How Would This Scam Be Possible If the Loans Were Real?

see https://www.mpamag.com/news/former-mortgage-company-president-indicted-in-multimilliondollar-fraud-224874.aspx

So not to rain on anyone’s parade, this scam seems only possible if nobody was minding the store. And nobody would be minding the store only if nobody owned the debt.

This is the pot calling the kettle black. The other institutions were posing as lenders when they were not. they were at all times being funded by Wall Street securities firms calling themselves “investment banks.”

If you boil it down it probably amounts to the banks getting angry because they were scammed out of the profits of their own scam.

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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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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Are Lawyers Missing the Boat Again on Foreclosure Defense?

The problem is that while most people think everyone has been bought off, and to a certain extent that is true, the real problem is that the clever plan of securitization is so counter-intuitive that nobody believes the truth that is in plain sight. The reason for fabricated documents is that there were no transactions, so the documents had to be fabricated to fit facially with the requirements of law for administration, collection and enforcement.
To anyone who is not conversant in the language of finance, that seems impossible, unlikely, or just plain wrong. So rather than keeping an open mind about it, they react to such assertions with aggression and incredulity.

I recently received a question from a fairly knowledgeable reader. Why are lawyers dropping the ball on foreclosure defense? His specific question, along with similar questions from other readers is where are the trust lawyers, the securities lawyers, the property lawyers, the civil litigations lawyers, the personal injury lawyers (emotional distress etc), etc.?

Here was my answer with some edits for typos which all of you know I am prone to make and miss on edits.

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The question you posed is the million-dollar question. I think you are correct in your analysis. I have attempted to enlist attorneys who specialize in those areas but I have failed.
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The only explanation that I can give you that has any truth to it is that lawyers, despite their reputation, are easily intimidated, lazy and greedy. I surveyed hundreds of lawyers over a two-year period In 2008–2009.
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The proposition was simple. assuming a client with sufficient financial resources to pay any reasonable fee, were they willing to represent homeowners in distress?
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The fact that the answer was in the negative was frustrating enough. But the reason most often cited was that they would rather represent “the bank.” And when I pointed out that they did not represent any banks nor did they have any prospects for doing so, that’s when they said that it didn’t matter.
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Some did express reservation about the assumption that the client could pay. I pointed it out that if they were not making a monthly payment for housing, they could easily pay. That made no difference. They saw the entire endeavor as futile and unprofitable — but in reality I could tell, like any trial lawyer could detect, that I was dealing with raw unbridled fear.
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So I attacked it with seminars on foreclosure defense that highlighted business strategies in which the lawyer could become rich, and some of the attendees did. Others made a good living.
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But it was based on lowering of expectations. By adopting a hub-and-spoke strategy some lawyers, adopting the business plan that I proposed, began servicing hundreds of homeowners at a time. But like all such practices, their business success depended upon settlement of the cases, which meant modifications. This resulted in adding to the illusion that the servicer had any right to be in the picture.
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My latest plan is that I am working on potential pleadings for a case in Reformation in which the investment banks are literally drafted into the litigation. The Court decides whether the homeowner received consideration for issuing the documents (note and mortgage) that enabled the securitization plan, and whether the homeowner received or should receive adequate or additional consideration that could offset the claim. (There is a lot more to this but for purposes of this article I simply state in brief form).
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I have no doubt that there is an opportunity to achieve immense wealth simply by pursuing the obvious. But it appears that the General Public, law enforcement, the Judiciary, and most lawyers have succumbed to the party line that enables the Investment Bank to sit in the shadows and designate names of irrelevant parties with no stake and the outcome to administer, collect and enforce obligations that were long ago retired through securitization, proof of which is easy to obtain, to wit: is there any company showing the existence of the debt as an asset on their balance sheet and a loss from nonpayment? 
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I definitely know the answer to that question. Current law therefore does not allow the current scheme of securitization to exist nor should it. It depends entirely upon concealment of the most relevant data in any transaction — the terms and conditions under which each party intends to serve the other and the terms and conditions under which each party might profit from the transaction.
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Most of all under the federal and state lending and securities laws (and general laws requiring fair dealing) the identity of the counterparty must be included in order to make the agreement an enforceable contract.
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This concealment allows investment banks to act illegally and against the idea of free markets or capitalism. It prevents both investors and homeowners from bargaining for adequate consideration based upon the true nature of the transaction. 
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The problem is that while most people think everyone has been bought off, and to a certain extent that is true, the real problem is that the clever plan of securitization is so counter-intuitive that nobody believes the truth that is in plain sight. The reason for fabricated documents is that there were no transactions, so the documents had to be fabricated to fit facially with the requirements of law for administration, collection and enforcement.
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To anyone who is not conversant in the language of finance, that seems impossible, unlikely, or just plain wrong. So rather than keeping an open mind about it, they react to such assertions with aggression and incredulity.
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Some lawyers do get it and they win their cases most of the time. Everyone else seems to argue for their own weaknesses (See Steven Covey’s Book) without looking to actual information or data. They insist that the foreclosure cases are both unwinnable and are morally unconscionable if they give the homeowner a free house.
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I insist that there is no debt because the investment bank was never depending upon the economics of a loan to make money. Foreclosures are gravy. They made all their money creating, selling, issuing, trading, and hedging securities. The labelling of the homeowner transaction as a loan was a false representation. The investment bank, who never appeared on any of the paperwork, was the real party in interest and at the end of the day there was no person or company who owned the so-called debt from the homeowner. 
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If that plan had been disclosed — as it was required to be disclosed under both “lending” laws and “securities” laws — both investors and homeowners would have had the opportunity to bargain for more more compensation and better terms — because they would have known they were taking a much larger risk than the one that was actually presented.
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Indeed, investors that were pension or other types of “stable managed funds” would not have been able to invest at all had they known the true nature of the certificate scheme into which they they were investing the futures of workers and companies that had contributed to the fund.
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Such funds, as investors, were critical to the success of the securitization scheme. Investment banks would have been legally required to present additional safeguards to the fund managers such as participation in the trading profits, hedge contracts and insurance contracts in order to make the sale of certificates to stable managed fund investors. 
The same logic holds true for homeowners.
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They were making the largest investments of their lives based upon their reasonable belief that the apprasial was real and the loan was viable — all resposnibilities imposed on the “lender” by law (see TILA).
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Had they known the true incentives and motives and existence of the investment bank they would have understood that this was no loan. It was a service they were performing and an investment — for which they were being paid to issue documents that required them to pay money over time in order to enable the securitization scheme.
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If the true profits of the securitization scheme were disclosed as as required by law, homeowners and originators would have been able to compete for a greater share of the securitization pie or they would have had the opportunity to choose not to do business in such a hazy scheme. 
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
*

FREE REVIEW:

If you want to submit your registration form click on the following link and give us as much information as you can. CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us.
In the meanwhile you can order any of the following:
*
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*
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CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
*
Please visit www.lendinglies.com for more information.

Tonight!! More on Qui Tam (Whistleblower) Actions and their Intersection with Foreclosure Litigation

Thursdays LIVE! Click in to the WEST COAST Neil Garfield Show

with Charles Marshall and Bill Paatalo

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

Homeowner groups are forming and lawyers are talking. We are all expecting another tidal wave of foreclosure proceedings arising from false claims against homeowners. But foreclosures impact communities, not just individuals. And communities are run by governments whose revenue is largely derived from taxes and fees on land, transfers and recording of mortgages and deeds of trust.

When government revenue declines the remaining taxpayers get to pay the balance. there is no other way. What happens if when declining revenue and increased costs are the result of false claims by private companies?

Wall Street securities firms have been sidestepping tax liability, stamps, recording fees and even income tax as they freely pretend to transfer mortgages while no money exchanges hands. The courts treat the transfers as real even though the law says no transfer of a mortgage can be completed without a transfer of ownership of the underlying debt.

So if it is real why is state and local government not receiving their fair share of revenue as prescribed by law? And why does state and local government get stuck with the bill on Zombie foreclosures?

More lawyers are looking at qui tam actions, mass joinder, and actions against regulatory capture that interfere with homeowners’ right to counsel and access to the courts.

Qui Tam Actions generally are lawsuits in which an individual sues on behalf of a governmental entity, typically the Federal Government, with the goal of remedying a defrauding of the government by a private organization or individual. These actions typically take the form of a whistleblower exposing the defrauding actions of his or her employer. Qui tam actions in the US are often brought under the False Claims Act, a Federal law specifically empowering individuals to sue as whistleblowers to recover private funds garnered through defrauding the Federal Government.

In the foreclosure context, individuals who are connected with, or in some cases simply apprised of, the defrauding behavior, can then bring a qui tam action to remedy the fraud. As a whistleblower, the suing individual is entitled to substantial compensation, including penalties, attorney’s fees, court costs, on top of the disputed amount of the fraud. The whistleblower receives his or her compensation as a percentage of the fraud money recovered. This amount can and often does run into the millions of dollars, depending on the nature of the fraud and the amount in dispute. Bill will highlight a recent successful qui tam action and address previous qui tam matters, involving for example mortgage servicers such as Nationstar.

W A R N I N G ! ! Dept of Labor seeks to allow pension and 401(k) investments into hedge funds with heavy investments in worthless residential REMIC certificates

Fund manager’s nightmare. With all the information currently available in the public domain and yoru subscription services you may be liable for placing any orders for purchase of residential REMIC certificates. DO YOUR RESEARCH.

Investors: Call your fund manager and demand that they do no such thing.

This is another move to create an artificial demand for securities that in this case are not only overvalued but also unregulated.

PennyMac and Other Companies are Making False Claims as “Servicers”: Black Knight, the king of fabricated documents is behind 62% of all “servicing records.”

The bottom line is that companies claiming to be servicers are not servicers although they perform some servicing functions as “clients” of Black Knight.

This provides a veil of plausible deniability for lying in court about testimony and documents. Hiding behind litigation immunity foreclosures are being pursued and granted resulting in windfall payments to intermediaries who never had any stake in the financial stake of any homeowner transaction. 

Examination of the facts shows that the “boarding process” is nonsense i.e., a lie). “New Servicers” simply log on to the Black Knight system. There is no boarding required. It is a total lie to fool courts into believing that the records were tested when they were not. 

Black Knight is not mentioned in part because of its prior record of criminal conduct. That record gives rise to inferences of lack of credibility or questions or credibility — either one of which is enough to prevent the employment of legal presumptions arising from what appear to be facially valid documentation. Without those presumptions there is no case because none of the claimants can offer proof of transactions in which actual ownership and control over the underyling obligation can be established. 

There is nothing like an admission that can change the course of thinking by a judge, lawyer, homeowner or law maker. Except for one thing: when the party not only admits the truth of the matter asserted but affirmatively alleges it in a lawsuit against someone else.

Exhibit A, brought to my attention by multiple sources and contributors to my blog. It is a lawsuit by someone who professes to have no connection with the alleged “servicing” of any transactions that are referred to as residential mortgage loans. It is never named in any lawsuit as a servicer. It does not show up in court as the source of servicing records. It does not send any robowitness to court to say that he/she is familiar with the books and records of this company. And yet, here is Black Knight, formerly Lender Processing Services and DOCX infamy (Lorraine Brown, President went to jail).

In a lawsuit against PennyMac, Black Knight asserts that PennyMac infringed upon its proprietary system that supplies the servicing records for 62% of all “servicing” performed in the U.S., — and that means that in 62% of all foreclosures, the companies that were proffered as servicers were not the servicers or at least did not perform all servicing functions — especially, as you read the complaint, as to payment histories and relevant documents for foreclosure.

So we have the only company that was ever caught red handed with fabricating, falsifying, recording, forging, robosigning false transaction documents. They changed their name but not their business model. Their business model is being the central repository of all the data that is created, stored, and manipulated with respect to 62% of all alleged “loans.”

That makes Ocwen and other loan servicers liars. And I have successfully pointed that out in trial. When you look at the copies submitted to qualify for an exception to the hearsay rule as a “business record” you can see that this did not come off of any particular system. And upon questioning of the witness they will profess ignorance as to the location of the server on which documents and records are created, maintained and manipulated.

No document is ever produced showing that Black Knight was named as servicer for any trust. That is because the trust has nothing and Black Knight is not working for nothing. Black Knight is working for investment banks who are the prime and only drivers of all trading, administration, collection and enforcing of contracts relating to securities and homeowner transactions. The transaction data (38%) not controlled by Black Knight is primarily controlled by a Chase controlled entity in the same way.

So the bottom line is that when the servicer representative comes into court to testify as to the foundation of the payment history, there are two things to remember for cross examination.

First, the copies he/she is attesting to are not from any system owned or controlled by his company and are not the records of the trustee or trust of any REMIC Trust.

Second those records are always missing any references to what goes out. Without entries showing disbursements to creditors, the records are incomplete. Without records showing establishment of the debt as an asset of some creditor, the records are incomplete. And THAT is what undermines the foundation for the admission of the records and can lead to objection and a motion to strike the exhibit during trial.

Failure to object and failure to attack in this way leads inevitably to a finding that the documents are real and that the information is true which then proves a default because the payment history says so.

But it doesn’t prove a default and the litigator must be able to show that. A default is established ONLY when proof of ownership of the asset (Loan) is established in the name of the claimant or Plaintiff. This never happens because there is no creditor showing the loan as an asset on its financial statements.

In current securitization practices, there is no creditor that actually claims ownership under generally accepted accounting principles that require a financial transaction (payment) in exchange for a conveyance of ownership of the underlying debt as a required by Article 9 §203 UCC as adopted by all U.S. jurisdictions. And if they are not creditors then they can’t be considered lenders and therefore can claim that lender liability does not attach to them. 

And without any officer of the trustee or trust testifying that those are there records of test rust, the copies preferred by the foreclosure mill and the robowitness are just props and not evidence and do not qualify as exceptions as business records. Accordingly they are barred by the hearsay rule which stands in the way of any evidence that lacks credibility.

Black Knight vs PennyMac Lawsuit

So why am I saying all this?

Here are some quotes from a complaint filed by high end lawyers representing Black Knight against PennyMac who they say falsely and illegally used the Black Knight systems, namely MSP© and Navigator©. Here is what Black Knight says, which corroborates, word for word what I have been saying for 14 years:

“Black Knight’s proprietary MSP® System, including its interdependent NavigatorTM electronic reference and procedural library, is the mortgage industry’s leading mortgage servicing software [e.s.] package. The result of years of research, complex coding, and continuous improvement, the MSP® System is used to service over 62% of the first lien mortgage loans in the United States, providing its users – the country’s largest and most successful lending institutions – with the ability to manage their portfolios in compliance with a broad set of laws and regulations. Black Knight protects its proprietary system through secrecy, and users of the MSP® System are granted access only under strict nondisclosure agreements with individual access controls.”

Now to be sure, they will claim that they are only providing software that “servicers” use. But that is not the way it actually happens. Black Knight owns, operates, maintains all servers with an iron hand as directed by the investment banks who like Black Knight want to be out of sight and therefore out of mind of any court.

The facts that every litigator should know is that the two parties who are not mentioned — the investment bank who started ands till controls the securitization scheme and Black Knight who is the central repository for all data to make sure that there is no public competition for claiming the same loan, are the only ones that actually out as real parties real witnesses.

So then we come to the fact that claims of servicing by PennyMac are completely false. If you read carefully and make appropriate inquiries one fact stands out: PennyMac is acting under Black Knight. PennyMac may get to make certain entries which in turn are tested by Black Knight and PennyMac may get to print out copies of reports that are produced by certain algorithms at Black Knight but PennyMac has no role in creation or maintenance of business records on Black Knight, who in turn does not do anything for trusts because it has no contracts with trusts. it has contracts with investment banks.

Notice how they are keeping the agreement between PennyMac and Black Knight a secret. Also note that the agreement names Fidelity Information Services, Inc. an Arkansas corporation as the principal and PennyMac is referred to as “client”.

“Pursuant to that certain Master Agreement entered into as of April 30, 2008, together with any addenda thereto (the “Master Agreement”), PennyMac became a registered user of the MSP® System and was granted a limited right to access and use the MSP® System in order to process PennyMac mortgage transactions.[e.s.] The Master Agreement includes clear and comprehensive restrictions against misuse of the MSP® System and associated confidential materials. Due to a confidentiality requirement in the Master Agreement, as well as the volume of documents, Black Knight attaches hereto as Exhibit “A” the cover page of the Master Agreement. A complete copy of the Master Agreement is in the possession of PennyMac, but a duplicate copy will be provided upon request.”

So the lawsuit is couched as a copyright infringement case. But the real purpose is that of the investment banks — to prevent the decentralization of data records that could reveal the fact that loans were sold multiple times in multiple ways. Of course there is also the monopolistic position that Black Knight enjoyed and wanted to protect. But without the support of the investment banks it would never have filed this lawsuit,.

“The MSP® System is made of a number of interdependent “modules,” with each performing a different function in the process of servicing a mortgage loan. These modules work together synergistically to produce the familiar experience and end product that is critical to the system’s success.”

“For example, the following specific aspects of the MSP® System contribute to its unique value: data schema and fields; user experiences and interfaces; files and records; transaction-type codes and sequence codes; input, processing and output transactions; workstation guides; technical support services; and documentation of the foregoing. Data collected are organized in specific files incorporated in a table that includes multiple records, each of which is a row that also includes a series of fields or cells, each of which has a specific name and position range. The confidential logic and business rules that drive the collection and manipulation of the data provide Black Knight a competitive advantage.” [e.s.]

“The NavigatorTM application is a critical component of the MSP® System. Acting in effect as an extremely detailed electronic reference and procedural user manual, it provides authorized users of the MSP® System with comprehensive information regarding each MSP® System module and workstation necessary to understand and use the MSP® System to service mortgage loans. This includes confidential details of MSP®-specific files; data dictionaries; data schema, records, and fields; MSP®-specific transaction-type and sequence codes; processing operations associated with MSP®-specific files; and MSP®-specific input and output transactions. It also contains confidential workstation guides and other user materials explaining how to work with MSP®-specific files and initiate execution of MSP®-specific operations. The NavigatorTM application and its related documentation are made available only to authorized users of the MSP® System for limited uses and are specifically designated by Black Knight as confidential proprietary, and trade secret information.

An authorized MSP® System user can also access data from the MSP® System in real-time using MSP® Mortgage Web Services. Like the NavigatorTM application, MSP® Mortgage Web Services contains detailed confidential documentation explaining its functionality and unique and proprietary data formatting structures and request codes, among other topics. And like the NavigatorTM application, MSP® Mortgage Web Services and its related confidential documentation”

One of our prolific readers and contributors “summer chic” has offered the following information that I consider useful in framing complaints:

On June 8, 2020 Black Knight announced that former OneWest CEO (aka OCC) Joseph Otting joined Black Knight’s  Board of Directors…..
 
 Black Knight is a renamed Lenders Processing Services/DocX who forged millions of assignments which were filed in Courts around the Nations to steal homes from American families.
 
 Bill Foley (FNF) , owner of LPS, DocX, Black Knight, ect. continues its illegal practices as of today while deceive borrowers with bogus Title Insurances. 
 
Speaking about monopoly, Mr. Foley owns majority of US Title Companies.
 
PennyMac is a renamed Countrywide Financial 
 
Caliber Home Loan is a renamed Countrywide Financial
 
HomeXMortgage is a renamed Fremont Loan and Investments
 
Matrix Private Capital is a renamed Lehman Brothers
 
New OCC Mr. Brooks is also a former OneWest CEO….
 
Former BlackRock CEO Michael Bright was CEO of Ginnie Mae….
 
VA Appraisal system is controlled by Bank of America via Core Logic LoanSafe program which is  renamed Countrywide’s LandSafe Appraisal system which BOA sold to VA in 2014….
 
Ginnie Mae’s Senior VP Michael Drayne is a seasoned  fraudster from Chevy Chase bank who was sued by investors and insurers for over $5.2 Billion securities fraud. Drayne was never charged for any damages.

*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.

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

BETA TEST — DISCOVERY SUPPORT

Discovery

In the meanwhile you can order any of the following:

*CLICK HERE TO ORDER TERA

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

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

*

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

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

The Best Article Yet on Illegal and Immoral Practices by Investment Banks Making False Claims About “Securitization of Debt” by Francesca Mari on Aaron Glantz Book “Homewreckers”

Francesca Mari in the JUNE 11, 2020 ISSUE of The New York Review of Books, has written a truly excellent piece on a book called “Homewreckers” by Aaron Glantz. 

If you ever had any doubt about whether homeowners have the moral high ground and whether the investment bankers have no moral or legal grounds for what they did, you should read the article and buy the book. ( I get nothing from sales of the book and I have not met either author — although I will contact them for interviews on my show).

The only point that I think both Mari and Glantz miss is that the loans were never securitized. Securitization is the process of selling assets in pieces to multiple investors. No residential loan to my knowledge has ever been sold to investors even on paper much less in reality.

Let me put it this way: there has never been a transaction in which investors buying certificates, investment banks or anyone else paid value in exchange for ownership of any debt, note or mortgage. They paid value but not for the loan. And they received the benefit of their bargain.

At the end of the day there is nobody who has paid value in exchange for a conveyance of ownership of the debt, note or mortgage. Claims of ownership of the debt, note or mortgage are all false even though they are documented. Documents are not transactions. They are evidence of transactions. And if there was no such transaction then the documents are false.

And that is why all of the documents in foreclosures are false, fabricated, forged, backdated and robosigned. The documents are false but they are presumptively valid if they conform to statutory requirements. The point missed by most homeowners, lawyers and judges is that just because they are presumed valid doesn’t mean they cannot be tested and rebutted.

Support Wendy Nora in Wisconsin

Dear Attorney General Kaul,
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My name is Wendy Alison Nora. I am writing to you with a copy of this email to the Administrator and Deputy Administrator of the Wisconsin Division of Criminal Investigations (DCI) in a continuing effort to report ongoing statewide crimes under Wis. Stat. sec. 165.70(1)(a).
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I had been reporting the use of false pleadings, supported by forged documents and falsely sworn affidavits in Wisconsin Circuit Court foreclosure actions and forged documents being produced for recording in the Offices of the Wisconsin Registers of Deeds since 2010 in defense of homeowners in foreclosure actions until I was suspended for doing so by the Wisconsin Supreme Court on March 30, 2018, effective April 30, 2018.
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I remain admitted to practice before the United States Supreme Court, which is fully informed of the disciplinary proceedings before the Wisconsin Supreme Court and has taken no action thereon.  I consult with foreclosure defense lawyers nationwide except in the State of Wisconsin due to the unconstitutional provisions of SCR 22.26 and SCR 22.27 from which I intend to obtain relief.  I also consult with homeowners nationwide who are seeking to file Petitions for Writs of Certiorari to the United States Supreme Court for violations of their rights to due process by the use of fabricated evidence in both judicial and nonjudicial foreclosure proceedings.
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Please see the attached proposed REVISED Third Amended Complaint (first document attached) which is but one a number of citizen complaints of the continuing operation of an ongoing criminal enterprise, which I have identified as the Fraudulent Foreclosure Enterprise.  In Wisconsin, the Fraudulent Foreclosure Enterprise has been engaging in violations of multiple, predicate acts in violation of the Wisconsin Organized Crime Conrtol Act (WOCCA) at Wis. Stat. secs. 946.80-946.88.
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I would like to set up a conference with you  and the Administrator of the Division of Criminal Investigations (DCI) as part of my continuing effort to report crimes that are statewide in nature, importance or influence, which the Wisconsin Department of Justice (DOJ) has a duty to  investigate under Wis. Stat. sec. 165.70(1)(a). Numerous homeowners and other property owners have statements and evidence provide in the course of the legislatively-mandated investigation, many of whom have lost title to and possession of their homes based on false pleadings, supported by fabricated and false evidence.
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I have voluminous evidence to support the position that false pleadings, supported by forged documents authenticated by falsely sworn affidavits have been and are being transmitted by mail and wire to be filed in the circuit courts of the State of Wisconsin, and uttered into evidence in circuit court foreclosure proceedings on a systematic basis which are predicate acts identified under Wis. Stat. sec. 946.82(4) in violation of Wis. Stat. sec. 946.83.
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You have inherited duty to investigate ongoing violations of the Wisconsin Organized Crime Control Act (WOCCA) at Wis. Stat. secs. 946.80-946.88, which were never investigated by former AG Schimel after he succeeded former AG Van Hollen.  Former AG Van Hollen’s staff failed to investigate my report to the Wisconsin Department of Justice (DOJ) on January 14, 2014. See the second document attached: my email to AAG Holly Pomraning dated January 14, 2014.
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Wisconsin circuit court records have been and continue to be infected with false pleadings and forged documents, authenticated by falsely sworn affidavits transmitted by mail or wire contrary to 18 U.S.C. secs. 1341 or 1343 which are predicate acts in violation of 18 U.S.C. sec. 1961 and are specifically incorporated as predicate acts in violation of WOCCA under Wis. Stat. sec. 946.82(4)
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The crimes which are being reported  involve multiple violations of Wis. Stat. sec. 943.38(1)(a) and Wis. Stat. sec. 946.32(1), defined as predicate acts under Wis. Stat. sec. 946.82(4), prohibited under Wis. Stat. sec. 946.83 and chargeable as crimes. In addition, since no later than January 10, 2012, attorneys for mortgage servicers have been uttering forged documents purporting to be “original” notes by presenting forged documents in Wisconsin foreclosure actions in violation of Wis. Stat. sec. 943.38(2) which conduct also violates SCR 20:3.3(1)(a), SCR 20:8.4(b), (c), and/or (f).
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Hundreds of forged documents have been transmitted by mail and wire to be recorded in the Offices of the Wisconsin Registers of Deeds, contrary to 18 U.S.C. secs. 1341 or 1343, which are predicate acts in violation of 18 U.S.C. sec. 1961 designated in Wis. Stat. sec. 946.82(4) as predicate acts and also  involve multiple violations of Wis. Stat. sec. 943.38(1)(a), defined as predicate acts under Wis. Stat. sec. 946.82(4), prohibited under Wis. Stat. sec. 946.83 and chargeable as crimes.
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Although the Department of Justice (DOJ) for the State of Wisconsin received at least $30,191,806.00 from the National Mortgage Settlement in the case titled United States of America, et al. v.  Bank of America Corporation, et al., Case No. 12-cv-361 in the United States District Court for the District of Columbia on April 4, 2012, the DOJ took no action to investigate violations of Wisconsin criminal statutes reported to the DOJ and the Division of Criminal Investigation (DCI) and DOJ has taken no action assist homeowners whose homes were and still are being taken in violation of the criminal law.
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Furthermore, while the State of Wisconsin received $1,505,315.00 from the Consent Judgment in the case titled The State of Connecticut v. Lender Processing Services, Inc., et al. (the LPS Settlement) filed in the Superior Court for the Hartford, Connecticut on January 31, 2013, the State of Wisconsin has taken no action to investigate, remediate or demand remediation of the false recordings in the Wisconsin Registers of Deeds Offices despite the availability of the LPS Settlement funds to do so.  See the third document attached: the Consent Judgment for the LPS Settlement. See also the November 20, 2012 conviction of DOCX CEO Lorraine Brown (DOCX is a subsidiary of LPS and party to the Consent Judgment) in which she admits that over 1,000,000 false documents have been filed in the public land records from her LPS subsidiary alone (fourth document attached).
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On February 5, 2020, an accounting was provided to a Wisconsin citizen detailing the allocation of funds from the National Mortgage Settlement and reporting that as of February 5, 2020, $550,000.00 of the National Mortgage Settlement funds still has not been expended by DOJ.  See the fifth document attached: February 5, 2020 letter from Wisconsin State Representative Tip McGuire.  There is no accounting for the $1,505,315.00 LPS Settlement of which I am aware and, to the best of my knowledge, DOJ undertook no effort to remediate the false documents recorded in the Offices of the Wisconsin Registers of Deeds.
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False pleadings, supported by forged documents and authenticated by falsely sworn Affidavits filed on behalf of nonexistent and misidentified entities continue to be used by the Fraudulent Foreclosure Enterprise described in the proposed REVISED Third Amended Complaint in Dane County Circuit Court Case No. 2018CV000916 in order to foreclose on Wisconsin real estate to this day.
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Thank you for your anticipated response to this continuing report of the ongoing criminal conduct of the Fraudulent Foreclosure Enterprise in the  State of Wisconsin by agreeing to the requested conference with you and the DCI.
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Respectfully
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Wendy Alison Nora
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bcc:  Interested Wisconsin citizens and others

Wendy Alison Nora*
ACCESS LEGAL SERVICES, LLC**
310 Fourth Ave. S., Suite 5010
Minneapolis, Minnesota 55415
VOICE: (612) 333-4144
FAX: (612) 206-3170
accesslegalservices@gmail.com
*Not admitted to practice law in Wisconsin or Minnesota
**Providing research, investigative, technical, filing and
process services at the direction of qualified attorneys
in all U.S. states exclusive of the State of Wisconsin
What I said:

Ms. Nora’s position is entirely correct. the failure of federal and state government agencies to police the actions of investment banks has resulted in undue burden on everyone including but not limited to investors, homeowners, court systems, taxpayers, tax agencies, local government and more.

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The basic facts are simple: there has never been a process for securitization of debt despite all representations and allegations to the contrary. In no case has any obligation of any homeowner been transferred to any investor under the current scheme of “securitization.”
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At the beginning, middle and end of the process, homeowners are drafted into a plan of securitization that they know nothing about, they get paid nothing for issuing the note and mortgage that enables claims of securitization, they get no credit for payouts of insurance and hedge contracts, and they do not get the benefit of any bargain they intended, to wit: a loan transaction in which an actual lender takes an actual economic risk and maintains a stake in the success of the transaction.
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Instead homeowners are left with the absence of a creditor and lender who could be responsible for compliance with Federal and State lending laws, including a lender who is ultimately responsible for the viability of the loan. And the process of paying them money for issuance of the note and mortgage is dependent upon a business plan that relies on the probability of events that can be declared as defaults even with the absence of a creditor who has paid value for the underlying obligation in exchange for a conveyance of ownership of the debt.
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This in turn triggers two things: foreclosure for profit (instead of restitution) and receipt of payments from counterparties to insurance and hedge products that are never credited to the “loan” account because the “loan” was only insured indirectly through a contract indexed on a certificate deriving its value from the existence, but not the ownership, of the “loan.”
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As a result the only possible foundation for foreclosure, collection or even administration is the production of false documents that are forged, robosiugned and backdated to memorialize transactions that never occurred. Homeowners are sued for forfeiture of their homes based upon demands for money that do not account for reductions of the debt resulting from receipt of funds without subrogation from third party sources.
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As a result, the documents that assert a memorialization of transactions in which the debt, note or mortgage were sold or purchased are all false and fabricated. Many of them are recorded. And government in general seems to be operating under the narrative promoted by Wall Street investment banks that this practice, while illegal, has now been institutionalized and there is nothing anyone can or should do. I disagree.  And I support Ms. Nora’s demands. Failure to intervene and prosecute criminal behavior is the major contributor to wealth inequality in this country and in every state of the union.

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Regards,
Neil F Garfield, Esq. M.B.A., J.D.

Sham Affidavit Rule in Federal Courts Might Apply to State Court Actions in Foreclosure

A sham affidavit is one that asserts facts that are inconsistent with facts alleged in pleadings or previously proffered in discovery, prior affidavit or proffered documents. This happens a lot in foreclosure cases when foreclosure mills file motions for summary judgment. They often casually change the claimant by reference or name adding some power of attorney or other claim that is not attached or explained. The sham affidavit rule bars the affidavit in its entirety if it asserts facts or positions that are not consistent with prior assertions.
The sham affidavit rule can apply to attempts to contradict not only prior deposition testimony, but prior written discovery as well. We’ve blogged about the sham affidavit rule a number of times. Briefly, the rule is that:
[A] party cannot create a genuine issue of fact sufficient to survive summary judgment simply by contradicting his or her own previous sworn statement (by, say, filing a later affidavit that flatly contradicts that party’s earlier sworn deposition) without explaining the contradiction or attempting to resolve the disparity.
Cleveland v. Policy Management Systems Corp., 526 U.S. 795, 805-06 (1999) (string citation omitted). See also Perma Research & Development Co. v. Singer Co., 410 F.2d 572, 578 (2d Cir. 1969) (generally viewed as the seminal case on sham affidavits). https://www.lexology.com/library/detail.aspx?g=60c7a1e1-4d34-4916-9a12-f41ab8fc5bf6
If a sham affidavit is filed, it is therefore barred unless the affidavit itself refers to the prior assertions and explains the differences that appear in the current affidavit. This explanation is not something that anyone in the foreclosure mill or servicer can do since they don’t have access to any of the facts causing the issuance of a default letter or foreclosure in the first place. They are just following orders.

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

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

BETA TEST — DISCOVERY SUPPORT

Discovery

In the meanwhile you can order any of the following:

*CLICK HERE TO ORDER TERA

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

*CLICK HERE TO ORDER CASE ANALYSIS

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

*

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

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

Tonight! Neil Interviews Co-Host Attorney Charles Marshall on His Success in Cal. Appellate Court as to the Chase-WAMU Fiasco

Thursdays LIVE! Click in to the Neil Garfield Show

Tonight’s Show Hosted by Neil Garfield, Esq.
Interviewing Charles Marshall

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

Tonight we pick up where the blog left off. the important but as yet unpublished opinion and decision in California Appellate court in which an appellate court stated clearly and unequivocally stated that allegations do state a cause of action if the homeowner contends that Chase did not buy loans in the Purchase and Assumption Agreement on September 25, 2008 between Chase, FDIC and the US Trustee in Bankruptcy.

see Massoud v JPM Chase Bank

The Court agreed that if Chase was claiming ownership and authority over the loan under those it was false claim. Charles Marshall succeeded where others had failed. Tonight we discuss how he did it. 

Homeowner debt is never sold to investors. Either you get it or you don’t.

It’s more complicated than just a Ponzi scheme.

In its simplest form the obligation of the homeowner was purchased by the Investment Bank through intermediaries. So the originator never touched the money. It was often masked by something called a warehouse lending agreement.

So the paperwork showing series of sales of the loan starting with the originator is completely fabricated and demonstrably untrue. It can be demonstrated through discovery. The absence of a meaningful response to simple discovery demands can be used to raise the inference that there is no ownership or authority over the loan. 

This also undercuts the false claims of a “boarding process” or “audit.” No such thing exists. Unfortunately the people who argue or testify that such practices exist are protected by litigation immunity doctrines that are far too broad.

But you must be persistent and aggressive in court. Merely demanding discovery is worthless. You must seek orders from the court compelling the response to Discovery. And when you still don’t get the answer you must seek orders of sanctions, including limiting the ability of your opposition to proffer any evidence of ownership or authority over the debt.

Once you know how to do that in litigation and you raised timely proper objections if the case ever gets to trial, the homeowner wins most of the time.


Many paper transactions that are shown as a refinancing of the original home owner transaction are equally fabricated. This is true when the originating Investment Bank is the same in both the original homeowner transaction and the new one. No money exchanges hands. It is all on paper. If the homeowner is getting cash out of the deal, then the Investment Bank advances only that amount of money. 

The Investment Bank in turn maintains the original securitization claims of the original homeowner transaction while at the same time starting a new one. And often there is a third securitizations scheme in which the original scheme is “resecuritized.” This allows the investment bank to make far more money than anything involved in the homeowner transaction. (And by the way I suggest you stop calling it a loan).

Where the Investment Bank for the original homeowner transaction is different from the Investment Bank in the new homeowner transaction that is called a “refinancing” then in most cases money actually changes hands. 

But in no case does the investment bank or the investors ever receive any conveyance of any right, title or interest in any homeowner debt, obligation, note or mortgage. This is intentional. If they did receive such a conveyance then they would be lenders under the lending statutes like TILA, and securities statutes, rules and regulations under the SEC.

The plan calls for evading or avoiding liability for violations of those laws. So they define the originator as a lender even though the originator is not loaning or even paying any money to the homeowner.

When foreclosure Mills come to court they argue the contrary. They’re able to do that because they are protected by litigation immunity.

Possession of a note does not automatically mean that the possessor has the right to enforce. 

And even if the right to enforce the note that exists, that does not mean that the possessor of the note paid value for the debt as required by article 9 §203 of the Uniform Commercial Code. 

That is why a paper transfer of a mortgage or deed of trust is a legal nullity without an actual transfer of the debt. All jurisdictions have case decisions that say exactly that. It’s the law.

The common error by lawyers and judges is that they presume that the note is evidence of ownership of the debt. That presumption does no harm when one is only enforcing the note for a money judgment. But when seeks forfeiture, especially of a homestead, that presumption defeats all the protections that were designed into lending and foreclosure statutes. Unless legal merger has occurred and the court specifically makes that factual conclusion, the execution of the note is not evidence of the debt.

The doctrine of merger is the only things that prevents the homeowner from creating two liabilities for the one payment. But merger only applies if the person paying consideration or value to the homeowner is the same person as the one designated as “payee” on the note. If those two are not the same, then merger cannot occur.

You have two legal events then. One being the payment to the homeowner which gives rise to a liability simply because the homeowner received it, and the other being the execution of the note that under the laws governing negotiable instruments gives rise to a separate liability that can be deadly to the homeowner if someone purchases the note for value (holder in due course), in which case they will be presumed to have acquired the debt. But the debt is not transferred unless the person selling the note owned the debt.

It is possible to enforce a note without the claimant having any actual Financial loss. This is an exception to the usual constitutional rule that in order to get into court you must be able to allege and prove some injury. But in foreclosure, the condition proceeding to filing the action for foreclosure is that the claimant must have paid value for the underlined obligation. In other words the requirement that the claimant has actually suffered Financial injury as a result of some failure on the part of the homeowner is not waived just because someone possesses the note. 

Lawyers who get it win their cases. Most lawyers don’t get it and they lose.
While it’s true that the securitization scheme has many of the elements of a Ponzi scheme, it is not that simple. It’s completely true that the investment Banks would not be paying any money to homeowners in the absence of security sales and that the proceeds of security sales are the main contributor to the revenue of the investment bank and its Affiliates and Co Venturers (see RICO). 

But much of the money that is paid to investors does in fact come from payments from homeowners. Or perhaps that is not the right way of saying it. The money received by investors comes from the Investment Bank who actually does not have much of a liability to the investors or to anyone else as a result of the sale of unregulated securities. The investors who purchase certificates are not purchasing payments from homeowners. They may think they are but they are not. No document says they are.

They purchased a conditional promise within the sole discretion of the Investment Bank. The Investment Bank is acting through a fictitious name of a special purpose vehicle whose only legal existence is technical and not legally real. The certificates are issued in the name of the trust, but the trust has no assets, no business, no liabilities, no income and no expenses.

The Investment Bank maintains the right, in its sole discretion, to continue making payments to investors despite the failure to receive payments from homeowners. Those payments are labelled “servicer advances” even though the money comes from a reserve fund established when investors purchased certificates. This is actually all spelled out in the prospectus and the offering circular to investors. All servicer advances come from investor funds and never from the “the master servicer” which is actually the Investment Bank in disguise. 


So the bottom line is that the money paid to homeowners comes from the Investment Bank at the very beginning. Therefore none of the intermediaries ever touches any money except that which is paid to them as fees. My point is that homeowners are entitled to a bigger piece of the pie than they received only because the Investment banks hid the pie.

*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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BETA TEST — DISCOVERY SUPPORT

Discovery

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.

Cities and Counties Bracing for Flood of Zombie Foreclosures

With 40 million people out of work so far, consumer spending dropping like a stone and the prospect of recovery still over the next hill, the cessation of relief for workers and consumers at the end of July means that by September there will be fake notices of default sent to thousands, perhaps tens of thousands or even hundreds of thousands of homeowners.

Following the past track record most homeowners will fail to contest the foreclosures erroneously believing the debt still exists in the same form and amount as when it was created (less payments made).

In districts where home values are low the investment banks, through their sham conduits will initiate forfeitures through foreclosure actions — and then abandon the property. The reasons are many but chief among them is that they don’t actually care about the money. they care about getting the foreclosure to insulate themselves from false claims of securitization of debt. The sale of the debt, you see, never happened.

That leaves the cities and counties without any legal person willing to pay taxes and fees. So far, the cities and counties have missed their opportunities. But when these zombie foreclosures hit the marketplace in January and February of 2021, they will again have an opportunity to recoup their money by suing the investment banks.

But they probably won’t because the politicians are often supported by political donations and other support from Wall Street banks. That in turn leaves the taxpayers — Federal State and Local to pick up the tab for services that are no longer being funded by assessments on those properties.

 

BETA TEST OF NEW SERVICE — DISCOVERY SUPPORT

 

Discovery

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.*

FREE REVIEW:

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

*CLICK HERE TO ORDER TERA

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

*CLICK HERE TO ORDER CASE ANALYSIS

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

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

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

Tonight! Qui Tam Actions

Thursdays LIVE! Click in to the WEST COAST Neil Garfield Show

with Charles Marshall and Bill Paatalo

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

Qui Tam Actions generally are lawsuits in which an individual sues on behalf of a governmental entity, typically the Federal Government, with the goal of remedying a defrauding of the government by a private organization or individual. These actions typically take the form of a whistleblower exposing the defrauding actions of his or her employer. Qui tam actions in the US are often brought under the False Claims Act, a Federal law specifically empowering individuals to sue as whistleblowers to recover private funds garnered through defrauding the Federal Government.

In the foreclosure context, individuals who are connected with, or in some cases simply apprised of, the defrauding behavior, can then bring a qui tam action to remedy the fraud. As a whistleblower, the suing individual is entitled to substantial compensation, including penalties, attorney’s fees, court costs, on top of the disputed amount of the fraud. The whisteblower receives his or her compensation as a percentage of the fraud money recovered. This amount can and often does run into the millions of dollars, depending on the nature of the fraud and the amount in dispute. Bill will highlight a recent successful qui tam action and address previous qui tam matters, involving for example mortgage servicers such as Nationstar. 

Transactions with Homeowners Are Part of Securitization Scheme: Why don’t homeowners and their lawyers use this fact?

So the “RMBS” industry is pushing for “economic relief” in the Pandemic. If they get it, it will be another windfall for Wall Street and investment bankers will go from laughing to convulsing in the privacy of their board rooms.

The Wall Street Journal published an article yesterday on how the mortgage market is not behaving “as expected.” With interest rates down so low there should be a flood of refinancing. And there is plenty demand to do just that. But, as the article points out, there might be demand but there is no supply. There is no supply because investors are not buying certificates issued as RMBS (Real Estate Mortgage Backed Securities). https://www.wsj.com/articles/mortgage-credit-tightens-creating-drag-on-any-economic-recovery-11590431459

The reason they are not buying RMBS is simple. They don’t trust the economy and all of the investors have growing doubts about the valuation and risk assessment associated with RMBS. Investors see mortgage default risks as being associated with safety of their investment because the certificates state that one of the discretionary reasons why investment banks don’t need to pay them is if there are declared defaults on certain specified loans — whether or not they are owned by the investment bank or anyone else.

And since securitization is in essence a Ponzi scheme, the more difficult it is to sell new certificates, the more difficult it is to pay investors. That part admittedly is counterintuitive but nonetheless true. While homeowner’s payments actually do cover the liability of the investment bank to investors, the reality is that the investment bank continues ot make payments to investors regardless fo receipt of money from homeowners IF they are continuing to make sales of new certificates.

The practical effect of all this for homeowners is to realize that if they sign on any dotted line they are pulling the trigger on a securitization scheme, of which their receipt of money is a tiny fraction. At the end of the day there is no person, company, business entity or trust that maintains any books and records showing the homeowner’s promise to pay as an asset on their balance sheet. In plain words, the role fo the creditor has been eliminated to avoid lender and servicer liability imposed by federal and state laws.

This fact — the absence of a creditor — has been the topic of discussion for two decades. And it is has never been addressed because the investment banks, who have the greatest amount of influence over politicians, don’t want it addressed. They don’t want it addressed because if it was addressed then the role of investment banks AS LENDERS would be revealed along with their gargantuan profits from “securitization” in which the obligations of homeowners are NOT sold to anyone, much less securitized.

In practice this means that homeowners can and probably should dispute their obligation to make payments before, during and after any false declaration of default. A declaration of default is a legal nullity if it isn’t declared by or on behalf of a creditor. If there is no creditor then there can be no default. Yes it is that simple.

So that is why I have been a broken record. Criminal lawyers tell their clients to keep their mouths shut because 80% of all criminal convictions are the direct result of what comes from the mouth of the defendants. That’s why I tell professionals with grievances filed against them the same thing.

And that is why I tell homeowners the same thing —- admit NOTHING. The reason is simple — your opposition is an investment bank regardless of who is named as claimant or plaintiff. If you admit any part of what they are saying they will argue that you admitted all of it. And they may be right under current rules.

Force them to the PROOF and they will fail the test every time.

Nothing they are saying is true and none of their documents are anything more than pure fiction. Don’t admit that the transaction was a loan, that there is an obligation, that the obligation is secured by a mortgage, that the obligation is set forth in the note, that the note or mortgage has been transferred, that the default ever occurred, or that the action is a foreclosure.

Don’t admit the trust or that a bank is a trustee or that the bank has any authority to represent a trust or the holders of certificates. None of it is true. Don’t even think that the action is for the benefit of investors. It isn’t.

And don’t think that you are cheating someone out of money by not making the payments you promised to make. Anyone who was legally entitled to receive a payment from you has already been paid. It is not your doing or your fault they got paid without your money. And it isn’t your responsibility to pay them again.

If investment banks want to change this analysis and return to the world where we are a nation of laws and not a nation where men make up their own rules and go to illegal or extra-legal schemes then they must seek to legally reform (see reformation) their schemes to protect all the stakeholders and not just themselves as intermediaries with the most to gain and the least to lose.

Your position is that you entered into a transaction in which you knew only a small part of the whole transaction and that you were entitled to know about the rest of it. Your intent was to establish a loan transaction. their intent was to start a securitization scheme in which the role of lender was eliminated.

So your intent was a loan and theirs was the creation, issuance, sale, trading and hedging of securities. Without your signature the securitization would not exist. Without securitization your homeowner transaction would not exist.

You got a payment for issuance of the note and mortgage and for a disguised and unintended license to resell personal data. That part of the consideration was offset by your required (see adherence contract) promise to make payments far in excess of the transaction payment received by the homeowner.

So was there any net consideration paid to the homeowner for issuance of the note, issuance of the mortgage and license to resell personal data? Auditors might vary in their opinions on that.

And given the requirements under all lending and securities laws to disclose the whole transaction — and not just the part of it called a “loan” — how much money should the homeowner have received for triggering a profit firestorm?

We won’t know because in a free market the homeowner would have been able to bargain for greater incentives if he/she knew about the entirety of the transaction. We won’t know because in a free market competitors for homeowners’ signatures would have offered more incentives. We won’t know because in a free market, investors would have asked for much greater incentives since, besides the homeowner, they were the only real player in the securitization scheme.

And THAT is what quasi contract law and the law of quantum meruit is all about. Use it or lose it.

*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.

FREE REVIEW:

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

*CLICK HERE TO ORDER TERA

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

*CLICK HERE TO ORDER CASE ANALYSIS (not yet)

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

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

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

How to Deal with Claims of Mortgage Selling and “Successors”

I received a question regarding Lehman along with information that the old Lehman crowd regrouped under the name of Matrix Private Capital Group in New York. Fuld is there and in any case involving Lehman engineered “loans” I would encourage the taking of his deposition.

The simple but counterintuitive answer is that Lehman wasn’t buying anything, but it did pay. It paid for the funding of the origination of loans.

Since the payment was already made, the originator did not have to be paid again in order to acquire the note and mortgage. Since the originator had never paid anything, it had nothing to sell.

So the originator never received any payment. 

Lehman was following the business plan that was invented at Goldman Sachs. The business plan was for the issuance of multiple levels of securities based upon the appearance of the creation of loan transactions and loan obligations. The trick of the plan was to do so without ever becoming a lender that was subject to federal and state lending laws regarding disclosure of compensation and profits.

So this is why all of the documents had to be fabricated after the origination of the illusion of a loan transaction without a creditor or lender. they had to create the appearance of a sale through documentation that was completely fabricated, false, and more often than not forged and backdated. but lawyers and judges all come from law schools in which their training is directed at the written instrument as though it was the Bible. 

In this case virtually all written instruments are part of a scam. 

This is part of the reason why the “boarding process” is completely false. The records, in most cases, of the payment history are solely in the care, custody, and control of central repositories like Black Knight who, like their investment bank bosses, remain out of sight. And the records of who receives payments made to the servicers are a closely guarded secret — something that is both illegal and extra-legal. Of course you’re entitled to that information since it shows clearly who is intended to receive payments on the homeowner obligation — i.e., the so-called creditor.

Whose Lien is it Anyway? Neil F Garfield, published by GTC Honors, Inc. f/k/a General Transfer Corporation (2008)


So if you really want to manage your expectations regarding these issues, the first thing you need to do is stop believing anything you read in the documents that are prepared by or on behalf of the investment Banks. —- And you need to get comfortable with ambiguity — yes you have an obligation but no you don’t have and probably never did have a lender.

The only legal way to enforce the obligation is for some party to step up and say they paid for the obligation and that they therefore own the debt, note and mortgage. But for anyone to do so they would be asserting an interest adverse to those of investors who think that they “own” the loans without any of the responsibilities that go along with ownership of loans or their administration. So the only thing for them to do legally is seek to reform the instruments to allow for designation of a creditor even when there is none.

The law firms representing the investment banks have long understood that taking the legal route would diminish the profitability of securitization schemes since it would necessarily result in the disclosure of all manner of profits from the scheme.

So they went the illegal route with great success. It worked because they managed to get everyone focussed on the “benefit” received by homeowners and the “windfall” they would receive if the home were not foreclosed.

Here is what they don’t want anyone to seriously consider: that the payment to the homeowner or on his/her behalf was just that — payment, not a loan. And the consideration for the payment was the issuance of a note and mortgage without which there could be no securitization. Further consideration was the grant of authority to resell private loan data.

Under normal legal analysis this results in a failure of consideration because the payment was illusory. At the same time as the homeowner receives it he issues the note and mortgage in which it is pledged out again.

But the securitizations scheme went forward anyway which is why the homeowner is entitled to receive payment in quantum meruit either as a direct claim or as a defense (affirmative defense) for set off or claim of disgorgement.

This is entirely dependent upon two things — (1) the amount of money generated as revenue that can be allocated to the origination of the homeowner transaction and (2) the reasonable amount of money, in a free market economy, that would normally be paid to a person for playing the critical role in allowing the securitization scheme to proceed.

A review of such cases shows that the percentage of compensation due to homeowners is between 5% and 15% of the revenue generated. In a typical securitization scheme the amount of revenue is on average $12 for each $1 of the homeowner transaction. So that translates to the homeowner being entitled in quantum meruit to between $0.60 and $1.80 for each $1 of the nominal amount of the homeowner transaction. So the bottom line is that the homeowner owes the $1 in quantum meruit but is also owed between $0.60 and $1.80 PLUS interest.

And that is the rest of the story. I dare anyone from the financial community to say I am wrong. That is anyone who has a license at risk and who can produce contrary data proving that this calculation is incorrect.

*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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Charles Marshall Scores Major Victory in Cal. 4th DCA on Chase-WAMU Fraud

This was no easy task. And this is exactly the ruling that all the nay-sayers said could not happen. But it did.

https://livinglies.me/wp-content/uploads/2020/05/D075582_Opinion.pdf

D075582_Opinion.pdf

We reverse because her complaint alleges facts that could support a legal theory of recovery if she were given leave to amend.

D075582_Opinion.pdf

But Masoud’s final basis for her title claims—that WaMu sold her deed of trust to unknown third parties three years before Chase assumed its assets—cannot be so easily dismissed. In sustaining the demurrer, the trial court relied on the P&A agreement between Chase and the FDIC to conclude that Chase obtained the rights to Masoud’s deed of trust. But the legal meaning of the P&A is that Chase obtained whatever assets WaMu possessed as of September 2008. It does not exhaustively list what assets those were.

D075582_Opinion.pdf

Assuming (as we must at this stage) that the allegations of the operative complaint are true, it would mean that Chase was never WaMu’s successor in interest as to Masoud’s deed of trust and that at most, it attempted to transfer an asset it never owned to US Bank in 2011. As a result, according to Masoud, a party with no legitimate claim to her deed of trust foreclosed on her house.

D075582_Opinion.pdf

This is precisely the kind of injury envisioned in Yvanova, which held that a borrower has standing to challenge a foreclosure sale ordered by a party with no authority to do so. (Yvanova, supra, 62 Cal.4th at p. 943.) This court has further clarified that the protections of Yvanova apply only in the postforeclosure context—exactly the position Masoud now finds herself in. (Saterbak, supra, 245 Cal.App.4th at p. 815.) And on at least one occasion, this court has applied Yvanova in reversing a judgment of dismissal after a sustained demurrer when a borrower alleged her deed of trust was sold twice by the same party, rendering the second sale void and the foreclosure that followed unlawful. (Sciarratta v. U.S. Bank National Assn. (2016) 247 Cal.App.4th 552, 565.)

D075582_Opinion.pdf

other than the original 2005 deed of trust that references WaMu as the lender, the judicially noticeable documents are all from 2008 or later. They shed no light on whether WaMu, after funding the loan in 2005, assigned the beneficial interest to another party or other parties later that same year such that it had no interest to transfer in 2008.

D075582_Opinion.pdf

defendants appeared to argue that even if WaMu sold the beneficial interest in 2005 (so that there was no asset to transfer to Chase as part of the 2008 P&A agreement), it nonetheless retained rights as the servicer on the

loan.7 They suggest these servicing rights transferred to Chase in 2008 such that Chase was entitled to foreclose in its capacity as the loan servicer regardless of which entity held the beneficial interest.

D075582_Opinion.pdf

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.) Here, Masoud has alleged that US Bank wrongly claimed to be the entity to which the deed of trust had been assigned. (Ibid. [borrower “is obligated to pay the debt . . . only to a person or entity that has actually been assigned the debt”].) At this point it remains a factual question as to which persons or entities held the beneficial interest in the deed of trust at the time of the foreclosure. That Chase may have inherited servicing rights or responsibilities from WaMu does not erase Masoud’s injury if a party with no beneficial interest in her loan directed foreclosure on her house.

D075582_Opinion.pdf

Liberality in permitting amendment of pleadings, even where there have been earlier opportunities, is required by this state’s well-established public policy favoring resolution of cases on their merits wherever possible. (See, e.g., Douglas v. Superior Court (1989) 215 Cal.App.3d 155, 158.)

How to Deal with Motion for Substitution of Plaintiff in Foreclosure Actions

The single basic tool of the investment banks, who are secretly running the whole foreclosure show, is musical chairs. By rotating the players they can successfully bar the courts and the litigants from knowing or pinning down who is real and what is real. All of that ends if you sue the investment bank.

Look at any foreclosure in which claims of securitization are known or suspected and you will find “rotation”.

In nonjudicial states it starts with “Substitution of Trustee” on the deed of trust which can be done without any motion.

Before or after that there is a change in the name of the servicer, which has perplexed judges since I first entered the picture in 2006.

Then there was a change in the credit bid after the foreclosure was complete or during the foreclosure sale where a new party mysteriously ended up “owning” the property.

And now we see with increasing frequency, the substitution of a new claimant or plaintiff during the foreclosure proceedings.

Motion for substitution of Plaintiff are becoming the rage simply because most state courts require a wrongful foreclosure action to be against the party who initiated the action. So the investment banks simply took their cue from that. They designate a new Plaintiff or a new claimant during the proceeding. Presto there is no wrongful foreclosure action. But there still may be the normal abuse of process claim.

Either way, they have no right to designate the first or the new Plaintiff or claimant. 


I would say that the likelihood of successful opposition to the motion for substitution of plaintiff is very low, as long as some explanation is offered. But this should trigger aggressive discovery where you go after the transaction by which the new plaintiff became the designee.

In a nutshell no such transaction exists because there was also no transaction by which the first Plaintiff became a creditor. It is all smoke and mirror. 


I am not saying that you shouldn’t oppose the motion for substitution of plaintiff. What I am saying is that the judge will regard it as merely a housekeeping chore until you raise the central issues of your defense narrative.

The moral of the story is that if you are going to sue for wrongful foreclosure you should be naming the investment bank that was calling the shots. Everyone else is a moving target with plausible deniability. That may not always be so easy to determine, but it isn’t impossible. We can help with that.

If you go after the investment bank you will be able to overcome the plausible deniability and technical requirements of claims based upon wrongful foreclosure. You can say that the action was brought by them using the name of a sham conduit. The change in “Plaintiff” therefore changes nothing.

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.*

FREE REVIEW:

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

*CLICK HERE TO ORDER TERA

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

*CLICK HERE TO ORDER CASE ANALYSIS (not yet)

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

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

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

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