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Today we discuss on the Show the California case of Bienfeld, et al. v. Ditech Financial, LLC, et al. This case involves as a Defendant Bank of New York Mellon (BNYM), the purported Trustee of a securitized trust at the heart of the lawsuit. While Ditech itself is in bankruptcy protection in a Chapter 11 in New York State, its co-defendant here BNYM is not covered by any potential bk automatic stay.

A pending motion for summary judgment has been continued as the Judge here has partially sided with Plaintiffs to compel Defendant BNYM to provide further and genuine responses to the following issues: chain of title re the subject loan; the transfer, sale, and purchase of the loan; the relationship between the trust beneficiary and its agents/loan servicers, etc.

Critical to the Judge’s order here is the viewing of evidence related to these matters being so critical that the motion for summary judgment was continued to enable Plaintiffs to seek such evidence to more adequately respond to the MSJ itself.

One other interesting wrinkle to this case: The demand and the providing of (here, apparently illegitimate) Certifications of Trustee, which certifications are just that, certifications that the mortgage note at issue is in fact legally part of the securitized trust with which it is supposed to be associated.

Editor’s Note: There is a difference to claiming rights under the note and ownership of the debt by reason of having paid for it. Article 9 §203 UCC is adopted in all 50 states. It says that the claimant (not some third party) must be the one who paid value for the debt.

Also there is more than one entity named DiTech and they are unrelated. Look it up. The one thing they all have in common is that none of them ever made or paid for a loan account.

Where Legal Fiction Triumphs Over Fact and Money

see Legal Standing established Only in Reference to Delivery of Note or Rights to Note

This is perfect example of what I have been talking about. The article raises legal points that are entirely correct. But it begs the question — who actually owned the debt by virtue of having paid money for it? The authors ignore that point entirely just as the memorandums of law and motions to strike do when they are filed by attorneys for parties claiming the right to foreclose.

The point of the article is that the courts are using presumptions that do actually apply to infer that legal standing is present. And those presumptions are almost always sufficient to deny a motion to dismiss a foreclosure complaint or a motion for summary judgment filed by the borrower.

True legal standing requires that the claimant is suffering actual economic loss as a consequence of the borrower’s action or inaction. That loss is not real if they don’t own the debt by reason of having paid value for it. If they have not paid value for it, then they obviously suffer no financial loss resulting from nonpayment. Therefore there is no default that can be legally declared by the claimant or on behalf the claimant.

This requirement has been codified for hundreds of years and is now found in the statutes of all fifty states who have adopted the exact wording of Article 9 §203 of the Uniform Commercial Code (UCC). It is a condition precedent to filing a foreclosure that the claimant has acquired title to the debt by virtue of having paid value for it. It is also common law in every state that a transfer of the mortgage without an effective transfer of the debt is a legal nullity. You can’t own a mortgage if you don’t own the debt.

The borrowers lose cases because in the absence of rebutting the legal presumptions, the borrower has not met its burden of proof and the party claiming the right to foreclose has met its burden of proof through the use of legal presumptions which if unrebutted are as good as real facts. On the issue of standing that is the entire story.

Borrowers can meet their burden of proof contrary to the belief of many judges and lawyers. And meeting that burden means that they destroy the presumption of standing and thus require the party claiming the right to foreclose to actually prove their legal standing, instead of just relying on paperwork. In other words by forcing the issue of facts over legal fictions like legal presumptions.

Lawyers and pro se litigants often make a procedural mistake which dooms them to failure at this point. They mistakenly believe that by raising the issue of whether the party actually has legal standing that the burden shifts to the party claiming the right to foreclose. It doesn’t. The burden shifts when you have established that the presumption is rebutted.

The way you establish that the presumption is rebutted is by revealing that either (a) the party claiming foreclosure does not own the debt and never paid value for it or (b) raising an inference that the party claiming foreclosure does not own the debt pursuant to Article 9 §203 UCC as adopted as state law in all 50 states.

The way you reveal that the party claiming foreclosure does not presently own the debt by reason of having paid for it is by asking them about the transaction in which they paid value for the debt. If they reply that there was no such transaction then you have satisfied your burden, assuming you bring this to the attention of the court in the proper manner. At that point the case is over. Payment of value for the debt is a condition precedent to initiating foreclosure. Thus the borrower wins in that scenario but the problem of course is that scenario never plays out that way.

The way you raise the inference that the party claiming foreclosure does not own the debt and never paid for it is by conducting aggressive discovery in which the claimant will always dodge the question and return fire with some legal memorandum about presumptions. The court will often need to be reminded that the gravamen of the case is whether the claimant is actually the owner of the debt and not just the presumed owner of the debt.

By serving properly worded discovery demands and then following it up with well drafted and legally supported motions to compel, followed by motions for sanctions you can raise the inference that the claimant has not paid value for the debt, defeat the presumption to the contrary, and force the claimant to prove that it is the current owner of the debt by reason of having paid for it. And you might also get an order from the court granting your motion in limine that essentially says that since they refuse to give an answer as to payment for the debt or ownership of the debt, they will not be able to produce any evidence to the contrary at trial. If granted the case is over.

The banks want you to go down a rabbit hole looking for kinks in the documents. While I won’t say that challenging obvious defects in the documents is pointless, the case will only be won when you have established that the proper party with a real claim is not before the court.

RETURN TO CAPITALISM: Don’t Abandon It —The Problem is Fear

Most people have become so fearful that things can only get worse that they are clinging to any vestige of normalcy in their lives, hoping it will last just a little while longer. Here is the truth: the banks have undermined capitalism. Those symbols of free market capitalism have been steadily eroding our capitalist economy for decades. Capitalism depends upon free market forces. Those forces have been corrupted by theft and deceit and have continued because the banks have literally bought political leaders at every level of government. Theft and deceit are not capitalism and they do not excuse illegal acts.

Here is what I wrote to a reader who was lamenting about the unwillingness of judges to venture into the realm of fact and who refuse to reject fiction for fear that it will topple our economy and our society.

Nobody wants to decide these cases. while judges do not understand the complexity of the financial manipulations that were accomplished under the umbrella of “securitization” they do know one thing, to wit: any acknowledgement by the court that the debt was converted to revenue and no longer exists will cause mayhem. the government has told them that, Wall Street is telling them that and it is probably true.

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FACT: only a change in the law will enable a party to legally foreclose. Right now before closing party must have paid value for the debt and must own it. In nearly all cases that party does not exist. Thus a foreclosure cannot be legally processed. But in order to change the law, they must also give recognition to the illegal practices of the banks in the past. And that means disclosing to investors what is really happening and disclosing to borrowers what is really happening so that both can bargain based upon real information about real events. and that is something that the banks don’t want. They want to keep all the money for themselves. As a result the winds of free market forces are blocked and gross inequalities emerge.
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A glance at litigation dockets shows with certainty that neither investors nor borrowers would have made a deal if they really knew the terms of the deal. The investors had no idea that only a portion of their investment would be used for loans and the borrowers had no idea that the named lender was not the lender and that millions of dollars in revenue were being generated off of that one loan.
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The fact that the burden and financial losses fall upon the only two parties who were actually involved in a financial transaction — the investors and the Borrowers —- and that the financial gains flow mainly to the investment Banks is known by people who make policy but they really don’t know what to do about it. Their fear is that if they do something about it the entire Financial system will collapse. if the entire Financial system collapses then it is thought that Society will collapse.

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What they don’t realize is that the collapse will mainly fall on the major players in securitization and that when the dust settles, if the government simply enforces its existing laws and regulations, the major players may fail but everyone else will be in better shape. It will take great courage to go down that path. The banks have bought off virtually everyone in government at federal, state and local levels. It can be done and frankly it must be done. There will be pain because we have let this fester for 20 years. But in the end we will have healed a major disease in our economic and social system.
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There are many economists who take a different view about the apocalyptic vision That Wall Street projects in the event that they are challenged for their illegal practices and the government claws back ill-gotten gains. The simple truth is that we already have over 7000 alternatives to the commercial banking services provided by the Mega Banks. And we have hundreds of alternatives for investment banking ranging from small boutique Investment Banking companies too much larger and more influential Investment Banking companies that we’re not involved in the securitization scheme. The electronic backbone of our payment system is already serving all 7000 Banks and credit unions and savings associations. The actual change will be in control of that system so that no one Bank or small group of banks can dictate the terms of commerce in the marketplace. In other words, it is a change back to capitalism and free market forces.
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By ending the dominance of the major Banks, we will be correcting inequalities in the marketplace that have corrupted free market forces. In plain language, it is only when we can stop a dominant Bank from looking at investors and borrowers as food that we will have a free market. Capitalism depends on a free market. Banks have been undermining capitalism. They have weakened the fundamental elements of most Financial transactions. we must end that. And the only way that we the people can do that is by electing those people who have the courage and the support to actually change the dynamics of the marketplace so that everyone is trading on an even playing field — or something close to it.

USURY: Exemptions and Privileges May Be Erased for Bundled Loans

see https://finance.yahoo.com/news/usury-lawsuits-put-future-563-113150817.html

I frankly never thought the topic would ever be taken seriously. But here we are.

Many loans have extra privileges and rights that accrue to the lender. Usurious rates may be charged as long as its a bank. Student loans may not be discharged in bankruptcy. And investment banks generate pornographic amounts of profit by “trading” in contracts that are loosely referred to as residential mortgage backed securities, including “derivatives” that derive their value from the original “Securities” which are exempt from securities regulation because they are supposedly private contracts.

My point raised in connection with student loans, is that the guarantee for student loans is to reduce or eliminate risk to the lender. Except for the fact that student loans went too far, this was a noble effort to make it affordable for every student who wanted to better themselves. They could get a loan from anyone without the lender having any risk of loss. And because of the presence of a federal guarantee of the loans, the students were barred from discharging those loans in bankruptcy.

BUT what if the lender never had any risk of loss? This is accomplished through bundling of loans into what is loosely called securitization of debt. What if the lender is selling the guarantee and making huge profits without any risk of loss? What if the buyers of that guarantee also have their risk covered because it is further guaranteed by a third party?

Since the guarantee was never intended to be a salable commodity it can and should, in my opinion, be argued that the lender waived the guaranteed rights, and therefore could not sell it, and already protected itself against the risk of loss. That being the case the student loan would be dischargeable in bankruptcy even if the guarantee was issued — unless the subsequent sale was invalidated. In truth the guarantee was never used as anything other than a commodity and not a reason for making the loan, which would have been done anyway — mainly because the enormous profits arising out of secondary transactions or “securitization.”

So that is my theory.

My other theory was that most of the loans over the past 20 years were violations of usury laws. Statutes protect certain lending banks from state usury laws. But once again if you bundle up the loans and originate loans for the bundles and bundlers you are not really offering a loan from a bank that is exempt from usury laws. You are offering a loan from an entity that does not remotely resemble a commercial bank and that does not have any deposit money at isk. That is what the current case is about.

I would only add that nearly all loans in the mortgage meltdown were usurious. First many of them with teaser rates were known to have a very limited shelf life — anywhere from 6 months to five years. Adding the points and closing costs as a cost of the loan to the interest rate that was applied and amortising them over the true and foreseeable life of the loan brings most such loans above the usury threshold.

Second most of them were not originated by banks that qualified for exemption from usury so there is that. And third, nearly all the loans were originated, as above, for the express purpose of bundling them for securitization, which means the intended lender was not a bank. So if the total cost of the loan is amortized over 5 years, and the annual cost is over the state limit for usury you have a violation that could actually result in forfeiture of the entire loan in some states.

Most states have stringent penalties for usurious loans both because they are oppressive and because they are considered immoral. This is one more point that qualifies as a potential achilles heel for the investment banks who were not banks that qualified for any exception to usury laws. Think about it.

 

Getting the Judge to See Things Your Way Isn’t Easy

I have received many comments and questions about my article  yesterday. Here is one response I wrote to one reader and client.

I have been exploring different wording and presentations to get through to judges. I think my efforts over the last 13 years are defined by that mission. I don’t think that simply presenting numbers to a judge will be sufficient for the judge to open his or her mind to the possibility that the case before them is not really a foreclosure. My current thinking is that a very aggressive effort to force the opposition into answering questions about any transaction in which the debt was purchased is probably the most efficient way to start the education of the judge.

  • There can be little question that the borrower is entitled to know who owns the debt.
  • There is no question that the legal presumptions arising from the possession of the promissory note are rebuttable.
  • Therefore there can be no question that questions regarding ownership of the debt must be allowed in Discovery.
  • Knowing you won’t get answers is the path toward getting the judge upset with your opposition.
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It is not merely the act of asking the question that proves the point. Knowing that they cannot and will not answer that question is what gives the homeowner leverage.
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By filing a motion to compel and then obtaining an order compelling the opposition to answer the questions and produce the documents you take the next step.
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In filing a motion for sanctions because they still didn’t comply with your Discovery request and they didn’t comply with the court order, the judge will respond to the defiance of the court order. by filing a renewed motion for sanctions including striking the pleadings of the other side and limiting their ability to introduce evidence of ownership of the debt merely by referring to possession of the promissory note, you are giving the judge an opportunity to slap them on the wrist and require them to provide proof of purchase of the debt. After continued defiance, a motion in limine could conceivably eliminate the Foreclosure completely.

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But in all events it still doesn’t seem likely that even with clear evidence of defiance of the Court and Court procedure that a judge will presume that the case at bar was not really a foreclosure. Rather they are more likely to conclude that the foreclosure violated too many requirements to be allowed. That is why they frequently dismiss without prejudice. Even after a complete failure of proof, the judges still maintain the view that if the Foreclosure had been allowed, it would have produced sale proceeds that would have been applied to the debt.
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The notion that the sale proceeds would actually have been distributed as Revenue is completely counterintuitive and runs against the natural bias of every human being that sits on the bench. Just because it is true doesn’t make it acceptable. These judges have been rubber stamping illegal foreclosures for years. They are human. Finding that the foreclosure was actually a scheme to generate revenue and not any effort to repay an unpaid debt would in effect be an admission of error in thousands of cases.
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As we have found so often, being right does not mean you are going to win. You have to work with what you have. And what you have, in most cases, is a judge who believes their principal function is to uphold contracts. This view is not wrong and in fact it is completely correct.
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The issue we confront is that in securitization as practiced by the investment banks on Wall Street the contract was completely changed after the origination of the loan.
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This is only possible because there is no actual loan agreement such as you would find in a commercial loan. There is no letter of commitment and there is no written agreement. There are no express warranties from the lender. All the “warranties” are implied from statute.
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In residential loan transactions the loan agreement is not defined but it is generally viewed as being the promissory note and the security instrument, which is the mortgage or deed of trust. But under contract law there are many additional terms that are contained within federal and state laws governing deceptive Lending and the disclosure documents that were presented to the borrower. Those provisions are the implied terms of the loan agreement and are every bit as important, if not more important than the terms expressed in the note and mortgage. 
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One of the tasks of a litigator is to educate the judge as to all of the components of the initial loan agreement. This will at least get the judge to consider possibilities outside of what is merely contained in the promissory note and mortgage.

Appraisal Fraud Changes the Real Terms of Borrowing: Black Knight Controls VA Appraisals

Arithmetic of False Appraisals

Bad appraisals lie at the heart of the profit seeking bank plan which they called securitization. Since they were making money not from interest, but from fees and other trading profit and bonuses, the basic premise behind each loan “agreement” was changed without the lender (investors) or the borrower (homeowner) knowing anything about it.

Part of that undisclosed revenue came directly from granting a loan funded with only part of the dollars advanced by investors, while keeping the rest. It makes sense then that if the “intermediary” banks were making a trading profit of $300 on each $1,000 loaned that they would want to inflate the the amount of dollars being loaned without regard to the potential for repayment — since they were not retaining any risk of loss. (see end of this article for detailed explanation of how this works).

It wasn’t hard to do that. By keeping “in house” appraisal services and making them de facto mandatory, the appraisals were all coming in around $20,000 over the price of the house in a purchase or over the amount of the loan. All that was needed was to break from the centuries old tradition of analyzing sales of real property from comparable geography and time. So for example, if the developer raised prices 10% every two months then the appraisals would reflect a higher valuation than what would ordinarily apply.

In 2005 there were 8,000 certified real estate appraisers who petitioned Congress to stop the pressure on them to either comply with bank pressure or lose their business. These appraisers were certain that the appraisals being sought were fraudulent and could never be sustained — i.e., they were predicting the crash that eventually occurred in 2008. Of Course Congress did nothing and this chapter in history is mostly forgotten.

But the effect was that borrowers were relying upon appraisals that before this era of so-called securitization were reliable. The borrowers were relying upon the premise that the banks were making loans that were viable, as required by the truth in lending act. But the banks were relying upon their control of the marketplace instead of on the borrower’s ability to repay the loan.

They even made loans that appeared to comply with the laws  concerning     viability by simply allowing the borrower to NOT pay for actual interest and amortized principal for a period of time. These “teaser” rates resulted in a “reset” that increased the monthly payment to beyond the entire household income.

Such loans were doomed to fail and when a few borrowers spotted this anomaly they were assured, never in writing, that the pattern of increasing prices of homes would continue and that their ability to repay was tied to the ability to refinance the home for a higher amount thus freeing up more money with which they could pay the monthly payments.

Believing in such false representations of the current market and in the false representation that the lenders would not make a loan that could not be repaid, the borrowers entered into doomed transactions, causing them to lose homes that often had been in the family for generations. In losing their homes they also lost their credit reputations and suffered from vast consequences to their homelife, emotional stress, suicide, divorce etc.

For the banks the false appraisals resulted in pure profit and an opportunity for more profit. By disguising the fatally defective loans, they were able to obtain additional investments in which even more investors were assuming the risk of loss and would pay the banks (not the investors who advanced the original sums that covered the origination of the loan and the hefty profits of the banks in loaning out less than what they had received) if the loan portfolios presented went down in value. Hence the banks made more money as the loans failed. This also presented yet another opportunity for increased profit and revenue.

When the loans were deemed in “default” by parties who had no interest in the loan, the loans moved into foreclosure. Investors whose money was at risk received nothing from foreclosure. The banks received everything. And since the banks were not the owners of the debt and had no risk of loss from “non-payment” they took the money in as revenue and did not maintain the loans on their balance sheets as assets, because they were not assets of the bank.

None of this could have occurred without false appraisals. If the appraisals discarded evidence of higher demands from developers and such, the appraisals would have stayed in line with true valuation, to wit: using median income as the base line, the price runup that occurred because of false appraisals would never have happened. The incentives to push impossible loans would have vanished and the crash if it happend at all would have found people with property that was still worth something much closer to the amount owed.

No bailout would have been necessary because there would have been no excess.

Investors and borrowers alike would have found themselves in a better position.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Hat tip to Summer chic.

So false appraisals were part of the reason for the 2008-2009 crash. And while statutes of limitations have run on collateral claims for damages in most instances, they can still be brought as affirmative defenses corroborating and supporting affirmative defenses for assumption of risk and recoupment. Defenses are not generally barred by the statute of limitations but there are limited to the amount that is claimed from the borrowers.

Summer chic in her never ending quest to dig up the truth of how this was all done writes as follows:

This Mafia is grown  around us like a black plague…

DocX became ServiceLink, they even have the same address in 3220 El Camino Real Irvine CA.

LPS became Black Knight, Inc. ALL use the SAME business address 601 Riverside Jacksonville, FL as Fidelity National Financial

ALL Appraisals are done by CoreLogic who owns Countyrwide’s LandSafe. Before that it was done by BOA who owned LandSafe.

From 2015 LandSafe is a mandatory appraisal service (fox in the hen house)  for  VA Appraisals….At the same time CoreLogic sells Veterans’ personal data to predatory lenders to push  vets into adjustable rate loans with huge cash outs…
I reviewed my Appraisal Report by Michigan Realty Counseling (MRC) which was done on June 30, 2016.

MRC incorporation date with the State of Michigan is July 15, 2016, or two weeks LATER.

All signatures of Mr. Smith who purportedly prepared Appraisal via A La Mode (now CoreLogic) are robo-signed signatures.

My original loan application was electronically signed by me and the lender, Alex,  on June 15, 2016 at around 10AM PACIFIC time (means California) while we both were in Chicago….

The Flood Map was ordered the SAME day, June 15, 2016 and completed around 20:00 PM…. FEMA’s offices are closed at this time. But CoreLogic owns Flood Zone Mapping company, Middletown, CT-based CDS Business mapping.
My Closing disclosures are different that Closing Disclosures sent to me by PennyMac…

In PM Closing Disclosures I electronically signed on 07 26 2016 at 14:16 PACIFIC Time.

HOW THE LENDING WORKED:

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It’s actually simple arithmetic. Investors are enticed to invest $1,000 for a “5% return. The investment bank promises (through its fictitious name “REMIC Trust”) to pay them $50 per year. $50 is the 5% the investor wanted, but the promise they are receiving does not come with any interest, right, or title to the debt, note or mortgage of any borrower. However if certain borrowers stop paying then the obligation of the investment bank to make payments to the investors is correspondingly reduced (actually by more than the decline in payments).
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Thus the  risk of loss is completely on the investors. The money from investors is taken by the investment bank as payment for “certificates” issued in the name of Trust which is falsely claimed to be a REMIC trust  but which bears no resemblance to an actual trust in which the debt is owned. Instead the trustee is given bare legal title to the mortgages without ownership of the note or the debt.
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The magic happens when the investment bank uses the money from investors to originate or acquire a loan. The investment bank makes more money on riskier loans. Impossible loans are unparalleled opportunities to make incredible sums of money.
Higher interest rates mean higher risk. While investors believed that they were funding 5% loans their money was actually used to fund loans with much higher interest rates. But they were only receiving the 5% that they wanted (along with the safety in a low risk 5% loan). Here is what happens:
  • Example 1: Investment bank originates or acquires a 7% loan. Using $1,000 from investors they lend $1000 to a borrower or buy the borrowers 7% loan for $1,000. The investment bank “books” an “expected” money return of $70 but only need to pay $50 to satisfy its promise to pay investors. The $70 income stream can then be “sold” to investors for $1400 because $70 is 5% of $1400. But there is no actual sale of the loan. The sale is a fiction at the trading desk of the investment bank where it pretends to sell the loan to the trust in a transaction in which no money exchanges hands. No money exchanges hands because the the investors already advanced the money and neither the investment bank nor the “trust” have advanced anything. Bottom Line: The investment bank pays $1,000 and sells the loan for $1400. Profit from the loan origination or acquisition is $400. Such profit did not exist before the era of claims of securitization. It is equal to 40% of the entire loan.
  • Example 2: Investment bank originates or acquires a 10% loan. Using $1,000 from investors they lend $1000 to a borrower or buy the borrowers 10% loan for $1,000. The investment bank “books” an “expected” money return of $100 but only need to pay $50 to satisfy its promise to pay investors. The $100 income stream can then be “sold” to investors for $2000 because $100 is 5% of $2000. But there is no actual sale of the loan. The sale is a fiction at the trading desk of the investment bank where it pretends to sell the loan to the trust in a transaction in which no money exchanges hands. No money exchanges hands because the the investors already advanced the money and neither the investment bank nor the “trust” have advanced anything. Bottom Line: The investment bank pays $1,000 and sells the loan for $2000. Profit from the loan origination or acquisition is $1000. Such profit did not exist before the era of claims of securitization. It is equal to the entire amount of the loan.
  • Example 3: Investment bank originates or acquires a 15% loan. Using $1,000 from investors they lend $1000 to a borrower or buy the borrowers 15% loan for $1,000. The investment bank “books” an “expected” money return of $150 but only need to pay $50 to satisfy its promise to pay investors. The $150 income stream can then be “sold” to investors for $3000 because $150 is 5% of $3000. But there is no actual sale of the loan. The sale is a fiction at the trading desk of the investment bank where it pretends to sell the loan to the trust in a transaction in which no money exchanges hands. No money exchanges hands because the the investors already advanced the money and neither the investment bank nor the “trust” have advanced anything. Bottom Line: The investment bank pays $1,000 and sells the loan for $3000. Profit from the loan origination or acquisition is $2000. Such profit did not exist before the era of claims of securitization. It is equal to twice the entire amount of the loan.

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As a result of this simple arithmetic analysis, in most cases the investment bank has already sold the risk of loss on the debt for more than the debt itself. But it retains bare naked legal title to the debt and the loan agreement even though it has no financial interest in the debt, the note or mortgage. Upon foreclosure the typical distribution of the $1,000 loan is based on a recovery of about 50% of the loan in a distressed sale. 70% of that is received by the investment bank as additional revenue while 30% is distributed to servicers and other parties who helped in the foreclosures and subsequent sales process. All of the distributions are made through layers or ladders of companies each of whom is paid a fee.

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Legal Note: A document purporting to transfer ownership of the mortgage is a nullity if it is not accompanied with by an actual purchase of the debt for real value (money). Only a party who owns the debt by reason of having paid value for it and retaining that interest may initiate foreclosure proceedings. Under Article 9 §203 UCC adopted by all 50 states a condition precedent to starting foreclosure is that the claimant be the current owner of the debt, having paid and retained value in the debt.

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Such actual financial interest is often subject to certain legal presumptions all of which can be easily rebutted by simple questions directed at when the claimant asserts that is was party to a transaction in which it paid value for the debt (or in which the settlor or trustor of a trust paid value for the debt. In most instances the answer will not be forthcoming and that in turn is what turns the tables  through motions to compel, motions for sanctions, motions in limine and objections at trial.

Who’s on First? Trustee vs Trust v Smoke and Mirrors

Don’t get lost in the weeds. In a normal trust situation the trust is the entity that owns the assets that were entrusted to the trustee. Of course any Trust or Corporation or any other business entity is a legal fiction that we use for convenience. We are able to do that because legislatures have passed laws (statutes) that allow for the creation of such entities.

For some purposes they are considered legal persons. They are not actual living persons. But in all cases they have to act through actual living people. Or they have to act through another business entity, like a trustee, which in turn is acting through actual living people.

So in a normal trust situation the comment from the “trustee” bank — Wells Fargo Bank, Bank of New York Mellon, U.S. Bank. etc. — would be true. The law requires third parties to deal with the trustee on all matters relating to the trust. Therefore title is held in the name of the trustee but solely for the trust and for the beneficiaries of the trust.

Today the beneficiaries of the trust are concealed. In most instances involving a REMIC trust the beneficiary, buried deep within an actual trust agreement that is concealed from third parties, is an investment bank. It is not the certificate holders — although disingenuous argument and assertions from counsel for claimants would have you and the court believe otherwise.

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But all of that is smoke and mirrors. in all probability your loan was never entrusted to Wells Fargo Bank for the benefit of beneficiaries of the trust that is named as the claimant. In order for your loan to have been entrusted to Wells Fargo Bank, a settlor or trustor would have had to convey the debt and the loan documentation to Wells Fargo Bank.
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In order to convey the debt, the trustor must have owned the debt by reason of having paid for it. Without that ownership the settlor or trustor is not conveying anything and is not a settlor or trustor even if they are named as such in a trust instrument. The only other alternative is that the trustee Bank, using trust assets for payment, was the purchaser of your loan, including the debt note and mortgage. Neither of those things happened.
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The truth is that the name of the trustee bank is rented to give an institutional flavor to an illicit scheme. The trustee is not allowed to do anything. It is not a trustee even though it is named as such in a trust instrument. This is congruent with most other fabricated documents currently used for the last 20 years — naming of entities as though they were acting in certain roles when in fact they were not so empowered. But if you don’t point it out, the court will assume that a trustee is a trustee, an assignee is an assignee, an assignor is an assignor and a lender is a lender instead of a pretender lender.
*
As per the nature of securitization of Mortgage Debt as it has been practiced for the last 20 years, it is almost impossible for those conditions to have been met. So the statement from Trustee bank is theoretically true, but it is misleading and untrue.
*
If there was an asset actually in the trust, the trustee bank statement would be true. But in all probability no such asset exists within the trust. Therefore the implied statement from “trustee” bank is false, to wit: that that the named “trustee” Bank holds title on behalf of the trust which owns the asset.
*
Keep in mind that under Article 9 § 203 of the Uniform Commercial Code as adopted by all of the state legislatures, a condition precedent enforcement of a security instrument (like a mortgage or deed of trust)is that the claimant must have paid value for the debt.
*
It is insufficient to merely have paperwork indicating a transfer of ownership, although such paperwork gives rise to the presumption that the holder of the paperwork has in fact paid the debt. An assignment of mortgage without an actual purchase of the debt for value is a legal nullity.
*
The problem for homeowners is that this presumption prevails in the absence of rebuttal. But rebuttal is actually easy, as long as you do it in Discovery and not try to do it at trial. While attempts to reveal the absence of an actual purchase of the debt at trial are sometimes successful, most cases that have been won by homeowners had a successful result because they asked the simple questions relating to the non-existent transaction in which the debt was supposedly purchased. Waiting for trial requires considerable skill at cross examination and a good bit of luck.

Tonight! How Homeowners Win Foreclosure Cases: Procedure v Substantive Law — Use It or Lose It.

Thursdays LIVE! Click in to the Neil Garfield Show

Tonight’s Show Hosted by Neil Garfield, Esq.

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

The difference between winning and losing is whether you are using procedural law to your advantage or you naively enter the courtroom believing that a substantive law will save you.

Spoiler alert #1: The substantive law is irrelevant until you make it relevant.

Spoiler alert #2: The court doesn’t want to let you make it relevant.

Tonight we will talk about the the Litigation Menu that leads to winning foreclosure cases. As always my premise, proved true in thousands of cases, is that there is not a single transaction in which anyone has purchased or funded the debt. This is counterintuitive but once you allow for the possibility that it is true, the doors are open to victory.

[By “anyone” I mean anyone in the chain relied upon by the party claiming foreclosure. Hint: You don’t need to prove who has a financial interest in the loan performance. You just need to reveal the fact that the claimant has no such interest.]

This is the outline of my Litigation Menu:

  1. Filing lawsuit or defenses and/or counterclaim. The difference between notice pleading and plausibility pleading.
  2. Safe harbor correspondence and filing — Lender Beware! Lawyer Beware!
  3. Abuse of process problems
  4. Fraud problems
  5. RICO issues — extreme pleading required.
  6. Discovery
    1. ASK: QWR. DVL, Interrogatories, Request to Produce Request for Admissions. Who paid for the debt and when?
    2. Receive
    3. Motion to Compel
      1. Compelling motion — Issues in Dispute
      2. Memorandum of law
    4. Motion for Sanctions
    5. Renewed Motion for Sanctions
    6. Motion in Limine
    7. Pretrial order — preserve objections
    8. Motion to strike witnesses, exhibits
    9. Trial Objections
      1. Motion to strike
    10. Motion for Judgment or involuntary dismissal

In Memory of Those Who Died

I have recently received reminders of the people who died and the criminal investigations that were gutted despite the obvious evidence of the largest economic crime in human history. I pass this on as a reminder that the fraud continues and as a caution to those who think that the worst has happened. They got away with it. The worst is going to happen — unless we intervene.

I remember reading the article by Mark Ames on Naked Capitalism. It seemed so obvious to me that we would reach a turning point in which the tragic foreclosure wave driven by pure greed (not recovery of debt) would simply stop. People who were responsible would go to jail as they did in other countries. Restitution of money and property would be ordered.

It didn’t happen. What did happen is that Capitalism came to redefined as a religion rather than a way of doing business. And the religion was that the person with the most gold always gets their way. The religion said that most of us were simply food for the hungry giants of the marketplace. As a culture we glorified those who aggregated wealth even if they stole it.

That is not capitalism. It is theft. And lying to keep the ill gotten gains is not capitalism either. It is fraud. And seeking to correct imbalances caused by  illegal behaviors is neither radical nor socialist. It is SOP — standard operating procedure for a country that whipsaws its way through history heaving hard to the right and then to the left and back again. It is who we are as Americans. It’s what gives us our vitality. We have always been defined by our excesses.

We still have not addressed this huge social and economic stain on our reputation as Americans because this scheme was hatched in the offices of investment banks located right here in the good ole USA. Somehow under the new religion it is unamerican to protect consumers and completely acceptable for winners to take all. And if the U.S. economy tanked, that’s life in a competitive world. right? And if the rest of the world tanks also, too bad.

We have an election season coming up. Most candidates for office treat the foreclosure wave and the student loan crisis as past events, irrelevant because people who borrow money should repay it — no matter what. Corporations and other business entities not so much. But real people always — even if the loan was unworkable, even if they were deceived when they took the loan, even if the lender wasn’t a lender, even if the loan wasn’t a loan, even if their signature was being sold for 12 times the amount of the loan.

But I agree that people who borrow money should repay it. I just think they should only pay it to someone who really deserves the money — like investors who advanced their money also under false pretenses. The banks block those efforts successfully and pocket the money that could and should go to investors, who have never received a single piece of paper telling them they owned a debt, a note or a mortgage. To the banks, each foreclosure is just more revenue.

So remember that people have died by suicide, murder and natural causes brought on by stress. Remember that our system of laws came close to nailing the perpetrators of the meltdown, the loss of jobs and the massive inequality of income and wealth. But in the end, Capitalism, as religion, won out — so far.

We still have a chance with some candidates but the ones who want to do some straight talk about this are considered fringe or radical or even the dreaded word “socialist.”

I’ve looked at all the candidates and I can’t find anyone who believes that the government should own or control the means of production of goods and services (i.e., socialism). I see people instead looking for ways to make life better which is what I think we all hope for. I don’t care if I am right, half -right or wrong or half wrong. I just want things to be better not in rhetoric but in reality. I know, now I am a radical, right?

seehttps://www.nakedcapitalism.com/2012/08/mark-ames-tracy-lawrence-the-foreclosure-suicide-america-forgot.html

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

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

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

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

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

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

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

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GET FREE HELP: Just click here and submit  the confidential, free, no obligation, private REGISTRATION FORM. The key to victory lies in understanding your own case.
Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 954-451-1230. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM 
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
========================
*
To be a “servicer” the company must received the appointment to administer the loan account from someone who is authorized to make the appointment. A power of attorney is only sufficient if the grantor is the owner of the debt — or had been given authority to make such appointment from the owner of the debt.
*
A person who is authorized to make the appointment is either the owner of the debt by virtue of having paid for the debt or an authorized representative of the owner of the debt by virtue of having paid for the debt. This is a key point that is frequently overlooked. By accepting the entity as a servicer, you are impliedly admitting that they have authorization and that a true creditor is in the chain upon which your opposition is placing reliance. In short, you are admitting to a false statement of facts that will undermine your defense narrative.
*
If the servicer is really authorized to act as such then your attempt to defeat foreclosure most likely fails because the case is about a real debt owed to a real owner of the debt.
*
The fact that they allege that they maintain records may be a true or false representation. But whether it is true or false, it does not mean that they had authorization to maintain those records or to take any other action in connection with the administration of the loan. Of course we know now that any such records are composed of both accurate and fabricated data.
*
We also know that the data is kept in a central repository much the same as MERS is used as a central repository for title.
*
The representations in your case about and intensive audit and boarding process most likely consist of fabricated documents and perjury. There was no audit and there was no boarding process. The data in most cases, and this probably applies to your case, was originated and maintained and manipulated at Black Knight formerly known as Lender Processing Systems.
*
Contrary to the requirements of law, the central repository does not ever handle any money or payments or disbursements and therefore does not create “business records” that could be used as an exception to the hearsay rule. The same thing applies MERS. These central repositories of data do not have any actual role in real life in connection with any financial transaction. Their purpose is the fabrication of data to support various purposes of their members.
*
All of this is very counterintuitive and difficult to wrap one’s mind around. but there is a reason for all of this subterfuge.
*
From a legal, accounting and finance perspective the debt was actually destroyed in the process of securitization. This was an intentional act to avoid potential risk of laws and liability. But for purposes of enforcement, the banks had to maintain the illusion of the existence of the debt. Since they had already destroyed the debt they had to fabricate evidence of its existence. This was done by the fabrication of documents, recording false utterances in title records, perjury in court and disingenuous argument in court.
*
The banks had to maintain the illusion of the existence of the debt because that is what is required under our current system of statutory laws. In all 50 states and U.S. territories, along with centuries of common law, it is a condition precedent to the enforcement of a foreclosure that the party claiming the remedy of foreclosure must be the owner of the debt by reason of having paid value for it.
*
The logic behind that is irrefutable. Foreclosure is an equitable remedy for restitution of an unpaid debt. It is the most severe remedy under civil law. Therefore, unlike a promissory note which only results in the rendition of a judgment for money damages, the Foreclosure must be for the sole purpose of paying down the debt. No exceptions.
*
The problem we constantly face in the courtroom is that there is an assumption that there is a party present in the courtroom who is seeking restitution for an unpaid debt, when in fact that party, along with others, is seeking revenue on its own behalf and on behalf of other participants.
*
The problem we face in court is that we must overcome the presumption that there was an actual legal claim on behalf of an actual legal claimant. Anything else must be viewed through the prism of skepticism about a borrower attempting to escape a debt. The nuance here is that the end result might indeed be let the borrower escapes the debt. But that is not because of anything that the borrower has done. In fact, the end result could be a remedy devised in court or by Statute in which the debt is reconstituted for purposes of enforcement, but for the benefit of the only parties who actually advance money and connection with that debt.
*
More importantly is that nonpayment of the debt does not directly result in any financial loss to any party. The loss is really the loss of an expectation of further profit after having generated revenue equal to 12 times the principal amount of the loan.
*
While there are many people who would argue to the contrary, they are arguing against faithful execution of our existing laws. There simply is no logic, common sense or legal analysis that supports using foreclosure processes as a means to obtain Revenue at the expense of both the borrower and the investor. And despite all appearances to the contrary, carefully created by the banks, that is exactly what  is happening.

Improperly Named Trustee on Deed of Trust Can be Liable for Actions on Behalf of Non-Beneficary

Hat tip to Scott Staffne

see Washington_Court_grants_summary_judgment

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

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

I have long expressed the belief that the courts had it all wrong when they, along with legislative attempts, decided that when parties are named as trustees they are not responsible for their actions. That is and was always nuts.

In this case the question gets even more specific. As I have repeatedly stated over 14 years in articles published in newspapers, magazines and blogs, as well as TV and Radio appearances and as an expert witness in litigation, it is not possible for a party to be immune from liability just because they were named trustee under a deed of trust. They can only enjoy a partial immunity if one condition precedent exists: that they were appointed by a beneficiary under the deed of the trust.

Simply stated, unless they really are trustees because they were appointed by a party who owns the debt by reason of having paid for it, they are liable for taking unauthorized illegal action for the purpose of personal gain and not for the purpose of restitution of an unpaid debt. Maybe that isn’t so simple. Study it.

This is amplified by the fact that in many cases the “new trustee” is a law firm. Whether they are lawyers or not, anyone who knew, should have known or must have known that the party appointing them as trustee was NOT a beneficiary under the deed of trust is party to scheme and maybe even a conspiracy that violates virtually every level of Federal and state laws governing conduct, creation of fabricated instruments, and recording false instruments with false representations.

And the law firm should not only be civilly and criminally liable for willingly and knowingly participating in such a scheme, it should also be subject to Bar discipline in state and Federal courts as well as administrative proceedings. In plain language they are engaged in a scheme to defraud borrowers for sure and maybe creditors as well.

The protections contained in statutory schemes for nonjudicial states do not and never have extended to parties pretending to be trustees on deeds of trust. They have only been intended and expressly worded to provide some protection for real trustees on the deed of trust because otherwise nobody would serve in that capacity without charging fees equivalent to the value of the property.

The Washington State case decision that Scott Staffne alerted me to shows that some judges, when  presented with the right education and a defense narrative that is bold, will allow a case to proceed to liability when the named trustee is sued for acting as though it was a trustee when in fact it wasn’t and knew it wasn’t.

Part of the problem here is that both pro se litigants and lawyers for homeowners are shy about stating their own positions. Either the assignments were void or they were not.  Either the trustee is a fake or it isn’t. If you don’t come right out and say it the judge isn’t going to help you.

How to Use Stonewalling Against the Banks in Discovery Phase of Litigation.

Yes, you can use discovery to win the case before it gets to trial. No, that won’t happen just because you asked. You must follow the rules of civil procedure for that to happen. And like everything that happens in court there are no guarantees that even the best played hand will win.

Many cases across the country have been won during the discovery phase of litigation because good litigators know how to enforce discovery requests. Many cases that should have or could have been won are lost because of pro se litigants and lawyers who are not experienced in trial practice.

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

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

So a recent question from an old client mirrored the requests from many lawyers and pro se litiangats about the discovery process. My answer is summarized in the following response to that question.

What you are really asking is how and when can you use the non-response to Discovery as a way of excluding evidence that is critical to the presentation of a prima facie case for foreclosure. Or you are asking how and when you can use their stonewalling to create favorable inferences at trial that support the defense narrative that might bar or mitigate the remedy the claimant is seeking.

The answer lies strictly in procedure. The fact that someone has not responded appropriately to Discovery demands does not entitle the other party do anything unless the court enters an order favorable to the proponent of the discovery demand. And even when such an order is rendered that still does not close the door on the foreclosure claim. This one point is a constant source of confusion to lay people.

*
In any lawsuit both parties are entitled to discovery, to wit: asking questions and demanding production of documents or other media where the answers or responses could lead to the discovery of admissible evidence on issues in dispute.
*
The first thing is that you have to identify the issues in dispute. And you must do so with specificity and particularity. Failure to do that results in failure to achieve anything during the discovery process.
*
The second thing is that you file the demands for discovery in accordance with the time limit set forth by court order or the local rules of civil procedure. Usually at some point there is a discovery cutoff date set b y local rule or court order.
*
The usual pattern in foreclosure litigation is that the lawyers for the opposition either failed to respond at all or provided a minimal response that did not address the central issues that you raised in your questions or demands for production. This failure does not give rise to any automatic right on the part of the homeowner to exclude evidence or otherwise win the case based upon the failure to respond. many lawyers and say litigants are confused about this but the law is clear. Nothing happens if they don’t answer. And you can’t complain about it later unless you take the following steps.
*
After the time for response has expired and/or the response fails to answer the question or produce the documents, the burden is on the proponent of the discovery request to ask for a court order (Motion to Compel) requiring the appropriate answer or appropriate response to the production of documents demanded by the proponent of the discovery request. Once again, nothing happens just because you asked the court for such an order and nothing is supposed to happen under the rules of procedure.
*
However if you get a hearing date on your motion and you are successful in briefing and arguing your motion then the court may issue an order commanding your opposition to answer your questions and produce the appropriate documentation. Successful litigants in this respect are the ones who can clearly and convincingly show the judge that they are not just on a fishing expedition (which is allowed) but that their questions relate specifically to issues in dispute that are critical to the resolution and consideration of the evidence relating to the prima facie case of your opponent or the defense narrative.
*
The usual pattern in foreclosure litigation is that the lawyers for the opposition continue to stonewall a response. And a common error by Pro Se litigants and inexperienced attorneys is the conclusion that the continued stonewall will automatically result in a favorable ruling at trial. While there is some discretion on the part of the judge as to how to treat the circumstance the usual ruling ignores the failure to respond.
*
Therefore the next step is to file yet another motion for sanctions against the opposition for failure to comply with the court order. Again merely asking for the sanctions does nothing. You must ask for a hearing date and all parties must receive notice of all hearing dates. In your motion you should specify what sanctions you are seeking, including barring the presentation of evidence relating to the responses sought by your discovery demands. 
*
Typically the court will issue an order that includes sanctions against the party who is stonewalling the Discovery, but the usual order contains a provision for purging the contempt of the prior order compelling answers to the discovery. Usually a very short period of time is allowed to cure the problem.
*
The usual pattern in foreclosure litigation is that the lawyers for the opposition continue to Stonewall a response. At this point you have a much stronger position at trial. But you must raise timely objections or file a Motion in Limine to the presentation of evidence based upon the failure to comply with the court order and the Order of sanctions.
*
Sometimes objections must be stated in advance of trial in accordance with the pretrial order. I must confess that I have been guilty of overlooking that provision of a pretrial order and then was surprised to trial when the judge automatically overruled my objections since they were not previously stated in writing. Failure to make the objection on a timely basis is a waiver of the objection.
*
So even after an order compelling them to answer your discovery and even after an order levying sanctions, it is possible for the evidence to be admitted at trial and for your opposition to win the case even though they theoretically had no right to produce that evidence since they were unable or unwilling to respond to your demands for discovery. As a general rule the burden is always on the party who is seeking to limit evidence at trial.
*
At trial, the proponent of the discovery demands should argue that inferences in favor of the homeowner may be and must be drawn from the opposition’s unwillingness to come clean.
*
Once the court has entered a judgement against the homeowner it is possible to appeal the Judgment based upon the fact that the court admitted evidence that should have been excluded as a result of the failure of your opposition to comply with your Discovery demands. That appeal must clearly and persuasively show that your opposition should have been barred from presentation of evidence and/or that your defense narrative failed only because your opposition failed to answer appropriate questions in Discovery and failed to respond to appropriate demands for production of documents or other media.
*
Asking a court for reconsideration is generally a futile effort, although sometimes it is highly recommended in order to present the case for appeal. However, if you can point out that the opposition was not playing fair, then you are pointing out that you did not get a fair trial. This might alert the judge that they might be subject to a reversal on appeal. Judges don’t like getting reversed.
*
But asking the court to reconsider a judgment based upon the failure of your opposition to respond to Discovery when you had not taken any steps to enforce that discovery and did not request sanctions is completely futile. The court will not and should not entertain such a motion since the conditions precedent to granting the motion are not present.
*
The moral of the story is that you can use Discovery to win your case based upon your knowledge that they are unable to answer your questions and unable to produce the documents that are essential to their Prima Facie case. And you can use Discovery to win your case based upon your knowledge that they are unable to answer your questions and unable to produce the documents that would prove or disprove the Essential Elements of your defense narrative. But Discovery is not a Magic Bullet any more than anything else. It is a process that must be followed point-by-point according to the rules of civil procedure and local rules and practices.

Listen to This! 6PM EDT — Trial Practice in Unlawful Detainer Actions

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

with Charles Marshall

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

Once the sale has occurred, the trustee on the deed of trust issues a deed to either the party who initiated the foreclosure process or to a third party bidder. Then the “winner” of the bidding process takes the deed to land registry and records it. Then if the homeowner is still residing in the property the “new owner” files an unlawful detainer action in order to gain possession.

That is the process in nonjudicial states. What many fail to realize is that the unlawful detainer lawsuit is the first time that the attorneys representing the “claimant” have been required to allege and prove a claim. So it is the first time that the homeowner can actually defend against false allegations.

The unlawful detainer action is simple — if the claimant has “perfected title” then he is entitled to possession. But can a claimant perfect title when the claimant was not the owner of the debt? Can a “credit bid” be accepted from someone who is not a beneficiary under a deed of trust as defined by state statute?

Today’s Show will cover the following topics, all related to unlawful detainer lawsuits following a non-judicial foreclosure sale:

– Issuing written discovery on the UD Plaintiff when that Plaintiff is the so-called Beneficiary of the ‘loan’, not a Third-Party purchaser;

– Issuing discovery on the UD Plaintiff when that Plaintiff is a Third-Party purchaser;

– Responding to discovery from either a ‘Beneficiary’ or a Third-Party Purchaser;

– Trends in Negotiating final settlements  and Move-outs from Subject Properties following a non-judicial foreclosure Sale, covering both the situation which applies when the UD Plaintiff is a ‘Beneficiary’, and when the Plaintiff is a Third-Party Purchaser.

The Compounding Effects of Void Court Decisions That Are Contrary to Timely TILA Rescissions Sent Pursuant to 15 U.S.C. §1635 and 12 C.F.R. §226.23 — for public review and comment

The Compounding Effects of Void Court Decisions That Are Contrary to Timely TILA Rescissions Sent Pursuant to 15 U.S.C. §1635 and 12 C.F.R. §226.23

Please send comments and suggestions to neilfgarfield@hotmail.com

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In 1968 the Federal Truth In Lending Act was enacted and signed into law in order to establish enforceable laws and regulations to promote the informed use of consumer credit. Faced with a choice of establishing a huge bureaucracy or allowing private actions for violations the 90th United States Congress chose private action. Anyone who is acquainted with court action involving this Federal Act knows that judges don’t like it and refuse to apply it.

 

Since the entire premise of the Act was informed use of credit, consumers need to be informed of terms and circumstances of their proposed credit transaction before they signed any documents. Lenders and other prospective creditors are required to disclose the real economic terms of the proposed deal and to disclose who is receiving compensation and in what amount.

 

If those disclosures were ignored, the lawmakers gave broad authority to government and individual consumers to take action on their own that would enable the consumers to cancel the transaction with a simple letter. The effect of the letter (Notice of Rescission) was to cancel the loan transaction, rendering the note void and any security instrument void by operation of law. 15 U.S.C. §1635 and 12 C.F.R. §226.23. Since the loan agreement consists of the note and mortgage, the cancellation must void the note and mortgage or else the loan agreement would not be canceled, contrary to the TILA Rescission statute.

 

The promissory note and the mortgage deed (or deed of trust) must be void because (a) that is exactly what is expressly stated in the statute and regulations and (b) because that is the only logical conclusion. Void means a legal nullity in this instance which means that in terms of any post rescission subsequent action or events no party, court, lawyer or banker can legally or equitably invoke the existence of the note or mortgage. In plain language, foreclosure is not an option in a post rescission world.

 

With the surge of the use of financial tools like securitization of debt, the disclosures to consumers failed to inform the borrower about the new broader parameters of the entirety of the proposed loan transaction, including the actual viability of the loan, and the fees and profits generated contemporaneously with the proposed loan.

 

Lenders, unknown to borrowers, were no longer operating on the premise of potential risk of loss from nonpayment because the named lenders and even the actual lenders had no risk of loss. This fundamental change in the dynamics of the marketplace was and remains largely unknown to consumers of debt products.

 

Lenders and their agents and affiliates were able to generate huge sums in fees and profits from instruments arising directly as a result of the execution of the loan agreement by the borrowers. Contrary to disclosure requirements under TILA, named lenders continued to render disclosures as if no such changes had occurred thus excluding the bulk of the fees, commissions and profits generated by the loan.

 

As a result the very thing that the 90th United States Congress and all subsequent congresses have sought to avoid — the lack of full disclosure, impaired the informed use of credit by borrowers. The result is history — a tsunami of foreclosure proceedings on loan products that from any objective standard could not possibly survive more than 3-5 years despite a stated “term” of 30 years.

 

Loans that adjusted to more than the entire household income were granted as though they complied with underwriting standards simply by reducing the “teaser” payment to something that was affordable for the first few months or years. Renters were enticed to take loans that could never be repaid. Homeowners were enticed to take new loans that could never be repaid thus inviting certain disaster — the loss of a home that had been family owned for generations.

 

Because of TILA, since 1968, caveat emptor does not legally apply to consumer loans; but judges sitting on the bench of state and federal courts are nonetheless regularly applying that standard in lieu of Federal and even state laws. The result has been and continues to be catastrophic loss to consumers while investment banks who created the current preferred scheme of securitization continue to make money on nonviable loan origination, acquisition, trading the offering of hedge and contract instruments based upon the existence of loans that don’t exist — legally or actually.

 

Starting around 2002, millions of consumers hired loan auditors who examined the disclosure statements and good faith estimates finding that the disclosures were deficient. Consumers en masse have been sending notices of rescission under 15 U.S.C. §1635. Nearly all of them were sent within the three-year time period prescribed by the TILA Rescission statute.

 

All of those legally rescinded loan agreements were replaced by a statutory scheme for collection of the unpaid debt by the creditor — i.e., the party who had value invested in the debt by reason of having paid for it. All right to repayment arose from the Federal Statute. The note and mortgage, if any, were cancelled. The note and mortgage were legally void, being legal nullities.

 

The issue addressed by this article deals with effect of orders, judgments, sales and evictions of property that is “foreclosed” post-rescission — i.e., after the mortgage and note ceased to exist. This subject has been assiduously avoided by nearly all writers on the subject for good reasons. Since the mortgage no longer existed, any subsequent order, judgment, sale or eviction was and still is void, not merely voidable.

 

That means that hundreds of thousands of foreclosures were done without any right, justification, jurisdiction, authority or excuse. And that means that tens of millions of subsequent events and transactions were void ab initio. And that means that the homeowners still own their property despite illegal evidence to the contrary. The only contrary argument is that what was done must be right because we did it. Or perhaps that we can’t undo it now because of all the trouble it would cause to put homeowners back in their rightful place.

 

Under the TILA Rescission statute, the named lenders have a twenty (20) day opportunity to comply with the duties set forth in the statute — or lose all hope of repayment of the unpaid debt. If they want to collect payment on the debt, they must first fulfill their duties under the statute. Congress provided zero room for stonewalling the effect of rescission.

 

In every case notices of TILA rescission are ignored by parties who assert authority to represent the creditor — i.e., the party who had paid for the debt. They continue to press forward with both judicial and nonjudicial foreclosures despite repeated advice from their attorneys that such actions could subject them to liability for monetary damages in addition to losing any right to claim repayment of the debt.

 

Despite the clear and unambiguous wording of the TILA Rescission statute trial judges arrogated to themselves the power to interpret the meaning of the statute and became creative in their interpretations designed to avoid the outcome required by the provisions of the statute and Federal regulations that were promulgated by the Federal Reserve Board and now the Consumer Financial Protection Board.

 

A unanimous Supreme Court of the United States, in Jesinoski v Countrywide, with Justice Scalia writing for the court in a terse opinion, struck down all attempts by all judges, justices and appellate reviewers to interpret the statute to mean anything other than what was expressly, clearly and unambiguously set forth in the statute.

 

No tender, lawsuit or claim or proof of nondisclosure or bad behavior of the creditor or anyone else is required before the rescission has the effect of cancelling the loan transaction. The notice of rescission has the same effect as any court order in that it is effective by operation of law.

 

The court did not address the impact of its decision on homes where legal title to the unencumbered home was treated as having been divested by use of state statutory schemes that only governed foreclosures based on the legal existence of mortgages or deeds of trust securing the performance of duties contained in a legally existing promissory note. Timely notices of TILA rescission had been sent and received in hundreds of thousands of cases. Such foreclosures and any interim orders based upon the pendency of the foreclosure proceedings were therefore entirely void lacking in jurisdiction, authority, or any subject matter upon which any court could rule. And yet they happened.

 

The obvious answer is that such homeowners still own their homes, the right to repayment of the debt from them has long since expired under applicable statutes of limitation, and right to possession and title is legally assured unless the homeowners have waited so long that statutes governing adverse possession were to apply. It is a draconian result, which is why judges don’t like it. But it is also what Congress intended as the law of the land in order to prevent wholesale violations of disclosure requirements.

 

Such forced “sales” and transactions did not legally occur based upon our system of laws. The instruments and records of such illusory transactions can and should legally be reversed to maintain the integrity of our land registry systems and to conform to Federal law. But considering the number of post rescission foreclosure sales and resales, the financing and refinancing — millions of transactions would be reversed at ground level and tens of millions of transactions would be reversed in the financial world, secondary market and shadow banking market.

 

The second obvious answer is that courts must stop allowing such post rescission foreclosures to proceed. There is no interpretation that allows for the void mortgage to be reinstated. Only an express agreement of the parties can do that, confirming with all laws, rules and regulations concerning the preparation, execution and recording of a new instrument for encumbering land or property.

 

At this point the Courts are building a bubble of void decisions that will and must be reversed unless the entire government abandons the rule of law. We clearly are at that tipping point.

 

The only remaining option that does not dispossess people who have long since occupied homes that they thought they had purchased, and to avoid the wholesale bankruptcy of title insurance companies and investment banks is to purchase waivers from homeowners who are still the legal owners of what had heretofore been considered foreclosed property. If investment banks want to buy their way out of the obvious problem of voiding trillions of dollars in transactions, they can do so if the homeowners agree. If not the investment banks will most likely collapse and millions of homes will change ownership and possession.

 

After publication of this article, there is little doubt that an increasing number of lawyers are going to see the efficacy and profitability of pursuing remedies for their clients, although some of those remedies for monetary damages might be initially barred by the applicable statute of limitations. But any thinking lawyer who litigates knows that is only part of the story. The fact remains that there is no statute of limitations on a deed.

 

Demanding possession of real property and cancelation of instruments purporting to change title do have a statute of limitation but only under adverse possession, which in Florida is 20 years. Thus any foreclosure sale in Florida after 1999 is and shall remain void with the right to title and possession still legally in the hands of the homeowner against whom the foreclosure lawsuit was filed.

 

The securitization infrastructure built upon the initial loan agreements and the subsequent infrastructure built upon the post rescission foreclosures resulted in fees, commissions and profits far in excess of the principal amount due on the original debt. The only rational business solution is to buy the property from the homeowner for whatever consideration the market will bear. The unwinding of the entire infrastructure will cost them many times what the property is worth.

 

As an investment banker and securities analyst, I have calculated the total compensation to be in excess of $12 for each dollar of debt – distributed to the investment bank, and its agents or affiliates. This explains stories of how people who were previously employed for delivery of pizzas were “earning” in excess of $500,000 per year.

 

That number ($12 or 12:1) comes from simple arithmetic — the amount of “nominal” value in the shadow banking market ($1 quadrillion) compared to the amount of real dollars in the real world in all currencies ($85 trillion) (in order to use the most conservative number possible). The real figure is probably closer to $15-$20.

 

That means that for an average $200,000 loan in the real world, the investment bank, the originators, the aggregator, the agents and affiliates all participated in a distribution of more than $2.4 million in fees, commissions, profits and bonuses. Despite 13 years of publishing articles incorporating these calculations that have been read by more than 15 million individual readers, nobody has ever challenged the conclusion set forth herein.

 

Investment banks and servicers seem well aware of this enormous risk. Their response has been multi-pronged to avoid the exposure. While there have been many settlements involving the payment of cash for waivers, the main tool has been the use of instruments that are entitled “modification.” Very few of such agreements are recorded in land registries. Even when they are recorded, their intended effect is to change the identity of the claimed creditor, and to change the terms of repayment of interest and principal. Even if the mortgage and note still legally existed it is difficult to see how the presumed modification would be anything other than a refinancing.

 

The final obvious issue is that it is not legally possible to modify something that doesn’t exist. As stated by one jurist who wishes to remain anonymous, “you can’t place a real roof on top of an invisible house.” Post rescission both the note and the mortgage do not legally exist even if they exist in the real world. In the face of a TILA rescission, not even the borrower can “reinstate” the mortgage without executing a new mortgage or deed of trust with the required formalities; and the claimed creditor may not offer such an instrument without compliance with applicable lending laws and regulations. Incorporating the terms of a void document leads to other bewildering issues beyond the scope of this article.

 

The inherent problem with that scenario is that the debt is either barred from collection or completely extinguished. And that means a failure of consideration might have occurred despite the thinking of the participants.

 

In most cases, the time for enforcement of the debt has long since expired under TILA. In states where such expiration eradicates the debt, there can be no consideration for the execution of such instruments, making them executory non-binding instruments.

 

In states where the expiration of the right to seek a remedy under TILA is treated as a statute of limitation it can be raised as an affirmative defense; but the execution of an instrument renewing the old mortgage and old note and old debt might be execution under duress or false pretenses as to the existence and identity of the creditor who legally owned or owns the debt.

 

The foregoing analysis is considered radical and even unpatriotic by many who are in close proximity to the levers of power. It remains correct and our system of laws requires that the laws be faithfully executed.

 

The fact that “process” occurred is not sufficient to establish that due process occurred; and the fact that “due process” occurred is not the same as due process of law. Due process of law requires that the laws be followed. In cases dealing with TILA Rescission the laws are not being followed. Institutionalizing judicial rebellion is a dangerous precedent that ultimately leads inevitably to chaos and anarchy. It puts the fate of men and women in the hands of other men and women who will decide on the outcome without regard to law or precedent.

 

Perhaps it is unavoidable for those who sit in judgment on the bench of some federal, or state court or at an administrative hearing; maybe the power that we grant as a society to such people must result in some internal sense of superiority and may be that sense is necessary to mete out justice. But all jurists must come to terms with the fact that even jurists must function within the bounds of the law as it is, not as they think it should be.

 

The Law of Rescission Under the Truth in Lending Act (TILA)

TILA Rescission is the law of the land. It is governed by Federal Statute 15 USC §1635 and Federal Regulation (12 CFR § 226.23) each of which have preemptive rights over state law.

Federal Statute:

15 U.S. Code § 1635. Right of rescission as to certain transactions

(a)Disclosure of obligor’s right to rescind

Except as otherwise provided in this section, in the case of any consumer credit transaction (including opening or increasing the credit limit for an open end credit plan) in which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any property which is used as the principal dwelling of the person to whom credit is extended, the obligor shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures required under this subchapter, whichever is later, by notifying thecreditor, in accordance with regulations of the Bureau, of his intention to do so. The creditor shall clearly and conspicuously disclose, in accordance with regulations of the Bureau, to any obligor in a transaction subject to this section the rights of the obligor under this section. The creditor shall also provide, in accordance with regulations of the Bureau, appropriate forms for the obligor to exercise his right to rescind any transaction subject to this section.

(b)Return of money or property following rescission

When an obligor exercises his right to rescind under subsection (a), he is not liable for any finance or other charge, and any security interest given by the obligor, including any such interest arising by operation of law, becomes void upon such a rescission. Within 20 days after receipt of a notice of rescission, the creditor shall return to the obligor any money or property given as earnest money, downpayment, or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction. If the creditor has delivered any property to the obligor, the obligor may retain possession of it. Upon the performance of the creditor’s obligations under this section, the obligor shall tender the property to the creditor, except that if return of the property in kind would be impracticable or inequitable, the obligor shall tender its reasonable value. Tender shall be made at the location of the property or at the residence of the obligor, at the option of the obligor. If the creditor does not take possession of the property within 20 days after tender by the obligor, ownership of the property vests in the obligor without obligation on his part to pay for it. The procedures prescribed by this subsection shall apply except when otherwise ordered by a court.

(c)Rebuttable presumption of delivery of required disclosures

Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosures required under this subchapter by a person to whom information, forms, and a statement is required to be given pursuant to this section does no more than create a rebuttable presumption of delivery thereof.

(d)Modification and waiver of rights

The Bureau may, if it finds that such action is necessary in order to permit homeowners to meet bona fide personal financial emergencies, prescribe regulations authorizing the modification or waiver of any rights created under this section to the extent and under the circumstances set forth in those regulations.

(e)Exempted transactions; reapplication of provisions
This section does not apply to—

(1)

residential mortgage transaction as defined in section 1602(w)[1] of this title;
(2)

a transaction which constitutes a refinancing or consolidation (with no new advances) of the principal balance then due and any accrued and unpaid finance charges of an existing extension of credit by the same creditor secured by an interest in the same property;
(3)

a transaction in which an agency of a State is the creditor; or
(4)

advances under a preexisting open end credit plan if a security interest has already been retained or acquired and such advances are in accordance with a previously established credit limit for such plan.
(f)Time limit for exercise of right

An obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the sale of the property, whichever occurs first, notwithstanding the fact that the information and forms required under this section or any other disclosures required under this part have not been delivered to the obligor, except that if (1) any agency empowered to enforce the provisions of this subchapter institutes a proceeding to enforce the provisions of this section within three years after the date of consummation of the transaction, (2) such agency finds a violation of this section, and (3) the obligor’s right to rescind is based in whole or in part on any matter involved in such proceeding, then the obligor’s right of rescission shall expire three years after the date of consummation of the transaction or upon the earlier sale of the property, or upon the expiration of one year following the conclusion of the proceeding, or any judicial review or period for judicial review thereof, whichever is later.

(g)Additional relief

In any action in which it is determined that a creditor has violated this section, in addition to rescission the court may award relief under section 1640 of this title for violations of this subchapter not relating to the right to rescind.

(h)Limitation on rescission

An obligor shall have no rescission rights arising solely from the form of written notice used by the creditor to inform the obligor of the rights of the obligor under this section, if the creditor provided the obligor the appropriate form of written notice published and adopted by the Bureau, or a comparable written notice of the rights of the obligor, that was properly completed by the creditor, and otherwise complied with all other requirements of this section regarding notice.

(i)Rescission rights in foreclosure

(1)In general
Notwithstanding section 1649 of this title, and subject to the time period provided in subsection (f), in addition to any other right of rescission available under this section for a transaction, after the initiation of any judicial or nonjudicial foreclosure process on the primary dwelling of an obligor securing an extension of credit, the obligor shall have a right to rescind the transaction equivalent to other rescission rights provided by this section, if—

(A)

a mortgage broker fee is not included in the finance charge in accordance with the laws and regulations in effect at the time the consumer credit transaction was consummated; or
(B)

the form of notice of rescission for the transaction is not the appropriate form of written notice published and adopted by the Bureau or a comparable written notice, and otherwise complied with all the requirements of this section regarding notice.
(2)Tolerance for disclosures

Notwithstanding section 1605(f) of this title, and subject to the time period provided in subsection (f), for the purposes of exercising any rescission rights after the initiation of any judicial or nonjudicial foreclosure process on the principal dwelling of the obligor securing an extension of credit, the disclosure of thefinance charge and other disclosures affected by any finance charge shall be treated as being accurate for purposes of this section if the amount disclosed as the finance charge does not vary from the actualfinance charge by more than $35 or is greater than the amount required to be disclosed under this subchapter.

(3)Right of recoupment under State law

Nothing in this subsection affects a consumer’s right of rescission in recoupment under State law.

(4)Applicability

This subsection shall apply to all consumer credit transactions in existence or consummated on or after September 30, 1995.

(Pub. L. 90–321, title I, § 125May 29, 196882 Stat. 153Pub. L. 93–495, title IV, §§ 404, 405, 412, Oct. 28, 197488 Stat. 1517, 1519; Pub. L. 96–221, title VI, § 612(a)(1), (3)–(6), Mar. 31, 198094 Stat. 175, 176; Pub. L. 98–479, title II, § 205Oct. 17, 198498 Stat. 2234Pub. L. 104–29, §§ 5, 8, Sept. 30, 1995109 Stat. 274, 275; Pub. L. 111–203, title X, § 1100A(2)July 21, 2010124 Stat. 2107.)

Federal Regulation

12 CFR § 226.23 – Right of rescission.

§ 226.23 Right of rescission.

(a)Consumer’s right to rescind.

(1) In a credit transaction in which a security interest is or will be retained or acquired in a consumer‘s principaldwelling, each consumer whose ownership interest is or will be subject to the security interest shall have the right to rescind the transaction, except for transactions described in paragraph (f) of this section. 47

47 For purposes of this section, the addition to an existing obligation of a security interest in a consumer‘s principaldwelling is a transaction. The right of rescission applies only to the addition of the security interest and not the existing obligation. The creditor shall deliver the notice required by paragraph (b) of this section but need not deliver new material disclosures. Delivery of the required notice shall begin the rescission period.

(2) To exercise the right to rescind, the consumer shall notify the creditor of the rescission by mail, telegram or other means of written communication. Notice is considered given when mailed, when filed for telegraphic transmission or, if sent by other means, when delivered to the creditor‘s designated place of business.

(3) The consumer may exercise the right to rescind until midnight of the third business day followingconsummation, delivery of the notice required by paragraph (b) of this section, or delivery of all material disclosures, 48 whichever occurs last. If the required notice or material disclosures are not delivered, the right to rescind shall expire 3 years after consummation, upon transfer of all of the consumer‘s interest in the property, or upon sale of the property, whichever occurs first. In the case of certain administrative proceedings, the rescission period shall be extended in accordance with section 125(f) of the Act.

48 The term ‘material disclosures’ means the required disclosures of the annual percentage rate, the finance charge, the amount financed, the total of payments, the payment schedule, and the disclosures and limitations referred to in §§ 226.32(c) and (d) and 226.35(b)(2).

(4) When more than one consumer in a transaction has the right to rescind, the exercise of the right by oneconsumer shall be effective as to all consumers.

(b)

(1)Notice of right to rescind. In a transaction subject to rescission, a creditor shall deliver two copies of the notice of the right to rescind to each consumer entitled to rescind (one copy to each if the notice is delivered in electronic form in accordance with the consumer consent and other applicable provisions of the E-Sign Act). The notice shall be on a separate document that identifies the transaction and shall clearly and conspicuously disclose the following:

(i) The retention or acquisition of a security interest in the consumer‘s principal dwelling.

(ii) The consumer‘s right to rescind the transaction.

(iii) How to exercise the right to rescind, with a form for that purpose, designating the address of the creditor‘s place of business.

(iv) The effects of rescission, as described in paragraph (d) of this section.

(v) The date the rescission period expires.

(2)Proper form of notice. To satisfy the disclosure requirements of paragraph (b)(1) of this section, the creditorshall provide the appropriate model form in appendix H of this part or a substantially similar notice.

(c)Delay of creditor’s performance. Unless a consumer waives the right of rescission under paragraph (e) of this section, no money shall be disbursed other than in escrow, no services shall be performed and no materials delivered until the rescission period has expired and the creditor is reasonably satisfied that the consumer has not rescinded.

(d)Effects of rescission.

(1) When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer shall not be liable for any amount, including any finance charge.

(2) Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.

(3) If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under paragraph (d)(2) of this section. When the creditor has complied with that paragraph, theconsumer shall tender the money or property to the creditor or, where the latter would be impracticable or inequitable, tender its reasonable value. At the consumer‘s option, tender of property may be made at the location of the property or at the consumer‘s residence. Tender of money must be made at the creditor‘s designated place of business. If the creditor does not take possession of the money or property within 20 calendar days after theconsumer‘s tender, the consumer may keep it without further obligation.

(4) The procedures outlined in paragraphs (d) (2) and (3) of this section may be modified by court order.

(e)Consumer’s waiver of right to rescind.

(1) The consumer may modify or waive the right to rescind if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency. To modify or waive the right, the consumer shall give the creditor a dated written statement that describes the emergency, specifically modifies or waives the right to rescind, and bears the signature of all the consumers entitled to rescind. Printed forms for this purpose are prohibited, except as provided in paragraph (e)(2) of this section.

(2) The need of the consumer to obtain funds immediately shall be regarded as a bona fide personal financial emergency provided that the dwelling securing the extension of credit is located in an area declared during June through September 1993, pursuant to 42 U.S.C. 5170, to be a major disaster area because of severe storms and flooding in the Midwest. 48a In this instance, creditors may use printed forms for the consumer to waive the right to rescind. This exemption to paragraph (e)(1) of this section shall expire one year from the date an area was declared a major disaster.

48a A list of the affected areas will be maintained by the Board.

(3) The consumer‘s need to obtain funds immediately shall be regarded as a bona fide personal financial emergency provided that the dwelling securing the extension of credit is located in an area declared during June through September 1994 to be a major disaster area, pursuant to 42 U.S.C. 5170, because of severe storms and flooding in the South. 48b In this instance, creditors may use printed forms for the consumer to waive the right to rescind. This exemption to paragraph (e)(1) of this section shall expire one year from the date an area was declared a major disaster.

48b A list of the affected areas will be maintained and published by the Board. Such areas now include parts of Alabama, Florida, and Georgia.

(4) The consumer‘s need to obtain funds immediately shall be regarded as a bona fide personal financial emergency provided that the dwelling securing the extension of credit is located in an area declared during October 1994 to be a major disaster area, pursuant to 42 U.S.C. 5170, because of severe storms and flooding in Texas. 48cIn this instance, creditors may use printed forms for the consumer to waive the right to rescind. This exemption to paragraph (e)(1) of this section shall expire one year from the date an area was declared a major disaster.

48c A list of the affected areas will be maintained and published by the Board. Such areas now include the following counties in Texas: Angelina, Austin, Bastrop, Brazos, Brazoria, Burleson, Chambers, Fayette, Fort Bend, Galveston, Grimes, Hardin, Harris, Houston, Jackson, Jasper, Jefferson, Lee, Liberty, Madison, Matagorda, Montgomery, Nacagdoches, Orange, Polk, San Augustine, San Jacinto, Shelby, Trinity, Victoria, Washington, Waller, Walker, and Wharton.

(f)Exempt transactions. The right to rescind does not apply to the following:

(1) A residential mortgage transaction.

(2) A refinancing or consolidation by the same creditor of an extension of credit already secured by the consumer‘s principal dwelling. The right of rescission shall apply, however, to the extent the new amount financed exceeds the unpaid principal balance, any earned unpaid finance charge on the existing debt, and amounts attributed solely to the costs of the refinancing or consolidation.

(3) A transaction in which a state agency is a creditor.

(4) An advance, other than an initial advance, in a series of advances or in a series of single-payment obligationsthat is treated as a single transaction under § 226.17(c)(6), if the notice required by paragraph (b) of this section and all material disclosures have been given to the consumer.

(5) A renewal of optional insurance premiums that is not considered a refinancing under § 226.20(a)(5).

(g)Tolerances for accuracy –

(1)One-half of 1 percent tolerance. Except as provided in paragraphs (g)(2) and (h)(2) of this section, the finance charge and other disclosures affected by the finance charge (such as the amount financed and the annual percentage rate) shall be considered accurate for purposes of this section if the disclosed finance charge:

(i) is understated by no more than 1/2 of 1 percent of the face amount of the note or $100, whichever is greater; or

(ii) is greater than the amount required to be disclosed.

(2)One percent tolerance. In a refinancing of a residential mortgage transaction with a new creditor (other than a transaction covered by § 226.32), if there is no new advance and no consolidation of existing loans, the finance charge and other disclosures affected by the finance charge (such as the amount financed and the annual percentage rate) shall be considered accurate for purposes of this section if the disclosed finance charge:

(i) is understated by no more than 1 percent of the face amount of the note or $100, whichever is greater; or

(ii) is greater than the amount required to be disclosed.

(h)Special rules for foreclosures –

(1)Right to rescind. After the initiation of foreclosure on the consumer‘s principal dwelling that secures the creditobligation, the consumer shall have the right to rescind the transaction if:

(i) A mortgage broker fee that should have been included in the finance charge was not included; or

(ii) The creditor did not provide the properly completed appropriate model form in appendix H of this part, or a substantially similar notice of rescission.

(2)Tolerance for disclosures. After the initiation of foreclosure on the consumer‘s principal dwelling that secures the credit obligation, the finance charge and other disclosures affected by the finance charge (such as the amountfinanced and the annual percentage rate) shall be considered accurate for purposes of this section if the disclosed finance charge:

(i) is understated by no more than $35; or

(ii) is greater than the amount required to be disclosed.

[Reg. Z, 46 FR 20892, Apr. 7, 1981, as amended at 51 FR 45299, Dec. 18, 1986; 58 FR 40583, July 29, 1993; 59 FR 40204, Aug. 5, 1994; 59 FR 63715, Dec. 9, 1994; 60 FR 15471, Mar. 24, 1995; 61 FR 49247, Sept. 19, 1996; 66 FR 17338, Mar. 30, 2001; 72 FR 63474, Nov. 9, 2007; 73 FR 44601, July 24, 2008]

Listen to This! 6PM The Fannie Mae-MERS Flush — The Neil Garfield Show

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Going back to even 2011 and before, approximately half of the mortgages owned or guaranteed by Fannie Mae were registered in the Mortgage Electronic Registration Systems (MERS). And the loan value on the official books for such loans was and undoubtedly still is over a trillion dollars.

And the value of all loans traded and refinanced during that period is over $20 Trillion. And the “value” of the derivative instruments on that was over $250 Trillion —- which is more than all the actual money in the world by a factor of 3. Those instruments remain as 1/4 of the entire shadow banking market. They are presently not subject to regulation even though by any reasonable analysis they are securities requiring adequate disclosure for the sale of any security.

In a recent deposition in a case Bill is associated with, a Fannie Mae official essentially admitted under oath that there is no agency relationship between MERS and Fannie Mae.

This is a potential bombshell for borrowers, in that it exposes how MERS is used by purported holders of notes and associated mortgages or deeds of trust to bypass recording statutes in that MERS is allowed to do what we have discussed on this show many times: record property interests in states near and far through robosigning and associated sleights of hand.

Yet what this deposition admission shows is that the mortgage entities using MERS, such as Fannie Mae, under the pressure of being under oath are subject to disclaiming the existence of a true agency relationship between MERS  and the purported ‘lender’.

To put it plain terms — if FANNIE has no agency relationship with MERS on loans it claims to own, then MERS has no right to be executing any documents of transfer of the mortgage after the date on which Fannie allegedly became the owner. And don’t take their word for it. In many of my cases on cross examination the robowitness testified that Fannie was the investor “from the start.”

See Neil’s Blog–and tune into the Show today–for further details.

seehttps://livinglies.me/2019/08/27/fannie-mae-admits-mortgage-transfers-without-recording-sees-substantial-liability/

Also see then following statement issued by R.K. Arnold CEO of MERS in 2010  containing numerous misrepresentations of fact and law and some admissions against interest. I would hasten to add that the fact that MERS was NOT named as claimant in a foreclosure does not make any assignment executed purportedly on behalf of MERS valid or truthful nor does it create any legal rights. Despite the lies contained in the following statement, MERS has never processed, received, transmitted or delivered any money or documents in connection with any loan. Any document stating or implying the contrary is a living lie.

https://nationalmortgageprofessional.com/news/20489/mers-ceo-rk-arnold-addresses-company-operations

Extension of Martin Act in New York Threatens Securitization Players

While most people didn’t notice, all of Wall Street took notice when the New York Governor signed into law a bill that extends the right of the state attorney general to investigate financial crimes and bring actions for equitable relief and damages.

Investment  bankers may not be going to jail but they are about to be taken to the cleaners for creating illegal securitization schemes that were directly intended to violate basic laws and doctrines that have existed for centuries. And this time the appetite is there to prosecute such claims.

PLAIN FACTS: The issuance of “certificates” aka “bonds” from a named “trust” was deceitful and based upon false claims, representations and assertions in the documents themselves in connection with REMIC Trusts and other special purpose vehicles. Both the certificates and the origination of loans took place in a scheme where concealment of the true nature of the transactions was the primary strategy. It is still happening.

  • The first purpose of the scheme was to lend money without any significant risk of loss regardless of whether the loan performed or not.
  • The second purpose of the scheme was to make money from the sale and trading of non-securities contracts that on average produced revenue of 12 times the amount of each loan.
  • The debt was obliterated by the sale of variant attributes of each debt on several different levels resulting in the divestment of the investbank of all risk of loss without transferring title to the debt to anyone.
  • Disclosure requirements were ignored as to both investors and borrowers
  • The loan transaction was distorted beyond recognition in which normal market forces between lender and borrower simply were not operating — and only the parties involved in securitization knew about it
  • Then for purposes of enforcement, the players created false documentation making it appear that the debt still existed.
  • Investors reasonably and erroneously believed that the loans were subject to normal underwriting standards, which they were not.
  • Borrowers reasonably and erroneously believed that the loans were subject to normal underwriting standards, which they were not.
  • Neither investors nor borrowers ever advised or given access or information that the investment banks and affiliated players were creating revenue of 12 times the amount of the investment of securities and 12 times the amount of each loan.

see New York Martin Act

Existing law is sufficient to address a scheme that was illegal starting with its conception. While securitization is not illegal, the employment of a securitization scheme for an illegal purpose is illegal per se.

Remedies include rescission for both investors and borrowers — or compensation to waive rescission.

What will emerge from all this is that the laws need to be changed to cover such securitisation schemes because as it stands now the debt is eliminated and enforceable under the requirements of both statutory and common law. That is not just an opinion, it is a fact. That fact is subject to equitable remedies worked out by the attorney general, the courts and the prospective defendants.

But that fact also means  that changes in the regulations and laws governing taxes (for so-called “REMIC), securities (for so called “mortgage backed” instruments), loans under TILA and deceptive lending practices must be put into play so that the intent behind all of those laws can still be accomplished, to wit: that both investors and borrowers know and understand exactly what is happening to their money, their names, their signatures, and their reputation and how much the investment bank is profiting from the transaction.

This is already intended by the law. But without regulations specifically targeting the practice of creating false documents and making false representations in the sale of allegedly mortgage-backed securities or the sale or enforcement of complex loan products to borrowers, the policies for enforcement will remain woefully inadequate.

Jurisdictional Defense —- Certificate Holders vs Trust

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

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

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

*

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

Fannie Mae Admits Mortgage Transfers Without recording — Sees Substantial Liability

Hat tip: Bill Paatalo

Everyone in law enforcement knows that if you  can get suspect to say something he thinks will help him, you have the beginning of a confession or at least an admission against interest. That is why criminal defense lawyers tell their clients to shut up and stay shut up.

Here is Fannie Mae in all of its glory disclosing a high risk element if proposed regulations go into effect requiring the recording of mortgage transfers in land registers and disclosure of the transactions. And it is potentially throwing MERS under the bus.

Spoiler alert: Those laws already exist. And violating them clouds title and hides taxable income and profits from transactions that are reported for purposes of foreclosure but never reported to the IRS because the transactions never occurred.

What Wall Street is doing is clever and they might get away with it. By convincing lawmakers and regulators that such disclosures and recording are unnecessary expenses for a “beleaguered giant” Fannie is leading the way to the holy grail of finance: transfers and transactions based upon or indexed to mortgage loans without any oversight. More importantly it is attempting to institutionalize the practice of violating existing laws requiring the recording of any transfer of a mortgage and the disclosure to the borrower.

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

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

see https://www.housingwire.com/articles/half-fannie-mae-mortgages-registered-mers-name

So over half of all mortgage loans claimed to be “owned” by Fannie either in its own portfolio or as Master trustee of a private label REMIC trust are registered with MERS. And Fannie admits that virtually all of those loans have been transferred multiple times but disclosed and recorded much less than the number of transfers. Hmmm.

That is why fabricated, forged, backdated and robosigned documents became so ubiquitous. Lots of paper transfers of the loan took place without anyone buying the debt. And we all know that a transfer of the mortgage without the debt is no transfer at all. So you might think “No harm no foul,” right?

Right except for the fact that the last party on that paper train is the party who brings the foreclosure action and who (a) has not purchased the debt for value and (b) is relying upon unrecorded transfer documents pursuant to transactions (“for value received”) that never occurred.

So they make up documents as if the transactions actually occurred but they never actually say that there was a transaction because that would be lying to the court.

By creating facially valid (i.e. conforming in form to statutory requirements) documents, they rely on the presumption that everything stated in the facially valid document is true. Why would someone record an assignment of mortgage if there was no transaction? The answer is simple: for foreclosure purposes only.

The Fannie disclosure is an exercise in misdirection. It wants people to think about the revenue to be gained and the price to be paid for recording those transfers so they won’t think about whether any of those transfers were real.

If people started asking that question then they might start finding out that the party named as the claimant in foreclosure actions is just a sham conduit not for the owner of the debt but rather for an investment bank seeking more revenue. And that too is a violation of law. Conduits can’t foreclose in any jurisdiction. Only the owner of the debt can foreclose and then only if the claimed owner has paid value for it.

You cannot foreclose just because you want income. You can only foreclose on a debt that is owed to you because you paid value for it. This isn’t capitalism. It’s theft.

Practice hint: What is the name of the trust? Is that a REMIC trust? A REMIC trust is a conduit. For what is the trust acting as conduit?

And for those who might forget

REMIC = Real Estate Mortgage Investment Conduit

Consent Order Contains Admission of False Affidavits and False Chains of Title

A lot of student loan debt ends up being claimed by “Trusts” that are exactly like REMIC trusts except they are not about residential mortgages. And as I have previously pointed out on these pages, the enforcement of those debts has gone through the same process of removing the risk of loss from those who made the loan and the creation of a scheme where it is perhaps impossible to find or identify any creditor who owns the debt by reason of having paid for it (as opposed to “owning the debt” by reason of having the promissory note or a copy of it).

As a side note, to the extent that debtors are prevented from discharging such debt because of government guarantees, I argue that such exclusion is inapplicable. Students should be able to discharge most student debt in bankruptcy. The risk has already been eliminated if the loans are subject to claims in securitization. The purpose of the guarantee has thus been eliminated.

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

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

Hat tip to summer chic

In this case, the CFPB filed suit essentially asserting its own administrative findings that mirror the defenses of homeowners in foreclosure, to wit: that the affidavits filed are false, and they are falsely signed and notarized, containing false information about title to the loan and false information about the business records.

What is interesting about this case is that the parties are submitting a consent order which includes as those findings of the court in paragraph 4 of the proposed consent order which states as follows:

See https://files.consumerfinance.gov/f/documents/201709_cfpb_national-collegiate-student-loan-trusts_proposed-consent-judgment.pdf

4. Since at least November 1, 2012, in order to collect on defaulted private student loans, Defendants’ Servicers filed Collections Lawsuits on behalf of Defendants in state courts across the country. In support of these lawsuits, Subservicers on behalf of Defendants executed and filed affidavits that falsely claimed personal knowledge of the account records and the consumer’s debt, and in many cases, personal knowledge of the chain of assignments establishing ownership of the loans.In addition, Defendants’ Servicers on behalf of Defendants filed more than 2,000 debt collections lawsuits without the documentation necessary to prove Trust ownership of the loans or on debt that was time-barred. Finally, notaries for Defendants’ Servicers notarized over 25,000 affidavits even though they did not witness the affiants’ signatures.[e.s.]

PRACTICE NOTE: HOW TO USE THIS INFORMATION. Sometimes I erroneously assume that people know what to do with this type of information. So let’s be clear.

  • This information means that servicers, subservicers and lawyers claims regarding chain of title, business records, and their use of affidavits or even testimony is not entitled to the same presumption of credibility that might otherwise apply.
  • That means that the presumptions on the use of business records are not entitled to a presumption of credibility and that additional foundation testimony must be offered in order to assure the court that what is contained in the document is authorized, properly signed, properly notarized and most importantly accurate.
  • The entire case against debtors in these situations is entirely dependent upon the use of legal presumptions  that can be rebutted. Rebuttal of presumptions takes place under two general categories.
  • The first is that that the presumed fact can be shown to be untrue.
  • The second ius that the process of presumption should not apply because the proponent of the document clearly has a stake in the outcome of litigation and has a history of falsifying such documents.
  • Once you rebut the presumption, the case against the debot (homeowner, student) is gone.
  • The opposition has no evidence of proof of payment for the debt, and this has no foundation for claiming authority of the servicer, trustee or even the lawyer.
  • Such authority must come from the owner of a debt who has paid value for it.

Dan Edstrom senior forensic loan examiner writes the following:

This is similar to what is in the foreclosure review consent orders (from US Bank Consent Order dated April 13, 2011):
(2) In connection with certain foreclosures of loans in its residential mortgage servicing portfolio, the Bank:​
(a)​ filed or caused to be filed in state and federal courts affidavits executed by its employees making various assertions, such as the amount of the principal and interest due or the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such personal knowledge or review of the relevant books and records;
(b) filed or caused to be filed in state and federal courts, or in local land records offices, numerous affidavits that were not properly notarized, including those not signed or affirmed in the presence of a notary;​
(c)​ failed to devote to its foreclosure processes adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training; and​
(d)​ failed to sufficiently oversee outside counsel and other third-party providers handling foreclosure-related services.​
(3)​ By reason of the conduct set forth above, the Bank engaged in unsafe or unsound banking practices.
And what about this quote from the student loan consent order:
In addition, Defendants’ Servicers on behalf of Defendants filed more than 2,000 debt collections​ lawsuits without the documentation necessary to prove Trust ownership of​ the loans or on debt that was time-barred.
So wait a minute. They allege the debt cannot be discharged in BKR, but (alleged) student loan debt that hasn’t been paid on in years – isn’t it time barred?  How does collection action work after decades where they took affirmative debt collection steps after the debt was time barred?  In the instance I am thinking about, a dentist was BARRED from taking patients with some type of federally covered insurance and this forced them out of their occupation.  The student loan debt hadn’t been paid in 2 or 3 decades (in California).
So in a related case (time-barred debt) in BKR in CA, a debtor filed a lawsuit against a creditor for filing a proof of claim on a time-barred debt. He lost, the court ruled that if the proof of claim was not objected to (with the relevant objection being that the debt was time-barred), the debtor waived the affirmative defense.
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