Update on MERS

Just assume that everything is a fiction and none of it is real. Then set out to create the inference against the use of key legal presumptions necessary for the foreclosure mill to establish a prima facie case. Those presumptions lead to conclusions that are contrary to facts in the real world.

The answer is always the same. MERS is a data storage  company that has no ownership of the data, or any documents that contain references to data, events, payments, assets or liabilities. The MERS database in intentionally unsecured — anyone can get access with a login and password which are easy to obtain.

The first reason for the looseness of data entry, maintenance and reporting is that the only real purpose for MERS is foreclosure. It is not used by anyone for any other purpose.  The second reason for the looseness of data handling is that even its members and users know that it is not admissible in court. As far as I know, nobody has ever tried to foreclose using data from MERS.

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GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================
MERS. it is merely a naked nominee. In some states it is banned. The holder of a mortgage or the holder of a beneficial interest in a deed of trust is required to be the owner of the debt, which is somebody who has paid value for the debt. Check state law.
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But the assignment from MERS has more problems than that. MERS is basically an agent. The principal is defined as the party who has been labeled as the “lender.”
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The designation of MERS usually includes “its successors and assigns.”
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That is the place where the Foreclosure Mills and the banks try to stuff in third parties who have no connection with the loan. Since MERS is merely a naked nominee, the only party that could issue instructions to MERS is the “lender” or its successors and assigns.
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Why would they do that? Revenue! The foreclosure process in most instances is a revenue scheme and has no relation to any plan, scheme or process by which the result is restitution for an unpaid debt.
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In most cases, by  the time the foreclosure process is started, the “lender” is dead and nobody has acquired its assets, liabilities or  business. There is no successor. So there have been many cases in which a judge has decided that a document supposedly executed on behalf of MERS by someone on behalf of a company that is labeled as “attorney in fact” is void in the absence of foundation testimony or documents showing that the interest of the “lender” has actually been transferred by way of payment to a transferee.
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MERS is not a servicer and MERS is not the owner of the debt. It has bare naked legal title to mortgages.
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There are no successors in interest or assigns with respect to either MERS or the “lender.” Since MERS does not possess and even disclaims any financial interest in the debt, note or mortgage, it may not execute any document of transfer except on behalf of the “lender” on the mortgage deed or deed of trust, or on behalf of a genuine successor to the “lender,” the document signed on behalf of MERS must be void, and not voidable.
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This is where many attorneys and pro se litigants miss the mark. they fail to parse the words and thus fail to recognize the Achilles heel in any chain of title which is dependent upon the transfer of any interest in any mortgage by or on behalf of MERS.
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The label of “authorized signer” is a lie on many levels. The signer has no corporate resolution from the Board of Directors, appointment by an actual officer with administrative duties at MERS, nor any employment by MERSas employee or as independent contractor. The person who signs is not paid by MERS.
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The person who signs is the employee of one of three entities — (a) the foreclosure mill (see David Stern), (b) the party claiming to be an authorized servicer of an entity who also does not own the debt or (c) an outside vendor who specializes in fabricating documents to “clear up” (read that as falsify) the title chain.
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In most cases there is no power of attorney executed by any employee, officer or director of MERS. But even in the rare instances where such a document has actually been properly executed and dated, the Power of Attorney cannot create any right, title or interest to any debt, note or mortgage.
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You need to keep their feet to the fire. If you don’t successfully attack such issues the presumption will prevail — i.e., that the chain of title is perfect. If you do attack those issues the presumptions fail and in addition to MERS being naked so is the foreclosure mill and the claimed labeled servicer.
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As always you will do well if you presume the entire foreclosure is a fake process in which the foreclosure process is weaponized to obtain revenue instead of restitution for an unpaid debt. Just assume that everything is a fiction and none of it is real. Then set out to create the inference against the use of key legal presumptions necessary for the foreclosure mill to establish a prima facie case. Those presumptions lead to conclusions that are contrary to facts in the real world.

Servicers: More Than One Set of Books

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

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

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

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

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

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

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

Comment posted on my blog:

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

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

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

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

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

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

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

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

Circuit Court West Palm Beach, Florida

ORDERED AND ADJUDGED AS FOLLOWS:

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

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

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

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

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

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

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

 

 

Frustrated with Your Lawyer’s Attitude?

PRESUMPTIONS VERSUS FACTS

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

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

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

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

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

Several things are happening here.

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

 

Here is what I wrote to the client:

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

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

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

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

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

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

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

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

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GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================
I think it is worth noting that securitization of loans was never completed in most scenarios. Value was paid by the Investors who, contrary to popular belief, never received ownership of the debt, note or mortgage.
  1. Cash flow was promised by the investment banker doing business as an alleged Trust, but the investors who were the recipients of that promise had no recourse to the mortgages (or the notes and underlying debts) and hence no recourse to enforce them.
  2. The alleged Trust never acquired the debt. Neither the trust nor any trustor or settlor ever entered into a transaction in which value was paid for the debt as required under Article 9 § 203 of the Uniform Commercial Code. It should be emphasized the this is not a guideline. It is statutory law in all U.S. jurisdictions. People get confused by court rulings in which ownership of the debt was presumed. Those decisions are not running contrary to Article 9 § 203 of the Uniform Commercial Code. To the contrary, those decisions seek to conform to that statutory requirement and the common law Doctrine that any reported transfer of the mortgage without transfer of ownership of the debt is a legal nullity. In short they avoid the issue by presuming compliance — contrary to the actual facts. 
  3. Under Article 3 of The Uniform Commercial Code it is possible that the trust acquired the note but under Article 9 of the Uniform Commercial Code the trust could not have acquired the mortgage, unless the transferor had sold the debt to the trust or the transferor was a party to the trust and had paid value for the debt. This is black-letter law.
  4. Endorsement of the note is of questionable legality since the endorser did not own the debt. In addition, the endorser had no legal right to claim a representative capacity for the investors who had paid value for the promise of the Investment Bank  (ie, they did not pay value for the debt). 
  5. I think that the only way an endorsement could be valid is if the endorser owned the debt or has legal authority to represent the owners of the debt who had paid value for the debt. I don’t believe that such a party exists.
  6. The only party who had barely legal title to the debt, the investment banker, had sold all or part of the cash flow from the mortgage loans for amounts in excess of the amount due on the debts. The remaining attributes of the debt or indirectly sold by financial instruments whose value was derived from the value of the derivative certificates issued in the name of the trust.
  7. There is no one party who has legal ownership of the debt and who has paid value for it. The brokerage of the note was merely a process of laundering title and rights to the debt to create the illusion that someone had both. The actual owner of the debt is a collection of legal entities that are not in privity with each other. That Gap was intentional and that is what enabled the Investment Bank to effectively sell the same loan an average of 12 times — for its own benefit.
  8. A Court of equity needs to allocate those sales proceeds. The implied contract with borrowers required disclosure of all compensation arising from the loan transaction. The implied contract with investors was the same. Both would have bargained for a piece of the pie that was generated by the investment bank. Neither one could do that because the large accrual of  heretofore impossible profits and compensation was both unknown and actively concealed from any reporting by investment banks.
  9. It is through no fault of the borrower that the investors put up money without acquiring the debt.
  10. The only way to bridge this problem is by somebody pleading Reformation or some other Equitable remedy in which the liability on the note or the liability on the debt is canceled.
    1. Anything less than that leaves the borrower with an additional prospective liability on either the debt or the note.
    2. But for the court to consider such a remedy in a court of equity it must restructure the relationship between the Investors and either the debt or the note and mortgage.
    3. And in turn it must then restructure the relationship between the party claiming a representative capacity to enforce the mortgage and the investors.
    4. In short, the investors must be declared to be the owner of the debt and the owner of the mortgage who has paid value for the debt.
    5. Only after a court order is entered to that effect may the investors then enforce the mortgage.
    6. The only way the Investors could enforce the mortgage would be if they were each named as the claimant and the investor(s) were receiving the proceeds of foreclosure sale to reduce or eliminate the debt.
    7. They could act through a collective entity, such as a trustee under a trust agreement in which the trustee was directly representing the investors. In that event the named trust in the Foreclosure action could be ratified and come into full legal existence as the legal claimant.
    8. Until then virtually all foreclosures naming a trust as claimant or naming “certificate holders” as unnamed claimants are fatally defective requiring dismissal with prejudice.
  11. However, this restructuring could interfere with the other derivative products sold on the basis of the performance of the certificates. The proceeds of such sales went to the Investment Bank and Affiliates who assisted in the selling of the additional derivative products.
  12. I repeat that none of this was caused by borrowers or investors or even known to be in existence.
  13. And the problem would not exist but for the persistence of the investment banks in maximizing Revenue at the expense and detriment of both investors and Borrowers.
  14. The problem with my solution is that much of the revenue collected by the investment Banks would accrue to the benefit of the investors.
  15. So the court would need to claw back a substantial amount of the revenue collected by the Investment Bank in each securitization scheme and then allocate the proceeds as to principal and interest on the underlying debt. Hence principal balances on the debt and the accrual of interest could be affected by the restructuring.

Jurisdictional Defense —- Certificate Holders vs Trust

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

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

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

*

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*

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

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

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

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

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

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

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

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

How to Put Leverage Back Into the Hands of Homeowners

You had the ultimate leverage when they needed your signature to start the loan agreement. Now you have the ultimate leverage if you can properly plead and become a credible threat based upon wrongful foreclosure. If a trust is named or implied as mortgagee or beneficiary you are not just threatening the one case of foreclosure filed against you, but all foreclosures initiated in the name of that trust.

Once faced with that threat the rule, contrary to general misconceptions, is that the homeowner will always receive offers of settlement that grant favorable terms. How beneficial? It depends upon the guts and determination of the homeowner and the lawyer for the homeowner.

see Homeowner Reverses Sale to Third Party Bidder Based on Wrongful Foreclosure and Get Modification

See https://livinglies.me/2019/07/19/california-decision-for-borrower-post-sale-in-eviction-proceeding/

See 2019.07.15 – Minute order for MSJ

See http://docplayer.net/37847883-The-exceptions-to-the-anti-injunction-act-a-federal-injunction-may-be-the-shortest-route-to-success-in-a-state-court-suit.html

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

The overwhelming majority of lawyers, judges and homeowners believe that they cannot stop a state from allowing the forced sale of the property, even though the the parties who initiate the forced sale are not creditors nor otherwise empowered to to conduct such a sale. Existing statutory and case law shows that is premise is wrong.

Further the existing consensus is that you cannot get a Federal Court to issue injunctions in either nonjudicial or judicial foreclosures. That too is wrong.

The simplest answer to the differentiation between consensus and reality is that not enough people are trying. In the real world of judicial warfare you can always find decisions that support bad applications of law and fact. The fact that this happens is no reason to abandon one’s rights, especially if it involves giving up title to your home and your lifestyle to companies who are merely seeking revenue from destroying your rights and interests.

An additional answer lies in the successful manipulation of news by the investment banks. Since 98% of all foreclosures happen by default (no opposition) banks are able to create the false notion that therefore the foreclosures were all solidly based in fact and law when nobody has ever decided that. By merely putting paper documents in front of judge that at a glance appear to be facially valid, the foreclosure is granted in judicial states and in nonjudicial states the parties initiating foreclosure don’t even need to do that.

Further upon losing cases, the banks almost always reach a settlement with homeowners where the homeowners are paid off to keep silent about their success. This has occurred in tens of thousands of cases that I know about and probably there are many more.

And finally, the banks have succeeded in mastering the psychology of litigation. The first thing they do when confronted by any credible threat in pleading is offer something that is worthless, indicating to the lawyer and the homeowner that their defense must be worthless. Unfortunately, most lawyers and most homeowners give up at his point because they are still trusting in the word of banks that engaged in the largest economic crime in human history. Homeowners hoping for an early end to the nightmare thus reach the false conclusion that any defense is hopeless.

Adding to that is the playbook that insurance companies use. They make it a long and tortuous process to get relief. They use ridicule and anything else at their disposal to delay litigation of your defense and just plain wear you out. That works a lot of the time.

So of all foreclosures initiated in the United States, less than 1/2% are resolved in favor of the homeowner upon reasonable economic terms. In simple numbers that means that a fair result was achieved in about 65,000 cases. In another 350,000+ cases, homeowners were able to hang onto their homes have been able to hang onto their homes on better terms than the original loan agreement. And in another 500,000 cases permanent loan “modifications” occurred wherein homeowners were able to renew payments on a loan agreement that was economically unsound.

For the banks it is “good business.” They get the revenue or cash flow from 98% of all foreclosures and the revenue from “modifications” in which the creditor is still not identified (because the debt has been reduced from actual to theoretical). When they lose they are losing revenue, not suffering any economic loss due to nonpayment.

Of the 65,000 cases reaching a fair result the banks manage to “save” approximately 60% of their revenue from foreclosures by offering deep discounts on loans they do not own. And in only 15,000-20,000 cases were homeowners brave enough and persistent enough to see it through to the end, where they defeated the foreclosure attempt on its merits. Because they had resolved to do that. In all such cases it required a level of perseverance bordering on obsession to get a just result.

Meanwhile in more than 12 million foreclosure cases thus far and climbing, investment banks are walking away with an average of $225,000 per case for a grand total thus far of more than two trillion seven hundred million ($2,700,000,000,000) dollars in revenue upon which they pay no tax because they falsely report it as repayment of debt. This deprived the US government and the economy of more than eight hundred ten billion ($810,000,000,000) dollars in tax revenue.

Why isn’t anyone doing something about that? Simple answer: because the banks control more of our governance than they have ever controlled in the past. The foxes are guarding the henhouse. And if you want to read an exposition of this problem and some methods to address it I strongly recommend reading and studying this plan from Elizabeth Warren whom I have followed with admiration since 2007 before she ever entered politics.

See End-wall-streets-stranglehold-on-our-economy

See the-coming-economic-crash-and-how-to-stop-it

Disclosure: While I do specifically endorse candidates I have donated money to the current and previous campaigns of Senator Warren.

 

How do I Use Article 9 §203 UCC Requiring Value Be Paid for Debt?

Many of you have essentially asked the same question referring to Article 9 §203 UCC as adopted by the laws of your state. There is no known cause of action for breach of that statute although one might be conjured. It is an interesting suggestion.
My reference to it is simple: the statute says that a condition precedent to enforcement of the security instrument (mortgage or deed of trust) is that the party seeking to enforce must have paid value for the security instrument. Translating that, it automatically means that if someone paid for it then they paid for the debt. BUT all law in all states says that if the “seller” or transferor does  not own the debt then the transfer of the mortgage is a nullity.
A condition precedent means you can’t do one thing without first doing the other. We are a nation of laws and personal bias about this is irrelevant.
GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

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What many lawyers continue to miss is that there is a difference between the laws entitling someone to enforce a note and the laws entitling someone to enforce a mortgage. There are different public policies behind each one. For Notes, the public policy is to encourage the free flow of negotiable instruments in the marketplace. For mortgages, the public policy is to make sure that the civil equivalent of the death penalty (loss of home) is not imposed by someone who actually has no interest in the debt.
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It is an added protection. As a condition precedent it means that standing to enforce the note is different from standing to enforce the mortgage. It is both factual and jurisdictional.
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The grey area occurs because many states adopt the doctrine that if someone has the right to enforce the note they automatically have the right to enforce the mortgage. Although that seems to contradict the Article 9 §203 provision it actually doesn’t. That is because possession of the note by a person who is entitled to enforce it raises the legal presumption that the value was paid by the person on whose behalf the note and mortgage are enforced.
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This is a fuzzy area of the law. But boiled down to its simplest components, it means that possession of the note is deemed (presumed) to be possession of legal title to the debt which, as we know from Article 9 §203 can only be true if the person has value invested in the deal.
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The point of that policy is that if the forced sale of the house is not going to produce proceeds that will be used to pay down the debt, then the foreclosure should not occur. If the person on whose behalf the foreclosure is brought is not the owner of the actual debt then without evidence from the lawyers representing the party named as Plaintiff or Beneficiary, there is no evidence that the proceeds will go towards paying down the debt and the court is required, with no discretion, to enter judgment for the homeowner.
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So the question comes down to whether the party claiming both possession and entitlement to enforce the note is the owner of the debt. The answer is yes if the homeowner does nothing. This presumption can be rebutted. A simple question as to whether the value was paid and if so, how many times, and demanding the dates and parties involved, would clear up the question if the banks had a factual answer. They don’t. They present a legal argument instead. As virtually all lawyers know, their job is to win however they can do it. So if they can’t dazzle the court with facts they can baffle the courts with bullshit.
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Carefully educating the judge who most probably slept through the UCC classes in law school is key to winning on this basis but it has been done many times. All jurisdictions have case decisions that reflect what I have described above. You must find those decisions and present them as part of your pleadings, memoranda and argument in court. 

Illinois Court of Appeals Cracks Code of Silence on Who Pays Foreclosure Mills

The wording of the decision strongly suggests that whether the claimant is US Bank, Deutsch or BONY Mellon et al, the third party who is actually paying the lawyer must be disclosed — at least if the homeowner asks.

Given the nature of the role that the alleged Trustee plays — i.e., none except to give the appearance of institutional involvement — this decision opens the door not only to disclosure but to possibly answering the question of who is pretending to be the creditor.

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

Hat tip Gregg DaGoose

Note that I endorse the reasoning here. The case should not used as authority as precedent except in the 1st District of Illinois. And of course the decision might further appealed.

see  https://jnswire.s3.amazonaws.com/jns-media/32/15/1386226/Margules_v_Beckstedt_appeal.pdf

We conclude that neither attorney-client privilege nor the Rules of Professional Conduct shield the identity of Steck’s third-party client, so affirm the judgment of the trial court and remand for further proceedings.

Relevant here, the citation requested “[a]ll documents evidencing any payments received by [Steck] or any others employed by [him] with respect to any representation of John Beckstedt [or When 2 Trade Group LLC] or by any other individual or entity acting on [their] behalf.” In addition, the citation requested “[a]ll documents evidencing any retainer received or held by No. 1-19-0012 – 3 – [Steck] or any others employed by or in partnership with [him] with respect to any representation of John Beckstedt [or When 2 Trade Group LLC] whether paid by [them] or by any other individual or entity acting on [their] behalf.” Steck, while noting and reserving some objections, denied having been paid by the debtors or anyone purporting to act on their behalf.

Steck responded that he had “no invoices, evidence of payment or other like records” because he had never billed or issued statements to Beckstedt or When 2 Trade. It was in this series of e-mails that Steck first asserted that “any information [he] ha[d] about [his] clients other than When 2 Trade and Beckstedt is privileged, including their identity.” [e.s.]

Attorney-client privilege “must be strictly confined within its narrowest possible limits.” (Internal quotation marks omitted.) People v. Radojcic, 2013 IL 114197, ¶ 41. Generally, the privilege does not protect a client’s identity. Cesena, 201 Ill. App. 3d at 104-05 (citing People v. Williams, 97 Ill. 2d 252, 295 (1983)). Two exceptions have been recognized: (i) where “the client will be prejudiced in ‘some substantial way’ if his identity were disclosed” (id. at 105 (quoting Williams, 97 Ill. 2d at 295)) and (ii) where protection would be in the public interest (id. (citing Shatkin, 128 Ill. App. 3d at 525); see also People v. Doe, 55 Ill. App. 3d 811, 815 (1977) (collecting cases)). The party asserting the privilege bears the burden of establishing that it applies. Shatkin, 128 Ill. App. 3d at 525.

plaintiffs cannot even attempt to put forward “some evidence” until they know the identity of the third party. Steck’s assertion of privilege as to his client’s identity has cut off the litigation before questions about plaintiffs’ evidentiary basis No. 1-19-0012 – 10 – could even be asked. Steck inserted the issue of attorney-client privilege into this case, and as the proponent of the privilege, he must show its application. [e.s.]

In Shatkin, the court recognized that a client’s identity is not protected by attorney-client privilege because “disclosure of the identity of an attorney’s client provides proof of the existence of the relationship, provides the opposing party with proof that his [or her] opponent is not solely a nominal party, and provides proof to the court that the client whose secret is treasured is actual flesh and blood.” (Internal quotation marks omitted.) Shatkin, 128 Ill. App. 3d at 525; see also Doe, 55 Ill. App. 3d at 814.

It follows then that requests could be made in discovery.

The first is whether the named claimant (e.g. US bank) has any retainer agreement with the foreclosure mill.  This is relevant to the issue of an award of fees in judicial foreclosure proceedings.

The second is “all documents evidencing any payments received by [foreclosure law firm] or any others employed by it with respect to any representation of [e.g. US Bank, BONY Mellon, Deutsch] or [e.g. Ocwen, SPS] or by any other individual or entity acting on [their] behalf.” In addition, the request for production should probably include “all documents evidencing any retainer received or held by [foreclosure law firm] or any others employed by or in partnership with it with respect to any representation of [e.g. US Bank, BONY Mellon Deutsch] whether paid by [them] or by any other individual or entity acting on their behalf.”

The third is possibly a subpoena making the same demand for discovery made to the alleged servicer and its predecessors. This is relevant to the issue of whether the named claimant is in fact the real party in interest or, as set forth in the defense narrative, is acting as a sham conduit or front for third party actors.

Veira v PennyMac and JPM Chase 4th DCA Finds What Everyone has Known all along — that PennyMac never has standing and Chase, most of the time, doesn’t have standing

Another case showing shifting attitudes toward illegal foreclosures. At the trial level there have been many such decisions, some with an expanded finding of fact showing that the foreclosure was a sham. On appeal, the courts were always looking for ways to sustain the foreclosure; they still do that but more and more appellate courts are starting to understand that there is no party who has standing in most instances — especially a creditor who actually paid value for the debt.

Note how they instruct that judgment must be entered for the borrowers — not dismissal.

And the other thing is that PennyMac is generally a sham in foreclosures. It doesn’t own the debt, it doesn’t own the mortgage, it doesn’t own the note and it probably doesn’t even own the servicing rights.

The big issue continues to be missed. Pleading is different from proof. Asserting standing may meet the requirements of pleading. Proving standing is all about whether the party claiming to be the creditor is the owner of the debt who has paid value for the loan. The presumption arises if the claimant has possession of the original note (if it really is an original and not a fabrication).

The presumption can be rebutted by simply showing that the indorsement was a sham and the assignment of mortgage was sham because there was no transaction in real life in which either party received or paid any money or other value for the loan. Article (§203 UCC prohibits enforcement of the mortgage under those circumstances.

It is black letter law in all jurisdictions that an assignment of mortgage without an actual transfer (purchase and sale of the debt) is a nullity precisely because all jurisdictions have adopted Article 9 §203 UCC.

“However, although the statute makes clear that an assignee has the “same means and remedies the mortgagee may lawfully have,” we have previously held that “[t]he mortgage follows the assignment of the promissory note, but an assignment of the mortgage without an assignment of the debt creates no right in the assignee.” Tilus v. AS Michai LLC, 161 So.3d 1284, 1286 (Fla. 4th DCA 2015) (citing Bristol v. Wells Fargo Bank, Nat’l Ass’n, 137 So.3d 1130, 1133 (Fla. 4th DCA 2014) );”[e.s.]

see VIEIRA v. PENNYMAC CORP | FindLaw

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

Interesting quotes for foreclosure defense lawyers. As usual with PennyMac, the search was on for the “lost” note, which we all know was destroyed contemporaneously with closing.

The allonge was undated and contained a signature by a JP Morgan representative, but no signature by a Chase Bank representative. The JP Morgan witness could not say when the allonge was executed or when it was imaged into any system.

we perceive the critical issue to be whether sufficient proof was presented at trial to show that Chase Bank transferred the note to JP Morgan, the original plaintiff, prior to suit being filed.

 

Through the JP Morgan witness, PennyMac also introduced into evidence the assignment of mortgage from JP Morgan to PennyMac.

Because it was substituted as plaintiff after suit was filed, PennyMac had to prove at trial that JP Morgan had standing when the initial complaint was filed, as well as its own standing when the final judgment was entered. Lamb v. Nationstar Mortg., LLC, 174 So.3d 1039, 1040 (Fla. 4th DCA 2015). Throughout the proceedings below, the note was lost. Thus, PennyMac had to prove standing and the right to enforce the note, using section 673.3091, Fla. Stat. (2017). Section 673.3091(1)(a), requires in part that “[t]he person seeking to enforce the instrument was entitled to enforce the instrument when loss of possession occurred, or has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred.” (emphasis added).

Standing may be established by possession of the note specially indorsed to the plaintiff or indorsed in blank. Peoples v. Sami II Tr. 2006–AR6, 178 So.3d 67, 69 (Fla. 4th DCA 2015); § 673.2031(1), Fla. Stat. (2017) (“An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument.”); § 673.2031(2), Fla. Stat. (“Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument ,including any right as a holder in due course ”).A plaintiff may also prove standing “through evidence of a valid assignment, proof of purchase of the debt, or evidence of an effective transfer.” Stone, 115 So.3d at 413 (quoting BAC Funding Consortium Inc. ISAOA/ATIMA v. Jean–Jacques, 28 So.3d 936, 939 (Fla. 2d DCA 2010) ). That is because “if an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, the transferee has a specifically enforceable right to the unqualified indorsement of the transferor ” § 673.2031(3), Fla. Stat.

there are problems with PennyMac’s “multi-tiered evidence” arguments. First, it is unclear in what way Chase Bank and JP Morgan are “related entities.” No evidence was presented that JP Morgan and Chase Bank merged or that Chase Bank was completely bought out by JP Morgan. As we have made clear in the past, separate corporate entities, even parent and subsidiary entities, are legally distinct entities. See Wright v. JPMorgan Chase Bank, N.A., 169 So.3d 251, 251–52 (Fla. 4th DCA 2015) (noting a parent corporation and its wholly-owned subsidiary are separate and distinct legal entities and a parent corporation cannot exercise the rights of the subsidiary corporation); see also Houk v. PennyMac Corp., 210 So.3d 726, 734 (Fla. 2d DCA 2017) (noting a conflict of allegations between affidavits and the complaint where the affidavits alleged PennyMac Loan Services, LLC was the servicer and the complaint alleged PennyMac Corp. was the servicer). There was no explicit testimony or other evidence that Chase Bank sold or equitably transferred the note to JP Morgan.

The major stumbling block is that the allonge was signed by a representative of JP Morgan, and there is no signature on the document by Chase Bank. Section 673.2041, Florida Statutes (2017), clearly requires a signature by the current note holder to constitute an indorsement and transfer of the note to another payee or bearer. § 673.2041, Fla. Stat. (“The term ‘indorsement’ means a signature for the purpose of negotiating the instrument [or] restricting payment of the instrument.”). We have previously said, “[t]o transfer a note, there must be an indorsement, which itself must be ‘on [the] instrument’ or on ‘a paper affixed to the instrument.’ ” Jelic v. BAC Home Loans Servicing, LP, 178 So.3d 523, 525 (Fla. 4th DCA 2015)(second alteration in original) (emphasis added)(quoting § 673.2041(1), Fla. Stat.).

 

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.”

 

How to argue the “allonge”

An Allonge is defined as follows:
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Allonge. Additional paper firmly attached to Commercial Paper, such as a promissory note, to provide room to write endorsements. An allonge is necessary when there is insufficient space on the document itself for the endorsements.
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So the elements for a prima facie case involving proof of an allonge are as follows:
 
  1. It’s on a paper that is separate from the instrument (promissory note) itself.
  2. It contains endorsements (technically spelled “indorsements”). The endorsement conveys an interest in the note from the current owner to a new owner. It might contain restrictive covenants as to whether it is conveyed with or without recourse. 
  3. A condition precedent seems to be that there be insufficient space on the original instrument (note). This has not gained clarity in litigation. The presentation of an “allonge” contained a simple small stamped endorsement when there was room to place it directly on the note is indicative of foul play. At the very least it requires an explanation of why the endorsement wasn’t placed on the original. 
  4. It must be so firmly and permanently affixed to the note that it is actually part of the original instrument. In normal transactions involving commercial paper this requirement is strictly construed. In securitized residential loans this has not been strictly construed and applied. It is important to note that this requirement is meant to prevent the very thing that has been occurring for the past 20 years — unauthorized trading in debts that are neither owned by the buyer or the seller. 
An allonge can contain an endorsement to nobody, in which case it became “bearer paper.” Whoever has it in their possession is the owner of the note. But we have seen in securitization that being the owner of the note and being the owner of the debt are not the same thing. 
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Notwithstanding the difference, the note can often be enforced without evidence of ownership of the debt because of legal presumptions arising from possession of the note. 
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However, the fact that a party is entitled to judgment on a note does not mean they are entitled to enforce the mortgage or deed of trust which does require ownership of the debt as explicitly and expressly required by statutes in all US jurisdictions who have adopted verbatim the requirements of the Uniform Commercial Code Article 9 §203 which requires payment of value as a condition precedent to enforcement of the encumbrance (mortgage or deed of trust). 
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It is custom and practice of the “industry” involved in foreclosures to use fabricated allonges that are not attached and never were attached to the original note. Such allonges are often executed by either a stamped endorsement or the signature of an “authorized signer.” In many if not most cases the authorized signer turns out to have been the real estate or mortgage broker on the loan at the time of origination. As such their “authorization” can be challenged. 
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Upon investigation, discovery and analysis it usually turns out that neither the endorser nor the endorsee had ever paid value for an interest in the debt or the note. This revelation is useful in defeating presumptions arising from possession of the note. This revelation thus raises questions that may be sufficient to rebut legal presumptions that the court might otherwise employ in deciding the case. 
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In fact, it could be used to defeat the presumption that the note is now evidence of the debt or that the merger doctrine, designed to prevent dual liability, even applies. This leaves the note as a separate claim for liability — separate, that is, from the debt itself. If the mortgage or deed of trust states that it secures the note that could mean that the mortgage is void or has become void. However if the security instrument ( mortgage or deed of trust) refers to the debt, then the security instrument would not be void unless the debt never occurred — i.e., there was no loan. 
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You should refrain from making any decisions or taking any actions based upon “interpretations” or “advice” from the internet even if it from a knowledgeable licensed attorney like myself. You should get assistance from a professional who analyzes your specific situation to determine whether you can get traction in raising defenses or claims related to these issues. 
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My Final Word On Quiet Title Strategies

Most people do not have a clear understanding about Quiet Title, because it means one thing to them and another thing in court. The common misconception about quiet title is that it is a thing that just happens, like the result of a magic bullet. In fact quiet title is a court process that begins with a lawsuit by the homeowner and ends with a court order declaring that the mortgage or deed of trust should be removed from the chain of title.
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The most typical use of quiet title claims is clearing the chain of title of recorded documents that mistakenly or fraudulently describe the wrong property. The use of quiet title against a mortgage or deed of trust does not generally get traction in a court of law.
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But the more recent strategy of attacking the assignment of mortgage and seeking nullification of that instrument has met with some success and it should succeed, because you are attacking the facial and substantive validity of that specific instrument and not the entire mortgage or deed of trust. That strategy merely attacks the technical requirements for creation and recording of an an instrument affecting title to real property and attacking the substantive validity of the assignment by revealing that the debt was not transferred to the assignee by a party who owned the debt.
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The current fad of proving unenforceability of the indebtedness does not provide the foundation for quiet title unless you can prove that that (a) the indebtedness never existed or (b) the debt has been satisfied. It is entirely possible for a court of law to determine that the mortgage or deed of trust cannot be enforced by the parties who initiated foreclosure. But that does not mean that the mortgage or deed of trust is a nullity. So winning the case on the debt against a particular party who sought to enforce it does not automatically mean that you proved a prima facie case that the debt was never or is not now subject to enforcement by anyone.
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The elements for quiet title are fairly simple. The lawsuit asks for a declaratory judgment finding, as a matter of fact and law, that the encumbrance is a nullity, which means that legally the encumbrance does not exist — not that it should not exist. In plain language that means that a judge finds that the mortgage or deed of trust does not secure any indebtedness owed by the owner of the property to the mortgagee on a mortgage or the beneficiary on a deed of trust.
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 The “mortgagee” or “beneficiary” includes legal successors to the named mortgagee on the mortgage or the named beneficiary (lender) on the deed of trust. Successfully attacking the assignment means that you have negated the assignment which returns the title to the mortgage to the previous party who might be the the original mortgagee or beneficiary or lender.
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Where MERS has been used as a buffer in the title chain legal practitioners should be aware that the MERS relationship to the original “lender” is tenuous at best and most probably nonexistent to pretenders who claim to be successors — because most loans were table funded without any legal or equitable relationship between MERS and the investment bank that funded the origination or acquisition of the loan. Since no transfer of beneficial interest or interest of a mortgagee legally exists without transfer of the debt, it is nearly impossible for anyone to show an assignment with a legal transfer of the debt from an owner of that debt.
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The only way the pretender lenders can succeed is by wearing down the homeowner who must be willing to expend considerable time, money and energy defending his property. They can do this by using legal arguments that come from legal presumptions a rising from the apparent facial validity of self serving documents they have fabricated, forged or robosigned to create the illusion of a legal chain of title.
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Securitization has opened many doors to homeowners who persistently and effectively challenge the parties who initiate foreclosures. It is now almost always true that the party who initiates a foreclosure is not the actual owner of the debt nor does that party represent a legal entity that owns the debt. Transfer of a mortgage without the debt has been stated by courts throughout the 50 states to be a “nullity,” which means that the transfer never legally occurred despite the writing on a face of a document purporting to be an assignment of mortgage.
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The word, “nullity” is what you are after and it probably only applies to the assignment. It probably will never be applied, despite arguments to the contrary, to the actual encumbrance except after a period of years after the attempts to foreclose have failed multiple times, it is evident that the the debt will never be enforced or is otherwise barred by the doctrine of latches or the statute of limitations.
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Thus strategically it is important to start off with an analysis of legal title performed by a title analyst who has education and training to do it. That normally means an attorney but it could mean a person who writes title policies or who assesses title risk for title insurance companies. After the analysis, then you need someone who can suggest strategies and tactics that can be reviewed and implemented by local counsel  or pro se with the guidance of local counsel using hybrid legal services.
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We provide the title analysis if you don’t already have it based upon a current title search, including copies of the recorded documents, and we provide a 30 minute recorded CONSULT based upon a review of both the title analysis and unrecorded documents such as notices, correspondence or statements from some party purporting to be the “servicer.”
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Nothing contained in this email or anywhere on this blog should be considered legal advice upon which you can rely. Get a lawyer.

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

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.
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So it is especially important to presume nothing and actually read words without making any assumptions. Much of what we see in the language of what is presented as a conveyance is essentially the same as a quitclaim deed in which there is no warranty of title and which simply grants any interest that the grantor MIGHT have. It is this type of wording that the banks use to weaponize the justice system against homeowners.
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There is no warranty of title and there is no specific grant of ownership in an assignment of mortgage that merely says the assignor/grantor conveys “all beneficial interest under a certain mortgage.” Banks want courts to assume that means the note and the debt as well. But that specific wording is double-speak.
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It says it is granting rights to the mortgage; but the rest of wording  is making reference only to what is stated in the mortgage, which is not the note, the debt or any other rights. So in effect it is saying it is granting title to the mortgage and then saying the same thing again, without adding anything. That is the essence of double speak.
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In the Cannela Case Judge Marx saw the attempt to mislead the court and dealt with it:

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

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

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

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

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

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

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

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

 

Applying Common Sense and Law to Assignments of Mortgage

Every time a homeowner wins in foreclosure the investors are actually protected. It’s the sale of the property and/or entry of the foreclosure judgment that cuts investors off from their investment. Weird, right?

An article in the recently published Florida Bar Journal illustrates perfectly the confusion that occurs within the courts and by lawyers when they stray from the simple pronouncement of accepted law in all jurisdictions.

Here is one simple proposition declared by the Florida Supreme Court which is a mirror of similar pronouncements from the Highest courts in all other U.S. Jurisdictions: The case is Johns v Gillian 134 Fla. 575, 184 So. 140 (1938).

“the mere delivery of the note and mortgage, with intention to pass title, upon proper consideration, will vest the equitable interest in the person to whom it is so delivered.”

The obvious implication is that such a person can enforce the mortgage. The other obvious implication is that a claimant who claims to have received possession by delivery of the note and mortgage cannot enforce the mortgage if there was no intent to transfer title to the mortgage, or if there was no payment of consideration.

The obvious takeaways from this simple, basic and completely accepted point of law are

  • delivery of note and mortgage is important and potentially dispositive BUT
  • defects in the instrument of assignment of mortgage are not fatal IF
  • intention to pass title is present AND
  • payment of proper consideration is present
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.
========================

The jumble occurs when anyone of those points is taken out of order or entirely out of consideration which is what the courts and even some foreclosure defense lawyers are missing.

Delivery of the original note and the recorded mortgage document is important and potentially dispositive. This is true if proper consideration was paid and there was an intent to pass title.

But the banks would have us believe that only the intent to pass title is important, even if the transferor has no title. There is no law and no case decision that agrees with that proposition. And the banks would have us believe that the intent to pass title is the only thing that matters even if no proper consideration was paid. There is no law and no case decision that supports that proposition.

By law, as adopted in the statutes of all 50 states when they adopted the Uniform Commercial Code, consideration must be paid for an effective transfer of the mortgage.  UCC Article 9 section 203. All the case law agrees and there is no case law contrary to that proposition.

BUT there is plenty of case law where the courts ignore it mostly because the pro se homeowners or foreclosure defense attorney didn’t present the issue clearly.

The money proves the intent and the intent justifies the money.  Without the money the transfer is a complete nullity which legally means it never happened.

While there are presumptions about transfer of the debt when the “original” note is supposedly delivered (as though transfer of the note was title to the debt), the only thing that actually transfers the debt under law is payment of money with intent to purchase and sell the debt and the mortgage.

Where’s the money?

In virtually all cases the money is absent, which leads directly to the point of the law to begin with — foreclosure should only be granted in circumstances where the proceeds of foreclosure will go to the party claiming that equitable remedy. Here is the plain truth. Those proceeds are not going to anyone who has value/consideration in the deal.

The investment bank’s legal strategy of claiming that it once paid consideration is defeated entirely by its sale of the “risk of loss” (i.e., the debt) several times over in the shadow banking market.

Dubious? Check the proposed and actual regulations concerning the retention of a share of the risk of loss by investment banks. That is the big dispute. For loans that were created up until around 2010, there was zero retention of risk.

The meaning  of that eludes most people unfamiliar with the terminology of Wall Street. So here it is: if you have no risk you own no debt.

My sources say that is still true and the regulators are powerless to stop it because of the right to enter into contracts that are disguised sales of the risk of loss, which is to say disguised sales of the debt by the one party who is always the one controlling events on the ground in foreclosures — the investment bank.

Do you need to prove all that? Nope. Just demand proof of consideration. And don’t stop demanding it no matter what the opposing lawyer says and even regardless of what the judge says. In the end, you’ll be right. Every time a homeowner wins in foreclosure the investors are actually protected. It’s the sale of the property and/or entry of the foreclosure judgment that cuts investors off from their investment.

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