The Truth about US Bank

Lawyers and pro se litigants continue to ignore the basics when mounting a challenge to foreclosures in which US Bank is asserted to be a trustee of a name that is then treated as though it was trust or REMIC Trust. If you look closely, the name is word salad, containing references or names to several named entities and other categories of entities.
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 A typical presentation asserts no presence of US Bank in its individual capacity, so the institutional implication is false. It is appearing strictly in a representative capacity and an court award of costs against the “claimant” would not, according to US Bank, attach liability to US Bank but to rather whoever was being represented by US Bank “as trustee.” On that we have word salad presenting many options such as
  1. US Bank, as trustee
  2. as successor to Bank of America, as trustee
  3. as successor by merger to LaSalle Bank, as trustee
  4. for the holders of certificates entitled
  5. XYZ Corp.
  6. Mortgage pass through Certificates series 200x-a1

If anyone can tell me  from that description who would be liable for costs I applaud them. But I can tell you who would pay the costs regardless of actual legal liability. It would be a company claiming to be an authorized servicer who in fact is getting the money from the investment bank through conduits.

The issue of what if anything was transferred between LaSalle Bank and Bank of AMerica and thus what if anything was transferred between Bank of America and US Bank has actually not been litigated.

My answer is that LaSalle Bank had no duties as trustee, was subjected to the impact of three mergers — ABN AMRO, Citi and Bank of America — and that a trustee only exists for a legally existing trust in which the subject matter (Loan) was entrusted to the trustee for administration of the active affairs of the “trust.” With none of those elements present, nothing could have been transferred.

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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As to U.S. Bank, Deutsch, BONY etc. there are two categories that must be considered. If US Bank is named in a Pooling and Servicing agreement then the reasons for its non existence (or more specifically lack of legal presence in court or any other foreclosure proceeding) in fact and at law remain as previously stated in prior articles —- but exclude one central issue that has not been litigated.
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If US Bank has been asserted as successor to another alleged trustee then all sorts of other issues pop up. The main one that has not been litigated is whether the position of trustee can be transferred or sold like a commodity without consent of the beneficiaries or some other authorized party.
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In truth the only real “beneficiary” would be the investment bank — if only the trust legally existed. And in truth the investment bank indemnified US Bank from liability in exchange for the use of the US Bank name to create the illusion of institutional involvement.
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And in truth the only real party in interest is the investment bank, and if the trust actually existed the investment bank would be the only real beneficiary in an arrangement in which the trust name is used as a shield or sham conduit to hold bare naked legal title to paper that fabricates the illusion of debt ownership, much like MERS.
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And of course the whole use of the term “successor” is constantly used to distract lawyers, judges and homeowners from the fact that the previous party had no interest or right to administer, own, or enforce the subject debt, note or mortgage — unless they are able to produce authorization from the investment bank.
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But the investment banks have been loath to even hint that they could or would issues such authorization because that would be an admission that they were or are the real party in interest — an admission which probably would subject them to many levels of liability for fraud and statutory violations.
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It may well be that the pursuit of court costs and discovery available to do that might be the achilles heel of this house of imaginary cards. It would reveal the absence of any party to pay them, which would reveal the absence of a claimant, which would reveal the absence of a claim which would reveal the absence of a client, which would reveal false representations by the foreclosure mill.

No the Mortgages Are Not Securities, But the “Certificates” Do Not Qualify for Exemption As “Mortgaged Backed”

For those straining to find a way to categorize mortgage loans as securities I offer this based upon my licensing, training and experience as a Wall Street Broker and Investment Banker and as an attorney who has practiced law, including securities law for over 42 years.

You are climbing the right tree but you are on the wrong branch, in my opinion. Despite possible legal and logical arguments for your point of view there is no way any court is going to take the common mortgage loan and say it is a security, and therefore was subject to regulation, registration, disclosure and sales restrictions. And the secondary market does not rise to the level of a free exchange. While loans appear to be traded under the guise of securitization they are not actually traded.

BUT
I like your reasoning when applied to (a) certificates issued by investment banks in which the investment bank makes promises to pay a passive income stream and (b) derivative and hedge contracts issued on the basis of deriving their value from the certificates.
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The specific challenge I think should be on the status of the certificates or “bonds” issued by the investment banks. If securitization in theory were a reality then under the 1998 exemption they would not be treated as securities and could not be regulated.
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That would mean that the fictitious name used by the investment bank was a real entity, an existing Trust (or special purpose vehicle) (a) organized and existing under the laws of some jurisdiction and (b) the trust actually acquired loans through (i) purchase for value or (ii) through  conveyance from a trustor/settlor who owned the loans, debts, notes and mortgages.
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But that isn’t what happened in practice. The entire business plan of the investment banks who participated in this scheme was predicated on their ability to sell the loans multiple times in multiple ways to multiple layers and classes of investors, thus creating profits far in excess of the amount of  the loan.
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Right now each of those sales is considered a separate private contract that is (a) separate and apart from the loan agreement and (b) not subject to securities regulation due to exemption under the 1998 law that does not allow securities regulation of mortgage-backed instruments.
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So the goal should be to show that
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(a) the securitization scheme was entirely based on the loan agreement under the single transaction and step transaction doctrines and therefore was not separate from the loan transactions
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(b) the certificates or bonds were not mortgage-backed because the holders have no right, title or interest to the loan agreements, debts, notes or mortgages and
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(c) the derivative and hedge contracts deriving their value from the certificates were securities based upon the certificates (“bonds”) that are more in the nature of warrants and options on the value of the certificates rather than any direct interest in the debt, note or mortgage of any borrower.
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Hence both the certificates and hedge contracts and all other derivatives of the certificates would be subject to regulation as securities. Based upon information I have that is very suggestive although not conclusive, it appears that the Internal Revenue Service has already arrived at the conclusion that the certificates are not mortgage-backed and the trusts are not viable entities because in order to have a valid trust it must have assets and active affairs. It must also have identifiable beneficiaries, a trustor etc.
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None of those elements are present or even alleged or asserted by the lawyers for the foreclosure mills. The only “beneficiary” is the investment bank, not the certificate holders who all expressly or impliedly disclaim any right, title or interest in the loans, debts, notes or mortgages and have no right to enforce. This has already been decided in tax court. The owners of certificates are not the holders of secured debt.
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There is no “res” or “thing” that is entrusted to the named Trustee of the so-called REMIC Trust for the benefit of identifiable beneficiaries. There is no settlor who conveyed loans to the Trustee to hold in trust for identifiable beneficiary except that as a catch-all the investment bank is named as beneficiary of any title to anything that might be attributed to the trust, if only the trust existed.
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Attacking this from the top down is the job of regulators who refuse to do so. But the attack can occur from the bottom up in courts. As shown above, in any case where a trust is referenced in a foreclosure there is no legal standing. That is there is no existing entity that owns the debt. The investment bank funded the origination or acquisition of the loan but contemporaneously sold off the value of the debt, the risk of loss, the cash flow and other attributes of the loan.
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The notes had to be destroyed and a new culture based upon images had to be put in place even if it violated law. The problem with the courts is not that they don;t get it; I think a lot of judges get it but don’t like the outcome of applying the law as it currently exists. So they wink and nod at fabricated notes, assignments and endorsements.
But those same judges, when confronted with unexplained deficiencies are forced to rule in favor of borrowers. And they do. This would best be done in mass joinder, class action or some other vehicle where resources could be pooled, but the procedural deck is stacked against such efforts.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

How the loan was sold multiple times.

 

THE CLAIM FOR HOMEOWNER ROYALTIES

It is like any hedge contract. The buyer of the hedge contract is the investment bank, sometimes working through sham conduits. It is saying it wishes to ensure stability of its “portfolio.” It provides triple agency rating and “insurance” from AIG for instance while at the same time buying insurance from  AIG based on the premise that hedge funds are selling hedge contracts. It looks like a safe bet as long as you don’t peek under the hood where you see that the debt, note and mortgage were split at inception and the enforcement of the debt, note and mortgage is at best a long shot if all the facts are revealed.

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The hedge funds and insurance companies make money because they are receiving fees from the investment bank for assuming the risk. It’s income pure and simple. The risk is seen as nonexistent. But in fact a small move in the value of the certificates whose value is entirely derived from the investment bank’s promise to pay certificate holders is a discretionary promise controlled exclusively by the vinestment bank. So Goldman can reduce payments and cause the certificates to decrease in value thus triggering the insurance and hedge contracts. Goldman can also, in its sole discretion declare that the value has reached the trigger point. And the counterparties expressly disclaim subrogation or any claims to the certificates, debts, notes or mortgages.
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In many cases the initial hedge contract was created for the highest tier of the tranches containing AAA rated mortgages. But the tier 1 tranche had received fees for issuing a hedge contract on the lowest tranche. The certificates were based upon the value of the tranche including the hedge contracts which investors thought were exclusively to protect the Tier 1 tranche but in fact contained a commitment to absorb losses for the Z tranche that contained 15% mortgages. So the modest but lucrative fees paid to hedge funds to assume the risk for stabilizing the Tier 1 tranche was in fact a guarantee of the entire Z tranche.
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When Z tranche failed as everyone knew it would, it took down the tier 1 tranche and through similar devices the entire issuance of that “trust” was reduced to rubble with investment bank getting the full amount of the investment (by certificate investors) paid to the investment bank (not the certificate investors) in mortgages that had (a) not failed and (b) did not have nearly the effect on perceived loss of value that was reported.
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Hence the investment bank sold, using the trust name as a fictitious name for the investment bank, to the investors who bought certificates whose value was perceived as derived from “underlying mortgages” and then sold again the same mortgages under guise of hedge fund and insurance contracts. In fact the value of the certificates was entirely derived from the value of the promise made by the  viestment bank with no right, title or interest to the indexed fictitious portfolio of debts, notes and mortgages arising out of the origination of or acquisition of residential mortgage loans.
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When the credit market collapsed (nobody was willing to trade in derivatives) Goldman and others had insurance contracts pending with AIG et al. The bailout was used to fund AIG so that GOldman could receive $150 Billion on losses never incurred by Goldman and which were never attributed to anyone who might be construed as having purchased the debt. Goldman was not lobbying to recover losses made from risky investments. Goldman was lobbying and did so successfully in protecting a windfall expectancy from hedge contracts and insurance procured through false pretenses. Losses on the loans had nothing to do with it.
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Goldman and Citi were successful at manipulating the story. TARP and FED and US Treasury and FDIC bailouts were at first predicated on losses caused by defaults on mortgages. But that is only part of the story. Mortgage Defaults actually were not a major cause of any collapse except in a few instances that Goldman PR seized on to make it appear that was what was happening marketwide. Most mortgage debt and all risk of loss had been sold multiple times. There simple was no owner of any debt in which the claimed “holder” had an pecuniary interest. Hence today we have no creditor — a proposition that virtually everyone finds unacceptable.
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So TARP evolved from Troubled mortgages to troubled Certificates. And when the promise was revealed to come not from homeowners but form the investment banks, TARP evolved again into a generic ill-defined “troubled asset ” classification that meant anything the banks decided. The stuff that simply could not be reconciled was put into the maiden lane entities and then later recycled out as new securitizations as though there was nothing wrong with the inherently defective and illegal nature of lending, servicing, selling and profiting from the sale of loan products that were guaranteed to fail in many instances and whose failure was central to the bank business model in which they would profit from the failure.
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What I am saying is that the infrastructure for all of that was established before the loans were made. That infrastructure and the expectancy of windfall revenues and profits from the origination or acquisition of loans was absolutely essential (condition precedent) to granting loans, whether they were viable or not. The funding of the loan was essential to getting the borrower’s name, signature and reputation as well as their house as collateral. Without that all the tranches, insurance contracts, hedge products and more advanced derivative products were never have been written, much less sold. This process did not, as was advertised, diversify risk. It concentrated it on borrowers, government and investors in that order.
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Note that the banks are left out of that equation because they were intermediaries as it relates to risk and they were principals as it relates to profits. It is my contention that this was an implied contract in which the homeowners should be compensated for their essential part and focal point, but for which the rest of the scheme, undisclosed to borrowers, could not have occurred.
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Consulting with insiders the average gross revenue from the loan of $1 was between $10 and $20 dollars. So for an average loan of $250,000 the gross revenue was in excess of $2, 500,000 and frequently topped $5,000,000. The average was $8,000,000. Royalties and license fees usually run from as low as 1.5% to an average of 6% and are applied to gross revenues. The implied contract that included the borrower and the investment bank thus computes as $480,000 plus statutory interest which at this point would average around 9% per year for an average of $43,200 per year for an average of 10 years or $432,000. Hence the value of the claim by each borrower is on average $900,000 for each $250,000 loan.
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In addition there exists a further claim for recovery of all undisclosed compensation as outlined above amounting to several times the above estimate. this presents an unparalleled profitable opportunities to good litigators. Pro se litigators are not invited. The theory is simple and if presented correctly will almost definitely survive a motion to dismiss and could be the subject of mass joinder, class action and even Qui Tam relief.
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While a DC group is forming I would be willing to help in the creation and development of a new group whose sole focus was on this theory.

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

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

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

see https://www.nytimes.com/2019/05/20/nyregion/nyc-taxi-medallion-loans-attorney-general.html?smid=nytcore-ios-share

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

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

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

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

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

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

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

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

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

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

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

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

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

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

AND NOTE THIS:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*

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

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

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

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

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

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

 

Applying Common Sense and Law to Assignments of Mortgage

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

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

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

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

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

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

  • delivery of note and mortgage is important and potentially dispositive BUT
  • defects in the instrument of assignment of mortgage are not fatal IF
  • intention to pass title is present AND
  • payment of proper consideration is present
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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

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

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

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

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

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

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

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

Where’s the money?

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

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

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

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

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

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

9th Circuit Inches Toward Decision of “America’s Wholesale Lender”

The issue is jurisdiction. Lawyers filed papers for AWL but AWL was dissolved as a corporation. The lawyers countered with the allegation, on appeal, that AWL was a fictitious name for Countrywide without specifying the location of CW. Hence no diversity of jurisdiction could be supported by the allegations in the notice for removal.

The claim of diversity was not supported by either facts or allegations establishing diversity. This is the common practice of foreclosure mills and their defenders. They simply make a claim and leave it as “implied” that the grounds exist. Attack that, and you can win.

So the issue before the 9th Circuit was whether the Federal District Court had jurisdiction to enter a dismissal of the claims for wrongful foreclosure. That in turn depended upon whether the case had been properly removed from state court by AWL. If it hadn’t been properly removed then the District Judge had no jurisdiction to enter any order other than the ministerial act of remand to the state court.

The 9th Circuit Court of Appeals approached the subject gingerly. Since AWL didn’t exist and there was no viable supporting allegation that it was the fictitious name of Countrywide the answer was obvious. AWL could not remove because it didn’t exist.

The hidden story is (a) the number of times AWL was named by lawyers as the foreclosing party with no reference to CW or anyone else claiming to use AWL as a fictitious name and (b) the number  of entities claiming that AWL was a fictitious name for them.

The real question is why should lawyers enjoy immunity from litigation under “litigation Privilege” when they file not for an actual legal entity  but for a group of vendors who all stand to benefit from the foreclosure? If there is no client why should lawyers be immunized?

see Martinez v AWL Remand

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

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

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

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

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

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

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

*

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

*

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

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

 

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

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

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

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

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

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

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

If that is so then the liability for lending violations MUST attach to the investment bank. And if that is so then at least in judicial states, by alleging those lending violations through the affirmative defense of recoupment, the foreclosure can be mitigated or defeated entirely. In nonjudicial states one would need to allege active concealment preventing the borrower from knowing the real party in interest with whom he was dealing.

*

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

*
It also shows the lengths that many courts will go to avoid “fraud.” While they will accept the notion that something was wrongful and that the defendants knew it was wrongful, contrary to fact and law, they refuse so see it as fraud. A quick look at any FTC action will reveal that such restrictions do not apply if the same allegations come from a governmental agency.
*

The case is also instructive in that it repeats a very common scenario regarding the origination and progression of the loan. This court and other courts will eventually face the day when their assertions come full circle: for now, they are saying that just because there was no consideration between then named lender and the borrower doesn’t mean there was no enforceable contract.

*

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

*

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

*

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

*

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

Stop Feeling Guilty — Be A Warrior

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

The genius behind companies like Citi is… Deception by Branding.  “Citi” is not a company, it’s a brand of a conglomerate of companies.  Even its subsidiary “Citibank N.A.” is deceptive.  First let’s dispel the myth that subsidiaries are equal to their parents.  Not true, not even when they are wholly-owned subsidiaries.  They are separate companies, albeit owned by a common parent. —- From Anonymous Writer
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Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Probably the biggest goof of the court system in foreclosure litigation (and in business litigation) is mistaking a brand for a company and not realizing that there is both a business and legal distinction between even a wholly owned subsidiary and another subsidiary or parent company.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

UCC: The Internet is no substitute for law school

The way that borrowers lose cases is by picking out one thing from a case or statute and treating it as a magic bullet. If the law were that simple a computer would be deciding all cases. The distinctions between possessors of a note, rights to enforce, status as a holder, owning the debt and the status as holder in due course are extremely detailed and they are fairly rigid. That is because the UCC was designed to effectuate the free flow of commerce and protection of both parties under a set of rules that must be rigid to accomplish the goals of free commerce and protection.

To assist foreclosure defense attorneys and pro se litigants I offer my take on application of UCC rules to residential foreclosures. As to my foundation for doing so I offer the following: I was the winner of the American Jurisprudence book award in law school for bills and notes; I was deeply involved on wall street with the actual trading of bills and notes; I was the original drafter of hundreds of deals involving bills and notes; and I have spent 43 years litigating cases involving bills and notes.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================

Confusion arises because of references to holder in due course. A holder in due course is one who purchases a note for value in good faith and without knowledge of the borrower’s defenses. If such a transaction actually occurred it would be difficult in this context to say that the buyer was not acting in good faith or knew of the borrower’s defenses.

Here is a key rule to guide all foreclosure litigation: As long as the judge thinks that the sale of the home will be used to pay the down the borrower’s debt to a party who owns the debt the court will find any possible way to rule for the party claiming rights to foreclose.

The converse is equally true — after step by step takedown of the evidence of the claimant — no judge will knowingly allow a claimant to force the sale of a home where the proceeds are more likely than not going to be used for profit rather than paying down the debt.

Most losing attempts are based upon the premise that there is a way to block the remedy. Most winning defenses are based upon the premise that there is no remedy because there is no claim and there is no claimant.

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So if good faith and knowledge are off the table that leaves payment of value. As a practical matter payment of value would be translated as purchase of the debt, rather than simply purchase of the note. In today’s context there is an actual question about that but for now just consider the purchase of the note to be the purchase of the debt IF the seller of the note owned the debt.
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That is where the analysis gets dicey. In most cases, but not all, the purchase of the note was not actually a purchase of the debt because the seller may have had ownership of the note but had not paid value or otherwise possess ownership of the debt.
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You can ONLY acquire the debt by payment of money to the owner of the debt (or an agent authorized to accept payment on behalf of the owner of the debt). The job of defense counsel  is to show that the opposition refuses to disclose the identity of the creditor (owner of the debt) thus blocking the defense and the court from confirming that the authorization is real. That refusal should either be taken as an admission against interest or it should be the basis for a motion in limine (or trial objection) to bar the claimant’s proffer of evidence of authority at trial.
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The UCC governs how these paper instruments and their enforcement are governed. In all events the mere delivery of the original note is sufficient under most circumstances to raise the legal presumption that the delivery was intended to convey ownership of the note and the rights to enforce it. Exceptions exist but there is case law that even a thief could sue to enforce the note, although  with any defense the thief would lose at trial. Their possession of the note would be sufficient to establish standing to sue, but not, as some courts have done, establish standing at trial.
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Thus almost anything gives a party claiming possession of the note, the right to sue to enforce the note. That doesn’t mean they have the right to enforce the mortgage because in order to do that they must show that they paid value for the debt, that they paid it to the owner of the debt and that the debt was transferred to them.
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It also doesn’t mean that they will win at trial because possession is insufficient to establish a prima facie case. They must show the right to enforce and that is where the mythical securitization claims get in the way of truth. The right to enforce means by definition that someone who owns the debt has authorized one or more intermediaries to enforce the note on behalf of the owner of the debt,  and the authorization allows the intermediary to sue in its own name, leaving the question of how to divide the proceeds up to the real parties after the litigation is over.
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The problem has been that the courts are presuming that such an owner of the debt exists rather than asking for disclosure as part of the prima facie case. So what foreclosure defense lawyers are all complaining about is that they are stuck with an undisclosed creditor suing through intermediaries who claim they are authorized but whose authority cannot be challenged or tested.
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Without that, neither the court nor the borrower has any way of knowing that if the suit is successful the proceeds will actually go towards paying down the debt. In fact, the reverse is true. Another party could emerge afterwards and claim that he had no knowledge of the previous parties claiming authority, and that those parties had no authority and that they didn’t have the real original note. Such a party could also get a judgment against the maker of the note unless the borrower could show some sort of apparent authority of the thieves who first sued him.
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So since the debt must be owned and in most instances, but not all, the payment of value for the debt and the delivery of the promissory notes makes the buyer a holder in due course, the shorthand way of referring to that is saying that the enforcer of the mortgage or deed of trust must be a holder in due course, even if that is not completely and always accurate. A holder in due course, by law, takes the note free from borrower’s defenses except where outright fraud is involved and can be proven.
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So references to the effect that in order to enforce the note you must be a holder in due course are wrong. You can enforce a note without being the holder in due course.
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And while there are presumptions that enforcement of the note is the same as enforcement of the debt, that is ONLY true if the enforcer owns the debt — i.e., has paid value. It is the legal presumption to the contrary that trips up defense lawyers.
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And references to the effect that only a holder in due course can enforce the mortgage are mostly true; it remains possible for someone to pay value for a note without becoming a holder in due course because the note was already declared in default, because they were not acting in good faith ro because they had knowledge of the borrower’s defenses. So not being a holder in due course is not a total bar to enforcement of the mortgage or deed of trust.
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The wrong turn on the road to justice and truth, was where the courts decided that standing to sue was the same thing as standing in a prima facie case and then the other turn, where they treated the holder of a note under the same rules as a holder in due course. This resulted in discounting or completely ignoring the borrower’s defenses and the judicial recitation echoed across the country that the loan was made, the borrower stopped payment, the rest is bullshit.
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Foreclosure defense attorneys all understand that the deck is stacked against them. Yet they still win cases because they cast considerable doubt by undermining the assumption that the case is brought by an injured party (owner of the debt) who will suffer further financial injury of the property is not sold, and whose collection of the proceeds of sale will go to pay down the debt. They are successful when they reveal the gaps in the prima facie case through discovery and cross examination and properly placed timely objections at trial.
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As a summary of my premise that has been expounded upon throughout this blog for 12 years, here is the reason why foreclosure defense works if properly applied.
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The actual creditors (owners of the debt) change over time. In securitization it starts with the investment banker.
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The sale of certificates is not a sale of any right, title or interest to the debt, note or mortgage, all of which is retained by the investment bank. It is in the sale of “contracts” to subsequent investors who are betting one or or another on the success of the certificates that the rights of ownership of the debt have been sold.
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So by the time foreclosure comes up, the entire chain is missing the actual creditors. Neither the certificate holders nor the owners of contracts have any rights to enforce the note or mortgage.
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So the investment bank controls the paper but cannot enforce the mortgage because it has sold the debt and the investors cannot  enforce the mortgage because they have waived the right, title and interest to enforce the note or mortgage.
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Hence in the many successful foreclosures the proceeds are retained by the investment bank legally in accordance with their contracts, and booked as trading profit rather than as payment on a receivable they hold on their books as reported to the public and regulatory authorities. That is because they do not hold the receivable on their books of account.
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This is not an indictment of securitization. It is a description of how claims of securitization were false. Borrowers have no role in creating this mess.

Common Sense Prevails: SCOTUS Broadens Primary Liability for Fraudulent Schemes

For quite some time, the courts have struggled with the concept of primary liability for a lying liar and secondary liability for a liar who passes on the lie knowing that it was a lie. Scotus, in the Lorenzo decision has now said that is a distinction without a difference.

It is not a secondary issue of aiding and abetting, it is a primary issue where the agent, employee, officer or representative of the liar is equally liable for the dissemination of a lie if they know it is a lie.

BUT you still need to prove intent to lie along with the other elements of fraud. A lie is not actionable if the recipient knew it was untrue or should have known or did not rely upon it. If the lie is not material then it is presumed to belie upon which nobody relied.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
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Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see https://www.morganlewis.com/pubs/supreme-court-adopts-broad-interpretation-of-primary-liability-in-sec-antifraud-case

See Lorenzo v. Securities and Exchange Commission

The interesting part of this decision is that it is parallel to false securitization claims where various lawyers, servicers and others say things that are lies to mislead the recipient of such information into thinking that the trust has assets that everyone who knows, knows that the trust doesn’t have those assets (i.e., loans).

Justice Breyer writes:

Petitioner Francis Lorenzo, while the director of investment banking at an SEC-registered brokerage firm, sent two e-mails to prospective investors. The content of those e-mails, which Lorenzo’s boss supplied, described a potential investment in a company with “confirmed assets” of $10 million. In fact, Lorenzo knew that the company had recently disclosed that its total assets were worth less than $400,000.

Some quotes from an article (see link above) on this highly important decision:

In a decision beneficial to the US Securities and Exchange Commission, the US Supreme Court has affirmed that those persons who disseminate statements containing material misrepresentations or omissions are primarily liable for such misstatements even if they did not directly make them.Private securities litigants will likely rely on Lorenzo v. SEC to assert claims against secondary actors—including bankers, lawyers, and accountants—who disseminate statements made by others that they allegedly know are materially misleading, and the Commission is now clear to charge such persons as primary violators without demonstrating that the person who actually made the statement also violated federal securities laws.
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the Court endorsed the SEC’s approach to scheme liability against those who distribute materially misleading statements with scienter, regardless of whether they are actually the maker of the statements. By holding that a nonmaker can still violate Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, it is expected that private securities litigants will rely on Lorenzo to assert claims against secondary actors who, with scienter, disseminate alleged misstatements made by others. Lorenzo may also further embolden the Commission to allege primary violations against “gatekeepers” and others who did not make the alleged misstatements, but are nonetheless alleged to have been involved in their dissemination.
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At the request of his supervisor, Lorenzo, an investment banker, sent two emails that he did not draft to prospective investors. Lorenzo’s supervisor provided the content of the two emails, which Lorenzo merely copy and pasted into his own emails. Lorenzo then transmitted the emails and included his signature block with a note that he could be contacted with any questions, but also stated in each email that he had sent it at the request of his supervisor. Although Lorenzo did not draft the content of the emails, the Commission found he acted with intent to defraud because he knew some of the content was false or misleading when he sent them.
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Before Lorenzo, the Janus and Central Bank decisions seemed to impose strict limits on claims brought by private plaintiffs. The Supreme Court’s new decision affirms that those who disseminate misstatements can commit a primary violation of Rule 10b-5, rather than just a secondary aiding and abetting violation, for which there is no private right of action. Accordingly, Lorenzo may curtail the effect of Janus and Central Bank, and could be interpreted to mean that a secondary actor (e.g., banker, lawyer, accountant) may, under similar facts, be held primarily liable under a scheme liability theory.[19]
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It will therefore be left to lower courts to determine how far Lorenzo—which on its face appears to limit primary liability to “those who disseminate false statements with intent to defraud”—will stretch primary liability in private actions, if at all. Indeed, plaintiffs will still be required to plead with particularity that the “nonmaker” had such an intent.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

Why Regulation is Failing the Mortgage Market

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

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

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

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

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

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

Warehousing Lending Liquidity Crisis Federal Reserve Board

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

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

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

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

 

A Replay of 2008 in the Works

Amongst the constant placement of article promoted and paid for by the banks that celebrate our supposed recovery from the mortgage meltdown is a new spate of articles that say otherwise. Rather than recovering we have merely papered over the problem allowing the banks to do it again. And worse, I would add, is the continuation of a general policy and perception that foreclosures are the way out of the mess created by the banks.

See LOVE AFFAIR WITH REPACKAGED DEBT

I know this stuff is dense and filled with financial concepts that can only be understood by those of us who have direct knowledge, experience, training and certification in securities and securitization of debt, but the lay articles at least give you a sense of what is truly happening. The above linked article by an investment banker, warning of the continuing moral and financial hazards, states it plainly.

A decade ago, the high-yield investment du jour pushed by Wall Street was mortgage-backed securities — home mortgages that had been packaged up and sold as “safe” investments all over the world. Nowadays bankers and traders are pushing another form of supposedly “safe” investment, the “collateralized loan obligation,” or C.L.O.

C.L.O.s are nothing more than a package of risky corporate loans made to companies with less than stellar credit. The big Wall Street banks make these loans to their corporate clients and then seek to move them off their balance sheets as quickly as possible, in the same way that a decade ago they packaged up and offloaded risky mortgage securities.

What is missing from all analyses of “repackaging” or “securitization” is that the failure of government to regulate this practice opens the door to extreme moral hazards enabling the banks to create financial weapons of mass destruction.

One backdoor risk is exacerbated by a tactic of some all-too-clever hedge fund managers. They buy a little of the debt of risky companies at a discount, and then buy a much larger amount of insurance on that debt — so-called “credit default swaps” — to theoretically hedge their risk. These wiseguys then do everything they can to force the company into a bankruptcy filing, which contractually triggers the insurance payoff on the debt. Since the insurance payment exceeds by far the overall cost of the discounted debt, the hedge fund profits handsomely.

The problem, of course, is that the bankruptcy filing can send the company and its creditors, including investors in C.L.O.s, into a downward spiral, hurting everyone but the architect of the scheme [e.s.]That’s what happened to Windstream, an Arkansas-based telecom company that was sent into bankruptcy protection in February. These “empty creditors,” as Henry Hu, a professor of law at the University of Texas has dubbed them, are rewarded for pushing companies into an otherwise unnecessary bankruptcy. That’s not the way the markets are supposed to work.

Sound familiar? It’s still happening with residential loans. The legal and policy question is whether it is good for the economy or good for society to have people profit off of a bad loan — especially when the the loan was intentionally made bad so it would fail? The architects of the scheme are the major investment banks. They never lose because they never actually take a risk. They know the loans will fail and manage to get investors to sell them credit default swaps and other disguised sale products so that the investors lose, but not the bank. Then the investors pass on the debt (risk of loss) to still more investors who are buying “minibonds” (coined by Lehman Brothers).

The end result is that the “borrower” is just a pawn. Instead of a traditional loan model, we have something far more sinister: the product sold by borrowers is their signature and from that signature the bank and hedge fund players make $10-$20 for each dollar that is described as a loan. The actual debt is disbursed to dozens if not hundreds of investors who have no direct right, title or interest to enforce the debt, note or mortgage.

And yet the debt, note and mortgage is allowed to be enforced by courts who don’t care about anything except that the loan once existed and even if it no longer exists the courts want to see it enforced.

Adding insult to injury, remote vehicles commissioned by the conduit players get still more “profit” by selling property that was foreclosed in the name of an entity that either doesn’t exist or has no interest in the debt, note  or mortgage and is so thinly capitalized that it cannot answer to even awards of costs and fees for unsuccessful attempts to enforce fabricated documents. The proceeds of sale go not to any named claimant but to a party claiming the proceeds as “recovery” of advances that were never funded by the “Master Servicer.”

This is insane. It has always been insane. I’m a capitalist, a former investment banker, commercial banker, and attorney who represented financial institutions. Generically speaking securitization is the bedrock of capitalism. But like a car driven into a crowd of people it can become a vehicle of terror.

As it is currently practiced, securitization of debt is constantly undermining our financial system and our society because it is not balanced by any assumption of risk.

The problem is laziness and billions of dollars in “donations” or “contributions” from the bank that enabled the banks to thwart reasonable regulation of mortgage backed securities to make sure they are at least backed by mortgages in a meaningful way and to make sure they are regulated securities. As it stands, MBS are not backed by the assets referenced in the offering documents. That means they are not MBS. And that means the exemption for MBS contracts does not apply and they should be regulated as securities.

And one more thing. The banks are going to hate this. The issuance of notes and mortgages by homeowners or corporate borrowers is not a traditional loan contract. It is an essential part of a securitization scheme. Without it, the scheme can’t exist. So notes and mortgages should be treated as securities. The definition of a security requires this categorization. The purchase of the debt, note or mortgage is no longer a purchase of a loan receivable. It is a passive vehicle for passive income generated by trading.

 

Unworthy Trusts

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

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

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


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

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

Gary Dubin: Proposed Mortgage Integrity Act (MIA):

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

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

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

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

——————————-
By Gary Dubin

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

13. Deficiency judgments are hereby abolished.

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

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

Part Three, covering transitional matters, as follows:

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

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

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

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

Caliber and LSF9 Trust Example of Smoke and Mirrors

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

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

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Bill Paatalo wrote the following in September 2018:

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

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

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

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

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

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

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

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

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

Back to LSF9:

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

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

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

Consider the following hypothetical extreme example which translates the affidavit:

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

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

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