Investors Were Not Injured By Non Payment from Homeowners. They Were Injured by Non Payment from Investment Banks

The trap door is thinking that investors were hurt by borrowers failing to make payments when in fact they were injured by brokerage companies not paying them regardless of how much money was being received and created. This trap door inevitably leads one into thinking that the money proceeds from a forced sale of property in foreclosure are being paid to investors. That is just not true.

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Exchange between me and fairly knowledgeable client:

Client: “But if investors put up the money then they would be the injured party if borrowers don’t pay, or at least if things were normal.”

From me:

Incorrect. Investors were injured by  the failure of brokerage firms to make payments to them that were purely optional. Investors were not injured by failure of borrowers to pay their mortgage payments as defined in the promissory note.

At the option of the investment bank, the investors who paid value for the certificates issued by the investment bank, continue to receive payments. Those payments come from a reserve pool of money funded entirely by the investors initial purchase of certificates (but they are labeled “Servicer advances”).

You are falling through the trap door that the banks and their lawyers have created. Investors did not put up money to purchase your loan or acquire it or originate your loan. They had no legal part in that unless a judge were to enter an order stating that while the form of the transaction says they had nothing to do with your loan, the investors were nonetheless substantively the “lenders.” The banks and the investors would argue against that since it would make investors liable for lending and servicing violations.

You are presuming something that the banks want you to presume. The truth is that the investors were told that they would be paid by the brokerage firm that set up the plan of what they called “securitization.”

The promise received by investors was from the brokerage firm not the borrower. The money on deposit with the brokerage firm was used to originate or acquire loans as a cost of doing business, to wit: the business of issuing and trading in derivative securities to which neither the investors nor “borrowers” were parties and therefore received no compensation despite the fact that without them none of those trades could have taken place.

The promise (certificate or mortgage bond) was issued in the name of a “trust” that at best was inchoate” under law (i.e., “sleeping”). The trust name was merely a business name under which the brokerage firm was doing business. The promise was not secured by any interest in the debt, note or mortgage on any loan. In fact, at the time of investment there were no loans in any portfolio that were the subject of the investment. There was a promise to aggregate such a portfolio and the list of loans attached to the prospectus is subject to the disclaimer that it is not the real list but rather an example of the kind of data the investors will see when the offering of certificates is complete.

The certificates themselves do not convey and right, title or interest to the debt, note or mortgage on any loan. The investors merely hold an unsecured promise to pay where the promissor is the brokerage firm (Investment bank) and the amount of payments to be received by investors are indexed on the data for an aggregate of loans; but such payments are entirely dependent upon the sole discretion of the investment bank (Brokerage firm) and the performance of the index — i.e., the performance of borrowers.

Investors thus receive money as long as the investment bank wants them to receive money regardless of actual performance of loans. The non performance of borrowers represents an excuse for the investment bank to stop paying the entire amount of their promise, if the managers of the investment bank so choose.

But since the investment bank (brokerage firm) was using money deposited on account the net result is that the investors paid value for the origination or acquisition of the debt but never got to own it under current law.

And the investment bank briefly became the “owner” of the debt without having actually paid for it, and then created a “sale” at its trading desk in which the loans were “sold” to the “trust” at an enormous premium (second tier yield spread premium) from the amount that was actually loaned to borrowers at much higher interest rates than the amount demanded by the investors. 

Bottom Line: Under current law in all jurisdictions nobody qualifies as the owner of the debt by reason of having paid for it because those two functions were split by the investment bank.

The value was paid by investors who did not receive ownership of the debt. The ownership of the debt as in the hands of the brokerage firm that started the securitization scheme and then transferred to itself using the name of the fictional trust. Hence the brokerage firm, directly or indirectly continued to “own” the debt without having actually paid for it. This is legally impossible under current law.

Under current law, nobody can claim to own or enforce a debt without having paid value for it. A transfer of rights to a mortgage is a legal nullity unless there is a concurrent payment of value for the debt. The only possible claimant in a court of equity is the investment bank, but they continue to hide behind multiple layers of sham conduits who actually have no contractual or other relationship with the investment bank. All such “securitized” loans are therefore orphans under current law where the debt, note and mortgage cannot be legally enforced.

The only way they have been enforced has the acceptance by the courts of erroneous presumptions that effectively reconstitute the debt, note and mortgage out of the prior transactions that split it all up. This produced the opportunity for profits that were far in excess of the loan itself which was viewed by the investment bank as simply a cost of doing business rather than an actual loan. Besides violating current law under the Uniform Commercial Code it also violates public policy as explicitly enunciated under the Federal Truth in Lending Act and public policy stated in various state laws prohibiting deceptive lending and servicing practices.

Those excessive profits should, in my opinion, be the subject of reallocation that includes the investors and borrowers without whom those profits could not exist. These are the actions for disgorgement and recoupment to which I have referred elsewhere on this blog. But in order to have real teeth I believe it is necessary to join the investment banks who had a role in the claimed “securitization.”

In affirmative defenses you can name a third party but you must express the defense as something for which the actual named claimant is vicariously accountable. Otherwise you need to file a counterclaim, the downside of which is that many such claims are barred by the statute of limitations whereas affirmative defenses are not usually subject to the statute of limitations.

The reason you can’t get a straight answer to discovery is that ownership and payment have been split between two entirely different parties. Yet current law demands that the enforcing party be (a) the owner of the debt, note and mortgage and (b) the party who paid value for the loan. In most situations involving claims of securitization that requirement cannot and is not meant to be fulfilled.

Clearly  changes in the law are required to allow for securitizations as practiced. But in order to do that the laws regarding disclosures to investors and borrowers must get far more specific and rigorous so that freer market forces can apply. With transparency market corrections for excessive or even unconscionable transactions are possible — allowing both borrowers and investors to bargain for a share of the bounty created by securitization arising from the investment of investors and borrowers.

Current law supports disgorgement of such profits because they were not disclosed. But current law fails to identify such “trading profits” as arising from the the actual transaction with investors, on one hand, and the borrowers on the other hand. This might be accomplished in the courts.

But a far better alternative is to level the playing field with clearly worded statutes that prevent what had been merely intermediaries from draining of money and other value from the only two real parties in interest as defined by both the single transaction doctrine and the step transaction doctrine.

Pump and Dump: When “Lenders” Have No Risk of Loss They Spend Millions Selling Defective Loan Products and Blame Borrowers

It’s easy to blame borrowers for loans that are in “default.” The American consensus is based upon “personal responsibility”; so when a loan fails the borrower simply failed. But this does not take into account the hundreds of millions of dollars spent every year peddling loans in the media and the billions of dollars paid as commissions and bonuses to those who sell defective loans to consumers.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see https://www.nytimes.com/2019/05/20/nyregion/nyc-taxi-medallion-loans-attorney-general.html?smid=nytcore-ios-share

The current case in point, in addition to the ongoing crimes of residential foreclosures, is the last decade in the taxi industry where in New York the playbook that produced the mortgage meltdown produced a replay that is now on display in New York City, where select major owners of taxi medallions artificially propped up prices of medallions, and then lured low earning drivers to take loans of $1 million to buy the medallions from the City who was complicit in the scheme. Now the loans are all in “default” while the players all got rich.

This is a direct parallel with the mortgage meltdown. Developers artificially raised prices in their developments creating a basis on which to base false appraisals of home prices that went far above home values. Then the banks lured borrowers into loans that were doomed to fail, producing “defaults” that did not take into account all the money that was made by selling and reselling the loan data and attributes. Local government was complicit in allowing the false appraisals to stand and even used the absurdly high “values” for taxation of real property.

The “default” only exists if two conditions are present. The first condition is a party who actually has a financial loss arising from nonpayment. The second condition is that the party owning the debt and presumably suffering the “loss” is allowed to ignore the profits generated from selling the name, signature and reputation of the borrowers.

In my view the first condition is not met in nearly all current loans. There is only one party who ever had any actual money directly invested in the loan; that is the investment bank who was doing business under various names to protect itself from liability and to preserve anonymity.

A key point to remember in assessing blame for nonpayment is that where there is no actual risk of loss for nonpayment on loans, the lenders will lend any amount of money on any terms to anyone. We saw that in the NINJA, No Doc and other crazy loans. We saw that because the “lenders” didn’t care about anything other that getting your name, signature and evidence of your reputation from credit reporting agencies.

The truth is that they didn’t care if the borrower paid anything. But the borrower didn’t know that and thus reasonably relied on the supposition and the law that placed the responsibility for viability of the new loan on the lender, not the borrower.

The investment bank sold the risk of loss and sold the debt multiple times. Its financial investment in the loan frequently never happened at all because it was using investor money, or terminated in all events within 30 days after the loan was included in a supposed portfolio of loans.

Concurrently with the sale of certificates to investors who were seeking secure income, and who received nothing more than a disguised promise from the investment bank, the investment bank sold the debt, risk of loss and other attributes of the loan dozens of times to other investors in the form of “contracts” that hedge losses or movement in the value of the certificates that were issued to the pension fund investors who bought certificates.

In my view these sales were nothing more than the sale of the borrower’s name, signature and reputation, without which the sale could never have occurred. All sales derived their value from the promise of the investment bank to make regular payments to the owners of certificates who had disclaimed any interest in the debt, note or mortgage, leaving such ownership to the investment bank. All promises by the investment bank derived their value from the name, signature and reputation of the borrower. And all sales of debt or risk of loss to additional investors derived their value from the value of the promise contained in the certificates.

Each sale represented profits arising from the name, signature and reputation of the borrower used on loan documentation that originated the loan. Hence the profits represent undisclosed compensation that according to TILA and RESPA should have been disclosed at closing. Imagine a borrower being told that his $200,000 loan would be generating $2 million in profits for the bank. Negotiations over the loan would likely be different but in any event the Truth in Lending Act requires the real players (Investment bank) and the real compensation (all profits, fees and commissions) to be disclosed to the borrower.

I have suggested and I am still receiving comments on whether the borrower might be entitled to royalty income for each sale. If so, the royalty income due would substantially offset the amount due on the loan, but the catch is that the investment bank must be joined in such foreclosures as a real party in interest.

However, regardless of the success of that theory, the fact remains that there is no debt left on the books of any entity as an asset or which is subject to risk of loss. By definition then, the mortgage is not enforceable because there is no current party who has paid value for it.

The named foreclosing party, as it turns out, rarely receives any proceeds from a successful foreclosure sale. In many cases the “named party” cannot be identified.

When the check is issued as proceeds of the sale of the foreclosed property it is deposited into the account of the investment bank. It all goes to the investment bank despite the fact that the investment bank has no debt on its books against which to apply the receipt of such proceeds. That debt has long since been sold and is no longer on its books as a risk of loss.

AND NOTE THIS:

The current crisis amongst taxi drivers was caused by aiming at unsophisticated, and uneducated borrowers, some of whom had issues with understanding the English language in addition to lacking knowledge of American law.

This recent article (see link below) shows that the ravages of predatory and fraudulent practices in originating and trading in residential mortgages are still present 12 years after the crash started. Where? Of course it was in Latin communities or black communities where residents were deprived or otherwise had no ready access to information or education that would enable them to understand and evaluate the nature of the documents they were signing.

Most such people signed documents that contained either purely English words and /or specific legal jargon that is not generally known by anyone other than a lawyer. TILA requires that the borrower be informed. This was not done.

see https://www.washingtonpost.com/business/2019/05/21/lingering-impact-foreclosure-crisis-felt-most-hispanic-black-communities-study-says/?noredirect=on&utm_term=.457379756595

What is the difference between the note and the debt? What difference does it make?

NOTE: This case reads like  law review article. It is well worth reading and studying, piece by piece. Judge Marx has taken a lot of time to research, analyze the documents, and write a very clear opinion on the truth about the documents that were used in this case, and by extension the documents that are used in most foreclosure cases.

Simple answer: if you had a debt to pay would you pay it to the owner of the debt or someone else who says that you should pay them instead? It’s obvious.

Second question: if the owner of the debt is really different than the party claiming to collect it, why hasn’t the owner shown up? This answer is not so obvious nor is it simple. The short version is that the owners of the risk of loss have contracted away their right to collect on the debt, note or mortgage.

Third question: why are the technical requirements of an indorsement, allonge etc so important? This is also simple: it is the only way to provide assurance that the holder of the note is the owner of the note. This is important if the note is going to be treated as evidence of ownership of the debt.

NY Slip Opinion: Judge Paul I Marx carefully analyzed the facts and the law and found that there was a failure to firmly affix the alleged allonge which means that the note possessor must prove, rather than presume, that the possessor is a holder with rights to enforce. U.S. Bank, N.A. as Trustee v Cannella April 15, 2019.

Now the lawyers who claim U.S. Bank, N.A. is their client must prove something that doesn’t exist in the real world. This a problem because U.S. Bank won’t and can’t cooperate and the investment bank won’t and can’t allow their name to be used in foreclosures.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================
Words actually matter — in the world of of American Justice, under law, without words, nothing matters.
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So it is especially important to presume nothing and actually read words without making any assumptions. Much of what we see in the language of what is presented as a conveyance is essentially the same as a quitclaim deed in which there is no warranty of title and which simply grants any interest that the grantor MIGHT have. It is this type of wording that the banks use to weaponize the justice system against homeowners.
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There is no warranty of title and there is no specific grant of ownership in an assignment of mortgage that merely says the assignor/grantor conveys “all beneficial interest under a certain mortgage.” Banks want courts to assume that means the note and the debt as well. But that specific wording is double-speak.
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It says it is granting rights to the mortgage; but the rest of wording  is making reference only to what is stated in the mortgage, which is not the note, the debt or any other rights. So in effect it is saying it is granting title to the mortgage and then saying the same thing again, without adding anything. That is the essence of double speak.
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In the Cannela Case Judge Marx saw the attempt to mislead the court and dealt with it:

The language in RPAPL § 258, which this Court emphasized—”together with the bond or obligation described in said mortgage“—stands in sharp contrast to the language used here in the Assignment—”all beneficial interest under a certain Mortgage”. If such language is mere surplusage, as Plaintiff seems to believe, the drafters of RPAPL § 258 would not have included it in a statutory form promulgated for general use as best practice.

So here is the real problem. The whole discussion in Canella is about the note, the indorsement and the allonge. But notice the language in the opinion — “The Assignment did not go on to state that the referenced debt “…. So the Judge let it slip (pardon the pun) that when he refers to the note he means the debt.

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The courts are using “the debt” and “the note” as being interchangeable words meaning the same thing. I would admit that before the era of false claims of securitization I used the words, debt, note and mortgage interchangeably because while there were technical  difference in the legal meaning of those terms, they all DID mean the same thing to me and everyone else.
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While a note SHOULD be evidence of the debt and the possession of a note SHOULD be evidence of being a legal note holder and that SHOULD mean that the note holder probably has rights to enforce, and therefore that note “holder” should be the the owner of a debt claiming foreclosure rights under a duly assigned mortgage for which value was paid, none of that is true if the debt actually moved in one or more different directions — different that is from the paper trail fabricated by remote parties with no interest in the loan other than to collect their fees.
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The precise issue is raised because the courts have almost uniformly assumed that the burden shifts to the homeowner to show that the debt moved differently than the paper. This case shows that might not be true. But it will be true if not properly presented and argued. In effect what we are dealing with here is that there is a presumption to use the presumption.
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If Person A buys the debt (for real) for value (money) he is the owner of the debt. But that is only true if he bought it from Person B who also paid value for the debt (funded the origination or acquisition of the loan). If not, the debt obviously could not possibly have moved from B to A.
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It is not legally possible to move the debt without payment of value. It IS possible to appoint agents to enforce it. But for those agents seeking to enforce it the debtor has a right to know why he should pay a stranger without proof that his debt is being collected for his creditor.
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The precise issue identified by the investment banks back in 1983 (when securitization started) is that even debts are made up of component parts. The investment banks saw they could enter into “private contracts” in which the risk of loss and other bets could be made totalling far more than the loan itself. This converted the profit potential on loans from being a few points to several thousand percent of each loan.
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The banks knew that only people with a strong background in accounting and investment banking would realize that the investment bank was a creditor for 30 days or less and that after that it was at most a servicer who was collecting “fees’ in addition to “trading profits” at the expense of everyone involved.
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And by creating contracts in which the investors disclaimed any direct right, title or interest in the collection of the loan, even though the investor assumed the entire risk of loss, the investment banks could claim and did claim that they had not sold off the debt. Any accountant will tell you that selling the entire risk of loss means that you sold off the entire debt.
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* Thus monthly payments, prepayments and foreclosure proceeds are absorbed by the investment bank and its affiliates under various guises but it never goes to reduce a debt owned by the people who have paid value for the debt. In this case, and all similar cases, U.S. Bank, N.A. as trustee (or any trustee) never received nor expected to receive any money from monthly payments, prepayments or foreclosure proceeds; but that didn’t stop the investment banks from naming the claimant as U.S. Bank, N.A. as trustee.
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**So then the note might be sold but the alleged transfer of a mortgage is a nullity because there was no actual transfer of the debt. Transfer of the debt ONLY occurs where value is paid. Transfer of notes occurs regardless of whether value was paid.
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US laws in all 50 states all require that the enforcer of a mortgage be the same party who owns the debt or an agent who is actually authorized  by the owner of the debt to conduct the foreclosure. For that to be properly alleged and proven the identity of the owner of the debt must be disclosed.
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That duty to disclose might need to be enforced in discovery, a QWR, a DVL or a subpoena for deposition, but in all events if the borrower asks there is no legal choice for not answering, notwithstanding arguments that the information is private or proprietary.
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The only way that does not happen is if the borrower does not enforce the duty to disclose the principal. If the borrower does enforce but the court declines that is fertile grounds for appeal, as this case shows. Standing was denied to U.S. Bank, as Trustee, because it failed to prove it was the holder of the note prior to initiating foreclosure.
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It failed because the fabricated allonge was not shown to be have been firmly attached so as to become part of the note itself.
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Thus the facts behind the negotiation of the note came into doubt and the presumptions sought by attorneys for the named claimant were thrown out. Now they must prove through evidence of transactions in the real world that the debt moved, instead of presuming the movement from the movement of the note.
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But if B then executes an indorsement to Person C you have a problem. Person A owns the debt but Person C owns the note. Both are true statements. Unless the indorsement occurred at the instruction of Person B, it creates an entirely new and separate liability under the UCC, since the note no longer serves as title to the debt but rather serves as presumptive liability of a maker under the UCC with its own set of rules.
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And notwithstanding the terms of the mortgage to the contrary, the mortgage no longer secures the note, which is no longer evidence of the debt; hence the mortgage can only be enforced by the person who owns the debt, if at all. The note which can only be enforced pursuant to rules governing the enforcement of negotiable instruments, if that applies, is no longer secured by the mortgage because the law requires the mortgage to secure a debt and not just a promissory note. See UCC Article 9-203.
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This is what the doctrine of merger is intended to avoid — double liability. But merger does not happen when the debt owner and the Payee are different parties and neither one is the acknowledged agent of a common principal.
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Now if Person B never owned the debt to begin with but was still the payee on the note and the mortgagee on the mortgage you have yet another problem. The note and debt were split at closing. In law cases this is referred to as splitting the note and mortgage which is presumed not to occur unless there is a showing of intent to do so. In this case there was intent to do so. The source of lending did not get a note and mortgage and the broker did get a note and mortgage.
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Normally that would be fine if there was an agency contract between the originator and the investment bank who funded the loan. But the investment bank doesn’t want to admit such agency as it would be liable for lending and disclosure violations at closing, and for servicing violations after closing.
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***So when the paperwork is created that creates the illusion of transfer of the mortgage without any real transaction between the remote parties because it is the investment bank who is all times holding all the cards. No real transactions can occur without the investment bank. The mortgage and the note being transferred creates two separate legal events or consequences.
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Transfer of the note even without the debt creates a potential asset to the transferee whether they paid for it or not. If they paid for it they might even be a holder in due course with more rights than the actual owner of the debt. See UCC Article 3, holder in due course.
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Transfer of the note without the debt (i.e. transfer without payment of value) would simply transfer rights under the UCC and that would be independent of the debt and therefore the mortgage which, under existing law, can only be enforced by the owner of the debt notwithstanding language in the mortgage that refers to the note. The assignment of mortgage was not enough.
Some quotables from the Slip Opinion:

A plaintiff in an action to foreclose a mortgage “[g]enerally establishes its prima facie case through the production of the mortgage, the unpaid note, and evidence of default”. U.S. Bank Nat. Ass’n v Sabloff, 153 AD3d 879, 880 [2nd Dept 2017] (citing Plaza Equities, LLC v Lamberti, 118 AD3d 688, 689see Deutsche Bank Natl. Trust Co. v Brewton, 142 AD3d 683, 684). However, where a defendant has affirmatively pleaded standing in the Answer,[6] the plaintiff must prove standing in order to prevail. Bank of New York Mellon v Gordon, 2019 NY Slip Op. 02306, 2019 WL 1372075, at *3 [2nd Dept March 27, 2019] (citing HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d 983, 983-984HSBC Bank USA, N.A. v Calderon, 115 AD3d 708, 709Bank of NY v Silverberg, 86 AD3d 274, 279).

A plaintiff establishes its standing in a mortgage foreclosure action by showing that it was the holder of the underlying note at the time the action was commenced. Sabloff, supra at 880 (citing Aurora Loan Servs., LLC v Taylor, 25 NY3d 355, 361U.S. Bank N.A. v Handler, 140 AD3d 948, 949). Where a plaintiff is not the original lender, it must show that the obligation was transferred to it either by a written assignment of the underlying note or the physical delivery of the note. Id. Because the mortgage automatically passes with the debt as an inseparable incident, a plaintiff must generally prove its standing to foreclose on the mortgage through either of these means, rather than by assignment of the mortgage. Id. (citing U.S. Bank, N.A. v Zwisler, 147 AD3d 804, 805U.S. Bank, N.A. v Collymore, 68 AD3d 752, 754).

Turning to the substantive issue involving UCC § 3-202(2), Defendant contends that the provision requires that an allonge must be “permanently” affixed to the underlying note for the note to be negotiated by delivery. UCC § 3-202(1) states, in pertinent part, that if, as is the case here, “the instrument is payable to order it is negotiated by delivery with any necessary indorsement”. UCC § 3-202(1) (emphasis added). The pertinent language of UCC § 3-202(2) provides that when an indorsement is written on a separate piece of paper from a note, the paper must be “so firmly affixed thereto as to become a part thereof.” UCC § 3-202(2) (emphasis added); Bayview Loan Servicing, LLC v Kelly, 166 AD3d 843 [2nd Dept 2018]; HSBC Bank USA, N.A. v Roumiantseva, supra at 985see also One Westbank FSB v Rodriguez, 161 AD3d 715, 716 [1st Dept 2018]; Slutsky v Blooming Grove Inn, 147 AD2d 208, 212 [2nd Dept 1989] (“The note secured by the mortgage is a negotiable instrument (see, UCC 3-104) which requires indorsement on the instrument itself `or on a paper so firmly affixed thereto as to become a part thereof’ (UCC 3-202[2]) in order to effectuate a valid `assignment’ of the entire instrument (cf., UCC 3-202 [3], [4])”).

[Editor’s note: if it were any other way the free spinning allonge would become a tradable commodity in its own right. ]

The Assignment did not go on to state that the referenced debt was simultaneously being assigned to Plaintiff.

 

Stop Feeling Guilty — Be A Warrior

Shame is the reason why most borrowers don’t contest foreclosures. That shame turns to intense anger when they realize that they were used, screwed, abused and now they are targets in a continuing blitz to embezzle much needed money from their lives and from the financial system generally.

The genius behind companies like Citi is… Deception by Branding.  “Citi” is not a company, it’s a brand of a conglomerate of companies.  Even its subsidiary “Citibank N.A.” is deceptive.  First let’s dispel the myth that subsidiaries are equal to their parents.  Not true, not even when they are wholly-owned subsidiaries.  They are separate companies, albeit owned by a common parent. —- From Anonymous Writer
GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

Probably the biggest goof of the court system in foreclosure litigation (and in business litigation) is mistaking a brand for a company and not realizing that there is both a business and legal distinction between even a wholly owned subsidiary and another subsidiary or parent company.

The reason that is such a big goof is that the actual transaction is being ignored while a small part of the transaction is being treated as the entire matter. That is like taking the spark plug out of car and then selling it to someone as though it was the whole car. It doesn’t work that way.

In conglomerates like “Citi” the brand intentionally blurs the factual and legal distinctions. And these distinctions make a difference precisely because the debt, note and mortgage are split and transferred multiple times between subsidiaries wherein each one is either moved off the books entirely or each subsidiary is showing an “asset” that it sells into the shadow banking market.

These practices results in a ten-fold increase in the apparent size of the asset, which is then owned by dozens, perhaps hundreds of different unrelated investors. And that enabled the banks siphon literally trillions of dollars out of the US economy and trillions more out of the world economy.

Through the devices of branding and “off balance sheet transactions” this wealth is controlled by handful of people; but this wealth is directly derived from one simple plan — to market the signature, reputation and identity of borrowers who were led to believe that they were executing loan documents. In fact they were executing the foundation documents for a string of transactions and book entries that would result in profits far beyond the amount of the loan.

These unsuspecting consumers had become ISSUERS without ever knowing it and they still don’t know it or understand it. So they still believe that somehow the investment bank behind the scheme is actually entitled to collect on a debt that the bank sold multiple times through multiple affiliates and subsidiaries in transactions that were often “off balance sheet.” And the fact that in virtually all cases the proceeds of foreclosure sales are not applied to reduce the debt owed to the owner of the debt is completely overlooked.

The clear issue that investment banks have been avoiding is that every one of their originated loans is part of a larger intended transaction, and that the homeowner gets absolutely no clue or disclosure that the bulk of the transaction is actually very different from a loan and actually the antithesis of a loan. Clearly the two were both unrelated and related.

The borrower thought it was a loan and it was a loan but the loan was a part of a larger transaction in which the attributes of a loan were shredded. So the loan was essentially a sham entry to allow the investment banks to profit regardless of the performance of the loan. Hence the transaction was not really a loan anymore. This is true even for loans acquired after origination by an actual lender.

Risk underwriting, the most basic part of lending, was thrown to the winds because it was irrelevant. And legally required disclosures were also thrown to the winds because lending laws (TILA) clearly state that compensation received after the loan closing must be disclosed.

What would have happened if the borrowers knew their signatures, reputation and identity were the real subject of the transaction and that they would be sold in a myriad of way producing compensation far beyond the amount of the loan. How would bargaining have changed? It’s obvious.

Even the most unsophisticated homeowner would have gone shopping for someone who would offer a share of the bounty. And that is why the “free house” PR gimmick is a myth. If the investment banks had not concealed the major attributes of the transaction, the mortgage meltdown would never have occurred.

And if “securitization” had proceeded anyway then homeowners would have received immediate and possibly total reductions in the amount due. Yes I recognize that this is a contradiction because if there is no loan then there are no derivatives to be sold. But that is not a problem created by homeowners or borrowers or consumers. It is a problem created by fraud and deceit by the investment banks.

In the final analysis the investment banks used homeowners and investors to issue unregulated securities and instead of turning the proceeds over to the issuers they kept the money. In any world of law enforcement they should have been jailed for that.

The goal was to get the signature and then sell it. That is not a loan. And the failure to disclose it violated everything about Federal  and State lending laws that require disclosure of identities of the real parties in interest and the amount of money they are getting as compensation for their role in “the transaction.”

The investment banks chose to unilaterally define “the transaction” as just the part dealing with the origination of the debt, note and mortgage. That was a lie. It concealed the fact that the borrower was in fact a real party in interest in a much larger transaction in which at each step profits, fees, and other compensation would be distributed in amounts vastly exceeding the amount that was disclosed to the borrower as the value of the transaction. For each $1 “loaned” there was $20 in profit.

By concealing this information the investment banks took all of the profit, fees and compensation without allowing the homeowner to participate in what amounted to a monetization of their signature, reputation and identity.

Thus the most essential part of the Federal and State lending laws was thwarted: that the “borrower” must know the identity of the parties with whom he/she is dealing and the “borrower” must know the amount of compensation being earned as result of the “borrower” signing documents at loan closing.

Instead the homeowner had become the issuer of unregulated securities, the proceeds of which were largely concealed and withheld from the homeowner. No lawyer would have permitted their client to enter into such a scheme — if the facts were known.

Borrowers get lost in the weeds when they make these allegations because they can’t prove them. Truth be told, even the bank could not prove them because of the number of transactions that occur “off balance sheet.” Abraham Briloff (in his book Unaccountable Accounting) first observed over 50 years ago, the invention of this ploy of “off balance sheet” transactions was an open door to fraud that would likely occur but might never be proven.

We are a nation of laws not opinions. Our laws depend upon findings of fact, not opinions or political views. That is the only control we have to prevent fraud or at least bring fraudsters to justice, or at the very least prevent them from continuing to reap the rewards of their multiple violations of statutory laws, common law  and the duty of good faith, honesty and fair dealing.

So when the robowitness signs affidavits, certifications or other documents or testifies at deposition or in court, be aware that in nearly all cases, he/she is either an independent contractor with absolutely no knowledge or authority concerning the subject transaction (as a have defined it herein) or an employee of a subsidiary with no connection to any transaction involving the homeowner or both.

You can reveal the lack of actual personal knowledge and thus then lack of foundation for evidence proffered in a foreclosure by discovery, motions to enforce discovery, motions in limine and good cross examination which always depends upon one single attribute to be successful: follow-up.

And in many cases the robowitness is not nearly as stupid as his/her script makes him out to be. The  robowintess often knows everything that is contained in this article. Good cross examination can frequently reveal that — that is where the case turns from enforcement of a legitimate debt to a case in which both the claim and the claimant have not been proven by any standard.

That is all you need to win. You don’t need to prove how they did it. You only need to reveal the gaps that exist because the substance is not there — the claiming parties have all long since divested themselves, at a profit,of any interest in the debt, note or mortgage. There is no debt left to pay, at least not to them. Stop feeling guilty and be a warrior.

Beware of Magic Bullets

Departing from my usual format, there are a few things I want to say to people who are looking for relief from foreclosure and are hearing what they want to hear.

  • ONLY A COURT ORDER CAN STOP A FORECLOSURE. THERE ARE NO EXCEPTIONS
  • YOU CAN’T GET A COURT ORDER UNLESS YOU FOLLOW THE RULES AND THE LAW.
  • NOBODY HAS EVER OBTAINED SUCH AN ORDER WITHOUT A PROLONGED COURT BATTLE.
  • If someone tells you “just do this” they are partially or entirely wrong or worse.
  • Like everything life is complicated and that includes litigation. Any thought you are entertaining that you have some magic elixir in which you will summarily get a court order is delusional.
  • Every plan looks good on paper until it is implemented.

I am worried that those who in good faith are trying to find the magic bullet are promoting a misguided set of principles that will continue to make bad law. I admit that I contributed to this initially back in 2008 when I proposed that a quiet title action should wrap things up. I was dead wrong and the people who continue to pursue that strategy are always getting the same result: the homeowner loses and another case is either decided badly or worse, makes bad law with a legal opinion issued by a judge or panel of judges.

The truth is that a successful quiet title action is a rare bird along with similar strategies. And remember that an unenforceable document by one party is no reason to lift an encumbrance from the chain of title. In order to remove an encumbrance from the chain of title, the instrument must be completely void and no voidable. That means it should never have been recorded in the first place or that it is now void by operation of law. That is the ONLY circumstance in which a mortgage or deed of trust or assignment of mortgage can be lifted out of the chain of title.

I do agree with the strategy of attacking the assignments in a lawsuit or motion. The motions don’t get much traction but the lawsuits tend to do better if they are pursued aggressively and persistently, with full recognition that no bank or service is going to roll over and play dead even if you are completely correct on the law. Your opponents and their lawyers will do everything in their power to wear you down, undermine your confidence and the undermine the confidence of the lawyer representing the homeowner. Your strategy must be laser-focussed, supported by substantive law and procedure.

But I don’t agree that any lay person can accomplish an attack on assignments without a lawyer representing them. If the practice of law was just about the contents of a statute we wouldn’t need courts. It’s about procedure, rules of evidence and basic notions and biases of fairness.

It’s true that the substitutions of trustee, the assignments, the indorsements etc. are probably legally void. For the most part they are fabricated. An assignment of mortgage probably lacks any foundation.

But what you’re up against, for example, is the fact that an assignment of mortgage is often assumed to be an assignment of the debt and the note. An indorsement of the note is often assumed to be an assignment of the debt. Possession of the note is often assumed to be possession of the debt. Possession is then assumed to be the result of delivery. Delivery implies authority. Transfer of the note implies a transfer of the debt. Transfer of the debt implies the assignment of mortgage was proper under state statutes. And a proper assignment supports a declaration of default and foreclosure. A proper assignment means that party foreclosing is going to get the proceeds of sale on foreclosed property. End of story.

So that is where you stand when your challenge begins. Don’t kid yourself. The task is daunting.

Those conclusions are all legally valid assumptions and presumptions because that is what the law says should be done with these documents and events. Facial validity is like possession — it’s 9/10 of the law.

If you think you can simply challenge these assumptions and presumptions and events and quickly get an order that completely undermines the parties attempting to foreclose — without going through a grueling court battle — you are simply wrong.

That said, thousands of homeowners have indeed won based upon such challenges. Nearly all of those cases have been buried under seals of confidentiality. The way they won was by educating the judge, one small piece at a time, using persuasive court techniques that nobody other than an experienced trial lawyer knows how to use. By the time the case ended, the court, unwilling to strike all such foreclosures, was careful to detail the specific abuses and gaps in the case against the homeowner.

Bottom Line: If you have the money and the time and the commitment to oppose these illegal foreclosures, by all means do it. And if you must do it pro se, know that the opposition will steamroll you on procedure and the laws of evidence. So you must have some knowledgeable lawyer giving you specific guidance as each point becomes an issue. Don’t pursue any strategy that promises to be a quick fix.

 

PTSD: A Breakdown of Securitization in the Real World

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

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

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

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

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

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

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

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

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

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

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

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

Unworthy Trusts

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

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

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================
*
For purposes of clarity I am using US Bank as an example. It is the most common.
*
US Bank has NO information about the trust, the servicer or the account for the borrower. Thus the purpose of any deposition of any officer of US Bank should be solely to establish the absence of events and data that should otherwise be present.
*
This is why as counsel for the lender, lawyers will not recommend going forward with the refinancing. Your opposition is asking you to accept their word for the “fact” that they represent a creditor who is entitled to payment not just because there is paperwork indicating that, but because they are really owed the money.
*
Knowing the truth is a basis for establishing gaps and revealing it to the trier of fact but should NOT be a basis of making allegations that you will be required to prove. It’s a thin line and the lawyer needs to be aware of this division, or else you will end up with a burden of proof you cannot sustain and unanswered questions that prevent the closing of refinancing — unless the “source” of refinancing is from another player in the world of securitization.
*
The fact that securitization players would accept the paperwork is only testament to the willingness of all securitization players to engage in such conduct as to maintain an illusion of legitimacy. Other lenders rely on such conduct at their peril. Other lenders do not receive the reward from multiple resales of the same debt.
*
So in your inquiries to officers of US Bank you want to establish the following, in order to force the true creditor to come forward (if there is one):
    1. US Bank has no duties normally attributed to a trustee.
    2. The “US Bank” name is basically a royalty arrangement in which the name can be used but there is no further substance to its “role” as trustee.
    3. There is no bank account established or maintained by US Bank for the alleged Trust.
    4. US Bank has never received any money through any means in connection with the subject debt. The borrower’s payments to the servicer have never been received by US Bank on its own behalf, as conduit or as trustee for any trust.
    5. In prior foreclosures involving the same trust, US Bank did not receive the proceeds of the foreclosure sale.
    6. US Bank has no reason to expect that it would receive the proceeds of a foreclosure sale involving the subject debt.
    7. US Bank has no mechanism in place where the payment of money to satisfy the claimed debt would be actually deposited into a bank account for the trust that is controlled by US Bank.
    8. The beneficiaries of the trust do not receive any money from borrower payments, foreclosure sales, or prepayments, refinancing or any other monetary transactions. US Bank probably does not know if this is true or not. US Bank has nothing to do with what, if anything, the “beneficiaries” of the “trust” receive or don’t receive.
    9. US bank has no information regarding the identity of the beneficiaries of the “trust.”
    10. US Bank has no information regarding whether any party is a beneficiary of the “trust”.
    11. US Bank has no information regarding the existence of the trust other than the documents forwarded to it for purposes of the deposition.
    12. US Bank does not keep or maintain accounting records pertaining to the trust.
    13. US Bank does not keep or maintain any records or documents pertaining to the trust.
    14. US Bank does not issue reports to anyone regarding the trust or the subject debt, note or mortgage.
    15. US Bank does not include information relative to the business activity of the “trust” or the subject debt, note or mortgage in any report to any regulatory authority, Federal or State.
    16. Except for fee income, US Bank does not include information relative to the business activity of the “trust” or the subject debt, note or mortgage in any financial report published to the public or to any regulatory authority, Federal or State.
    17. There is no “trust officer” appointed by US Bank to actively manage the affairs of the “trust.”There is no “trust officer” appointed by US Bank to actively manage the affairs of the subject debt.
    18. US Bank neither accepts nor gives any instructions to anyone regarding the affairs of the “trust.”
    19. US Bank neither accepts not gives any instructions to anyone regarding the subject debt, note or mortgage.
    20. US Bank has no power to either accept or give instructions regarding the trust or the subject debt.


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

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

Gary Dubin: Proposed Mortgage Integrity Act (MIA):

For ten years, Gary Dubin in Hawaii has been practicing law defending homeowners from foreclosure. He has preached his own version of how to combat foreclosure fraud. And he has practiced what he preached. I find his work enlightening and refreshing. So when I read his Proposed Mortgage Integrity Act (MIA) I decided to republish it in its entirety. Some of what he proposes is new but most of it, in my opinion, is a much needed tune-up of the wording of existing law.

His article and proposals are extremely well-written, objectively stated, reasonable and necessary. In my opinion Dubin’s quest  should be supported by homeowners and non homeowners alike as it proposes to correct a deficit in our legal system, our economic system, and our society. The inequality of wealth that was exacerbated by what amounts to outright theft by a handful of banks can be corrected and our economic system can be stabilized if we return to the rule of law.

I have added commentary where I thought it might help readers understand WHY homeowners should win and how the current system is rewarding theft.

Go here listen to replays of previous Gary Dubin shows and find reference documents:
http://www.foreclosurehour.com/past-broadcasts.html

——————————-
By Gary Dubin

The Proposed Mortgage Integrity Act (MIA): Some Common Sense Urgently Needed Practical Institutional Reforms For A Foreclosure System Completely Out Of Service…

I am entering my tenth year as a radio commentator specializing in developments in the foreclosure field following the Mortgage Crisis of 2008.

Despite isolated legislative and judicial attempts at reform during the last ten years discussed on The Foreclosure Hour, for the vast majority of American homeowners facing foreclosure little unfortunately has really changed.

False documentation and myopic judicial oversight still predominate in foreclosure courts, while hundreds of millions of dollars in hard earned equity is literally stolen in the loan securitization process in one of the largest fraudulent transfers of wealth to a few inside traders in United States history.

[EDITOR’S NOTE: He’s right. The direct meaning of this is that a handful of investment banks received trillions in investments. Then they originated or acquired loans eventually using the fictitious name of a nonexistent trust. But it was the investment bank that was the real player.
Then they sold the debt and the paper multiple times through disguised derivatives. This disbursed claims to debt ownership to dozens of players, who eventually came to rely on the value of the paper (contract or derivative) they acquired as set by the marketplace in private transactions rather than the intrinsic value of the debt, thus freeing the investment bank from ever accounting for the debt.
In short, none of the players are desirous or expecting any payment from parties who were borrowers with a debt that has now been completely satisfied. And claimants in foreclosure neither expect nor receive the remedy (foreclosure) that lawyers claim. The proceeds of foreclosure sale never go to the party named as claimant.
So the bottom line is that the investment bank is behind everything and it has long since received multiples of its investment in the loan. Having raked in an average of $3-$4 million on each $200,000 loan “repayment” of the loan was irrelevant and unwarranted. Neither the original investors nor the borrowers are given any credit for the receipt of proceeds of sale of the debt.
But foreclosure served as a vehicle to galvanize the myth that the debt still existed (and the note and mortgage could be enforced) and was owned by at least someone in the orbit of the investment bank, when it had long since departed. Judicial oversight has both failed and refused to consider the possibility that any alleged owner of the debt has already been paid in full and many times over.
That recognition of these basic facts produces a windfall for the homeowner and a death blow to the shadow banking market is not a consequence of anything the borrowers did, but rather a consequence of running a PONZI scheme. The windfall aspect might be corrected through the use of equitable doctrines; but in all events the promissory note and mortgage cannot be enforced to collect on a debt that has been sold to third parties.
The actual truth is that the actual claims to the debt, note and mortgage are buried deep within the shadow banking market and cannot be traced because they are, according to law, private contracts that need not be registered anywhere and are transferred in trading that is never recorded anywhere. The current remedy allowed by the courts is based entirely on the premise that someone who actually owns the debt is getting paid from the proceeds of liquidation of the “collateral.” This is entirely untrue. It never happens except for instances where the original lender is still the creditor.
The declaration of delinquency or default from a lawyer purporting to represent a nonexistent trust or an existing servicer when the declaration relates to a party who is entirely removed from ownership or any right to the debt, note or mortgage is obviously fatally defective, as many court cases have demonstrated. But the players, for a fee, must pretend that the debt is real and the the note and mortgage need to be enforced. That is the origin of the need for fabrication, backdating, forgery and robosigning.]

Backlogged courts applying mostly outdated traditional mortgage concepts remain ill-equipped to protect American homeowners from mortgage abuse.

Waging a foreclosure defense is still beyond the financial means of most homeowners, and those that can find the money to hire an attorney, find that few if any attorneys are trained in foreclosure defense and those that are, are usually less than adequately competent.

New and reform minded decisions by State Supreme Courts are nevertheless rarely adhered to by many of their state trial courts.

Hundreds of billions of dollars in sanctions levied by state and federal governments against lenders and loan servicers detailing mortgagee abuses have nevertheless failed to stop such identical abuses, and sanction money earmarked to assist borrowers has been largely diverted to other State uses.

Meanwhile, there is literally a war against foreclosure defense attorneys still taking place in our courts and among attorney regulators who think homeowners in foreclosure are just deadbeats and attorneys representing them are just preying on vulnerable defendants.

The present mortgage and trust deed foreclosure systems in the States simply do not work except for lenders and pretender lenders, whereas the federal banking system, specifically the Government Sponsored Enterprises Fannie Mae and Freddie Mac as well as MERS, are the real cause of and not the cure for most of the present serious problems in the foreclosure field.

Nevertheless, the reforms that are needed are not expensive nor complex, just a matter of simple common sense adjustments to a foreclosure system that is centuries old and no longer compatible with the needs of a democratic society under siege by greedy and unscrupulous quick-buck securitization thieves.

On today’s show John and I unveil our view of the general outlines of a proposed overhaul of the foreclosure system in the States, what we call legislation wise “The Mortgage Integrity Act” (MIA for short).

We intend to present this proposal later this year in the format of model legislation for adoption by State Legislatures.

Meanwhile, we hope to get our listeners’ comments and suggestions before drafting the actual Legislation in the form of a Model Act to be sent to the judiciary committees of every State Legislature.

The Model Act will have three main parts. Part One will address the nature of the emergency, Part Two will address the enacted institutional reforms, and Part Three will address transitional issues.

Part One, to be drafted in whereas clauses, will state the following:

1. Keeping record track of and protecting interests in land within each State has historically been an exclusive State function in the United States presumably protected by the Tenth Amendment to the United States Constitution;

2. Such protection has also been a strong State public policy, affecting the economic as well as the social and political well being and health of citizens in each State since respective statehood.

3. That exclusively State function has been recently undermined by the federal government in numerous ways and is responsible for the present mortgage crisis.

4. The result has been the fostering of corruption at virtually all levels of state foreclosure systems.

5. As a result, the State Legislature hereby declares a State Emergency, requiring a restructuring of the State foreclosure system through immediate institutional reforms as well as transitional measures to safeguard the wealth and well being of our citizens from increasing confiscatory forfeitures.

6. Ironically a foreclosure system said to have its goal to stabilize real estate markets in the United States has to the contrary destabilized real estate markets in this State, driving down the value of properties and dislocating tens of thousands of homeowners annually.

Part Two, to be drafted in enactment clauses, will state the following:

1. The existing foreclosure related statutes in this jurisdiction [setting forth the affected statutes by name and number] are hereby amended, abolished and/or replaced, as follows;

2. The exercise of personal jurisdiction by State Courts shall henceforth require service of all complaints by personal service, the proof of which shall henceforth require contemporaneous photographs of those being served. Substitute service is abolished.

3. Service by publication in lieu of personal service shall require attempts to serve defendants first by certified mail, return receipt requested, and next by certification first that an independent investigative agency licensed by the State has made a diligent effort to locate the defendant and within a reasonable time no shorter than two months has failed to do so, using nationwide tracking services.

4. There shall be only one form of combined promissory note and mortgage (or deed of trust) enforced in this jurisdiction, an inseparable ‘Mortgage Note”, which shall only be valid and enforceable if and when duly recorded at a County or Statewide recording office, and which shall not be classified as a negotiable instrument, which may only be transferred by an assignment similarly required to be recorded to be valid and enforceable.

5. Recording offices shall be staffed by attorneys who shall be responsible for researching and approving the standing of all claimed holders of recordable Mortgage Notes prior to their recordation, their compensation to be adequately funded through increases in recording fees taxed upon recorders of securitized trust instruments.

6. Enforcement of Mortgage Notes shall require proof of notices of default consisting of return receipt requests together with personal knowledge affidavits attesting to preparation and mailing by the preparers and mailers.

7. Enforcement of Mortgage Notes shall also require verification of the entire loan general ledger by an independent CPA with no institutional connections, direct or indirect, to the foreclosing plaintiff or its representatives or affiliates.

8. The State Insurance Commissioner is directed to investigate providing mortgage default insurance for the benefit of homeowners.

9. There shall be a specialized foreclosure court in every County in the State, whose Judges shall be prohibited from directly or indirectly having any ownership interest in or any other connection with any financial institution.

10. Mortgage defaults shall by law be considered confidential and not disclosed to anyone other than the affected borrowers, accommodating mortgagors, and guarantors under penalty of fines and imprisonment, to avoid foreclosure blight lowering the market value of affected properties.

11. Foreclosure complaints shall similarly be considered confidential and filed under seal, to avoid foreclosure blight lowering the market value of affected properties.

12. Foreclosure auctions are hereby abolished. Properties subject to foreclosure shall be sold in the ordinary market place by licensed real estate brokers and listed in the Multiple Listing Service as directed by the Foreclosure Court.

13. Deficiency judgments are hereby abolished.

14. In cases in which the Foreclosure Court finds that there is little or no equity remaining after payments required to be made to a foreclosing plaintiff, a foreclosure defendant must vacate the premises within a reasonable time no less than 90 days or must elect to forfeit ownership in exchange for an immediate lease agreement preserving possession for a stated period of time including indefinitely as determined by the Foreclosure Court provided a monthly market leasehold rental payment is agreed to and timely paid.

15. In cases where the Foreclosure Court finds that there is substantial equity remaining after payments required to be made to a foreclosing plaintiff, a foreclosure defendant my elect to retain possession as a tenant as aforesaid and shall have the right to recover title including therefore his equity in the property within a time period of at least one year to be determined by the Foreclosure Court provided at the time of the exercise of that right the foreclosure defendant reimburses the foreclosing plaintiff for whatever amounts may then be due on the mortgage note.

Part Three, covering transitional matters, as follows:

1. The dates of effectiveness of the various enactments will have to be tailored to existing conditions and between new and existing secured loans.

2. The respective powers between the States and the federal government in various respects above will likely require negotiation and litigation. Fortunately, the United States Supreme Court has recently shown deference to the States in related issues involving financial regulation.

Please join John and me today and email us your comments and suggestions. Let us know if you think we missed anything and if there any other way you can think of to change a system so badly out of service?

——————————-
Gary Victor Dubin
Dubin Law Offices
Honolulu, Hawaii 96813
Office: (808) 537-2300
Email: gdubin@dubinlaw.net
Licensed in California and Hawaii

Caliber and LSF9 Trust Example of Smoke and Mirrors

The lesson is keep your eye on the ball. The natural human reaction to an affidavit is to assume it is true. We assume that it would not be submitted if the lawyers knew it wasn’t true. And in most cases people don’t lie in affidavits. But they do mislead sometimes by leaving out context. And then there are affidavits and declarations fabricated, executed, filed and even recorded in  foreclosure cases which are mostly lies and virtually all misleading.

To reveal this you must take your time in reviewing the documents and affidavits submitted. They were created so that at a glance everything would seem in order. On closer reading you can see that they don’t actually say anything of value and therefore should not be considered facially valid documents conveying or certifying anything.

==============================
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
==========================

Bill Paatalo wrote the following in September 2018:

In 100% of the cases I’ve investigated regarding “U.S. Bank Trust, N.A. as Trustee for LSF9 Master Participation Trust,” the servicer (most often “Caliber”) provides the exact same type of affidavit. This is all they ever produce, and here, the court says it doesn’t cut it.

“Moreover, Mr. Cantu is not an employee of Plaintiff or Wells Fargo and therefore can not attest to what is in the possession of the Plaintiff or Wells Fargo. As noted above, the copy of the Note and allonge does not contain any endorsement or date which would support that the Plaintiff had possession when the action was commenced. The affidavits of Caliber’s Default Service Officer did not give any factual details of a physical delivery and, thus, failed to establish that the plaintiff had physical possession of the note at the time the action was commenced, and as such Plaintiff is not entitled to summary judgment. (see Wells Fargo Bank, NA v Burke, 125 AD3d 765, 766 [2d Dept 2015]; US Bank N.A. v Faruque, 120 AD3d 575, 577 [2014]; Bank of NY Mellon v Gales, 116 AD3d 723 [2014]). Accordingly, it is hereby

ORDERED that Plaintiff’s motion is denied, and it is further”

So what foreclosure mill lawyers are doing is filing affidavits and declarations. That part of it is true. They are filed and sometimes recorded.

But what is in those affidavits and declarations is not supported by anything on the face of the instrument, or what is attached to it, nor even by reference within the instrument to a fact or document in the public domain. So it is wholly useless without resort to extrinsic evidence (testimony and exhibits), which means that it cannot be considered a facially valid document.

Putting this into practice is actually not hard. You simply need to break down the wording so that each phrase or statement is analyzed for the truth of the matter asserted.

The LSF9 Master Participation Trust is but one example. It is named but not described. So where normal custom and practice would dictate that it be named and described, the foreclosure mill lawyers are convincing judges to treat it as though it was described.

When the homeowner is described it is usually with a name, and place of residence or as title owner of certain property. When a Trust is described it is named without a place of residence and with no direct statement that it owns anything. In other civil pleadings, if the LSF9 Master Participation Trust was real, it would say that it was a common law (or statutory) trust organized and existing under the laws of the state of XXXXX with its principal place of business at YYYYYYYY in the City of ZZZZZ.

If you do a thorough search of all cases, you will not find a single instance in which a trust is named as Defendant except certain cases where the homeowners are suing the apparent trust under the misapprehension that it is an existing legal entity. On the finance side nobody refers to the trust much less sues it. There are a few cases in which banks claiming to be Trustees of a claimed REMIC Trust sued someone for delivering improperly underwritten loans, but no case in which the allegation is made that the Trust actually purchased those loans. All those cases settle long before trial.

Back to LSF9:

The lawyers submitted an affidavit that was probably forged. But assuming it wasn’t, the affidavit said nothing that could be accepted as evidence of anything because the knowledge of the alleged affiant, the employment of the alleged affiant and the authority of the alleged affiant were nonexistent.

But it gives the appearance of having facial validity even if there is none. It has a named affiant, a statement  and a notarized signature.

As the court found in New York, the affiant failed to state the basis for his knowledge which could NOT be implied from the affidavit since it did not recite that he was an employee of the Trust, the Bank or any other presumed party in interest.

Consider the following hypothetical extreme example which translates the affidavit:

My name is John Smith. I am an independent contractor for Caliber. I was hired to sign this affidavit. I have no knowledge of anything contained in this affidavit. I was not present in any capacity when any of the events or documents recited in this affidavit occurred or were created. I have never been an employee of any entity whose records are described in this affidavit nor did I have any role or knowledge of the events or the documents or records referred to herein. However I am familiar with the name Wells Fargo and I can see the name “LSF9 Master Participation Trust” on the affidavit prepared for me to sign.

Such affidavits are common place ONLY in one place, to wit: in the courtroom where a foreclosure is pending. And in all cases, except foreclosures, such affidavits are instantly rejected.

Why Fabrications? Why Forgeries?

In an increasing number of foreclosure cases, homeowners are going head to head with the lawyers who file claims on behalf of entities on the basis of fabricated and/or forged instruments that in many cases were also recorded in county records. Lawyers like Dan Khwaja in Illinois are getting clearer and clearer about it. They hire experts who understand exactly how the notes are mechanically created and the endorsements are not real signatures.

The key question is why would the notes have been fabricated and forged when there actually was a closing and a note was actually signed? We’re talking about the financial industry whose reputation depends upon safeguarding all signed documents. If they didn’t safeguard the documents and instead destroyed them or “lost” them, why was that allowed to happen?

==============================
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
==========================

So we have a case in Illinois where lawyers filed a judicial foreclosure on behalf of Bank of New York/Mellon (BONY) as trustee (i.e. representative of) “holders” of certificates. The lawyers attach a copy of a note and indorsements. Khwaja hired an expert who found quite definitively that the note and the endorsements were all fabricated (forged). Khwaja has filed a motion for summary judgment.

Here is my analysis:

*
The lawyers who filed the claim have a serious problem. If they cannot convince the judge that they have no need to respond they are dead in the water. They must either pay someone to commit perjury or seek to amend with an actual original note. In view of prior studies that show that most (or at least half) of all notes were “lost or destroyed” immediately following the “closing” combined with your expert on hand, coming up with the original note is not an option.
*
And that brings us to the question of “why?” If there really was a closing at which the borrower signed documents, why do they need fabricated documents? To me, the answer is simple. In order to sell the same loan multiple times they needed to convert from actual to imaged documents. The actual one had to disappear. And the handful of megabanks who had a virtual monopoly on tens of millions of mortgage transactions made it “custom and practice” to use images rather than actual documents. [This practice has spilled over to property sale contracts where neither party gets an original].
*
And we have the additional issue which is presented by the foreclosure complaint. It says that BONY appears on behalf of the holders of certificates. The simple question is “so what?”
*
Being holders of certificates means nothing. It leaves out any assertion that the holders of the certificates are owners of the certificates, or anything that might identify those “holders”. So the proceeds of foreclosure could then go to whoever was chosen by the parties actually pulling the strings.
*
They are asking the court to fill in the blanks. They want the court to draw an inference without ever stating the fact to be inferred, to wit: the holders of the certificates are owners of the certificates who are therefore owners of the debt, note and mortgage. There simply is no such allegation nor any exhibit indicating that is true. The reason is that it is not true.
*
So who is really the Plaintiff? Supposedly not BONY who is appearing in a representative capacity.
*
If “sanctions” were applied against the “Plaintiff” BONY would claim it is not the actual party and that the unidentified “holders” of certificates are the proper party or perhaps an implied trust.
*
So then is it the certificate holders, represented by BONY? But they don’t have any right, title or interest to the subject debt, note or mortgage. The prospectus and certificate indentures make that abundantly clear in most cases.
*
Examining what happens after a foreclosure is “successful” provides clues. Neither BONY nor any certificate holder ever receives the actual money from the proceeds of the purported sale of the property.
*
So who does?
*
As the one party with actual control over the loan receivable, the investment bank that created the “securitization” scheme is the only party that comes close to being an actual creditor. But here is their problem: that loan receivable has been sold multiple times. This not only leaves them with no claim to the debt, but a surplus of funds over and above the amount due on what was the loan receivable. It’s basic accounting and bookkeeping. And if that were not true the banks would not be doing it.
*
So in the real world it is the investment bank that gets the proceeds of a foreclosure sale. But they do it as the “Master Servicer” of an implied (and nonexistent) trust. The money simply disappears.
*
In order to get away with selling the debt multiple times they had to make each sale a non recourse sale. And they did that. So the buyers of the debt, note and mortgage had no actual legal title to the debt, note and mortgage and no recourse to the borrower to collect on the unpaid debt.
*
THAT leaves NOBODY as owner of a debt that has probably been extinguished and reveals the paper issued to buyers/investors as essentially the issuance of cash equivalent instruments (also known as currency). And THAT is the reason the banks, after  two decades of this nonsense, have yet to come to court and simply say “here is proof of our funding of the origination or purchase of the debt, note and mortgage.”
*
If they did, they would be admitting to lying in millions of foreclosure cases over at least a 15 year period of time. Their scheme effectively concentrated the risk of loss on investors and borrowers while literally retaining all the benefits of supposed loan transactions for the sole benefit of the intermediaries, who then leveraged loans multiple times.
*
This translates as follows: the money taken from investors is an unsecured liability of the investment bank. To be sure that has a value — but not a value derived from loans to homeowners. THAT value was taken by the investment bank who cashed in on it already.
*
Note: For certain second tier investment bankers there were transition periods in which they were at actual risk. Examples include Lehman and Bear Stearns. But the top tier was able to sell forward on the certificates and never commit a single dime of their own money into the securitization scheme even in transition. But by pointing to Lehman and Bear Stearns they were able to convince policy makers that they were in the same position. This produced the “bailout” which was essentially the payment of even more money for losses that did not exist.
*
In an odd twist of irony, Wells Fargo was the only party (2009) that admitted to no loss but was forced to take bailout money so that other “less fortunate” parties would not be singled out as weak institutions.
*
In truth the AIG bailout and similar bailouts were merely payments of extra profits to Goldman Sachs and some other players, leaving investors and borrowers stranded with nearly worthless investments and collapsed markets for both homes, whose prices had been inflated by over 100% over value, and a nonexistent market for the bogus certificates that the Fed chose to revive by its purchasing program of “mortgage bonds” that were neither bonds nor backed by mortgages.
*
Despite the complexity of all this, on a certain level most people understand that the banks caused the misery of the meltdown and profited from it.  They also understand that it is still happening. The failure of government to deal appropriately with the existential threat posed by the megabanks clearly played into and perhaps caused the social unrest around the world in the form of “populist” movements. And until governments deal with this issue head-on, people will be looking for political candidates who show that they are willing to take a wrecking ball to the banks and anyone who is protecting them.
*
In the meanwhile, an increasing number of homeowners (again) are walking away from homes in the mistaken belief that they have an unpaid debt to the party named as the claimant against them.

Facially Invalid Recorded Documents

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

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

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

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

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

==============================
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
==========================

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

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

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

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

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

Back to Real Property 101.

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

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

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

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

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

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

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

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

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

 

FLA S Ct Reverses Course on Homeowner’s Award of Attorney Fees and Raises Other Issues for Defense of Foreclosures

For those of us that have access to the data, we know that homeowners are winning foreclosure cases all the time. Nobody else knows because as soon as a homeowner wins or gets into a winning position they are offered money for their silence. The situation worsened when Florida and courts in other states turned down the homeowner’s demand for attorney fees after the homeowner had flat out won the case — especially where the case was dismissed for lack of standing.

Here the homeowner once again wins, having advanced several defense narratives. The homeowner applies for recovery of attorney fees and the demand is rejected because the loan contract no longer exists or because the party seeking to use it was shown not to be party to it, at least when suit was commenced. The Florida Supreme Court reversed that decision and rejected others like it.

Recognizing the danger of the erroneous rulings from the trial court and the district courts of appeal, the Court rejected arguments that a dismissal, voluntary or otherwise, based upon lack of standing meant that the loan contract no longer existed. While not completely abandoning the lower courts the Florida Supreme Court has narrowed the issues such that it is again almost always arguable and even inevitable that if the homeowner wins the foreclosure case an award of fees will follow.

fla s ct attny fees 1-4-19 sc17-1387 Glass v Nationwide

see also Follow Up Article to this Article

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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This case opens a can of worms for the banks and servicers and corroborates much of what I have been writing for 12 years.

At issue was the homeowner’s right to prevail on an attorney fees award after winning the case in the trial court. This has previously been denied on the basis that cases dismissed for lack of standing meant that there was not contract. But the Florida Supreme Court says that the fact that just because the party involved had no right to enforce the contract doesn’t mean there was no contract.

The clear implication here is that the court did not want the erroneous rulings of trial courts and appellate district courts to be construed as completely canceling the loan contract. Any other ruling would be inherently ruling on the rights of unidentified third parties who DID have a right to collection of payment from the borrower’s debt and who did have a right to enforcement — without any notice to them because they are undisclosed and unknown.

The Supreme Court ruled that failure to allege or prove standing does not negate the fact that the homeowner is the prevailing party and entitled to fees under F.S. 57.105(7).

Citing its own decision in 1989, Katz v Van Der Noord 546 So 2d 1047, the Supreme Court held that even if the contract is rescinded or held to be unenforceable the prevailing party is still entitled to fees under the reciprocity provisions of F.S. 57.105(7).

This upends a basic strategy of the banks and servicers. Up until this decision they were virtually guaranteed an award of fees and costs if they won and immunity to fees if they lost. This reopens the fees issue and may give attorneys a reason to accept foreclosure defense cases — even on contingency or partial contingency.

But the court, perhaps in dicta, also mentions whether the note is negotiable, quoting from the homeowner’s arguments and pleadings.

Up until now the mere existence of the original note and in many cases a copy of the note, was sufficient to regard the note as a negotiable instrument. But the Florida Supreme Court is hinting at something here that the banks and servicers really don’t want to hear, to wit: it takes more that announcing the existence of a note to make it negotiable. This is not so.

Which brings me to my final point: read carefully the day the claimant is introduced and you will probably find that the note and assignment are not facially valid because they require reference to parole or extrinsic evidence. This bars legal presumptions, at least in the absence of a specific reference to the documents supporting the execution of the instrument as a substitution of trustee, an assignment or an endorsement.

The court was more than hinting at the idea that subsequent treatment of the note, which may have been a negotiable instrument at the time of execution (if the “lender” was in fact the lender). The question is whether the note is facially valid, to wit: whether the note specifically names a maker, payee and an unconditional promise to pay. If the originator was not the lender then extrinsic evidence would be required to prove the loan and the debt and the party who would have been appropriately named as payee on the note.

If subsequent indorsements or assignments for a note that WAS negotiable remove certainty from one or more of the elements of a facially valid instruments, then it is no longer a negotiable instrument. And THAT means that the all “reasonable” assumptions and legal preemptions are taken off the table.

The reason is simple. In order to be a negotiable instrument the assignee or successor must have certainty as to the parties and terms of the note. If extrinsic or parole evidence is required to provide that certainty the instrument is not negotiable and thus not entitled to any assumptions or presumptions.

So for example (taken from another case) when a Substitution of Trustee occurs in a nonjudicial state and it is executed by “U.S. Bank National Association, as trustee, in trust for registered Holders of First Franklin Mortgage Loan Trust, Mortgage Loan Asset-Backed Certificates, Series 2007-FF I, by Select Portfolio Servicing, Inc., as attorney-in-fact” then there are several points that require extrinsic or parole evidence, making the note non negotiable or at least arguably so.

In this scenario for an assignee to take a note from a party claiming rights to enforce in this instance one must know

  1. The name of the Trust, and the jurisdiction in which it was organized and is now existing.
  2. The instrument by which US Bank claims to be trustee
  3. Identification of “registered holders”
  4. The identification and content of the certificates
  5. The instrument by which SPS claims to be “attorney in fact”
  6. If you look closely you will also see that there is a question as to whom it is claimed that SPS is representing as attorney in fact. In any event “attorney in fact” means that a power of attorney exists but without specific reference to that power of attorney by date and parties, extrinsic or parole evidence is required meaning that no assumptions or legal presumptions may be made.

In other words the note cannot be accepted by anyone without extrinsic evidence. The fact that documents are apparently accepted by the assignees doesn’t change anything as to the facial validity of the document. Without facial validity there can be no negotiability under Article 3 of the UCC. Without negotiability there can be no assumptions or legal presumptions and thus the claimant must prove every element of its claim without presumptions.

And of course when the homeowner wins an award of attorney fees is now once again probable in addition to court costs.

Remember always: the point is not who can get away with enforcement. The point of the law is assuring that the owner of the debt is the one enforcing the debt and collecting the proceeds of enforcement. Before false claims of securitization this premise was almost universally true. Now it is rarely true that the true owner of the debt is represented.

And the apparent absence of such a party due to manipulation of the debt by intermediaries, does not legally create a vacuum into which anyone with knowledge and access to data may step in and claim rights of enforcement. As stated in California Ivanova decision the law does not allow the borrower’s debt to be owed to anyone whose premise is simply that they claim it.

Using TILA Rescission as Jurisdictional Issue

I think TILA Rescission should be approached as a jurisdictional issue since it focuses on the procedural aspects of the TILA Rescission statute. In other words it should always be front and center.

I think a problem with TILA Rescission is that not even borrowers understand that the rescission issue is over. By asking a court to  make rescission effective you underline the correct premise that rescission has already occurred. All your pleadings after that should be based upon that premise or you undermine yourself.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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The plain wording of the statute says that rescission is effective, as a matter of law, when delivered (or sent via USPS). SCOTUS says no lawsuit is required to make rescission effective. The fact that the banks treat it as ineffective is something they do at their own peril. The statute explicitly says otherwise along with REG Z procedures based on the statute 15 USC §1635 and the Jesinoski decision.
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Under the statute and Reg Z the loan contract is eliminated and replaced with a new relationship under the statute — a set of procedures creating a statutory claim for the debt. It follows that ONLY a party who is an actual creditor or owner of the debt can even appear much less claim or defend anything about rescission. If they claim standing from the loan contract, they have no standing.
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Hence if the formers holders of the now nonexistent note and mortgage are also creditors they have no problem. They can plead anything they want, including defenses to or motions (or lawsuits) to vacate TILA Rescission. 
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BUT usually the former holders of the loan contract (note and mortgage) were using the loan CONTRACT as the sole basis of their standing — desiring to raise legal presumptions from the existence of those contracts (note and mortgage).
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What happens next is incontrovertible by logic or legal reasoning. Although they might be named parties to an action pending in court such ex-holders have lost their standing in that court action or they never had it to begin with. By operation of law the note and mortgage from which all their claims derive do not exist. That is a jurisdictional issue and it MUST be decided against the banks — by operation of law. Failure to present this has resulted in a number of escape hatches for judges who don’t like TILA Rescission. Your job is to close those hatches.
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The whole point of the rescission strategy is to remove any possibility of an arguable claim for standing to foreclose on the now nonexistent mortgage or deed of trust. Unless the claim for standing is based upon ownership of the debt subject matter jurisdiction is absent.
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This means that no claim or defense against the effectiveness of the rescission can be raised by anyone other than the owner of the debt.  
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This also means that there can be no foreclosure because the loan contract has been replaced by a statutory “contract.”
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Borrowers undermine this premise by filing lawsuits asking the court to declare that the rescission is effective. The TILA Rescission statute 15 USC §1635 has already answered that and THAT is what should be pled. SCOTUS has also already answered that in the Jesinoski case. Asking the court to declare it so means that you take the position that the statute has not already answered that question, that SCOTUS has not already ruled and that therefore it is now up to the trial court to make a ruling.
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You are opening the door for argument when there is no such argument intended by the statute or the US Supreme Court. Upon being invited to do so a judge who doesn’t like the statute will come with reasons not to declare the rescission effective — usually based upon objections from parties who could not possibly have standing to raise such objections.
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If that is true (and it is true by definition in our legal system once the highest court has ruled) then a party seeking relief from rescission would need to allege that they are the owners of the debt and then  prove it without reference to the note or mortgage. In other words they would need to prove they funded the debt or they purchased it with actual money.
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We all know that the fake securitization scheme was entirely dependent upon illegally funding the origination and purchase of the loans in the fictitious name of the trust for the account of the underwriter and that the investors were cut off contractually from having any right, title, interest or even opportunity to review or audit the portfolio of loans claimed to be in a fictitious pool that was being managed by a trust that did not exist, which in turn was managed by a trustee that had no powers of administration for the benefit of nonexistent beneficiaries.
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Hence the problem of the banks is clearly that they can’t prove funding or purchase because doing so would expose their illegal activities. Whether this would actually lead to a free house is debatable, depending upon the exercise of equitable jurisdiction in the courts.
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What is clear is that the banks were told by their own lawyers not to ignore rescission or they would lose everything. They ignored it anyway believing they could steamroll through the courts, which was in fact an accurate measurement of their own power.
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BUT as the banks persist along this strategy they continually build the inventory of homes that by operation of law are still owned by the borrowers, all other actions being void ab initio, not voidable by any stretch of the imagination.
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AND the banks are by their own actions and inaction causing the debt to slip away from them as well. Under TILA Rescission the old loan contract is replaced with a new statutory contract. Actions for enforcement under that contract must be based on violation of TILA. TILA has a statute of limitations. Thus claims beyond the statute of limitations are barred. And THAT means that claims for the debt are barred after the statute of limitations (on claims arising from TILA) has run — as result of plain arrogance of the banks — and no fault of any borrower.

Foreclosure Defense Discovery Timeline

In answer to a number of very similar questions about the paid services we provide on www.lendinglies.com regarding the subject of Discovery, I submit the following:

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The TERA will definitely give you narrative from which you can cut and paste questions or at least ideas on what questions you could ask in discovery. But it is far from a complete analysis for discovery. It is a part of the analysis required to come up with a complete defense narrative that you can use to guide you through litigation and educate the judge on what is wrong with the false case against you and your property (if that is the case).
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The Case Analysis goes much deeper and completes the defense narrative as well as providing you with more in depth insight that can be used for cut and paste into discovery and the narrative for defending your discovery requests which most certainly come under attack.
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Discovery is a multi faceted approach.
  • First you have the QWR and DVL.
  • Then you have the complaints to the State AG and the CFPB.
  • Response to statutory letters often provide the basis for the next step, because your opposition will evade, lie, and provide inconsistent answers. 
  • It is not uncommon to see them back off of a sale or dismiss a foreclosure case entirely when confronted with questions and accusations from the homeowner. 
  • The next step in the discovery process is the filing in court and service of discovery requests (usually limited to a specified number — i.e., you might need to submit more than one set) in the form of one or more of the following:
    • Interrogatories
    • Request to Produce (only aimed at party who is named in litigation)
    • Subpoena for documents
    • Subpoena for deposition duces decum
    • Request for Admissions
    • Request to enter or inspect
  • Following the filing and service of any discovery request you will almost definitely be met with objections and motions to strike and so forth. You must use the defense narrative to justify your questions and to answer how your request might lead to the discovery of admissible evidence. This part requires an aggressive stance — one that is often missed by pro se litigants and foreclosure defense lawyers.
  • Once you have received an order commanding compliance with your discovery request you will probably need to consider filing a motion for sanctions for non compliance. (We know that they will never admit that there is no trust or that the claimant has no interest in the loan or that the claimant won’t receive the proceeds of liquidation of the property.)
  • And lastly you will need to preserve objections before trial and possibly file a motion in limine to restrict the evidence your opposition can introduce at trial to the extent that includes discovery items they refused to give you.
While the questions will generally follow the same theme from case to case your discovery will be shot down if it is not specific according to your  defense narrative for this case alone.
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We provide all these services either through www.lendinglies.com or by direct retainer of Neil Garfield (neilfgarfield@hotmail.com) as an expert consultant or for legal consulting and analysis that can be used in conjunction with and in support of a local attorney.
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In order to put all these elements into an actual plan for your case alone, you must submit the REGISTRATION FORM to us before even beginning. Put as much information on then form as you can do. The less information you give the more work we must do and must charge you for us to do the work.
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Finally that leads to the Consult. Usually a thirty minute CONSULT is sufficient. In that conversation we decide on the path that you wish us to take in preparing pre litigation and litigation documents. Later Consults are for strategic assistance in confronting the efforts of the lawyers for often nonexistent clients to obfuscate, wear you down and thus defeat you.
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Generally speaking we require consults to be ordered with the PDR (Preliminary Document Review). This pays us to review some of your documents and the most recent reports and correspondence in preparation for the Consult with me, Neil Garfield.
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But all of this work is virtually identical to the background work needed to defend against a motion for summary judgment. However, if you want us to write the opposing motion and brief you need to hire us to do that by direct retainer of Neil Garfield (neilfgarfield@hotmail.com) as an expert consultant or for legal consulting and analysis that can be used in conjunction with and in support of a local attorney.

Punitive Damages for Violations of Automatic Stay in Bankruptcy §362

Since 2008 I have called out bankruptcy practitioners for their lack of interest in false claims of securitization. The impact on the bankruptcy estate is usually enormous. But without aggressive education of the presiding judge the case will not only go as planned by the banks, it will also lock in the homeowner to “admissions” in bankruptcy schedules and orders that lead to a false conclusion of fact.

Where a pretender lender ignores the automatic stay Bankruptcy judges are and should be very harsh in their penalty. The stay is the bulwark of consumer protection under bankruptcy proceedings which are specifically enabled by the U.S. Constitution. Hence it is as important as free speech, freedom of assembly, freedom of religion and the right to keep and bear arms.

The attached article shown in the link below gives the practitioner a running start on holding the violator responsible and in giving the homeowner a path to punitive damages, given the corrupt nature of the mortgages and foreclosures that arose during the great mortgage meltdown.

This might be the place where a hearing on evidence is conducted as to the true nature of the forecloser and a place where the petitioner/homeowner will be given far greater latitude in discovery to reveal the emptiness behind the presumptions that the foreclosing “party” exists at all or to show that it never acquired the debt but seeks instead to enforce fabricated paper.

Remember that in cases involving securitization claims or which are based upon apparent securitization patterns the named “Trustee” is not the party in interest. The party is the named “Trust.” If the Trust doesn’t exist it doesn’t matter if the Pope is named as the Trustee, there still is no existing party seeking relief from the Court.

see Eviction Can Lead to Sanctions Including Punitive Damages for Violation of Automatic Stay

The challenge here is that most bankruptcy lawyers are not well equipped for litigation. So it is advised that a litigator be introduced into the case to plead and prove the case for sanctions, if the situation arises in which a violation of stay has occurred or if there is an adversary proceeding seeking to prevent the pretender lender from acting on its false claims.

Most of the litigation in bankruptcy court has simply been directed at motions to lift the automatic stay. In such motions, the petitioner is merely saying we want to litigate this in state court. The burden of proof is as light as a puff of smoke. If the court finds any colorable interest in the alleged loan, it will ordinarily grant the motion to lift stay — as it must under the existing rules. Homeowners in bankruptcy find it a virtually impossible uphill climb to defend because they are required to have evidence only in possession of the opposing party who also might not have the information needed to prove the lack of any colorable interest.

But the lifting of the stay applies to the litigation concerning foreclosure. It does not necessarily extend to the eviction or unlawful detainer that occurs afterwards. And where the stay has not been lifted the pretender lender is out of luck because there is no excuse for ignoring the automatic stay.

So further action by the foreclosing party is probably a violation of the automatic stay. And in certain cases the court might apply punitive damages on top of consequential damages, if any. The inability to prove actual damages is relatively unimportant unless the homeowner has such damages. It is the violation of the automatic stay that is paramount.

The article below starts with a premise that the “creditor” has received notice of the BKR and ignored it — sometimes willfully and arrogantly.

Here are some notable quotes from this well-written article by Carlos J. Cuevas.

The imposition of punitive damages for egregious violations of the automatic stay is vital to the function of the consumer bankruptcy system. Most consumer debtors cannot afford to pay their attorneys to prosecute an automatic stay violation. The enforcement of the automatic stay is predicated upon major financial institutions observing the automatic stay.

If there is a doubt as to the applicability of the automatic stay, then a creditor can obtain a comfort order as to the applicability of the automatic stay, or obtain relief from the automatic stay from the Bankruptcy Court.

“Parties may not make their own private determination of the scope of the automatic stay without consequence.”

What would be sufficient to deter one creditor may not even be sufficient to gain notice from another. Punitive damages must be tailored not only based upon the egregiousness of the violation, but also based upon the particular creditor in violation.

In determining whether to impose punitive damages under Bankruptcy Code Section 362(k), several bankruptcy courts have identified five factors to guide their decision. They are the nature of the creditor’s conduct, the creditor’s ability to pay, the motives of the creditor, any provocation by the debtor, and the creditor’s level of sophistication: In re Jean-Francois, 532 B.R. 449, 459 (Bankr. E.D.N.Y. 2015).

The fact that Church Avenue pursued the eviction more than a week after it learned of the debtor’s bankruptcy suggests that Church Avenue either made its own—incorrect—legal conclusion with respect to whether the eviction would be a stay violation, or decided that moving ahead to empty the building quickly and evict the occupants was worth more to it than the risk associated with defending a future § 362(k) motion.

when a creditor acts in arrogant defiance of the automatic stay it is circumventing the authority of the bankruptcy judge to exercise authority over that particular bankruptcy case. A bankruptcy judge is the only entity vested with the authority to determine whether the automatic stay should be lifted.

Egregious violations of the automatic stay can be deleterious to a consumer bankruptcy debtor. For example, a creditor who refuses to return a repossessed vehicle after the commencement of a bankruptcy case can create a significant hardship for a consumer debtor. A debtor whose vehicle has been repossessed may not be able to rent a substitute vehicle. This can create a significant hardship for a debtor who has to commute to work, who has to transport a child to school, or who is a caregiver for a sick relative.

Questions to Ask About the Trust and the Trustee

In the final analysis you are looking for evidence of absence of any real events currently presumed as facts in any foreclosure case.

The trustee issue is a jurisdictional issue. If the Plaintiff Trust does not exist, then it has no standing to make or pursue any claims. If the named Trustee is not engaged in the active management of active trust affairs on behalf of the beneficiaries of a trust, then it is not a trustee imbued with the powers to administer assets that have not been conveyed and entrusted to the Trustee.
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If the named beneficiaries have received a promise from the named “Trust” and the beneficiaries have expressly disclaimed any interest in the “underlying” loans, notes, mortgages or debts, then they are not beneficiaries and the entity is not a trust. (That fact pattern describes individual contracts with each investor who purchased a promise to pay executed by someone allegedly on behalf of an entity self proclaimed as a trust. If the named entity does not exist then the party who executed the isntruments may have liability for the promise).
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Since the Trust has not been identified as having been organized and existing under the laws of any jurisdiction, it is entirely appropriate to ask questions about the existence of the trust and its right to do business in the state or the courts. The second jurisdictional issue is subject matter jurisdiction in which the question is whether the trust owns the indebtedness. I frequently deal with these issues in drafting the substance of documents to be filed with the court, subject to opinion of local counsel.
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If prior demands for discovery are clear the appropriate strategy is to force the issue through a motion to compel. Filing an “amended” request fro discovery probably starts the clock all over again. By the time you get to a demand for sanctions for contempt the case could be over. If it is denied she should consider an interlocutory appeal on the issue of whether the record contains assertions or evidence of the existence of the trust. The only prejudice that could exist would be that the trust doesn’t exist and that “they” (actually the lawyers) would be “prejudiced” because they couldn’t foreclose using the trust name.
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There is no doubt in my mind that one or both narratives are true: (1) the trust doesn’t exist and never did and (2) the loan (i.e., the indebtedness) was never purchased by the trust, acting through tis alleged trustee.
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One of the problems here is that it would be wise, although not essential, to notice the named Trustee for deposition duces tecum. That’s often a problem because most homeowners not appear to have anyone competent to conduct the deposition. In a normal deposition, one MUST ask the witness identifying questions like
  1. What’s your name?
  2. Who do you work for?
  3. What is the relationship between your bank and this trust?
  4. Besides the alleged Prospectus and the alleged PSA, what agreements exist wherein the Trustee bank is obligated to do or receive anything from the trust, directly or indirectly. [This one should be broken up into parts].
  5. Under what jurisdiction was the trust organized?
  6. Under what jurisdiction is the trust now existing?
  7. Who is the trust officer for the trust?
  8. In which department(s) are trust matters generally handled in the Trustee Bank?
  9. In which department(s) are trust matters usually handled in the Trustee Bank for this trust?
  10. Has the Trustee bank published any memos or guidelines concerning the administration of securitization trusts?
  11. Assuming that the word “loan” means the indebtedness of the homeowners here in this case, on what date did US Bank as trustee purchase this loan to hold in trust?
  12. Who was the seller of the debt in that transaction?
  13. Was payment for the loan performed through a financial account held in the name of the Trustee for the alleged trust?
  14. How did US Bank as Trustee for the alleged trust perform due diligence to confirm the existence and ownership of the debt?
  15. Who are the beneficiaries of the alleged trust?
  16. Who is the trustor or settlor of the alleged trust?
  17. What is the date and name of the instrument that purports to create the trust?
  18. Describe the current functions of US Bank as trustee of the alleged trust.
  19. Describe the current assets of the alleged trust.
  20. Describe date and content of the last financial report received by US Bank as trustee for the alleged trust.
Most likely opposing counsel will object to the question’s relevancy at the time deposition is taken. But relevancy is not even a question at deposition which is by nature a fishing expedition. Even if opposing counsel was right that the question does not directly relate to proof of a fact asserted at trial, you are still entitled to inquire because it might lead to the discovery of admissible evidence.

TONIGHT! Aggregation and Assignments on the Neil Garfield Show

Are Assignments Based Upon Aggregated Pools Real?

Thursdays LIVE! Click in to the The Neil Garfield Show

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

East-West: Charles Marshall California Attorney co-hosts the discussion

 

The bottom line is that the courts are not accepting denials of assertions or allegations by the foreclosing party. The courts are requiring the homeowner to file an affirmative defense rather than simply denying everything in the complaint. This forces the burden of proof and burden of persuasion onto the homeowner to come up with facts supporting their denial. These facts are within the sole care, custody and control of the party initiating foreclosure.

Through the magic of writing things down on paper anyone can make anything seem like it might be real. Of course in the legal system it goes further than that. If it is written there are many assumptions and presumptions that arise simply because a piece of paper was produced with some writing on it. But nobody ever intended such writing to be used in lieu of facts that are contrary to the truth.

The first place you see this scheme in operation is in the supposed aggregation of loans. The truth is that the DATA for the loans was aggregated, which only means that information ABOUT the supposed loans was taken from several spreadsheets and combined into one.

This is done all the time when a PROPOSED deal is in the works. The aggregation of the data is known as a pro forma presentation — with all parties knowing that it isn’t real, but here is what it might look like if we really did it.

The banks have elevated pro forma spreadsheets into the illusion of actual deals. The reason nobody has ever come up with a money trail showing that the aggregation took place and was sold to a trust is that no such money trail exists.

The truth is that no actual aggregation took place and there was no sale to the trust. In fact probing the trusts, there is never a time that the trust is actually created by entrusting money or property to the named Trustee. Without that there is no Trust because nothing is held “in trust.”

The money from investors is never held by the Trustee. The loan debt is never owned by the Trustee or the Trust. There is no sale. And that is because the Broker Dealers funded the loans in the first place using the money of investors.

So there was nobody to pay for purchase of the underlying debt except the investors and the banks certainly were not going to pay for the underlying debt by handing the investors a check or wire transfer.

How did they do it? Through the illusion of Assignments and endorsements by entities and people who have no ownership interests or other rights to the underlying debt. Even servicing relies upon authority from a trust that does not exist and which neither owns the paper nor the underlying debt.

Let’s go back to the beginning. For ANY deal to be legally binding you need the following elements:

  1. An offer of terms by A to B.
  2. Acceptance of those exact terms by B.
  3. Now you have an agreement but not a contract (yet).
  4. Memorialization of the contract in writing.
  5. The contract is not enforceable until the parties sign
  6. The Closing: Reciprocal consideration is exchanged.
  7. Now you have an enforceable contract.

The only thing we get with assignments and endorsements on supposed “allonges” is #4 — Memorialization in Writing. There is no evidence or even assertion that any of the other things happened. Hence the foreclosing party is using an unenforceable false memorialization of a transaction (transfer of loan paper and no transfer of the underlying debt) that never occurred in order to create the illusion of a foreclosure by a real party in interest.

This is all basic Black Letter law. Yet the courts have routinely ignored several very specific laws governing loans, notes, mortgages and assignments and endorsements. Judges have routinely assumed and even presumed that the paper memorialization was all they needed. The door to moral decay and hazard was opened wide. And we all experienced the shock of seeing our economy nearly turn on its belly.

Now Congress is in the process of rolling back the safeguards so that the investment banks can return to business as usual — transforming the role of banks from being financial intermediaries into some multi-headed hybrid creature that can steal money and homes. The banks can do this by using ordinary deposits by its customers, or by soliciting new deposits with the false promise that the money is actually going into a Trust where a big name bank like US Bank will watch over it.

How do you stop it? By litigating on the strategy and narrative that there is no meat in the sandwich, no deal that ever occurred in real life and no authorized intermediary whose claim is solely based upon the existence of a nonexistent trust and nonexistent transactions in which the underlying debt was bought and sold.

 

Homeowners Sue SPS in Class Action Over Failure to Mitigate

Thousands of cases like this one have pointed out that SPS and other servicers like Ocwen do not consult with any investor, do not evaluate the case for settlement, modification or mitigation. The answer to questions arising from the unwillingness of those companies to comply with law stems from the fact that the  vast majority of their income comes from undisclosed third parties (the TBTF Banks).

TBTF Banks (BofA, Chase, Wells Fargo, Citi, etc.) do not want settlements or modifications or anything that will make the loan start performing. Subservicers like SPS and Ocwen are used as conduits to other conduits that provides window dressing for claims of compliance or efforts to comply.

Contrary to common sense nobody wants a settlement or modification. The players would rather have the value of the alleged loan reduced to zero or less in the case of foreclosures requiring the bank to maintain the property without any hope of selling it. Common sense says that faced with a value of ZERO versus a value of $200,000, for example, any normal business would select the obvious —- $200,000.

The most extreme cases are where the modification is deemed approved and a new servicer comes in to dishonor it and forecloses, even though the homeowner made the trial payments. Yet Petitions to Enforce the modification agreement are rare; but when they are filed they are usually successful. And in many of those cases the modification is modified for a greater principal reduction than was originally offered.

GET A CONSULT

FREE RESEARCH: Go to our home page and enter subject in search bar.

GO TO LENDINGLIES to order forms and services. Our forensic report is called “TERA“— “Title and Encumbrance Report and Analysis.” I personally review each of them for edits and comments before they are released.

Let us help you plan and draft your answers, affirmative defenses, discovery requests and defense narrative:

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Purchase audio seminar now — Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations.

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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Whether or not the class gets certified or settled the suit brings up certain salient points which again give rise to the most common question of all, to wit: “Why is that?”

The answer is hiding in plain sight: None of these parties represent a creditor or owner of the debt . All of them represent undisclosed third parties who are making money hand over fist in the shadow banking market. A completed foreclosure represents the first and only valid legal document in their long train of lies promulgated by piles of fabricated, forged, robo-signed paper. The justice system isn’t always right but it is always final. That is the game the banks are playing.

If SPS or Ocwen actually was set up to help homeowners avoid foreclosure and preserve the value of the loan receivable they would lose virtually all their business. A performing loan would change the makeup of the pools that the players claim to have created. All the re-sales of the same loan would be based upon a loan, even if it existed at one time, that doesn’t exist presently.

So the players NEED that foreclosure not for investors or a trust that doesn’t exist, but for themselves because most of the proceeds of the re-sales of the same loan went the TBTF Banks. They want to preserve their ill-gotten gains rather than do anything that could possibly benefit investors. And the best way they can do that is with an Order or Judgment signed by a duly authorized judge in a court of competent jurisdiction — not with a modification.

Practice Hint: If you see a case that has been ongoing for 8-10 years that is a strong indicator that the investors have received a settlement and no loner have any claim for payment and/or that the “Master Servicer” is continuing to allow payments to investors out of a pool of investor money — i.e., a Ponzi scheme. Those continuing payments have been inappropriately named “servicer advances.” They are not “advances” because it is merely return of investor capital. And since the payments come from an investor pool of cash the payments are not from the servicer since the money came from the same or other investors.

They are called servicer advances because using that name fictitiously allows the “Master Servicer’ (actually the underwriter of the certificates) to claim a “recovery” of “servicer advances.” The recovery is ONLY allowed after sale of the property after a foreclosure where the buyer is a BFP.

So for example if payments to investors attributed to the subject loan are $2,000 per month, 10 years worth of “servicer advances” results in a “recovery claim” of $240,000. Generally that is enough to wipe out any equity. The investors get nothing. The foreclosure was actually for the sole interest and benefit of the banks, not the investors. And the homeowner again finds himself used as a pawn for others to make money over the rotting carcass of what was once his home.

Hence the trial strategy suggested would be drilling down on whether the trust is receiving payment from a “third party,” whether that party has rights of subrogation or is satisfied by some other fee or revenue. If you get anywhere near this issue the bank will fold up like a used tent. They will pay for confidentiality.

The Role of Dynamic Dark Pools in Ponzi Schemes Masquerading as Securitized Loan Pools

The bottom line is that there are no financial transactions in today’s securitization schemes. There is only fabricated paper. If you don’t understand the DDP, you don’t understand “securitization fail,” a term coined by Adam Levitin.

GET A CONSULT

GO TO LENDINGLIES to order forms and services. Our forensic report is called “TERA“— “Title and Encumbrance Report and Analysis.” I personally review each of them for edits and comments before they are released.

Let us help you plan your answers, affirmative defenses, discovery requests and defense narrative:

954-451-1230 or 202-838-6345. Ask for a Consult. You will make things a lot easier on us and yourself if you fill out the registration form. It’s free without any obligation. No advertisements, no restrictions.

Purchase audio seminar now — Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations.

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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I received a short question today to which I gave a long answer. The question is “What happens when an investor decides that he or she wants to cash it in does someone redeem their certificate ?”

Here is my answer:

YES they get paid, most of the time. It is masked as a “trade” on the proprietary trading desk of the CMO Dept. which is completely unregulated and reports nothing. As long as the Ponzi scheme is going strong, the underwriter issues money from the investor pool of money (dynamic dark pool -DDP). It looks like a third party bought the “investment.” If the scheme collapses then the underwriter reports to investors that the market is frozen and there are no buyers.

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There is no redemption because there are no certificates. They are all digital entries on a server. Since the 1998 law deregulated the certificates, reporting is limited or nonexistent. The entries can be changed, erased, altered, amended or modified at will without any regulator or third party knowing. There is no paper trail. Thus the underwriter will say, if they were ever asked, whatever suits them and there is no way for anyone to confirm or rebut that. BUT in discovery, the investors have standing to ask to see the records of such transactions. That is when the underwriter settles for several hundred million or more.
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They discount the settlement based upon “market” values and by settling for pennies on the dollar with small community banks who do not have resources to fight. Thus if they received $2 billion for a particular “securitized pool” that is allocated to a named trust they will instantly make about 10-20 times the normal underwriting fee by merely taking money before or after the money hits the DDP. Money is paid to the investors as long as sales of certificates are robust. Hence the DDP is constantly receiving and disbursing money from many more sources than a fixed group of homeowners or investors.
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It is all about gaps and absences. If a debt was properly securitized, the investor would pay money to the underwriter in exchange for ownership of a certificate. The money would then be subject to fees paid to the underwriter and sellers of the certificates. The balance would be paid into a trust account on which the signatory would be a trust officer of the Trustee bank.
 *
If a scheme is played, then the money does not go into the trust. It goes to the DDP. From there the money is funneled through conduits to the closing table with the homeowner. By depositing the exact and expected amount of money into the trust account of the closing agent, neither the closing agent nor the homeowner understands that they are being played. They don’t even have enough information to arouse suspicion so that they can ask questions.
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Hence if you combine the proper securitization scheme with the improper one you see that the money is diverted from the so-called plan. This in turn causes the participants to fabricate documents if there is litigation. They MUST fabricate documents because if they produced real documents they would have civil and criminal liability for theft, embezzlement in investor litigation and fraud and perjury in foreclosure litigation.
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It is only by forcing a peek around the multiple layers of curtains fabricated by the players that you can reveal the absence of ownership, authority or even an economic interest — other than the loss of continued revenue from servicing and resales of the same loan through multiple investment vehicles whose value is completely derived from the presumed existence of a party who is the obligee of the debt (owner of the debt, or creditor).
 *
That party is the DDP — fund that is partially authorized for “reserve” and which the prospectus and trust instrument (PSA) state (1) that the mortgage loan schedule is not the real one and is presented as an example and (2) that the investors acknowledge that they might be paid from their own money from the “reserve.”
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The gap is that the DDP and the reserve are two different accounts. The “reserve” is a pool of money held in trust by, for example, U.S. Bank as trustee for the trust. There is no such account. The DDP is controlled by the underwriter but ownership is intentionally obscured to avoid or evade detection and the liability that would attach if the truth were revealed.
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We win cases not by proving theft from investors but by hammering on the fact that the documents are fabricated, which is true in virtually all cases involving a named trust. We will win a large award if we can show that the intended beneficiaries of the foreclosure were parties other than the obligee on the debt.
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Thus the attorneys, servicers and trustee are protecting their ill-gotten gains and seeking to grab more money and property at the expense of the unnamed investors and homeowners. They are then transforming an expected revenue stream into the illusion of a secured debt owed not to the funding sources but to the intermediaries.
Go to LENDINGLIES for more help.

Lehman to Pay $2.4 Billion out of Bankrupt Estate

“Lehman’s own documents show it was aware of the widespread problems and deteriorating performance of the loans it had securitized,” with half the loans at one point containing material misrepresentations, the trustees said in a court filing.

Editor’s Note: The difference is money — investors have it and borrower’s don’t. So while investors are successfully litigating fraud and deceit, the borrowers can’t afford to litigate the same issues. The idea that Lehman was somehow honest with borrowers and not with investors is preposterous.

Lehman recently closed out a $2 billion dispute with Citigroup Inc. over derivatives, and similar litigation over derivatives with Credit Suisse Group AG is the last major remaining contest.

Around 14 large institutional holders, including Goldman Sachs Asset Management LP and BlackRock Financial Management, broke ranks with hedge funds and accepted a settlement last year valuing claims around $2.4 billion. Chapman noted that these “sophisticated players” held around 24 percent of the RMBS.

GO TO LENDINGLIES to order forms and services

Let us help you plan your answers, affirmative defenses, discovery requests and defense narrative:

954-451-1230 or 202-838-6345. Ask for a Consult. You will make things a lot easier on us and yourself if you fill out the registration form. It’s free without any obligation. No advertisements, no restrictions.

Purchase now Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations. Presenters: Attorney and Expert Neil Garfield, Forensic Auditor Dan Edstrom, Attorney Charles Marshall and and Private Investigator Bill Paatalo. The webinar and materials are all downloadable.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230 or 202-838-6345. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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See Lehman Brothers Knew 1/2 the loans were misrepresented to both borrowers and investors

The trustees representing RMBS holders are Deutsche Bank National Trust Co., Law Debenture Trust Co. of New York, U.S. Bank National Association and Wilmington Trust Co., according to court papers.

A group of hedge funds, including Whitebox Advisors LLC, Deer Park Road Management Co. and Tilden Park Capital Management LP, was formed in 2016, and expanded in May 2017 to include Prophet Capital Management LP, Tricadia Capital Management LLC, BlueMountain Capital Management LLC and others, according to court records.

The case is In re Lehman Brothers Holdings Inc., 08-13555, U.S. Bankruptcy Court, Southern District of New York (Manhattan.)

Practice note: Dig into the pleadings and exhibits in these cases and you will find a treasure trove of information that supports your contention at trial that the documents are unreliable and therefore the proof of the matters asserted must be proven with facts, not assumptions. You will probably uncover inconsistent allegations from Deutsch, Credit Suisse et al. They are most likely saying one thing in court with borrowers and another in court with investors.

An important note here is that these actions are based upon the presumptive finding of the US Bankruptcy trustee as to Lehman misrepresentations.

 

 

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