Summary Judgment by Ambush: Motion to Strike Affirmative Defenses

Posted by  MotionToStrikeAffirmativeDefenses

Attorney Nick Mermiges (Miami, I think) has written an excellent article on motion practice which is very illuminating and extremely clear. In essence he has called out the bank lawyers who are filing motions to strike affirmative defenses and then using the law on summary judgment to argue their case. The result is that most of the homeowner’s affirmative defenses are indeed struck, eventually with prejudice and it is all tied to attorney fees for the benefit of the bank lawyers. The Judges are hearing these motions as though the he or she was hearing evidence, which is obviously not the case. For myself I am considering whether to file interlocutory appeals where the Judge has essentially decided the entire case based legal argument that does not even apply to the motion filed.

the basic thrust of the argument is that the Defendant has asserted “mere legal conclusions,” and that the Affirmative Defenses as pled don’t contain sufficient factual support. Plaintiffs’ counsel contend that the Defendant should have to plead specific facts in its Answer/Affirmative defenses, instead of simply asserting the legal basis for the affirmative defense.

I fell into this trap and reworded the affirmative defenses to provide a long narrative of the facts supporting the affirmative defenses. By doing that I was forced to both disclose specific facts outside of discovery and assume others because I had not received discovery. And THEN adding insult to injury I am prohibited from pursuing discovery on issues that the court has already ruled “irrelevant.”

I’ll admit that it is a clever tactic but it is only working because the Judges are letting it happen. This is summary Judgment by ambush.

these Motions are filed and granted with great frequency. Most of the time, Plaintiffs’ counsel misleadingly cite either (1) cases that discuss the sufficiency of affirmative defenses in the context of summary judgment; or (2) cases that address the pleading requirements when a party asserts an affirmative defense of fraud. See, e.g., Cady v. Chev Chase Sav. And Loan, Inc., 528 So. 2d 136 (Fla. 4th DCA 1988) (an opinion arising from a summary judgment order relating to a foreclosure, which primarily addresses allegations of fraud); Bliss v. Carmona, 418 So. 2d 1017 (Fla. 3d DCA 1982) (an opinion arising from a post­trial final judgment order relating to a foreclosure, which primarily addresses the sufficiency of the appellant’s response); Ridley v. Safety Kleen Corp., 693 So. 2d 934 (Fla. 1996) (an opinion arising from a challenge to a jury verdict on the grounds that the court’s jury instructions relating to the seatbelt defense were improper); Jacobs v Westgate, 766 So. 2d 1175 (Fla. 3d DCA 2000) (an opinion arising from an order granting a directed verdict in a landlord tenant dispute); Langford v. McCormick, 552 So. 2d 964 (Fla. 1st DCA 1989) (an opinion arising from a post­trial final judgment order relating to a probate dispute, which does

not address the standards for properly pleading an affirmative defense); Nash v. Wells Fargo Guard Services, Inc., 678 So. 2d 1262 (Fla. 1996) (an opinion arising from an order on a motion for new trial, which sets out standards for naming a Fabre Defendant).
While all of the aforementioned opinions have little pieces of language that can be misleadingly quoted and then strung together into a motion that someone might fall for if they weren’t paying attention, the common thread that ties them all together is that they consider the sufficiency of Affirmative Defenses after the close of discovery. And, naturally, after discovery has concluded, the Court would be in the proper position to determine whether the Defendant has uncovered evidence and facts which are sufficient to support the Affirmative Defenses as pled. But, it makes no sense to apply this same test at the beginning of discovery, because it presumes that the Defendant already knows everything there is to know.

The author takes dead aim at judges and lawyers who ignore the rules of engagement in litigation. The only basis to strike affirmative defenses is that the stated affirmative defense is not an affirmative defense or is scandalous as worded. Bank lawyers are using this tactic because the court won’t grant summary judgment on the same issues. After getting this order from the court, the Plaintiff pretender lender has clear sailing over the objections and affirmative defenses as properly pled because the order from the court has struck them.

The general umbrella for these spurious motions to strike is “relevance” which is by definition an evidentiary matter not a legal sufficiency matter. If you are challenging the lawsuit filed the purpose of the affirmative defenses is to put the Plaintiff on notice of what you intend to prove — not to provide a target for the Plaintiff to argue matters of evidence or the law of civil procedure for summary judgment.

let’s take a look at the language of the operative rule. Florida Rule of Civil Procedure § 1.140(f) provides that:
“[a] party may move to strike or the court may strike redundant, immaterial, impertinent, or scandalous matter from any pleading at any time.”
Based on the actual language of this rule, a Motion to Strike would only be proper if I asserted the same Affirmative Defense ten times (redundant), if I asserted an Affirmative Defense of Accord and Satisfaction in a Wrongful Death case (immaterial), or if one of my Affirmative Defenses was that the Plaintiff was an alcoholic communist (impertinent, scandalous). I don’t see any language directing the Court to strike allegations which have not yet been factually substantiated.

And while it appears that numerous Trial Courts aren’t inclined to adhere to the actual Rules of Civil Procedure (perhaps because Defense Counsel aren’t actually arguing the law), it turns out that multiple Florida Appellate Courts agree that the rules says what they actually say. Thus, these Courts have held that in the context of a motion to strike (i.e., prior to the close of discovery), the proper inquiry is only whether the affirmative defense is “legally sufficient on its face.” Citizens & S. Realty Investors v. Lastition, 332 So. 2d 357, 358 (Fla. 4th DCA 1976). Indeed, at the beginning of discovery, when a party asserts its Affirmative Defenses, the purpose of same is to establish what the Defendant seeks to prove, thereby putting the opposing party on notice. Thus, in Zito v. Washington Federal Sav. & Loan Asso., 318 So. 2d 175 (Fla. 3d DCA 1975), the Third DCA noted:
As in plaintiff’s statement of claim, the requirement of certainty will be insisted upon in the pleading of a defense; and the certainty required is that the pleader must set forth the facts in such a manner as to reasonably inform his adversary of what is proposed to be proved in order to provide the latter with a fair opportunity to meet it and prepare his evidence.

MERS Assignments VOID

For further information please call 954-495-9867 or 520-405-1688

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see http://www.msfraud.org/law/lounge/mers-auroraslammed.pdf
While there are a number of cases that discuss the role of Mortgage Electronic Registration Systems (MERS), this tells the story in the shortest amount of time. MERS was only a nominee to track the off-record claims from multiple parties participating in what we call the securitization of loans. It now appears that the securitization in most cases never took place but the banks and their affiliates are foreclosing in the name of REMIC trusts anyway, relying on “presumptions” to “prove” that the Trust actually purchased and took possession of the alleged loan. In every case I know of  where the homeowner was allowed to probe deeply into the issues of whether the Trust actually received the loan, it has either been determined that the Trust didn’t own the loan, or the case was settled before the court could announce that ruling.

Decided in April of last year, this case slams Aurora, who was and remains one of the worst offenders in the category of fraudulent foreclosures. The Court decided that since the basis of the claim was an assignment from MERS who had no interest int he debt, note or mortgage, there were no “successors.” This logic is irrefutable. And as regular readers know from reading this blog I believe the same logic applies to any other party who has no interest in the debt, note or mortgage — like an unfunded “originator” whose name appears on not only the Mortgage, like MERS, but also on the note.

Judges have trouble with that analysis because in their minds they think the homeowner is trying to get a free house. Even if that were true, it doesn’t change the correct application of law. But the opposite is true. The homeowner is trying to stop the foreclosing party from getting a free house and the homeowner is trying  to find his creditor. I actually had a judge yesterday rule that the source of funds, ownership and balance was essentially irrelevant. Discovery on nearly all issues was blocked by his ruling, leaving the trial to be a very short affair since the defenses have been eliminated by that Judge by express ruling.

The attorney representing the bank basically argued that the case was simple and that anything that happened prior to the alleged default was also irrelevant. The Judge agreed. So when a trial judge makes such rulings, he or she is basically narrowing the issue down to when we were just starting out in 2007 in what I call the dark ages. The trial becomes mostly clerical in which the only relevant issues are whether the homeowner received a loan and whether the homeowner stopped paying. All other issues are treated as irrelevant defenses, including the behavior of the “servicer” whose authority cannot be questioned (because of the presumption raised by an apparently facially valid instrument of virtually ANY sort).

The moral of the story is persistence and appeal. I believe that such rulings are reversible potentially even as interlocutory appeals as to affirmative defenses and discovery. If anyone files a lawsuit they should be required to answer all potential questions about that that lawsuit in good faith. That is what discovery is for. The strategy of moving to strike affirmative defenses is meant to cut off discovery to the point where no defenses can be raised or proven. And cutting off discovery is what the foreclosers need to do or they will face sanctions, charges of fraud, perjury and worse when the real facts are revealed.

Confronting the Ridicule of Counsel for the Bank

For more information on foreclosure offense, expert witness consultations and foreclosure defense please call 954-495-9867 or 520-405-1688. We offer litigation support in all 50 states to attorneys. We refer new clients without a referral fee or co-counsel fee unless we are retained for litigation support. Bankruptcy lawyers take note: Don’t be too quick admit the loan exists nor that a default occurred and especially don’t admit the loan is secured. FREE INFORMATION, ARTICLES AND FORMS CAN BE FOUND ON LEFT SIDE OF THE BLOG. Consultations available by appointment in person, by Skype and by phone.

See also these articles:

The Right to Foreclose & the UCC

Weinstein Article NJ Law Journal

SearchforNegotiability Ronald Mann (1)

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If you file a claim or affirmative defenses along with your answer denying everything, you will often be met with a motion to strike the affirmative defenses or claim. The reason is simple, once the court agrees that the matters you alleged in your pleading are in issue, you are automatically entitled to discovery on those issues. And that is why I continue to say that the more aggressive you are in the beginning of litigation the more likely you are to get win or get a settlement early in the process. Pleading lack of consideration raises the issue of what happened with the money? Once that is in issue, your discovery questions and requests can be directed at that. Once the foreclosers are forced to open up their books and records, my experience is that they will fold. They generally don’t have a cancelled check or wire transfer receipt from anyone in their “chain.”

Here is what was submitted in one case in opposition to the motion to strike the affirmative defenses of the homeowner:

 

  1. Counsel for the Plaintiff wants this court to ignore the defenses of the Defendants on the basis that the theory of the case advanced by said defendants is “Absurd.”
  2. Defendants agree that there are patent absurdities and unexplained mysteries in this case.
  3. Plaintiff has alleged that it is a “holder” and has not alleged that it is a “holder in due course.” And it has not alleged the source of its authority to claim “rights to enforce.” By definition this means they admit that Plaintiff is not a purchaser for value, in good faith without knowledge of the Borrower’s defenses.
  4. If Plaintiff (or anyone whom Plaintiff represents) actually purchased the loan for value, in good faith and without knowledge of the borrower’s defenses, they would say so. That would make them a Holder in Due Course. Florida statutes protect the Holder in Due Course allocating the risk of signing documents without receiving consideration to the borrower. It would end the debate — eliminating nearly all of the borrower’s defenses by definition. So where is a holder in due course in this court proceeding?
  5. Defendants concede that anyone who signs a document assumes the risk of liability (even if they didn’t get the loan) that it might be used as a negotiable commercial instrument (cash equivalent) and that if an innocent buyer of the loan documents who was acting in good faith without the knowledge of the borrower’s defenses acquires such loan documents those documents can be enforced and that the borrower is limited in potential remedies to pursue satisfaction from the loan originators, mortgage broker etc.
  6. But Plaintiff is not alleging it is an innocent buyer. It is not even disclosing for whom the  the loan documents are being enforced. By trick of logic, Plaintiff wants this court to “assume” or “presume” that some actual creditor or owner of the loan has given the Plaintiff the right to enforce. But Plaintiff is not providing any allegation or proof, despite numerous requests as detailed in the affirmative defenses, as to the identity of the real creditor nor any facts or documents that how show the “real creditor” is imbued with the status of holder in due course,, creditor or “owner” of the loan.
  7. Instead they allege status of “holder” without any clarity of how they acquired the loan documents nor the basis of their authority to enforce the loan documents.
  8. Counsel for the Plaintiff wants to be treated as a holder in due course where the defenses of the homeowner are ignored regardless of whether they have merit. Counsel is attempting to elevate the status of the Plaintiff to treatment as a holder in due course, while the only allegation is the the Plaintiff is a “holder.”
  9. Being a holder does not automatically entitle anyone to enforce a document. If it were otherwise any delivery service would be able to stop by the courthouse and file a lawsuit on the papers they are carrying. A “holder” must have “rights to enforce.” And these rights come from the actual owner of the loan, whom they refuse to disclose.
  10. The “absurd” conclusion that there was no consideration at the “closing” of the “loan” arises from the the perfectly logical progression of reasoning stemming from the lack of consideration at every step in the chain, upon which Plaintiff relies. If there does exist a transaction in which the loan was (a) funded by the designated lender and (b) transferred for value at each step of the “assignment” process, then it is impossible for SOMEONE not to be a holder in due course. But the Plaintiff refuses to disclose in its pleading the identity of the holder in due course or anyone else designated as the creditor or owner of the loan.
  11. If the Plaintiff wants this court to enforce the loan documents, by its own pleadings it does so as a mere “holder.” That means that Plaintiff is subject to the defenses of the borrower arising from the closing. Plaintiff stands in no better shoes than the “originator” of the loan whom Defendants allege was not the actual lender.
  12. If the Plaintiff wants this court to to enforce the loan documents, it must prove that it has the actual loan documents, and it must prove that it has the right to enforce those documents not by presumption but with facts. And Defendants are permitted to raise the issue of consideration and inquire in discovery as to the reality of the transaction at the time of the loan.
  13. If Plaintiff wishes to state that it has the right to enforce the loan documents, even though it is a mere holder, then it must have been given those rights to enforce from the actual creditor. That is a step that Plaintiff seeks to avoid for reasons that will be flushed out in discovery and at trial. Defendants take the position that the their is no real creditor or real owner of the loan in any sense of the words, in the entire chain of “ownership” relied upon by the Plaintiff. If that is untrue, then Plaintiff can simply provide proof of payment at each step of the original transaction and each step in which there was an alleged transfer.
  14. Plaintiff is attempting to rely upon presumptions which would lead to a conclusion that is contrary to the actual facts.
  15. The presumptions upon which Plaintiff intends to rely, as is obvious from their complaint, would lead the court to conclude that there was consideration at the “closing” and each “transfer” of the loan. Such presumptions are rebuttable for the precise reason that they exist for the sake of expediency. Ordinarily, before the era of “securitization” such presumptions reflected the actual facts. In this case, they do not.
  16. Defendants need not prove their case at this stage of litigation. They have raised bona fide issues. If the issues raised as defenses are completely devoid of any basis, then the court has remedies available. Defendants have requested proof of payment to support the closing documents and each “transfer” of the loan. Such requests are found in the fact pattern described in the affirmative defenses. Plaintiff refuses to show such proof, betting on this Court’s need for an expeditious result.
  17. The defensive pleading of the Defendants are sound and sustainable, as pled, because they must be taken as true for purposes of the hearing on the Plaintiff’s Motion to Strike.

Courts Continue to Ratify Theft of Money and Documents by Banks

An ordinary individual finds a sack of promissory notes, and you might expect him to try to locate the owners of those notes. After all they are the equivalent of cash. But the banker sells the stolen notes with false assignments, insures them, gets them guaranteed with payment proceeds to himself and then settles with the lender for pennies on the dollar. Then the banker sues to collect on the stolen notes and wins. Except in this case the banker created the sack, created the notes, falsified the payee and inflated the amount due. The Banker has successfully stolen the money from the lender and stolen the notes from the lender. Despite 7 years of active litigation the judiciary has still failed to pick up on this scenario. Neil Garfield, www.livinglies.me

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I was responding to an email  from a lawyer who was wondering if a grievance could be filed against judges who failed to maintain judicial stability and demeanor. I ended up on a rant, and made it into an article. My conclusion is that a grievance is probably not he right venue, but judges should be a little more curious about what really went on in the mortgage meltdown.

I have been thinking about this sort of thing for a while now. The cases are prejudged not only individually by each judge but also because the judges speak with each other, and feed off of the decisions of other trial judges. Adding to this is the bias shown in Appellate courts.
This amounts to several presumptions against the homeowner, who is a best a pawn and at worst a victim of fraud just like the torrent of lawsuits and settlements have been stated by MBS investors, insurers, CDS counterparties, GSE guarantors, law enforcements and regulatory agencies — all saying the same thing: FRAUD (not breach of contract etc.).
Frustration is rising amongst homeowners and attorneys who represent their clients in a kangaroo court will the rules of pleading and the rules of evidence are turned upside down to give the thief the products of his fraudulent scheme.
First is the assumption behind the question “did you get the loan?” This is a fundamental question but the same judge who asks the borrower that question fails to require the foreclosing party that there WAS a loan from anyone in their paper trail. And the same issue applies to acquisition of loans after some bank with a charter makes the loan and then sells it to a “successor in interest.” The reason for this gross failure of the judiciary though is simply because they have never known a scheme like the one perpetrated by the banks this time.
Starting with that premise, the judiciary considers defenses by homeowners as perhaps technically right but leading to an unjust result— the loss of money by a bank who loaned money and who will now lose money if the homeowners’ defenses are applied. The logic is inexorable — it leads to the inevitable conclusion that the judiciary must put on a show about due process, but we all know that the foreclosure is inevitable. The corollary is that the reason the court dockets are clogged are because even though the loan was received by the borrower the homeowners are perpetrators a vast abuse of there judicial system.
In turn, the courts view foreclosure defense lawyers as something less than “real lawyers” and many judges have lost patience with both pro se litigants and lawyers defending the rights of homeowners. In your case, you were genuinely engrossed in a medical problem bunt the judge went ahead anyway because the judge saw the whole thing as “harmless error.” The foreclosure would, in the end, proceed, no matter what you said or what your clients or experts would proffer as facts in testimony.
The result is inexplicable rulings by trial courts and appellate courts. Underlying their opinions, rulings and orders is the basic premise that the homeowner received a loan. And so your judge called you a liar and refused to continue the case despite your inability to appear due to disability. Is this a case where a letter should be sent to the Judicial Qualification Committee or the Florida bar stating a grievance? Yes, as long as you realize that whoever reviews this is going to be suffering from the same delusion that permeates the rest of hedge judiciary. But it is of course relevant that the judge called you a liar, which goes far beyond the subject case at hand, and amounts to slander as well as prejudgment and bias. Perhaps a letter to the judge describing your reputation in the courts and the damage of having a judge call you a liar would cause the judge to reverse the judge’s opinion of you and apologizing for taking her remarks so far.
But the essential point remains the same. The issue is the unfortunate absence of support for basic pleading practice. Just look at the form pleadings published by the Florida Supreme Court, or look at the complaints filed by banks and credit unions for foreclosure. There is a requirement when you plead to collect on a loan to plead that you made the loan. In actions on a note, the requirement that the plaintiff allege financial injury is right there in the the Florida forms.
The real reason why the court dockets are clogged is because judges insist in ignoring basic pleading practice: the allegation of the existence of a debt owed by the Defendant to the Plaintiff and/or the allegation that financial injury has been suffered by the Plaintiff as a result of the failure of the Defendant/homeowner to make the payments set forth in the note.
The second question is whether the homeowners signed the note. The answer in most cases is yes. So what defenses will ultimately have merit in defending the foreclosure?
Even most foreclosure defense attorneys are far too timid in attacking these delusions maintained by the judiciary. They fear looking foolish and the embarrassment of losing repeatedly. They miss the first attack completely — that no, the homeowner did NOT receive a loan from the foreclosing party or anyone in the he chain in most cases. The problem is that their motion to dismiss does not force this issue. the result is that the existence of a debt wherein the homeowner became a debtor TO THE FORECLOSING PARTY is successfully avoided by the banks, as is the requirement of alleging financial injury.
The effect of this is to prevent the homeowner to enter an answer that denies the loan, denies the acquisition of the loan in any sale, and denies financial injury.
Instead by failing to require the banks to make the allegations that are required by the Supreme Court in its published forms, the homeowner is unfairly is unfairly required to raise the issues in affirmative defenses. The pernicious result of that is that the homeowner is required to prove a negative.
Discovery requests are met with fierce resistance by the banks, who usually run out the clock by the time the motion for summary judgment is heard or the the time that the trial occurs. The homeowner is therefore forced to prove a negative, when the rules require the banks to prove a positive fact that is based upon information that is ONLY accessible by the plaintiff.
The reason why the complaints do not allege the existence of a debt arising from receiving a loan from the foreclosing party or any predecessor in the chain of paper is that there is no such debt. The reason why the foreclosing party does not allege financial injury is (a) that there is no such financial injury and (b) the opening of this issue for discovery would require that all accounts be settled and resolved to determine the balance, if any, owed by the homeowner to anyone. 
The reason why lawsuits and regulatory actions allege that the broker- dealer investment banks committed fraud is that they intentionally lied and used the investor money to their own benefit. And the reason as why the investors, agencies, insurers, credit default swap counter parties and government sponsored guarantors are alleging fraud — and stating that the closing papers with the borrowers and the mortgage bonds are “unenforceable obligations” and “defective instruments” is because that is an accurate description. And the reason the banks are settling those cases and facing criminal prosecution is because they know that the paperwork is legally indefensible and unenforceable against borrowers.
By some twisted logic, thousands of judges, tens of thousands of lawyers, and millions of owners who lack the information and understanding of this massive fraud, the fraud at one end of the stick (sale of fraudulent mortgage bonds) is ignored on the the other end of the same stick (foreclosure of fraudulent Foreclosures on fatally defective STOLEN notes and mortgages). There was no debt in most of the cases and closings where documents were signed. There is no loss or financial injury to a party who has never funded the origination or acquisition of a loan.
The only debt ever created in most instances was from the homeowner directly to the pension funds and other investors who were left with no enforceable claim to enforce valid notes and mortgages. The only debt due in all cases is the amount due to the investors. Allowing the banks to enforce the debts on paperwork that is evidence of theft is a failure of the judicial system.
The dockets would be cleared with the questions “why have you not alleged a debt owed to you and financial injury?” This would establish jurisdiction or the lack of it at the outset. Unable to prove the debt, and being required to prove it because they alleged it, the banks would shrink from foreclosure and attempt to resolve the issues through non-judicial means.

 

Answer, Affirmative Defenses and Counterclaim by April Charney

IN THE CIRCUIT COURT OF THE
FOURTH JUDICIAL CIRCUIT, IN AND
FOR DUVAL COUNTY, FLORIDA

CASE NO.:16-2007-CA-00852-XXXX-MA
DIVISION: CV-D

DEUTSCHE BANK NATIONAL TRUST COMPANY
Plaintiff,
vs.

ERICO LOGAN, ET AL,
Defendant.
______________________________/

DEFENDANTS ERICO LOGAN AND GLORIA BROOK’S ANSWER
AFFIRMATIVE DEFENSES; COUNTERCLAIMS AND DEMAND FOR JURY TRIAL

COME NOW, the separate Defendants and for their answer, affirmative defenses, counterclaims and demand for jury trial , state:
COUNT I
Denied that the plaintiff has stated a cause of action to reestablish a promissory note pursuant to F. S. 673.3091.
Admit execution of note, deny that the note was executed and delivered in favor of plaintiff or plaintiff’s assignor.
Denied. The plaintiff has not stated a cause of action to reestablish a promissory note pursuant to F. S. 673.3091.
Denied. The plaintiff has not stated a cause of action to reestablish a promissory note pursuant to F. S. 673.3091.
Denied. The plaintiff has not stated a cause of action to reestablish a promissory note pursuant to F. S. 673.3091.
Denied. The plaintiff has not stated a cause of action to reestablish a promissory note pursuant to F. S. 673.3091.
Defendant admits that the plaintiff does not own the mortgage or the note, admits that the plaintiff does not hold the note; however that plaintiff does not have legal possession of and cannot obtain possession of the subject note or determine its whereabouts. The plaintiff has not stated a cause of action to reestablish a promissory note pursuant to F. S. 673.3091.
Denied.
Denied and move to strike on account of Paragraph 9 of the plaintiff’s complaint does not contain a fact allegation.
Denied. The plaintiff has not stated a cause of action to foreclose a mortgage.
Admit.
Denied.
Admited.
Denied.
Denied.
Denied.
Denied.
Denied.
Denied.
Denied.
Denied.
22. Defendant denies that this plaintiff has stated a cause of action for foreclosure because on the date this lawsuit was filed the plaintiff was not the true owner of the claim sued upon; is not the real party in interest and is not shown to be authorized to bring this foreclosure action.
23. Defendants request the court dismiss this action pursuant to Rules 1.210(a) and 1.140(7) of the Florida Rules of Civil Procedure because it appears on the face of the complaint and the documents attached to the plaintiff’s March 12, 2007 notice of filing that a person other than the Plaintiff is the true owner of the claim sued upon on the date this action was commenced and that the Plaintiff was not the real party in interest at the commencement of this action, had no interest in the subject mortgage and note at the date on which the subject complaint for foreclosure was filed and is not shown to be authorized to bring this foreclosure action.
24. This action was commenced on January 29, 2007, but the assignment upon which the plaintiff is relying to support its claims is based on an assignment dated February 5, 2007, which post dates the filing of the complaint.
25. Additionally, the plaintiff has filed a separate assignment that conflicts with the February 5, 2007 assignment because on August 14, 2007, the date of the purported second assignment, the assignor had already transferred its interest in the subject mortgage and note to another entity and further because there was a lack of any consideration for the August 14, 2007 assignment.
26. The filing of these two assignments by the plaintiff, neither of which support the plaintiff’s claim of ownership of the subject mortgage on the date this foreclosure was filed, are a sham and a fraud on the court.
27. Plaintiff came into the this court alleging that it owned the subject loan on January 29, 2007, the date this action was commenced when the plaintiff was fully aware that was not true. This is fraud on the court.
28. Fla.R.Civ.P. Rule 1.130(a) requires a Plaintiff to attach copies of all bonds, notes, bills of exchange, contracts, accounts, or documents upon which action may be brought to its complaint.
29. Although the plaintiff alleges in its complaint that it is the owner of the promissory note and the mortgage that are the subject of this foreclosure action, the note and mortgage and assignments attached to the plaintiff’s complaint and to the plaintiff’s notice of filing conflict with these allegations and therefore the contents of actual mortgage and note cancel out the inconsistent and conflicting assignments and allegations as to the ownership of the note and mortgage at the commencement of this action.
30. When exhibits are inconsistent with the plaintiff’s allegations of material fact as to who the real party in interest is, such allegations cancel each other out. Fladell v. Palm Beach County Canvassing Board, 772 So.2d 1240 (Fla. 2000); Greenwald v. Triple D Properties, Inc., 424 So. 2d 185, 187 (Fla. 4th DCA 1983); Costa Bella Development Corp. v. Costa Development Corp., 441 So. 2d 1114 (Fla. 3rd DCA 1983).
31. Plaintiff was not the real party in interest on the date this action was commenced and is not shown to be authorized to bring this action.
32. Because the facts revealed by the exhibits attached to the plaintiff’s complaint and in the Plaintiff’s notice of filing are inconsistent with Plaintiff’s allegations as to ownership of the subject note and mortgage, those allegations are neutralized and Plaintiff’s complaint is rendered objectionable. Greenwald v. Triple D Properties, Inc., 424 So.2d 185,187 (Fla. 4th DCA 1983).
AFFIRMATIVE DEFENSES
1. FAILURE OF CONTRACTUAL CONDITION PRECEDENT: NO NOTICE OF DEFAULT: Plaintiff failed to provide Separate Defendants with a Notice of Default and Intent to Accelerate as required by and/or that complies with Paragraph 22 of the subject mortgage.  As a result, Separate Defendants have been denied a good faith opportunity, pursuant to the mortgage and the servicing obligations of the Plaintiff, to avoid acceleration and this foreclosure.
2.   NO HUD COUNSELING NOTICE: Plaintiff failed to comply with the foreclosure prevention loan servicing requirement imposed on Plaintiff pursuant to the National Housing Act, 12 U.S.C. 1701x(c)(5) which requires all private lenders servicing non-federally insured home loans, including the Plaintiff, to advise borrowers, including this separate Defendant, of any home ownership counseling Plaintiff offers together with information about counseling offered by the U.S. Department of Housing and Urban Development.  The U.S. Department of Housing and Urban Development has determined that 12 U.S.C. 1701x(c)(5) creates an affirmative legal duty on the part of the Plaintiff. Plaintiff’s non-compliance with the law’s requirements is an actionable event that makes the filing of this foreclosure premature based on a failure of a statutory condition precedent to foreclosure which denies Plaintiff’s ability to carry out this foreclosure.  Plaintiff cannot legally pursue foreclosure unless and until Plaintiff demonstrates compliance with 12 U.S.C. 1701x(c)(5).
3. PLAINTIFF FAILED TO COMPLY WITH APPLICABLE POOLING AND SERVICING AGREEMENT LOAN SERVICING REQUIREMENTS: Plaintiff failed to provide separate Defendants with legitimate and non predatory access to the debt management and relief that must be made available to borrowers, including this Defendant pursuant to and in accordance with the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission that controls and applies to the subject mortgage loan. Plaintiff’s non-compliance with the conditions precedent to foreclosure imposed on the plaintiff pursuant to the applicable pooling and servicing agreement is an actionable event that makes the filing of this foreclosure premature based on a failure of a contractual and/or equitable condition precedent to foreclosure which denies Plaintiff’s ability to carry out this foreclosure.
a. Defendants assert that the special default loan servicing requirements contained in the subject pooling and servicing agreement, to be filed in pertinent part and which is on file at: http://www.secinfo.com , are incorporated into the terms of the mortgage contract between the parties as if written therein word for word and the defendants are entitled to rely upon the servicing terms set out in that agreement.
b. Alternatively or additionally, the defendants are third party beneficiaries of the Plaintiff’s pooling and servicing agreement and entitled to enforce the special default servicing obligations of the plaintiff specified therein.
c. Plaintiff cannot legally pursue foreclosure unless and until Plaintiff demonstrates compliance with the foreclosure prevention servicing imposed by the subject pooling and servicing agreement under which the plaintiff owns the subject mortgage loan.
d. The Plaintiff failed, refused or neglected to comply with prior to the commencement of this action with the servicing obligations specifically imposed on the plaintiff by the PSA in many particulars, including, but not limited to:
1. Plaintiff failed to service and administer the subject mortgage loan in compliance with all applicable federal state and local laws.
2. Plaintiff failed to service and administer the subject loan in accordance with the customary an usual standards of practice of mortgage lenders and servicers.
3. Plaintiff failed to extend to defendants the opportunity and failed to permit a modification, waiver, forbearance or amendment of the terms of the subject loan or to in any way exercise the requisite judgment as is reasonably required pursuant to the PSA.
e. Plaintiff’s failure to meet the servicing obligations imposed by the PSA cause the filing by plaintiff of this foreclosure to be in premature, in bad faith and a breach by plaintiff of its obligation to defendants implied in the mortgage contract and as specified in writing in the PSA, to act in good faith and to deal fairly with defendants.
f. Instead, plaintiff’s servicing failures as set forth herein render plaintiff’s actions in filing this premature foreclosure to be in bad faith and not acceptable loan servicing under the written contracts between the parties which include the mortgage, the PSA incorporated therein or by which defendants are third party beneficiaries thereof and the promissory note.
g. Plaintiff intentionally failed to act in good faith or to deal fairly with these Defendants by failing to follow the applicable standards of residential single family mortgage lending and servicing as described in these Affirmative Defenses thereby denying these Defendants access to the residential mortgage lending and servicing protocols applicable to the subject note and mortgage.
4. ILLEGAL CHARGES ADDED TO BALANCE: Plaintiff has charged and/or collected payments from Defendants for attorney fees, legal fees, foreclosure costs, late charges, property inspection fees, title search expenses, filing fees, broker price opinions, appraisal fees, and other charges and advances, and predatory lending fees and charges that are not authorized by or in conformity with the terms of the subject note and mortgage or the controlling pooling and servicing agreement which specifies the waiver of late payments and other collection charges as part of the forbearance and loan modification default loan servicing. Plaintiff wrongfully added and continues to unilaterally add these illegal charges to the balance Plaintiff claims is due and owing under the subject note and mortgage.
5. FAILURE OF GOOD FAITH AND FAIR DEALING: UNFAIR AND UNACCEPTABLE LOAN SERVICING: Plaintiff intentionally failed to act in good faith or to deal fairly with the subject Defendants by failing to follow the applicable standards of residential single family mortgage servicing as described in these Affirmative Defenses thereby denying Defendant s access to the residential mortgage servicing protocols applicable to the subject note and mortgage.
6. UNCLEAN HANDS: The Plaintiff comes to court with unclean hands and is prohibited by reason thereof from obtaining the equitable relief of foreclosure from this Court. The Plaintiff’s unclean hands result from the Plaintiff’s improvident and predatory intentional failure to comply with material terms of the mortgage and note; the failure to comply with the default loan servicing requirements that apply to this loan, all as described herein above. As a matter of equity, this Court should refuse to foreclose this mortgage because acceleration of the note would be inequitable, unjust, and the circumstances of this case render acceleration unconscionable. This court should refuse the acceleration and deny foreclosure because Plaintiff has waived the right to acceleration or is estopped from doing so because of misleading conduct and unfulfilled contractual and equitable conditions precedent.
WHEREFORE, Defendants demands the Plaintiff’s complaint be dismissed with prejudice and for fraud on the court, and for their attorney’s fees and costs and for all other relief to which this Court finds Defendants entitled.
7. PLAINTIFF LACKS STANDING: DEUTSCHE BANK NATIONAL TRUST COMPANY is not the true owner of the claim sued upon, is not the real party in interest and is not shown to be authorized to bring this foreclosure action.
COUNTERCLAIMS
COUNT I: DECLARATORY AND INJUNCTIVE RELIEF
1. This is an action for declaratory and injunctive relief against the Plaintiff.
2. Plaintiff failed to provide Separate Defendants with a Notice of Default and Intent to Accelerate as required by and/or that complies with Paragraph 22 of the subject mortgage.
3. Plaintiff failed to comply with the foreclosure prevention loan servicing requirement imposed on Plaintiff pursuant to the National Housing Act, 12 U.S.C. 1701x(c)(5) which requires all private lenders servicing non-federally insured home loans, including the Plaintiff, to advise borrowers, including this separate Defendant, of any home ownership counseling Plaintiff offers together with information about counseling offered by the U.S. Department of Housing and Urban Development.
4. Plaintiff cannot legally pursue foreclosure unless and until Plaintiff demonstrates compliance with 12 U.S.C. 1701x(c)(5).
5. Plaintiff failed to provide separate Defendants with legitimate and non predatory access to the debt management and relief that must be made available to borrowers, including this Defendant pursuant to and in accordance with the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission that controls and applies to the subject mortgage loan.
6. Plaintiff’s non-compliance with the conditions precedent to foreclosure imposed on the plaintiff pursuant to the applicable pooling and servicing agreement is an actionable event that makes the filing of this foreclosure premature based on a failure of a contractual and/or equitable condition precedent to foreclosure which denies Plaintiff’s ability to carry out this foreclosure.
7. The special default loan servicing requirements contained in the subject pooling and servicing agreement are incorporated into the terms of the mortgage contract between the parties as if written therein word for word and the defendants are entitled to rely upon the servicing terms set out in that agreement.
8. Defendants are third party beneficiaries of the Plaintiff’s pooling and servicing agreement and entitled to enforce the special default servicing obligations of the plaintiff specified therein.
9. Plaintiff cannot legally pursue foreclosure unless and until Plaintiff demonstrates compliance with the foreclosure prevention servicing imposed by the subject pooling and servicing agreement under which the plaintiff owns the subject mortgage loan.
10. The section of the Pooling and Servicing Agreement (PSA) is a public document on file and online at http://www.secinfo.com and the entire pooling and servicing agreement is incorporated herein.
11. The Plaintiff failed, refused or neglected to comply, prior to the commencement of this action, with the servicing obligations specifically imposed on the plaintiff by the PSA in many particulars, including, but not limited to:
a. Plaintiff failed to service and administer the subject mortgage loan in compliance with all applicable federal state and local laws.
b. Plaintiff failed to service and administer the subject loan in accordance with the customary an usual standards of practice of mortgage lenders and servicers.
c. Plaintiff failed to extend to defendants the opportunity and failed to permit a modification, waiver, forbearance or amendment of the terms of the subject loan or to in any way exercise the requisite judgment as is reasonably required pursuant to the PSA.
12. The Plaintiff has no right to pursue this foreclosure because the Plaintiff has failed to provide servicing of this residential mortgage loan in accordance with the controlling servicing requirements prior to filing this foreclosure action.
13. Defendants have a right to receive foreclosure prevention loan servicing from the Plaintiff before the commencement or initiation of this foreclosure action.
14. Defendants are in doubt regarding their rights and status as borrowers under the National Housing Act and also under the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission. Defendants are now subject to this foreclosure action by reason of the above described illegal acts and omissions of the Plaintiff.
15. Defendants are being denied and deprived by Plaintiff of their right to access the required troubled mortgage loan servicing imposed on the plaintiff and applicable to the subject mortgage loan by the National Housing Act and also under the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission.
16. Defendants are being illegally subjected by the Plaintiff to this foreclosure action, being forced to defend the same and they are being charged illegal predatory court costs and related fees, and attorney fees. Defendants are having their credit slandered and negatively affected, all of which constitutes irreparable harm to Defendants for the purpose of injunctive relief.
17. As a proximate result of the Plaintiff’s unlawful actions set forth herein, Defendants continue to suffer the irreparable harm described above for which monetary compensation is inadequate.
18. Defendants have a right to access the foreclosure prevention servicing prescribed by the National Housing Act and under the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission which right is being denied to them by the Plaintiff.
19. These acts were wrongful and predatory acts by the plaintiff, through its predecessor in interest, and were intentional and deceptive.
20. There is a substantial likelihood that Defendants will prevail on the merits of their counterclaims.
WHEREFORE, Defendants request the Court dismiss the Plaintiff’s complaint with prejudice, enter a judgment pursuant to Fla. Stat. 86 declaring that the Plaintiff is legally obligated to provide the Defendants with access to the special troubled loan servicing prescribed by the National Housing Act and under the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission and enjoining the Plaintiff from charging foreclosure fees and costs and from commencing or pursuing this foreclosure until such servicing is provided to this Defendant, for attorney’s fees and for all other relief to which Defendant proves themselves entitled.

COUNT II: ILLEGAL CONSUMER COLLECTION
Defendants reassert and reallege, as their Statement of Facts, paragraphs 2 through 20, inclusive as set out in Count I of these counterclaims.
22. Defendants are consumers and the obligation between the parties which is the debt owned pursuant to the subject note and mortgage is a consumer debt as defined in F. S. Section 559.55(1).
23. Plaintiff has engaged in consumer collection conduct which amounts to a violation of F.S. Section 559.72(9) as set out below and Defendants, as a proximate result thereof, have sustained economic damages for which the Defendants are entitled to compensation from the Plaintiff, pursuant to F.S. Section 559.77.
24. Plaintiff’s collection activities described herein violated F.S. 559.72(9) in that the Plaintiff is claiming, attempting and threatening to collect and enforce this consumer mortgage debt by this foreclosure action when the Plaintiff knows that the right to pursue foreclosure does not exist.
25. These acts were wrongful and predatory acts by the plaintiff, through its predecessor in interest, and were intentional and deceptive.
26. Additionally, the reason the Plaintiff does not have a legal right to pursue this foreclosure is because the Plaintiff has failed to first comply with the foreclosure prevention loan servicing obligations imposed on Plaintiff prescribed by the National Housing Act and under the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission.
27. These foreclosure prevention loan servicing obligations are imposed on the Plaintiff pursuant to the National Housing Act, 12 U.S.C. Section 1710(a) and the Pooling and Servicing Agreement filed by the plaintiff with the Securities and Exchange Commission.
28. The Plaintiff is claiming, attempting and threatening to collect fees and charges including, but not limited to, attorney fees, legal fees, foreclosure costs, late charges, property inspection fees, title search expenses, filing fees, broker price opinions, appraisal fees, and other charges and advances, and predatory lending fees and charges all of which are not authorized by or in conformity with the terms of the subject note and mortgage.
29. Plaintiff wrongfully added and continues to unilaterally add these illegal charges to the balance Plaintiff claims is due and owing under the subject note and mortgage.
30. Plaintiff continues to claim, attempt, and threaten to enforce this mortgage debt through acceleration and foreclosure when the Plaintiff knows that such conduct is in bad faith because the Plaintiff has charged and collected money from defendants that they did not owe; forced defendants into deepening indebtedness and then failed to meet the contractual and statutory conditions precedent before filing this action to collect this consumer debt.
31. As a result of the Plaintiff’s failure to properly service this mortgage loan before filing this foreclosure action, Defendants have been damaged and Defendants seek to recover their actual or statutory damages from the Plaintiff under F.S. 559.77.
WHEREFORE, Defendants demand the Plaintiff’s complaint be dismissed with prejudice, for an award of damages in defendants’ favor and against the plaintiff for their actual or statutory damages whichever is greater and for their attorney’s fees and costs and for all other relief to which this Court finds Defendants entitled.
DEMAND FOR TRIAL BY JURY
Defendants hereby demands trial by jury.
WHEREFORE, Defendants demand the Plaintiff’s complaint be dismissed with prejudice for failure to state a cause of action and for fraud on the court, and for judgment against the plaintiff for their damages, for an award of attorney’s fees and costs and for all other relief to which this Court finds Defendants entitled.
CERTIFICATE OF SERVICE
The undersigned certifies that a true copy of this document has been mailed to Sean Moloney and to Linda Chelvam, Law Offices of Marshall C. Watson, P.A. 1800 N.W. 49th Street, Suite 120, Fort Lauderdale, FL 33309, Attorney for Plaintiff this ______________________________.
JACKSONVILLE AREA LEGAL AID, INC.
_______________________________ APRIL CARRIE CHARNEY, Esquire Fla. Bar No.: 310425
126 West Adams Street
Jacksonville, Florida 32202
Telephone: (904) 356-8371, ext.373
Facsimile: (904) 224-7050
april.charney@jaxlegalaid.org
Attorney for Defendants

Foreclosure Offense and Defense: Basic Rules, Discovery, Affirmative Defenses and Audits

I found an excellent article by an excellent writer I would like to share with you. It underscores the importance of the requiring the lender to prove the original note, the ownership of the note and mortgage and the alleged non-payment. There is much more. If you are involved in a foreclosure or you are an attorney representing someone in foreclosure this is a must read article. see also http://mortgage-home-loan-bank-fraud.com

Affirmative Defenses and Procedure

You Can Stop Foreclosure

and Put the Lender on the Defense.

 Does the Lender have the “Original” Note in Hand?

by: Kenneth M DeLashmutt

 

Step One: Answer the Foreclosure Lawsuit

Foreclosure Filing Schedule:

You receive a Summons and Complaint…

(The plaintiff–bank, lender or other creditor–starts the foreclosure by having a marshal serve the defendant–owner or borrower–with a Summons and Complaint.) You can check the foreclosure rules in your State. Click on the following link:

http://www.stopping-banks-foreclosures.com/state-foreclosure-process.html

Within 2 days of the Return Date on the Summons…

File an Appearance

Within 15 days of the Return Date on the Summons…

File and send an Answer.  Be sure to put a certification of service at the end of your answer, and that you have sent your Answer to everyone who has Appeared in the case.  You will need to sign the certification separately from your signature on the Answer.

If you choose foreclosure by sale, file a Motion for Foreclosure by Sale

 

Step Two: The Lender Must Prove Existence of the Note.  

 

To recover on a promissory note, the plaintiff (the Lender in the case of foreclosure) must prove:(1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note in due course; and (4) that a certain balance is due and owing on the note.

 

Trial court erred when it did not proceed to take testimony before it entered default judgment (see definition below) for the plaintiff; the unsworn statement of plaintiff’s (plaintiff is the lender) attorney could not support default judgment rendered.” 

 

It is also true, in mortgage foreclosures, prove up of the claim requires presentment of the “ORIGINAL” promissory note and general account and ledger statement. Claim of damages, to be admissible as evidence, must incorporate records such as a general ledger and accounting of an alleged unpaid promissory note, the person responsible for preparing and maintaining the account general ledger must provide a complete accounting which must be sworn to and dated by the person who maintained the ledger. 

 

To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note in due course; and (4) that a certain balance is due and owing on the note.

1) the existence of the note in question

2) If the “ORIGINAL” note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then your defense is as follows:

3) the “named” Plaintiff is not the ‘holder in due course” of the note and only an agent or nominee for the true beneficial owners and holders in due course;

4) there may be fraud upon the court in that the named Plaintiff may not have ANY interest to the note and that the supposedly lost note is not lost, but may have been intentionally destroyed due to missing assignments on the note which may have made it void and a legal nullity, thus they have exploited key and vital evidence;

5) there is no proof that the named Plaintiff ever held the note or took possession of the note and thus has no claim or right to bringing about the foreclosure;

6) there is no proof, without the note, that a proper chain of assignments took place and that the lien positions were properly perfected;

7) other unnamed and disclosed real parties in interest may have a claim to the note and be the rightful beneficial owners to the note and must be identified and brought before the court;

8) there may be several unnamed and disclosed real parties in interest may have a claim to the note and be the rightful beneficial owners of the note;

9) that the party sued signed the note

10) If the “ORIGINAL” note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then you need to notify me and also put on affirmative defenses that:

11) the note in question is not the note you signed and executed in ink and only the one you signed in ink that presumably contains your fingerprints can be relied upon by your handwriting analysis expert;

12) in an electronic age, it is a simple matter to place someone’s signature or image upon a document and that it is very difficult to imagine such a valuable negotiable instrument being lost or missing without a nefarious motive.

13) that the plaintiff is the owner or holder of the note in due course;


14) If the “ORIGINAL” note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then you need put on affirmative defenses that:

a) the mortgage industry, investors, and GSE’s such as Fannie Mae, Freddie Mac, and FHLBs etc. have a requirement that the last endorsement to them be undated and “blank” leaving the payee line blank and making the negotiable instrument a sort of “bearer bond” and instrument. as such, any party finding or stealing the note can place their name on the payee line, claim ownership of the note, and sell the note to others who may make a demand upon you in the future. as such, you require money to be deposited in an escrow account or with the court in an amount equal to the amount claimed owed on the note, until such missing note is found or upon your death. notes have a life of their own…

b) if the note was destroyed or lost intentionally (the industry maintains this practice) then they may be trying to hide the beneficial owners and shield them from any assignee liability arising from the actions of the servicer who they hire, supervise and most importantly authorize to foreclose upon you. without the note, since subsequent endorsements are not recorded to avoid payment of taxes and t hide true and real beneficial interests, there is no possible way to determine who ever held a rightful interest in the note and who you may have claims or counter claims against and who should be presently before the court as a real party in interest.

c) Furthermore, if there are missing assignments of the original note and the assignment went from Lender A to Lender B to Lender D without an intervening assignment from Lender B to Lender C and From Lender C to Lender D, then the note may be void and a legal nullity in your state.

d) It is industry practice to not name the GSE, investor, or real party in interest in foreclosure and to use as a front for the Plaintiff:

i) The very original lender who may or may not even be in business any more or sold their interest in the note long ago, only to have a claim made upon them for repurchase;

ii) A Servicer of even “special servicer” who is acting as an agent for the investors, GSE’s or real party in interest, but has no beneficial ownership in the note since they are only being paid to collect and foreclosure by the real parties in interest

iii) A “nominee” such as MERS who has no legal authority to foreclose upon you and do business in your state and who according to their own written documents and verbal assurances never hold the note or own “any” beneficial interest in the note!!!!!

e) Notes are pledged, sold, bifurcated, and traded in various derivative transactions like bubblegum baseball cards and their transfers, sales, pledges etc. Are not publicly recorded. As such, only possession of the actual original note can prove the actual owner and holder in due course of the note and who you can make an offer of payment to for purchase of the note by yourself, another family member or partner. You have a right to know the rightful owner of the note so an offer for payment of the note at a discount and at fair market value can be made. If the note has been pledged and encumbered, then that party must be made aware of the foreclosure and your right to negotiate with them a payment and release of the note by you, other lien holders or private parties;

f) Notes are traded often and you need to inspect the physical note to see who the real prior parties were that held and endorsed your note since you may have counter and cross claims against them and need to bring them before the court for the action, since they may have improperly inflated your principal balance, amount owed or escrow account by not applying your payments correctly; adding fees not legally owed by you to the principal balance; miscalculating the interest and not properly amortizing your loan; fraudulent selling your loan or misreporting you on your credit report.

g) Federal Circuit Courts have ruled that the only way to prove the perfection of any security [including promissory note] is by actual possession of the security. Current or prior possession must be proved up.

(h) that a certain balance is due and owing on the note.

15) You must have the master transaction histories and general ledgers for the account since a “dump,” “summary,” or redacted record cannot be relied upon to determine the rightful amounts owed by having a complete audit of your account. In order to conduct a proper audit, master records and all prior records must be compiled, reviewed, analyzed, and reconciled. In is not you responsibility to prove each payment was made. It is your responsibility to say a payment was made and provide evidence, including your word that it was made. It is the note holder’s duty and responsibility to validate the claims being made on the note and the amount owed. If they have the master records or claim that the records of prior servicers are missing, then there is no rightful way for anyone to prove up the balances and amounts they claim are owed!!!! Furthermore, you must claim:

a) That the principal balance claimed owed, is not owed, and is the wrong amount.

b) That the loan has not been properly credited and amortized;

c) That the current servicer cannot be relied upon to testify and certify that prior amounts, transactions, credits, debits, charges and fees added by prior servicers were indeed proper and correct and that the account they were transferred was properly amortized and credited. As such, the person holding the ledgers at the prior servicer must come and testify as to the amounts owed on the note.

d) dumps and summaries of amounts owed cannot be relied upon and only original ledgers and master records and the keeper of those records cant testify as to the amounts claimed owed and due.
 

 

Supporting Case Law

 

Where the complaining party cannot prove the existence of the note, then there is no note.

 

See  Pacific Concrete F.C.U. V. Kauanoe,  62 Haw. 334, 614 P.2d 936 (1980), GE Capital Hawaii, Inc. v. Yonenaka  25 P.3d 807, 96 Hawaii 32, (Hawaii App 2001).

 

Siwooganock Bank in Lancaster NH, in alleged foreclosure suit, failed or refused to produce the actual note which Siwooganock alleges Eva J. Lovejoy owed.  

To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note; and (4) that a certain balance is due and owing on the note.  See In Re: SMS Financial LLC. v. Abco Homes, Inc. No.98-50117 February 18, 1999 (5th Circuit Court of Appeals.)

 

Volume 29 of the New Jersey Practice Series, Chapter 10 Section 123, page 566, emphatically states, “…; and no part payments should be made on the bond or note unless the person to whom payment is made is able to produce the bond or note and the part payments are endorsed thereon. It would seem that the mortgagor would normally have a Common law right to demand production or surrender of the bond or note and mortgage, as the case may be. See Restatement, Contracts S 170(3), (4) (1932); C.J.S. Mortgages S 469,  in Carnegie Bank v, Shalleck 256 N.J. Super 23 (App. Div  1992), the Appellate Division held, “When the underlying mortgage is evidenced by an instrument meeting the criteria for negotiability set forth in N.J.S. 12A:3-104, the holder of the instrument shall be afforded all the rights and protections provided a holder in due course pursuant to N.J.S. 12A:3-302″

 

Since no one is able to produce the “instrument” there is no competent evidence before the Court that any party is the holder of the alleged note or the true holder in due course. New Jersey common law dictates that the plaintiff prove the existence of the alleged note in question, prove that the party sued signed the alleged note, prove that the plaintiff is the owner and holder of the alleged note, and prove that certain balance is due and owing on any alleged note.  Federal Circuit Courts have ruled that the only way to prove the perfection of any security is by actual possession of the security.

 

Supporting Case Law

 

Unequivocally the Court’s rule is that in order to prove the “instrument”, possession is mandatory.

 

See Matter of Staff Mortg. & Inv. Corp., 550 F.2d 1228 (9th Cir 1977).  “Under the Uniform Commercial Code, the only notice sufficient to inform all interested parties that a security interest in instruments has been perfected is actual possession by the secured party, his agent or bailee.” Bankruptcy Courts have followed the Uniform Commercial Code. In Re Investors & Lenders, Ltd. 165 B.R. 389 (Bankruptcy.D.N.J.1994), “Under the New Jersey Uniform Commercial Code (NJUCC), promissory note is “instrument,” security interest in which must be perfected by possession.

 

Step Three: Audit Your Closing Documents for TILA Violations, Illegal Kickbacks and Fraud

 

In order to find for consumer protection law violations you will have to gather and assemble your loan and closing documents and put them in order.

 

Required Documents for your Audit

 

To begin the Audit process, put together a package of the following documents:

 

NOTE: All of the following documents are required.

If you do not have all of the documents DO NOT call your lender unless you have sent the lender the RESPA document the “qualified written request.”

 

List of loan documents for audit.

 

*anything that was given to you at the time of signing the loan

*Promissory Note (very important)

*Mortgage or Deed of Trust (very important)

*Application for the loan, if available

*Good Faith Estimate (very important)

*Settlement Statement (very important)

*Right to Cancel/Right to Rescission (very important)

 

Disclosures:         

*HUD 1 Statement

*TILA Disclosures (very important)

*RESPA Servicing Disclosures

*Any and all disclosures (very important)

 

A copy of the current billing statement.

 

A copy of any notifications from the lender or other party of a change  in where the borrower is to send the payments.  This may be because the lender sold the note (a new assignee), or sold the rights to collecting the payments (a new servicer). 

 

A copy of any default notices, acceleration papers, or foreclosure paperwork.

 

A copy of any and all court paperwork if the property is in

foreclosure or there is any court process ongoing that involves this property.  If you do not have this paperwork, it must be obtained from the court files.

 

What are you looking for?

 

Now you can audit your closing documents and look for TILA, HOEPA and RESPA violations.

 

If the answer to any of the following questions is “yes,”

you are most likely a victim of predatory lending practices and may be able to void the mortgage and apply 100% of your payments to principal. And, you may also be able to recover money damages.

 

Such violations can be used as a defense to a mortgage foreclosure. If there is a violation,

 

1. Have you repeatedly refinanced your loan? Was the last refinance within the last 3 years? (A common predatory practice is “flipping,” which involves “repeatedly refinancing a mortgage loan without benefit to the borrower, in order to profit from high origination fees, closing costs, points, prepayment penalties and other charges, steadily eroding the borrower’s equity in his or her home.”).

 

2. Did you increase rather than lower your rate upon refinancing?

 

3. Are you paying an interest rate in excess of 9.5%?

 

4. Was the loan obtained to pay for home improvement work that was not done properly, or even at all?

 

5. Have you had problems with the mortgage company regarding untimely posting of monthly payments? Sudden increases in payments? Adding amounts to your balance for insurance, “property preservation,” or other “advances”? Does your principal balance never seem to go down?

 

6. Were you charged high closing costs (points and fees) on the mortgage?

 

7. Did the terms of the mortgage change to your detriment at the last minute before the closing?

 

8. Did the lender pay money to your mortgage broker (look on your HUD-1 Settlement Statement for a “premium” or “YSP” or “yield spread premium” or “POC”, “Paid Outside of Closing”)?

 

9. If you have an adjustable rate mortgage, were any adjustments done improperly? Can you even tell if the adjustments were correct or not?

 

10. Does your loan contain a prepayment penalty?

 

11. Do you believe you were treated unfairly by your mortgage company? Has correspondence with the mortgage company gone unanswered? (Mortgage companies have a statutory obligation to respond to complaints and requests for explanations of accounts. Often, they don’t. Each failure may entitle you to $1,000. If your claim against the mortgage company may exceed the number of monthly payments you allegedly missed, the mortgage company may not be able to prove that you are in default.)

 

12. Did all collection letters sent to you by debt collectors comply with the Fair Debt Collection Practices Act? (Up to $1,000 more if they did not.)

 

13. Did you (or anyone else who has an ownership interest in and lives in the house) receive a “notice of right to cancel” that was not completely filled out?

 

14. Did you receive your copy of the loan documents at the closing (as opposed to being sent to you later)?

 

15. Did you sign a document at the closing stating that you were not canceling?

 

16. Did the closing occur by mail, or at your home, or in another city?

 

The following is an example of some of the other TILA violations you may find in your closing documents.

 

Over-escrowing

 

Junk charges

(i.e. yield spread premiums and service release fees)

 

Payment of compensation to mortgage brokers and originators by lenders

 

Unauthorized servicing charges

(i.e. the imposition of payoff and recording charges)

 

Improper adjustments of interest on adjustable rate mortgages

 

Upselling

 

Overages

 

Referral fees to mortgage originators.

(i.e. a lender who pays a mortgage broker secret compensation may face liability for inducing the broker to breach his fiduciary or contractual duties, fraud, or commercial bribery)

 

Failure to disclose the circumstances under which private mortgage insurance (”PMI”) may be terminated.

 

Underdisclosure of the cost of credit

 

Excessive escrow deposits

 

Breach of Fiduciary Duty

 

You may also find breach of contract claims.

 

There is a common assumption (among judges, borrowers, and the public) that mortgage companies do not desire to foreclose and acquire real estate. This assumption is no longer well founded.

 

There are an increasing number of “scavengers” that buy bad debts, including mortgages, for a fraction of face value and attempt to enforce them. Such entities profit by foreclosure. “Mortgage sources confide that some unscrupulous lenders are purposely allowing certain borrowers to fall deeper into a financial hole from which they can’t escape. Why? Because it pushes these consumers into foreclosure, whereupon the lender grabs the house and sells it at a profit.

 

 

Kenneth M. DeLashmutt

“Predatory Lending Defense Specialist”

email: bankfraud@cox.net

website: http://mortgage-home-loan-bank-fraud.com

 

FORECLOSURE DEFENSE: THE RELEVANCE OF SECURITIZATION

SEE GARFIELD’S GLOSSARY AND TACTICAL GUIDELINES 

http://livinglies.me/glossary-mortgage-meltdown-and-foreclosure/

THE UNDERLYING THEME OF THE MORTGAGE MELTDOWN WHICH HAS SIGNIFICANCE TO FORECLOSURE DEFENSE IS THAT FOR EACH “LOAN” TRANSACTION THERE WERE CORRESPONDING INVESTMENTS IN ONE OR MORE ASSET BACKED SECURITY, BOTH (MORTGAGE AND ABS) DEPENDENT ON EACH OTHER FOR THEIR CREATION.

THE SPREADING OF RISK, THE OBLIGATION FOR PAYMENT, AND THE SEPARATION OF THE OBLIGATION TO PAY FROM THE TERMS OF THE SECURITY INSTRUMENT (MORTGAGE) GIVE RISE TO NUMEROUS OFFENSIVE AND DEFENSIVE CLAIMS, DEFENSES, JURISDICTIONAL ISSUES, AND BUSINESS QUALIFICATION ISSUES IN VARIOUS STATES BY THE BORROWER WHO IS AT RISK OF FORECLOSURE OR WHO HAS BEEN DAMAGED BY THE LOAN TRANSACTION.

THE THEORY IS FURTHER EXPANDED BY THE NOTION THAT THE ESSENTIAL NATURE OF THE LOAN TRANSACTION WAS CONVERTED FROM A STANDARD PURCHASE MONEY FIRST, SECOND AND/OR THIRD MORTGAGE TO THE SALE OF TWO SECURITIES ON A SINGLE CHAIN — THE ABS INVESTOR WHO SUPPLIED THE MONEY AND THE PROPERTY INVESTOR WHO SUPPLIED THE SIGNATURES. 

PAYMENT:

In the context of the mortgage meltdown experience, payment was converted from one source to many. See SPV (Structured Purpose Vehicle). This was necessary because of the the purpose of the SPV and the collateralized securities issued from it to investors — the spreading of risk. It is therefore possible for an investor owning an ABS (Asset Backed Security) issued from an SPV to be paid in full without a single payment from any particular borrower. Thus the payment obligation on the note and mortgage at the loan closing was one of many options by which the obligation could be met. There is no doubt that efforts were made to make payments from the funds created in SPV’s through sale of their CDO/CMOs, and that contribution from third parties in the securitized chain starting with the “lender” all the way through guarantees, buy-back obligations and cross collateralization and credit swap vehicles. It is for this reason, among others, that the loan closing was itself the sale of a security based upon an inflated asset appraisal to support an inflated security rating, in which the borrower and the investor in the ABS were “assured” of a passive return on their investment through ever-increasing housing prices. Thus the securitized chain consists of two securities at its base — the “loan” and the ABS — and a myriad of other derivative securities and hedge products together with insurance policies that guaranteed the quality of the underwriting process at the lender level and at the investment banking level. 

Whether those who paid have any claims against any other obligors — including but not limited to the borrower — is unknown. But it is highly probable that those claims are unsecured and therefore dischargeable in bankruptcy. And it is highly probable that such claims are subject to offset, counterclaims and affirmative defenses based upon violations of TILA, RESPA, RICO, common law fraud and state unfair and deceptive business or lending practices together with state and federal securities regulation at the lender underwriting level and at the investment banking underwriting level.

SPECIAL PURPOSE VEHICLE (SPV)

THE “ENTITY” CREATED BY THE INVESTMENT BANKING FIRM TO HOLD AN INTEREST IN THE CASH FLOW AND/OR OWNERSHIP OF THE NOTE AND/OR OWNERSHIP OF THE SECURITY INSTRUMENTS (BY ASSIGNMENT, WHICH ARE RARELY RECORDED IN PROPERTY RECORDS) AND/OR OWNERSHIP OF THE RISK OF LOSS. It is the SPV that is the “company” which “issues” securities for the purpose of selling those securities (stock, bonds etc.) to qualified investors. The typical “security” that has been issued during the mortgage meltdown is the mortgage backed security (MBS) and more specifically, the collateralized debt obligation (CDO) and more specifically the collateralized mortgage obligation. The terms CDO and CMO are frequently used itnerchangeably but CDO connotes a larger class of securities that CMO.

CMO/CDOs vary in structure and underlying assets, but the basic principle is the same. Essentially a CDO is a corporate or other legal entity (LLC, LLP, Trust etc.) constructed to hold assets as collateral and to sell packages of cash flows to investors. A CDO is constructed as follows:

  • The SPV issues different classes of bonds and equity and the proceeds are used to purchase the portfolio of credits. The bonds and equity are entitled to the cash flows from the portfolio of credits, in accordance with the Priority of Payments set forth in the transaction documents. The senior notes are paid from the cash flows before the junior notes and equity notes. In this way, losses are first borne by the equity notes, next by the junior notes, and finally by the senior notes. In this way, the senior notes, junior notes, and equity notes offer distinctly different combinations of risk and return, while each reference the same portfolio of debt securities. These levels of risk are called “tranches”. 
  • A TYPICAL PROVISION OF THE CMO/CDO ISSUED BY THE SPV IS THAT THE PROCEEDS OF SALE CAN BE USED FOR PAYMENT OF THE PROMISED RETURN. THE SIGNIFICANCE OF THIS IN FORECLOSURE DEFENSE IS THAT THE PARTY TO WHOM PAYMENT IS TO BE MADE IS RECEIVING FUNDS FROM AN INTERMINGLING OF (A) THE FUND CREATED FROM THE SALE OF THE SPV SECURITIES (B) INCOME FROM THE LOWER TRANCHES (C) GUARANTEES OF THE SELLER OF THE SECURITIES, THE ORIGINATING LENDER (D) CLAIMS AGAINST THE SECURITY RATING AGENCY WHICH OFTEN RATED THE CMO/CDO ONLY IN ACCORDANCE WITH THE TOP TRANCHE WHICH MISSTATED THE RISK ASSOCIATED WTH THE ENTIRE SECURITY. THIS OVERSTATEMENT OF THE VALUE OF THE SECURITY IS IDENTICAL TO THE APPRAISER’S OVERSTATEMENT OF THE VALUE OF THE PROPERTY AND THE LENDER’S OVERSTATEMENT OF THE RISKS AND THEREFORE THE VALUE OF THE LOAN. 
  • In both cases (rating agency and appraiser) the public was deceived by intentional inflation of value. In both cases, there were specific financial incentives for the rating agency to overrate the security and for the appraiser to overvalue the property an for the lender to overrate the borrower’s financial ability or willingness to pay in accordance with the terms of the note and mortgage. In neither case was the potential liability and the potential litigation over these inherently bad practices ever disclosed to either the borrower or the investor. 

 

collateralized loan obligation (CLO) A multi-tranche security secured by a pool of corporate loans. Similar to the more familiar CMO, except that in a CBO the tiers or tranches are created with differing levels of credit quality. The CBO structure creates at least one tier of investment-grade bonds, thus providing liquidity to a portfolio of junk bonds.
collateralized mortgage obligation (CMO) A type of MBS created by dividing the rights to receive the principal and interest cash flows from an underlying pool of mortgages into separate classes or tiers. The tiers or classes are usually called tranches. In other words, it is a multiclass bond backed or collateralized by mortgage loans or mortgage pass-through securities. A given tranche is typically not redeemed until all bonds with earlier priority have been redeemed. By dividing the cash flows into one or more tranches with shorter terms, the risk resulting from the potential volatility from future changes in prevailing rates is shifted away from the shorter-term tranche or tranches and onto the longer-term tranches and the residual tranche.
commingled funds Money pooled for a common purpose. Often funds pooled for investments. See Quiet Title, Temporary Injunction. 

Foreclosure defense and offense: Filing an answer to a complaint

For general instructions on filing an answer, see this link. Remember that an answer is not the same as an affirmative defense and an affirmative defense is not the same as a counterclaim. In most cases for foreclosure and even bankruptcy you should be prepared to file an answer, affirmative defenses, and counterclaim, in state court proceedings, and an adversary proceeding in bankruptcy proceedings.

http://www.lawhelp.org/documents/273941C-5%20Filing%20an%20Answer.pdf?stateabbrev=/FL/

 

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