Right in Front of Our Eyes: Black Knight and U.S. Bank

Anyone who knows about foreclosure litigation and securitization of residential debt knows that the only way the banks could succeed is if they had a central repository and central command center from which all documents were fabricated and all instructions were issued.

For nearly all loans the central command was Lender Processing Systems, aided by DOCX. While DOCX is technically defunct and Loraine Brown went to jail taking one for the team, the functions of LPS remained the same.

LPS  changed its name to Black Knight and in a PR coup transformed itself into the publisher of what is largely viewed as comprehensive data on mortgage lending and foreclosures.

Hence it went from the purveyor of false, fraudulent, forged documentation to the purveyor of data perceived as reliable and thence became a trusted source whose data is considered worthy of legal presumptions.

Systems at LPS/Black Knight include data processing on virtually all residential loans subject to claims of securitization many of which are represented by data on the MERS  Platform which is a workaround to hide separate split transfers of the debt, the note and the mortgage or deed of trust.

The systems on LPS/Black Knight are designed for the the express purpose of presenting consistent data in foreclosure claims. As such it also enables the rotation of apparent servicers, none of whom perform bookkeeping functions even if some of them interact with borrowers as if they were actually the servicers.

The rotation of servicers comes with the false representation and illusion of boarding in which the process is falsely represented as meaning that the new servicer inspected, audited, reviewed and input the data into their own system. None of that occurred. Instead the new servicer merely gained access to the same LPS system as the last servicer with a new login and password.

All evidence shows that the functions for fabricated, forging and robosigning documents continue to be performed under the direction of LPS/Black Knight which receives all instructions from various investment banks who have each started their own securitization scheme masking apparent trades in the secondary market for loans and trades in the shadow banking market where “private contracts” are regularly traded without any securities regulation.

Far from dropping their connection with LPS/DOCX the major banks have completely embraced this central repository of all loan data, all of which is subject to manual and algorithmic manipulation to suit the needs of the banks; thus they produce a report that creates the illusion of credibility, reliability and even independence even though none of those things are true.

So now U.S. Bank is further embracing LPS/Black Knight technology in the form of “Empower” for loan originations. U.S. bank is of course the major player whose name is used in foreclosures despite the fact that it has no interest in the loans and does not receive one cent from foreclosure sales of property. It merely receives a royalty for the use of its name as part of a fictitious name of a nonexistent trust which is falsely represented to have engaged in a transaction in which the trust acquired the debt, note and mortgage on multiple loans.

This deal furthers the PR myth. It strengthens Black Knight as having the attributes of a legitimate player when in fact it is a central figure in the greatest economic crime in human history.

see https://www.prnewswire.com/news-releases/us-bank-expands-relationship-with-black-knight-to-correspondent-and-hfa-lending-channels-on-empower-loan-origination-system-300859760.html

US Bank will implement the Empower LOS to manage loans purchased via its correspondent and HFA lending channels. The bank already uses Black Knight’s MSP servicing solution which integrates with the LOS; and its artificial intelligent virtual assistant AIVA.

“Aligning with Black Knight’s Empower for our Correspondent and HFA business serves our forward-looking vision of providing innovative capabilities that advance the lending process and provide a better client experience,” said Tom Wind, executive vice president, US Bank. “Expanding our enterprise relationship with Black Knight allows us to enhance our digital capabilities and customer experience throughout the entire homeownership cycle.”

 

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

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

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see https://www.nytimes.com/2019/05/20/nyregion/nyc-taxi-medallion-loans-attorney-general.html?smid=nytcore-ios-share

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

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

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

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

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

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

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

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

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

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

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

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

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

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

AND NOTE THIS:

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

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

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

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

The Big Hoax: Are “Sales” of “Loans” and “Servicing” Real?

References to sales of loans and servicing rights are usually merely false assertions to distract homeowners and lawyers from looking at what is really happened. By accepting the premise that the loan was sold you are accepting that the loan was (a) real and (b) owned by the party who was designated to appear as a “Seller.”

By accepting the premise that the servicing data and documents were transferred you are accepting that the transferor had the correct data and documents and that the designated servicer is actually in position to represent the accounting records of the party whose name was used to initiate the foreclosure.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

As Reynaldo Reyes of Deutsche Bank said in deposition and in recorded interviews, the entire structure and actual events are “counterintuitive.” The banks count on that for good reason. Most lawyers and almost all homeowners assume that at least some of what the banks are saying is true. In fact, nearly everything they say, write or produce as “business records” is a fabrication. But homeowners, lawyers and judges buy it as though it was solid gold.

In defending homeowners from foreclosure, lawyers who win more cases than they lose do so because of their willingness to believe that the entire thing is a hoax. Their withering cross examination and use of discovery reveals the complete absence of any corroborating evidence that would be admissible in court.

Even the most “biased” judges will concede that the case for foreclosure has not been made and they rule for the homeowner. But this only happens if the lawyer takes the opposition to task.

Chase did not acquire loans from WAMU and WAMU did not acquire loans from Long Beach etc. At the time of the claimed “acquisition” those loans were long gone, having been funded or purchased by one of the big 4 investment banks, directly or indirectly (through intermediate investment banks or simple cham conduit fictitious names or entities). In fact the ONLY time that the actual debt was clearly owned by anyone was, at best, a 30 day period during which the investment bank had the debt on its balance sheet as an asset.

So all sales from any seller other than one of the investment banks is a ruse. And there are no references to sales by the investment banks because that would be admitting and accepting potential liability for lending and servicing violations. It would also lead to revelations about how many times and in how many pieces the debt was effectively sold to how many investors who were NOT limited to those who had advanced money to the investment bank for shares in a nonexistent trust that never owned anything and never transacted any business.

Similarly the boarding process is a hoax. There is generally no actual transfer of servicing even with the largest “servicers.” They are all using a central platform on which data is kept, maintained, managed and manipulated by a third party who is kept concealed using employees who are neither bonded nor trained in maintaining accurate records nor protecting private data.

There is no transfer of servicing data. There is no “boarding” and no “audit.” In order to keep up the musical chairs game in which homeowners and lawyers are equally flummoxed, the big investment banks periodically change the designation of servicers and simply rotate the names, giving each one the login and password to enter the central system (usually at a server maintained in Jacksonville, Florida).

BOTTOM LINE: If you accept the premises advanced by the lawyers for the banks you will almost always lose. If you don’t and you aggressively pound on the legal foundation for the evidence they are attempting to use in court the chances of winning arise above 50% and with some lawyers, above 65%.

To be successful there are some attitudes of the defense lawyer that are necessary.

  • The first is that they must believe or be willing to believe that their client deserves to win. A lawyer who thinks that the client is only entitled to his/her time or a delay of the “inevitable” will never, ever win.
  • The second is that they must believe or be willing to believe that the entire scheme of lending, servicing and foreclosure is a hoax. Each word and each document that a lawyer assumes to be valid, authentic and not fabricated is a step toward defeat.
  • The third is that the lawyer must fight to reveal the gaps, consistencies and insufficiencies of the evidence and not to prove that this is the greatest economic crime in human history. All trials are won and lost based on evidence. The burden is always on the foreclosing party or the apparent successors to the foreclosing party to prove that title properly passed.
  • Fourth is arguably the most important and the one that is most overlooked. The lawyer must believe or be willing to believe that the foreclosure was not initiated on behalf of any party who could reasonably described as a creditor or owner of the debt. The existence of the trust, the presence of a real trust in any transaction in which a loan was purchased, sold or settled to a trustee, and the various permutations of strategies employed by the banks are not mere technical points. They are a coverup for the fact that no creditor and no owner of the debt ever receives any benefit from a successful foreclosure of the property.

Yes it is counterintuitive. You are meant to think otherwise and the banks are counting on that with you, your lawyer and the judge. But just because something is counterintuitive doesn’t mean that it isn’t true.

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

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

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

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

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

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

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

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

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

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

*

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

 

DiTech: The Pretense Continues

DiTech was not a lender. It was a sales agent or loan broker. Nonetheless a new agreement has been executed in which major creditors of DiTech are resurrecting the illusion that the current use of the DiTech name is sufficient to establish ownership of the debt, note or mortgage on any loan that was “originated” by DiTech. This is nothing less than a brazen attempt to attach orphan loans (no known creditor) to a newly conceived entity bearing little or no resemblance to the entity that once sold loans to the public  under the advertising banner of “lost another one to DiTech.” It’s a lie.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see DiTech RSA

Courtesy of Philip Koebel, Esq. and Charles Cox, here is a list of the entities involved in the consolidated DiTech Bankruptcy, which was only kept alive because it representing a legacy name that could be used to reconstitute apparent ownership of loans. The creditors are basically reversing the transactions and writing off nearly $1 billion in “debt” and then miraculously allowing orphan loans to appear as though  DiTech was the lender the whole time. It never was the lender. It didn’t own loans at the time of the bankruptcy. It never owned the loans. But the current deal allows the emga banks to use DiTEch as a vehicle of illusion and deception.

Schedule 1
Debtor Case Number Tax ID Number Date Filed District
Green Tree Credit LLC 19-10411 (JLG) 75-3115864 February 11, 2019 S.D.N.Y
Ditech Holding Corporation 19-10412 (JLG) 13-3950486 February 11, 2019 S.D.N.Y
DF Insurance Agency LLC 19-10413 (JLG) 30-0936918 February 11, 2019 S.D.N.Y
Ditech Financial LLC 19-10414 (JLG) 41-1795868 February 11, 2019 S.D.N.Y
Green Tree Credit Solutions LLC 19-10415 (JLG) 27-1311565 February 11, 2019 S.D.N.Y
Green Tree Insurance Agency of Nevada, Inc. 19-10416 (JLG) 88-0187331 February 11, 2019 S.D.N.Y
Green Tree Investment Holdings III LLC 19-10417 (JLG) 20-0031008 February 11, 2019 S.D.N.Y
Green Tree Servicing Corp. 19-10418 (JLG) 20-0843552 February 11, 2019 S.D.N.Y
Marix Servicing LLC 19-10419 (JLG) 56-2646101 February 11, 2019 S.D.N.Y
Mortgage Asset Systems, LLC 19-10420 (JLG) 87-0798148 February 11, 2019 S.D.N.Y
REO Management Solutions, LLC 19-10421 (JLG) 27-2377787 February 11, 2019 S.D.N.Y
Reverse Mortgage Solutions, Inc. 19-10422 (JLG) 77-0672274 February 11, 2019 S..D.N.Y
Walter Management Holding Company LLC 19-10423 (JLG) 86-1059818 February 11, 2019 S.D.N.Y
Walter Reverse Acquisition LLC 19-10424 (JLG) 46-0928837 February 11, 2019 S.D.N.Y

 

Cal. 3d DCA: WRONGFUL FORECLOSURE — You Can Cancel the Assignment, Notice of Default, Notice of Sale and Reverse the Sale.

This decision “Not for publication” takes one more step toward unravelling the false claims of securitization that resulted in millions of fake foreclosures over at least 15 years. The pure nonsense being peddled by Wall Street investment banks still remains as the underlying basis for assumptions and presumptions that are contrary to fact and contrary to legal and equitable principles.

But the window is now open to include the investment banks as defendants in complaints for damages and disgorgement, because as this decision reveals, the courts may not be willing to take a giant leap of faith that someone must be the lender and that “someone” is part of the chain of players who are pursuing foreclosure. Without that leap of faith, without that bias, their “doctrine” is left dangling in the wind.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

See http://lawzilla.com/blog/rainn-gauna-v-jpmorgan-chase-bank/

YES it does stand for the proposition that at least this court says that cancellation of instruments is the one cause of action that in fact does exist because the assignment was from an assignor that had no interest in the debt. I think that it is important to make it clear that the words “no beneficial interest” means “no ownership of the debt.” But the use of the words “no beneficial interest” implies the validity of the deed of trust by which the property was encumbered in favor of a “lender” (or its agent “MERS”) who was a sales agent and not a lender and from whom the borrower received no funds.

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This twisted concept seems to be saying to the judicial world that we know that table funded loans occur but we are not going to invalidate the enforcement of contracts lacking in consideration because there must be someone in the mix who did provide consideration and who was in some kind of relationship with the sales agent. Hecne the courts are thinking that they are following substance over form and thus preventing a windfall to borrowers. Instead they are stepping over the facts.
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The money came from an investment bank and yes the investment bank knew that the “originator” would be named as lender. The purpose of this arrangement was to shield the investment bank from liability for violations of lending laws of which we all know there were many spanning the categories of appraisal fraud, avoidance of underwriting risk (without which nobody could be considered a lender), to concealment instead of disclosure of terms, compensation etc.
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You can’t pick up one end of the stick without  picking up the other. If we are going to accept the notion that in foreclosure cases we are going to treat a contract as enforceable even though it lacked consideration and nobody else that is named in the chain has ever paid value, then the assumption is that an unnamed party who actually did pay value, is the real party in interest. That is the investment bank. And THAT can ONLY mean that the investment bank was present in underwriting and granting the loan through its naked nominee, the sales agent or “originator.”
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If that is so then the liability for lending violations MUST attach to the investment bank. And if that is so then at least in judicial states, by alleging those lending violations through the affirmative defense of recoupment, the foreclosure can be mitigated or defeated entirely. In nonjudicial states one would need to allege active concealment preventing the borrower from knowing the real party in interest with whom he was dealing.

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This could be the end of nonjudicial foreclosures at least as to LBMT-WAMU-Chase. It should be treated as such. If I had time, I could literally write a book about this decision as it is so instructive as to pleading requirements and common mistakes made by trial and appellate courts like for example, assuming that a legal default exists when nobody who owned the debt declared such a default or even said that payment was delinquent in some way.

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It also shows the lengths that many courts will go to avoid “fraud.” While they will accept the notion that something was wrongful and that the defendants knew it was wrongful, contrary to fact and law, they refuse so see it as fraud. A quick look at any FTC action will reveal that such restrictions do not apply if the same allegations come from a governmental agency.
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The case is also instructive in that it repeats a very common scenario regarding the origination and progression of the loan. This court and other courts will eventually face the day when their assertions come full circle: for now, they are saying that just because there was no consideration between then named lender and the borrower doesn’t mean there was no enforceable contract.

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Yes it does mean that in every context other than foreclosure litigation. But because of the rules in UCC Article 3 the maker of a note takes a risk when they execute the promissory note without having received any consideration because the note represents, under law, the right to enforce it, which if it is acquired for value might mean the enforcement would be free from borrower”s defenses. That liability does not create an enforceable loan contract. Even common sense dictates that for a loan contract to be enforceable there must be a loan between the parties to the contract.

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PRACTICE NOTE: All that said, this case only stands for the proposition that a complaint is sufficient when it pleads that the party on whose behalf an assignment was made had no ownership in the debt. The proof of the pudding will be at trial. How will you prove this basic proposition. The answer is that you have taken the first step which is that you put the matter in issue. The second step is discovery. And the third step, if it ever gets to that, is establishing at trial that the supposed beneficiary under a deed of trust or the mortgagee under a mortgage deed had not satisfied its burden of proof showing an ownership interest in the underlying debt.”

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The opposition to that narrative will be what it has always been. That possession of the “original” note raises the legal presumption that the named beneficiary under the deed of trust in fact was the legal beneficiary under the deed of trust. Possession of the note, they will argue equals ownership of the debt. If the judge accepts that proposition, the burden of proof will then fall on the borrower to rebut that presumption — a leap that most judges have already demonstrated they don’t want to make. So the persuasiveness of then presentation including an unrelenting march toward revelation of the truth is the only thing that carries the day.

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The banks know that what they’re doing is wrong. But history shows that they can get away with it except with the apparently rare homeowner who aggressively and relentlessly defends the foreclosure.

Stop Feeling Guilty — Be A Warrior

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Is that Mortgage or Deed of Trust Void or Just Unenforceable?

Proving that an instrument is unenforceable does not void the instrument unless it is unenforceable by anyone. Better to prove that it should never have been written.

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.
========================
The DOT could only be void if it was not facially or actually valid. That, in my opinion, means that the the DOT should never have been written, should never have been executed and should never have been recorded. It must the equivalent of uttering a false instrument and have the qualities of being a wild deed.
You need to look at your state statute that authorizes the use of a Deed of Trust. Look for the elements. If they are present, the DOT is not void on its face. If the elements are falsely presented then the  instrument can still be proven void. 
Proving that an instrument is not enforceable by the party trying to enforce it does NOT prove that nobody could enforce it. Hence it isn’t void until you can show that there is nobody who can or will enforce it. You must show that the DOT should never have been presented, signed and certainly not recorded.
That isn’t easy. And it is nearly impossible without investigation and discovery in which some party claiming to have an interest admits that there are fatal defects in the DOT. Defects in assignments or legal standing do not prove that the original instrument is void.
Put yourself in the shoes of a party whose money was used to give you the loan. Would you want your collateral wiped out because your servicer did something wrong in enforcement?
So in Washington DC the operative statute says as follows:

§ 42–801. Execution, acknowledgment, and recordation in same manner as deeds.

Mortgages and deeds of trust to secure debts, conveying any estate in land, shall be executed and may be acknowledged and recorded in the same manner as absolute deeds; and they shall take effect both as between the parties thereto and as to others, bona fide purchasers and mortgagees and creditors, in the same manner and under the same conditions as absolute deeds.

So then we are referred to the execution of absolute deeds. That statute says as follows:

§ 42–401. Effective date of deeds; exception.

Any deed conveying real property in the District, or interest therein, or declaring or limiting any use or trust thereof, executed and acknowledged and certified as provided in §§ 42-10142-121 to 42-123 [repealed], 42-306, and 42-602 and delivered to the person in whose favor the same is executed, shall be held to take effect from the date of the delivery thereof, except that as to creditors and subsequent bona fide purchasers and mortgagees without notice of said deed, and others interested in said property, it shall only take effect from the time of its delivery to the Recorder of Deeds for record.

And you may have trouble with this one:

§ 42–403. Defective grants recorded on or after April 27, 1994.

Any instrument recorded in the Office of the Recorder of Deeds on or after April 27, 1994, shall be effective notwithstanding the existence of 1 or more of the failures in the formal requisites listed in § 42-404, unless the failure is challenged in a judicial proceeding commenced within 6 months after the instrument is recorded.

But look at this —-

§ 42–404. Failures in formal requisites of an instrument.

(a) The failures in the formal requisites of an instrument that may be cured by this act are:

(1) An omission of an acknowledgment or a defective or improper acknowledgment;

(2) A failure to attach a clerk’s certificate;

(3) An omission of a notary seal or other seal; or

(4) An omission of an attestation.

(b) Nothing in this act shall be construed to eliminate the requirement that a deed be under seal. Any deed accepted for recordation without a seal but made effective by operation of this act shall be deemed a sealed instrument.

(c) Nothing in this act shall be construed to validate any instrument with respect to which there was any misrepresentation, fraudulent act, or illegal provision in connection with its execution or acknowledgment.

(d) Any person convicted of a fraudulent act, in connection with the validation of any instrument under §§ 42-10142-40242-403, and 42-602 shall be subject to the penalties set forth in § 22-3222.


So putting it all together you probably cannot prove that the instrument is facially invalid but you can prove that it is invalid for misrepresentation of the lender and the terms of the loan referenced by the DOT by its reference to the promissory note. The actual terms were that a remote undisclosed party would sell the borrower’s signature multiple times reaping huge rewards without any application of sale proceeds to the borrower’s account. 
*
The part about the wrong name being inserted as the lender is a good one. But that could be theoretically corrected by an affidavit of scrivener’s error, although supporting such an affidavit would be nearly impossible. 
*
But since the statute speaks to the commission of a fraudulent act you might be able to invalidate the the DOT without appearing to invalidate the debt. Or you could attempt to reform the DOT to name the actual lender, which I think might be a more productive tack, since it completely avoids the appearance of seeking a free house. 
Remember thought that fraud must be specific: You need a representation that was false, which the party knew was false, for the purpose of getting you to reasonably rely on the representation to your detriment and to their advantage. I think you have that here.
*
And remember that once you prove by clear and convincing evidence that the DOT was void for being part of a fraudulent scheme, any assignments of the mortgage or assignments of the beneficial interest in the void deed of trust are equally void because assignments convey only the interest possessed — they do not create interests. 

 

Gary Dubin: Proposed Mortgage Integrity Act (MIA):

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

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

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

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

——————————-
By Gary Dubin

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

13. Deficiency judgments are hereby abolished.

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

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

Part Three, covering transitional matters, as follows:

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

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

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

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

The Facts Behind Smoke and Mirrors

Nearly everyone is confused as to the identity of the real holder in due course, or the “creditor,” or the owner of the debt. Nearly everyone thinks that ultimate it is investors who purchased certificates.

In fact there is no holder in due course and there never will be in most instances. There was never any possibility for a holder in course claim because in most cases the origination of the loan took place in what is called a table funded loan, which is against public policy as a matter of law (as expressed in the Truth in Lending Act).

The creditor or owner of the debt is actually a party who was never disclosed in any of the dealings with borrowers and is not adequately disclosed in the secondary market or pretend underwritings and sales of certificates.

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

A Client just asked me if we should consider all the disclosed players as a single entity. Here is what I replied:

You could take that position but in reality they are all taking orders from a single entity that does not appear anywhere in the paper trail.

But it’s not like they are receiving orders on specific cases or events. They have standing orders to which they have agreed.

The party from whom they are receiving instructions is an investment bank who posed as an underwriter for the issuance and sale of bogus certificates from a nonexistent trust. The investment bank used money obtained under false pretenses from investors.

The investment bank might, under law, be considered a creditor — but it can’t assert that without opening itself up to a myriad of liabilities. In fact the investment will move heaven and Earth to avoid the revelation that the only financial transaction that means anything as a basis for foreclosure involves the investment bank and NOT any of the other disclosed parties with whom you are in litigation.

So in the end, the bottom line is that there is party who is willing to step up and claim status as creditor or owner of the debt — ever.

If you push this to the extreme in litigation you get some interesting results. Instead of being afraid that they will pop out a real creditor or owner of the debt, you should know that that in the end they will refuse to produce any such party.

And you will know that when they do assert or imply that this is the creditor you should look carefully at their wording and realize they are using a sham entity to cover up the fact that the investment bank who started it all is the real party in interest.

It is the investment banks’ unwillingness (for good reason) to be revealed as having anything to do with the loan, foreclosure or any other transactions that can be used as leverage if you push hard enough.

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

hat tip Bill Paatalo

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

see also Follow Up Article to this Article

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

This case opens a can of worms for the banks and servicers and corroborates much of what I have been writing for 12 years.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Using TILA Rescission as Jurisdictional Issue

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

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

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

Losing Strategy: “Getting it on the Record”

I know I am going to take some heat for what I am about to say. In my opinion “getting it on the record” is an excuse for losing and implies that the judge’s decision was wrong and can be appealed when in fact the judge’s decision was correct and will be easily affirmed on appeal.

Clients and lawyers and others frequently ask me to “review” something they have written. Below you will find my usual responses. The main trap door that losing homeowners fall through is that they bury their own argument in an attempt to litigate the entire case (i.e., to get it on the record, AGAIN) on each and every filing they submit to the court.

Let us help you plan your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

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

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

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

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

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

Here is my reply to most people whether they professionals or lay people.

The only caveat to this is that I personally know of many excellent legal writers “out there” for whom this article does not apply. They understand that the goal is to win in litigation and that means victory in as many points in the timeline of motions and discovery as is possible. You don’t win without that.

The second caveat is that persuasion and credibility are two sides of the same coin. You gain nothing by tossing out allegations that you can never prove and that are not backed up with foundation and corroboration. Practices like that lead to stuffing pleadings with irrelevant gibberish which might be true, but will dilute the good arguments and will never be considered, much less allowed into evidence.

Here are some of my common replies, shortly before they ask what it will cost for me to rewrite the pleading or memorandum.

In my opinion this needs to be rewritten, it needs to be much shorter and it must focus in on a small number of bullet points. The first points must catch the attention of the judge since it is unlikely that the judge will read beyond page 2.A “Reply” should be exactly that, to wit: something that answers the objection filed by or on behalf of ABC. While components of a reply are present they are buried under what is largely re-litigating the entire case.
Your point about all defendants being represented by the same attorney is well-taken. Do something with that, don’t just say it. Perhaps you could float an argument like “Opposing counsel seeks to invoke alter ego status on the one hand in order to invoke res judicata and on the other hand wants us to believe that ABC is a separate and independent entity with no connections to the alleged violations of law asserted by Plaintiff.
Under either scenario the baseline narrative is completely dependent upon a chain of ownership of the debt that is neither asserted nor substantiated by any foundation or documentary exhibits or evidence. In a sleight of hand maneuver, Defendants instead want us to focus on the note or mortgage (deed of trust), which at best are only paper instruments supposedly memorializing a transaction that is neither asserted nor in existence.
Thus they argue a false equivalency between the debt and the note despite no allegation nor proof that the note accurately memorialized a financial transaction in the real world between maker and payee on the note. They neither allege nor argue the merger doctrine in which the debt is absorbed into the note. This would force them to prove the money trail which nobody in the shoddy history of false claims of securitization is ever willing to allege or even provide a response.
“Getting it into the record” is not a trial strategy. It is a losing strategy both at the trial level and appellate level. That is because the goal is wrong. The goal is really to win, which can be and has been done in tens of thousands of cases. Getting something into the record is a euphemism for negligence, because it means that it is a data dump rather than a compelling narrative designed to persuade the trier of fact. Data dumps are virtually ignored by judges, just as you would if you were sitting on the bench.
“Defendant Counsel’s “Representation” of all defendants, each with supposedly different interests is at odds with his grouping of all the defendants together — ignoring the fact that if the case is decided against one of them it might be applied to them all. Do all the Defendants consent to this representation? Or, as alleged by Plaintiff, are they all sham conduits working for a fee in a common enterprise to create the illusion of an interest in ownership, servicing and transfers of the recorded encumbrance? Does one of them own the debt or are any of the defendants in privity with the owner of the debt?

GARFIELD PREMISES

Most people really don’t completely understand our premise when we investigate, research, examine and analyze a case or case documents. We have several premises with which we start and check to to see if they apply. While the answer is short the work behind it is long and complicated.

Let us help you plan your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

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

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

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

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

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

15 Assumptions we make that show up in all our reports and drafting.

  1. Rescission is an event that occurs upon mailing of the notice. It is not a claim for which the borrower must justify before it becomes effective. It is effective on mailing.
  2. The trusts are empty. They never took part in any transaction in which any loan was purchased. Therefore referring to the loan as being in a trust is erroneous.
  3. The Trusts don’t exist. The use of the Trustee’s name is an accommodation for a fee, and the use of the alleged trust name is the use of a fictitious name of the underwriter for certificates issued in the name of the trust. Hence the certificate owners own nothing (especially since they usually have disclaimed all interest in the debt, note or mortgage.)
  4. Since there is no trust in which the subject loan was entrusted to the named trustee, all claims to servicing rights arising from the written trust instrument (PSA) are also fictitious.
  5. None of the parties in the named trust have any right, title or interest in ownership or servicing the subject loan.
  6. In most cases the named payee on the note was neither a source nor a conduit for funds. All documents, especially mortgage documents, are construed against the drafter of those documents.
  7. The naming of a Payee who is not the source of funding prevents merger of the debt with the note, which can only occur when the payee and creditor are the same.
  8. In most cases the named Payee is different from the the creditor who funded the loan, intentionally or otherwise.
  9. In most cases the recorded mortgage names as creditor (“Lender”) a party (the named payee on the note) who is different from the creditor who funded the loan, intentionally or otherwise.
  10. In most cases (nearly all) the originator of the loan named as Payee on the note and “lender” on the mortgage was never in privity with the actual funding source.
  11. In nearly all cases referring to a lender or servicer as a lender or servicer is erroneous and admits a fact that is not true.
  12. In nearly all cases referring to a trustee as a REMIC Trustee is erroneous and admits a fact that is not true.
  13. In nearly all cases referring to a trustee as a DOT Trustee is erroneous and admits a fact that is not true.
  14. In virtually no case does equitable or legal ownership of the debt get transferred with documents of transfer.
  15. In virtually no case is there a real world transaction in which a loan is purchased and sold. It is the paper that is transferred, not the debt; hence there is no consideration.

Why Everyone (except SCOTUS) is Wrong About TILA Rescission

All contrary arguments are erroneous since they would insert a contingency where the statute contains no room for any contingency. The language of the statute bars any such contingency when it says that the TILA Rescission is effective upon delivery, by operation of law. If anyone wants the statute to say or mean anything different they must get their remedy from the legislature, not the courts, who have no authority whatsoever to interpret the statute otherwise. The status of any case involving foreclosure is that it does not exist. Hence the court is left ONLY with the power to perform the ministerial act of dismissing the case for lack of jurisdiction.

Let us help you plan your TILA RESCISSION strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

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

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

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

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

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

So in answer to questions about putative “modifications”, eviction or unlawful detainer, bankruptcy, and TILA Rescission this is what I have written in response to some inquiries.

Should the rescission be recorded? Not necessarily but

YES. I would like to see it recorded. You need to check with the clerk in the recording office or an attorney who understands recording procedure. Generally recording a document with an old date must be attached to an affidavit that is recorded with the notice of rescission attached. The affidavit explains that the attachment was inadvertently not recorded at the time it was created.

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Should a copy of the notice of rescission be filed in the court record also?

YES. If there is any way to get the recorded document into the court record, it should be pursued.

This presents title issues because if you are recording this long after events have transpired, some of which are also recorded as memorializing transactions, fake or real. Any recorded instruments that purports to be a memorialization of a transaction before the rescission was recorded would generally be given priority.
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The lawyer sent me an answer to my notice of rescission. Now what?
Either file to enforce the duties to be performed (if you are within one year of the date of delivery of the notice of rescission), or file a quiet title action if the one year has expired. There are several different scenarios actually, but this is the one I would focus upon.
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I am getting kicked out of bankruptcy court. Now what?
Getting “kicked out” of BKR court probably means that you are back in the state court system which might open some opportunities for you to get more into the court record. (Like an old rescission).
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My property is being sold. Does that mean that I have to get out?
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They can’t get you out without filing an unlawful detainer (eviction in some jurisdictions) based upon an asserted change of title. There might be a period of time between the sale and the attempt to get you out of the home (eviction or unlawful detainer). If the property is sold to a “third party” they want want rent from you, which could allow you to stay.
The unlawful detainer action presents another opportunity to raise the issue of rescission, since the entire action is based upon a valid change of title. It also sets off potentially another round for appeal, especially on the issue of rescission. Res Judicata and Collateral Estoppel do not apply to jurisdictional issues. If the rescission was mailed then by operation of the law the note and mortgage are void.
The defense is ordinarily that the “sale” was a fabrication based upon fictional claims and was contrary to the notice of rescission, which voided the note and mortgage upon which they were relying. The time for challenging the rescission has long passed. Hence all enforcement actions after the date of the 2009 rescission are void since they were based upon various claims attendant to paper instruments that were void, effective the day of delivery of the rescission.
Note that delivery of TILA Rescission notice is complete when dropped in a USPS mailbox and your testimony that it was sent via US Postal Service is all that is necessary as foundation.
I sent 2 notices of rescissions. Is that better or worse for me?
If I was defending against your claim of rescission I would argue that sending the 2016 rescission was either an admission that the earlier one had not been sent or that it was a concession that, for whatever reason, the 2009 rescission notice had been abandoned.
Hence I suggest you put very little emphasis on the new rescission and maximum emphasis on the old rescission.
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I sent the rescission less than 3 years after the modification but more than 3 years since the alleged consummation. Hoes my rescission affect my loan in that instance?
In most cases “modifications” are not treated as new loans. But the fact that something is called a modification and it really changes everything including the “lender” it may be possible to characterize it as a new loan subject to TILA Rescission. TILA Rescission hinges on whether the “modification” was a new loan — a fact, we would argue — that must be determined by trial. Since intent is part of the analysis of a contract, this could present another opportunity to force them to admit they don’t know the identity or intent of the creditor and whether said creditor had given them authority to make a new contract.
And the underlying narrative for this approach is that as a new contract, the “lender” was required to comply with disclosure requirements at the time of the new contract, thus triggering the three day right of rescission and the the three year limitation. Under my theory, based on Jesinoski, it doesn’t matter whether the three years has expired or not.
We know for certain that the notice of rescission is effective upon mailing; it is not based upon some contingent event or claim or court order. The date of consummation is itself a factual issue that can be in the pleading of the creditor (who is the only one with standing, the note and mortgage having been rendered void) claiming that the notice of rescission should be vacated based upon the three years, the date of consummation etc. 
Any alternative theory that puts the burden on the property owner would be contrary to the express wording of the statute and the SCOTUS ruling in Jesinoski. The statute 15 USC §1635 and SCOTUS are in complete agreement: there is no law suit required to make rescission effective. It would make the statutorily defined TILA Rescission event indefinite, requiring a court ruling before any rescission would be treated seriously. In other words, the opposite of what the statute says and the opposite of what SCOTUS said in Jesinoski. 
All contrary arguments are erroneous since they would insert a contingency where the statute contains no room for any contingency. The language of the statute bars any such contingency when it says that the TILA Rescission is effective upon delivery, by operation of law. If anyone wants the statute to say or mean anything different they must get their remedy from the legislature, not the courts, who have no authority whatsoever to interpret the statute otherwise. The status of any case involving foreclosure is that it does not exist. Hence the court is left ONLY with the power to perform the ministerial act of dismissing the case for lack of jurisdiction.
All this is important because we ought to be heading toward any defensive strategy that reveals the absence of a creditor. We are betting that the fight to conceal the name of the creditor is a cover for not knowing the the identity of the creditor, hence fatally undermining the authority as holder, servicer, trustee or anything else.
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What if consummation never occurred?
It may turn out that consummation between the parties to the note and mortgage never occurred. It’s important to remember that would mean the rescission is irrelevant since the loan contract does not exist. But such a finding by a court of competent jurisdiction would negate the legal effect of the note and mortgage; this is true as long as the note was not purchased for value in good faith by a buyer without knowledge of the borrower’s defenses.
In that case, the burden does shift to the homeowner and it is entirely possible that under that scenario there could be no consummation but nevertheless homeowner liability would continue on the falsely procured note and potentially the mortgage as well. The reason is simple: that is what the State statute says under Article 3 and Article 9 of the UCC, as adopted by all 50 states. The homeowner’s remedy in such a scenario would be limited to actions for damages against the intermediaries who perpetrated the the fraudulent and fictitious “transaction” in which the named lender failed to loan anything.
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