Latest Moratorium Extensions Are Two-Edged Sword

The new president is facing incoming fire from all directions. If he does not extend the moratorium on foreclosures and evictions, hundreds of thousands of people are going to be homeless. But the extension does not come without costs.
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As you have seen on these pages, I am quite confident that none of the scheduled payments from homeowners are legally due. On the other hand, I am loathe to tell homeowners or tenants that they should withhold payments if they can make them.
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The reason is basically extortion or duress. By withholding a scheduled payment without a court order telling you can don’t need to make the payment, you put yourself and your home in jeopardy. the Wall Street foreclosure team will use that as their excuse for pursuing collection and enforcement ending in foreclosure and eviction if you don’t properly defend.
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The situation with tenants is even more dire. Many if not most rental units are owned by small landlords who do not possess the resources to get through this pandemic period. When the time comes that their units are exempted from moratoriums by time or edict, they will be required to pay the “arrearage” just like everyone else. Those homeowners who are using the moratorium as an excuse to withhold payment without having a plan of attack are headed for trouble — possibly the kind they can’t fix.
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The obvious answer to this problem is for homeowners to launch preemptive lawsuits against the securitization team. But my observations and experience show that most judges will not allow such lawsuits to go forward. this is because it is seen as an attack on the financial system generally and because judges are afraid that allowing such lawsuits will invite many more that will clog all the court systems. I have had many judges agree that the lawsuit did state a claim but dismissed it anyway sometimes after as much as 14 months of sitting on the motion to dismiss.
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Some people believe that the judges don’t get it. But most of them do “get it” — at least in part. Since those judges believe the loan exists, the loan account exists and that the homeowners almost certainly owe the payments, they see little harm in waiting until enforcement action is brought against the offending homeowner. Then they will occasionally rule in favor of a homeowner who reveals fatal deficiencies in the proof of the claim.
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It is during the moratorium periods that homeowners have an unprecedented opportunity to start actions against the securitization team — but not entirely the way most might think. By sending a proper Qualified Written Request and Debt Validation Letter you open up a more palatable action for the Judges in advance of enforcement. This is the opening step in the homeowner’s challenge.
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They must answer and they risk some rather harsh sanctions if they lie — so they withhold information. But the information they give in response to the statutory inquiries will most likely contain inconsistencies with their correspondence.
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Your questions need to be very specific. And they should start with existence, ownership, and authority over a loan account receivable on the ledger of some company; that entry can only be legal and valid if value was paid in exchange for a conveyance of ownership of the loan account receivable (aka underlying debt or underlying obligation). This is the most basic requirement established by law and custom over centuries in English common law and statutes, American common law; it is also established as the law in every jurisdiction in their adoption of Article 9 §203 of the Uniform Commercial Code.
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Next, the homeowner can file a complaint with the Consumer Financial Protection Board and the Consumer Division of the Attorney General of their State. Once again a response is mandated by statute and the securitization/foreclosure team does no dare withhold a response. but once again their response is going to be filled with legalese evasion of admitting the simple fact that they don’t own the loan account receivable and they have not been given any authority from anyone who does own it.
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Homeowners should not allege nor try to prove that all securitization of residential “debt” is a fraudulent scheme or a lie, even though that is true. It scares judges and it sounds like a conspiracy theory to them. So keep it simple and to the point.
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Foreclosure is about restitution for an unpaid debt. If the claiming party has no actual ownership of the debt arising from a real-world transaction in which they paid value in exchange for owning the loan account receivable they fail the test of the condition precedent set forth in 9-203 of the UCC. And that opens the door to “limited” actions for violations of the FDCPA (title X, 124 Stat. 2092 (2010) and other statutes. Those statutes have a bite to them and the foreclosure mills are afraid of them.
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The advantage of the preemptive action by the homeowner is that very often the securitization/collection/foreclosure team is not ready with fabricated documents containing false information about transactions that never occurred.
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The rule of thumb is to create a vehicle that can be gradually expanded as more information is obtained and the judge is gradually educated as to the true facts of the case. And remember that attorney fees are often recoverable in such actions along with statutory or compensatory damages.
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Once filed and discovery is underway, the best practice is to take information gleaned from discovery and then request a leave of court to amend the pleadings to include a broader action for declaratory, injunctive, and supplemental relief.
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The homeowner would be seeking damages for illegally trying to enforce a debt, and disgorgement of amounts paid to parties who had no nexus to ownership, or authority over the claimed “debt.” While this premise is true in virtually all cases in which securitization claims were in play, it can only be established by revealing the inability or unwillingness of the opposition to answer the most basic questions about existence, ownership, and authority over the debt.
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They can’t but you must do much more than accusing them. You must out litigate them which is why you most likely should have a lawyer who knows how to file motions to dismiss, discovery requests and motions to enforce discovery requests, along with motions for sanctions, motions for the court to adopt a negative inference against the opposition and motions in limine.
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If small landlords take heed, they can force the situation to tilt in their own favor, pass some of the savings to tenants and come out the other end of this crisis somewhat intact. If they don’t then it is unlikely that many of them will survive after the moratorium ceases unless their tenants have been paying rent in a timely fashion.
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Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford. 

Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.

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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us. In  the meanwhile you can order any of the following:
CLICK HERE ORDER ADMINISTRATIVE STRATEGY, ANALYSIS AND NARRATIVE. This could be all you need to preserve your objections and defenses to administration, collection or enforcement of your obligation. Suggestions for discovery demands are included.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
Please visit www.lendinglies.com for more information.

TONIGHT! Why Lawyers Should Want Foreclosure Defense Cases and What They Are Missing $$$

Thursdays LIVE! Click into the Neil Garfield Show

Tonight’s Show Hosted by Neil Garfield, Esq.

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

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This show is devoted to convincing the lawyers who will listen that they are missing out on something very profitable and important. Representing homeowners faced with foreclosure papers can and does present an opportunity for large paydays, consistent victories in court, and playing a part in changing the trajectory of home finance in this country and around the world.

In 2008 I presented a seminar that provided the essentials of foreclosure defense as we knew them at that time. We repeated it several times in different parts of the country. In that seminar, I also presented a business plan for lawyers to do it. It was the hub and spoke plan that allowed homeowners to pay monthly based upon the known length of time that any foreclosure would last.  About a dozen lawyers followed my instructions and made millions of dollars.

It’s time for a new push.

Modifications Are Part of the Big Lie: Don’t send that application for modification if you don’t want to waive important rights.

The application for modification licenses New Rez aka PHH aka Ocwen to sell, distribute the personal data and transaction data to third parties. Besides the obvious problems with data privacy, this confirms the apparent voluntary participation of the homeowner in a securities scheme that was and still is concealed from the homeowner.

By filing the application the homeowner is waiving his right to keep the compensation that was paid for the homeowner’s role in launching the securities scheme or to ask for more compensation. And it creates an assumption of risk by the homeowner that was, is, and always will be concealed from the homeowner. All of this is “illegal” but by signing the document the homeowner has launched a legal presumption that the document and everything on it is valid.

It reaffirms the concealed nature of the transaction in which the note and mortgage were executed and delivered. Instead of a loan agreement, the application alone establishes the authority of the New Rez aka PHH aka Ocwen to act as agent/servicer even though it has no such authority. It also makes New Rez aka PHH aka Ocwen the creditor, which means the homeowner is accepting a virtual creditor instead of a real one. And the homeowner is waiving any right to contest the standing of New Rez aka PHH aka Ocwen to administer, collect, and enforce the note and mortgage.

On behalf of a client, I recently received an “offer” for my client to apply for a modification. My response is going to be that we would be happy to apply for modification if New Rez aka PHH aka Ocwen can demonstrate (a) that the loan account receivable exists, (b) that U.S. Bank owns it on behalf of either a trust or certificate holders and (c) that New Rez aka PHH aka Ocwen can demonstrate that they have been authorized to act as agent/servicer for a creditor who owns the underlying obligation because (a) they paid for it and (b) they received a conveyance of ownership of the debt as part of a purchase transaction from someone who owned the loan account receivable.

Of course I know that they cannot do that. I know it because along with Patrick Giunta, Esq. in Fort Lauderdale all of that was established beyond any doubt. the Judge found that the trust, the trustee, and the agent/servicer (Ocwen) had no relationship to the debt, note, or mortgage but may have had possession of a note (now lost) that might have been an original. Final Judgment for the homeowner. In fact, at trial, the robowitness was dumbfounded when he realized that the fabricated “Power of Attorney” appointing Ocwen as servicer and as an “attorney in fact” had been not only false but incorrectly created with Chase being the grantor. Chase had nothing to do with this case.

But because they did not file the “original note” until after the lawsuit began — in 2008 — the judge felt compelled under Florida law to enter judgment for the homeowner with findings of fact that disposed of the merits of the case but dismissing the case without prejudice. that is because finding that there was not even the allegation of possession of the note before the filing of the lawsuit there was no jurisdiction. And no jurisdiction means the court is powerless to do anything but dismiss the case.

So the lawyers refiled the case even though there has been a complete negative adjudication of all facts necessary to prove a prima facie case for foreclosure. And they barely managed to squeak through a motion to dismiss because the defense of res judicata is an affirmative defense and so we will file our own motion for summary judgment.

The first interesting thing about all this is that the lawyers chose to file a case that they had already lost. Why? Well until two weeks ago, the law in that DIstrict was that there was no claim for attorney fees if the homeowner won because they established that the named claimant lacked legal standing — a fancy way of saying no case.

The recovery of attorney fees can only be based upon statute or contract. There is no statute that specifically grants the right to recover attorney fees when the named Plaintiff loses a foreclosure case. But there is the contractual provision in the note and mortgage for recovery of fees and Rule 57.105 Fla. R.C.P. that says that such provision is reciprocal.

BUT once the homeowner proves that the Plaintiff is NOT part of the contract, the law WAS that having proven that there was no contractual relationship between the Plaintiff and the homeowner, the homeowner was barred from taking advantage of the attorney’s fees provision in that contract.

All of that may seem to have some logic except for one thing: it was the Plaintiff who invoked the contract when they started the lawsuit asking for attorney fees and when they were shown to be lying, there are about a dozen reasons why they should not escape an award of attorney fees and costs. And that is what the Florida Supreme Court found. So now the attorneys have filed a new lawsuit that they thought had no risk if they lost; but they have a huge risk because the premise under which they were operating was not only wrong but downright malevolent. The playbook is designed to wear the homeowner down even if there is no case against the homeowner.

And so it is interesting that the unauthorized agent/servicer New Rez aka PHH aka Ocwen, constantly changing names to confuse the recipient, is now sending an “offer” to allow my client to apply for a modification. And just to be clear, that is no offer at all. They’re not saying they will consider it, grant it, or even that they are offering it on behalf of some named creditor. And that is why I scored points by filing three motions for sanctions against the opposing side which were granted. They showed up at “mediation” without any authorized person to settle the case. They were only authorized to offer to allow the homeowner to apply for a modification.

This particular offer was sent pursuant to a settlement agreement with the Florida Attorney General that requires them to modify loans. The AG office of course made the same mistake as all law enforcement and all regulators, to wit: that the agent/servicer was actually authorized to modify. In fact, the agreement can now be used to argue that they must have had the authority to modify — why else would that agreement require modification? THE AG was either hoodwinked or playing along. I don’t know.

But the main point of the modification is clear. It changes the falsely labeled loan agreement executed by the homeowner into something entirely different. Instead of a loan contract, the proposed application for modification changes the transaction forever. Perhaps the better description is that it reaffirms the concealed nature of the transaction in which the note and mortgage were executed and delivered. Instead of a loan agreement, the application alone establishes the authority of the New Rez aka PHH aka Ocwen to act as agent/servicer even though it has no such authority. It also makes New Rez aka PHH aka Ocwen the creditor, which means the homeowner is accepting a virtual creditor instead of a real one. And the homeowner is waiving any right to contest the standing of New Rez aka PHH aka Ocwen to administer, collect, and enforce the note and mortgage.

So there you have it. That is the reason they sent it. It was designed to lure me into sending this to my client in order to establish a fact that doesn’t exist and a fact that has already been defeated — standing for either the named Plaintiff (U.S. Bank as trustee for SASCO, etc) or anyone else designated by New Rez aka PHH aka Ocwen. If they had been successful they might have a shot on the second lawsuit. And it now licenses New Rez aka PHH aka Ocwen to sell, distribute the personal data and transaction data to third parties. Besides the obvious problems with data privacy, this confirms the apparent voluntary participation of the homeowner in a securities scheme that was and still is concealed from the homeowner.

By filing the application the homeowner is waiving his right to keep the compensation that was paid for launching the securities scheme or ask for more. And it creates an assumption of risk by the homeowner that was, is, and always will be concealed from the homeowner. All of this is “illegal” but by signing the document the homeowner has launched a legal presumption that the document and everything on it is valid. And it makes the unauthorized agent/servicer the agent of the homeowner!

The accountholder(s) [label establishes homeowner as holder of an account that exists] consent [uninformed consent] to the disclosure by my servicer  [affirms “servicer” as agent] or authorized third party,* [i.e, anyone and there is no referenced asterisk at the end of the document], or any investor/guarantor [note the introduction of new parties] of my mortgage loan(s) [affirming it is a mortgage loan], of any personal and non-personal information during the mortgage assistance process and of any information about any relief I receive, to any third party that deals with my first lien [affirming lien] or subordinate lien (if applicable) mortgage loan(s), including Fannie Mae, Freddie Mac or any investor, insurer, guarantor, or servicer of my mortgage loans(s) or any companies that provide support to them, for purposes permitted by law. Personal information may include, but is not limited to: (a) my name, address, telephone number; (b) my Social Security Number; (c) my credit score; (d) my income; and (e) my payment history [affirming paymetns were due] and information about account balances and activity and (f) my tax return and the information contained therein. I/We hereby authorize the servicer to release, furnish, and provide information related to my/our account to: [BLANK FOR ANYONE TO FILL IN LATER IF THEY NEED IT]

The Florida AG fell for this hook, line, and sinker. So have most homeowner and their lawyers. Take a closer look and ask yourself why they would have such wording if they were truly sure of their status as an agent for a lender, and why they wouldn’t announce guidelines for what the “modifications” would look like if “granted” and on whose behalf they are allegedly “modifying” the transaction falsely labeled as a loan. Every correspondence offering the hope of modification is a potential trap for homeowners who frankly, in my opinion, owe nothing. They were paid money equal to at most 8 1/2% of their revenue generated by these securities scheme, everyone received every payment to which they were entitled, and then they signed a note to give it back because they thought it was a loan.
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But if it was a loan then there would have been an identifiable lender who had an entry on its accounting ledgers showing payment of value for the underlying debt. No such entity exists because the investment bankers were securities brokers and security brokers are interested in trading securities. They had no intention of assuming any risk of loss on nonperforming loans, so they made sure that the transaction looked like a loan but wasn’t. They had no interest in lending and they did not lend money. Investors loaned money to the brokerage firms. And nobody complied with lending statutes because there was no lender.
DID YOU LIKE THIS ARTICLE?

Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.

Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.

Click

*
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FREE REVIEW: Don’t wait, Act NOW!

CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us. In  the meanwhile you can order any of the following:
CLICK HERE ORDER ADMINISTRATIVE STRATEGY, ANALYSIS, AND NARRATIVE. This could be all you need to preserve your objections and defenses to administration, collection or enforcement of your obligation. Suggestions for discovery demands are included.
*
CLICK HERE TO ORDER TERA – not necessary if you order PDR PREMIUM.
*
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR) (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
Please visit www.lendinglies.com for more information.

 

How and Why to Litigate Foreclosure and Eviction Defenses

Wall Street Transactions with Homeowners Are Not Loans

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I think the biggest problem for people understanding the strategies that I have set forth on this blog is that they don’t understand the underlying principles. It simply is incomprehensible to most people how they could get a “loan” and then not owe it. It is even more incomprehensible that there could be no creditor that could enforce any alleged obligation of the homeowner. After all, the homeowner signed a note which by itself creates an obligation.
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None of this seems to make sense. Yet on an intuitive level, most people understand that they got screwed in what they thought was a lending process.
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The reason for this disconnect between me and most of the rest of the world is that most people have no reason to know what happens in the world of investment banking. As a former investment banker, and as a direct witness to these seminal events that gave rise to the claims of “securitization” I do understand what happened.
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In this article, I will try to explain, from a different perspective, what really happened when most homeowners thought that they were closing a loan transaction. For this to be effective, the reader must be willing to put themselves in the shoes of an investment banker.
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First, you must realize that every investment banker is merely a stockbroker. They do business with investors and other investment bankers. They do not do business with consumers who purchase goods and services or loans. The investment banker is generally not in the business of lending money. The investment banker is in the business of creating capital for new and existing businesses. They make their money by brokering transactions. They make the most money by brokering the sales of new securities including stocks and bonds.
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The compensation received by the investment banker for brokering a transaction varied from as little as 1% or 2% to as much as 20%. The difference is whether they were brokering the sale of existing securities or underwriting new securities. Obviously, they had a very large incentive to broker the sale of new securities for which they would receive 7 to 10 times the compensation of brokering the sale of existing securities.
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But the Holy Grail of investment banking was devising some system in which the investment bank could issue a new security from a fictional entity and receive the entire proceeds of the offering. This is what happened in “residential lending.” And this way, they could receive 100% of the offering instead of a brokerage commission.
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But as you’ll see below, by disconnecting the issuance of securities from the ownership of any perceived obligation from consumers, investment bankers put themselves in a position in which they could issue securities indefinitely without limit and without regard to the amount of the transaction with consumers (homeowners) or investors.
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In short, the goal was to make it appear as though loans have been securitized even know they had not been securitized. In order for any asset to have been securitized it would need to have been sold off in parts to investors. What we see in the residential market is that no such sale ever occurred. Under modern law, a “sale” consists of offer, acceptance, payment, and delivery. So neither the investment bank nor any of the investors to whom they had sold securities, ever received a conveyance of any right, title, or interest to any debt, note, or mortgage from a homeowner.
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At the end of the day, the world was convinced that the homeowner had entered into a loan transaction while the investment banker had assured itself and its investors that it would be free from liability for violation of any lending laws — as a “lender.”
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Neither of them maintained a loan account receivable on their own ledgers even though the capital used to pay homeowners originated from banks who loaned money to investment bankers (based upon sales of “certificates” to investors), which was then used to pay homeowners as little as possible from the pool of capital generated by the loans and certificate sales of “mortgage-backed bonds.”
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From the perspective of the investment banker, payment was made to the homeowner in exchange for participation in creating the illusion of a loan transaction despite the fact that there was no lender and no loan account. This was covered up by having more intermediaries claim rights as servicers and the creation of “payment histories” that implied but never asserted the existence or establishment of a loan account. Of course, they would need to dodge any questions relating to the identification of a creditor. That could be no creditor if there was no loan account. This tactic avoided perjury.
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Of course, this could only be accomplished through deceit. The consumer or homeowner, government regulators, and the world at large, would need to be convinced that the homeowner had entered into a secured loan transaction, even though no such thing had occurred. From the investment bankers’ perspective, they were paying the homeowner as little money as possible in order to create the foundation for their illusion.
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By calling it “securitization of loans” and selling it that way, they were able to create the illusion successfully. They were able to maintain the illusion because only the investment bankers had the information that would show that there was no business entity that maintained a ledger entry showing ownership of any debt, note, or mortgage — against which losses and gains could or would be posted in accordance with generally accepted accounting principles (and law). This is called asymmetry of information and a great deal has been written on these pages and by many other authors.
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Since the homeowner had asked for a loan and had received money, it never occurred to any homeowner that he/she was not being paid for a loan or loan documents, but rather was being paid for a service. In order for the transaction to be perceived as a loan obviously, the homeowner had to become obligated to repay the money that had been paid to the homeowner. While this probably negated the consideration paid for the services rendered by the homeowner, nobody was any the wiser.
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As shown below, the initial sale of the initial certificates was only the beginning of an infinite supply of capital flowing to the investment bank who only had to pay off intermediaries to keep them “in the fold.” By virtue of the repeal of Glass-Steagall in 1998, none of the certificates were regulated as securities; so disclosure was a matter of proving fraud (without any information) in private actions rather than compliance with any statute. Further, the same investment banks were issuing and trading “hedge contracts” based upon the “performance” of the certificates — as reported by the investment bank in its sole discretion.
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It was a closed market, free from any free market forces. The theory under which Alan Greenspan, Fed Chairman, was operating was that free-market forces would make any necessary corrections, This blind assumption prevented any further analysis of the concealed business plan of the investment banks — a mistake that Greenspan later acknowledged.
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There was no free market. Neither homeowners nor investors knew what they were getting themselves into. And based upon the level of litigation that emerged after the crash of 2008, it is safe to say that the investors and homeowners were deprived of any bargaining position (because the main aspects fo their transition were being misrepresented and concealed), Both should have received substantially more compensation and would have bargained for it assuming they were willing to even enter into the transaction — highly doubtful assumption.
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The investment banks also purchased insurance contracts with extremely rare clauses basically awarding themselves payment for nonexistent losses upon their own declaration of an “event” relating to the “performance” of unregulated securities. So between the proceeds from the issuance of certificates and hedge contracts and the proceeds of insurance contracts investment bankers were generally able to generate at least $12 for each $1 that was paid to homeowners and around $8 for each $1 invested by investors in purchasing the certificates.
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So the end result was that the investment banker was able to pay homeowners without any risk of loss on that transaction while at the same time generating capital or revenue far in excess of any payment to the homeowner. Were it not for the need for maintaining the illusion of a loan transaction, the investment banks could’ve easily passed on the opportunity to enforce the “obligation” allegedly due from homeowners. They had already made their money.
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There was no loss to be posted against any account on any ledger of any company if any homeowner decided not to pay the alleged obligation (which was merely the return of the consideration paid for the homeowner’s services). But that did not stop the investment banks from making claims for a bailout and making deals for loss sharing on loans they did not own and never owned. No such losses ever existed.
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Investment bankers first started looking at the consumer lending market back in 1969, when I was literally working on Wall Street. Frankly, there was no bigger market in which they could participate. But there were huge obstacles in doing so. First of all none of them wanted the potential liability for violation of lending laws that had recently been passed on both local and Federal levels (Truth in Lending Act et al.)
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So they needed to avoid classification as a lender. They achieved this goal in 2 ways. First, they did not directly do business of any kind with any consumer or homeowner. They operated strictly through “intermediaries” that were either real or fictional. If the intermediary was real, it was a sham conduit — a company with virtually no balance sheet or income statement that could be collapsed and “disappeared” if the scheme ever collapsed or just hit a bump in the road.
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Either way, the intermediary was not really a party to the transaction with the consumer or homeowner. It did not pay the homeowner nor did it receive payments from the homeowner. It did not own any obligations from the homeowner, according to modern law, because it had never paid value for the obligation.
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Under modern law, the transfer or conveyance of an interest in a mortgage without a contemporaneous transfer of ownership of the underlying obligation is a legal nullity in all states of the union. So transfers from the originator who posed as a virtual creditor do not exist in the eyes of the law — if they are shown to be lacking in consideration paid for the underlying obligation, as per Article 9 §203 Uniform Commercial Code, adopted in all 50 states. The transfers were merely part of the illusion of maintaining the apparent existence of the loan transaction with homeowners.
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And this brings us to the strategies to be employed by homeowners in contesting foreclosures and evictions based on foreclosures. Based upon my participation in review of thousands of cases it is always true that any question regarding the existence and ownership of the alleged obligation is treated evasively because the obligation does not exist and cannot be owned.
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In court, the failure to respond to such questions that are posed in proper form and in a timely manner is the foundation for the victory of the homeowner. Although there is a presumption of ownership derived from claims of delivery and possession of the note, the proponent of that presumption may not avail itself of that presumption if it fails to answer questions relating to rebutting the presumption of existence and ownership of the underlying obligation. Such cases usually (not always) result in either judgment for the homeowner or settlement with the homeowner on very favorable terms.
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The homeowner is not getting away with anything or getting a free house as the investment banks have managed to insert into public discourse. They are receiving just compensation for their participation in this game in which they were drafted without their knowledge or consent. Considering the 1200% gain enjoyed by the investment banks which was enabled by the homeowners’ participation, the 8% payment to the homeowner seems only fair. Further, if somehow the homeowners’ apparent obligation to pay the investment bank survives, it is subject to reformation, accounting, and computation as to the true balance and whether it is secured or not. 
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The obligation to repay the consideration paid by the investment bank (through intermediaries) seems to be a negation of the consideration paid. If that is true, then there is neither a loan contract nor a securities contract. There is no contract because in all cases the offer and acceptance were based upon different terms ( and different deliveries) without either consideration or execution of the terns expected by the homeowner under the advertised “loan contract.”
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Payments By Homeowners Do Not Reduce Loan Accounts

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Each time that a homeowner makes a payment, he or she is perpetuating the myth that they are part of an enforceable loan agreement. There is no loan agreement if there was no intention for anyone to be a lender and if no loan account receivable was established on the books of any business. The same result applies when a loan is originated in the traditional way but then acquired by a successor. The funding is the same as what is described above. The loan account receivable in the acquisition scenario is eliminated.
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Once the transaction is entered as a reference data point for securitization it no longer exists in form or substance.

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For the past 20 years, most homeowners have been making payments to companies that said they were “servicers.” Even at the point of a judicial gun (court order) these companies will fail or refuse to disclose what they do with the money after “receipt.” Because of lockbox contracts, these companies rarely have any access to pools of money that were generated through payments from homeowners.
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Like their counterparts in the origination of transactions with homeowners, they are sham conduits. Like the originators, they are built to be thrown under the bus when the scheme implodes. They will not report to you the identity of the party to whom they forward payments that they have received from homeowners because they have not received the payments from homeowners and they don’t know where the money goes.
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As I have described in some detail in other articles on this blog, with the help of some contributors, the actual accounting for payments received from homeowners is performed by third-party vendors, mostly under the control of Black Knight. Through a series of sham conduit transfers, the pool of money ends up in companies controlled by the investment bank. Some of the money is retained domestically while some is recorded as an offshore off-balance-sheet transaction.
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In order to maintain an active market in which new certificates can be sold to investors, discretionary payments are made to investors who purchase the certificates. The money comes from two main sources.
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One source is payments made by homeowners and the other source is payments made by the investment bank regardless of whether or not they receive payments from the homeowners. The latter payments are referred to as “servicer advances.” Those payments come from a reserve pool established at the time of sale of the certificates to the investors, consisting of their own money, plus contributions from the investment bank funded by the sales of new certificates. They are not servicer advances. They are neither in advance nor did they come from a servicer.
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Since there is no loan account receivable owned by anyone, payments received from homeowners are not posted to such an account nor to the benefit of any owner of such an account (or the underlying obligation). Instead, accounting for such payments are either reported as “return of capital” or “trading profits.” In fact, such payments are neither return of capital nor trading profit. Since the investment bank has already zeroed out any potential loan account receivable, the only correct treatment of the payment for accounting purposes would be “revenue.” This includes the indirect receipt of proceeds from the forced sale of property in alleged “foreclosures.”
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By retaining total control over the accounting treatment for receipt of money from investors and homeowners, the investment bank retains total control over how much taxable income it reports. At present, most of the money that was received by the investment bank as part of this revenue scheme is still sitting offshore in various accounts and controlled companies. It is repatriated as needed for the purpose of reporting revenue and net income for investment banks whose stock is traded on the open market. By some fairly reliable estimates, the amount of money held by investment banks offshore is at least $3 trillion. In my opinion, the amount is much larger than that.
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As a baseline for corroboration of some of the estimates and projections contained in this article and many others, we should consider the difference between the current amount of all the fiat money in the world and the number and dollar amount of cash-equivalents in the shadow banking market. In 1983, the number and dollar amount of such cash equivalents was zero. Today it is $1.4 quadrillion — around 15-20 times the amount of currency.
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Success in Litigation Depends Upon Litigation Skills: FOCUS

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I have either been lead counsel or legal consultant in thousands of successful cases defending Foreclosure. Thousands of others have been reported to me where they used my strategies to litigate. Many of them resulted in a judgment for the homeowner, but the majority were settled under the seal of confidentiality.
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Thousands more have reported failure. In reviewing those cases it was clear that they were either litigated pro se or by attorneys who were not skilled in trial practice and who had no idea of the principles contained in this article and my many other articles on this blog. I would describe the reason for these failures as “too little too late.” In some ways, the courts are designed more to be final than to be fair. There are specific ways that information becomes evidence. Most people in litigation do not understand the ways that information becomes evidence and therefore fail to object to the foundation, best evidence, hearsay etc.
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Even the people that submit wee phrased and timely discovery demands fail, more often than not, to move for an order to compel when the opposition fails or refuses to answer the simple questions bout the establishment, existence, and ownership of the underlying alleged obligation, debt, note or mortgage. Or they failed to ask for a hearing on the motion to compel, in which case the discovery is waived. Complaining about the failure to answer discovery during the trial when there was no effort to enforce discovery is both useless and an undermining of the credibility of the defense.
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Since I have been litigating cases for around 45 years, I don’t expect younger attorneys to be as well-versed and intuitive in a courtroom as I have been. It’s also true that many lawyers, both older and younger than me, have greater skills than I have. But it is a rare layperson that can win one of these cases without specific training knowledge and experience in motion practice and trial law.
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In the final analysis, if the truth was fully revealed, each foreclosure involves a foreclosure lawyer who does not have any idea whose interest he/she is representing. They may know that they are being paid from an account titled in the name of the self-proclaimed servicer. And because of that, they will often make the mistake of saying that they represent the servicer. They are pretty careful about not specifically saying that the named plaintiff in a judicial foreclosure or the named beneficiary in a nonjudicial foreclosure is their client. That is because they have no retainer agreement or even a relationship with the named plaintiff or the named beneficiary. Such lawyers have generally never spoken with anyone employed by the named plaintiff or the named beneficiary.
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When such lawyers and self-proclaimed servicers go to court-ordered mediation, neither one has the authority to do anything except show up. Proving that the lawyer does not actually represent the named trustee of the fictitious trust can be very challenging. But there are two possible strategies that definitely work.
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The first is to do your legal research and find the cases in which investors have sued the named trustee of the alleged REMIC trust for failure to take action that would’ve protected the interest of the investors.
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The outcome of all such cases is a finding by the court that the trustee does not represent the investors, the investors are not beneficiaries of the “Trust,” and that the trustee has no authority, right, title, or interest over any transaction with homeowners. Since the named trustee has no powers of a trustee to administer the affairs of any active trust with assets or a business operating, it is by definition not a trustee. For purposes of the foreclosure, it cannot be a named party either much less the client of the attorney, behind whom the securitization players are hiding because of a judicial doctrine called “judicial immunity.”
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The second thing you can do is to ask, probably during mediation at the start, whether the lawyer who shows up is representing for example “U.S. Bank.” Or you might ask whether US Bank is the client of the lawyer. The answer might surprise you. In some cases, the lawyer insisted that they represented “Ocwen” or some other self-proclaimed servicer.
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Keep in mind that when you go to mediation, frequently happens that it is attended by a “coverage lawyer” who might not even be employed by the Foreclosure bill. Such a lawyer clearly knows nothing about the parties or the case and will be confused even by the most basic questions. If they fail to affirm that they represent the named trustee of the named fictitious trust, that is the time to stop  the proceeding and file a motion for contempt for failure to appear (i.e., failure of the named plaintiff or beneficiary to appear since no employee or authorized representative appeared.)
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And the third thing that I have done with some success is to make an offer. You will find in most cases that they are unwilling and unable to accept or reject the offer. A substantial offer will put them in a very bad position. Remember you are dealing with a lawyer and a representative from the alleged servicer who actually don’t know what’s going on. Everyone is on a “need to know” footing.
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So if you make an offer that the lawyer thinks could possibly be reasonable and might be acceptable to an actual lender who was holding the loan account receivable, the lawyer might be stuck between a rock and a hard place. Rejection of an offer that the client might want to accept without notifying the client is contrary to bar rules.
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But both the lawyer and the representative of the alleged servicer know that they have no authority. So they will often ask for a continuance or adjournment of the mediation. At that point, the homeowner is well within their rights to file a motion for contempt. In most cases, the court order for mediation requires that both parties attend with full authority to settle the case. In plain language, there is no reason for the adjournment. But they need it because they know they have no authority contrary to the order mandating mediation. Many judges have partially caught on to this problem and instruct the foreclosure mill lawyer to make sure he doesn’t need to “make a call.”
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Every good trial lawyer knows that they must have a story to tell or else, even if the client is completely right, they are likely to lose. You must focus on the main issues.
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The main issue in foreclosure is the establishment, existence, and ownership of the alleged underlying obligation. All of that is going to be presumed unless you demonstrate to the court that you are seeking to rebut those presumptions. There can be no default and hence no remedy is there is either no obligation or no ownership of the obligation by the complaining party.
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Discovery demands should be drafted with an eye towards what will be a motion to compel and proposed order on the motion to compel. They should also be drafted with an eye toward filing a motion in limine. Having failed and refused to answer basic questions about the establishment, existence, and ownership of the alleged underlying obligation, the motion in limine would ask the court to limit the ability of the foreclosure mill to put on any evidence that the obligation exists or is owned by the named Plaintiff or beneficiary. They can’t have it both ways.
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Failure to follow up is the same thing as waiving your defenses or defense narrative.
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So that concludes my current attempt to explain how to win Foreclosure cases for the homeowner. I hope it helps.
*
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
*
Please visit www.lendinglies.com for more information.

Careful what you say in “Hardship Letter”

Modifications are tricky. They are trickier than you think. First of all the offer is made by a company who has no right to act as “servicer” or to change the terms of your contract. By changing the apparent lender or creditor to the named servicer, the agreement is probably tricking you into accepting a virtual creditor in lieu of a real one.

But the most important trick is that what they are really looking for is a direct or tacit acknowledgement of the status and ownership of the debt. So if you say that this “servicer” did something or that “lender” did that, you are admitting that the company who presents itself as servicer is inf act an authorized entity to administer, collection and enforce your loan.

And if you refer to a “Lender” you are directly  or tacitly admitting that a creditor exists and they own the loan and that raises the the almost irrebuttable presumption that the “lender” has suffered financial injury as a direct and proximate result of your “failure” to pay.

Not paying is not a failure to pay, a delinquency or a default if the party demanding payment had no right to do so. So if you admit the default in your “hardship” letter you are putting yourself into the position of defending against compelling arguments that you waived any right to deny the default or the rights of the parties to enforce the debt, note or mortgage.

I recognize that there is the factor of coercion and intimidation in executing a modification (just to stop the threat of foreclosure, regardless of whether it is legal or not). But the question is whether the entire process of modification is a legally recognizable event.

If the offer comes from someone who has no ownership or authority to represent the owner of the underlying obligation then the offer is a legal nullity. But if it is accepted then there is a possibility that the homeowner might be deemed to have waived defenses. Also if the beneficiary of the agreement and the payments made would go to a party who does not own a loan account then the agreement has been procured by misrepresentation or implied misrepresentations.

Proper pursuit of discovery demands will most often result in an offer of settlement and modification that is simply too good to refuse. The reason is that your opposition  has no answers to your question that would not constitute an admission of civil or even criminal liability.

*
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
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Please visit www.lendinglies.com for more information.

 

Thousands of Homeowners Win Against the Banks: Here is Why You Never Hear About It

you made all that revenue possible by signing a note and mortgage in favor of someone who was not lending you any money. Nobody told you about that. And nobody told you that you were not entering a transaction in which there was a lender and borrower. There was only a borrower.

The simple fact is that the banks are breaking the law every time they attempt to administer, collect or enforce a debt. This is true in all cases where securitization is part of the deal. And securitization is in play 99% of the time even where no mention of securitization is made in the claim brought against a homeowner. The banks are breaking the law because there is no debt, no claim and no creditor. The money they receive from “successful” foreclosures is pure profit. They have no right to even be in court much less get a “remedy” that is limited to creating more revenue.

Buying or owning a house is the largest single investment for most families. And yet, nearly all of them leave the keys on the counter when they are threatened with foreclosure. They are completely ignorant of the fact that they have been cheated, that more money might be owed to them, and that there is no debt to pay or to be enforced. So the banks have succeeded in using the fact that most homeowners don’t understand what they are walking away from. 96% of all foreclosures are uncontested — thus reinforcing the belief that the foreclosures are legal and valid.

Of the remaining 4% about half of those accept modification agreements or cash for keys agreements that effectively change the entire loan agreement into one in which the homeowner as borrower now accepts a virtual lender rather than a real one, thus enabling virtually anyone to make a claim. The “modification” agreement comes with no warranties or ownership of the debt, note or mortgage. But the homeowner must agree that he/she/they will accept the named servicer as if they were a creditor and to disregard what happens outside of the relationship between the “servicer” and the homeowners.

The modification agreement is probably subject to challenge because it is based upon a number of false premises, first among them that the “servicer” is not a servicer for anyone who has paid value and therefore owns the obligation. Therefore the authority of the servicer from the named claimant is irrelevant. If they don’t own the debt they can’t claim injury to their asset. I usually suggest that the if the homeowner is disposed to accept the agreement, the homeowner might get still better terms by demanding that the named claimant (e.g. BONY Mellon, US Bank, Deutsche) acknowledge and accept the modification agreement., Funny thing.

That request is ALWAYS rejected — because the servicer does not represent the interests or assets of the named claimant. They can’t supply that acknowledgement because the “trustee” won’t give it. They won’t give it because if they did, that would make them really involved in the transaction rather than just being window dressing.

So then you come to those who fight persistently. Unfortunately, it usually takes a lawyer to win. Anyone can litigate — it’s your constitutional right. But generally speaking (Not always) the winning homeowner is in that position because there as a competent trial attorney litigating the case. Out of the 2% who actually fight persistently with a lawyer who knows what to do and does it (motions, discovery, etc), 2/3 of them win. that might seen like a small number. But applied against he number of foreclosure cases filed over the last 15-20 years it means that around 150,000 homeowners have won or settled their cases on satisfactory terms.

Satisfactory terms means that they either received a substantial reduction in principal (20%-90%) plus waiver of all arrearages and restoration of credit reports, or they received a cash payment in the hundreds of thousands of dollars. The lawyers made money (a lot of it), the homeowner was made whole and the foreclosure was either cancelled or allowed as part of the settlement agreement without any negative credit report.

So why doesn’t anyone hear about it? It’s because the settlement agreement makes it clear that the homeowner may not release, authorize or otherwise disclose anything about the case, the agreement or anything else.

Here is an example of the wording you find in such documents.

  1. Confidentiality and Notices: As a material inducement and an indivisible part of the consideration to be received by Defendants to enter into this Agreement, the Parties agree that it is appropriate to maintain any discovery exchanged in the Litigation, this Agreement, the terms of this Agreement, and the settlement provided for herein (collectively, the “Information”) as confidential on a going forward basis as of the date of this Agreement. Toward that end, Plaintiff agrees that he and her attorneys will neither disclose nor reveal to any person or entity or directly or indirectly publish, publicize, disseminate, or communicate to any person or entity the Information on a going forward basis as of the date of this Agreement, including but not limited to a prohibition on Plaintiffs and his attorneys posting or otherwise disclosing Information on the Internet or any other paper or electronic media outlet (including but not limited to news organizations websites or newspapers, email, biogs, Facebook, MySpace, Twitter, etc.). The only permitted disclosure of Information hereunder is to the persons or entities specifically identified in subparagraphs (i) through (ix) below, and the confidentiality obligation of Plaintiff’s attorneys is intended to provide for confidentiality to the full extent of, but no further than permitted by, the applicable attorney ethics or disciplinary rules.
  2. The Parties may provide a copy of this Agreement and/or describe the terms and conditions of this Agreement within any lawsuit before a United States court of competent jurisdiction only in response to a Court order to that The Parties further agree that, if they or their attorneys receive legal process designed to disclose any Information deemed confidential under this Agreement, the disclosing Party will provide advance written notice to counsel for the non-disclosing Party within three (3) business days of receiving such subpoena, court order, or other legal process, so that the non-disclosing Party has the option of taking steps to protect the confidentiality of this Agreement, its terms, or any Information deemed confidential under this Agreement;
  3. The Parties may provide a copy of this Agreement and/or describe the terms and conditions of this Agreement to their respective officers, directors, employees, attorneys, financial advisors, accountants, insurers, auditors, and other professional advisors who regularly have access to Information of this type in order to perform their duties, or with whom the Parties may consult regarding any aspect of this Agreement, provided that such persons or entities first agree to maintain this Agreement, the terms of this Agreement, and the settlement provided for herein as confidential;
  4. Non-Disparagement. Releasors and their attorneys will not, directly or indirectly, make any negative or disparaging statements against the Releasees maligning, ridiculing, defaming, or otherwise speaking ill of the Releasees, and their business affairs, practices or policies, standards, or reputation (including but not limited to statements or postings harmful to the Releasees’ business interests, reputation or good will) in any form (including but not limited to orally, in writing, on any social media, biogs, internet, to the media, persons and entities engaged in radio, television or Internet broadcasting, or to persons and entities that gather or report information on trade and business practices or reliability) that relate to this Agreement and the Information (as defined above) or any matter covered by the release within this Nothing in the Agreement shall, however, be deemed to interfere with each party’s obligation to report transactions with appropriate governmental, taxing, or registering agencies. Nothing in this Agreement prohibits or limits Plaintiff or Plaintiffs counsel from initiating communications directly with, responding to any inquiry from, volunteering information to, or providing testimony before, the Securities and Exchange Commission, the Department of Justice,

So the bottom line is that the choice between challenging and leaving is a deeply personal one and that there is no one right answer. But the choice to leave should not be based on the erroneous myth that you can’t or shouldn’t win. these people have received many times the amount funded at your loan closing and have closed off the account on their own books. They have not only been paid, they have made more money posing as lenders than they ever could have by actually being lenders. And you made all that revenue possible by signing a note and mortgage in favor of someone who was not lending you any money. Nobody told you about that. And nobody told you that you were not entering a transaction in which there was a lender and borrower. There was only a borrower.

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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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*
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
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Please visit www.lendinglies.com for more information.

 

Watch that modification agreement. You are being forced to accept a virtual creditor instead of a real one.

“Morality is an existential threat to commerce and politics. Although we legislate morality we refuse to enforce it. It is OK to lie to consumers or borrowers but not OK to lie to a financial institution who by the way is lying to you.” Neil F Garfield, October 2009 speech to regional bankruptcy conference in Phoenix Arizona.

The proposed modification agreement is an attempt to force or coerce the borrower into accepting a NEW term of the loan agreement that any attorney would advise against, to wit: acceptance of a designated creditor instead of a real one.  

The transmission of a proposed Modification Agreement by a “servicer” like Ocwen, PHH, SPS. SLS, Bayview etc. would be mail fraud if it was sent via USPS. It seeks to extort a signature from the borrower that directly acknowledges and accepts the existence of a virtual creditor.

The obligation was funded by a third party (investment bank) who did not take ownership of the debt, note or mortgage.

The reason the investment banks didn’t want ownership is that they were in the business of lending money without being subject (at least on the surface) to long standing federal and state statutes and common law restricting the behavior of lenders and requiring full and fair disclosure of the terms of the transaction. 

I recently received another modification agreement to review. The true nature of the agreement only appears when you read it carefully. If you do that, it is obvious.

In any normal circumstance where the lender existed and owned the underlying obligation because it had paid value for the note and mortgage, the lender, or its successor would be identified as such. And the Lender or Successor would insist on being named for its own protection, lest some third party claiming to be servicer runs off with the money.

This is not only custom and practice in the commercial banking and investment banking industry, it is also the only way, without committing legal malpractice, to draft such an agreement to protect the creditor from any intervention or claims.

But if you look carefully you will not see any reference like this: “Whereas, ABC was the owner of the loan account, note and mortgage and was succeeded by XYZ who purchased and paid value for said debt, note and mortgage on the __ day of ___, 2020,

Here is my recent analysis:

The modification agreement is very helpful because it corroborates what I have been saying.
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The agreement first states that the parties to the agreement are the debtor, xxxxx yyyyy, and then two other parties, to wit: New Residential Investment Corp., [NewRes] who is not identified as to its role or relationship to the yyyyyyy loan, and Ocwen Loan Servicing LLC, [Ocwen] who is identified as the servicer or or agent for NewRes.
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NewRes asserts in the public domain that it is an REIT. But records show that it grew out of a loan servicing business, which I believe to still be the case. In any event there is no representation or warranty in the modification agreement that states or even implies that NewRes is a creditor or lender. That status is raised by implication for the benefit of Ocwen. And who Ocwen is really working for is left out of the agreement altogether.
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The statement that Ocwen is servicer for NewRes does not make Ocwen a servicer for the loan account. Unless NewRes is or was the owner of the account who paid value for the underlying debt, Ocwen’s agency might exist but it had nothing to do with the subject loan. This is why homeowners need lawyers arguing these points which, for most people, dulls the brain. “Because I said so” may work in the house with children but it was never intended to be accepted in courts of law.
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So far the banks have fooled courts, lawyers and homeowners into thinking that this type of legal gibberish can be used with impunity and  that this gives the lawyers free license to characterize it in any way that is convenient for the success of a false, illegal and fraudulent foreclosure case. And they can do so because the lawyers are protected by the overly broad doctrine of  litigation immunity.
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Authority is not magic. It can only occur if the loan account is owned by a creditor who paid value and authorized Ocwen to act as loan servicer or agent in their stead. Such a creditor would have the legal right to grant servicing rights to Ocwen in a servicing agreement (not a Power of Attorney).
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When challenged, Ocwen is obliged under law to answer simple questions: (1) from whom did you receive authority to administer, collect or enforce the debt, note or mortgage? Is the grantor of such authority a person or entity that has paid value for the underlying obligation? If not, is the grantor representing a person or entity that has paid value for the underlying obligation?
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Absent from the agreement is any reference or assertion or even implied assertion that NewRes paid value for the debt, or even the assertion that NewRes is the owner of the debt, note or mortgage.
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This absence, in my opinion, is evidence of absence, to wit: that NewRes is not the owner of the debt, note and mortgage and does not maintain any entry in its bookkeeping records reflecting a purchase of the subject loan or any loan — at least not from anyone who owned it.
*

No such transaction could have occurred because the obligation was funded by a third party (investment bank) who did not take ownership of the debt, note or mortgage. In other words, there was nobody to pay and so payment was not made.

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Instead the agreement says that Ocwen will be called the “Lender/Servicer or agent for Lender/Servicer (Lender).”
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This statement corroborates my conclusion and factual findings that there is no loan account in existence, and therefore no creditor who possesses a legal claim for equitable or legal remedies to pay for losses attributed to the loan account as a result of the action or inaction of a homeowner.
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If there was a party who had the yyyyy loan on its bookkeeping or accounting ledgers as an asset receivable it would be there because that entity had paid value for the debt — the key element and condition precedent to both ownership of the debt and the authority to enforce the note or mortgage.

Without authority from the owner of the underlying debt there is no legal foundation supporting the allegation that the claimant is a holder with rights to enforce. The allegation may be enough for pleadings but it is not enough for trial. Further the court has no authority to apply any legal presumptions arising out of the possession of the note unless the creditor is identified.

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The agreement is clearly an attempt to insert Ocwen as the lender for purposes of the agreement. But Ocwen is not the lender nor a creditor nor even an authorized servicer on behalf of any party who has paid value for the underlying debt. NewRes appears to be yet another nominee in a long list of nominees and designees to shelter the investment banks from liability, even while they pursue profit by weaponizing administration, collection and enforcement of loans. 
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The modification agreement is an attempt to force or coerce the borrower into accepting a term of the loan agreement that any attorney would advise against, to wit: acceptance of a designated creditor instead of a real one.  

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This is further evidence of deceptive servicing and lending practices. They are evading the responsibility imposed by law to identify the creditor and the authority to represent the creditor. They are evading the responsibility imposed by law to provide an accurate accounting for the establishment and current status of the alleged obligation.
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The reason for this behavior is that there is no current obligation claimed by any company to be owed to them as a result of ownership of the loan account arising from a transaction in which value was paid for the underlying debt.
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Accordingly there can be no authority to act as servicer, agent, or “acting lender”, nominee or designee.
*
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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CLICK HERE ORDER ADMINISTRATIVE STRATEGY, ANALYSIS AND NARRATIVE. This could be all you need to preserve your objections and defenses to administration, collection or enforcement of your obligation.
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CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR) (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
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Please visit www.lendinglies.com for more information.

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

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

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The first part is the purchase of a certificate that promises payments to the investor based upon a formula that is independent of any homeowner debt, note or mortgage. It does not commit the Investment Bank to using the funds in any particular way. But the payments are partially indexed on the performance of an arbitrarily chosen group of loans that are not owned by anyone.
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The second part is the establishment of a pool of funds controlled by the Investment Bank which also does not have any restrictions as to its use. The prospectus reveals that investors may be receiving payments out of the pool of funds, which obviously comes from their own money. This is the source of what is labeled as servicer advances.
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By labeling these payments as servicer advances, and by providing that servicer advances will be paid to the master servicer (i.e., the Investment Bank) the so-called securitization scheme creates another Profit Center.
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Investment Banks can claim return of servicer advances that they never advanced. By doing that they not only create the profit Center but they also able to claim that it was not Revenue for tax purposes.  A lot of the bookkeeping, financial reporting and tax reporting is based on this strategy.
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In my opinion it is not legal. But I am certain that it is not legal from the perspective of the homeowner, who gets no credit for any payments or profits made in the scheme because nobody maintains an account in which the homeowners debt is claimed as an asset; this results in literally no place to credit the homeowners debt for incoming payments and profits that actually offset any potential liability of the homeowner.
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The third part exists by implication. The normal agreement (prospectus) would provide for a specific use of proceeds from the proceeds of an offering of any Securities or certificates for mortgage bonds. This is absent.
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The reason that it is absent is because the balance of the funds are pure profit to the Investment Bank. this is because of the second tier of a yield spread premium that is not widely understood in legal circles because in legal circles they mostly have no experience or knowledge of Finance. I do. As a former investment banker who actually practiced literally on Wall Street I understand exactly how this happened.
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The investment bank has complete discretion as to what to do with the money that investors have paid them — something that never exists in the offering of securities to investors but does exist in so-called securitization plans. This is the holy grail for investment banks — issuing securities in the name of nonexistent entities. Instead of getting their normal fee of at most 15% of the proceeds, they get it all. 100%.
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They issue certificates in the name of a trust that does not exist. The actual Trust Agreement (NOT THE PSA) corroborates this by stating that the trustee has only one function: to hold legal title to loan documents. The beneficiary is the Investment Bank.
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And of course the role of a trustor or settlor is completely absent because there is nobody who has paid value in exchange for receiving a convenience of ownership of the underlying debt of any homeowner. *
So the Investment Bank, to simplify for this article, is promising to pay the investor at a rate which appears to the investor to be in excess of market rate but is far below the amount charged to homeowners. This strategy enables the Investment Bank to profit on several different levels.
  • first, the yield spread premium is the difference between the amount of money that needs to be paid to homeowners for issuance of what is labeled as loan documents, versus the amount of money the investment bank received from investors.
    • So if an investor paid $1,000 expecting a 5% return, the investor was expecting $50 per year.
    • But the Investment Bank funded a loan at 7.5%.
    • This means that in order to satisfy what they had to pay to the $1,000 investor they only needed to to pay the homeowner around $666 leaving a $334 pure untaxed profit.
    • Right there for every $1 they paid the owner the investment bank received $0.50.
    • In addition, by placing themselves in the position of Master servicer, they were the ultimate recipient of payments received from homeowners which in many cases exceeded any planned payments to investors.
    • NOTE THAT THIS IS WHY SUBSERVICERS LIKE OCWEN ET AL REFUSE TO TELL YOU WHERE PAYMENTS FROM HOMEOWNERS ARE SENT. FIRST THEY DON’T ACTUALLY RECEIVE THE MONEY AND SECOND THE MONEY IS NOT BEING SENT TO THE CLAIMANT IN FORECLOSURE, CORROBORATING THE DEFENSE NARRATIVE THAT THE NAMED PLAINTIFF OR BENEFICIARY IS NOT THE PROPER CLAIMANT NOR DOES IT POSSESS ANY CLAIM AGAINST THE HOMEOWNER.
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The fourth aspect is that under current systems and processes that are generally accepted on Wall Street, most Investments are held in street name. Investors do not receive any written document like a stock certificate or a bond when they buy it. Holding a security in street name means that for all practical purposes the Securities firm owns it for the benefit of an investor. THE ONLY EVIDENCE OF OWNERSHIP THE INVESTOR GETS IS A STATEMENT FROM THE SECURITIES FIRM IN WHOSE NAME THE SECURITY IS REGISTERED.
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And while it is true that the law says that an investor is the beneficiary of an arrangement wherein the securities firm holds title in trust for the investor, there’s nothing to stop the Securities firm from trading on the existence of the certificate as if it were their own. This Is how they are able to obtain insurance contracts and hedge contracts that are payable to the investment bank rather than the investors who put up the money.

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

FREE REVIEW:

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

It’s time to reassess the role of investment banks, originators, servicers and other players claiming “securitization” before the next foreclosure tidal wave.

Since foreclosures are about to start another meteoric rise, this would be a good time to write a new article on what went wrong the last time, what is going on now, and what is still likely to go wrong this time.
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I know that some of the rantings on the internet seem like the spillage of conspiracy theorists and some of them are just that. But overall they are right.
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The bottom line is that back in 1993, investment banks latched onto a scheme that had been partially developed by Michael Milken, who went to prison. The new scheme was patently illegal, which made it one step over the line that Milken actually didn’t cross. His junk bonds were perfectly legal. Drexel Burnham disclosed the real risks. But Michael had bigger plans. The plan was to raise the perception of junk bonds to investment grade.
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But then he went to jail. But upon release he was immediately paid $50 million and then hundreds of millions more to help devise the scheme. His actual role is subject to conjecture.
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The goal was to tap the largest market for debt in the world — home lending. It required all the major investment banks (Citi, Goldman, JPM, Credit Suisse) to “cooperate” (i.e., conspire).
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They had to each support the “securitization” schemes of each other, entice other lesser investment banks into playing (Lehman, Bear Stearns) and then influence or buy off fund managers (pension funds) to purchase the junk bonds they were issuing as “Certificates.”
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It as the “holy grail” of investment banking. Issuing trash securities as though it was for a third party issuer when in fact the issuer was the investment bank itself.
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To justify the purchases by stable managed funds, the investment banks paid off and coerced the insurers into issuing insurance contracts and the rating agencies to issue highest quality ratings based upon false assumptions about diversification of risk. The error is simple: diversification is irrelevant if the entire group of loans is (a) not owned and (b) tainted by bad underwriting.
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And the insurance contracts were payable not to the investors nor even for their benefit but rather for the profit of the investment bank who purchased it. The contracts were based upon index performance not actual losses.
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The same is true for the bailouts that occurred. No losses were paid off because the parties receiving the benefits of insurance or bailout had no loss. See the evolution of the definition of TARP from something covering loan losses, to something covering losses on certificates issued by investment banks, to an undefined toxic asset category.
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The now infamous AIG bailout was primarily for the benefit of Goldman Sachs. Having installed their former CEO as US Treasury Secretary, a very reluctant President Bush was convinced to bailout AIG on the false premise that the financial markets would collapse if he didn’t. But the proceeds went to Goldman Sachs as pure profit.
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AIG took the money to pay off Goldman for its bet that the certificates would decline in value. The decline in value was based upon a contractual provision that gave Goldman the sole right in its sole discretion to declare the event. The money covered no losses because Goldman had no losses. It was pure profit. And when the money was received (around $50 billion from the bailout, bonuses, parties and lavish spending ensued.
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Meanwhile the only two real parties to the scheme — investors and homeowners — were left out in the cold.
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At the end of each securitization cycle, the goal was to avoid liability for violations of lending and securities laws. Avoiding lending laws was easy. They used sham entities to act as “originators” who served for a fee and who appeared on the note and mortgage as a lender.
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Avoiding violations of securities was also easy. they disclosed enough to be able to say they told investors what they were doing, the investors were sophisticated and should have been able to ascertain the risks, and through leveraging the typical herd mentality on Wall Street they created a stampede in all securities brokerage firms to buy and sell the certificates. The world was hooked on a financial weapon of mass destruction.
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Eliminating the liability of a lender in form and substance meant that the role of creditor or lender had to be eliminated. That was accomplished by actually eliminating the homeowner’s debt without notice to the homeowner. Hence the “boarding process” asserted in court is fake. There can be no boarding of a debt that does not exist and a history of payments on the nonexistent debt is irrelevant.
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Each party other than the investor got paid in full. But the homeowner never received any notice of reduction due to receipt of payment because nobody maintained an accounting entry on any books of record that showed that the debt was owed or owned.
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The debt could not be owned without a corresponding entry that showed value being paid for the debt. No such transaction had never occurred since the only actual value was paid by investors, who didn’t own the debt.
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The investor never purchased any debt, note or mortgage. At the end of the day there was no person or entity that legally owned any debt, note or mortgage and therefore no lender or lender successor who could be liable for violations of Federal and State lending laws.
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The scheme then required foreclosure on debts that had already been fully paid several times over. To do this the investment banks had to again resort to using sham entities who would fake their roles using fabricated, false, forged and backdated instruments literally manufactured out of thin air. Despite numerous settlements in all US jurisdictions for such practices, they continue unabated.
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And the proceeds of foreclosure are ultimately received by the investment banks who pay out lavish compensation for the players who contributed to the foreclosure process. *
Since no loss is covered or paid or recorded on any books of account, the money is literally free money in which for tax purposes, is falsely reported as payment on loans. So the foreclosure proceeds are pure profit which is untaxed, at least up until this point in time. Investors never see a penny and homeowners are never the wiser that their debt does not exist anywhere.
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In order to accomplish all this the banks needed to coordinate their activities. enter Black Knight who is literally a  successor to DOCX, which was acquired by Lender Processing Systems (LPS). Lorraine Browne took one for the team when she became the only person in the scheme to go to jail for fabrication of documents.
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Somehow the courts continue to apply presumptions that are supposed to only raise from inherent credibility of documents that are patently false. This results in foreclosure on the erroneous assumption that even if the paperwork is somehow false or even fabricated the proceeds will find their way to the investors. That presumption is wrong.
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Black Knight is the hub in which all things are centralized to prevent foreclosure of the same homeowner transaction by more than one entity — something that would expose the false nature of all of the foreclosures.
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By getting a foreclosure judgment the investment banks succeeded in getting a legal stamp of approval on everything that had transpired before the foreclosure was initiated and the grounds on which they could report the proceeds as return of loan. Basically all fabricated false documentation emanates by or at the direction of Black Knight.
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Judges of all stripes have always been curious about the muscle chairs strategy of presenting several servicers, plaintiffs and other parties. Maybe this time, with a little help from the press, they might be open to considering the fact that the investment banks are not saving the economy, they are stealing from investors and homeowners alike. And if they start asking for fake bailouts again they are stealing from the government and taxpayers. 

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New foreclosure rocket dockets will emerge unless these practices are controlled or stopped. If the claimant is not the owner of the debt, present, existing, black letter law, does not allow foreclosure. In fact, enforcement of the note or separately, the debt, is not allowed unless the right to enforce comes from the owner of the debt. The law is clear, unless someone pays value, they can’t own the debt. Assignments of mortgage without the debt are a legal nullity.
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To “save” the economy the only legal option available is to reassess the homeowner transaction using the equitable powers of the court. It might be true that the homeowner obligation can be enforced after such a reassessment — but only after the facts are all exposed and all stakeholders are brought to the table.
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This would require that the court hear a properly filed pleading requesting equitable reformation of the contract to allow for maintaining the homeowner obligation because without that, the entire securitization infrastructure is in danger of collapse — even though nobody in the securitization infrastructure actually ever owns the debt or suffers a loss from nonpayment.
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To make the homeowner obligation enforceable the court must allow a designee or nominee to pose as creditor. Further the court must adopt procedures that allow a party to act as the designator, even though neither the designee nor the designator own the debt and will suffer no loss from any payment or nonpayment by a homeowner. The current practice of allowing such designees to reap such rewards is  not legally sustainable and probably unjust and unfair.
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The legal analysis requires a beginning point of analysis the contracting intent of the contracting parties. And that in turn requires an analysis of the identity of the contracting parties.
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That analysis results in an indisputable truth: taken separately there was no meeting of the minds — because the homeowner wanted a loan and the investment bank , acting through the originator, wanted the issuance of securities — the note and mortgage — without anyone assuming the substantive role of a lender.
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But taken together a contract can be fashioned in which the homeowner transaction can be treated as a loan contract and the absence of any creditor can be adjusted to insert a designee or creditor who can enforce. but ti do that, the entire contract must be taken into consideration.
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If the homeowner was seeking an actual loan under lending laws but didn’t get it, what is the consideration for entering into a deal that was so profitable for the other contracting parties, whether they were stated or concealed?
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If the answer is nothing, then the court must determine the proper amount of consideration that the homeowner should have received for being drafted into a risky securities scheme — a scheme in which his rights as a consumer, borrower or customer were virtually eviscerated by the substance of the deal.
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The only other legal option is common law rescission. That will result in dismantling the entire securitization scheme.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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In the meanwhile you can order any of the following:
*
CLICK HERE TO ORDER TERA – not necessary if you order PDR PREMIUM.
*
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*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR) (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
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Please visit www.lendinglies.com for more information.

Moratoriums Extended: That Doesn’t Mean You Won’t Be Out On the Street Or Living With Relatives

Governor Ron DeSantis (R) Florida, issued a new order extending the moratoriums on foreclosures and evictions.

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The investment banks on Wall Street like this turn of events because they no longer need to lie orally to homeowners in order to get them to fall behind in payments. Their goal is foreclosure and eviction mostly except for abandoned properties after foreclosure which are called Zombie properties.

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Practically everyone who has had an issue with mortgage payments has heard the familiar refrain: “you don’t qualify for a modification because you are not delinquent in your payments. You must be at least 90 days behind in payments before you should submit your application for a modification.”

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Since it was oral communication (not written) and either not recorded or the recording is later destroyed, the foreclosure mills, hiding behind litigation immunity are free to deny that the homeowner ever received that information — which by the way is practicing law without a license (a felony in many states).

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Judges hearing that story are very skeptical of that story even though it is true. They are skeptical because why would any creditor want a “borrower” or obligor to not pay them? Why would anyone want to lose money in a transaction? It just doesn’t make sense to judges, which is why Mr. Reyes from Deutsche bank got away with it when he said the entire securitization system is “counter-intuitive.”

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The Judge’s attitude comes with the assumption that he/she is dealing with an actual creditor. If you drop that assumption everything makes sense. The only way a non-creditor can make money is by pretending to be a creditor and foreclosing on a property in which it has no interest — and of course getting away with it.

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The bonus is that once the foreclosure is successful it has a legal presumption of validity which means that all prior illegal acts are subsumed into the foreclosure.

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So don’t believe the moratorium any more than you believe the tune that you must stop making payments in order to qualify for a modification. The banks are counting on you spending money that would have otherwise gone to making payments such that when the 90 day period is over or when the moratorium is over you are so far behind that you cannot catch up.

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That is exactly what the banks want even though that seems crazy to the casual observer, including judges.

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Now if you are already involved in foreclosure there is nothing but confusion as to the effect of the roders on moratoriums. Exactly what do they stop?  We don’t know.

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But most judges are interpreting the orders as meaning they can hear nothing on any foreclosure or eviction which is probably correct — or else there will be a landslide of motions seeking to set aside orders granted while the moratorium was in effect.

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But I wonder if a motion to compel discovery or demands for discovery are still allowed. I think they might be.

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And I repeat for the umteenth time that you can’t prove anything against the foreclosure mill or any supposed client of the foreclosure mill. You don’t have the evidence or data. I issue that reminder because everyone who loses their fight against the foreclosure mill comes to the same erroneous conclusion: they can’t win. They skip the part about having gone down the wrong path.

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The winning strategy, every time is based upon the knowledge, not the evidence of wrongdoing on the part of the foreclosure mill and its “clients.”

The winning strategy is simply challenging the assertions, implied references, assumptions of fact, and presumptions at law through the proper and timely use and enforcement of discovery.

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That means crafting discovery questions that are simple, easy to understand and that can be defended as being central to the issue of ownership and authority over the underlying obligation. People seem to avoid getting proper help from a knowledgeable source on drafting discovery. It also means that you have a memorandum of law ready with citations to statutes, rules of procedure and cases interpreting those rules in which you should clearly and convincingly that your questions are simply designed to test the basic question that a creditor or representative of a creditor is present in court.

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The people that claim they cannot get answers in the discovery process are missing the point. If your opposition could answer those questions without admitting they have no claim they would do so. But they don’t. So when you DON’T get answers, that begins your journey toward revealing and demanding an inference that the foreclosure mill has no basis to assert or imply that the foreclosure will result in payment against a debt on the books of some creditor — i.e., a creditor who is the claimant/beneficiary in a nonjudicial foreclosure or the plaintiff in a judicial foreclosure.

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

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Discovery

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

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

The Problem With those Powers of Attorney

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

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

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

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

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

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

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Ocwen Stock Is Riskier Than Investors Know

the truth is there for anyone who wants to see it, which means that the entire prospect for Ocwen is that of an actor with only one foot on the edge of a cliff.

This article represents the analysis and opinion of the writer. Take no action with consulting a legal and financial adviser. 

The common stock of Ocwen Loan Servicing is traded actively. The company is backed by the largest banks in the world and its reported income is generally rising. BUT Ocwen has also been positioned by its backers (Goldman, BofA, Citi, etc.) to be thrown under the bus if the going gets rough.

The stock is currently valued based upon the presumption of economic viability because all the mortgages claimed to be servicing are generating revenue and Ocwen is receiving revenue and making a profit.

But another scenario is emerging from the shadows even if it appears unlikely. The number and percentage of homeowner successes in foreclosure is increasing. Those successes are all based upon one single fact, whether explicitly stated in court findings or not — that the named creditor on whose behalf Ocwen says it is collecting was not the owner of the debt. Hence Ocwen’s claims, notices, and testimony are not based upon its relationship with such named creditors or claimants.

If it is further revealed that Ocwen was in fact acting at the behest of an investment bank rather than a trustee of a named REMIC trust, the result could be catastrophic for both Ocwen and the investment bank. That scenario occurs if the investment bank was giving instructions on loan administration and foreclosure while it had no financial interest in the underlying debt.

That would mean that Ocwen never had any nexus to the debt owner. And that in turn would mean that Ocwen, in many and perhaps most cases, does not have any right to administer or service the loan “portfolio” it claims to be managing. And it would mean that all “modification” applications were improperly directed and processed. It could also mean that Ocwen is being paid to pretend it possesses such rights.

Ocwen could be the target of even more lawsuits alleging fraud and other intentional torts. On a more granular level the absence of any agency relationship with an identified creditor who owned the debt by reason of having paid for it would disqualify an Ocwen representative from testifying as the robowitness and would fail the exception test to hearsay objections as to their records, since they would not be records of either the named claimant nor of the actual owner of the debt.

If the facts are revealed and finally accepted by American courts, most foreclosures would grind to a halt. American law requires that paper title and actual payment of value for the debt must be combined into one party before any foreclosure action is filed. Under the weird securitization scheme adopted by the major investment banks no such party exists. The whole point of what they were doing was to sell parts of the debt for amounts vastly exceeding the market value of the actual debt.

By using Ocwen as the front for enforcing foreclosure actions, Ocwen is primed to be the one thrown under the bus wherein the inevitable finger pointing from investment banks will be directed at Ocwen and other servicing entities like it. Acting without authority and knowingly contributing to windfall illicit gains from foreclosures also places Ocwen at risk for actions by Attorneys General of all 50 states and several regulatory authorities.

The combined administrative and legal risks vastly exceeds the market valuation of the entire company. If and when these facts are finally accepted in the courts, Ocwen would be forced into bankruptcy and would most likely file under Chapter 7 or Chapter 11 as a liquidation in bankruptcy. Either way, the outlook for  the valuation of Ocwen shares would be bleak at best.

If somehow the investment banks are either able to maintain the ruse or continue the current governmental attitude of wink and nod, none of those scenarios are applicable. But the truth is there for anyone who wants to see it, which means that the entire prospect for Ocwen is that of an actor with only one foot on the edge of a cliff.

SCOTUS Revives Qui Tam Actions

Until this decision I had assumed that Qui Tam actions were essentially dead in relation to the mortgage meltdown. Now I don’t think so.

The question presented is whether actions brought by a private person acting as a relator on behalf of a government entity can bring claims for damages under the False Claims Act. Such actions are barred by the statute of limitations, which requires a violation to be brought within six years of the violation or three years “after the date when facts material to the right of action are known or reasonably should have been known by the official of the United States charged with responsibility to act in the circumstances.”[3] 

In a unanimous decision the Court held that the tolling period applies to private relator actions. This does not by any stretch of the imagination create a slam dunk. Relators must have special knowledge of the false claim and the damage caused to the government. It will still be necessary to argue in an uphill battle that the true facts of the securitization scheme are only now unfolding as more evidence appears that the parties claiming foreclosure are neither seeking nor receiving the benefit of sale proceeds on foreclosed property.

Some claims might relate back to the origination of mortgages and some relate to the trading of paper creating the illusion of ownership of loans. Still others may relate to the effect on local and State government (as long as the Federal government was involved in covering their expenses) in the bailout presumably for losses incurred as a result of default on mortgage loans in which there was no loss to the party who received the bailout, nor did such bailout proceeds ever find the investors who actually funded the origination or acquisition of loans.

And remember that a relator needs to prove special knowledge that is arguably unique. The statute was meant to cover whistleblowers from within an agency or commercial enterprise but is broader than that. The courts tend to restrict the use of Qui Tam actions when brought by a relator who is not an “insider.”

See https://www.natlawreview.com/article/supreme-court-recognizes-longer-statute-limitations-qui-tam-plaintiffs-false-claims

See Review of False Claims Act 18-315_1b8e

See Cochise Consultancy, Inc. v. United States ex rel. Hunt

I also find some relevance in the decision penned by J. Thomas writing for the court as it applies to TILA Rescission, FDCPA claims, RESPA claims and other claims based upon statute:

Because a single use of a statutory phrase generally must have a fixed meaning, see Ratzlaf v. United States, 510 U. S. 135, 143, interpretations that would “attribute different meanings to the same phrase” should be avoided, Reno v. Bossier Parish School Bd., 528 U. S. 320, 329. Here, the clear text of the statute controls. Cochise’s reliance on Graham County Soil & Water Conservation Dist. v. United States ex rel. Wilson, 545 U. S. 409, is misplaced. Nothing in Graham County supports giving the phrase “civil action under section 3730” in §3731(b) two different meanings depending on whether the Government intervenes. While the Graham County Court sought “a construction that avoids . . . counterintuitive results,” there the text “admit of two plausible interpretations.” Id., at 421, 419, n. 2. Here, Cochise points to no other plausible interpretation of the text, so the “ ‘judicial inquiry is complete.’ ” Barnhart v. Sigmon Coal Co., 534 U. S. 438, 462. Pp. 4–8. (e.s.)

Point of reference:

I still believe that local governments are using up their time or might be time barred on a legitimate claim that was never pursued — that the trading of loans and certificates were transactions relating to property interests within the State or County and that income or revenue was due to the government and was never paid. A levy of the amount due followed by a lien and then followed by a foreclosure on the mortgages would likely result in either revenue to the government or government ownership of the mortgages which could be subject to negotiations with the homeowners wherein the principal balance is vastly reduced and the government receives all of the revenue to which it is entitled. This produces both a fiscal stimulus to the State economy and much needed revenue to the state at a cost of virtually zero.

In Arizona, where this strategy was first explored it was determined by state finance officials in coordination with the relevant chairpersons of select committees in the State House and Senate and the governor’s office that the entire state deficit of $3 Billion could have been covered. Intervention by political figures who answered to the banks intervened and thus prevented the deployment of this strategy.

I alone developed the idea and introduced it a the request of the then chairman of the House Judiciary committee. We worked hard on it for 6 months. Intervention by political figures who answered to the banks intervened and thus prevented the deployment of this strategy. It still might work.

See also

http://www.mondaq.com/unitedstates/x/809786/White+Collar+Crime+Fraud/False+Claims+Act+Statute+of+Limitations+Relators+Now+Get+Up+to+10+Years+to+File+Suit

The Court also held that the relator’s knowledge does not trigger the limitations period. The statute refers to knowledge of “the official of the United States charged with responsibility to act in the circumstances[.]” Had the Court interpreted this provision to include relators, fears of protracted tolling by relators would largely dissipate because the qui tam action would have to be filed within three years of the relator’s knowledge or six-years of the violation, whichever is later. The Court rejected this approach, finding the express reference to “the” government official excludes private citizen relators. The Court held it is the government’s knowledge that triggers the limitations period.

The Court, however, left unanswered the question of which government official’s knowledge triggers the limitations period. The government argued in its briefs and at oral argument that such official is the Attorney General or delegate. As we have noted in prior posts (see Holland & Knight’s Government Contracts Blog, “ Self-Disclosure and the FCA Statute of Limitations: Cochise Consultancy, Inc. v. United States v. ex. rel. Billy Joe Hunt,” March 27, 2019), there is a broader question as to whether knowledge by governmental actors outside of DOJ, including knowledge trigged by self-disclosure, should start the limitations period. The Court did not rule on this question, though its decision hints at an interpretation that includes only the Attorney General. If true, DOJ becomes the sole repository for disclosures that trigger the limitations period. That is, unless defendants can argue that DOJ “should have known” of the violation when investigative bodies such as the Office of Inspector General or the FBI have actual knowledge of the violation … more on this latter issue is sure to come.

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
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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.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“Lost notes” and the Sudden Appearance of “Original Notes.”

Think of it this way: If someone wrote you a check for $100, which would you do? (1) make a digital copy of the check and then shred it or (2) take it to the bank? Starting with the era in which banks made what is abundantly clear as false claims of securitization the banks all chose option #1. And they collected incredible sums of money far exceeding the Madoff scam or anything like it.

Back in 2008 Katie Porter was a law professor and is now a member of the US House of  Representatives. For those of who don’t know her, you should follow her, even on C-Span. She nails it every time. She knows and other congressmen and women are following her lead. Back in 2008 she uncovered the fact that in her study of 1700 filings in US Bankruptcy court, 41% were missing even a copy of the note, much less the original note.

Around the same time, the Florida Bankers Association, dominated by the mega banks and who absorbed the Florida Community Bank Association, told the Florida Supreme Court that, after the purported “loan closing,” digital copies of the notes were made — and then the original notes were destroyed. FBA said it was “industry practice.” It wasn’t and it still isn’t — at least not for actual creditors who loan money. Out in the state of Washington on appeal, lawyers for the claimant in foreclosure admitted they had no clue as to the identity of the creditor. The state banned MERS foreclosures, along with Maine.

That admission, with full consent of the mega banks, raised the stakes from 41% to around 95% — a figure later confirmed in Senate Hearings by Elizabeth Warren. The other 5% are loans that were truly traditional — funded by the “lender” (no pretender lender) and still owned by the lender who had the original documents in their vault.

The law didn’t change. In order to enforce a note you needed the original. And in order to plead you “lost” the note, you had to allege and prove very specific things starting with the fact that it was lost and not destroyed. Then of course you had to prove that the original was delivered to you, which nobody could because the original was destroyed immediately after closing and a fax copy was the only thing used after that.

Typically destruction of the note means that the debt is discharged or forgiven — something that is actually a natural outgrowth of the same debt being sold dozens of times in varying pieces under various contracts, none of which give the buyer any direct right, title or interest in the “underlying” debt, note or mortgage. In short, neither the debt nor the note exist in most cases shortly after the alleged loan closing.

The representatives of the mega banks who started the illusion of securitization of mortgage debts could neither produce the original note (because it was destroyed) nor tell a credible story to explain its absence. So they did the next best thing. They recreated the note to make it appear like an original using advanced technology that could even mimic the use of a pen to sign it.

Some of us saw this early on when they failed to account for the color of the ink that was used at closing. Those were among the first cases involving a complete satisfaction of the alleged encumbrance, plus payment of damages and attorney fees, all papered over by a settlement agreement that was under seal of confidentiality.

While obviously presenting moral hazard, the process of recreation could have been legal if they had simply followed the protocols of the UCC and state law to reestablish a lost note. But they didn’t. The reason they didn’t is that they still had to prove that the note was a legal representation of a debt owed by the borrower to a creditor that they had to identify. But they couldn’t do that.

If they identified the creditor(s) they would admitting that they had no claim because a person or entity possessing a right, title or interest in the debt did not include the named claimant in the foreclosure. Naming a claimant does not create a claim. A real claim must be owned by a real claimant. That is the very essence of legal standing.

If they had no claim they would be admitting that the securitization certificates, swaps and other contracts were all bogus. That would tank the $1 quadrillion shadow banking market. That is where we see the evidence that for every $1 loaned more than $20 in revenue was produced and never allocated to either the debt of the borrower or the investment of the investors. The banks took it all. $45 trillion in loans and refi’s turned into $1 quadrillion in “nominal” value. Nice work if you can get it.

So then they did the next next best best thing thing. They simply presented the recreation of the note as the actual original and hoped that they could push it through and that has worked in many, probably most cases.

It works because most borrowers and their lawyers fail to heed my advice: admit nothing — make them prove everything. By giving testimony regarding the “original” note the borrower provides the foundation and the rest of the foreclosure is preordained.

For some reason, lawyers who are usually suspicious, refuse to acknowledge the basic fact that the entire process is a lie designed to take property, sell it and apply or allocate the sale proceeds to anyone except the owner(s) of the debt. They hear “free house” and get scared they will look foolish.

A free house to those persistent and enduring souls who finance the great fight is a small price to pay for the mountains of windfall profit of the banks and related parties. As for the banks, adding the proceeds of a house that should never have been sold is adding insult to injury not only to the homeowner but to the entire society.

If anyone wants to know why so many Americans are angry, look no further than the 40 million people were directly displaced by illegal foreclosure and the additional 70 million people who were affected by those dislocations. Voters know that if the many $trillions spent on bailouts had been used to level the playing field, 110 million Americans and millions more worldwide would have never faced the worst effects of the great recession.

And we will continue voting for disruptors until a level playing field re-emerges.

see Lost notes and Bad Servicing Practices and Incentives SSRN-id1027961

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

 

Why Regulation is Failing the Mortgage Market

A new report from the Federal Reserve Board identifies the central issues confronting regulators — issues that regulators have avoided assiduously. The bottom line is that the FED knows that it lacks accurate information and knows that it is not confirming information given to it by banks who are now all in the background of lending.

The real information should be coming from small thinly capitalized private entities that serve as sham conduits for loans. Neither the FED nor any other regulator gets any information on those loans which now account for more than 50% of all loans. This presents important ramifications for litigating foreclosure defenses.

The practice, which they detail as starting in the early 1990’s of separating servicing rights from the loans was the beginning. Separating the rest of components through facial warehouse lending to avoid lending laws was the rest of the story and is continuing to evolve today.

Bottom line: everyone knows that the lenders are a sham and nobody wants to anything about it. The authors are raising warning flags about market liquidity as a consequence of using thinly capitalized “lenders” who can’t be held accountable for bad lending practices and whose loans are underwritten by third parties who are never mentioned in the chain of “lenders.”

But it’s what they don’t say that is really scary. Investment banks, who are now commercial banks also, have created a lending industry in which they are the principal players but nobody can or will hold them accountable for their actions.

And those same investment banks are selling off the debts of borrowers so that they too have no liability for defaults. Ultimately you end up with rogue REMICs or SPV’s and an orphan debt in which the only risk of loss is on the borrower who simply does not know that the debt has been the source of profit for everyone in the chain. No losses are sustained because investors keep selling to other investors and the government guarantees the balance.

Warehousing Lending Liquidity Crisis Federal Reserve Board

Practice Note: Government guarantees are paid AFTER all other alternatives have been exhausted. So the question always becomes whether the currently named claimant has any loss, a partial loss, or a total loss. This is especially true in most credit default swaps and similar contracts of “insurance” where the insuror explicitly waives subrogation to the claim.

So the net “loss” rather than the gross “loss” would need to be calculated in most loan foreclosures. I put “quotes” around the wor “loss” because in most cases the named claimant has suffered no loss — and the parties for whom it is serving as conduit have enjoyed a profit regardless of whether or not the borrower pays the debt.

In short if you can move the needle and get the court to accept the question of fact as to the amount of the loss, you might have a winning case despite all appearances to the contrary.

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

 

Facially Invalid Recorded Documents

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

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

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

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

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

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

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

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

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

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

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

Back to Real Property 101.

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

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

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

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

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

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

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

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

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

 

Rogue REMICs? 2016 Study Reveals Lack of Standing

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

see campbell – capstone inquiry into rogue remics

Significant quote from the abstract of the article:

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

And then there is this:

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

and this:

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

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

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

Reaching the conclusion

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

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

If you don’t challenge the smoke and mirrors the smoke becomes law and the mirrors become an inescapable nightmare.

Bottom Line: Failure to attack the facial validity of the documents is virtually hanging the homeowner letting him/her twist in the wind. Without such a relentless attack based upon scrutiny of the exact wording on documents revealing that nobody is actually identified as a real party in interest, you will be trapped by an endless cascade of legal presumptions against the homeowner.

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

In response to an email from a fellow attorney asking me about bankruptcy (BKR), the statute of limitations (SOL) adn renewing the debt after BKR discharge or renewing the payment by acknowledging it after BKR, I wrote the following.

  1. If the loan was scheduled as secured in favor of a particular creditor it is probably incorrect. If the loan was subject to a valid encumbrance at all, it almost certainly was not in favor of the current claimant, who has not purchased the debt and therefore no debt was transferred in fact despite paperwork appearing to state the contrary. Nor has the current claimant obtained authorization from the real owner of the debt as agent or representative.
  2. SOL: You are right but courts got tricky with this and they rule, like in Florida, that the statute ran out only on payments that were due and that there is a presumption of deceleration at some point. Check NY law. Florida is changing back to the old rule slowly which supports your view.
  3. Any payment on a debt can restart the statute running. Check Federal BKR law and NY Law. Payment while in BKR presents problems if not done with court approval.
  4. Under “modification” there are several problems. First every such modification is in actuality the transfer of the debt from an old pretender to a new pretender (servicer). In most respects it is a new loan agreement entirely, probably subject to TILA disclosure requirements because the old chain of title is being abandoned and a new one is being started — all without any reference to or formal grant of authority from the actual owner of the debt.  Payments under such a “modification” agreements are not really payments on the debt because the payment is neither going to the owner of the debt nor anyone formally authorized by the owner of the debt. Such payments could be construed as a new and probably unenforceable obligation.
  5. Acknowledgment by borrower of the debt owed to Pretender A directed to Pretender B is not acknowledgment of the debt if neither of them was the owner of the debt or an authorized representative or agent of the owner of the debt. But unless you attack the facial validity of the instruments, the law of the case will slide toward treating both pretenders as real. Once final that becomes irreversible.
  6. BKR discharge operates by law and not individual action. See BKR law and procedure. A promise to pay AFTER discharge might subject both the pretender creditor and the borrower to sanctions.
  7. An unconditional promise is just that and it is enforceable if supported by consideration. But there is no consideration.
  8. At a minimum there should be disclosure to the court and possibly seek court approval for agreements signed. But if you do that you are again creating law of the case that essentially requires treatment of the pretenders as real parties.
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