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WHAT IS A SERVICER ADVANCE? According to Ocwen it has zero credit risk and is not really an advance

One place where securitization players and foreclosure players don’t lie is in reports that are formally filed with the SEC. So in my research, I found a document in which Ocwen describes itself and which is subject to judicial notice because it is a government document downloaded from the Sec.gov website. The filing of 8k and other reports required by securities laws and regulations is an official act. It is a sworn representation by the issuer (Ocwen here) that the facts being presented are accurate and true on penalty of going to jail. Here we see a filing that identifies the people who would go to jail if the facts were not at least arguably accurate.

THIS IS ALSO A MENU OF INDIVIDUALS WHO COULD BE SUED INDIVIDUALLY FOR PARTICIPATING IN FRAUDULENT, NEGLIGENT ENTERPRISES AND WRONGFUL FORECLOSURES. 

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NOTE ON JUDICIAL NOTICE AND SEC.GOV

Note my words here. In most court cases, the documents used by foreclosure mills are merely self-serving documents laundered through the SEC website. If you have the credentials you can upload anything including but not limited to porn.

So for court purposes only they upload as much as they can to the SEC.gov website — and then download it with “sec.gov” in the heading. Then they produce it as a governent document (which it isn’t) and ask for judicial notice. Without opposition, the judge grants the motion for judicial notice and that practically means the case is over.

Most pro se litigants don’t know what judiclal notice is and most lawyers and homeowners take it for granted that they can’t oppose judical notice for a government document. they forget to inquire whether that IS a government document and in virtually ALL cases, it is not a govenrment document — and therefore (1) it is not subject to judicial notice and (2) the attempt to use it as such is subject to a motion for contempt and sanctions — if you file the motion. This is another example of how the banks are using pure fabrications and weaponizing civil procedure to support their thieving scheme.

see https://shareholders.ocwen.com/static-files/24390846-8787-4a36-9c30-53b5b5f0a0e5

OCWEN 8K 0001193125-13-015500

Note that this is a “Lender’s Presentation.” That means it is a presentation to prospective lenders. Any lies would be subject to criminal prosecution not only for violations of securities laws but also for bank fraud.

Take a look at this from Ocwen’s 8k report to the SEC in 2013: Note how the filing is devoid of any representation that Ocwen is a lender, successor lender, or attorney in fact for anyone.

Note how Ocwen is basically always teetering close to bankruptcy because it has very few assets and maintains a business plan that is always based entirely on income from “servicing.”

Note how on page 20 they represent Ocwen, BOA servicing, Chase servicing, Saxon Servicing, Litton Servicing, and HomeEq Servicing to all be the same thing. Since 2013 you can add PHH, REZ, and other entities or names that were used ficitiously.

THEN ON PAGE 36 THEY ANSWER THE QUESTION: WHAT IS A SERVICER ADVANCE?

  1. Note that they use the word “advance” in quotes, just like I did here. That is because if they said it was an advance they would be lying. There is no advance. This is a cover-up for the fact that there is no loss to anyone when scheduled payments are not paid by homeowners. So there is no need for any advance, much less by a “servicer”. No company would accept responsibility for making such advances. Imagine if your bookkeeper said “That’s ok, if they don’t pay you, I will.” Imagine the fees that would need to be paid for any company to incur such liability. Imagine insurance and reserve deposits required. None of those things exist.
  2. So the advance does not come from Ocwen’s balance sheet and it actually does not exist. This is cover for the Master servicer putting in a claim for nonexistent advances. All payments to creditors of the securities brokerage firm (i.e., investors who purchased uncertificated certificates) are made from a huge such fund that is referred to in other documents as a reserve pool which consists of (1) proceeds from the sale of the certificates (2) money deposited with permission of the stockbroker who started this scheme including money received from homeowners and (c) proceeds of sales from other similar schemes. It is all commingled and obviously, this has nothing to do with any homeowner (aka “borrower”).
  3. Next, they say that “servicers incur funding costs on these non-interest bearing advances but do not bear credit risk.” Translation: there is no advance.  But we claim funding costs in order to get paid for pretending that servicer advances are real thus justifying fees for nonexistent services.
  4. Next, they say that “Advances are recoverable at the ‘top of the waterfall’ first from proceeds at a loan level, and then if those funds are insufficient, from cash collected from other loans in an RMBS trust.” Translation: Advances are recoverable but not by Ocwen. It never sees that “recovery.” The money is taken first from “a loan level.” which means it could be any loan. That is reinforced by the remaining words which refer to other loans in any RMBS trust. And that is why I say that there is no loss to anyone in any individual loan. It’s impossible. As long as there is money anywhere from investors, homeowners, or insurance for the certificates, everyone gets paid. So far there has always been money available not only to make all payments to everyone but also to for exceedingly high profits like what we saw with Goldman Sachs in 2009 when they forced the AIG bailout not to cover losses, but rather to cover additional profits.
  5. And lastly, they make the silly statement that “A servicer” can ‘stop advance’ if it believes that an advance will not be recoverable from the borrower.” This is silly because first of all there are no advances except from other people’s money with which Ocwen has no control. Second, because recovery from a borrower is irrelevant as described above. This statement is made solely as part of the coordinated illusion created by the stockbroker (aka investment bank) that started the scheme. It is made to reinforce the false representation that there are any loans, that there is any loan receivable account on the ledgers of anyone, and that therefore those accounts need servicing.
P.S. Note the very beginning where is says: “On January 17, 2013, Ocwen Financial Corporation (“Ocwen”) is making a presentation at a meeting among potential lenders for the proposed Senior Secured Term Loan facility. Barclays, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are acting as Joint Lead Arrangers and Joint Bookrunning Managers for the facility. Barclays Bank PLC is acting as Sole Syndication Agent and Administrative Agent for the facility. A copy of Ocwen’s slide presentation for such conference is attached as Exhibit 99.1 hereto. Such slide presentation shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.” This means they are trying to say, unsuccessfully that even though they’re filing it with the SEC it shouldn’t count against them if they’re lying. 
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
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TONIGHT! Why Lawyers Should Want Foreclosure Defense Cases and What They Are Missing $$$

Thursdays LIVE! Click into the Neil Garfield Show

Tonight’s Show Hosted by Neil Garfield, Esq.

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

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

It’s time for a new push.

Repurchase agreements only advance the myth that loans were purchased in the first place.

Investors would do much better if they stopped litigating the duty to enforce repurchase agreements. The repurchase agreement is void because there was no purchase. There are better claims to make that are more easily proven.

Homeowner litigants need to have more courage and attack the existence and ownership of the underlying alleged obligation much more explicitly and directly. They will be pleasantly surprised. While they will never get an admission that the whole affair is a scam, they will be able to raise the inference and thus limit the evidence in court that would ordinarily be allowed to prove the existence, ownership, and enforceability of what the claimant says is an unpaid debt. The key to winning any defense narrative is establishing insufficiency of the evidence.

As I stated in 2006 on TV, radio and articles published in many news outlets, both homeowners and investors should get on the same page. This was a sham. Investors probably can become creditors if they ask the court for a declaration of rights and maybe even appointment of a receiver. The debtors would be the Wall Street firms and possibly even homeowners — although not to the full extent of the purported obligation to repay the compensation paid to homeowners for assuming concealed risks.

see https://www.nationalmortgagenews.com/opinion/will-cmbs-litigation-be-the-new-rmbs-litigation

This is how the legal system became twisted beyond recognition in dealing with claims arising from investors, homeowners, and GSEs. There was a faulty and totally erroneous assumption (in most cases) that there was ANYTHING to buy or sell.

Wall Street banks have successfully relied upon complexity to force everyone else to rely on a single source for explanation of the falsely proclaimed “securitization” process. That single source is Wall Street. As long as we are only getting our information from the perpetrators of this financial terrorism we will be paralyzed.

Now this is spilling over to commercial transactions where some securitization actually happened. As between banks it was called “syndication” of loans, but when they get outside investors to take a piece then it is called “securitization” because each investor gets some paper document proclaiming them to be the owner of part of the loan debt, note, and mortgage.

That never happened with residential loans. No investor ever purchased a share of any loan. No Wall Street securities brokerage firm (aka “investment bank”) ever established, maintained or sold any homeowner obligation. But the Wall Street firms did pretend to sell the note and mortgage, albeit without any conveyance of the alleged underlying obligation.

A paper transfer of an asset is evidence of transfer, but it is not the actual transfer. So homeowners can ask for proof of payment of value for the underlying obligation (see Article 9 §203 UCC) to rebut the appearance of a transfer. A transfer of a mortgage without transfer of the underlying obligation is a legal nullity in all 50 states, as it should be.

And unless Wall Street wants to tell us that such transfers were gifts, then those “purchases” were never completed because there was no payment of value one exchange for a conveyance of ownership of the alleged underlying obligation. This is one of the finer points that Wall Street is exploiting. They may point to the movement of money or value — but that movement did not result in a transaction in which an owner of the obligation (i.e.e someone who paid for it) was paid value for the obligation and executed a transfer document “for value received.”

Of course, the underlying obligation had been extinguished contemporaneously with the origination or acquisition of the obligation — because nobody wanted to be left holding the bag. Any entry on the accounting ledger of any entity that established the obligation as an asset purchased for value would make that entity liable for violations of lending laws. And nobody wanted to suffer a real loss if the homeowner failed to make scheduled payments to pay off a nonexistent debt.

So nobody wanted to own any debt from homeowners. And they didn’t need to own anything. The securities scheme was not securitization of any homeowner debt. It was a much larger scheme that used homeowner transactions only as an outside reference point for data reporting in the sole discretion of Wall Street firms who were the bookrunners in each scheme.

The securities were bets — not evidence of ownership of anything. The sale and trading of such securities, combined with insurance and hedge contracts produced so much money that the homeowner transaction became irrelevant excepts as a reference point for data. So everyone got paid in full and then some. Nobody needed to own any homeowner obligation and the fact that they didn’t own the obligation would not stop them from pursuing enforcement despite the lack of ownership.

In order to really sell an asset, you must own it. In order to own it you must pay for it. In order to transfer ownership of the asset, you must transfer the actual asset not just a piece of paper that talks about the asset. It is possible that some payment of value exchanged hands in which there was a reference to both residential and commercial loans. But in residential transactions with homeowners, it is mostly NOT possible that any underlying obligation was transferred (even if it appears to have been “sold”).

So “repurchase agreements” for bad loans were in fact a misnomer and perpetuated the myth that securitization of residential loans actually occurred. Litigation over rights that do not exist is a farce. But that is exactly where the courts are stuck. This is not a failing of the courts. It is the failure of litigants to bring the true facts to the court’s attention.

This failure arises from the lack of understanding of the process that Wall Street is calling “securitization.”

Litigants need to have more courage and attack the existence and ownership of the underlying alleged obligation much more explicitly and directly. They will be pleasantly surprised. While they will never get an admission that the whole affair is a scam, they will be able to raise the inference and thus limit the evidence in court that would ordinarily be allowed to prove the existence, ownership, and enforceability of what the claimant says is an unpaid debt. The key to winning any defense narrative is establishing the insufficiency of the evidence.

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

FREE REVIEW: Don’t wait, Act NOW!

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

 

How and Why to Litigate Foreclosure and Eviction Defenses

Wall Street Transactions with Homeowners Are Not Loans

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

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

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

Success in Litigation Depends Upon Litigation Skills: FOCUS

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

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*
*
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*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
*
Please visit www.lendinglies.com for more information.

The elephant in the living room: Is the “free house” a windfall or simply just compensation for being drafted into a concealed securities scheme?

SHOW ME THE LEDGER! NO, NOT THE ONE FROM THE SELF PROCLAIMED SERVICER. SHOW ME THE ONE FROM THE COMPANY CLAIMING THEY PAID VALUE FOR THE DEBT.

I have been beating around the bush too long. In my opinion, rejection of a claim for foreclosure from securitization players is not the equivalent of any windfall for any homeowner. It is merely an acknowledgment of payment for services rendered by the homeowner. The reverse is true: allowing foreclosure to securitization players results in a windfall payment to those players without any corresponding reduction of any “loan” account receivable.

If you send a QWR or DVL out, you are sending it to someone who has no relation to your loan, thus allowing the other players to claim plausible deniability for all the lies you are about to be told. The response is gibberish and in total is the equivalent of “because we said so.”

I might also add that they never assert that the loan account is owned by anyone despite their protestations to the contrary. They often do not identify the originator (like “America’s Whole Lender”) as a legal person or business entity. If it is not a legal person it cannot be a legal person who is the principal in an agency relationship with MERS. People forget that “nominee” means agent.

In lay language, the question is “who do I ask?” What is the name of the company that claims ownership of my underlying obligation resulting from payment of value?
*
My opinion is that they don’t say it because nobody does. And nobody says it because there is no person or business entity that has any confirmable entry on its ledgers showing payment of value in exchange for a conveyance of ownership of the underlying obligation.
****
This is not a technical objection. It is completely and utterly substantive. Without payment for the obligation, nobody can claim a loss. They can’t claim a loss because there is no loss. Without a loss there can be no remedy. 
****
The securitization players offered securities to investors, the proceeds of such sales going to the investment bank who in turn distributed the money to the other players including “borrowers.” Without those securities, there would have been no transaction. But as a result of issuing and selling those securities — and then derivatives of those securities—  the revenue from the sale of securities was in excess of 12  times the amount of the homeowner transaction. {Don’t ask me to justify that — ask ANYONE in the industry if that is not true}
**
Nobody wanted to be a lender who would then be accountable for violations of lending laws.  So they made sure there was no lender. We are all going down the same rabbit hole when we refer to the homeowner transaction as a loan. It was a payment to get the homeowner to execute documents that were labeled as loan documents — a payment that had to be returned, leaving the homeowner with no compensation for his/her role in generating so much revenue.
**
In fact when you factor in payments labeled as “interest” the homeowner receives negative compensation. Viewed from that perspective the homeowner is paying for his own execution.
****

Everyone is shying away from the elephant in the living room. What is so bad about the homeowner getting a “free house” in the context of a larger scheme that produced so much revenue to everyone except the homeowner?

****
If it was a loan, then there would be a lender with a risk of loss and who was accountable for compliance with lending laws — particularly those requiring disclosure of compensation and revenue arising from the execution of the documents.
*
If it was a loan, then there would be a lender who was a stakeholder — i.e., someone who retained risk of loss and intent for the transaction to be performed and successful.
*
Instead, homeowners got no lender and not even a clue as to who they did business with nor the true extent of revenue and profits generated from what was in reality, simply a securities scheme with no substantive characteristics of a loan.
*
Instead, the homeowner was left with a nonlender who had no role in underwriting the viability of the loan contrary to the express requirements of TILA. In fact, and again contrary to the express requirements of TILA, the homeowner was left with nobody who had any stake in the viability or performance of any loan.
*
To add insult to injury, the securitization players had substantial financial incentives to steer borrowers into nonviable loans against which the players bet would fail — this producing even more profits.
**
So tell me again why this is a loan. And tell me why the compensation that the securitization players chose to give to the homeowner should not be retained by the homeowner. And while you are doing that, tell me why the consideration for drafting the homeowner into a concealed securitization scheme should not be expanded.
**
But don’t tell me you can foreclose and evict a homeowner just to get back the only consideration he/she ever received from you. That’s not capitalism. It is a fraud.
PRACTICE HINT: At the very start be confrontative. When opposing counsel says “Your Honor, this is a standard foreclosure,” you should interrupt and object saying that the face of the complaint or notice shows that this is not a standard foreclosure and it may not be a foreclosure at all if they can’t produce a creditor. Drill in the defense narrative wherever you can create the opportunity. 
Remember that you are not just looking for securitization language. You are also looking for securitization players. If the foreclosure is on behalf of Citi, PennyMac or BofA, those are securitization players. Just because they don’t refer to securitization does not mean that they are holding a ledger showing their payment for the debt and maintenance of a current asset account against which they are claiming a loss. If you don’t understand what that means, go talk to a CPA.
*
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
*

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*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR) (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
*
Please visit www.lendinglies.com for more information.

Here we go — the next tidal wave of foreclosures is upon us. When the moratoriums are over prepare for shock and awe (again)

see https://www.abcactionnews.com/news/local-news/i-team-investigates/floridas-foreclosure-rate-second-highest-in-the-u-s-filings-increase-as-courts-open

The Wall Street playbook calls for an insidious process of creeping up on you. Within days, in some cases, weeks in other cases and certainly within months, people are going to wake up to the fact that they are already in the middle of a foreclosure proceeding. And the new wave will be just as destructive as in 2008.

Contrary to the party line that has been successfully advanced by Wall Street banks, foreclosure proceedings are NOT the result of non-payment. They are the result of greed.

For non-payment to be a reason to seek redress in court, the claimant must be entitled to receive payment from the person they are suing, and they must be “injured” (financially) by the homeowner’s failure to pay. In al most all foreclosures, contrary to popular belief, these elements are completely absent and no, there isn’t anyone behind  some fictional curtain who is getting the money to satisfy and unpaid debt.

And yet here is what is about to happen:

  • 96% of all homeowners who are served with foreclosure notices will walk away from the biggest investment of their lives and losing a huge asset
  • 2% will attempt to litigate “on the cheap” looking or delay, modification or something other than simply winning against a law firm falsely representing it has a client who is proper claimant and falsely implying that if the foreclosure is successful the money will go to someone who needs it instead of just wanting it.
  • 2% will litigate in earnest and 65% of them will win their cases because there is no legitimate claimant or claim.
  • The courts will largely remain ignorant about the true nature of securitization — specifically that not a single residential loan has ever been securitized.
    • Building on that ignorance, the courts will erroneously accept direct or implied assertions of authority to administer, collect or enforce obligations by law firms who also lack any authority to collect or enforce.
    • Many lawyers will make the same mistake, believing that the self proclaimed “servicer” has been granted any right by any party who paid value for the underlying obligation in exchange for receiving a formal conveyance fo ownership of the debt, note or mortgage.
    • Discovery demands, even if properly framed and timed, will largely be ignored by everyone because of lawyers and pro se litigants’ lack fo understanding of motion practice.
  • The CFPB, FTC, SEC and IRS will continue to cover up the largest and most blatant fraud in human history — the creation of the illusion of a loan without any lender and without any loan account on the ledger of any company reflecting payment for the debt, note or mortgage.
  • Once again, wealth will be sucked out of the US economy when it is needed most in the hands of consumers who are the ONLY demographic capable of reviving and stabilizing a consumer-driven economy.

Moral of the story: It’s not capitalism if you are stealing something for the sake of grabbing money. That is and always has been grant theft.

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

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

More Details on VendorScape, CoreLogic and Black Knight

Hat tip to “Summer chione”

So it is apparent that the banks are responding to discoveries about how orders are transmitted to lawyers, “servicers”, realtors etc.. While it is all the same playbook, they merely change the name of the characters. So internally the name VendorScape might still be used but externally, to the public, they are showing different names and even showing multiple names for the same “service”.

But is always the same, to wit: a central repository of data that has been robotically entered to support misrepresentations of investment banks that massage the data, control the reports, and initiate administration, collection and enforcement under the letterhead of “subservicers” who have almost nothing to do and are merely being kept alive to throw under the bus when this scheme explodes.

For those familiar with the game of Chess, think of the following entities as all being pawns whose existence is to provide a barrier to the encroachment of government or borrowers in litigation — and who can and will be sacrificed when the game explodes.

  1. Foreclosure law firms (“mills”)
  2. “Servicers”
  3. Trustee of REMIC Trust
  4. Trustee on Deed of trust
  5. MERS
  6. Companies that provide “default services”
  7. Realtors
  8. Property  Managers
  9. REMIC  trusts: remember that back in early 2000’s, the same trusts that are being named as claimants today were denied as having any existence or relevance. It was only after failure of naming a servicer or MERS that they fell back on naming the non functional trustee of a nonexistent trust as the claimant.
  10. Every other company that is visible to the investors and homeowners.

And keep in mind that the claims of a “boarding Process” or detailed audit of accounts when the name of one subservicer is changed to something else are totally and completely bogus. There is no transfer much less boarding of accounts. the fabricated accounts are always maintained at the central repository.

The argument over “business records” is sleight of hand distraction. There are no business records. Go do your research. You will see that nothing the banks are producing are qualified business records, muchless exceptions to the hearsay rule. 

It is or at least was universal custom and practice that before accepting  an engagement, lawyers, servicers and realtors needed to have an agreement in writing with their employer. In the wholly unique area of foreclosures, sales, REO and remittances this practice has been turned on its head.

As I have repeatedly said on these pages, lawyers in a foreclosure mill have no idea who hired them. They don’t know the identity of their client. They will and do say that their client is some “subservicer” (e.g. Ocwen), they file lawsuits and documents proclaiming their representation of some bank (e.g. Deutsche) with whom they have (a) no contact and (b) no retainer Agreement.

This is because all that Deutsche agreed to was the use of its name to give the foreclosure an institutional flavor. It is labelled as a trustee but it possesses zero powers of any party that could be legally described as a trustee. It has no fiduciary duty to any beneficiaries nor any right to even inquire about the business affairs of the trust — which we know now (with certainty) do not even exist.

So there is no reason for the foreclosure mill to have an agreement with Deutsche because (a) Deutsche has not agreed to be a real party in interest and (b) Deutsche has no ownership, right, title or interest in any loan — either on tis own behalf or as representative of either a nonexistent or inchoate (sleeping) trust with no assets or business or the owners of non certificated certificates (i.e., digital only). Indeed the relationship between Deutsche and the holders of certificates is that of creditor (the investors) and debtor (Deutsche acting as the business name only of an investment bank who issued the certificates).

So the lawyers in the foreclosure mill are misrepresenting its authority to represent. In fact it has no authority to represent the “trustee” bank.

So the banks have come up with a circular argument that is still erroneously used and believed in court: that because the subservicer (e.g. Ocwen) is the nominal client — albeit without any contact prior to the electronic instructions received by the foreclosure mill — and because the subservicer claims to be acting for either the trustee, teht rust or the holders of certificates, that eh lawyers can claim to be representing the bank, as trustee. In a word, that is not true.

So the foreclosure mill is falsely claiming that its client is the named “trustee” who has no power for a “trust” which has no assets or business on behalf of certificate holders who own no right, title or interest to any payments, debt, note or mortgage executed by any “borrower.”

Instructions from a third party with no right, title or interest that the lawyer should claim  representation rights for yet another party who has no knowledge, right, title or interest is a legal nullity. That means that, in the legal world, (like transfer of mortgage  rights without transfer for the underlying debt), there is nothing that any court is legally able to recognize and any attempt to do so would be ultra vires once the facts are known to the court.

The trick is to present it to the court in such a manner that it is unavoidable. And the best way to do that is through aggressive discovery strategies. the second best way is through the use of well planned timely objections at trial.

All of this is done, contrary to law and prior custom and practice to cover up the fact that all such foreclosures are for profit ventures.

That is, the goal is not paydown of any loan account, because no such account exists on the books of any creditor.

And that is hiding the fact that the origination or acquisition of the loan was completed with zero intent for anyone to become a lender or creditor and therefore subject to rules, regulations and laws governing lending and servicing practices.

They didn’t need to be a lender or creditor because they were being paid in full from the sales of securities and thus writing off the homeowner transaction. Bottom Line: There was no lending intent by the originator or acquirer of the loan. When the cycle was complete, the investment bank owned nothing but still controlled everything.

And the way they controlled everything was by hiring intermediaries who would have plausible deniability because they were using images and records that were automatically generated and produced based upon algorithms written by human hands — programs designed to facilitate foreclosure rather than report the truth.

So let’s be clear. Here is the process. The lawyer, realtor or subservicer knows nothing about the loan until it is time to foreclose. All activity that is conducted under its name is initiated by CoreLogic using the VendorScape system.

So when a lawyer, for example, comes to work, he sits down in front of a computer and gets a message that he doesn’t know came from CoreLogic under the direction of Black KNight who is acting under the strict control of the investment banks. There are no paper documents. The message on the screen says initiate foreclosure work on John Jones in the name of Deutsche Bank as trustee for the CWABS Trust 2006-1 on behalf of the certificateholders of CWABS Trust 2006-1 series pass through certificates.

Contrary to the rules of law and ethical and disciplinary rules governing lawyers, the lawyer does no due diligence to discover the nature his agreement with the naemd claimant, no research on whether the claim is valid, and requires no confirmation ledgers showing establishment of ownership of the debt and financial loss arising from cessation of payments. He/she sends notice of delinquency, notice of default and initiates foreclosure without ever seeing or even hearing about a retainer agreement with Deutsche whom he supposedly represents.

He/she has no knowledge regarding the status or ownership of the loan account. ZERO. By not knowing he/she avoids liability for lying to the court. And not knowing also provides at least a weak foundation for invoking litigation privilege for false representations in court, behind which the investment banks, Black Knight, CoreLogic et al hide. The same plausible deniability doctrine is relied upon by CoreLogic and Black Knight. They will all say that they thought the loan account was real.

But they all knew that if the loan accounts were real, the notes would not have been destroyed, the control over the loan accounts would have stayed close to the investment banks and compliance with lending and servicing laws would have been much tighter — starting with disclosure to investors that their money was being used to justify a nonexistent trading profit for the investment bank, and disclosure to homeowners that they were signing on for an inflated appraisal, immediate loss of equity, and likely foreclosure because after the origination, the only real money to be made off the loan was through foreclosure.

And both investors and borrowers were prevented, through the artful practice of deceit and concealment, from bargaining for appropriate incentives and compensation for assuming gargantuan risks they know nothing about.

This is like cancer and it is continuing. Nobody would suggest that we keep selling crops that were infected with ebola or which contained some tar substance that reliably and consistently produced cancer. The argument that a company or industry might collapse would not fly because in the end we value human life more than allowing companies to profit off of death and destruction. And the argument that allowing the judicial creation of virtual creditors who can enforce non existent debt accounts is going to save the financial system is just as pernicious — and erroneous.

Wall Street banks are merely protecting their profits. Don’t blame them for doing that. It is up to government and the public to stop it and arrive at something other than the false binary choice of either forcing people out of their homes or allowing a “windfall” to homeowners against the interest of all other honest people who make their mortgage payments. The real solution lies in reformation by judicial doctrine or through new legislation — but until that is completed, there should be no foreclosures allowed. Until it is determined how much concealed risk was piled on investors and borrowers, they should not be stuck with contracts or agreements that sealed their doom through concealment of material facts.

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

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

You might not know VendorScape but it sure knows you

In a somewhat startling admission by CoreLogic, we now have an admission of many facts that might not have otherwise surfaced but for intensive and aggressive, persistent Discovery. I am not publishing the entire letter from them for privacy reasons. But it is worth mentioning that the letter was sent, after careful legal analysis, as a response to a complaint to the Federal Consumer Financial Protection Board — organized by Elizabeth Warren under the Obama administration. The response was (a) mandatory and (b) subject to charges of lying to a Federal agency.

The problem faced by CoreLogic was that on the one hand it IS and was the central repository of all data and electronic records for most residential loans in the United States. The main IT platform running several systems is called VendorScape which is owned, maintained and operated by CoreLogic pursuant to instructions from Black Knight (and perhaps others) who are serving the interests of investment banks who have no legally recognized interest in any of the alleged “loan accounts”.

But they don’t want the government or the public to know any of that because they are designating nominees to serve or pose as “servicers” who can be thrown under the bus at any that that foul play is actually addressed instead of settled (see 50 state settlement).

So here is what they said

Interesting.

image.png
And here is how it breaks down (legal analysis):
  1. VendorScape exists although they deny it is currently accessed through CoreLogic
  2. VendorScape is an “electronic case management system.” Taken in context with customs and practices in the industry in addition to simple logic, it is THE case management system and it is electronic which means that anyone with login credentials can get into it.
  3. VendorScape output consists of the following:
    1. centralized electronic workplace
    2. storage of “documents” — i.e., images not the original documents because they are not a records custodian for anyone. As the centralized place for “storage” it is VendorScape that is the source server from which all records are produced in printed reports that are merely generated from what is in VendorScape regardless of who added or deleted or changed anything.
    3. initiate workflows “defined by our clients”. This is odd wording.
      1. They appear to be saying that clients access the system and are simply using it as an IT platform to conduct business of the client.
      2. But VendorScape initiates workflows, which means that they have admitted that whoever is actually running VendorScape is making the decisions on when and how to initiate any action.
      3. Since the entire purpose of this system is preparation for foreclosure, the only logical conclusion is that it is a system to initiate foreclosures, notices of default, notice of delinquency etc. based upon human decision-making or automated decision making initiated by humans that control VendorScape.
      4. They will of course say otherwise and that seems to be what they are trying to say — that the client determines the definitions and circumstances of workflows.
      5. But dig a little deeper and you will find that the “client” has no right to make such decisions and that the decision is labelled as the decision of a client (e.g. Ocwen) by permission from Ocwen, who is not actually allowed to make such decisions and does not make such decisions. 
      6. So the reference to the  Client making such decisions is circular allowing anyone to say that it was CoreLogic or  VendorScape who made the decision (thus avoiding liability for Ocwen et al) OR to say that it was Ocwen, as they do in this letter.
  4. They admit that CoreLogic is the party who owns and maintains the storage and functions of the VendorScape system while at the same time implying that they have no connection with VendorScape.
  5. They assert that the data is owned by the clients. This is a common trick.
    1. The data is not owned by the clients because it doesn’t consist of any entries or proprietary information placed in the system by the client.
    2. The information or data is placed there mostly through automated systems controlled by Black Knight but operated by CoreLogic.
    3. Nominal “Servicers” (Ocwen e.g.), who are the “clients” actually have no way of knowing anything about a homeowner account until after it is placed in the system by third parties.
    4. This is why servicer records should not be admitted into evidence as exceptions (business records) to the hearsay rule.
    5. The deadly mistake by many lawyers in court is the failure to timely object to lack of foundation, best evidence and hearsay.
      1. A timely objection is one that is raised at the same time the admission of evidence is being considered by the court.
      2. Waiting until the end of questioning is spitting in the wind. It is already in evidence by that point.
      3. And the second mistake is that after the objection is sustained, the failure to move the court to strike the offending testimony and exhibits. That failure is equivalent to a waiver of the objection, thus leaving the offending testimony or exhibits in evidence.
*
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
*

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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
*
Please visit www.lendinglies.com for more information.

Why Antitrust Legislation Should be Applied Against the mega banks

Securitization of data that is mischaracterized as securitization of debt has enabled the securities firms to write off the loan concurrently with funding it

I believe there is a very strong case for applying antitrust legislation against the big winners in the securitization game because they could and did apply multiple incentives to borrowers to accept loan products that were clearly losers from a business perspective. This blocked competitors who wanted to make real loans with real lenders and raised the risk of loss to consumers without any disclosure to the consumer, to government regulators or anyone else. All of this was performed at the same time that the risk of financial loss was entirely eliminated on any transaction with homeowners that was characterized as a loan.

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The big securities brokerage firms acting as investment “banks” were able to fund loans and then sell securities that were completely dependent upon data released by the same securities firms about the performance of the data, as announced by the securities brokerage firm in its sole discretion. Effectively and substantively they sold the same loan multiple times. But nominally there was no reduction in the loan receivable account because there was no loan receivable account.

*

 This effectively forced small community banks, credit unions and other lenders into the position of not competing — if they had offered the same incentives on real loans to homeowners, they would have suffered catastrophic loss. So they had to step out of lending, which would have been catastrophic or originate loans “for sale.”

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The result was an undisclosed reduction of risk of loss for everyone on the “lending” side. But the more pernicious result was that the bank practices also flooded the market with money such that salespeople were selling payments instead of price and the accuracy of appraisals was reduced as a factor in granting loans. This created a second antitrust impact — the price of homes was driven up by cheap money rather than demand for housing. But values remained the same because median income has been flat.
*
The effect on consumers was that they all bought or financed homes based upon appraisals that were based upon the amount of the intended loan rather than the value of the property. So the net effect was that homeowners were forced into deals where they were taking an immediate loss of as much as 65% of the “price” of acquisition of the home or new loan. This was a hidden increase in the cost of credit. Amortizing the likely loss over the likely period of retention of the home increases the cost of credit far beyond usury prohibitions.
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The overall bottom line is that the big banks acting as unregulated lenders have grabbed a market share for lending that controls more than 80% of the market and heavily influences the rest of the market.
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Consumers suffer because they are not dealing with a party who could answer for damages resulting from violations of TILA and other lending and servicing statutes and because they are not left with either a lender or a loan account in real terms that is maintained as an asset on the books of any business. They are left with a toxic transaction in which they are strictly on their own when they discover the deficiencies in the lending process. They’re on their own because there is no actual creditor who claims ownership of their debt, note or mortgage.
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The risk of foreclosure is high, especially on those transactions in which the appraisal is far higher than the value of the home and especially where the transaction is labeled as an option loan in which the homeowner gets reduced payments for some specified period of time. In short, the failure to regulate the securities brokerage firms acting as investment “banks” and then as licensed commercial “banks” has so distorted the marketplace that no borrower can find a source of funds who will admit to being part of the the transaction, much less the lender in any specific transaction.
*

Securitization of data that is mischaracterized as securitization of debt has enabled the securities firms to write off the loan concurrently with funding it, while at the same time pursuing foreclosures and other enforcement or “modification” processes in which they have been successful at pretending the loan account exists, that a party owns it, that a loss was sustained as a result of the homeowner’s “failure” to make payments on a nonexistent loan account.

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

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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
*

Processing Fees are more than illegal — by adding them to balance due, the default letter is defective.

This is simple logic. If illegal processing fees were greedily added to the “loan accounts” falsely asserted to exist, then the amount demanded from “borrowers” was incorrect. That would make the statements sent to borrowers part of a fraudulent scheme through US Mails which would be mail fraud. And it would make the notices of delinquency and notice of default and notices of default defective and perhaps fatally defective because they were seeking to enforce an amount not due. And it would make foreclosure judgments and sales based upon such demands potentially voidable.

see https://spotonflorida.com/southeast-florida/1835819/ocwen-phh-corp-pay-125-million-settlement.html

CLICK HERE ORDER ADMINISTRATIVE STRATEGY, ANALYSIS AND NARRATIVE. This could be all you need to preserve your objections and defenses to administration, collection or enforcement of your obligation.

You know Ocwen. It’s that company that stays in business by the largess of large financial institutions that buy its stock on the open market. Investment bankers use the Company to shield themselves and their own company from potentially trillions of dollars in liability — and possibly prison. It is the company that pretends to be the “servicer” of your loan — which you readily accept because (a) someone needs to do it and (b) nobody else is saying they are “servicing” your loan.

But in reality it is not your servicer because of some technical problems – like the absence of a loan account and the absence of anyone who claims to own your loan account. Only such a company that owned your debt could give authority to a third party to administer, collect or enforce your debt or loan account. Ocwen never received that authority from anyone because in most cases (nearly all) no such creditor exists. (see previous blog articles as to how this highly counterintuitive result is created and exploited by investment banks).

And there is another sticky problem because Ocwen doesn’t actually “service” your loan payments — Black Knight does that, hidden behind the curtains that Goldman Sachs calls “layering” or laddering.” So in the musical chairs presentation of servicers, for enforcement, and Ocwen is designated by Black Knight to come forward as “servicer”, it does so as a witness once removed from the actual entity that collected payments on behalf of a loan account that doesn’t exist.

In plain language the entire process of “boarding” is a charade. The prior company that was designated as “servicer” is simply dropped from the letterhead of notices and statements generated by Black Knight, and Ocwen’s name is inserted instead. “Boarding” comprises a new login name and password to the Black Knight systems.

Ocwen/PHH (after merger) have never made a profit and never will. It is a publicly traded business entity that is waiting to be thrown under the bus. When the s–t hits the fan, and it becomes widely known and accepted that there are no loan accounts and there is nothing to administer, collect or enforce, the plan is to have Ocwen, and companies like Ocwen to take the heat, leaving the investment banks free from blame or liability for civil or criminal infractions. At least that is the plan. But if the government ever breaks free of the control by Wall Street — and clawback of money siphoned from our economy becomes a priority —then it won’t be difficult to pierce through the corporate veils of Ocwen like companies to seize assets held here and abroad.

So it should come as no surprise that such people would add on such things as “processing” or “convenience” fees when there is no processing and there is no convenience. Ocwen has now agreed to pay money because it received a slap on the wrist. But like the hundreds of preceding settlements, nobody is asking about the effect of the illegal practices on the presumed loan accounts, even if they existed.

This is simple logic. If illegal processing fees were greedily added to the “loan accounts” falsely asserted to exist, then the amount demanded from “borrowers” was incorrect. That would make the statements sent to borrowers part of a fraudulent scheme through US Mails which would be mail fraud. And it would make the notices of delinquency and notice of default and notices of default defective and perhaps fatally defective because they were seeking to enforce an amount not due. And it would make foreclosure judgments and sales based upon such demands potentially voidable.

But nobody talks about that because it is the unstated sub silentio policy to uphold the securitization infrastructure that does not exist, to wit: no loan was sold and no loan was securitized. That is impossible because for securitization to be real the loan must be sold to investors. There was never any such sale.

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

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CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us. In the meanwhile you can order any of the following:

CLICK HERE ORDER ADMINISTRATIVE STRATEGY, ANALYSIS AND NARRATIVE. This could be all you need to preserve your objections and defenses to administration, collection or enforcement of your obligation.

*CLICK HERE TO ORDER TERA – not necessary if you order PDR PREMIUM.

*CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)

*CLICK HERE TO ORDER CASE ANALYSIS 

*CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR) (PDR PLUS or BASIC includes 30 minute recorded CONSULT)

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

  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more. 
  • Yes you DO need a lawyer. 

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

Beware of Financial Rescue Scams Including Modifications

The offer of modification is actually inviting you to formally join the securitization process without getting paid for it.

I write often about the illegality of the Wall Street schemes that have defrauded investors and homeowners out of their money and investments. But there is also another aspect to this.

The coming Tidal Wave of evictions and foreclosures is going to produce a tidal wave of scams that deprive homeowners and tenants of what little income or assets they have left.

Some of the scams are very close to legitimate business propositions. There is nothing wrong with a risk sharing agreement in which an investor gives consideration to the homeowner in exchange for petitioner patient in the title will proceeds arising from the sale or refinancing from the house. And the consideration could be funding the defense of the property – or even making an offer to pay off the balance as demanded, provided the claimant show proof of payment which in turn would show proof of ownership of the underlying debt.

There are plenty of legitimate business propositions that could be profitable and successful for both the homeowner and the investor/rescuer. In some of them, homeowners might be required to pay rent to the investor. There is nothing illegal about that.

But mostly, homeowners are going to be approached by disreputable people who are simply out to make a buck and neither intend any beneficial outcome for the homeowner nor do they have any credentials, training or education which they could employ for the benefit of the homeowner.

As I have previously written on these pages, the form in which the scams are presented varies because, like the banks, they use labels to hide what they are really doing. But the substance is always the same.

Since the goal is money, and they probably know they need to hit and run, they going to demand money in one form or another to be transferred from the homeowner to the “rescuer” sooner rather than later.

In addition, they may ask for quitclaim deed, the execution of which is detrimental to the interests of the homeowner. By the execution of a quitclaim deed, the homeowner might lose standing to challenge the investment banks when they seek to administer, collect or enforce the homeowner transaction that gave rise to the appearance of a “loan” transaction.

So if someone asked for money or deed upfront, the proposal is probably part of a scam. An excellent way of determining whether the proposal is part of the scam is to simply read and hear what they are promising. In order to close the deal scam artist will promise things or results that will never be delivered.

Any qualified professional will tell you that when you are entering into a dispute, if anyone promises or guarantees a specific result, they are lying to you. So if someone guarantees you a result, the proposal is probably part of a scam.

In addition remember that if it seems too good to be true, then it is not true and it is not good. Scammers will tell you what you want to hear and you will want to believe it because it is what you want to hear.

So as a yardstick to measure such proposals consider this blog. I will tell you that current law forbids enforcement of your debt, note or mortgage. But I also tell you that (a) in order to defend you must enter the process of litigation and administrative contests and (b) the odds are stacked against you because judges have it in their mind they are saving the financial system form collapse. While I say that a majority of the people who follow my advice win their cases or achieve a successful result, that also means that in a substantial minority of cases, people lose and are forced to leave their homes after spending money on the defense. I can guarantee that current law means that homeowners SHOULD win but I can’t guarantee that they WILL win.

MODIFICATION IS A SCAM

Lastly, one of the scams that will be proposed to you is an offer of modification from what appears to be the “servicer” of your “loan”. In most cases this is offering you ice in the winter. You should consult an accountant or other financial expert to determine the value of the offer of modification. But more than that you need to realize that the offer of modification is actually inviting you to formally join the securitization process.

Modifications actually formalize the illegal practices conducted by the investment banks. Since they have retired the actual loan accounts, there are no actual creditors who can legally make a claim.

The banks have been getting away with designating parties to act as though they were creditors even though they are not. They know this is a very weak spot in their strategy. So they offer agreements that are entitled “modifications” which do virtually nothing to change the terms and conditions of the loan, although some incentives might be offered to reduce the homeowner to sign the agreement.

The real purpose of the agreement is to get the homeowner to agree that the use of the designee, like the company pretending to be the “servicer”, is perfectly acceptable to the homeowner. In so doing, the homeowner has essentially waived all potential defenses that could arise under the Uniform Commercial Code or under common law. The requirement that claimant must have financial injury in order to bring a claim will also have been waived unintentionally by the homeowner, who will then be sued or coerced into making payments that are not due. This also sets the stage for the declaration of default by a non-creditor which can then be enforced by the contract of “modification”.

It is obvious that the proposal for modification is coming from someone who has no authority or powers to propose or enter into any agreement that affects your homeowner transaction (“loan”) in any way. Yet for purely practical reasons it may well be in your interest to agree. Depending upon your financial circumstances and your appetite for risk you might want the entire ordeal to simply end and modification might be an effective way out of it.

But remember though you do have some bargaining control that is not apparent. And although the agreement is not actually a legally binding instrument for a variety of reasons it no doubt will be treated as binding by the courts and will be codified into legitimacy by the coming resets of state legislatures.

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

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If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.In the meanwhile you can order any of the following:

*CLICK HERE TO ORDER TERA – not necessary if you order PDR PREMIUM.

*CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)

*CLICK HERE TO ORDER CASE ANALYSIS 

*CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR) (PDR PLUS or BASIC includes 30 minute recorded CONSULT)

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

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

How to ask the right questions in discovery

Discovery is part law, part art, and part intuition. The lawyer must generate questions that can be used, by themselves, to bring certain issues in front of the judge either because the opponent answered the questions or because they didn’t answer.

If your point is that your opponent doesn’t own the claim even though they either said or implied that they do own it, then you need to do some investigation first so you can ask the right questions in the right way. If your point is that there are two agreements, one for loan and the other for securitization, the same thing applies. Either way you face an uphill climb as you attempt to persuade a judge who is not an investment banker and doesn’t understands securitization but still thinks he or she understands residential homeowner transactions.

So continuing with our example, you want to show the judge that despite the requirements for legal standing your opponent does not have standing. In order to have standing the claimant must have an injury. Financial injury qualifies and that is what the banks are relying upon when they try to foreclose.

How does one have financial injury? Actual financial damages occur when one actually loses money or permanent value of some property — tangible, intangible, real or personal property all qualify.

By “actual” that means you can count the money that was lost as a direct and proximate result of the action or inaction of the defendant or, in this case, the homeowner.

If the homeowner doesn’t make a payment that had been expected, then several things occur in the law that makes this fairly simple proposition complex.

  1. Does the homeowner owe any money to the party to whom payment was previously being made? If not, then the complaining party had no right to declare, much less enforce the claim of default. The subheading here is counterintuitive — does the debt exist as  an asset owned by any entity, including the claimant? Assuming that the answer to these questions is in the affirmative is an assumption that compromises the entire defense of a foreclosure case. Assuming the answer is no, then discovery will be on the right track.
  2. BUT having previously made payments to the complaining party, the homeowner has been acting against his/her own interest and that is often treated as an implied admission that payment was previously made because the homeowner thought it was due. To take a contrary position now is contradictory and diminishes the credibility of the homeowner who later says that the money is not due.
  3. Was there an agreement under which the homeowner agreed to make the payment? Not so fast. This is more complicated than anything you can imagine because there is no agreement, no matter what was signed or what was even done, unless the agreement is enforceable. In the eyes of the law an unenforceable agreement is no agreement — a legal nullity. And there are very precise elements of a legally enforceable agreement, each of which must be present. this isn’t horseshoes — close is not enough.
  4. Is the claimant a party to the agreement? In the context of loans this is easy if there really was an original lender and a borrower. In the context of securitization, this condition can only be satisfied by the claimant if it purchased the underlying debt for value in exchange for a conveyance of the ownership of the debt. In today’s foreclosures this element is the focal point for most litigation. The claimant always has a conveyance, but never produces any proof of payment for the debt. That makes the conveyance (assignment of mortgage or indorsement of note) void even if it was executed and recorded. It is regarded in all jurisdictions as a legal nullity. If the conveyance was void then the claimant is not a party to the agreement. Litigation is between the bank forces using legal presumptions arising from the apparent facial validity of the conveyance and the actual facts which are absent showing that value was paid for the debt in exchange for the conveyance.
  5. Was there mutual consideration? If not, there is no agreement. In the context of loans this means that the original agreement produced mutuality. In other words, the party that is disclosed as “lender”, pursuant to the provisions of the Truth in lending Act, gave money to the borrower and the borrower took it, in exchange for a promise to repay the money to that party. At least 65% of all loans from the year 2000 to the present were not originated by the party named as “lender” in the “agreement” (note and mortgage). They are table funded loans against public policy. But they are often enforced under the belief that the originator was in privity (agreement) with the source of funds. In the context of securitization, which covers around 95% of all such loans, there was no privity because the source of funds did not want to liable for lending violations (inflated appraisals, nonviable loans etc). The issue is complicated by the fact that the borrower did receive consideration and did make the promise to pay the originator — but neither the note nor the mortgage were supported by consideration from the originator. Any “purchase” from the originator was therefore void, and any conveyance of the mortgage or note from the originator was void unless the grantee had already paid for the underlying debt. In virtually all cases in which securitization claims are present, the grantee has never paid for the debt, nor has it ever possessed the resources to purchase the debt. It is a
    “bankruptcy remote vehicle” which is to say that it is there in name only and possible not even as a legal entity. If you can show that fact or show that the other side refuses to answer properly worded questions about the status and ownership of the debt, then you can raise the inference that the claimant doesn’t possess a claim and therefore lacks standing.

So the questions that should be constructed and posed should center on the following guidelines, for purposes of this illustration:

  1. In which bank account were prior payments received and who controlled that bank account.
  2. On what general ledger of what company is the claimed debt appearing as an asset receivable of that company?
  3. What was the asset account from which the claimant entered a debit to pay for ownership of the debt?
  4. Does the named claimant as beneficiary or Plaintiff own the claimed debt as a result of a transaction on a certain date in which it paid value for the debt to a grantor who owned the debt in exchange for an conveyance of ownership of the debt?
  5. To whom did the servicer forward payments received from the borrower/homeowner?
  6. What person or entity did not receive money as a result of the claimed default?
  7. What is the date on which the named claimant received ownership of the underlying debt?
  8. On what dates has the named claimant issued any payments to third parties whose contractual rights to such payments were in any way related to payments received from the borrower/homeowner?
  9. What is the name and contact information of the officer(s) or employee(s) of the named claimant who is in charge of accounting and finance for the named claimant?
  10. What is the name and contact information of the officer or employee of the named claimant who is the custodian of records relating to the underlying debt, payments received and payments disbursed that were in any way related to the underlying debt, payments made by the borrower/homeowner, or payments received by third parties (possibly investors).
  11. Describe source and the amount of the remuneration and compensation received by the named claimant in connection with the creation, administration, collection or enforcement of the subject underlying debt, note and mortgage.
  12. Describe dates and names of the lockbox contract(s) maintained with third parties for the collection of borrower/homeowner payments relating to the subject loan.
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Don’t use the above as the actual wording of your interrogatories, request for production or request for admission although some cutting and pasting could be used. Check with local counsel before you attempt to enter the legal process of discovery, motions to compel, motions for sanctions and motions in limine.
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This article is not a complete treatise on discovery in foreclosure actions. It is not a substitute for seeking advice from an attorney licensed in the jurisdiction in which your property is located.
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KEEP IN MIND THAT THEY WILL NEVER ANSWER THESE QUESTIONS. DON’T EXPECT ANSWERS. EXPECT THE ABSENCE OF ANSWERS. THEN USE THEIR REFUSAL TO ANSWER AS THE BASIS FOR RAISING INFERENCES AND PRESUMPTIONS AGAINST THEM.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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ALERT! Migrating from fake notes to eNotes: If consumers don’t stop this they will be without any defense to any abusive practice and any fake account started in their name

The banks have been securitizing data not debt. Now they are trying to make data the substitute for the real thing. In other words, screw the investors, screw the consumers, screw the government and the banks take everything.

It’s not securitization that is evil. It is a handful of bankers who are lying to us about securitization. There is a factual and legal difference between securitization of loans and securitization of information about loans. The acceptance of eNOTES or any digitized version of important legal documents is an invitation to disaster. This will make 2008 nostalgic for us.

We are the stage of final approval — allowing eNotes to be used instead of real notes. There are no protections for consumers and the practice of passing off securitization of data will be institutionalized as meaning the same thing as securitization of debt. The biggest ripoff in human history will be signed, sealed and delivered. Both investors, as a class (i.e., pensioners) and homeowners as class will suffer for generations because of this.  

Write to the CFPB, your congressman and your Senators. Voice your objection to dropping paper documents. Your life depends upon it. 

They make it sound good — like the next step in human evolution. But what they are proposing is a completely open playing field for only the banks — leaving consumers back in the dark ages.

see https://www.ginniemae.gov/Summit/Documents/June_13_11_15am_Digital_Collateral_Industry_Workgroup.pdf

This is basically institutionalizing moral hazard. For two decades the banks have gotten away with using images of notes that have been destroyed. The issue is the same as digitized voting. if you don’t have the physical document to backup the data, you are left with a cyber world in which anyone with access can change reality.

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I have no objection to the use of images of notes or mortgages or deeds of trust as long as the physical document exists and can be accessed upon demand.  but I have plenty of objections to the use of digitized versions of important legal documents unless they are adequately protected by the government in transparent practices.
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The whole reason we have public records is to prevent what the banks are now trying to do. If this goes through, public records will no longer exist. they will consist of digitized data from parties who have paid their way into being considered trustworthy. the average consumer doesn’t stand a chance in that environment.
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In a nutshell here is the problem: Wall Street has been fraudulently presenting securitization of data as though they were securitizing loans and debts. that never happened, which is why all of the documents from REMIC transactions are false, fiction, fabricated, forged and backdated.
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If they had securitized your “loan”, the language included in the note and mortgage would be sufficient, to wit: you would have consented to the resale of your loan and that the successor who purchased it would have the same rights to administer, collect and enforce as the original lender. That is what you signed up for and that, coupled with the fact that our economy runs on securitization of assets to diversify risk, is what makes securitization legal, necessary, proper and just.
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But they didn’t securitize your loan or anyone else’s loan because from their end there was no loan. From their end they made sure you received money and that money was used an incentive to issue the note and mortgage. But nobody purchased the note and mortgage. In most cases nobody ever purchased it even at origination. Although they told you the name of a party who was defined as “Lender” that party had no money, access to money nor any right to any money flowing into or out of the homeowner transaction.
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That is why the notes were destroyed — probably 95% of them. To you that is like shredding currency. But to them, their plan required them to keep all revenue generated by their scheme — not just some of it. So they needed to substitute data for documents. Every scanned image is data. And those images can be copied indefinitely. But you can only have one signed original note. The banks are tired of being restricted to selling your loan once, so they developed a plan to sell the data from your loan dozens of times.
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The analogy is the atom. In the legal world you can only sell the atom once. But wall Street figured out a way around that.
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They sell information about (i.e., data) the protons, electrons and nucleus along with a variety of other behavioral characteristics of those physical elements but they never say they are selling the atom — even though their collective sales of information about the everything composing the atom is equal to dozens of times the price of the atom.
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By using this fictional strategy they can say they never sold or bought the atom and therefore any liability arising from purchasing or selling the atom doesn’t attach to them.
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Does that mean no securitization ever occurred? NO! But it does mean that what everyone thinks has been securitized is still sitting there untouched. They securitized data not debt.
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That means that your loan, like that atom, has never moved and was not in fact a loan and there is no loan agreement because nobody agreed to become your lender.
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You signed papers where YOU agreed to designate a party as a lender but nobody at any stage of the process they labelled as “lending” ever signed anything that said “I am your lender. I own your obligation. I paid for it. You owe me the money.” You might think or assume that happened but it never did. 
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So far the investment banks have been pretending to be lenders when they are not and they would fight to the death if you sued them as lenders. Their defense would be that they are not lenders and as proof they would swear they have no interest in your loan. And they would be right.
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They made a ton of money selling information about your loan in the form of derivatives, hedge contracts, insurance contracts etc. On average they made $12 from every $1 they gave you. But they never paid you one penny for your role in their scheme of securitizing data. Whatever money you received they lured you into promising to pay it — but little did you know that you would paying companies with financial interest in your transaction which you mistakenly think is a loan. YOUR LOAN HAS NOT BEEN SOLD BECAUSE THERE IS NO LOAN.
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They did this by converting from public records to digital private records which means that management of any given company can claim anything and nobody is the wiser unless someone does an audit and understands what they’re looking at. By directing everyone’s attention to images they are directing everyone to data instead of documents.
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There is nothing legal about what the vienstmetn banks did to investors and nothing legal about what they’re doing to homeowners. But they have convinced most judges, regulators, lawyers and consumers that their practices, while not exemplary, are merely an accurate presentation of the truth and so the deficiencies occur without harm to the system or to investors or homeowners. Nothing could be further from the truth.
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In a nutshell investors were harmed because they unknowingly bought into some highly risky unsecured junk bonds and then signed away their right to do anything about it.
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In a nutshell homeowners were harmed because instead of getting the protections of the truth in lending Act and other federal and state statutes they were left hanging in the wind, with a fake loan agreement in which the players on the other side had no stake or incentive to make the transaction successful. In fact the loan agreement failed to deliver a lender. Quite the opposite they knew the transaction was toxic and they bet on it and the worse the odds the more money they made.
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So instead of physically committing the crimes of forgery, perjury, uttering a false instrument, recording a false instrument and mail fraud, now they seek to avoid all of that by forcing and seducing us into thinking that digitally records are enough, digital signing is enough and that digital contracts and promissory notes are enough. And anytime they want, they access those documents and alter them for other purposes temporarily or permanently in order to produce the highest possible revenue and profit.
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It’s now or never folks. If they get away with this one, you can kiss every consumer protection you have goodbye.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst. On Wall Street in NYC, he was director of investment banking at Garfield and Company, member of the NYSE, AMEX, Chicago Mercantile and 4 other exchange associations. 
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It’s Not a Default If You Stop Paying — Unless Someone owns Your Debt and Can Prove Financial Loss

NOTE: BE AWARE THAT WELLS FARGO AND OTHERS MAY HAVE PUT YOUR TRANSACTION IN A FORBEARANCE PROGRAM WITH UNKNOWN TERMS.

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I think that the banks have unfairly benefited from assumptions regarding the connection between the cessation of payments by homeowners and the existence of a default.
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I think that there are elements of a default that we have never had to think about before.
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The first element, in my opinion, is that somebody must have suffered a loss or injury
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The second element is that the loss or injury must be the approximate result of a breach of Duty
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The third element is that the Duty must be owed to them by the person who breached the duty.
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If you don’t have both elements, I don’t think you have a default, nor do I think that anyone has the authority to declare one.
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When this thing began we didn’t know if cessation of payments has actually produced an injury or loss. now we know.
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There is no correlation between cessation of payments and any injury or loss to any party. In fact, my analysis reveals that no such loss or injury occurs.
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Going further, my analysis strongly indicates that payment has been received directly and indirectly multiple times without being credited to any asset account in which a homeowner obligation is held as an asset. And the reason is simple — there is no such account anywhere. How can there be a default?
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One thing you may not know about me is that long ago I literally taught auditing under generally accepted accounting principles when I received my Masters in Business Administration. A guy by the name of Abraham Briloff wrote a book called Unaccountable Accounting back then. I actually have the right to republish it granted by his daughter. He accurately predicted this situation because of changes that were being allowed in the rules. But some things don’t change and haven’t changed.
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Perhaps because of my background on Wall Street I have always seen this as an accounting problem more than a legal problem. In accounting, the approach is very straightforward.
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If a company wants to claim ownership of an asset, it will have an entry on its balance sheet either for that asset or for a category that includes that asset. If the company does not report that item as an asset it is not legally claiming ownership of it. And if it does not claim that item as an asset it has no account to post deductions as a result of payments or offsets. 
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And if the company makes a claim anyway in court or out of court it is making a false statement. While there is probably nothing to prevent it from alleging the claim, and there may be presumptions that theoretically could support the claim, they cannot legally recover on the claim if it is challenged. There are several legal reasons for this result: lack of jurisdiction, failure of condition precedent etc.
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There is only one way for an item to appear on the balance-sheet of any person or company. There must be a transaction on the general ledger in which the company has paid for the asset. Under Double Entry bookkeeping, this would be shown as a deduction from some other asset like cash in exactly the same amount as the addition of the new asset. In the world of securitization no such transaction exists. And the reason that it doesn’t exist is because nobody wants to be called the lender because that would result in potential liability for violation of lending and servicing laws.
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The purpose of an auditor is to determine whether or not that asset exists in accordance with generally accepted accounting principles as now published by the Financial Accounting Standards Board. Unless the auditor finds objective proof is that a transaction occurred on the general ledger which is backed up by actual proof of payment, sales receipt Etc,  the posting of the asset on the balance sheet by management will be removed or the auditor will refuse to issue a clean bill of health for the audit, stating that the financial statements do not comply with generally accepted accounting principles.
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Go back to the default. If no such account exists in any company or person, then no company or person has actually experienced a default. accordingly there is no reason to declare a default on behalf of such a company or person. The fact that the company or person knows not a homeowner I stopped making payments to a party that he was otherwise paying, makes a witness not a creditor.
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Legally I think we have all committed a grave error by admitting or ignoring the allegation of a default and not challenging it aggressively, we are inherently admitting the status and ownership of the debt and therefore inviting the inevitable foreclosure result.
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Starting in 2006 I said that the expert that people needed was not a securitization expert like me but a CPA who specializes in forensic auditing. This is a person who could specifically state that the loan was not an asset on the books of the claimant and that the claimant suffered no injury or loss as a result of anything that the homeowner did or didn’t do. I had some extensive talks with the prestigious accounting firm in Tucson Arizona which almost resulted in the marketing of these services. They backed out when Bank of America retained their services and created a conflict of interest.

Who is PennyMac and Why Was It Needed by Wall Street Banks?

I received an email from one of my most prolific contributors that I am republishing here because virtually everything in it is entirely correct. I especially approve of her point about the fact that servicer advances are funded from proceeds of public offerings of stock that were all purchased by the Wall Street banks who did the underwriting.  Substance over form: the banks were giving PennyMac the money to make servicer advances. The banks were using the investor sourced money supply to buy the fake stock offering. None of it was real.

The end result is that all roads lead back to one thing, to wit: all of the money trail and all of the paper trails lead back to a handful of Wall Street banks who had “successfully” created a void between the real parties in interest — investors and homeowners — and the found a way to create the illusion of filling the void that cut out the financial interests of those real parties in interest. 

The banks were only intermediaries. They successfully posed as the real parties in interest when they were trading and issuing derivatives. But at the other end of the stick they maintained their position as intermediaries who had no interest in the debt and therefore could not be defined as lenders subject to the obligations and restrictions imposed by statutory and common law governing lending, consumer practices, servicing or anything else.

All of the fabricated documents that ensued were designed to cover up the fact that there was no person or entity that owned the underlying debt of any homeowner. Hence nobody could claim financial injury — a basic requirement for getting into court or making any claim.

who is PennyMac (PM) and why are they needed.
I think we need to look back at the PM history to answer this question.
PennyMac is a renamed Countrywide Financial which now operates at least 4 (four) known to me organizations.
1. PennyMac (one of most criminal, with Kurland and Spector)
2. Caliber Home Loan Inc, a middle-level intermediary, operated by Chris Mozilo who pass money from table pools to homebuyers via Black Knight (originator)  and smaller “Lenders”
3. BAC Home Loans
4. LandSafe Appraisal (purchased by CoreLogic) . In 2014 BOA sold a very similarly named system, LoanSafe to VA which is now handles all appraisals; plus CoreLogic gradually purchased most smaller appraisal companies*
Why Bank of America needed PennyMac to appear as a Large Lender and a Biggest servicer?
For the same reason why Countrywide needed American’s Wholesale Lender; and Fidelity National needed two (2) DocX,LLC and LPS – to create an additional corporate curtain to cover for the real parties.
Plus to use PennyMac and other “Servicers” as recipients for new bailouts.
If you take a closer look at PennyMac’s finances, here are nothing even close to $368+ billions worth of mortgages financed and 2 million homes serviced by PennyMac.
Moreover, if you see their Prospectuses, you will find out that the underwriters of PM securities (issued by PennyMac) are the same Stockbrokers who purchased PM’s securities, leaving about $29 million in fees to Penny Mac. I doubt is BOA or GS actually “purchased” anything from PM under this “offering” which they issued under glimpse of PennyMac.
But according to the legend, PennyMac now has to pay pay “servers’ advances” to “investors” for four months from their “own funds” until GSE’s (who sold their bonds to Fed. R. in advance) who cover these MBS, will step in and pick up the payments on “behalf of taxpayers  – while  GSE cannot even identify any Trusts where mortgages were pooled.
These GSE SOLD their unsecured bonds to Federal Reserve who buy about $30 Billion per WEEK from GSE beginning March 2020 to present time. Note that no Trusts were involved in these sales and no one homeowner was informed about the cage of ownership of their “debt”
I don’t know which “Servicers’ advances” and to whom PennyMac “pays” now, when the ownership of the “MBS” bonds was passed to Federal Reserve. At least Federal Reserve keeps it secret.
Apparently Kurland and know all risks involved and decided to steal some data from BK to create more money for themselves.
On May 2, 2019 they sent me a letter that “servicing” was transferred to them – but not mentioned by whom.
On May 3, 2019 PM sent a letter to BK informing them that PM is not going to extend their contract.
soon after Black Knight claimed that they “noticed some irregularities of use” their system by PM – apparently after I brought it to their attention. This is why no assignments were recorded reflecting the “sale” of my loan to PennyMac who cannot identify the Seller.
Since Oct. 31st  BK terminated PM as a client .
In Complaint  filed by PM against BK, they insist that the owner/investor is Ginnie Mae (who sold their MBS to Federal Reserve) – but continue to lie to me and DIFS that PennyMac is “owner/investor” in my loan.
The bottom line, as Neil said – these “servicers” and “lenders” are nothing. They are thin-capitalized clowns for hire and nobody sold any loans to GSEs because loans were destroyed at the beginning to create “manipulated data” in Black Knight system which Big Banks  sold as unsecured derivatives which GSE either sell to Federal Reserve or obtain payments from Stockbrokers directly, like FHFA v. Goldman Sachs
“GSE’s ownership” is the same myth to force people paying a long-time non existing “debt”.
So-called “universal income” proposed by Democrats is a camouflaged attempt to make Big Banks  pay royalties from trades to people .
Of course the Government cannot disclose the Truth since it will reveal that during last 40 years they allowed Stockbrokers to destroy property Titles to virtually ALL homes in America; plus create a slavery never existed before, where a small group of people enjoy tax-free profits from free servitude provided to them by the rest of the Country – plus income from stolen homes.
*Lagow worked at LandSafe, Inc., an appraisal company owned by Countrywide Financial and ultimately acquired by Bank of America, from 2004-2008. According to his unsealed complaint, Mr. Lagow observed widespread disregard for laws that regulate Federal Housing Administration (FHA) underwriting and home appraisals.

Specifically, he claimed that Countrywide conspired with LandSafe and homebuilder KB Homes to inflate the appraised value of homes, boosting the size of the lending giant’s loans to homebuyers. In order to accomplish this, the lending giant allegedly used a number of strong-arm tactics to pressure appraisers to report favorable home values.
Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
*

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

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

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

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New foreclosure rocket dockets will emerge unless these practices are controlled or stopped. If the claimant is not the owner of the debt, present, existing, black letter law, does not allow foreclosure. In fact, enforcement of the note or separately, the debt, is not allowed unless the right to enforce comes from the owner of the debt. The law is clear, unless someone pays value, they can’t own the debt. Assignments of mortgage without the debt are a legal nullity.
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To “save” the economy the only legal option available is to reassess the homeowner transaction using the equitable powers of the court. It might be true that the homeowner obligation can be enforced after such a reassessment — but only after the facts are all exposed and all stakeholders are brought to the table.
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This would require that the court hear a properly filed pleading requesting equitable reformation of the contract to allow for maintaining the homeowner obligation because without that, the entire securitization infrastructure is in danger of collapse — even though nobody in the securitization infrastructure actually ever owns the debt or suffers a loss from nonpayment.
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To make the homeowner obligation enforceable the court must allow a designee or nominee to pose as creditor. Further the court must adopt procedures that allow a party to act as the designator, even though neither the designee nor the designator own the debt and will suffer no loss from any payment or nonpayment by a homeowner. The current practice of allowing such designees to reap such rewards is  not legally sustainable and probably unjust and unfair.
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The legal analysis requires a beginning point of analysis the contracting intent of the contracting parties. And that in turn requires an analysis of the identity of the contracting parties.
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That analysis results in an indisputable truth: taken separately there was no meeting of the minds — because the homeowner wanted a loan and the investment bank , acting through the originator, wanted the issuance of securities — the note and mortgage — without anyone assuming the substantive role of a lender.
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But taken together a contract can be fashioned in which the homeowner transaction can be treated as a loan contract and the absence of any creditor can be adjusted to insert a designee or creditor who can enforce. but ti do that, the entire contract must be taken into consideration.
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If the homeowner was seeking an actual loan under lending laws but didn’t get it, what is the consideration for entering into a deal that was so profitable for the other contracting parties, whether they were stated or concealed?
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If the answer is nothing, then the court must determine the proper amount of consideration that the homeowner should have received for being drafted into a risky securities scheme — a scheme in which his rights as a consumer, borrower or customer were virtually eviscerated by the substance of the deal.
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The only other legal option is common law rescission. That will result in dismantling the entire securitization scheme.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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How to Use the Business Records Exception to Hearsay Rule to Keep Out “Servicer” Records in Foreclosure Cases

Fundamentally you must understand that the investment banks want you and everyone else to look only at the payments history — not the debt, who owns it and whether anyone suffered a loss resulting from any lack of payment by the homeowner.
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Their strategy is to get the court to presume that in the absence of payments someone must have suffered a financial loss since the debt was clearly established in a transaction in which the homeowner received money and issued a note and mortgage. In the present securitization era that paradigm is wholly untrue but not obvious because the banks turned “lending” on its head. The homeowners took what they thought was a loan but the banks were not lenders and had no intention of becoming lenders.
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The problem is that most homeowners believe the myth promulgated by the banks because they don’t understand what really happened in what the banks call “securitization.”
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The truth is that nobody has suffered a financial loss from “nonpayment” by the homeowner.
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Everyone has already been paid as to the principal obligation.
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Collection efforts directed at the extinguished obligation are pure business strategy designed to increase already astonishing profits achieved through “Securitization” which like everything else is not in substance what the label conveys, to wit: the homeowner obligation was never sold to investors and therefore cannot be said to have been securitized. 
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One of my most prolific contributors points out how Fannie Mae uses a company who to this day incredibly remains out of the limelight despite being the only company whose division president, Lorraine Brown, went to jail for falsifying documents. It wasn’t really her fault. There were no transactions that fit the mold required to have an enforceable claim in foreclosure. But the banks wanted the money anyway. So they invented the appearance of transactions even though nothing had happened in the real world.

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It isn’t just Fannie Mae. Most homeowner transactions are established on LPSDesktop.

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The banks, in their never ending quest to send us down rabbit holes only present the “servicers” and their “business records”.

They do that to (a) avoid the hearsay rule because someone comes in without knowledge and says he has knowledge that these records were created in the ordinary course of business and they were created at or near the time of the transactions — which is only partially true and (b) to avoid the pesky problem of presenting details about the transaction that could show that the debt and the role of the creditor were extinguished in the process they’re calling “Securitization.”

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Practitioners would be wise to keep in mind two things:
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(1) the “servicers” are not servicers in the sense that anyone thinks of a servicer. They do process payments from homeowners but they do not process anything else. — The “servicer” records do NOT show where payments were forwarded, which would identify and confirm that the claimant or Plaintiff in foreclosure is in fact the owner of the debt.
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(2) the payment record from the “servicer” reflects only those payments received by that servicer (and perhaps an unaudited compilation of prior payments reported through LPS Desktop). The payment history might be admissible in evidence but only as to the record of payments, about which the practitioner should object for lack of foundation. — Without testimony or other evidence that (a) the debt was established as owned by a specific creditor anad (b) that the payment history is part of the records of the creditor, not just the servicer, the payment history should be excluded. 
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(3) A subpoena issued to Black Knight fka Lender processing Systems, aka LPS, demanding records relating to the subject debt, note or mortgage will be met with a barrage of objections, which if properly litigated will probably result in a favorable decision for the homeowner.
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(4) The object of litigation of foreclosure defenses is to show that the debt was removed from the chain. You accomplish this by relentlessly and aggressively pursuing the identity of the creditor. there isn’t one where any REMIC is involved.
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(5) Without a creditor there can be no delegated authority to enforce, collect or even administer the loan. “Authority” does not exist in a vacuum. there must be a source of authority. And the source of authority must be someone who legally owns rights to the debt over which he can delegate, as owner, the rights to enforce. 

see Black KnightÕ latest innovation: LoanSphere supports entire loan lifecycle – HousingWire

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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
*
Please visit www.lendinglies.com for more information.

Coming this fall! A new wave of illegal foreclosure claims. Will we get it right this time?

Some have pointed to some articles indicating that the securitization ponzi scheme collapsed already.

It might be more accurate to say that the scheme was reorganized rather than collapsed. But even if it collapsed the Wall Street banks will continue sending servicers and foreclosure mills into the field to file foreclosures. After, all, it’s free money if they win, and there is so far, a statistical certainty that in nearly all cases they will win simply because of the erroneous belief by homeowners that they have done something wrong and that they have a moral obligation to leave the house, once they stop paying.

So homeowner will give their precious house to people who have no right to receive it.

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We are a long way from when homeowners realize that they were flim flammed from the very start and that taking the substance of the homeowner transaction in total and in perspective, the homeowner (a) did not owe any money to anyone claiming it and (b) the homeowner was probably owed more money from the investment bank than he/she could possibly owe under the note and mortgage that was issued.
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It wasn’t a loan and we should stop calling it that. The “lender” side had no lending intent. At the conclusion of the process there was no creditor holding the homeowner obligation as an asset. Therefore they were not lenders or even creditors and accordingly not liable or accountable to act in accordance with lending and servicing statutes.
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The confusion emanates from the fact that all homeowners entered into the transaction with borrower intent. But there was no lending intent from the other side. The other side masked the real transaction as a loan to deceive the homeowner into accepting the label “borrower”.
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The real transaction was payment to the homeowner for issuance of note and mortgage to start the securitization processes. It was in reality a simple commercial transaction, to wit: the investment bank, through intermediaries agrees to pay money to the homeowner in exchange for the homeowner issuing a note and mortgage and putting up their home as collateral for an obligation that offsets the payment received. It could have been a loan, but it wasn’t.
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Because the banks lied about the transaction to the homeowner and to further make it look like a loan, they got the homeowner to issue a note and mortgage in most cases to an entity that never paid any money. This might negate the consideration for the transaction altogether because they were making a payment  but also getting a promise to pay even more to unknown creditors who would be illegally designated later. That part is a close question.
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But in quantum meruit, quasi contract and reformation, the only legal way that their designation system could be made legal is by getting consent from the homeowner to that system of designation of a creditor to act as a lawful creditor even though it wasn’t. That was the real reason for MERS, the use of Originators and the offering of “modifications.” The players on paper are designees or nominees — not real players. They are using the language of the notes and mortgages to imply consent to a “no creditor” transaction.
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But that is not informed consent or real consent, nor is it legal without other language of contract. A binding contract must have offer, acceptance, clear terms and consideration between the parties to the contract. In most cases the homeowner transactions were therefore not binding contracts. The Payee on the note was not a creditor. The doctrine of merger cannot apply when the payee is different from the source of funds unless there is a specific express contractual provision stating that. The mortgagee is usually a nominee which I think is a tacit admission that there is no creditor.
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In order to foreclose, the party asking for foreclosure remedy must be a creditor. A creditor is only one who either (a) owns the debt or (b) represents someone who owns the debt. Ownership of the debt is only accomplished in one way — payment of value in exchange for an instrument conveying title to the debt from an owner of the debt to a new owner of the debt.
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The ONLY time any value was paid was by investors. But they did not get any instrument of conveyance of the debt. Quite the contrary. The intent was to make certain that they would never be considered lenders. What they received was a discretionary promise from the investment bank dba REMIC trust to make payments that were partially indexed on but not dependent upon receipt of payments from homeowners.
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It is therefore impossible for any transaction to have occurred wherein value was paid for ownership of the debt after the investors paid the investment bank. Even if someone wanted to pay value in exchange for an instrument of conveyance of ownership of the debt, there was nobody to pay.
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The only party who paid value was the group of investors or arguably the investment bank. But neither of those entities had ever received any instrument of conveyance of ownership of the debt and in fact they disclaimed any such ownership because it would have made them lenders subject to TILA and other lending and servicing laws.
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BUT in order to foreclose, the papers filed by the foreclosure mill would need to show that a creditor was applying for the remedy of forfeiture. See Article 9 §203 UCC. So that required assignments of mortgage to be prepared, executed and recorded even though there was no financial transaction between the parties. In short, the scheme required the preparation, execution and recording of false utterances in false documents that were forged and illegally recorded.
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Since the homeowner has always assumed the homeowner transaction was a loan agreement, almost nobody has thought to credibly and properly challenge these assignments as legal nullities.
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The credible challenge would be not only that there was no consideration paid for the assignment, but that the payment of consideration was not a commercially reasonable basis for the execution and recording of the instrument, since the only consideration came from parties who did not and do not want ownership of the debt.
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The absence of any valid assignment is not just a fact; it is legally impossible under current securitizations schemes to have a valid legal assignment. The investment banks as intermediaries between investors and homeowners have structured the cash flow such that the investment banks get most of the benefits from the securitization process at the cost to and detriment of investors and homeowners — the only two real parties in interest in the homeowner transaction which is mistakenly called a “loan.”
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The note, payable to a party with whom the homeowner unknowingly conducted no actual business, creates a liability under Article 3 of the Uniform Commercial Code regardless of the lack of consideration. The maker of the note has defenses to be sure, but if someone buys the note for value, without knowledge of the maker’s defenses, and in good faith, then the maker must pay the note and the only remedy available to the maker is by making a claim against the Payee on the note and anyone else that induced him to execute a note in favor of someone who gave him/her nothing.
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The foreclosure mills for claimants in foreclosure do not plead status as a holder in due course because they can’t prove the elements: payment, good faith and lack of knowledge of borrower’s defenses. But they induce both homeowners, their attorneys and the courts to treat the claimant as a holder in due course because of the complexity of legal analysis in distinguishing between an HDC, holder, possessor and anyone with rights to enforce.
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As a result, because the position is not properly challenged, the court then often reduces or even eliminates discovery on the central issue — whether the claimant is a creditor of the homeowner.
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The “rights to enforce” argument almost always leaves out the presumed component that is a condition precedent to any such analysis, to wit: that the creditor has authorized the enforcement. But if there is no creditor — i.e., anyone holding the debt as an asset — then such authority cannot legally exist.
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This explains the appearance of false, fabricated, forged, backdated and robo signed documents that are still regularly used. Since there is no creditor the pursuit of foreclosure is a pursuit of profit rather than restitution for an unpaid debt. It is not recovery on a loan.
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And if the transaction was unraveled from its complex appearance, it is plain as day that the homeowner is entitled to credits and probably payments from the investment bank under quantum meruit and quasi contract for being drafted into a highly profitable securitizations scheme that gave the homeowner nothing for initiating the scheme.
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We are about to be besieged with new foreclosure claims. Let’s get it right this time. The “flood of litigation” argument for rocket dockets is not valid because it presumes that the claimant does have status as a creditor and that the foreclosure is for restitution of an unpaid debt.
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Aggressive and persistent demands for identification of the claimant and for evidence of proof payment for value — along with thoughtful, credible and persuasive presentation might well result in prevention of a flood of foreclosures because there is no entity that actually stands to lose any money arising from the action or inaction of any homeowner.
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They won’t plead injury because there is no injury. They can’t prove any injury. They can only induce the court to presume it based upon erroneous application of legal presumptions arising from the apparent facial validity of documents that are neither facially valid nor true representations of any transaction in the real world. 

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

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

Has any homeowner transaction ever been sold to investors? No? Then why are we accepting the bank myth that it was securitized?

Bob gives me a mortgage and I sign a note for $300k. Bob assigns the mortgage and note to Steve in exchange for “certificates / securities.” Bob retains the note and pledges to Jim in a collateral assignment to raise money to fund more loans. (i.e. WaMu and the Federal Home Loan Banks). I stop paying and soon Steve declares a default and tries to foreclose. My defense is that Steve doesn’t have the note, never took the note, and the note was collaterally assigned elsewhere before Steve filed the foreclosure action. If so, we can make that same defensive argument in every case it would seem.

No that is not a good defense. Your defense should be centered on who owns the debt. And only someone who has paid value for the debt can own it. If someone pays value in exchange for ownership of either the note or mortgage, then it is presumed that they own the debt — and it would be very hard to rebut that presumption.

So if someone pays money without getting or being entitled to a document that transfers the ownership of the debt from the current owner to the new owner, they have not acquired the debt.

Similarly, if someone has not paid value for the debt or note and they do get such a conveyance of ownership of the debt, even from one who is the owner of the debt, they too don’t own the debt. And a non-owner of the debt cannot issue any rights or instructions regarding the debt without deriving authority from an owner of the debt who paid for it.

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The transaction between Bob and Steve was a sale. Steve paid value unless the certificates or securities he used as payment were known to be worthless at the time of the sale. The fact that Bob retained possession of the note does not change the analysis. When Steve seeks to enforce the note he either has to get Bob to produce it or if he can’t, then he needs to plead a lost note. The transaction that you have used as an example does not convert the note to a security.

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Steve also has the option of suing Bob in the event that Bob is reluctant to turn out for possession of the note. but in all events Steve can show that he bought the note, which means that he bought the debt, and therefore is probably a holder in due course or at least a holder with rights to enforce as the owner of the debt.
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But the analysis does change if the example is changed slightly. If Bob was loaning you money because Steve was contemporaneously taking Bob out of the loan, then in substance the conduct of the parties shows that Steve was the actual lender and that Bob was simply an intermediary. This is the essence of a table funded loan which is against public policy as set forth in the Truth in Lending Act.
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So if Steve did not take possession of the note because Steve did not want to be accountable or liable for violations of lending laws as a lender, there is a case to be made that the nature of the transaction shifted. And if Steve gave Bob the money to lend to you because Steve was contemporaneously divesting himself from any risk of loss on the loan, then the argument would go one of two ways.
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Either the next person in the chain acquired ownership interest in the debt and note — or if Steve was merely selling derivatives whose value was indexed on the performance of your loan, then then the debt and note probably lost a creditor who could legally claim rights to enforce. As I see it, this would definitely be true if nobody in the chain was carrying the debt and note as an asset after Steve made his sale of derivatives.
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But I don’t think that under Securities analysis, the latter example would result in finding that the note had been converted to a security. It’s hard to see any analysis that would support that conclusion. If nobody was paying for legal ownership of the note then how would the note be converted?
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Of course that could be one possibility that would preserve the securitization infrastructure. And maybe if the courts catch the Wall Street banks with their hands in the cookie jar, the banks themselves might push that idea.
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Given the political climate that allows Wall Street to make up its own rules, that might happen, leaving both investors and homeowners out in the cold. That is why I’m starting to push Reformation as the better alternative which takes all stakeholders into account.
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