. U.S. Bank had no right, title or interest in the loan, debt, note or mortgage and neither suffered any financial loss for nor was it exposed to any default  declared or otherwise. And neither did any entity supposedly or presumably represented by U.S. Bank.

Note that acceleration can be accomplished through filing of a lawsuit where acceleration is declared. But in nonjudicial states, this is not possible if nonjudicial foreclosure is pursued.

Foreclosure Defense: To BKR or not to BKR, here are the issues in Bankruptcy

The bottom line is that Chapter 7, 11, or 13 bankruptcy can be effective tolls in defending against unlawful foreclosures, but hey are not magic bullets. Like all legal procedures attempting to navigate them without a licensed legal professional who is a known quantity in Bankruptcy Court, is at the very least hazardous.

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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.
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I have a client in the service of our country for whom I am rendering services with minimal charges. He asks me now about filing a bankruptcy petition. LIke all litigation strategies contesting unlawful foreclosures, success really depends upon either a successful discovery strategy, a successful cross examination of the robo witness, or both. Here is what I wrote to him:

First I need to coordinate with your BKR attorney. Make absolutely certain that you put nothing on any of your schedules that could be construed as admitting that  there is a valid secured lien in favor of anyone. Second, you might not need to file a lawsuit, because they will probably file a proof of claim — and you can object to the proof of claim. We often trip them up exactly there. If they don’t file a proof of claim (theoretically they are are not required to do so if they claim to be a secured creditor) you can file one for them in which you state that nothing is owed and there is no lien in favor of the named creditor.

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But if your schedules are done correctly (contrary to virtually all software used by BKR attorneys) they will be forced to file a proof of claim, because you will be listing the house as an asset that is collateral for a loan, if it still exists, that may be owned by John Doe.
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They might also file a motion to lift stay (MLS). That gets tricky because the threshold on such a motion is whether there is ANY color of a claim that could be pursued in the state courts or by nonjudicial foreclosure and subsequent possession. Assuming we are right that the current claimant has no claim, the lawyers and/or servicers will produce fake documents that are facially valid, even though they are totally fake.
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In most instances the facially valid documents are taken as sufficient color of title or claim such that the stay is lifted. While this is often treated by both attorneys and judges as a judgment on the merits, it is not. It is merely a determination by the bankruptcy court that in the interest of judicial economy and the bankruptcy estate, the matter should be resolved under state law, rather than Federal bankruptcy law.
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Depending upon how the wind is blowing, you can file a lawsuit. You can do this in one of three ways: (1) an adversary lawsuit in the bankruptcy court seeking declaratory, injunctive or supplemental relief, (2) a collateral action in state court or (3) a collateral action in Federal court.
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The key to any of this is getting discovery. First you serve interrogatories, requests to produce and requests for admissions directed at who owns the debt by reason of having paid for it. The added implied component is that they paid a party who owned the debt by reason of having paid for it. And the further implied element is that the claimant paid value for THE debt not just any debt, such as that arising solely from the note itself which may or may not be evidence of the debt.
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Then you file a motion to compel if they don’t answer or object. That is standard fare for the foreclosure mills. If they do have a confirmable money trail you are most likely going to lose, so if you get to that point, I think it would be wise to settle. While there have been some judges who simply won’t give anything to homeowners and who think that all homeowners in foreclosure are deadbeats, my experience is that the overwhelming majority of judges will grant an order to compel answers to the discovery propounded to the claimant.
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The big mistake made by pro se litigants is that they snatch defeat from the jaws of victory by failing to file a motion to compel and then failing to file a motion for sanction seeking to strike the pleadings and enter judgment for the homeowner. the plain simple fact is that in most cases the entire foreclosure case rests upon a paper trail that diverges from the money trail. If you are successful, at a minimum, you will be undermining the prima facie case that the claimant is pursuing foreclosure for restitution of an unpaid debt owed to the claimant — and you will win at least 65% of the time (based upon my experience).
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The reason for the high percentage of cases in which the foreclosure mills lose the case is simply that they don’t have a real client, a real claim or a real claimant. Their entire case is completely dependent upon presumptions arising from the facially validity of fake documents.
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As I have seen repeatedly, possession of the note is by the law firm and the law firm is naming a claimant as client with whom they have had no contact nor any retainer agreement. It is all based upon plausible deniability of everything blows up. And the lawyers under current construction of litigation privilege seem to have total immunity for pushing a revenue scheme that includes the law firm.

To Appeal or Not To Appeal — What was the Question?

Making a mistake is not appealable unto itself. You must show that the error caused an improper decision. And by “improper” I mean that there is no way under existing law that the decision was based upon the law or, if you wish to pursue a still higher standard of review, that the law as applied violates constitutional protections.

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

So the judge is quite certain that she has no sympathy for your position. Nonetheless, if you plan to appeal, and the rules of Court permit it, it may be to your advantage to file a motion for rehearing which focuses in on one or two points that could be right for appeal. This focuses the attention of the clerk for the appellate judge who orders the case to be put in one pile (affirmed) or another (review). That one decision — usually made by a clerk — either gives air to your appeal or kills it.

Remember that an appeal is solely directed at the question of whether or not there was any basis upon which the trial court could have entered the final judgement. it is not a retrial of the case. It is an entirely different inquiry looking for “fundamental error.” As long as the court record has anything in it that supports the ultimate decision it is extremely likely that the judgement, even if disliked, will be affirmed.

FAST FACTS: 1 in 6 appeals are successful to any degree. Of those more than half are in criminal cases where the stakes are perceived as much higher than civil cases. That means that less than 1 in 12 civil appeals will accomplish anything. And of the ones that accomplish something only a fraction are actually reversed with judgment for the losing side in the trial court.

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The fact that nobody else would have decided the case that way is not a basis for appeal. Bias is not a basis for appeal either unless the record clearly shows that the judge had a direct interest in the outcome of the case.
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An appeal is about whether anyone sitting as Judge could have decided the case as written in the findings of fact and law. That is different from the case at the trial level, which is about who should win. Appeals are about who could win. If the party who won at trial is party who could win under existing law, the decision will almost always be affirmed.

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The question in your case is whether or not the trial court appropriately applied legal presumptions to arrive at the conclusion that the plaintiff actually owns the loan, and was therefore an injured party, and was therefore entitled to foreclosure. The first such question focuses on whether there were any legal presumptions to be applied, and if so, for whose benefit they should be applied.
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The presence of facially valid documents definitely triggers the court discretion on whether to apply legal presumptions of fact. So the remaining questions relate to whether or not there are fatal inconsistencies in the facially valid documents or whether evidence is in the court record that requires rejection of the legal presumption of fact. A rejection of the legal presumption of fact means that the party relying on such presumptions must actually introduce evidence of the facts that had previously been presumed.
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If argued well in trial court, the judge can be educated as to the effect of legal presumptions and might slow the inevitable outcome once the presumptions are applied.
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As Dean Wigmore has explained, ” the peculiar effect of a presumption “of law” (that is, the real presumption) is merely to invoke a rule of compelling the (trier of Fact) to reach a conclusion in the absence of evidence to the contrary from the opponent. If the opponent offer evidence to the contrary (sufficient to satisfy the judge’s requirement of some evidence), the presumption disappears as a rule of law, and the case is in the (factfinder’s) hands free from any rule.” As more poetically the explanation has been put, “(p)resumtions… may be looked on as the bats of the law, flitting in the twilight, but disappearing in the sunshine of actual facts.”
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In the absence of either legally permissible presumptions or real evidence, the plaintiff fails on the proof, to wit: it fails to satisfy the requirements for a prima facie case.
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So the question here needs to focus on the Essential Elements of the Prima facie case. And the essential element above all others is whether the case has produced a judgement that will be used to satisfy a just debt owed to a party who paid value for it.
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While there are plenty of good strong legal and logical arguments to challenge the existence of the debt, I know of no instance In which court has been the least bit receptive to that narrative. It leaves open the unanswered question about what happened to the debt and does that absolve the borrower of all liability to pay anything.
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You don’t need to prove where the money is going. You only need to raise sufficient questions about the evidence such that the legal presumptions should have been discarded.
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In your case, with the legal presumptions discarded, the Plaintiff would have had to introduce credible evidence that it was the owner of the debt in order to establish ownership of the mortgage, which in turn is needed to prove authority to foreclose. The Plaintiff is allowed to rely completely on legal presumptions if the case is based on facially valid documents — although a complete absence of actual evidence is frequently the excuse for an appellate court to question and then reverse the trial court’s decision.
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In your case the reliance on legal presumptions has led to an attenuated conclusion of fact that could be challenged on appeal. As per the Court’s finding of fact, the mortgage was transferred several times. At one point it was transferred to U.S. Bank as trustee for a trust and then, after that transferred to Bank of America.
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An instrument purporting to transfer a mortgage without a contemporaneous transfer of the debt is a legal nullity in all U.S. jurisdictions. The transfer of a debt occurs ONLY upon satisfaction of one condition — that value has been paid  by the transferee to the transferor who had in turn paid value for the debt. That is universally true. It requires proof of payment OR it requires sufficient evidence to raise the presumption that payment was made.
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In your case the Judge has expressly ruled that value was paid. Since there was no evidence of any proof of payment there can only be one possible explanation for such a finding — i.e., that the court was relying upon presumptions of fact arising from facially valid documents.
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Transfer of the debt is presumed when the original note is transferred because it is presumed that the original note is evidence of the debt and should be accorded the effect of title to the debt. Since promissory notes are cash-equivalent instruments, there is no rational reason why a note would be transferred without payment; hence payment is presumed.
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This presumption is defeated only if the court record demonstrates that there either was no financial transaction in which the debt was acquired or where the record raises sufficient questions such that the presumption should not have been applied. This is exactly where the courts frequently commit error but not necessarily reversible error.
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In most loans that were ever subject to claims of securitization, the origination of the loan took place between an “originator” and the borrower, not the actual lender and the borrower. In plain language that means that the since the originator had never paid any value for the debt, they never owned it and therefore the mortgage naming the originator was void, which in turn means that any assignments of the void mortgage were also void.
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This precisely why the Truth in Lending Act says that table funded (third party funded) loans are against public policy. But the Truth in Lending Act does not expressly state that such loans are void, meaning that acting in a representative capacity at a loan closing without the knowledge of the borrower is frowned upon but not explicitly outlawed.
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So we must accept the idea that somehow the mortgage is valid but that does not address the question of who can enforce it or transfer it. The answer to that question in all jurisdictions is that it is only the party who has suffered a financial injury resulting from nonpayment. That is both a constitutional and statutory requirement.
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In order to suffer financial injury from non payment you must have paid value for the loan. Payment of value is established upon proof of payment or a presumption that such payment was made.
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The problem in your case is that the Judge presumed that such payment was made not just because she thinks she was allowed to do so, but because she actually believes it. She is assuming that even if there were “technical” irregularities or mistakes, that the foreclosure will result in payment to the party (ies) who paid value for the debt. And the problem with that, as we all know or at least suspect, is that she is wrong.
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The money will go to players who were angling for revenue and the parties who actually advanced the money for the origination or acquisition of the loan are long gone. They won’t see one cent from the sale of the home.
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The problem for you is therefore whether the judge was rightfully exercising her authority, jurisdiction and discretion to use legal presumptions in lieu of legal proof by proof of payment. You can’t introduce new evidence on appeal. So you must rely entirely upon what is in the court record or absent from it. And it is not enough to be correct; you must be convincing to a panel of judges who at best don’t care whether you win or lose. 

Dancing with ghosts. The banks have no shame in contradicting themselves

The bottom line is that foreclosures are all about collecting on unpaid debt. The only party who can initiate foreclosure proceedings that will force the sale of title to the home and then forcibly dispossess the homeowner is a party who owns the debt, is injured by nonpayment and who receives the proceeds of foreclosure as restitution for an unpaid debt.

In a pending case the attorneys for the “bank” argue that ownership of the debt is irrelevant.

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

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.
========================
Article 9, §203 of the Uniform Commercial Code as adopted by the statutes of the State of Hawaii simply says that a condition precedent to enforcement of as security instrument is payment for the debt. Opposing counsel has proposed a daring, inventive argument to avoid producing evidence of something that he should be anxious to demonstrate: this his client is an injured party seeking restitution. Instead opposing counsel has advanced argument intended to divert the court’s attention into Dickensian (see Bleak House, Charles Dickens, serially published March 1852-September 1853 ) meandering in which the point of the proceeding is totally lost on lawyers who no longer remember the reason the matter is in court.
The statute merely states as matter of law what is already axiomatic: in order to bring a case to court the claimant must be an injured party and present an actual controversy wherein some act of the accused has produced such injury. Opposing counsel doesn’t like that apparently because he does not represent an injured party and yet still seeks the remedy which thus will result in the generation of unaccountable revenue to a party simple because they asked for it.
In the case at bar the defendant has been sued in foreclosure, presumably for restitution of an unpaid debt. She asks in discovery whether the Plaintiff is actually the party who has suffered an injury by way of asking for evidence of who paid for the debt and when that occurred. In another decade counsel for the foreclosing party would have happily obliged, thus removing any likelihood of failure of the action. But here, counsel resists, saying that such a request is not warranted since the action is not dependent upon on ownership of the debt. It seems to be the argument that the mere possible existence of the debt is sufficient for anyone to enforce it.
Opposing counsel is essentially objecting as a substitute for filing a motion to dismiss or summary judgment. Despite the convoluted and erroneous arguments proposed by opposing counsel, the fact remains that discovery is allowed on any subject that could lead to the discovery (hence the name “discovery”) of admissible evidence. Since foreclosure is by definition a remedy for the recovery of debt, it is impossible to fathom an argument against requiring the suing party to answer questions about that debt. Yet that is exactly what opposing counsel seeks to do with smoke and mirrors. Defendant is entitled to an order requiring a good faith factual answer because there is no basis to deny her request or sustain any bojection of opposing counsel.
While it therefore is not necessary entertain the “merits” of the supercilious argument advanced by opposing counsel, the following is submitted in an abundance of caution.
Thus the first erroneous element of the argument of opposing counsel is that it ignores a simple fact, to wit: the note is one contract and the mortgage is another separate contract. Opposing counsel is seeking to mislead the court into ignoring the mortgage contract and laws concerning conditions precedent and standing to enforce the mortgage contract which is a security instrument, despite arguments to the contrary offered up by opposing counsel. If a mortgage is not a security instrument then it will come as unwelcome news to the holders of tens of millions of mortgages on real property.
In practice there are some presumptions that arise from possession and rights to enforce the promissory note in residential mortgage transactions; but those presumptions can be rebutted when, for example, the presumption of ownership of the loan is rebutted by evidence or inference or legal presumption — i.e., a showing that the claimant is neither the owner of the debt nor representing any owner of the debt who paid for it — or by undermining the use of the legal presumptions arising from their claims of possession, ownership or rights to enforce the promissory note. Those legal presumptions are those that allow a court tor reasonably conclude that the claimant is the owner of the debt and therefore would be receiving restitution for an unpaid debt to satisfy an unpaid debt due to the claimant.
Opposing counsel seeks to remove the very purpose of such legal presumptions, arguing instead that ownership of the debt is irrelevant and that anyone can initiate proceedings to forcibly divest title and peaceful possession from a homeowner merely by showing possession of the promissory note — thus wholly ignoring the conditions precedent to enforcement of the mortgage. The question of whether the proceeds of a foreclosure sale would go to pay anyone who had suffered actual economic loss from nonpayment is thus rendered irrelevant. Opposing counsel wishes this court to divert from current laws of enforcement of mortgages to new “interpretations” that only require certain conditions that allow for enforcement of the promissory note in residential mortgage transactions while ignoring any laws regarding the actual mortgage.
The fundamental flaw in their argument is that if they were right, then a few other things would also be true. The motive is clear — to provide a legal theory in which ownership of the debt is completely divorced from enforcement of the mortgage. This opens the door to moral hazard and outrage. Foreclosure, which is enforcement of a security instrument, is widely considered to be the most severe penalty under civil law — the equivalent of capital punishment in criminal law. It results in the loss of homestead property. Opposing counsel would have this court believe that no statutory law controls the conditions precedent to initiating a foreclosure proceeding. Such an offering is both absurd and dangerous.

First, the result of their intentionally misleading argument would be that there is no provision in the entire Uniform Commercial Code governing the conditions in which a mortgage could be enforced. This argument, wholly specious, produces the anomalous result of having no statutory authority setting forth standards for foreclosure and leaving it entirely to interpretation of contract law. If this were true, then foreclosure law would be entirely common law doctrine and would lead to wildly inconsistent results.
This is not the case. Foreclosure law is consistent in all U.S. jurisdictions precisely because the standards are the same, to wit: only the owner of the debt can authorize initiation of foreclosure proceedings because only the owner of the debt is an injured party arising from nonpayment. Opposing counsel is attempting to alter this paradigm and  enable virtually anyone with the right information to bring a foreclosure action, pocket the proceeds, and divest the homeowner of ownership and peaceful enjoyment of their home. Foreclosure is not and should not be an opportunity for entrepreneurs to generate revenue. Foreclosure is intended, by statute, to be strictly limited to a remedy (restitution) for an unpaid debt. Opposing counsel seeks to expand the remedy of foreclosure from restitution for an unpaid debt to the owner for the debt to a whole new concept — generation of revenue without regard to the owner of the debt.
Second, their argument is disingenuous. They are trying to get the court the court to assume that there is no UCC provision under Article 9 for enforcement of a security instrument against the owner of real property while at the same time they seek to use the UCC provisions under Article 3 to support legal presumptions that they are in fact owners of the debt and authorized to enforce not only the promissory note, which is governed by Article 3 but the mortgage which they say is not governed by anything. Thus they invoke the UCC for their purpose of invoking foreclosure procedure while at the same time they deny the application of the UCC to the actual enforcement of the mortgage.
Hence they seek to shift the focus from enforcement of the mortgage to enforcement of the note. In other words they want it both ways, to wit: they want the legal presumptions under Article 3 which removes any obligation to prove payment for the debt payment with evidence but they want to remove any possibility of rebutting those presumptions as being irrelevant, because now under their theory they don’t need to be or represent anyone who owns the debt by virtue of having paid for it.
Thus anyone who claims to possess the note and have the status of someone who could enforce it would also automatically be conclusively presumed to be able to enforce the mortgage. According to the argument proposed by opposing counsel, the note should be converted from being considered evidence of the debt to actually being the debt and the facts be damned. If someone else paid for the debt, they are automatically excluded from the foreclosure process — which means that the one party who actually might have suffered from nonpayment by the borrower gets none of the proceeds.
Hence the basic premise behind the argument of opposing counsel is to undermine existing law and replace it with a haphazard set of possible interpretations.
Next look at their convoluted attempt to state that Article 9 does not cover real estate transactions.
First, looking at the simple wording of Article 9, §203 UCC, if there was meant to be an exclusion or exemption, it would be there. No such exclusion or exemption exists. The argument of opposing counsel consists entirely of twisting other provisions of UCC, as adopted by the laws of the State of Hawaii, to mean that the law does not mean what it says when it relates to a residential mortgage. Without ambiguity, the court has no power to “interpret” the statute to mean something other than what is says. Yet opposing counsel seeks to have this court interpret the statute as being irrelevant thus rendering moot the entire concept of a present controversy, legal standing, and public policy.
The rest of opposing counsel’s arguments are rebuffed, rebutted and rejected by his own quotation from Article 9 §308 UCC which states as follows:
“(e) [Lien securing right to payment.]

Perfection of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage, or other lien on personal or real property securing the right.”

In plain language, the statute defining perfection of as security instrument includes the word “mortgage,” which is defined in Article 9 § 102 as “(55) “Mortgage” means a consensual interest in real property, including fixtures, which secures payment or performance of an obligation. “Security Instrument” is defined in Article 9 § 102 as “(74) “Security agreement” means an agreement that creates or provides for a security interest” and “secured Party is defined in Article 9 §102 as

“(73) “Secured party” means:

(A) a person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;

(B) a person that holds an agricultural lien;

(C) a consignor;

(D) a person to which accountschattel paperpayment intangibles, or promissory notes have been sold;

(E) a trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for; or

(F) a person that holds a security interest arising under Section 2-4012-5052-711(3)2A-508(5), 4-210, or 5-118.”

Opposing counsel attempt to thread the needle by pointing to only one of six possible situations in which the rights arise of a “Secured Party.” A mortgage clearly qualifies as a security interest, as banks and attorneys for banks have argued for centuries. Their position on this issue has been constant and it has been codified into state law that is consistent throughout all U.S. jurisdictions. They have always been right, until they said they were not right.

For all of the above reasons the objections of plaintiff should be overruled, the Plaintiff should be directly ordered to answer the queries of the Defendant and failing that, the Defendant is entitled sanctions and the legal presumption that the Plaintiff is not an owner the debt, not a secured party, has not paid value for the debt, and this does not qualify as an injured party.

While We Were Sleeping: Remote Online Notarization is Becoming a Reality in Florida effective 1/1/2020

see https://www.floridabar.org/the-florida-bar-journal/danger-will-robinson-the-new-frontier-of-remote-online-notarization-and-electronic-wills/

I knew this was planned. But frankly I didn’t pay close attention. When the initial plans for electronic signatures were announced 10 years ago, we collectively convinced President Obama that the law as written made it too easy to fabricate documents and then have them be declared facially valid — thus raising legal presumptions about the document and its contents.

Under the new law in Florida and I presume in other states, notarization of documents for recording in county records can be accomplished electronically. The banks have lobbied hard for this and have done a lot of PR to pave the way for this law as reflecting “progress.”

The problem is that this greases the slippery slope on which the banks unleash a torrent of fabricated documents creating legal presumptions of fictitious facts — leaving homeowners to defend nonsensical allegations without the benefit of requiring the claimant to prove actual facts for its prima facie case.

Dean Wigmore — the man whose name is equated with the law of evidence — said that legal presumptions were like bats that fly around and then disappear in the light of actual facts. For nearly 20 years homeowners have been fighting bats in the belfry.

Those that persisted and had the money to contest illegal foreclosures mostly won simply because the legal presumptions were rebutted, leaving the foreclosure mill with no actual facts to present because there were not actual facts that favored their position. None of the foreclosures in which a supposedly REMIC trust was involved ever involved any party who had paid value for the debt as required by state statutes adopting Article 9 § 203 of the Uniform Commercial Code making it a condition precedent to filing a foreclosure.

The assumption or presumption has always been that the named Plaintiff existed, and that it must have paid value for the debt. But they never did.

Most homeowners (96%+) were required to walk away because they lacked the resources of time, money and energy to contest the forced sale of their homestead by actors in a fraudulent scheme for revenue instead of any actor would could obtain restitution of an unpaid debt through a real foreclosure.

The simple answer is that the investors were the only ones who paid value but they never got title to the debt, note, or mortgage. This created a vacuum in which the investment bank pretended to own the debt and then act through surrogates to claim foreclosure without turning over the proceeds of foreclosure to the investors. It was a plain fraudulent revenue scheme.

The Florida legislature has now made it far easier for the banks to continue making money on actions that are simply labelled as foreclosures. This act enables the foreclosure mills and document fabricators to not only speed up the notarization process but also create a gap in accountability for errors, omissions and fraudulent content. It’s all happening online.

Judges are going to be required to treat notarization as presumptively valid when in fact the notary was a robo notary and the online process is fully automated behind the scenes. Thus the Florida legislature has continued and expedited the current process by which investment banks, acting through conduits or surrogates, sell the house, take the money and run. Not a penny is returned to investors who bought “certificates”.

Servicers: More Than One Set of Books

Since we know that most documents presented in foreclosure are inconsistent with other “securitization” documents it is only natural to suspect, assume and then corroborate that there are inconsistent sets of accounting records that are maintained to report different outcomes to the courts, the borrowers, the investors and the holders of contracts between the investment bank and the investors.

Lawyers and pro se litigants are probably overlooking this and should not simply notice the “Plaintiff” to produce a corporate representative at deposition. They should subpoena duces tecum all the documents, accounting records and correspondence relating to the subject loan. And they should subpoena duces tecum the servicer to produce the director, officer and employees with the most knowledge about each document.

As I have previously stated on these pages, this will reveal the “rest of the story.” The party claiming to be servicer is stating that they are a representative of the claimant in foreclosure. But is that who they pay after they receive borrower payments? Is that who they pay when they receive foreclosure proceeds? Is that who they pay then they do a short-sale or “modification”?

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

Lawyers know and understand the law. Unfortunately they are not so knowledgeable about finance, bookkeeping or accounting, nor of reporting requirements. The players in securitizations schemes are all reporting different data to different government entities and agencies that are inconsistent with each other. I have been saying for 13 years that this entire foreclosure problem is related to accounting and not just law. The absence of an accountant in these cases, at least as consultant for discovery, is in my opinion a mistake.

Simply understanding double entry bookkeeping may  give you a much broader and better understanding enabling you to sink your teeth into the false and fraudulent case of foreclosure being presented.

  1. The receipt of payments from the borrower is one entry. In every bookkeeping system there is a required second entry.
  2. Lawyers should pursue the second entry.
  3. The first entry is posted to general ledger as an increase to cash on the balance sheet.
  4. It is not revenue.
  5. The second entry is posted to liabilities since the payment is being held, subject to withholding fees, for payment to third parties.
    1. This entry will tell you who gets the payment from the servicer — a vital clue as to who is really directing things (and thus who the client is for the foreclosure mill).
    2. It also rebuts the presumption that the holder of the note, as alleged by the foreclosure mill, is the party who will get paid by the foreclosure. Once that is exposed, there is no foreclosure case.
    3. The party(ies) getting paid are not the owners of the debt by reason of having paid value for the debt.

Comment posted on my blog:

Ocwen has been using defaulted loans to divert trust funds to its own master servicing fund. It maintains two sets of books: one reported to the trusts with paid down balance using servicer advances even though defaulted loans no longer in the trusts; other set of books with accrued interests billed to the to-be foreclosed on homeowners. The difference is to be realised at foreclosure. I have proof with my own mortgage. My loan was reported by Bloomberg had balance of $239K while they are trying to collect $450K from me. The difference is to be pocketed by Ocwen.

My only additional comment is that the writer was only partially right. The difference is distributed between Ocwen, the Master Servicer (Investment Bank) and other players.

PRACTICE HINT: The alleged “boarding process” (which does not really exist) is merely another fiction to create the illusion of confirmation of false data. You should ask for the accounting entries on the books of the alleged “successor” servicer. You might not find any entries because the new servicer only replaced the former party with a new login name and password and did not actually receive any money from the prior servicer.

Patrick Giunta Esq. Scores Another Homeowner Win in South Florida v US Bank Trustee LSF9 Master Participation Trust: William Paatalo, Expert Testifies

Foreclosure volume has declined  but that doesn’t reduce the number of cases that are deficient and even fraudulent.

As more senior Judges have more time to review the evidence, the legal presumptions sought by foreclosure mills and come to conclusions about the facts, they  are increasingly suspicious about the claimant, the claim and the failure of proof of real facts.

Kudos again to trial lawyer Patrick Giunta, Esq. with offices in Ft. Lauderdale, Florida. Trial was held on October 7, 2019. This is the third time we have covered a win by Giunta.

Final Judgment for Defendant Case #50-2017-CA-012236, 10/8/19

Circuit Court West Palm Beach, Florida

ORDERED AND ADJUDGED AS FOLLOWS:

  1.  Plaintiff failed to prove it had standing to enforce the note.
  2.  On Count I, Mortgage Foreclosure, and Count II Re-establishment of Lost Note, Plaintiff US Bank as Trustee for the LSF9 Master Participation Trust take nothing by this action and the Defendants …. shall go hence without day.

Game set and match. The Judge here obviously sought to prevent the foreclosure mill from bringing another action.

Some judges upon finding that standing was lacking follow precedent and dismiss without prejudice enabling the foreclosure mill to try again. But more judges are taking great pains to examine the evidence and are coming to the legal conclusion that the Plaintiff’s proof failed.

Upon a factual finding of failure to prove a prima facie case, the court then enters Final Judgment, which for all purposes between that claimant and that borrower is a final determination on the merits.  Any future attempts to foreclose by US Bank or the LSF9 Master Participation Trust are barred by res judicata, collateral estoppel and the Rooker Feldman Doctrine if it applies.

If any attempt is made to bring another foreclosure action in the name of another entity, trust, LLC or corporation, they would also likely be barred without pleading and proving real facts that show that the Plaintiff is the owner of the debt and paid value for it and the previous parties had executed assignments and other documents without any right,  justification or excuse and without notice to the new claimant. That isn’t going to happen.

Giunta doesn’t take a lot of these cases but when he is engaged he tends to win. He understands securitization and relates it back to the failure to prove a prima facie case. He avoids trying to prove or even accepting the burden of proving who actually paid value for the debt, if anyone.

He employed Bill Paatalo in this case whose testimony underscored the deficiencies in the allegations, the documents, and the proof. Paatalo appeared as an expert fact witness.

 

 

Frustrated with Your Lawyer’s Attitude?

PRESUMPTIONS VERSUS FACTS

The bottom line is that lawyers want to do the best possible job for their client and get the best possible result. They like winning. But sometimes they must protect clients against themselves. It’s true there are lazy lawyers out there who take money and don’t do the work. But most of them want to win because their livelihood depends upon a good reputation in the courtroom which includes respect as a winner.

There is a  huge difference between what is written in statutes and case decisions and how and when they are applied. The fact that a court fails to apply the law that you think or even know should have been applied is not a failure of the lawyer so much as it is a failure of the courts to escape their bias. The simple fact is that I agree that most foreclosure cases should be decided in favor of the borrower but getting a court to agree is a daunting challenge to the skills of the lawyer representing a client who is largely seen as food for the system.

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

So in a recent email exchange here is what I said some things about legal presumptions. I should have added the following:

Another legal presumption or factual assumption employed by the courts and often overlooked by foreclosure defense lawyers arises from the naming of the alleged claimant. A typical naming convention used by lawyers for the “claimant” is “ABC Bank, as trustee for the certificate holders of the DEF, Inc. Trust pass through certificates series XYZ-YY-Z.

Several things are happening here.

  1. The case is being styled with the name of a bank creating a misleading impression that the bank has any involvement with the foreclosure.
  2. The reference to the bank as trustee is never supported by any assertion or allegation that it is indeed a trustee and under what trust agreement. The court erroneously presumes that the bank is a trustee for a valid trust who owns the claim.
  3. The reference to the certificate holders makes the certificate holders the claimant. But the pleading does not state the nature of the claim possessed by the certificate holders nor does it identify the certificate holder. In fact, the certificate holders have no right, title or interest to the debt, note or mortgage and are due nothing from the borrower. The court erroneously presumes that the reference to certificate holders is just a long way of referencing the trust.
  4. The reference to the corporation creates ambiguity as to the name of the trust or the party whom the lawyers are saying is represented in the foreclosure proceedings. The court presumes that the naming of the corporation is irrelevant.
  5. The reference to the certificate series falsely implies the certificates convey an interest in the subject debt, note or mortgage. By erroneously presuming this to be a fact the court is not only wrong factually but it is also accepting a presumption that i factually in conflict with the presumption that the claimant is a trust.

 

Here is what I wrote to the client:

I have no doubt that existing law, if properly applied, would be on your side. The problem is that the courts are bending over backwards to find false presumptions that create the illusion of applying existing law.

For example, the only claimant that can bring a foreclosure action as one who owns the debt and who has paid for it. Article 9 § 203 of the Uniform Commercial Code as adopted by state statute.

But the banks have convinced many courts that they comply with that statute. The way they do it is through the use of legal presumptions leading to false conclusions of fact.

So even though the named claimant has not paid value for the debt and doesn’t own the debt the courts end up concluding that the claimant does own the debt and has paid value for it. This is done through a circuitous application of legal presumptions.
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By merely alleging that they have possession of the original note, it raises the assumption or presumption that they have the original note. This is probably false because most notes were destroyed and the banks were relying upon images.
*
By arriving at the conclusion of fact that the claimant is in possession of the original note (even though it is only a representative of the claimant that asserts possession) the courts then apply a legal presumption that the possessor of the original note has the authority to enforce it. There may be circumstances under which that is true, but that doesn’t mean that have the authority to enforce the mortgage.
*
By arriving at the conclusion that the claimant has the authority to enforce the note and has possession of the note, courts then take the leap that the claimant owns the note because they have alleged it. This is improper but it is nevertheless done because the court is looking for ways to justify a decision for the claimant.
*
By arriving at the conclusion that the claimant owns the note, and is not acting in a representative capacity (which is barred by Article 9 § 203 is of the Uniform Commercial Code) the court applies a legal presumption that the claimant has paid for the note (why else would they own it?). [NOTE: Many times the lawyers will say that the claimant is the holder of the note without saying that the claimant is the owner of the note. In such cases it could be argued that they are admitting to not owning the note but are merely claiming the right to enforce the note; by doing that they are admitting to not having paid value for the debt thus undermining their compliance with Article 9 §203 UCC as adopted by state statute. Hence while they might be able to enforce the note they cannot enforce the mortgage. The courts often erroneously presume that enforcement of the note (Article 3 UCC) is the same as enforcement of the mortgage (Article 9 UCC) — which should be addressed early and frequently by the defender of foreclosures.] 
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By arriving at the conclusion that the claimant has paid for the note, the court applies a legal presumption that this is equivalent to payment of value for the debt. In this case the note is treated as a title document for the debt. This would only be true if the original payee on the note was also the source of funds for the debt.( In most cases the source of funding for the debt is an investment bank acting on its own behalf. But the investment bank never appears in the title chain nor as claimant in foreclosure).
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Without the above assumptions and presumptions the claimant could never win at trial. The simple reason for that is that there’s never been a transaction in which the claimant paid value for the debt. It is only through the use of commonplace assumptions and legal presumptions that the court can arrive at the conclusion that the statutory condition precedent to initiating foreclosure has been satisfied.
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In truth neither the court nor most lawyers actually go through the process of analysis that I have described above. If they did they would find multiple instances in which the presumptions should not be applied to a contested fact.
*
But the truth is that there is a bias to preserve the sanctity of contract and a belief that if the claimant is not allowed to succeed in foreclosure, the homeowner will receive a windfall benefit through the application of technical legal Doctrine.
*
The truth is that the court is granting Revenue to a fake party with a fake claim. The court is not preserving contract, since the contract has already been destroyed through securitization. There was no contract for revenue. There was only a contract for debt. 
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And while the borrower might appear to be getting a windfall, the success of the borrower merely reflects the larger implied contract that included securitization and should have included payment to the borrower for use of the borrower’s name reputation and collateral. The windfall already occurred when the Investment Bank sold the parts of the debt for 12 times the amount of the actual debt.
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So I mention all of this because I think it applies to your case. However you have an attorney and I don’t believe that a telephone conference with me is necessary or even appropriate. There is nothing in this email that your lawyer does not fully understand.
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But the practice of law involves much more than written statutes or case decisions. The practical realities are that the courts are not inclined to give borrowers relief despite the fact that they are clearly entitled to it by any objective standard. The trial lawyer or appellate lawyer must make practical decisions on tactics and strategy based upon knowledge of local practice and the specific judges that will hear evidence or argument.
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I understand your frustration. The situation seems clear to you and objectively speaking it is clear. but it has always been a daunting challenge to get the courts to agree. If your attorney wants a telephone conference with me, she can call me. But my knowledge of your attorney is that she has full command of the procedural options to oppose eviction or do anything else that might assist you. The only reason she might resist doing so is her belief that the action would be futile or potentially even result in adverse consequences to you.

The Solution to Defective Securitization of Mortgage Debt: The Bare Legal Truth About Securitization of Mortgage Debt

The basic truth is that current law cannot accommodate securitization of mortgage debt as it has been practiced. In short, what they (the investment banks) did was illegal. It could be reformed. But until the required legal steps are taken that address all stakeholders virtually all foreclosures ever conducted were at best problematic and at worst the product of a fraudulent scheme employing illegal tactics, false documents and false arguments of law and fact.

Without specifically saying so the courts have treated the situation as though the correction has already occurred. It hasn’t.

It is through no fault of the borrower that the investors put up money without acquiring the debt. That doesn’t mean they were not the ones who paid value for the debt. Therefore the only conceivable party, in equity, who should be able to enforce the mortgage is the investors but they cannot because they contractually barred from doing so. 

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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.
========================
I think it is worth noting that securitization of loans was never completed in most scenarios. Value was paid by the Investors who, contrary to popular belief, never received ownership of the debt, note or mortgage.
  1. Cash flow was promised by the investment banker doing business as an alleged Trust, but the investors who were the recipients of that promise had no recourse to the mortgages (or the notes and underlying debts) and hence no recourse to enforce them.
  2. The alleged Trust never acquired the debt. Neither the trust nor any trustor or settlor ever entered into a transaction in which value was paid for the debt as required under Article 9 § 203 of the Uniform Commercial Code. It should be emphasized the this is not a guideline. It is statutory law in all U.S. jurisdictions. People get confused by court rulings in which ownership of the debt was presumed. Those decisions are not running contrary to Article 9 § 203 of the Uniform Commercial Code. To the contrary, those decisions seek to conform to that statutory requirement and the common law Doctrine that any reported transfer of the mortgage without transfer of ownership of the debt is a legal nullity. In short they avoid the issue by presuming compliance — contrary to the actual facts. 
  3. Under Article 3 of The Uniform Commercial Code it is possible that the trust acquired the note but under Article 9 of the Uniform Commercial Code the trust could not have acquired the mortgage, unless the transferor had sold the debt to the trust or the transferor was a party to the trust and had paid value for the debt. This is black-letter law.
  4. Endorsement of the note is of questionable legality since the endorser did not own the debt. In addition, the endorser had no legal right to claim a representative capacity for the investors who had paid value for the promise of the Investment Bank  (ie, they did not pay value for the debt). 
  5. I think that the only way an endorsement could be valid is if the endorser owned the debt or has legal authority to represent the owners of the debt who had paid value for the debt. I don’t believe that such a party exists.
  6. The only party who had barely legal title to the debt, the investment banker, had sold all or part of the cash flow from the mortgage loans for amounts in excess of the amount due on the debts. The remaining attributes of the debt or indirectly sold by financial instruments whose value was derived from the value of the derivative certificates issued in the name of the trust.
  7. There is no one party who has legal ownership of the debt and who has paid value for it. The brokerage of the note was merely a process of laundering title and rights to the debt to create the illusion that someone had both. The actual owner of the debt is a collection of legal entities that are not in privity with each other. That Gap was intentional and that is what enabled the Investment Bank to effectively sell the same loan an average of 12 times — for its own benefit.
  8. A Court of equity needs to allocate those sales proceeds. The implied contract with borrowers required disclosure of all compensation arising from the loan transaction. The implied contract with investors was the same. Both would have bargained for a piece of the pie that was generated by the investment bank. Neither one could do that because the large accrual of  heretofore impossible profits and compensation was both unknown and actively concealed from any reporting by investment banks.
  9. It is through no fault of the borrower that the investors put up money without acquiring the debt.
  10. The only way to bridge this problem is by somebody pleading Reformation or some other Equitable remedy in which the liability on the note or the liability on the debt is canceled.
    1. Anything less than that leaves the borrower with an additional prospective liability on either the debt or the note.
    2. But for the court to consider such a remedy in a court of equity it must restructure the relationship between the Investors and either the debt or the note and mortgage.
    3. And in turn it must then restructure the relationship between the party claiming a representative capacity to enforce the mortgage and the investors.
    4. In short, the investors must be declared to be the owner of the debt and the owner of the mortgage who has paid value for the debt.
    5. Only after a court order is entered to that effect may the investors then enforce the mortgage.
    6. The only way the Investors could enforce the mortgage would be if they were each named as the claimant and the investor(s) were receiving the proceeds of foreclosure sale to reduce or eliminate the debt.
    7. They could act through a collective entity, such as a trustee under a trust agreement in which the trustee was directly representing the investors. In that event the named trust in the Foreclosure action could be ratified and come into full legal existence as the legal claimant.
    8. Until then virtually all foreclosures naming a trust as claimant or naming “certificate holders” as unnamed claimants are fatally defective requiring dismissal with prejudice.
  11. However, this restructuring could interfere with the other derivative products sold on the basis of the performance of the certificates. The proceeds of such sales went to the Investment Bank and Affiliates who assisted in the selling of the additional derivative products.
  12. I repeat that none of this was caused by borrowers or investors or even known to be in existence.
  13. And the problem would not exist but for the persistence of the investment banks in maximizing Revenue at the expense and detriment of both investors and Borrowers.
  14. The problem with my solution is that much of the revenue collected by the investment Banks would accrue to the benefit of the investors.
  15. So the court would need to claw back a substantial amount of the revenue collected by the Investment Bank in each securitization scheme and then allocate the proceeds as to principal and interest on the underlying debt. Hence principal balances on the debt and the accrual of interest could be affected by the restructuring.

Rescission and Burden of Proof

There are winners and losers in every courtroom. When dealing with TILA Rescission under 15 USC §1635 you must go the extra mile in not merely showing the court why you should win, but also revealing that the opposition is not actually losing anything. The same logic applies to every foreclosure where securitization is either obvious or lurking in the background.

The bottom line is that no payment of value has ever been paid or retained as a financial interest in the debt by the named claimant nor anyone in privity with the named claimant. Once you can show the court the possibility or probability that the foreclosure is simply a ruse to generate revenue then it is easier for the court to side with you. Once you show the court that your opposition refuses to disclose simple basic questions about ownership of the debt then you have the upper hand. Use it or lose it.

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

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

Another analysis just completed for a client: The situation is that the homeowner sent a notice of rescission under the TILA REscission Statute 15 U.S.C. §1635 within days of having “consummated” the loan agreement. By statute that notice of rescission canceled the loan agreement and substituted in place of the loan agreement a statutory scheme for repayment of the debt which is NOT void. The notice of rescission only voids the written note and mortgage, it does not void the debt. The free house argument is pure myth.

The client goes on to ask how we can prove when the transactions occurred and who were the parties to those transactions and when they occurred. The answer is that you will never prove that. But you can raise an inference that the claimant is not the owner of the debt who has paid and retains value in the debt such that a successful foreclosure will not be used for restitution of an unpaid debt.

By undermining the presumptions arising from possession of facially valid and recorded documents you eliminate the ability of your opposition to use legal presumptions and thus require them to prove their case without those presumptions. The simple truth is that generally speaking they can never prove a case without legal presumptions. Once the presumptions are gone there is no case.

Here is my response:

It sounds like you are on solid ground. But as you probably know trial judges and even appellate judges and justices bend over backwards to either ignore or rule against the notice of rescission and its effect. For a long time, the bench has rebelled against the Truth in Lending Act generally. They rebelled against TILA rescission viscerally. Despite the unanimous SCOTUS decision in Jesinoski both the trial and lower appellate courts are unanimous in opposition to following the dictates of the statute and following the rule of law enunciated by SCOTUS.

You must be extremely aggressive and confrontative in standing your ground.
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As for the “free house”  argument the answer is simple. There is no free house. unless you are seeking to quiet title, which I think is an unproductive strategy if you not on solid ground with TILA Rescission. You are only seeking to eliminate the current people from attempting to enforce the mortgage, collect on the note or enforce the note. The last point might be your weakest point (without rescission). Enforcement of the note under Article 3 of The Uniform Commercial Code is much more liberal the enforcement of the security instrument under Article 9.
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It is actually possible that they could get a judgement on the note for monetary damages but not a judgment on the mortgage (without rescission in play). They can only get a judgment on the mortgage if the claimant has paid value for the debt. of course all of this should be irrelevant in view of the rescission which completely nullifies the note and mortgage.
Education of the court is extremely important. There is no free house in rescission. The obligation to repay remains the same. That obligation is not secured by the mortgage which has been rendered void nor is it payable pursuant to the terms of the promissory note which was also rendered void by the rescission. the obligation under contract (loan agreement)is simply replaced buy a statutory obligation to repay the debt.
They had ample opportunity to comply with the statute and get repaid. They didn’t. That is no fault of the homeowner.
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If they want repayment of the debt they might be able to still get it. If they produce a claimant who has paid value for the debt and had no notice of the rescission and who regarded your current claimants as unlawful intervenors, the same as you, then it is possible but the court might allow the actual owner of the debt to comply with the statute and seek repayment of the debt.
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At least that is what you will argue. You probably know that no such person exists. The ownership of the debt has been split from the party who paid value for it. So they probably don’t have anyone who qualifies.
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As for your last question about discovering the actual dates on which the debt was purchased pursuant to Article 9 § 203 of the Uniform Commercial Code, as a condition precedent to enforcement of the security instrument (mortgage or deed of trust), the answer is that neither the debt nor the note were ever purchased for value. The whole point is that they’re saying that these transactions occurred when in fact they did not.
*

The only transaction that actually took place in which money exchanged hands is the one in which the certificates were sold to the investors. It might be successfully argued that the Investment Bank had paid the value for the debt so that is another possibility. If that argument succeeds then for a brief moment in time the Investment Bank was both the owner of the debt and the party who had paid value for it. But then it subsequently sold all attributes of the debt to the investors. the investors did not acquire any right title or interest directly in the subject debt, note or mortgage the only correct legal analysis would be that the Investment Bank retained bare naked title to the debt but had divested itself of any Financial interest in the debt. That divestiture generally occurred within 30 days from the date of funding the origination or acquisition of the loan.

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So if you are looking for the dates of transactions in which money exchanged hands in exchange for ownership of the note you are not going to find them. but strategically you want to engage in exactly that investigation as you have indicated. there’s no need to hire a private investigator who will never have access to the money Trail starting with the investors in the Investment Bank. So your investigation would be limited to aggressive discovery. Your goal in discovery is to reveal the fact that they refuse to answer basic questions about the identity of the party who currently owns the debt by reason of having paid for it as required by article 9 section 203 of the Uniform Commercial Code as adopted by state statute.

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This requires properly worded Discovery demands and aggressive efforts to compel Discovery, followed by motions for sanctions and probably a motion in limine.
*
Since you have a notice of rescission within the 3-year time period, what you are actually revealing is that your opposition has no legal standing. Their claims to have legal standing are entirely dependent upon the loan agreement which has been cancelled by your notice of rescission. Unless they can now also state that they are the owners of the debt by reason of having paid for it, they are not a creditor or a lender. therefore they have no legal standing to challenge legal sufficiency of the notice of rescission nor any standing to seek collection on the debt. And they certainly have no legal standing to enforce the note and mortgage which have been rendered void according to 15 USC 1635.
*
Their problem now is that their only claim now arises from the TILA rescission statute — and all such claims are barred by the statute of limitations on claims arising from the Truth in Lending Act. That time has long since expired.

*

It appears that no judge is going to like this argument even if it is completely logical and valid according to all generally accepted standards for legal analysis.

*
So you’re going to have to address the elephant in the living room. The fact remains that if you are successful, as you should be, you will end up with a windfall gain. The judge knows that and denying it will only undermine your credibility. The Counterpoint is that if your opposition does not own the debt by virtue of having paid for it pursuant to the requirements of statute then their attempt at foreclosure is really an attempt to generate Revenue. If the Foreclosure is not going to provide money for restitution of an unpaid debt it can’t be anything else other than Revenue.
*
In order to drill that point home you are going to need to argue, contrary to the judge’s bias, that not only is the current claimant not the owner of the debt by reason of having paid for it, but that the current claimant is not an authorized representative of any party who paid for the debt by reason of having paid for it and that the proceeds of foreclosure, if allowed, will never be used to pay down the debt. Again the only way you’re going to accomplish this is through very aggressive Discovery and motions.
*
Don’t attempt to prove the dates of transactions, the data for which is within the sole care custody and control of your opposition, and can be easily manipulated, if you only focus only on the paperwork.
*
Don’t accept that burden of proof. The only way your opposition has gotten this far is because of legal presumptions arising from that claimed possession of the original note. you need to research those legal presumptions. Generally speaking the legal presumption of fact must include the conclusion that the claimant is the owner of the debt by reason of having paid for it. Possession of the note is considered the same as title to the debt, The presumption arises therefore that possession of the note is ownership of the debt and the further presumption is that ownership of the debt is not likely to have been transferred without payment of value.

Legal presumptions are subject to rebuttal. the way to rebut the presumption is not by proving a particular fact but raising an inference that destroys the presumption. And the way to do that is by asking questions about payment to value for the debt (not just a note on mortgage) and pointing to the refusal of your opposition to give you an answer and to produce documents corroborating their answer.

After the appropriate motions, you will be able to legally require an inference that they are not the owner of the debt by reason of having paid for it and that they don’t represent anyone who does own the debt by reason of having paid for it. Once the presumption is rebutted, the burden of proof falls back onto your opposition. and because they violated the rules of discovery, your motion should demand that they be prohibited from introducing evidence to the contrary of your inference that they don’t own the debt by reason of having paid for it and they don’t represent anyone who owns the debt and who paid for it.

Jurisdictional Defense —- Certificate Holders vs Trust

Litigators often miss the point that the foreclosure is brought on behalf of certificate holders who have no right, title or interest in the debt, note or mortgage — and there is no assertion, allegation or exhibit that says otherwise.

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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 an excerpt from one of my recent drafts on this subject:

*

LACK OF SUBJECT MATTER JURISDICTION: the complaint attempts to state a cause of action on behalf of the certificate holders of an apparent trust, although the trust is not identified as to the jurisdiction in which it was created or the jurisdiction in which it operates.
*
Even assuming that such a trust exists and that it issued certificates, there is no allegation or attachment of an exhibit demonstrating that the certificates contain a conveyance enabling the holder of the certificate to enforce the alleged debt, note or mortgage upon which the complaint relies. In fact, independent investigation shows the exact opposite.
*
Nor is there any allegation that any money is due to the certificate holders or any allegation that the certificate holders possess the promissory note or have the right to enforce either the promissory note or the mortgage. Even if the indenture for the certificates were produced before this court, it would only show a contract for payment from a party other than the homeowner in this action. Accordingly, no justiciable controversy has been presented to the court. In the absence of an amendment curing the above defects, the complaint must be dismissed for lack of subject matter jurisdiction.
*
STANDING:
  1. As to Bank of New York Mellon there is no allegation or attachment to the complaint that alleges or demonstrates an agency relationship between Bank of New York Mellon and the certificate holders, on whose behalf the complaint is allegedly filed. If Bank of New York Mellon is the trustee of an existing trust and the trust is alleged to own the debt note and mortgage along with the rights to enforce, then the agency or representative capacity of Bank of New York Mellon is with the trust, and not with the certificate holders. Based upon the allegations of the complaint and independent research defendant asserts that there is no representative capacity between Bank of New York Mellon and the certificate holders.
  2. As to the alleged trust which has not been properly identified there is no allegation that the action is brought on behalf of the trust; but the implied allegation is that the trust is the plaintiff. The complaint states that the action is brought on behalf of the certificate holders who merely hold securities or instruments apparently issued in the name of the alleged trust. There is no allegation or exhibit attached to the complaint that would support any implication that Bank of New York Mellon possesses a power of attorney for the certificate holders or the trust. In fact, in litigation between Bank of New York Mellon and investors who have purchased such certificates, Bank of New York Mellon has denied any duty owed to the certificate holders.
  3. As to the certificate holders, there is no allegation or exhibit demonstrating that the certificate holders have any right, title or interest to the debt, note or mortgage nor any right to enforce the debt, note or mortgage. Based upon independent research, the certificate holders do not possess any right, title or interest to the debt, note or mortgage nor any right to enforce. In fact, in Tax Court litigation the certificate holders are deemed to be holding an unsecured obligation, to wit: a promise to pay issued in the name of a trust which may simply be the fictitious name of an investment bank. There is no contractual relationship between the defendant and the certificate holders. Further, no such relationship has been alleged or implied by the complaint or anything contained in the attachments to the complaint.
  4. As to the certificate holders, they are neither named nor identified. Yet the complaint states that the lawsuit is based upon a claim for restitution to the certificate holders. The reference to the trust may be identification of the certificates but not the certificate holders. In fact, based upon independent investigation, the holders of such certificates never received any payments from the borrower nor from any servicer who collected payments from the borrower nor from the proceeds of any foreclosure. In the case at bar. the complaint is framed to obscure the fact that the forced sale of the property will not be used to satisfy the debt, note or mortgage in whole or in part.
  5. As to any of the parties listed in the complaint as being a plaintiff or part of the plaintiff there is no allegation or exhibit demonstrating that any of them paid value for the debt, or received a conveyance of an interest in the debt, note or mortgage from a party who has paid value for the debt as required by article 9 § 203 of the Uniform Commercial Code as adopted by state law, which states that a condition precedent to the enforcement of a mortgage is the payment of value for the debt. Hence regardless of who is identified as being the actual plaintiff none of the parties listed can demonstrate financial injury arising from nonpayment or any other act by the defendant.
  6. In the absence of any amendment to cure the above defects, the entire complaint and exhibits must be dismissed with prejudice for lack of subject matter jurisdiction and lack of a plaintiff who has legal standing to bring a claim against the defendant.
The only thing I would add to the existing second affirmative defense is the affirmative statement that based upon independent investigation, such signatures were neither authorized nor proper, to wit: they consist of forgeries or the product of robosigned in which the signature of a person is affixed without knowledge of the contents of the instrument to which it is affixed.
*
In my opinion, the specificity that I have employed in the above comments not only provides a basis for dismissal, but also the foundation to support Discovery requests that might otherwise be denied, to wit: who, if anyone, ever paid money for the debt?

Consent Order Contains Admission of False Affidavits and False Chains of Title

A lot of student loan debt ends up being claimed by “Trusts” that are exactly like REMIC trusts except they are not about residential mortgages. And as I have previously pointed out on these pages, the enforcement of those debts has gone through the same process of removing the risk of loss from those who made the loan and the creation of a scheme where it is perhaps impossible to find or identify any creditor who owns the debt by reason of having paid for it (as opposed to “owning the debt” by reason of having the promissory note or a copy of it).

As a side note, to the extent that debtors are prevented from discharging such debt because of government guarantees, I argue that such exclusion is inapplicable. Students should be able to discharge most student debt in bankruptcy. The risk has already been eliminated if the loans are subject to claims in securitization. The purpose of the guarantee has thus been eliminated.

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

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

Hat tip to summer chic

In this case, the CFPB filed suit essentially asserting its own administrative findings that mirror the defenses of homeowners in foreclosure, to wit: that the affidavits filed are false, and they are falsely signed and notarized, containing false information about title to the loan and false information about the business records.

What is interesting about this case is that the parties are submitting a consent order which includes as those findings of the court in paragraph 4 of the proposed consent order which states as follows:

See https://files.consumerfinance.gov/f/documents/201709_cfpb_national-collegiate-student-loan-trusts_proposed-consent-judgment.pdf

4. Since at least November 1, 2012, in order to collect on defaulted private student loans, Defendants’ Servicers filed Collections Lawsuits on behalf of Defendants in state courts across the country. In support of these lawsuits, Subservicers on behalf of Defendants executed and filed affidavits that falsely claimed personal knowledge of the account records and the consumer’s debt, and in many cases, personal knowledge of the chain of assignments establishing ownership of the loans.In addition, Defendants’ Servicers on behalf of Defendants filed more than 2,000 debt collections lawsuits without the documentation necessary to prove Trust ownership of the loans or on debt that was time-barred. Finally, notaries for Defendants’ Servicers notarized over 25,000 affidavits even though they did not witness the affiants’ signatures.[e.s.]

PRACTICE NOTE: HOW TO USE THIS INFORMATION. Sometimes I erroneously assume that people know what to do with this type of information. So let’s be clear.

  • This information means that servicers, subservicers and lawyers claims regarding chain of title, business records, and their use of affidavits or even testimony is not entitled to the same presumption of credibility that might otherwise apply.
  • That means that the presumptions on the use of business records are not entitled to a presumption of credibility and that additional foundation testimony must be offered in order to assure the court that what is contained in the document is authorized, properly signed, properly notarized and most importantly accurate.
  • The entire case against debtors in these situations is entirely dependent upon the use of legal presumptions  that can be rebutted. Rebuttal of presumptions takes place under two general categories.
  • The first is that that the presumed fact can be shown to be untrue.
  • The second ius that the process of presumption should not apply because the proponent of the document clearly has a stake in the outcome of litigation and has a history of falsifying such documents.
  • Once you rebut the presumption, the case against the debot (homeowner, student) is gone.
  • The opposition has no evidence of proof of payment for the debt, and this has no foundation for claiming authority of the servicer, trustee or even the lawyer.
  • Such authority must come from the owner of a debt who has paid value for it.

Dan Edstrom senior forensic loan examiner writes the following:

This is similar to what is in the foreclosure review consent orders (from US Bank Consent Order dated April 13, 2011):
(2) In connection with certain foreclosures of loans in its residential mortgage servicing portfolio, the Bank:​
(a)​ filed or caused to be filed in state and federal courts affidavits executed by its employees making various assertions, such as the amount of the principal and interest due or the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such personal knowledge or review of the relevant books and records;
(b) filed or caused to be filed in state and federal courts, or in local land records offices, numerous affidavits that were not properly notarized, including those not signed or affirmed in the presence of a notary;​
(c)​ failed to devote to its foreclosure processes adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training; and​
(d)​ failed to sufficiently oversee outside counsel and other third-party providers handling foreclosure-related services.​
(3)​ By reason of the conduct set forth above, the Bank engaged in unsafe or unsound banking practices.
And what about this quote from the student loan consent order:
In addition, Defendants’ Servicers on behalf of Defendants filed more than 2,000 debt collections​ lawsuits without the documentation necessary to prove Trust ownership of​ the loans or on debt that was time-barred.
So wait a minute. They allege the debt cannot be discharged in BKR, but (alleged) student loan debt that hasn’t been paid on in years – isn’t it time barred?  How does collection action work after decades where they took affirmative debt collection steps after the debt was time barred?  In the instance I am thinking about, a dentist was BARRED from taking patients with some type of federally covered insurance and this forced them out of their occupation.  The student loan debt hadn’t been paid in 2 or 3 decades (in California).
So in a related case (time-barred debt) in BKR in CA, a debtor filed a lawsuit against a creditor for filing a proof of claim on a time-barred debt. He lost, the court ruled that if the proof of claim was not objected to (with the relevant objection being that the debt was time-barred), the debtor waived the affirmative defense.

How to Distinguish Between Ownership of the Debt, Ownership of the Note and Ownership of the Mortgage (or Deed of Trust)

Amongst the lay people who are researching issues regarding who actually can enforce a mortgage, there is confusion arising from specific terms of art used by lawyers in distinguishing between a debt, a note and a mortgage. This article is intended to clarify the subject for lawyers and pro litigants. The devil is in the details.

Bottom Line: In most cases foreclosures are allowed because of the presumption that the actual original note has been physically delivered to the current claimant from one who owned the debt because they both had paid money for it. In most cases merely denying that fact is insufficient to prevent the foreclosure because the court is erroneously presuming that even if the foreclosure is deficient the proceeds of sale will still go to pay the debt.

In most cases those presumptions are untrue but must be rebutted. And the way to rebut those presumptions is to formulate discovery that asks who paid for the debt, when and who were the parties to the transaction?

The  lawyers from the foreclosure mills will fight tooth and nail to prevent an order from the court directing them to answer the simple question of who actually owns the debt by reason of having paid value for it and thus who will receive the foreclosure sale proceeds as payment for the debt. The answer is almost always the same — the foreclosure mill is unable to identify such a party thus conceding the lack of subject matter jurisdiction and standing to bring the foreclosure action.

Eventually some party will be identified by changes in the law as being the legal owner of the debt. thus cleaning up the jurisdictional issue caused by utilizing parties who have neither suffered any financial injury nor are threatened with any such financial injury. But for now, the banks are stuck with the mess they created.

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

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

Transfer of debt is by payment for the debt. Payment means you have a legal and equitable right to claim the debt as your own. Payor is the new owner of the debt and the Payee is the prior owner of the debt. There are no exceptions.

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The note is evidence of the debt. It is not the debt.
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Payment of money to a borrower creates a debt or liability regardless of whether or not any document is signed.
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Signing a document promising to pay creates a liability regardless of whether or not there was ny payment of money. In fact, if someone buys the note for value they become a holder in due course and the maker is liable even if they never received any money, value or consideration.
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Enforcement of the debt alone is governed by statutory and common law.
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Enforcement of notes and enforcement of the security instrument (mortgage or deed of trust) is controlled strictly by the adoption of the Uniform Commercial Code (UCC).
*
Article 3 UCC governs the negotiation and enforcement of paper instruments containing an unconditional promise to pay a certain sum on a certain date.
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Article 9 governs the transfer and enforcement of security agreements (mortgages and deeds of trust).
*
Whereas Article 3 does not require the holder of the note to be the owner of the debt for purposes of enforcement of the note, Article 9 requires the holder of the mortgage to be the owner of the debt as a condition precedent to enforcement of the mortgage. No exceptions.
*
Ordinarily the execution of the note causes the debt to be merged with the obligations under the terms of the note. But this is only true if the owner of the debt and payee under the note are the same party. If not, then the execution of the note creates two distinct liabilities — one for payment of the debt and one for payment under the terms of the “contract” (i.e., the note).
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Before securitization it was customary that the owner of the debt had paid money to the borrower as a loan, and the execution of the note formalized the scheme for repayment. Hence under the merger doctrine the borrower who accepted the loan and the maker of the note were the same party and the Lender of the money to the borrower was also the payee named in the note.
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Now this is not always the case and appears to be not the case in most loans, which is why the banks have resorted to fabricated backdated forged and robosigned documents. The Lender in many if not most loan originations was not the party named as payee on the note. And the party named as payee on the note had no authority to represent the interests of the lender. Where this is true, merger cannot apply. And where this is true, enforcement of the note is NOT enforcement of the debt. Rather it is enforcement of a liability created entirely by contract.
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Foreclosure of a mortgage must be for payment of the debt, not just the liability on the note. All states have case law that says that transfer of mortgage without the debt are a nullity. This executing and receiving an assignment of mortgage and even recording it is a legal nullity unless the recipient paid money for the debt and the transferor was conveying ownership of the debt because the transferor had paid money for the debt. If those conditions are not met the executed and recorded assignment of mortgage is a legal nullity and the title record must be viewed by the court as lacking an assignment of mortgage.
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The judiciary has not caught up with these discrepancies in most instances. Hence a judge will ordinarily presume that the delivery and endorsement of the note and the assignment of the mortgage was equivalent to the transfer of title to the debt, with payment being presumed for the debt. So while the law requires ownership of the debt by reason having paid for it, the courts presume that the debt was transferred along with the paper, subject to rebuttal by the maker and borrower.
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The rubber meets the road when in discovery and defenses the borrower raises the issue of who paid for the debt and when. In the current world of securitization the answer will be the same: the banks won’t tell you and they won’t admit that the party named as claimant in the foreclosure never paid for the debt, despite appearances to the contrary. 

Chase-WAMU: Is it time to Declare Non Judicial Foreclosure Unconstitutional As Applied?

Faced with a notice of foreclosure sale from a company claiming to be the trustee on a deed of trust, homeowners in judicial states are forced to defend using well known facts in the public domain that are not evidence in a court of law. This is particularly evident in scenarios like the Chase WAMU Agreement with the FDIC and the US Bankruptcy Trustee on September 25, 2008.

In my opinion the allowance for nonjudicial foreclosure in circumstances where a new party appears under a lawyer’s claim that the new party is the beneficiary under a deed of trust under parole claims of securitization is an unconstitutional application of an otherwise constitutional  statutory scheme.

All such foreclosures should be converted to judicial and the claimant must prove the essential element under Article 9 §203 UCC that it has a financial interest in the debt because they paid for it. Forcing homeowners to prove that such an interest does not exist is requiring homeowners to have access to knowledge that is unavailable and solely within the control of the party falsely claiming to have the right to enforce the deed of trust and promissory note.

In my opinion this is an unconstitutional application of an otherwise constitutional statutory framework. In plain language it favors expediency and moral hazard over truth or justice.

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

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

I have received questions, most notably from Bill Paatalo, the famed Private Investigator who has provided so much information to lawyers, homeowners and a=everyone else about the foreclosure crisis relating to non judicial foreclosures and the Chase-WAMU farce in particular. Here is my answer:

If what you’re saying is that the FDIC never became the beneficiary under the deed of trust, that is correct. But the legal question is whether it needed to become the beneficiary under the deed of trust. As merely a receiver for WAMU the question is whether WAMU was a beneficiary under the deed of trust and the answer is no because they had already sold their interest or presold it before origination.

*
If WAMU was an actual beneficiary then the FDIC was the receiver for the beneficial interest held by WAMU. If that is the case the FDIC could have been represented to be beneficiary on behalf of the WAMU estate for foreclosures that occurred during the time that FDIC was receiver.
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If WAMU was not an actual beneficiary and could not, as your snippet suggests, sell what it did not own, then the FDIC’s receivership is irrelevant except to show that they had no record of any loans owned by WAMU.
*
One key question that arises therefore is what is a beneficiary? In compliance with Article 9 §203 UCC I think all states that a beneficiary is one who has paid value for the debt, owns it and currently would suffer a debit or loss against that asset by reason of nonpayment by the borrower. Anything less and it is not a beneficiary. And if it isn’t beneficiary, it cannot instruct the trustee to send out notices as though it was a beneficiary.
*
So any notice of substitution of trustee, which starts the whole foreclosure process is bogus — i.e., void as in a nullity. The newly named trustee does not possess the powers of a trustee under a deed of trust. Hence the notice of default, sale and trustee deed are equally bogus and void. They are all nullities and that means they never happened under out laws even though there are lawyers claiming that they did happen.
*
Despite the Ivanova decision in California declaring that such foreclosures can only be attacked after the illegal foreclosure, this is actually contrary to both California law and the due process requirements of the US Constitution.
*
With more and more evidence of fake documents referring to nonexistent financial transactions, the time is ripe for some persistent homeowner, with the help of a good lawyer, to challenge not only the entire Chase-WAMU bogus set up, but to get a ruling from a Federal judge that the abr to preemptive lawsuits to stop collection or foreclosure activity is unconstitutional as applied.
*
In nonjudicial states it converts a statutory system which is barely within constitutional bounds to an unconstitutional deprivation of property and civil rights without due process, forcing the homeowners to come up with answers and data only available to the malfeasant players seeking to collect revenue instead of paying down the debt.

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

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

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

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

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

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

See HOW TO FRAME TILA RESCISSION IN YOUR PLEADINGS

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

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

How to Frame TILA Rescission in Your Pleadings

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

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

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

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

*

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

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

*

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

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

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

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

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

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

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

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

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

Thursdays LIVE!

The Neil Garfield Show — WEST COAST

with CHARLES MARSHALL AND BILL PAATALO

or prior episodes

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

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

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

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

On the Show tonight Charles and Bill address the following:

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

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

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

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

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

California Decision for Borrower Post Sale in Eviction Proceeding

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

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

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

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

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

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

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

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

See 2019.07.15 – Minute order for MSJ

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

Key quotes from this decision:

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

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

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

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

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

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

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

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

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