HELOC Securitization Analysis — Why Are There Two “wet ink” Signatures? What Rights Does MERS Possess?

“a transfer of the mortgage without the debt is a nullity, and no interest is acquired by it”

“because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose.”

The writer of this article shall remain anonymous. He sent me the following. I concur with his analysis:

I came across your June 17th post about the mortgage exec that double-pledged some notes.  This is a subject I’ve been looking into for a while, thanks to Nye Lavalle’s writings – damn him for sending me down that rabbit-hole.  You might also look at:

https://www.justice.gov/usao-sdny/pr/former-comptroller-mortgage-lender-charged-bank-fraud-and-wire-fraud and the incitement at https://www.justice.gov/usao-sdny/press-release/file/1017921/download

As I came to realize that this isn’t a one-off scam…  I got to thinking about why do all closings require two wet-ink originals?  Not only for “sum certain” mortgages but for HELOC’s too.  So, I darned my tinfoil hat and let my mind wander into the conspiracy abyss.  I’ve always been uncomfortable with the double-document signing at closings.

As I carefully nit-pick through my own documents, I can’t help noticing that, often is the case that the County recording uses one set of the wet-inks, while the bank uses the other.  Is this just a matter of convenience, whereby the closing title/abstract company sends one set to the county clerk and the other to the lender, for its MERS recording.  Of course, the counties don’t record notes, only mortgages, so that’s a bit of a chink in the armor there.

Then I realized that the Clerk set isn’t indorsed because that process comes later (albeit not much later, actually depending on the county’s back-log it could be sooner than later) – OK, no big deal – BUT WAIT – it’s not like they wait to get the recorded set back and then indorse it – no – they just indorse the other set.  So, the secondary-market set is not the recorded set.  Hmmm, Ok, a bit nefarious, but is it a non-starter for foreclosure –  probably not.

But then I realized that my HELOC had the same slipperiness.  In HELOC foreclosures (at least mine with Citibank), the bank presents the endorsed HELOC (HELOC-CEMA because it’s NY) as its prima facie evidence for standing, swearing that it’s the “indorsed note”; while sometimes also swearing that it’s not securitized it never left the bank’s hands (holding), which in-and-of itself is curious, because if it never transferred, then why is it indorsed?

TIME OUT:  No Neil, I didn’t make a spelling mistake (indorsed vs endorsed), but I am messing with you, because so are the banks.  Of course, you know (but your readers probably don’t, and many judges probably miss the subtlety too).  “Endorse” means accredit by bestowing recognition; whereas “Indorse” means to sign a negotiable instrument for transfer as per the UCC.  Sadly, many dictionaries, especially software and web-based lexicons make these two words synonymous, which they are not.  Some lexicons don’t sanction“indorse” as a correct spelling, which it is, but as a different word, not just an alternate British/American spelling choice.

OK, back to the bank’s slip & slide of portending that they are presenting an indorsed note.  Nope, a revolving line of credit agreement (HELOC or Reverse mortgage) is not a note.  It’s not a “sum certain” so it can’t be a note, because a “note” is a negotiable instrument (as per article 3 — but even article 9 provides the same definition albet enables transfer by assignment because it may not be indorsed, hence non-negotiable).

This lack of “sum certainty” restricting “note” status was adjudicated in NY Appellate 2nd Dept. in 2018 (i.e. it’s not a note)

But it’s rarely cited – probably best, since most lawyers would mess-up the citing and blow it for those of us who know how to use it – i.e. hand judges opportunities to make bad precedential decisions.

An observing-eye reminds us that a note is a one-sided promise, whereas an agreement is a two-sided contract (signed and countersigned – regardless of adhesion); thus, not really assignable, carte blanche, it requires a blessing by both parties but that step never transpires – imagine that…

Anywho: This is just the jumping-off point, the next part is the fun stuff.

So, the bank provides affidavits and exhibitions swearing (a/k/a perjuring) up-and-down that the indorsed note is right there in front of the judge.  Sure, it may look like a HELOC agreement, but the plaintiff’s attorney assures the judge, it’s a note – pointing to the prima facie doc – look right there, there’s the indorsement, so it must be a note – Right?  WRONG!  i.e. your long-standing argument about “presumption”.

Well, first of all, we (you and I) believe that the HELOC was securitized, so they don’t, or shouldn’t really, have a copy of the document anyway.  But we haven’t really dug much deeper, because we believe it’s impossible to get anywhere  with the dastardly banks in discovery.  So, I did some digging…. albeit without the help of formal discovery.

HELOCs (revolving lines of credit) can’t be securitized, because securitizations require fixed assets for valuations, and a revolving line of credit isn’t a fixed asset, it can’t be valued “sum certain” from its “four corners.”  But wait, that’s ridiculous, because we all know that HELOCS, Reverse mortgages, Credit Cards, etc. ARE securitized; perhaps not as RMBSs but rather as ABSs or other permutations.  So, what the hell am I talking about, saying they can’t, it’s impossible, bla bla bla…

You guessed it, there’s a work-around; and it’s documented.  The bank (the originator) transfers the HELOCs to a flimflam trust.  To do this they “endorse” the Agreement in-blank, which looks exactly like an “indorsement-in-blank” but the endorsement is an accreditation, not a negotiation.  Now the trustee (a/k/a “the Issuer”) does his sorting and stacking of the pool and – and this is the magic part – then, he (or she) makes notes against the HELOCs.  Yes, of course, it’s a legal fiction, and they have a name for it,  – “HELOC-backed notes” and it is those notes (the HELOC-backed notes) that are securitized.

The originator (who is often the servicer) retains the HELOC agreement & mortgage (a/k/a “lien”) since it is supposedly the “PETE”, but is it?  Is it really?  Does it matter?  Well, not until the servicer has the enviable task of foreclosure of a HELOC that has been pledged elsewhere, likely to an ABS that’s vaporized into the secondary market either-zone.  Hence, the foreclosing bank has nowhere to send the proceeds from the foreclosure – oh well – that’s a shame.

There’s more, but I sense you’re getting bored.  HELOC-backed notes – interesting.  Think about the Article 9 maxim “the mortgage follows the note;” A maxim laid down over a-hundred years ago by Justice Noah Swayne (Appointed to SCOTUS by Abraham Lincoln – a republican – LOL)

“The note and mortgage are inseparable; the former as essential, the latter as an incident.  An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”  Carpenter v. Longan (USA 1872)

Words that still carry-the-day in such recent stare decisis cases as Bank of NY v. Silverberg (NY 2nd Dept. 2011).

Ironically, this HELOC-backed note means that the note follows the mortgage(a/k/a HELOC Agreement, with a mortgage nested inside it).

“The issue presented on this appeal is whether a party has standing to commence a foreclosure action when that party’s assignor — in this case, Mortgage Electronic Registration Systems, Inc. (hereinafter MERS) — was listed in the underlying mortgage instruments as a nominee and mortgagee for the purpose of recording, but was never the actual holder or assignee of the underlying notes. We answer this question in the negative.

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 275 (N.Y. App. Div. 2011)”

because MERS was never the lawful holder or assignee of the notes described and identified in the consolidation agreement, the corrected assignment of mortgage is a nullity, and MERS was without authority to assign the power to foreclose to the plaintiff. Consequently, the plaintiff failed to show that it had standing to foreclose.

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 283 (N.Y. App. Div. 2011)

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 280 (N.Y. App. Div. 2011) (“ “a transfer of the mortgage without the debt is a nullity, and no interest is acquired by it” ( Merritt v Bartholick36 NY 44, 45 [1867]; see Carpenter v Longan83 US 271, 274 [an assignment of the mortgage without the note is a nullity]; US Bank N.A. v Madero80 AD3d 751, 752US Bank, N.A. v Collymore68 AD3d at 754Kluge v Fugazy145 AD2d 537, 538 [plaintiff, the assignee of a mortgage without the underlying note, could not bring a foreclosure action]; Flyer v Sullivan284 App Div 697, 698 [mortgagee’s assignment of the mortgage lien, without assignment of the debt, is a nullity]; Beak v Walts266 App Div 900). A “mortgage is merely security for a debt or other obligation and cannot exist independently of the debt or obligation” ( FGB Realty Advisors v Parisi265 AD2d 297, 298). Consequently, the foreclosure of a mortgage cannot be pursued by one who has no demonstrated right to the debt ( id.; see 1 Bergman on New York Mortgage Foreclosures § 12.05 [1] [a] [1991]).”)

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 281-82 (N.Y. App. Div. 2011) (“as “nominee,” MERS’s authority was limited to only those powers which were specifically conferred to it and authorized by the lender ( see Black’s Law Dictionary 1076 [8th ed 2004] [defining a nominee as “(a) person designated to act in place of another, (usually) in a very limited way”]). Hence, although the consolidation agreement gave MERS the right to assign the mortgages themselves, it did not specifically give MERS the right to assign the underlying notes, and the assignment of the notes was thus beyond MERS’s authority as nominee or agent of the lendersee Aurora Loan Servs., LLC v Weisblum85 AD3d 95, 108 [2d Dept 2011]; HSBC Bank USA v Squitieri29 Misc 3d 1225[A], 2010 NY Slip Op 52000[U]; LNV Corp. v Madison Real Estate, LLC2010 NY Slip Op 33376[U]; LPP Mtge. Ltd. v Sabine Props., LLC2010 NY Slip Op 32367[U]; Bank of N.Y. v Mulligan, 28 Misc 3d 1226[A], 2010 NY Slip Op 51509[U]; OneWest Bank, F.S.B. v Drayton29 Misc 3d 1021Bank of N.Y. v Alderazi28 Misc 3d 376, 379-380 [the “party who claims to be the agent of another bears the burden of proving the agency relationship by a preponderance of the evidence”]; HSBC Bank USA, NA. v Yeasmin27 Misc 3d 1227[A], 2010 NY Slip Op 50927[U]; HSBC Bank USA, N.A. v Vasquez24 Misc 3d 1239[A], 2009 NY Slip Op 51814[U]; Bank of NY. v Trezza14 Misc 3d 1201[A], 2006 NY Slip Op 52367[U]; LaSalle Bank Nat’l. Assn. v Lamy12 Misc 3d 1191[A], 2006 NY Slip Op 51534[U]; In re Agard, 444 BR 231; but see US Bank N.A. u Flynn, 27 Misc 3d 802).”)

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 278 (N.Y. App. Div. 2011) (“”Mortgage lenders and other entities, known as MERS members, subscribe to the MERS system and pay annual fees for the electronic processing and tracking of ownership and transfers of mortgages. Members contractually agree to appoint MERS to act as their common agent on all mortgages they register in the MERS system” ( Matter of MERSCORP, Inc. v Romaine8 NY3d at 96 [footnotes omitted]).”)

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 278-79 (N.Y. App. Div. 2011) (“This leaves borrowers and the local county or municipal recording offices unaware of the identity of the true owner of the note, and extinguishes a source of revenue to the localities. According to MERS, any loan registered in its system is “inoculated against future assignments because MERS remains the mortgagee no matter how many times servicing is traded.” Moreover, MERS does not lend money, does not receive payments on promissory notes, and does not service loans by collecting loan payments.”)

Bank of N.Y. v. Silverberg, 86 A.D.3d 274, 279-80 (N.Y. App. Div. 2011) (“Where, as here, the issue of standing is raised by a defendant, a plaintiff must prove its standing in order to be entitled to relief ( see U.S. Bank, N.A. v Collymore68 AD3d 752, 753Wells Fargo Bank Minn., N.A. v Mastropaolo42 AD3d at 242). In a mortgage foreclosure action, a plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced ( seeU.S. Bank, NA. v Collymore68 AD3d at 753Countrywide Home Loans, Inc. v Gress68 AD3d 709, 709Wells Fargo Bank, N.A. v Marchione69 AD3d 204, 207-208Mortgage Elec. Registration Sys., Inc. v Coakley41 AD3d 674, 674Federal Nat’l. Mtge. Assn. v Youkelsone303 AD2d 546, 546-547First Trust Nat’l. Assn. v Meisels, 234 AD2d 414).”)

Why Reformation Makes Sense as a Response to Illegal Claims of Servicing, Collection or Enforcement of Homeowner Mortgage Obligations

In the world of pretend REMICs, there can be no debate that investors who buy “certificates” are unsecured creditors of the investment banks and that investment banks are not legally creditors of homeowners. So why are we allowing investment banks to administer, collect and enforce homeowner obligations?

This has been my point from the beginning in 2006 when I started writing and appearing on TV and Radio. The “Securitization” never happened. Investors became unsecured creditors of the investment bank (IB) not secured creditors of homeowners. In turn the investment bank also wanted to avoid accountability and liability as lender so the IB never accepted any legal document saying that it had paid for and it owned the underlying homeowner obligation.

But for purposes of enforcement through foreclosure the IB designates a non-creditor to initiate foreclosure proceedings. There is no basis in law for this behavior and it is both illegal and inequitable for this conduct to be allowed.

  • The claim that  the action is brought on behalf of  or for the benefit of investors who own certificates is false.
  • The implied assertion that whatever deficiencies exist in the presentation of parties and documents in foreclosures, the granting of a foreclosure will result in payment to a creditor who would otherwise have suffered a loss is also false.
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That leaves nobody to own the debt. Under current law, absent a contract that says otherwise, nobody can administer, collect or enforce a debt without owning it or representing someone who owns it. Since nobody owns it nobody satisfied that condition precedent as set forth in Article 9 §203 UCC.
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In the absence of a creditor the obligation can only be enforced by a designee or nominee that is accepted by the debtor.
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It will take a court decision to decree that since there is no alternative remedy at law, the homeowner is consenting to the designation of a party to enforce who then becomes the lender for purposes of accountability or liability under lending and servicing laws.

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There is no contract that says otherwise  unless and until a court declares it under the rules of reformation, quasi contract and quantum meruit.
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So in all homeowner transactions arising within the scope of claimed securitization, homeowners lost their access to any party who claimed to be a lender or creditor except the originator who was not lending any money and who was in most cases thinly capitalized such that penalties for lending and servicing violations would simply result in bankruptcy and no relief to homeowners. 

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And in the underwriting process, despite the obvious and expressly stated requirements of law no lender was left who had any stake or risk of loss in ensuring the validity of the appraisal or the viability of the loan.
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They might call it a loan transaction, but it wasn’t. It was deceitful process for obtaining the homeowner’s participation in a highly profitable securitization scheme. A scheme where the profits were neither disclosed as to existence or amount and that withheld consideration from the homeowner for his/her participation.
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As such the apparent “loan agreement” was simply a cover and a vehicle for concealment of the true nature of the transaction with the homeowner.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
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Regulatory Capture and Monopoly of Residential Lending by Wall Street

It is simply not true and has not been true for 20 years that lending is subject to free market forces or that lenders are subject to regulation. 

all of this has resulted from extraordinary illegal Market Control which has resulted in the complete inability of small financial institutions to compete with lending practices sponsored by investment banks on Wall Street.

As a result consumers are negatively affected. Contrary to the requirements of law they do not have the right to choose the party with whom they are dealing, they do not have the protections of the truth in Lending Act, and they are lured into a dangerous transaction in which the counterparties have an incentive merely to bring a transaction into existence and label it as a loan.

When it comes to regulation, it is the legislature that deems who is worthy of regulating and on what terms. The legislature then enacts into law those terms and creates the agency or enforcement mechanism.
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Regulatory Capture occurs when persons and companies whom the legislature has deemed worthy of regulating have control over the agency or enforcement mechanisms. This happens all the time when the regulators are persons formerly, currently or intended to be employed by the companies that they are supposed to regulate.
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I am sure, now that it has been pointed out, that there has been in a concerted strategy of regulatory capture that has negatively impacted the legal profession and therefore chilled access to the courts and to counsel. This has enabled a monopoly that has so constrained free market forces as to make them virtually irrelevant. It is simply not true and has not been true for 20 years that lending is subject to free market forces or that lenders are subject to regulation.
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Even the most uninformed lay person knows by now that the Wall Street banks screwed the market and the marketplace. True, they don’t understand how it was done. But they know it happened, which is why I have counseled persons running for public office to run against the banks, because right now, almost everyone hates the Wall Street securities firms that call themselves “investment banks.”  But very little is being done to counter their illegal impact on free markets, consumer rights, and the hallmark of any capitalist economic system — competition.
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This has shown up in regulation and discipline of lawyers. Lawyers who advance false claims in court go with both impunity and immunity. Lawyers who defend homeowners from those false claims almost always find themselves the target some investigation, complaint discipline, sanctions or judgements from Bar associations, the FTC or the attorney general of some state.
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The result is entirely predictable. Most trial lawyers won’t take on cases involving foreclosure defense because they fear for their livelihood. Consumers are the ones who suffer the most because they can’t find a lawyer to take their case. So they try to appear pro se and they lose because only lawyers know how to navigate the judicial system. It’s a perfect storm for the Wall Street firms.
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I am also sure that all of this has resulted from extraordinary illegal Market Control which has resulted in the complete inability of small financial institutions to compete with lending practices sponsored by investment banks on Wall Street.
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Homeowner transactions sponsored by Wall Street do not rely upon profits from the transactions with homeowners. They rely entirely upon profits from false claims arising out of securitization Cycles. so it is literally possible and often happens that the marketing and other expenses associated with generating transactions with homeowners are much higher than any cash flow that could be considered Revenue. This makes it possible to offer incentives and lower interest rates for the sole purpose of initiating another securitization cycle, which is the source of all actual profit.
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As a result consumers are negatively affected. Contrary to the requirements of law they do not have the right to choose the party with whom they are dealing, they do not have the protections of the truth in Lending Act, and they are lured into a dangerous transaction in which the counterparties have an incentive merely to bring a transaction into existence and label it as a loan.
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Those counterparties also have an incentive to see the transactions fail, since they have knowingly created obligations based upon false appraisals and false assessments of viability. In doing that they have guaranteed themselves additional profit simply by insuring the certificates that are indexed on the performance of the homeowner transactions. And they further profit from false claims leading to forced sale of property for profit rather than restitution for an unpaid obligation.
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Thus this monopolistic control causes homeowners to enter into transactions that they think are loans but instead are investments into securitization schemes. The terms and incentives for conduct are far different than the reasonable expectation of any reasonable consumer borrower. 
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The other class negatively impacted by this strong arm behavior is the U.S. class of approximately 7,000 community banks, credit unions and savings and loan associations that would otherwise be able to compete for loan business but can’t because they are presented with a bad choice: either they serve merely as sham conduits to feed securitization or their loan business virtually fails. In turn this negatively impacts their ability to cross market for depository business and other bank services. 
My point is that just like 100 + years ago when the big trusts were considered impregnable, they were brought down with a thud by claims that they had ruined the free markets with both economic control and asymmetry of information. Regulatory capture was of course a perk that enabled them to write and make laws that made their ruinous behavior totally legal — until the courts and Congress said it wasn’t legal.

Plaintiffs present this evidence as a prototypical example of “regulatory capture,” a term coined by public choice economists to indicate when members of a regulated occupation also dominate the regulatory and law-making process in their field. Professor Todd Zywicki of George Mason University School of Law, a leading scholar in law and economics, testified that the limitations on funeral home ownership in Maryland are consistent with the principles of regulatory capture. He stated that in his opinion the Morticians Act appears to be:

an effort to create governmentally imposed barriers to entry in the funeral home industry and thereby to transfer wealth to a discrete, well-organized interest group at the expense of consumers of funeral home services and the public at large. The result of this regulation is reduced competition in the provision of funeral home services and higher prices and reduced choice in funeral home products and services for consumers.

Brown v. Hovatter, 516 F. Supp. 2d 547, 553 (D. Md. 2007)

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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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How to Use the Real Deal On Securitization to Homeowner’s Advantage

Like citizenship in this country litigation is not easy. We keep banging our heads against the same wall expecting a different result. We need a strategy that directly addresses the inescapable realities of every homeowner transaction and every securitization cycle.

My substantive analysis of the transaction is that the homeowner was drafted into a securitization scheme which in my opinion clearly triggers quasi contract and quantum meruit — the only possibility for inquiring into the adequacy of consideration. Lawyers and litigants have shied away from this because of its complexity and because they don’t know how to approach it.
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In simple terms the homeowner transaction was a “”Qualified Financial Contract” (QFC), part of which contained some apparent attributes of a loan, but which went much further and diverged extensively from a “loan” as the term is currently used in custom and practice in the financial industry and society in general.
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The QFC is not some invented term for this article. it is defined in all securitization documents. Investment banks knew they were not creating a loan. The job of litigants and their attorneys is to point out and argue that the documents submitted as a foundation for their claim of legal standing contains language that opens the door to quasi contract and quantum meruit. 
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In logistical terms, the homeowner delivered the only service the investment bank was seeking, to wit: issuance of the note and mortgage. Neither the investment bank nor the originator designee of the investment bank was at all interested in making a loan, collecting revenue from repayment nor assuming any meaningful risk of loss.
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Although the homeowner entered the transaction desiring a loan he/she didn’t receive a loan. If there is no legally responsible lender or creditor at the conclusion of that transaction, it isn’t a loan.
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And since too many bona fide third party transactions have occurred to rescind or unwind the transaction the only possibility remaining is to have a court reframe the agreement to include the basis upon which the investment bank entered into the transaction — i.e., the creation, issuance, selling, trading and hedging of unregulated securities.
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We know the investment bank had no intention of becoming a lender and that there was no intention to make investors lenders.
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And we know that the investment banks funded the origination or acquisition of the loan through originators and aggregators.
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Further we know that investors paid value for the certificates which excluded any right, title or interest in any debt, note or mortgage.
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The result, obviously intended, is that while parties were paying value, none of them ever received a conveyance of ownership of the debt, note or mortgage.
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And we can easily see that anyone who received such a conveyance (a) did not pay value and (b) was not acting as an authorized agent or representative of anyone who paid value in exchange for a conveyance of an ownership interest in the subject debt, note or mortgage.
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It was partly a scheme for avoidance or evasion of lending and securities laws.
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The reason for this is blatantly stated in all of the promotional material for sale of certificates, to wit: no liability for violation of lending or servicing laws using “bankruptcy remote” vehicles  for origination and acquisition of homeowner obligations.
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And scratch the surface and you discover that the only thing that makes the transactions bankruptcy remote is that the underlying obligation, note and mortgage are not included in the schedules of bankruptcy because they were never owned by the originator or aggregator.
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The problem for the last 20 years has been that nobody has been asking the obvious question: “if they don’t own the loan, then who does?” Or at least nobody has followed up on that question in which they truly persisted in aground war to get the answer.
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So any such conveyance was either a legal nullity (mortgage assignment) or did not carry the right to enforce (note). If the conveyance didn’t include the obligation there are very specific rules that apply.
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Authority to enforce the note can only come from one who is entitled to enforce. And the premier person who has the right to enforce is owner of the underlying debt that the note is supposed to memorialize. Under the laws of all jurisdictions nobody gets to own the obligation without paying value.
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This seems to be challenging not only for the courts but for defense lawyers. It is a very simple logical progression. In the end enforcement of the note is intended to pay the debt. If it doesn’t pay the debt the maker of the note is subject to multiple liabilities for the same transaction. And that is what happened. Since the originator did not substantively fund the homeowner transaction the issuing of the note and mortgage in favor of the originator was a legal nullity. The issuance of the note created a new liability that was not merged with the underlying obligation to repay the money, if any, that was received or paid on behalf of the homeowner.
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So the reason I mention all of this is that I have somewhat reluctantly but persistently arrived at the conclusion that the homeowner transaction was not a loan and yet the obligation to make payment survives even in quasi contract or quantum meruit.
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This is an unavoidable conclusion because we know that where money was funded to the homeowner or on his/her behalf and where the homeowner issued a promise to pay money, the obligation to pay arises and can be secured by a lien (mortgage or deed of trust) which in fact is enforceable.
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But note that since there is no lender or creditor at the conclusion of the securitization cycle, the intent of the homeowner is thwarted — i.e., he/she does not have a loan agreement. It is something else. And that is where quasi contract and  quantum meruit come into play.
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The homeowner could have bargained away reasonable compensation or consideration for his/her role in initiating the only documents that made securitization claims possible — i.e., the note and mortgage.
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Our legal system is not designed to correct stupid mistakes in bargaining or negotiation in transactions or agreements.
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Our system is designed to enforce the intent of the parties. So we can’t get away from the intent to create an obligation and the intent to have that obligation enforceable and memorialized by a note and mortgage. In fact, I propose we should embrace it.
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The reason is that the intent to create the enforceable homeowner obligation was not the only intent operating. Since the securitizations cheme — and the homeowner’s vital role in it — was not disclosed (actually actively concealed), the homeowner did not, could not and never did bargain away rights to compensation or consideration for his role and risks in this dangerous risky transaction.
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Thus we enter the realm of quasi contract and quantum meruit. 
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So now the question is how much consideration  did the homeowner actually receive for issuance of the note and mortgage? Since it wasn’t a loan, even though that was what was intended by the homeowner, the receipt of money must be categorized as payment of consideration. And that is a lot of consideration by any standard.
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But now the issuance of the note and mortgage becomes a service rather than the result of an underlying obligation to repay.
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So the consideration of the receipt of benefit from the funding of the homeowner transaction is entirely offset by a promise to pay more than the consideration received in the form of money paid to the homeowner. That might still result in a court finding some consideration, since the money on the front end might not be found by a court to exactly equal the money promised on the back end.
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On the other hand there is good reason to find that the consideration for issuance of the documents required to start securitization claims, securities, selling trading and hedging was entirely negated by the concurrent promise to pay more than the money received. But assuming there was a finding of consideration, was it enough?
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In a court of equity wherein rescission is no longer an option the court must determine what a reasonable homeowner would have bargained for or received through the process of free market forces if disclosure had actually been made regarding the securitizations scheme and the vast profits and revenue generated under the scheme.
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The court would hear testimony from a variety of experts and reach a conclusion as to whether the homeowner had received enough consideration or if the homeowner should have received more as per the quasi contract and not just what was presented as a loan agreement.
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The range of possibilities is nearly infinite. From zero to a majority of the pot because the investment bank secretly tricked the homeowner into a dangerous transaction, the risks of which were unknown to the homeowner. Using the shadow banking marketplace (i.e., where all derivatives are traded for nominal value) as the external reference point for heuristic projection, it may be fairly assumed that the average revenue generated from each securitization cycle was $12 for each $1 transacted with homeowners. Additional securities analysis reveals that the figure could be much higher.
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In a free marketplace where there was no asymmetry of information the fair question could be posed as follows: from the investment bank’s perspective they would be saying that they are going to make $12 on each $1 during the securitization cycle, perhaps more.
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The homeowner and investor sitting at the same fictional but still legal table would inevitably concede that for inventing and managing such an ingenious scheme the investment bank might be entitled to the lion’s share of the profit.
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The investors would say their role as investors is critical to the existence and success of the securitization cycle. And since capital is valued more highly than labor they would claim a greater share than that awarded to homeowners. Homeowners would make the same argument as investors — without them there is no securitization and there are no revenues and there are no transactions claimed as “loans.”
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So looking at the customs and practices of the financial industry the investors would probably initially claim 40% as angels and the homeowners could justify a claim of around half that amount for their indispensable role.
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Or one could look at the money actually spent (commissions, bonuses etc) on getting homeowners to execute the required note and mortgage while concealing the truth about the transaction as a measure of what the homeowners should get. Or a license or royalty arrangement might be adopted.
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All of them in my opinion average around 15%-20% of the total revenue generated by the scheme. this would leave the investment bank with 40% or more of the securitization cycle revenue which is around 1000% of normal revenues for underwriting and sale of debt securities.
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So the court would offset the obligation with whatever it decided was reasonable consideration for the homeowner. It would either order payment to the homeowner of any excess consideration due or order the homeowner to pay the balance of the obligation after offset for the consideration due. And if the homeowner still owed money both the note and mortgage would be enforceable.
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But here is the rub. None of this is possible without creating a contract by decree in which it is possible to designate a party who is not a creditor to act as a creditor — in a transaction to which the homeowner agrees that for all purposes the designee will be a creditor. And that creditor is subject to lending and servicing laws. This is essential because under current law only the owner of the debt can enforce the mortgage and only someone representing the owner of the debt can enforce the note unless they are a holder of the note in due course — which means they purchased it for value in good faith and without knowledge of the  maker’s defenses. 
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So it becomes necessary to plead for this attribute to be made part of the newly minted agreement because without it, you don’t have an enforceable agreement  Without an enforceable agreement you’re left pleading for damages under RICO, wrongful foreclosure, etc. And while the note and mortgage might not be subject to enforcement, they still exist. No lender or buyer will complete a transaction with that hanging over the deal.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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Moratoriums Extended: That Doesn’t Mean You Won’t Be Out On the Street Or Living With Relatives

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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Discovery

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How to Stop the Court from Speculating About the Identity of Claimants in Foreclosure Cases

As long as you continually attack the sub silentio assumptions of the court, you will be weakening the case against you for foreclosure. Failure to do so means almost certain failure.

Foreclosure is considered a draconian remedy equivalent to capital punishment. All US jurisdictions have adopted as a matter of law and public policy (Article 9 §203 UCC) that the remedy will only be granted to one who paid value for the underlying obligation.

If you don’t challenge the sub silentio assumptions of the court, then the judge is free is assume that the granting of foreclosure is a remedy for restitution of unpaid debt and that he/she has granted it under the assumption that the owner of the debt is going to get the money when the property is sold to a third party.

THE FIRST MISTAKE YOU MAKE IS IN ASSUMING THAT THE OBLIGATION STILL EXISTS AND HAS NOT BEEN EXTINGUISHED IN THE PROCESS OF SECURITIZATION BY PAYMENT OUT OF HIGHLY PROFITABLE SECURITIZATION SCHEMES THAT WERE PART OF THE ISSUANCE OF THE MORTGAGE AND NOTE.

None of the court assumptions are true. But you can make them true by failure to challenge the assumptions and misleading arguments presented by the foreclosure mill. It is through no doing of the homeowner that the obligation has been retired without payment from the homeowner. And the homeowner has no legal or moral reason to pay it again. BOTTOM LINE: IF NOBODY HAS AN ASSET ON THEIR BOOKS SHOWING THEY PAID FOR THE DEBT, THEY HAVE NO RIGHT TO ENFORCE IT. THEY ARE JUST A WITNESS — NOT A PARTY.

This is a procedural problem. Technically speaking, a motion to dismiss has very strict rules — taking all allegations and exhibits of the complaint, does the complaint does state a potential cause of action upon which relief could be granted. Once you introduce something outside of the allegations of only the complaint you are in the realm of Motion for Judgment on the Pleadings, Motion for Summary Judgment etc.

 
Opposing counsel is attempting to mislead the court into speculating about the identity and nature of the claim, and the identity of the parties who are named as Plaintiff. The essence of the position of opposing counsel is a sub silentio argument: i.e., presume that somebody, somewhere is going to get the benefit of payment on a debt they own owed by the homeowner. The complaint and exhibits filed do not contain allegations of ultimate facts upon which relief could or should be granted. Such relief can only be granted if the court rejects basic jurisdictional and procedural requirements. Neither the Defendant nor the court has any basis for actually knowing the identity of the claimant(s) in this action. Relief cannot be granted to the world at large. 


The issue here is that opposing counsel now admitted certain things and their own complaint basically says the opposite of their current position in court. Inconsistent statements, some of which must logically and of necessity be false, are protected by litigation immunity behind which both opposing counsel and the participants in the instant lawsuit are hiding. But just because they cannot be held accountable for misleading the court doesn’t mean that they should be permitted to do it. 


Since the complaint is clearly filed, in its own words, on behalf of certificate holders, their current position that the bank is somehow the actual party is without foundation. The complaint lacks an allegation stating that the bank is the legal representative of certificate holders and further lacks any allegation that the bank is trustee for the certificate holders who are beneficiaries of a trust. Further the complaint fails to allege that the trust exists or was organized under the laws of any jurisdiction. 


They appear to be taking the position that the bank is a plaintiff, not on its own behalf but on behalf of some third party. If it is a trust, they have failed to identify the trust or any transaction in which the subject loan was entrusted to the trustee under the terms of a trust instrument which is also not alleged. 


Accordingly, based upon the argument of counsel, the complaint fails to state the cause of action that opposing counsel is currently pursuing. This court lacks jurisdiction to hear any matter in which the Plaintiff is not identified or in which the named Plaintiff is not alleged to have suffered some injury caused by the Defendant or someone through whom the Defendant claims an interest in the subject matter. 


As it stands the complaint must be dismissed because it lacks both basic requirements for authority of the court to hear any dispute, to wit:  The identity of the Plaintiffs is concealed, withheld or otherwise not alleged and the ultimate facts upon which relief could be granted as the basis of their claim is not alleged.

The current action is based upon the implied conveyance contained within unidentified certificates, the contents of which are neither described nor attached as exhibits. And the claim is alleged to be brought on behalf of undefined holders of those certificates, who are not alleged to have any interest in the subject obligation. On the contrary, opposing counsel continues to assert the position that the plaintiff is a bank acting as trustee for an implied trust. 


Opposing counsel is attempting to have it both ways and to distract the court from the obvious conflict presented in this case. Either the claim is brought on behalf of an actual or implied trust or it is brought on behalf of holders of certificates. In either case neither the “trust” nor the “certificates” or “holders” are identified. Defendant is forced to litigate with a ghost. This court is being guided into a final judgment that grants to relief to unknown legal persons based upon assumed injury that is never alleged. 


Defendant is entitled to know exactly who she is litigating against and why. that is basic pleading practice as required by the most basic constitutional standards, statutes and rules of civil procedure. As it stands, opposing counsel is promoting a case that has not been alleged. 


Defendant asserts that the case must be dismissed without prejudice or that judgment must be entered for the Defendants. The opposition filed by opposing counsel actually corroborates every basis for the motion to dismiss that was filed. This court should refuse to consider an unspecified case with unspecified plaintiffs on an unspecified claim. To do otherwise opens the door to new doctrine in which anyone can file a lawsuits based upon facts known to them as a witness instead of a party. 

The court should reject the sub silentio argument presented by opposing counsel — that even if the the trustee, trust and holders have no right, title or interest in the mortgage, the action should proceed because they know that the homeowner did not make a payment.

The protections enunciated by the state legislature in their adoption of Article 9 §203 of the Uniform Commercial Code are not optional. Only the owner of the underlying obligation can force forfeiture of property to pay a debt. Black letter law in all jurisdictions is crystal clear: debt is not acquired without paying value for it. Black letter law is in all jurisdiction is clear: assignment of mortgage without a sale of the underlying obligation is a legal nullity. 


“even if we could entertain the argument we would reject it. The complaint alleges that US Bank claims to hold the beneficial interest and the right to foreclose, which is fully consistent with defendants’ representations in their brief as well as the judicially noticeable documents in the record. The issue is not Chase’s role as the loan servicer, but the proper identification “of the party enforcing [the] debt.” (Yvanova, supra, 62 Cal.4th at p. 937.) Yvanova makes clear that “􏰀􏰁􏰂he borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.” (Id. at p. 938, italics added.)”

Masoud v JP Morgan Chase, Cal. 4DCA, May 26, 2020, Case #D075582.

Yvanova v. New Century Mortg. Corp., 62 Cal.4th 919, 937 (Cal. 2016) (“Defendants argue a borrower who is in default on his or her loan suffers no prejudice from foreclosure by an unauthorized party, since the actual holder of the beneficial interest on the deed of trust could equally well have foreclosed on the property. As the Jenkins court put it, when an invalid transfer of a note and deed of trust leads to foreclosure by an unauthorized party, the “victim” is not the borrower, whose obligations under the note are unaffected by the transfer, but “an individual or entity that believes it has a present beneficial interest in the promissory note and may suffer the unauthorized loss of its interest in the note.” (Jenkins, supra, 216 Cal.App.4th at p. 515156 Cal.Rptr.3d 912; see also Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75, 85161 Cal.Rptr.3d 500 ”)

Yvanova v. New Century Mortg. Corp., 62 Cal.4th 919, 937-38 (Cal. 2016) (“Nor is it correct that the borrower has no cognizable interest in the identity of the party enforcing his or her debt. Though the borrower is not entitled to object to an assignment of the promissory note, he or she is obligated to pay the debt, or suffer loss of the security, only to a person or entity that has actually been assigned the debt. (See Cockerell v. Title Ins. & Trust Co., supra, 42 Cal.2d at p. 292267 P.2d 16 [party claiming under an assignment must prove fact of assignment].) The borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.”)

In any valid case for foreclosure, the complaining party must plead and prove the current existence of the debt, the current ownership of the debt being in the claimant or plaintiff, and the default of the homeowner as to the claimant (not someone else, about whom the court could only speculate as to their existence or their interest in the proceedings).

If they fail to make such allegations or prove that case, foreclosure must be rejected. And if the reason they failed to make such allegations is that they are pursuing a profit motive in lieu of an attempt to collect on an existing debt held as an asset by some creditor then all parties involved should be held accountable for abusing or weaponizing foreclosure process in an extra-legal and therefore illegal manner, all claims of litigation privilege notwithstanding.

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

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

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

The Problem With those Powers of Attorney

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

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

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

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

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

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

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

Wait! Somebody must have paid something right?

How do you know what was paid by whom and when and what terms applied? The whole point here is that money was paid by investors who did not receive ownership to the debt, note or mortgage. Nor did they assign any equitable right to the debt, note or mortgage. Since the value was paid by a party who never received ownership, no “successor” would have any reason to pay value for ownership nor did they do so.
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And before you decide to shift gears, the investment bank took in money from investors as a commercial deposit — i.e. a  third party loan — as part of purchase of promissory note (certificate) to make payments to the buyers. While that COULD have resulted in the vinestment bank becoming the owner of the debt, note and mortgage on loans granted to borrowers, it didn’t. Like the investors who bought certificates, they paid for it but not in exchange for ownership of the debt, note or mortgage.
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Not one note or mortgage was made payable to the investment bank and not one “Loan” transaction was funded directly by the investment bank who channeled funds through several existing legal business entities. This was done to evade liability for lending law violations and as Chase found out you can’t have it both ways. You either were the lender or you were not. You either “succeeded” to the position of the predecessor or you didn’t.
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The media gets it wrong because they cannot conceive of a scheme that simply isn’t allowed under existing law and if it was allowed there would be changes in all affiliated laws as well — this giving investors the real scoop on what was being done with their money and the borrowers the real scoop on how much revenue was being generated from the origination or acquisition of their loan. In the current custom and practice of securitization of residential debt, the certificates and possibly the promissory notes would be regulated as securities.
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The key change in the law that is needed for securitization to be allowed as practiced and for title to be cleared is the designation of a non-owner who didn’t pay value for the debt to be the creditor. This is a massive paradigm shift, but one which is probably needed. But right now the ONLY way we can acquire a debt is through payment of value for it in exchange for rights of ownership of the debt.
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That is precisely where the media, attempting to report on the facts, gets it wrong. they simply cannot conceive of a scenario where all this paperwork would be flying around and that such instruments would be meaningless, without value and legal nullities — except for erroneous legal presumptions arising from the erroneous conclusions that the instruments have facial validity. So you see court decisions and article referring to sales that never occurred. They also report loans that never occurred.
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And so we have a huge body of law allowing foreclosure rewarding people and business entities who receive the proceeds of forced sale as revenue instead of payment on a debt they never owned or paid for. And that is required change in the law that is needed. Upon revision of all relevant statutes, once a business entity is “designated” as creditor all efforts by anyone else must stop as to collection, processing, administering, or enforcement of any debt, note or mortgage. The game of musical chairs played by investments banks, servicers, “trustees” etc. must stop if we are to make sense out of any of this.
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In most cases loans were originated from non capitalized brokers or sellers of loan products, not lenders or were creditors. This information is withheld from borrowers contrary to the requirements of Federal and state disclosure requirements to consumer borrowers.
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Also withheld from borrowers is the fact that their signature, name, reputation and home is being used as part of a securitization scheme in which the loan labeling is misleading because neither the originator nor even the “warehouse lender” has any risk of loss. The entire transaction is different from what the borrower thought and different from what the borrower had a right to think as per common law, Federal and state lending statutes.
*
Borrowers are not required to understand that the “loan” is no longer part of the system in which money supply increases (because that already happened when investors purchased certificates from investment banks).  But under current law lender s ARE required to know that and do know that and they further know that their incentive is to get the signature of a consumer for fees not interest income.
*
The entire burden of viability of any consumer loan is not on the borrower (Caveat emptor) but on the lender who knows better. That is the law. AND the law presumes that the risk of loss is a self-regulating market force that forces lenders to make good loans. But what happens when there is no such risk? The transaction is changed and the transaction is no longer within the boundaries of the existing lending laws.
*
In short, such transactions are either not legal or carry heavy penalties for violations. If banks avoid such liabilities by intentional concealment of the true facts and thus produce catastrophic anomalies in the marketplace (see 2008) displacing tens of millions of people from their homes, why should those homeowners bear the full burden of such a catastrophe? Both policy and law agree on this. They shouldn’t.
*
The counterpart in what was labeled as a loan agreement was in actuality a vendor to the investment banking industry who didn’t receive interest as revenue for making a loan and who had no risk of loss. It was a scheme where all participants received fees, commissions, bonuses trading profits and other compensation arising from the origination of the transaction intentionally mislabeled as a loan in which the mislabeled “lender” was seen as seeking interest income on principal when in fact the interest payments and even the payments on principal were completely irrelevant to the originators and the “warehouse” lenders.
*
“Successors” under current law are merely designees not successors because they have not contributed any money toward payment of value for the debt — a basic black letter requirement under current law.
*
All of this is very counterintuitive and it is meant to be. The more complicated the banks make it the more everyone relies on the banks to tell them what these paper instruments mean and what events are memorialized in those paper instruments. But the plain fact is that there are no events memorialized in the paper instruments. There were no transactions. Why would anyone pay value for a debt that is not owned by the “seller?”
*

While We Were Sleeping: Remote Online Notarization is Becoming a Reality in Florida effective 1/1/2020

see https://www.floridabar.org/the-florida-bar-journal/danger-will-robinson-the-new-frontier-of-remote-online-notarization-and-electronic-wills/

I knew this was planned. But frankly I didn’t pay close attention. When the initial plans for electronic signatures were announced 10 years ago, we collectively convinced President Obama that the law as written made it too easy to fabricate documents and then have them be declared facially valid — thus raising legal presumptions about the document and its contents.

Under the new law in Florida and I presume in other states, notarization of documents for recording in county records can be accomplished electronically. The banks have lobbied hard for this and have done a lot of PR to pave the way for this law as reflecting “progress.”

The problem is that this greases the slippery slope on which the banks unleash a torrent of fabricated documents creating legal presumptions of fictitious facts — leaving homeowners to defend nonsensical allegations without the benefit of requiring the claimant to prove actual facts for its prima facie case.

Dean Wigmore — the man whose name is equated with the law of evidence — said that legal presumptions were like bats that fly around and then disappear in the light of actual facts. For nearly 20 years homeowners have been fighting bats in the belfry.

Those that persisted and had the money to contest illegal foreclosures mostly won simply because the legal presumptions were rebutted, leaving the foreclosure mill with no actual facts to present because there were not actual facts that favored their position. None of the foreclosures in which a supposedly REMIC trust was involved ever involved any party who had paid value for the debt as required by state statutes adopting Article 9 § 203 of the Uniform Commercial Code making it a condition precedent to filing a foreclosure.

The assumption or presumption has always been that the named Plaintiff existed, and that it must have paid value for the debt. But they never did.

Most homeowners (96%+) were required to walk away because they lacked the resources of time, money and energy to contest the forced sale of their homestead by actors in a fraudulent scheme for revenue instead of any actor would could obtain restitution of an unpaid debt through a real foreclosure.

The simple answer is that the investors were the only ones who paid value but they never got title to the debt, note, or mortgage. This created a vacuum in which the investment bank pretended to own the debt and then act through surrogates to claim foreclosure without turning over the proceeds of foreclosure to the investors. It was a plain fraudulent revenue scheme.

The Florida legislature has now made it far easier for the banks to continue making money on actions that are simply labelled as foreclosures. This act enables the foreclosure mills and document fabricators to not only speed up the notarization process but also create a gap in accountability for errors, omissions and fraudulent content. It’s all happening online.

Judges are going to be required to treat notarization as presumptively valid when in fact the notary was a robo notary and the online process is fully automated behind the scenes. Thus the Florida legislature has continued and expedited the current process by which investment banks, acting through conduits or surrogates, sell the house, take the money and run. Not a penny is returned to investors who bought “certificates”.

Update on MERS

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

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

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

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

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

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

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

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

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

Don’t Admit Anything About the Servicers Either — It’s All a Lie

Want to know why this site is called LivingLies? Read on

Homeowners often challenged the authority of the named claimant while skipping over the actual party who is supporting the claim — the alleged servicer.

You might also want to challenge or at least question their authority to be a servicer. The fact that someone appointed them to be a servicer does not make them a servicer.

Calling themselves a “servicer” does not constitute authority to administer or even meddle in your loan account. As you will see below the entire purpose of subservicers is to create the illusion of a “Business records” exception to the hearsay rule without which the loan could not be enforced. The truth here is stranger than fiction. But it opens the door to understanding how to engage the enemy in trial combat.

That “payment history” is inadmissible hearsay because it was not created by the actual owner of the record at or near the time of a transaction and the actual input of data is neither secure mor even known as to author or source. Likewise escrow and insurance payment functions are not authorized unless the party is an actual servicer. The fact that a homeowner reasonably believed and relied upon representations of servicing authority is a basis for disgorgement — not an admission that the party collecting money or imposing fees and insurance premiums was authorized to do so.

PRACTICE NOTE: However, in order to do this effectively you must be very aggressive in the discovery stage of litigation. (1) ASK QUESTIONS, (2) MOVE TO COMPEL, (3) MOVE FOR SANCTIONS, (4) RENEW MOTION FOR SANCTIONS, (5) MOTION IN LIMINE AND (6) TIMELY OBJECTION AT TRIAL.

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

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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To be a “servicer” the company must received the appointment to administer the loan account from someone who is authorized to make the appointment. A power of attorney is only sufficient if the grantor is the owner of the debt — or had been given authority to make such appointment from the owner of the debt.
*
A person who is authorized to make the appointment is either the owner of the debt by virtue of having paid for the debt or an authorized representative of the owner of the debt by virtue of having paid for the debt. This is a key point that is frequently overlooked. By accepting the entity as a servicer, you are impliedly admitting that they have authorization and that a true creditor is in the chain upon which your opposition is placing reliance. In short, you are admitting to a false statement of facts that will undermine your defense narrative.
*
If the servicer is really authorized to act as such then your attempt to defeat foreclosure most likely fails because the case is about a real debt owed to a real owner of the debt.
*
The fact that they allege that they maintain records may be a true or false representation. But whether it is true or false, it does not mean that they had authorization to maintain those records or to take any other action in connection with the administration of the loan. Of course we know now that any such records are composed of both accurate and fabricated data.
*
We also know that the data is kept in a central repository much the same as MERS is used as a central repository for title.
*
The representations in your case about and intensive audit and boarding process most likely consist of fabricated documents and perjury. There was no audit and there was no boarding process. The data in most cases, and this probably applies to your case, was originated and maintained and manipulated at Black Knight formerly known as Lender Processing Systems.
*
Contrary to the requirements of law, the central repository does not ever handle any money or payments or disbursements and therefore does not create “business records” that could be used as an exception to the hearsay rule. The same thing applies MERS. These central repositories of data do not have any actual role in real life in connection with any financial transaction. Their purpose is the fabrication of data to support various purposes of their members.
*
All of this is very counterintuitive and difficult to wrap one’s mind around. but there is a reason for all of this subterfuge.
*
From a legal, accounting and finance perspective the debt was actually destroyed in the process of securitization. This was an intentional act to avoid potential risk of laws and liability. But for purposes of enforcement, the banks had to maintain the illusion of the existence of the debt. Since they had already destroyed the debt they had to fabricate evidence of its existence. This was done by the fabrication of documents, recording false utterances in title records, perjury in court and disingenuous argument in court.
*
The banks had to maintain the illusion of the existence of the debt because that is what is required under our current system of statutory laws. In all 50 states and U.S. territories, along with centuries of common law, it is a condition precedent to the enforcement of a foreclosure that the party claiming the remedy of foreclosure must be the owner of the debt by reason of having paid value for it.
*
The logic behind that is irrefutable. Foreclosure is an equitable remedy for restitution of an unpaid debt. It is the most severe remedy under civil law. Therefore, unlike a promissory note which only results in the rendition of a judgment for money damages, the Foreclosure must be for the sole purpose of paying down the debt. No exceptions.
*
The problem we constantly face in the courtroom is that there is an assumption that there is a party present in the courtroom who is seeking restitution for an unpaid debt, when in fact that party, along with others, is seeking revenue on its own behalf and on behalf of other participants.
*
The problem we face in court is that we must overcome the presumption that there was an actual legal claim on behalf of an actual legal claimant. Anything else must be viewed through the prism of skepticism about a borrower attempting to escape a debt. The nuance here is that the end result might indeed be let the borrower escapes the debt. But that is not because of anything that the borrower has done. In fact, the end result could be a remedy devised in court or by Statute in which the debt is reconstituted for purposes of enforcement, but for the benefit of the only parties who actually advance money and connection with that debt.
*
More importantly is that nonpayment of the debt does not directly result in any financial loss to any party. The loss is really the loss of an expectation of further profit after having generated revenue equal to 12 times the principal amount of the loan.
*
While there are many people who would argue to the contrary, they are arguing against faithful execution of our existing laws. There simply is no logic, common sense or legal analysis that supports using foreclosure processes as a means to obtain Revenue at the expense of both the borrower and the investor. And despite all appearances to the contrary, carefully created by the banks, that is exactly what  is happening.

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

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

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

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

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

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

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

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

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

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

Finally a Judge Asks the right Questions about TILA Rescission and Invites Briefs

The time may now be coming where the court systems and Federal and State legislatures must come to terms with two inescapable legal facts:

(1) That borrowers who sent TILA rescission notices — and particularly those who sent them within 3 years of consummation of the mortgage — still own the land that was deemed “lost” in foreclosure.

(2) That such borrowers possess valid claims to recover title. possession and money damages. 

It was bound to happen and now it has. In one case, a judge is asking the following questions and inviting briefs on the following subjects:

  1. What is the effect of the failure to return consideration upon an attempt to exercise the right of TILA Rescission?  
  2. What is the effect on rescission if the borrower continues to pay? 
  3. Does TILA pertain to refinancing?

See HOW TO FRAME TILA RESCISSION IN YOUR PLEADINGS

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GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================
The Tila Rescission Statute 15 USC §1635 requires, as a condition precedent to demanding payment of the borrower’s debt, that the parties who received money from the borrower arising out of the loan agreement return all such money to the borrower first before anyone can make a claim for repayment. This is why bank lawyers have long advised their arrogant bank clients that failure to follow the rules set forth in the TILA Rescission statute could not only result in loss of enforcement of the mortgage which is automatic, but also loss of the right to enforce the debt.
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The investment houses, who were the real parties in interest behind the origination or acquisition of residential loans, have long been bullying their way through the TILA Rescission statute since it undermines the value of the derivative infrastructure built and sold over every loan. Thus far they have succeeded in getting virtually all courts. except the Supreme Court of the United States, to go along with the bank narrative regarding 15 USC §1635. In plain terms they got what they wanted: judges ignored TILA rescission and entered orders as though it didn’t exist. But it did exist by operation of law and the US SUpreme Court said so.
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Failure to return consideration bars collection of the debt. And there are two other things that the “lenders” are required to do as conditions precedent (return cancelled original note, which we all know they don’t have, and file a satisfaction and release of the mortgage in the county records so that the world will know that rescission has occurred. This is the replacement for cancellation of the loan agreement. The new “agreement” is set forth by the statute.
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The judge doesn’t ask “effect on what?” The mortgage in all events is void, by operation of law. Neither the borrower nor the  creditor can effectively take any out of court action that changes that.
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There is no unilateral or bilateral action that can be taken by either or both parties to change something that is effective “by operation of law.” The only exception MIGHT be (and probably WILL be) that rescissions sent outside the 3 year period of expiration could conceivably be ignored, but if they are recorded in county records only a party with legal standing could have the rescission notice removed from the chain of title with a court order.
*
And the problem for the banks is that they have no party who could be defined as a creditor — a party who had paid value for the debt and owns the debt, to wit: a party to whom the debt is currently owed. Another way of saying it, if you were listening to to the forensic auditor seminar last Friday, is that only a party who was carrying the borrower’s debt as an asset on its balance sheet as a loan receivable could claim the status of owner of the debt i.e., creditor.
*
The genius of the way securitization has been practiced with respect to residential loans, is that there is nobody who takes a loss from nonpayment of any debt. Nobody is entitled to actually receives the borrower’s payments or the proceeds from a foreclosure or other sale. The money that is received therefore, is revenue upon which they pay no tax because they report it as repayment of debt rather than income. This explains why you can’t get a straight answer on “who owns my debt.” The answer is nobody. But that answer is counter intuitive which is another way of saying nobody wants to actually believe that.
*
The issue is whether the borrower’s should forfeit their homes on a scheme that was based upon receipt of revenue rather than repayment of debt?
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TILA Rescission highlights this problem because it cuts down the veil or curtain behind which the banks hide. There is no more loan agreement and there is no more note or mortgage from which all sorts of legal presumptions can arise. While I would have thought this day would come sooner we finally have our first judge asking the right questions. Thus the hard “talk” begins.
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  • What is worrisome is the Judge’s use of the word “attempt.” He phrases the questions in the context of an “attempt at rescission” rather than the event of rescission. Either the rescission was sent or it wasn’t. In Jesinoski v Countrywide that is the end of the issue. If it was sent then TILA rescission is effective by operation of law. There is no attempt which insinuates that TILA rescission is a claim rather than an action with legal consequence. There is no attempt and there is no claim.
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Paying on the mortgage is only to protect the borrower’s credit rating and prevent action to foreclose on the mortgage that does not exist but will obviously be treated as existing in the current judicial climate. It does nothing to effect what has already occurred by operation of law. The loan agreement is cancelled and with it the note and mortgage became void. The only consequence, rather than effect, is such payments increase the amount of money due back from the parties to whom the money was given or from  parties who originated the loan agreement under TILA or unjust enrichment. No person, whether borrower or lender, can “waive” a legal event that occurred by operation of law any more than they can ignore a court order without being in contempt of court.
*
TILA does pertain to refinancing. I don’t know what is meant by instant “circumstances.” Many “modifications” are actually refinancing. The creditor has changed and remains concealed. The entire purpose of the banks in modification is to validate what is otherwise a void or unenforceable loan agreement using undue duress or even extortion to get the borrower to sign away rights.

Tonight! How to Use TILA Rescission in Court! The Neil Garfield Show 6PM EDT

FORENSIC AUDITORS TAKE NOTE

Thursdays LIVE!

The Neil Garfield Show

or prior episodes

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

*******************************

There are many potential claims arising out of attempted foreclosure after TILA rescission is effective.
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But one of them is not a violation of your rescission rights. By pleading that you are putting into play the burden of proving the effectiveness of rescission which has already occurred by operation of law.
*
By pleading or arguing such a notion you are inviting interpretation form a court that is only too happy to reject your claim. In most cases your right to enforce the duties of a lender under the TILA Rescission statute, 15 USC §1635 has long since expired under TILA so you have no claim to violation of your rescission rights. You are making a claim that does not exist.
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Nearly all successful foreclosure defenses are based upon the defense narrative that the party bringing the foreclosure action has no right to bring it. In the case where rescission has been effected, there is no claim for foreclosure anymore. The debt remains but there is a new way to collect it under the TILA Rescission statute.
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You do have claims for violations of other statutes that protect consumers against fraudulent or wrongful claims and provide damages and the basis for declaratory, injunctive and supplemental relief. So you probably have a claim under the FDCPA in addition to other statutes. And you have claims under common law.

How to Put Leverage Back Into the Hands of Homeowners

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

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

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

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

See 2019.07.15 – Minute order for MSJ

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

California Decision for Borrower Post Sale in Eviction Proceeding

BIG HAT TIP TO STEPHEN LOPEZ, ESQUIRE FOR THIS SAN DIEGO WIN!!

This is the latest of a string of decisions from trial judges who took the time to carefully analyze the law and then facts. In this case the issue was whether the Plaintiff in a lawsuit for Unlawful Detainer could be awarded Summary Judgment simply because the sale had been recorded.

This decision, following the law in all jurisdictions, says that recording the sale is interesting but not dispositive. If the actual sale was void because ti was conducted in favor of a party who was not a true beneficiary under the deed of trust, then the sale itself is void.

This judge quote approvingly from otheor case decisions words to the effect that any other decision would produce the absurd result of allowing completely disinterested parties to issue instructions to sell the property and then claim possession of homestead property.

Despite the long line of “bad results” published, this case shows that a case properly presented, properly argued and based upon sound legal reasoning has a good chance of gaining traction even after the foreclosure has been allowed to proceed. That means you need to prepare and be certain as to your facts and that you don’t ask the court to presume facts in your favor.

We don’t know how this case will  be decided at trial, if there is one. In all probability this case, like thousands of others like it, will most likely be buried by settlement with the homeowner and payment to the homeowner for executing a confidentiality agreement.

For those who bother to actually read the decision it looks like I wrote it. I didn’t. My point is that what I have provided in my articles is not theory. It is fact based upon established law and the real facts of most foreclosure cases. The assignments are void.

If the Plaintiff in this Unlawful Detainer case is unable to prove at trial that it is the owner of the debt it will lose because owning the debt is the key component or element of being a beneficiary under a deed of trust and a key component or element of a valid credit bid.

See 2019.07.15 – Minute order for MSJ

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

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

Key quotes from this decision:

“To establish that he is a proper plaintiff, one who has purchased property at a trustee’s sale and seeks to evict the occupant in possession must show that he acquired the property at a regularly conducted sale and thereafter “duly perfected” his title.” ((Code Civ. Proc., § 1161 a, subdiv. 3.) (Id.))[California]”

“[W]here the plaintiff in the unlawful detainer action is the purchaser at a trustee’s sale, he or she ‘need only prove a sale in compliance with the statute and deed of trust, followed by the purchase at such sale, and the defendant may raise objections only on that phase of the issue of title.”‘ (Bank of New York Mellon v. Preciado, (2013) 224 Cal. App. 4th Supp. 1, citing, Old Nat’/ Fin. Servs. V. Seibert (1987) 194 Cal.App.3d 460, 465, 239 Cal.Rptr. 728.) “The statute” with which a post-foreclosure plaintiff must prove compliance is Civ. Code, § 2924. (Bank of New York Mellon v. Preciado, supra, citing Seidell v. Anglo-California Trusts Co. (1942) 55 Cal.App.2d 913, 920, 132 P.2d 12.)

The term ‘duly’ implies that all of those elements necessary to a valid sale exist, else there would not be a sale at all.” (Bank of New York Mellon v. Preciado, supra at 9-10, citing Kessler v. Bridge (1958) 161 Cal.App.2d Supp. 837, 841, 327 P .2d 241 [internal citations omitted].) This holding by the court in Preciado makes clear that in Code Civ. Proc., § 1161a post-foreclosure trustee sale cases, a focus on the sale itself (rather than simply the recorded title documentation) is part of the analysis of determining  whether the title was “duly perfected.”

subsequent buyer must also prove that the trustee sale was conducted in accordance with Civ. Code, § 2924 and that title has been duly perfected. (Stephens, Parlain & Cunningham v. Hollis, supra, at p. 242.)

[l]f the borrower defaults on the loan, only the current beneficiary may direct the trustee to undertake the nonjudicial foreclosure process. “[O]nly the ‘true owner’ or ‘beneficial holder’ of a Deed of Trust can bring to completion a nonjudicial foreclosure under California law.” (Barrioneuveo v Chase Bank, N.A. (N.D.Cal.2012) 885 F.Supp.2d 964, 972.” (Id. at pp. 927-928.) Where the nonjudicial post-foreclosure trustee sale is not property initiated, ” … a borrower may base a wrongful foreclosure claim on allegations that the foreclosing party acted without authority because the assignment by which it purportedly became beneficiary under the deed of trust was not merely voidable but void.” (Yvanonova, supra, at pp. 851-852.)

“A void contract is without legal effect. (Rest.2d Contracts,§ 7, com. A.) “It binds no one and is a mere nullity.” (Little v. CFS Service Corp. (1987) 188 Cal.App.3d 1354, 1362, 233 Cal.Rptr. 923.) “Such a contract has no existence whatever. It has no legal entity for any purpose and neither action nor inaction of a party to it can validate it …. ” (Colby v. Title Ins. And Trust Co. (1911) 160 Cal. 632, 644, 117 P. 913.) “If a purported assignment necessary to the chain by which the foreclosing entity claims that power is absolutely void, meaning of no legal force or effect whatsoever, [internal citations omitted] the foreclosing entity has acted without legal authority by pursuing a trustee’s sale, and such an unauthorized sale constitutes a wrongful foreclosure. (Yvanonova, supra, at pp. 855-856; citing Barrionuevo v. Chase Bank, N.A., at pp. 973-974.

it would be an “‘odd result indeed’ were a court to conclude a homeowner had no recourse where anyone, even a stranger to the debt, had declared a default and ordered a trustee’s sale.”

“[w]hen a non-debtholder forecloses, a homeowner is harmed because he or she has lost her home to an entity with no legal right to take it. If not for the void assignment, the incorrect entity would not have pursued a wrongful foreclosure. Therefore, the void assignment is the cause-in-fact of the homeowner’s injury and all he or she is required to allege on the element of prejudice.” (Id. at pp. 555-556.) “A contrary rule would lead to a legally untenable situation – i.e., that anyone can foreclose on a homeowner because someone has the right to foreclose. ‘And since lenders can avoid the court system entirely through nonjudicial foreclosures, there would be no court oversight whatsoever.”‘

What is Fair?

The question should not be the bipolar question of who gets a “free house,” with the answer being the borrower or a party claiming entitlement to enforce. The question should be how to create a new equitable and legal infrastructure to clean up the mess that the banks created without unnecessarily penalizing either the investors who put up the money in the first place and the borrowers who put up their lives.

This is a question that BOTH the courts and the legislatures must face for failure to do so compounds the already compounding chaos and tragedy that befell our nation when the scheme initially collapsed in 2008.

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

GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================
The borrower was lured into a loan contract in which she thought that the named lender had a financial interest in the outcome of the contract. The actual lender was a remote investment bank about whom she had received no disclosure and, as an average person of ordinary knowledge and means, had no access to information that would revealed the true nature of the contract.
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Rather than seeking to conform to law in selling such loan products the real lender sought to avoid the law.
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Rather than making money through the receipt of interest payments, the real lender intended and quickly divested itself of any interest or expectation of receiving interest or principal payments. The real lender also divested itself all of all risk of loss associated with payments. In short, the real purpose of the loan was to create multiple vehicles that could be sold as private contracts, resulting in the receipt of money that far exceeded the principal amount of the loan made to the borrower.
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While ordinary residential homeowners normally rely on the premise that the loan’s purpose was to generate revenue and profit for the lender through the receipt of interest payments, her named lender would not and did not receive interest payments and had no profit except from fees paid by the remote investment bank through conduits.
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Thus the actual lender entered into a loan arrangement without contract for the sole purpose of selling various attributes of the loan to as many investors as possible using as many complex financial instruments as they could conjure. The borrower had entered the arrangement believing that the named lender was the actual lender and that all compensation arising from the consummation of the loan was disclosed.
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The actual lender retained no direct interest in the performance or outcome of the loan. The borrower was unaware that they had signed up for an arrangement in which the other side of the equation would create millions of dollars in “trading profits” arising from the declared existence of the loan, along with her name, reputation, signature and the collateral of her home.
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Hence the goal of the lender was to create such loans regardless of quality. In fact, the lower the quality the more profit they made. And foreclosures became the vehicle by which the actual lender (investment bank) covered up the violation of federal and state lending statutes and common law doctrines of fair dealing and public policy.
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Since judges thought that the proceeds of a foreclosure sale would go to the owner of the debt, and thus pay down the debt, they thought that there was little harm in granting foreclosures even if the paperwork was somewhat “dodgy.” But an increasing number of judges are questioning two main issues.
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The first issue, which has been repeatedly voiced by hundreds of judges since 2008, is why there have been so many changes in the name of the servicer who supposedly was authorized to administer the loan and whether the servicer was actually administering the loan for or on behalf of an owner of the debt as required by law. Because without that its records would not  be allowed in as an exception to the hearsay rule. (The claimed “servicer” would just be a company that had intervened for its own financial interest which included fees for enabling a successful foreclosure. Hence their records would not have intrinsic credibility of a third party who had no interest in the outcome of litigation).
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The second issue which is being raised with increasing frequency is why it was necessary to create documents of dubious origin and authenticity? In an industry that created virtually all the paperwork required for closing loan transactions, and created the industry standards for maintenance of such documents how and why did they manage to lose or destroy the original promissory note so often? (And why was it necessary to fabricate any documents?)
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And a third issue which is only now being discussed with some earnest, is whether the right to resell the loan automatically includes the the right to use the personal data of the borrower for many sales of many of the loan attributes that were not contemplated by the borrower because they were hidden from the borrower.
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Europe is ahead of the U.S. in understanding that personal data is a property right. But laws in the U.S. do answer the question. Where the contract in known by only one side to have attributes that are withheld from the other side it is subject to the doctrine of implied contract (assumpsit) in which the party discovering the true nature of the contract may enforce a right to receive compensation for the attributes that were previously unknown.
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There can be little doubt that nearly all loan arrangements for residential property as collateral since 1996 have all the elements of an implied contract that is far beyond the scope of the written contract. Hence there can be no doubt that the borrowers are entitled to some form of compensation or damages arising from the implied contract and/or the violation of disclosure requirements in the Truth in Lending Act and state lending laws.
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The scope of this issue is a fact. In 1983 there was zero in nominal or actual value of instruments deriving their value from debt. Today there is over 1 quadrillion ($1,000,000,000,000,000) dollars in the shadow banking market. The total amount of fiat (actual) currency in the world is only 85 trillion ($85,000,000,000,000) dollars.
*
The meaning is clear: for every dollar ($1.00) in real transactions of fiat currency there is, on average, $11.75 in trading profits for the banks and investors who trade in that market. That means that for the average of loan of $200,000 it is almost certain that the profits generated from the origination or acquisitions that loans was on average $2,352,941. In other words, payoff on the loan was incidental to the loan transaction — not the point of the loan arrangement.
*
The current claim by the banks is that this enormous profit from lending is the result of separate contracts and transactions that should not be included as part of the original contract with borrowers.
*
The claim by borrowers, while phrased in different ways, is that somehow the borrowers should be receiving some compensation or allowance as part of the package since the base transactions from which all value was derived for further instruments or agreements was their own signature, name, reputation and home as at least apparent collateral. Borrowers consider the non disclosure of the actual intention of the actual lender to be base violations of TILA and state lending laws.
*
In addition, with the proceeds of foreclosure sale being distributed as revenue rather than the payoff of a loan receivable, existing law is insufficient to deal with the crisis of nonpayment by borrowers most of whom have been paying servicers who have been feeding such payments into large pools of cash from which payments are made to the holders of “certificates” who only have a right to receive payments from the investment banker who was doing  business under the name of a nonexistent trust.
*
In some sense the holders of such certificates are the ones most likely to be considered owners of the debt. But the certificates themselves and the accompanying contracts (prospectus) clearly state that the certificates convey no right, title or interest in the borrower’s debt, note or mortgage.
*
There is no right of investors to enforce the certificates against borrowers and the certificates are not “mortgage backed” despite claims to the contrary. This has already been decided in several tax cases. Their exemption from securities regulation is therefore unfounded.
*
This has resulted in various parties posing as authorized enforcers of the debt and the security instrument ( mortgage or deed of trust). Regardless of their claimed title or status, all such entities share one controlling characteristic: they all initially or eventually claim to be acting in a representative capacity even when they present themselves as the “holder” of the note or any other claim to rights to enforce the note or mortgage.
*
The evolution of such claims lends some perspective. Initially foreclosures were brought in the name of “servicers” and when challenged the servicing claims were then accompanied by an denial of securitization or the existence of any trust that owned the debt, note or mortgage. As it turned out the lawyers for such entities were telling the truth — there was no such trust nor would it have been the owner of the debt, note or mortgage even it had existed.
*
In addition foreclosures were brought in the name of Mortgage Electronic Registration Systems, Inc. (MERS).
*
Neither the servicers nor MERS ever could assert or allege that they had any right, title or interest in debt, note or mortgage. In the case of MERS it could not even alleged possession of the note or mortgage and had handled no money whatsoever in relation to any loan.
*
And in all cases the proceeds of foreclosure sales permitted by the courts were distributed as revenue to several participant claiming authority to act, including the lawyers, servicers, master servicers, and the investment bank. In no case were such proceeds distributed to the owners of certificates issued in the name of a “trust.” Several forensic analysts tracked the “credit bids” and quickly discovered that those bids were not submitted by a creditor.
*
The existence of the actual debt from the borrower has been converted from actual to theoretical; this explains the lack of any identified party who is the owner of the debt. This is not a problem created by borrowers who knew nothing of this scheme nor do they now understand it.
*
This all results in the posing of three issues that need to be addressed head on if this crisis is to end.
  • The first which everyone has voiced since the beginning of the crisis is whether the homeowner should get a “free house” merely because the paperwork is now out of order.
  • The second is whether the current parties receiving revenue from the sale of foreclosed homes should be allowed to receive a “free house.”
  • The third is whether the borrowers have always been entitled to receive compensation for the larger implied contract in which compensation and revenue was generated from the origination or acquisition of their loan.
*
Since this is a pervasive issue occurring through tens of millions of loan contracts, the best possible vehicle for addressing a remedy is through government action that goes far beyond the nominal settlements that have been announced thus far.
*
All stakeholders should be given a voice at this table. Any approach that is punitive only to one particular class of stakeholders should be rejected. Laws need to be changed to reflect the modernization of financial instruments, only after consideration of the effects of such changes. Any law that simply makes it easier to foreclose or to merely cover up the title and legal errors that have been occurring for 20 years should also be rejected.
*
If we are to make sense out of this chaos that was in fact conjured and created by investment banks, then we need changes in our property laws, contract laws, securities laws, lending laws, laws of civil procedure and due process, and laws of evidence. If the banks have put themselves in a position where they cannot foreclose on mortgages, that should not be the end of the inquiry.
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The question should not be the bipolar question of who gets a “free house,” with the answer being the borrower or a party claiming entitlement to enforce. The question should be how to create a new equitable and legal infrastructure to clean up the mess that the banks created without unnecessarily penalizing either the investors who put up the money in the first place and the borrowers who put up their lives. 

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.
========================
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.
*
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.
*
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.

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

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