MERS Is NOTHING — The Correct Translation of “MIN”

Posted on January 18, 2019 by Neil Garfield

Without a contract in writing executed with the formalities required for transfer of interests in real property, it is highly probable that any instrument executed on behalf of MERS means nothing without the necessity of drilling into the authority or knowledge of the signor. In fact, it might just be that the execution of an assignment might be the utterance of a false instrument for purposes of recording, which in and of itself constitutes illegal activity.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult or check us out on www.lendinglies.com. Order a PDR BASIC to have us review and comment on your notice of TILA Rescission or similar document.
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A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
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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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Upon close inspection, investigation and research of hundreds of cases we have found no evidence that MERS ever enters into any contract for agency or anything else with originators who are not lenders. So we conclude that in cases where the originator is named on the note as Payee and on the Mortgage as Mortgagee or on the Deed of Trust as beneficiary, no such written contract exists and no correspondence or other communication exists between the originator and MERS.
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The current consensus is that MERS is a naked nominee, something I have repeated myself. But that appears to be true only in cases where the originator is a member of MERS and has therefore entered into an agency agreement with MERS.
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Entities like Broker One and American Brokers Conduit, whose name tells the whole story, are not likely to have had any contract, email, correspondence directly with MERS and are probably not party to any agreement in which the originator, if it exists at all, has agreed to let MERS be its agent and if so, under what conditions and for how long.
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I think the mistake we might have all made is in accepting the implied agency contract inferred from the face of the Mortgage or Deed of Trust. In many if not most courts the assignment by MERS of a Mortgage or Beneficial interest in a Deed of Trust is seen as the act of a “disclosed” naked nominee.
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First, basic law dictates that any contract in which the transfer of title to real property is involved must be written not oral, inferred or implied. Second, each state varies but all require the recording of the instrument.
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Third, there was no disclosure prior to closing which violates TILA disclosure requirements. This raises possibilities  of claims in a lawsuit by the homeowner or affirmative defenses of a homeowner if they are sued. As affirmative defenses they would claims of recoupment.
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Nobody tells the prospective borrower that when they sign the Mortgage or Deed of Trust they will be handing over an interest in their new or existing home to an entity that might serve the interests of just anyone. But, in fact, that is what is happening which means that on the face of the Deed of Trust or Mortgage, the originating parties are violating the provisions of TILA that make table funded loans against public policy. And as any 1st year law student will tell you any contract that violates public policy is probably void.
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At closing, if the borrowers are reading at all, MERS doesn’t show up until the day of closing and it is never pointed out by closing agents, originators or anyone else acting as mortgage broker or lender. Nor is the written agreement appointing MERS as “nominee” appear anywhere ever.
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If the appointment of MERS is void it might void the Mortgage or Deed of Trust. Or, it might be surplusage which is more likely. That means the mention of MERS means nothing.
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Hence the assignment of the Mortgage or Deed of Trust would be required to be executed by the named lender, who in turn probably could not assign the mortgage because at the time they are asked to sign such an instrument they (a) don’t exist and/or (b) don’t own the debt and probably never did. As such they would be uttering a false instrument for recording which amounts to two illegal acts probably constituting crimes.
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PRACTICE NOTE: ASSIGNMENT OF A MORTGAGE WITHOUT TRANSFER OF THE DEBT IS A NULLITY. Lawyers for the foreclosure mills are often using MERS assignments as a substitute for transfer of the debt.

Filed under: burden of pleading, BURDEN OF PROOF, CORRUPTION, discovery, Discovery -Subpoena, evidence, Fabrication of documents, foreclosure, foreclosure defenses, foreclosure mill, forensic investigation, jurisdiction, legal standing, Mortgage, Motions, Pleading, Servicer, sham transactions, standing, STATUTES, Title, trustee | Tagged: , , , , | 7 Comments »

Deutsch: Trustee in name only

Posted on September 10, 2012 by Neil Garfield
TOO BIG TO GO TO JAIL?!?
For information on seminars and legal representation in Northern California please call our customer service line at 520-405-1688. Neil is now directly involved in assisting the attorneys plead an script these cases. A new seminar in Auburn, CA which focuses on the bankruptcy venue, is soon to be announced.
Editor’s Comment: Echoing the analyses presented here over the last few weeks, our senior securitization analyst wrote me this note which corroborates the basic assumption that everything is upside down. In the recorded words of Reynaldo Reyes at Deutsch — “it is all very counter-intuitive.” It is also wrong, illegal and probably criminal.
That is a euphemistic way of referring to a shell game that is covering up the largest Ponzi scheme in human history — and one which is still on-going because regulators and law enforcement either refuse to see it or simply don’t have the resources to study it.
We are left with the appearance of a REMIC — the equivalent of what I once called a holographic image of an empty paper bag. We have a paper trust that is both unfunded and in which there are no assets, that was routinely ignored by the investment bankers who directed them to be written but not used. We have beneficiaries who think they are holding asset-backed mortgage bonds when there are no assets to back up the bonds because the bonds were issued by the empty trust. Investors are paid out of their own money and the sale of new “mortgage bonds.” Classic PONZI.
Then as Dan so simply explains it, you have a paper “trustee” over the paper trust, where the paper trustee has been stripped of all powers — powers that are 100% delegated (back to the banks acting as servicers) in the documents written for the trust, unless the investors say otherwise, but there is no way for investors to identify other investors in the paper trust in order to compare notes and give instructions to the trustee.
Same as the homeowner who has kept asking “which trust owns my loan.” The answer is that none of them do. The banks don’t own the loan either. It is the investors who own the loan receivable, but the loan receivable is neither documented nor secured.
Everything else is just paper and ink that didn’t matter to the investment banks who were creating servicing entities and other exotic vehicles through which they could “trade” loans that didn’t belong to them, receive insurance on losses they didn’t have, get federal bailouts on lies about mortgage defaults when it was only the threat of NOT receiving an undeserved windfall that the banks were worried about — 100 cents on the dollar for loans and fictitious pools for each insurance or CDS contract they purchased — using the investors money.
As Dan points out, the entire scam comes back to one thing, as it always does in an illegal fraudulent scheme — control was by the banks who should have only served as intermediaries both on paper and in action. They did neither. They posed as the investor when it suited them and even changed MERS records to show that, as if it were true. They posed as owners of an obligation from homeowners when they neither funded nor purchased the loans.
AND they convinced Judges that millions of foreclosures should be allowed where the bank acting for itself and on behalf of the paper trust, submitted a credit bid from entities that never had any money or assets, much less ownership of the loan receivable.
The plain simple truth is that if you compare what should have been done if this was honest dealing, is that the money invested would have gone into the pool (REMIC, SPV, Trust) and the used to fund mortgages. Instead the money went elsewhere and no loans were assigned into the pool, the mortgage bonds were worthless, and the complexity of the fraud has so far been too daunting for law enforcement and regulators to step in.
If this was a legal transaction in which the  intent of the investment banks was honest, the instructions to the closing agent and the documents and disclosures would have the name of the pool all over them. Instead they put in the names of entities who were neither acting as brokers nor lenders. And the purpose of the banks was to “borrow” the funds from one end and “borrow” the fraudulent documents on the other end and trade for their own benefit. Obama’s advisers are just plain wrong when they tell him that the transactions were bad or wrong, but legal under existing laws and regulations.
I still believe that law enforcement and regulators are both stepping in and getting their ducks in a row. Unraveling something this complex on paper, requires a solid foundation of knowledge in which they can ignore the paperwork just like the banks did. After that it becomes clear that this is just another Ponzi scheme based upon tens of millions of fraudulent documents were produced supporting tens of millions of transactions that were never completed in which tens of millions of recorded documents lie ticking like a time bomb in the county recorders’ offices, only to surface later as a blight on a corrupted title system.
From Dan:
Here is how out of control the situation is. The Trustee (Deutsche in this case) has serious concerns over the servicing and foreclosure activity of the servicers.  Deutsche has (by contract) given control to the servicers.  Deutsche has no ability to interfere with what the servicers are doing (unless instructed by the investors). [Editor’s Note: But they knew this going in meaning they were accepting “trustee” fees without acting as trustees, which is why these paper trusts were never administered from the trust department of ANY of the banks alleging they are trustees for the on-existent trusts. An unfunded trust is no trust at all. It is fictitious.]
On the other side, Deutsche is constrained and cannot exercise control over the servicers unless and until a certain percentage of the investors give written authorization and agree to indemnify Deutsche. [Editor’s Note: That percentage can only be reached when the investors know who the other investors are. So far the banks have succeeded in keeping most of the information secret — as both investors and homeowners unravel the mystery of vanishing documents and money in flight]
The scenario created by Wall Street is a sinking ship that does not allow the officers of the ship (Deutsche), to interfere with workers repairing a hole in the bottom of the ship, unless the ship owners (the investors) get together and give them (the officers) written authorization to remediate the actions of the workers.
This ship is going down and there is no stopping it. [Editor’s Note: When those “assets” on the balance sheets of the mega banks turn out to be at best worthless and at worst fraudulent, the bank’s financial condition will be changed from viable to impossible and they will be broken up. But as Iceland showed us clearly, the other banks pick up the pieces, the household debt is reduced forcing the banks to cooperate, and as much money as possible is returned to the investors who were the first victims in this fraudulent PONZI scheme]
This type of contractual relationship is against public policy and should be unenforceable.
Once again, the principal is not exercising any control over the agent (investors and trustee).
Once again, the principal is not exercising any control over the agent (trustee and servicers).
Once again, the principal is not exercising any control over the agent (foreclosure trustee and beneficiary).  In fact the foreclosure trustee does not even know who the beneficiary is.
Thx,
Office: 530.392.4681

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , | 30 Comments »

Assignment must exist in writing, even if the court says it doesn’t need recording

Posted on August 24, 2012 by Neil Garfield

Dan Hanacek, who will be at the conference in Emeryville tomorrow, and Charles Cox can be reached through our customer service number 520-405-1688. Dan is a lawyer with whom I am engaged in mentoring and resourcing in Northern California cases and Charles helps people all over the country. The tide is turning. The basic principles of title in place for hundreds of years, TILA in place for dozens of years and RESPA in place for dozens of years will yet win the day. Title analysis and attorney advice is crucial to making the write choices and communication with a party purporting to be either a lender or servicer. Don’t assume you know what they are saying is correct. Not even the original note can be admitted because of the thousands of instances in which the “original” is a Photoshopped version that is not the original note and therefore does not contain the original signature of the borrower.

Editor’s Note:

With Banks and servicers playing fast and loose with the rules of procedure, the rules of evidence and black letter law it well to remember BASIC BLACK LETTER LAW. An assignment without delivery is probably a nullity. An assignment that isn’t even in writing is (a) not proper under most existing laws and (b) requires the allegation of an oral “assignment” to be explained as to why it wasn’t in writing before, just like a lost or destroyed note.

The assignment can only be valid and used if the assignee is capable of accepting it, paying for it and either acceptance is for the assignee or as an authorized agent. The Notice Default does not give the Trustee or even the original mortgagee where there has been an assignment, the right to declare default. Then it becomes the representation of the trustee, who is supposed to be objective and disinterested in the result.

For the Trustee to issue a notice of sale and notice of default on behalf of the supposed beneficiary, means that the trustee is no longer accepting the responsibilities of the trustee to act with due diligence and good faith toward both the trustor and the beneficiary.

Hence the substitution of trustee is an offer which has not and cannot be accepted. Any actions taken by the trustee in a notice of default or any other notice or collection letter is out of bounds. The only reason the banks do this is to hide behind yet another layer of people and entities so when the arrest warrants are issued, they can claim plausible deniability that the wrong procedure was being followed. This is poppycock. The beneficiary supposedly knows whether or not he is the creditor entitled to submit a credit bid at auction based upon the the existence of a properly kept loan receivable account reflected on the CREDITOR’s books.

This is just another example where the banks and servicers have borrowed the identity of the creditor, claimed that said identity is private and privileged, and then used it for their own advantage to the detriment of both the lender-investor and the borrower.

Witness this exchange between two of our golden boys — Dan Hanacak and Charles Cox:

Dan wrote:

1624.  (a) The following contracts are invalid, unless they, or some
note or memorandum thereof, are in writing and subscribed by the
party to be charged or by the party's agent:
   (2) A special promise to answer for the debt, default, or
miscarriage of another, except in the cases provided for in Section
2794.
   (3) An agreement for the leasing for a longer period than one
year, or for the sale of real property, or of an interest therein;
such an agreement, if made by an agent of the party sought to be
charged, is invalid, unless the authority of the agent is in writing,
subscribed by the party sought to be charged.
 
Would this section not require the following:
  1. Assignments must be in writing as they are “…for the sale of real property, or of an interest therein.”
  2. Immediately contradict the Gomes holding as it assumes that the authority of the agent has already been subscribed by the party to be charged and pre-empts any challenge by the injured party to the alleged contract.

And Charles Cox wrote back:

I’ve just been drafting argument against TDSC (in opposition to their demurrer)  for the proposition of their authority (as an agent for the beneficiary) in which (as is common) they attempt to use an agent they have assigned, to record a NOD (usually prior to an assignment being recorded) which I refute as follows:

In P&A p.10:26-p.11:27: TDS wrongfully states a “title company representative as agent for T.D.” could validate a Notice of Default which by the terms of the purported Deed of Trust (“NOD”.)  By the terms of the purported Deed of Trust, a NOD is required to be executed or caused to be executed by the “Lender” not the trustee nor the Trustee’s sub-agent as was done here (see Compl. Exh. 1 p.13 ¶ 22 second paragraph.) TDS’s citations are inapposite relating to “authorized agents” (meaning, authorized by the principal, not by another agent.)  Pursuant to CCC § 2304, an agent cannot act for an agent without the express authority of the principal.  CCC § 2322(b) does not allow an agent to define the scope of the agency (which TDS is attempting to do here).  CCC § 2349(4) requires authorization by the principal.  CCC § 2350 states an agent’s sub-agent is the agent of the agent, not of the principal and has NO connection to the principal.

TDS misstates CCC § 2349(1) as it relates to allowing an agent to delegate acts which are purely mechanical.  The statute actually states:

“An agent, unless specially forbidden by his principal to do so, can delegate his powers to another person in any of the following cases, and in no others:
1. When the act to be done is purely mechanical (emphasis added)”
   Note the statute states “another person” not another agent or sub-agent.  The alleged “notice of default” TDS refers to (Plaintiffs are not sure which one, having not been identified in TDS’s P&A but assume as follows:) was signed by “LSI TITLE COMPANY AS AGENT FOR T.D. SERVICE COMPANY,” NOT merely by “a title company representative”  or “person” as statutorily authorized.  This, notwithstanding that authorizing recording a Notice of Default is hardly “purely mechanical.”  This is yet another attempt by TDS to mislead the Court.  
   TDS’s citation of Wilson v. Hyneck cannot be relied on because it is an unpublished opinion and is inapposite anyway. 
    TDS’s further arguments (P&A p.11:5-27) fail for the reasons detailed above.

Plaintiffs Complaint contains sufficient facts constituting Plaintiffs’ cause of action specifically against TDS.  Nothing stated in this section of TDS’s Demurrer provides available grounds sufficient to sustain Defendants’ Demurrer (see p.2:19-25 above.)

Defendant fails to meet the legal standards to sustain its Demurrer.  See Plaintiffs’ Section III below.

Defendant’s Demurrer is without merit and must be overruled.

Amazing how these guys fail to accept responsibility for anything they do!

Charles
Charles Wayne Cox
Email: mailto:Charles@BayLiving.com or Charles@LDApro.com

 

Filed under: bubble, CDO, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage | Tagged: , , , , , , , , | 64 Comments »

Assignments to Non MERS Members Further Cloud Title

Posted on March 15, 2010 by Neil Garfield

Your case should first be summarized by your securitization expert who relies upon the expert opinions of others as to underwriting, appraisal, mortgage brokers etc. Then those other experts come in. After that, the forensic analyst and homeowner come in to fill in the facts upon which the experts relied.

But you build your case in reverse of the order of presentation, starting with the homeowner, then the forensic analyst, then the sub-experts, and finally the securitization expert.

From: Tony Brown

Editor’s Note: I have not bothered to edit the following comment because for those of you who are attending the forensic workshop I wanted you to see how information is often presented. Here is clear evidence of (a) why a forensic analyst is essential and (b) why you need a method of presentation that gives the Judge a clear picture of the true nature of a securitized transaction.

The other lesson to be gleaned is that forensic analysts should stick to facts and expert witnesses should stick to opinions. Lawyers should stick to argument. Any overlap will result in a brutal cross examination that will, quite rightfully, draw blood.

I’m planning a workshop whose working name is Motion Practice and Discovery for late in May. You see there is method to our madness here notwithstanding our critics.

Your case should first be summarized by your securitization expert who relies upon the expert opinions of others as to underwriting, appraisal, mortgage brokers etc. Then those other experts come in. After that, the forensic analyst and homeowner come in to fill in the facts upon which the experts relied.

But you build your case in reverse of the order of presentation, starting with the homeowner, then the forensic analyst, then the sub-experts, and finally the securitization expert.

Mers was named nominee on the mortgage and filed at the Register Of Deeds in Greenville SC, supposedly according to a lost note affidavit the original lender RBMG sold the note and according to MERS servicer ID the loan was transferred off of the MERS system and MIN# deactivated because of a sale to a non-mers member in 2002. NO ASSIGNMENT WAS RECORDED.Now the new owner EMC sold the loan to Bear Stearns which deposited into the Asset Backed Securities which did an assignment/sell to JP MORGAN CHASE as trustee. Now there has been a foreclosure started on the loan in March 2009 by The Bank OF New York Mellon as successor trustee for JP MORGAN CHASE who claims to be the real party in interest and hold the note. By way Of an assignment which was recorded at the ROD after the LIS-PENDENS and after the filing of complaint.Here is more fraud because the assignment was from MERS on behalf of the original lender RBMG which is defunct and has been since 2005 to the THE BANK OF NEW YORK MELLON. MERS has no authority to do an assignment because the loan was transferred from them in 2002 and Mers was Longer the mortgagee as nominee of record.Now are you with me( no chain of title) the BANK OF NEW YORK MELLON produced in discovery to me an allonge RBMG to EMC along with the lost note affidavit. EMC showed an allonge to JP MORGAN CHASE which skipped BEAR STEARNS. BEAR STEARNS was the depositor into the securities. First let start with the allonges: according to the UCC an allonge is only used when there is NO ROOM ON THE ORIGINAL NOTE FOR ENDORSEMENT and must be firmly attached as to become a part of the note. AN ALLONGE cannot be used to transfer interest and is invalid if there is room on the note for endorsements and is invalid it not attached. A lost note and two allonges that were not signed and not dated and even skipped BEAR STEARNS that deposited it into the securities is the purported chain of title , now let’s look at the prospectus:Bear Stearns Asset Backed Securities Inc · 424B5 · Bear Stearns Asset Backed Certificates Series 2003-2 · On 6/30/03 Document 1 of 1 · 424B5 · Prospectus . Assignment of the Mortgage Loans; Repurchase At the time of issuance of the certificates, the depositor will cause the mortgage loans, together with all principal and interest due with respect to such mortgage loans after the cut-off date to be sold to the trust. The mortgage loans in each of the mortgage loan groups will be identified in a schedule appearing as an exhibit to the pooling and servicing agreement with each mortgage loan group separately identified. Such schedule will include information as to the principal balance of each mortgage loan as of the cut-off date, as well as information including, among other things, the mortgage rate,the borrower’s monthly payment and the maturity date of each mortgage note. In addition, the depositor will deposit with Wells Fargo Bank Minnesota, National Association, as custodian and agent for the trustee, the following documents with respect to each mortgage loan: (a) except with respect to a MOM loan, the original mortgage note, endorsed without recourse in the following form: “Pay to the order of JPMorgan Chase Bank, as S-40——————————————————————————– trustee for certificate-holders of Bear Stearns Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2003-2 without recourse,” with all intervening endorsements, to the extent available, showing a complete chain of endorsement from the originator to the seller or, if the original mortgage note is unavailable to the depositor, a photocopy thereof, if available, together with a lost note affidavit; (b) the original recorded mortgage or a photocopy thereof, and if the related mortgage loan is a MOM loan, noting the applicable mortgage identification number for that mortgage loan; (c) except with respect to a mortgage loan that is registered on the MERS(R) System, a duly executed assignment of the mortgage to “JPMorgan Chase Bank, as trustee for certificate-holders of Bear Stearns Asset Backed Securities, Inc., Asset-Backed Certificates, Series 2003-2, without recourse;” in recordable form, as described in the pooling and servicing agreement; (d) originals or duplicates of all interim recorded assignments of such mortgage, if any and if available to the depositor; (e) the original or duplicate original lender’s title policy or, in the event such original title policy has not been received from the insurer, such original or duplicate original lender’s title policy shall be delivered within one year of the closing date or, in the event such original lender’s title policy is unavailable, a photocopy of such title policy or, in lieu thereof, a current lien search on the related property; and (f) the original or a copy of all available assumption, modification or substitution agreements, if any. In general, assignments of the mortgage loans provided to the custodian on behalf of the trustee will not be recorded in the appropriate public office for real property records, based upon an opinion of counsel to the effect that such recording is not required to protect the trustee’s interests in the mortgage loan against the claim of any subsequent transferee or any successor to or creditor of the depositor or the seller, or as to which the rating agencies advise that the omission to record therein will not affect their ratings of the offered certificates. In connection with the assignment of any mortgage loan that is registered on the MERS(R) System, the depositor will cause the MERS(R) System to indicate that those mortgage loans have been assigned by EMC to the depositor and by the depositor to the trustee by including (or deleting, in the case of repurchased mortgage loans) in the computer files (a) the code in the field which identifies the trustee and (b) the code in the field “Pool Field” which identifies the series of certificates issued. Neither the depositor nor the master servicer will alter these codes (except in the case of a repurchased mortgage loan). A “MOM loan” is any mortgage loan as to which, at origination, Mortgage Electronic Registration Systems, Inc. acts as mortgagee, solely as nominee for the originator of that mortgage loan and its successors and assigns. S-41——————————————————————————– The custodian on behalf of the trustee will perform a limited review of the mortgage loan documents on or prior to the closing date or in the case of any document permitted to be delivered after the closing date, promptly after the custodian’s receipt of such documents and will hold such documents in trust for the benefit of the holders of the certificates. In addition, the seller will make representations and warranties in the pooling and servicing agreement as of the cut-off date in respect of the mortgage loans. The depositor will file the pooling and servicing agreement containing such representations and warranties with the Securities and Exchange Commission in a report on Form 8-K following the closing date. After the closing date, if any document is found to be missing or defective in any material respect, or if a representation or warranty with respect to any mortgage loan is breached and such breach materially and adversely affects the interests of the holders of the certificates in such mortgage loan, the custodian, on behalf of the trustee, is required to notify the seller in writing. If the seller cannot or does not cure such omission,defect or breach within 90 days of its receipt of notice from the custodian, the seller is required to repurchase the related mortgage loan from the trust fund at a price equal to 100% of the stated principal balance thereof as of the date of repurchase plus accrued and unpaid interest thereon at the mortgage rate to the first day of the month following the month of repurchase. In addition, if the obligation to repurchase the related mortgage loan results from a breach of the seller’s representations regarding predatory lending, the seller will be obligated to pay any resulting costs and damages incurred by the trust. Rather than repurchase the mortgage loan as provided above, the seller may remove such mortgage loan from the trust fund and substitute in its place another mortgage loan of like characteristics; however, such substitution is only permitted within two years after the closing date. With respect to any repurchase or substitution of a mortgage loan that is not in default or as to which a default is not imminent, the trustee must have received a satisfactory opinion of counsel that such repurchase or substitution will not cause the trust fund to lose the status of its REMIC.

I’m not a MOM loan the loan transferred off of MERS, Mers no longer tracked the assignments and let’s not forget I HAVE IN MY POSSESSION THE ORIGINAL NOTE STAMPED FULLY PAID AND SATISFIED NEGOTIATED TO ME FROM RBMG. The note is date stamped MARCH 2002 and has been in my possession since 2004 along with a letter from the RBMG stating the loan is fully paid and satisfied address to me which is the declaratory letter.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , | 12 Comments »

Trust, Trustees, Constructive Trust, Fiduciary Duties

Posted on March 9, 2010 by Neil Garfield
Editor’s Note: I am currently working on the issue of fiduciary duty, so I would appreciate receiving material from any of you that have submissions on the subject.
There is an article in the Florida Bar Journal this month on this topic. “If a fiduciary has special skills or becomes a fiduciary on the basis of representations of special skills or expertise, the fiduciary is under a duty to use those skills” . P. 22 Florida Bar Journal March, 2010 , “Understanding Fiduciary Duty” by John F Mariani, Christopher W Kammerer and Nancy Guffey Landers. So if a party presents itself to a borrower as a “lender” one would reasonable presume that they employed one or more underwriters who would perform due diligence on the loan, property and viability of the transactions including borrower’s income, affordability etc. A borrower would NOT reasonably presume that the “lender” didn’t care whether or not they would make the payments now or at some time in the future when the loan reset.
It is a fascinating subject, but the area I am centering in on, is the presumption of a trusted relationship giving rise to a fiduciary duty where (1) the superior party takes on MORE tasks than called for by the contractual relationship between the two would normally imply, and (2) where the transaction is so complex and the knowledge one of the parties so superior, that the injured party is virtually forced to rely on the superior party.
It doesn’t hurt either where the borrower is told not to bother with an attorney (“You can’t change anything anyway,” or “These documents are standard documents using Fannie Mae, FHA, HUD, Freddie Mac forms” etc.). Trust me, nobody who wrote those forms had nominees or MERS in mind when they were prepared.
The issue is particularly important when we look at the layers of Trustees (implicit or explicit) in each of the securitized transactions. Whether it is the Trustee on the Deed of Trust who obviously has duties to both the Trustor (homeowner) and beneficiary (?!?), the Trustee for the aggregate pool under the pooling and service agreement, The Trustee of the Structured Investment Vehicle which typically off shore, the so-called Trustee for the SPV (REMIC) that issued the mortgage backed securities, each of whom presumptively is the successor to the “Trustees” before it, we are stuck with layers upon layers of documents that contain discrepancies within the documents and between the provisions of the documents and the actions of the parties.
You also have the key issue that the true chronology of events differs substantially from the apparent chronology, starting with the fact that the mortgage backed securities were sold prior to the funding of the loan, the assignment and assumption agreement was executed prior to the borrower being known, and the pooling and service agreement also executed prior to any transaction with the borrower.
The use of “close-out” dates and the requirement that assignments be recorded or in recordable form creates another layer of analysis. On the one hand you have clear provisions that explicitly state that the “loan” is not accepted into the alleged “trust” while on the other hand you have the parties acting as though it was accepted into the “trust.”
You have entities described as trusts that have no property, tangible or intangible in them, and “trustees” named where the enabling documents chips away relentlessly at the powers and duties of the trustee leaving you with an agent whose powers are so limited they could be described as a candidate to be an agent rather than one with actual agency powers.
The laws allowing the borrower to claw back undisclosed fees and profits are obviously based upon the presumption that the party who received those fees had some duty toward the borrower to act in good faith, knowing that the borrower was relying upon them to advise them correctly. Steering them into a loan that is likely or guaranteed to put them into foreclosure is obviously a breach of that trust, and taking compensation to act against the interest of the borrower is exactly what Truth in Lending and deceptive lending laws are all about.
The article below clearly highlights the issues. The agent or broker gets paid only upon “closing the sale.” The agent gets paid a standard industry fee for doing so. But when the fee is a yield spread premium or some other form of kickback or rebate undisclosed to the borrower, the debtor ends up in a product that is not easily understood and is probably better for the “ledner” than the loan product that would have been offered if the “lending parties” were acting in good faith.
So this article should be read with an eye toward applying similar fact patterns to the securitized loan situation where the loan originator was in many cases not even a bank but looked like a bank to the borrower.
In the securities industry the issue is in flux more than the laws applying to mortgages where the investment represents the entire wealth of many borrowers. The stakes are usually much higher than in an individual stock purchase transaction.
March 4, 2010

Trusted Adviser or Stock Pusher? Finance Bill May Not Settle It

You have probably seen the television commercial, the one where you seem to be watching an intimate conversation between family members. But at the end, you learn that the conversation was actually between a broker and his client.

The advertisement is meant to evoke the idea of financial adviser as confidant, and is part of brokerage firms’ broader effort in recent years to recast their image — from mere stock pushers to trustworthy advisers.

But in interviews, former and current brokers said the ad told only part of the story. All said their jobs depended less on giving advice and more on closing sales. The more money they brought in, the more they, and their firms, would earn.

“I learned a lot about being a good salesman at Merrill,” said David B. Armstrong, who left Merrill Lynch after 10 years and with partners started an advisory firm in Alexandria, Va. “The amount of training I sat through to properly evaluate investment opportunities was almost nonexistent relative to the training I got on how to sell them.”

While the issue of broker responsibility is not new, it has resurfaced as Congress has been considering financial overhaul legislation. In his original draft, Senator Christopher J. Dodd, chairman of the Senate Banking Committee, proposed requiring brokers to put their customers’ interests first — what is known as fiduciary duty — when providing investment advice. But in recent weeks, the chances of this proposal’s making it into the bill began to dim.

Senator Tim Johnson, a South Dakota Democrat on the Banking Committee, has proposed an 18-month study of the brokerage and investment advisory industries, an effort that would replace Senator Dodd’s provision.

Imposing a fiduciary requirement could have an impact on investment firms’ profits. Guy Moszkowski, a securities industry analyst at Bank of America Merrill Lynch, said that the impact of a fiduciary standard was hard to determine because it would depend on how tightly the rules were interpreted. But he said it could cost a firm like Morgan Stanley Smith Barney as much as $300 million, or about 6 to 7 percent of this year’s expected earnings, if the rules were tightly defined. “It’s very nebulous, but I think that is a reasonable estimate,” he added.

In a research report about Morgan Stanley last year, Mr. Moszkowski wrote, “Financial advisers will be expected to take into account not just whether a product or investment is suitable for the client, but whether it is priced favorably relative to available alternatives, even though this could compromise the revenue the financial adviser and company could realize.”

Technically speaking, most brokers (including those who sell variable annuities or the 529 college savings plans) are now only required to steer their clients to “suitable” products — based on a customer’s financial situation, goals and stomach for risk.

But Marcus Harris, a financial planner who left Smith Barney 10 months ago to join an independent firm in Hunt Valley, Md., said the current rules leave room for abuse. “Under suitability, advisers would willy-nilly buy and sell investments that were the flavor of the month and make some infinitesimal case that they were somehow appropriate without worrying,” he said.

Kristofer Harrison, who spent a couple of years at Smith Barney before leaving to work as an independent financial planner in Clarks Summit, Pa., said the fact that brokers were paid for investments — but not advice — also fostered the sales mentality.

“The difficulty I had in the brokerage industry” he said, “is that you don’t get paid for the delivery of financial advice absent the sale of a financial product. That is not to say the advice I rendered was not of professional quality, but in the end, I always had the sales pitch in the back of my mind.”

Mr. Armstrong, Mr. Harris and Mr. Harrison all said they had decided to become independent because they felt constrained by their firms’ emphasis on profit-making and their inability to provide comprehensive advice.

A current branch manager of a major brokerage firm who did not want to be identified because he did not have his employer’s permission to speak to the media, confirmed that “you are rewarded for producing more fees and commissions.” While he said that “at the end of the day, I think that the clients’ interests are placed first and foremost by most advisers,” he added that “we are faced with ethical choices all day long.”

Brokers are typically paid a percentage of fees and commissions they generate. The more productive advisers at banks and big brokerage firms could collect 50 percent of the fees and commissions they generate, said Douglas Dannemiller, a senior analyst at Aite Group, a financial services research group.

The firms may also make money through other arrangements, including what is known as revenue sharing, where mutual fund managers may, for instance, agree to share a portion of their revenue with the brokerage firm. By doing this, the funds may land on the brokerage firm’s list of “preferred” funds. Some brokerage firms, including Merrill Lynch and Morgan Stanley Smith Barney disclose their revenue sharing information on their Web sites, or at the point of sale. Edward Jones discloses it as well, as the result of a settlement of a class-action lawsuit. UBS and Wells Fargo Advisors declined to comment on whether it discloses this information.

Unlike fiduciaries, brokers do not have to disclose how they are paid upfront or whether they are have incentives to push one investment over another. “The way the federal securities law regulates brokers, it does not require the delivery of information other than at the time of the transaction,” said Mercer E. Bullard, an associate professor at the University of Mississippi School of Law who serves on the Securities and Exchange Commission’s investment advisory committee.

The legislative language on fiduciary responsibility was one part of the financial overhaul bill aimed at protecting consumers’ interests. Another part, setting up an independent consumer protection agency, may also be watered down.

The study proposal by Senator Johnson may be included in the actual bill, which means it would not be subject to debate. And consumer advocates contended that the study would stop regulators from making any incremental consumer-friendly changes until the study was completed. The study would also require the S.E.C. to go over territory already covered in a 228-page study, conducted by the RAND Corporation in 2008 at a cost of about $875,000, the advocates said.

“In my opinion, the Johnson study is a stalling tactic that will either substantially delay or totally prevent a strong fiduciary standard from being applied,” said Kristina Fausti, a former S.E.C. lawyer who specialized in broker-dealer regulation.

“The S.E.C. has been studying issues related to investment-adviser and broker-dealer regulation and overall market conditions for over 10 years,” she said. “It’s puzzling to me why you would ask an agency to conduct a study when it is already an expert in the regulatory issues being discussed.”

Even after the study was completed, legislation would still need to be passed to give the S.E.C. authority to create a fiduciary standard for brokers who provide advice. “As we all know, the appetite for doing this in one or two years is certainly not going to be what it is today,” said Knut Rostad, chairman of the Committee for the Fiduciary Standard, a group of investment professionals advocating the standard. His group circulated an analysis that tried to illustrate where answers to the study’s questions could be found.

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RULES OF ENGAGEMENT FOR FORECLOSURE DEFENSE LAWYERS

Posted on January 31, 2010 by Neil Garfield

See Judge Long’s Decision – Make sure you shepardize 384283_Ibanez Larace motion to vacate memorandum Oct2009Misc 384283 and Misc 3867551

when a foreclosure is noticed and conducted for one party
by another, the name of the principal must be disclosed in the notice.

the plaintiffs themselves recognized that they needed assignments in recordable form explicitly to them (not in blank) prior to their initiation of the mortgage foreclosure process, that the plaintiffs’ “authorized agent” argument fails both on its facts and as a matter of law

Editor’s Note: We’ve reported on this case before. And as a caution, there is report that the case was overturned on appeal but I don’t see it. Either way, the reasoning of the case is extremely persuasive and the only basis for reversal would be on procedural grounds, not substance.

Here is the essence of the pretender lender tactic. Their argument is basically that they have the right to foreclose whether or not they are the real party in interest, whether or not they are the holder in due course and especially whether or not they are the creditor in the “loan” transaction with the homeowner(s).

RULES OF ENGAGEMENT FOR FORECLOSURE DEFENSE LAWYERS: If you engage the “enemy” on their terms you will most likely lose. After all they created a narration that they think they can win. So YOUR strategy should be to change the narrative to YOUR points that can win.

In this case, it was simple. The Judge simply saw that the creditor was not involved in the foreclosure process and that the sale was therefore invalid. Implicitly the Judge was protecting both the real creditor and the homeowner from financial double (or multiple jeopardy).

So the Judge helped out the homeowner here by giving the homeowner the correct narrative. to wit: even if the party seeking to initiate the collection on the note or the foreclosure of the mortgage is an authorized agent (by virtue of possession or holding the note, etc.) the principal MUST BE DISCLOSED. How else can the court or the homeowner or the principal know the matter is subject to disposition through sale or judgment?

In a recent case in Arizona a pro se litigant finally penetrated the fog of Chauncery (see Dickens, BLEAK HOUSE), and the Judge who denied all homeowner motions before the weekend, finally got it and asked the attorney for the pretender lender what was going on (in another case in Ohio the Judge said “what are you trying to pull here?”).

Those cases are now proceeding through discovery (which we all know will never be completed) in which the identity of the creditor and a full accounting of ALL money transacted in connection with the subject loan is fully disclosed.

While there are cases we are tracking in which the homeowner is being bounced on his/her rear end, the tide is turning. The fact that there was federal bailout money and insurance proceeds paid in connection with these loans, is extremely relevant to the amount due and the identity of the current creditor.

This in turn is extremely relevant to the homeowner and the “lender” complying with federal mandate for modifications or state mandate for mediation. If the creditor is unknown how can the court or anyone else know that the “agent” is authorized?

At first the Judge’s knee jerk reaction is “What are you talking about, who else would make payments on this loan.?” But upon hearing the answer that the U.S. Treasury (TARP, TALF etc.), Federal reserve, and counter-parties in credit default swap insurance have made billions of dollars in payments and have not thus far accounted for their use of the money, the Judge may not believe you will succeed in your case but he will agree that you have a right to inquire. And THAT is all you need. because once you make the inquiry, the pretender lender will be on the defensive from that point on, disclosing itself as an impostor and a fabricator.


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Semantics: What a difference a word makes — Creditor — Trustee

Posted on January 13, 2010 by Neil Garfield

Using the voluminous amount of feedback to Livinglies.wordpress.com, some observations about the words you use in litigation and in your correspondence, QWR and DVL might well be of some assistance.

  1. CREDITOR: It seems that using the word creditor has much more power than lender, pretender lender or even holder in due course. I’ve been told that the word “creditor” conveys a relationship of business vs. consumer that is a lot closer to the truth than “lender” which implies that the party who initiated the foreclosure was a bank and that the homeowner is trying to get out of a legitimate debt. A creditor is one who has advanced money, goods or services with the intention of getting it back through the payment of money, the delivery of services or goods or the return of what was extended by the creditor. The simple statement is that the Plaintiff (in judicial states) or party initiating foreclosure proceedings is NOT the creditor and that the obligation you signed for calls for you to pay money to the creditor, not the opposing party in your foreclosure. The party you are up against has advanced no funds, goods or services. Thus they are not the creditor. Ask them in open court if you need to do so. Yet they want the court to pretend that they are a creditor anyway — or phrased another way, they want to assert that they have the right to collect on the obligation and foreclose on the home even though they are NOT the creditor. If their position is that they are foreclosing on behalf of the creditor, your answer would be that they must then disclose the creditor and name them as nominal plaintiffs, and show how they, as non-creditors, have the right to sue on behalf of the creditor. You must be given the chance to inquire in discovery whether this revelation is in fact the creditor and if so, you must be given a chance under Federal Law to attempt modification or mediation with the real decision-maker — i.e., the creditor. BEWARE: Attorney representations in or out of court are not evidence and should be objected to, pointing out that such representations raise an issue of fact that you deny and therefore you have a right to at least inquire through discovery the truth or falsehood of those representations.
  2. SPV MBS POOL: There are at least two pools of assets in every securitization scheme involving home mortgages — the aggregator’s pool which is made up of multiple assets usually all home mortgages, and the SPV or MBS Pool which receives an assignment from the aggregator. Don’t use the word “TRUST” to describe the second pool (the one that goes into the pool of assets that is then fractionally sold to buyers of certificates in which the ownership is conveyed in fractional interests and the promise to pay comes from the SPV in the form of a note or bond). Since the SPV or MBS pool is part of a REMIC transaction, it may be fairly assumed and argued that the equitable and legal owners of the assets in the pool are actually the certificate holders. In addition, the holders of a certificate are not described as beneficiaries, which would be the words associated with a trust. Since the SPV pool is a REMIC (Real Estate Mortgage Investment Conduit)under the Internal Revenue Code the reference to the existence of a trust is a reference in name only. In fact, there is no trust and there are no beneficiaries. The owners of the pool are quite clearly the certificate holders of mortgage backed securities (MBS). The pool is owned by those owners of the certificates not by some non-existent trust.
  3. AGENT With Limited Power of Attorney: Examination of the enabling documents in their totality clearly shows that the party named as “Trustee” is not a trustee and has no trustee powers. This was done intentionally by the investment banks so that they could avoid the implication of a fiduciary duty of a Trustee, which would have included telling the investors the truth about the crap they were buying. So you might want to say that (a) there is no trust, there is just a pool owned by investors. (b) You might want to say the Conduit status of the SPV (Special Purpose Vehicle) mandates that no actual transactions are occurring in the name of the REMIC (SPV) or else it loses its “tax-exempt” status, something that would be contrary to the interests of the investors. (c) you might want to say that therefore there is nothing in any trust, so even if it DID exist, it has no assets. And (d) you might want to say that the party designated as “TRUSTEE is in reality merely an agent for the certificate holders and that the indentures or enabling documents simply appoint the Agent to act with limited power of attorney under certain circumstances. Remember that neither the “TRUSTEE” nor the “TRUST” ever physically receives the notes, mortgages or assignment or any other pieces of paper except for the mortgage backed security. The paper is held elsewhere, which is where the investment banks actually had the opportunity to trade and bet on those securities, since they were the ones (directly or indirectly) who always controlled the possession and distribution of the actual notes, mortgages, assignments or other paper documents.

More to come

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