Jurisdictional Defense —- Certificate Holders vs Trust

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

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

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

Attorney Fee Award: Heads the Bank Wins, Tails the Homeowner Loses

Appellate courts stepping on a rake: This thread of decisions makes it extremely important for attorneys representing homeowners to establish the earliest possible safe harbor period so they can recover fees when they win.

These decisions are essentially punishing homeowners on the grounds that they won on an issue that revealed the underhanded, fictitious narratives that are cooked up by central repositories of fabricated data and documents in order to obtain a foreclosure judgment to which the banks and servicers are not entitled.

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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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see Attorney Fees 57-105 DOC030317

The bottom line is that Judge Jennifer Bailey was right and the appellate court was wrong. Another case of the rules being used to twist the court system against itself. There are consequences arising from the Courts making policy (a legislative function). One of them may well be that even the highest court in a state could be subject to obvious reprimand from courts in the Federal system.

Since 2001, foreclosure litigation has been a strange world combining Opposite Day with twisted legal opinions based upon the single premise that the Banks must win and the homeowners must lose. Nowhere is that more obvious than in Florida, where a homeowner can win the case, with Final judgment entered in the Homeowner’s favor, but still lose the case on the issue of recovery of reasonable attorney fees and costs.

Under the logic of the Alexander case and now this third district opinion, the Bank can assert rights under what is an existing contract and, if it wins, recover attorney fees and costs. But the homeowner cannot recover fees if the homeowner wins. Despite the provisions of F.S. §57.105(7) that expressly states that if one party is entitled to recovery of fees in a contract then the provision becomes reciprocal — i.e., if the party using the contract for suit loses the prevailing party gets fees upon winning the case.

As in other decisions the court is hell bent on making it more difficult for homeowners to defend their homes by denying them recovery for their attorney fees. The obvious impact is to increase the risk of challenging the core defect in all foreclosures — standing. The DEBT is simply not owned by any of the parties who have been acting as “servicers”, “collectors” or “lenders” or “investors.”

The logic of the courts is defective and twisted. If US Bank, for example, is defeated in a foreclosure action because it was never a party to any loan contract, written, implied or otherwise, then it nevertheless does not need to pay for attorney fees for the opposition homeowner BECAUSE the homeowner won on standing.

Thus a party like US Bank et al who invokes a presumably valid contract, stands to lose nothing if it loses. The simplicity of the decisions is misleading. The appellate courts are making a finding of fact contrary to that of the trial judge. In this case the trial judge found that the Plaintiff was not a party to the contract and never became one. Hence the court entered judgment for the homeowner and then ruled that the homeowner was entitled to attorney fees and costs and awarded over $40,000 to the defendant as recovery of fees and costs.

But the appellate courts invented a concept that simply does not exist. They are finding that the contract does not exist rather than the trial court’s finding that the Plaintiff never became a party to the contract despite its allegations to the contrary. Either the contract exists or it doesn’t. If it doesn’t exist then nobody gets to enforce it and the the homeowner is now free to quiet title and get the mythological “free house.”

The correct decision under these cases should be that the Plaintiff, having invoked the contract including an award of attorney fees, was admitting that the reciprocity provisions of F.S. §57.105(7) apply and is now bound by the contractual provisions regardless of the outcome of litigation. Having failed to prove their rights under the contract, they are subject to the consequences set forth in the contract that formed the entire basis of their lawsuit in foreclosure.

This issue should be taken up with the Florida Supreme Court. These decisions are essentially punishing homeowners on the grounds that they won on an issue that revealed the underhanded, fictitious narratives that are cooked up by central repositories of fabricated data and documents in order to obtain a foreclosure judgment to which the banks and servicers are not entitled.

But the interesting thing about this reasoning, is that the issue of whether the contract exists or not might lead to a quiet title action for the homeowner.

Having established that the Plaintiff had no right to bring the action, the trial court must then vault such a decision into a rule, per se, that therefore there is no contract. This can only be prevented in the event that the next step in this thread is to suggest that the contract DOES exist but not as to the Homeowner in connection with this Plaintiff. But that will muddy title even more, inasmuch as all the evidence adduced to date was that the loan was somehow under the control of the Plaintiff or Plaintiff’s agents. How does another creditor/predator come along and say “OK, it was really us all along?”

A plain reading of the doctrine of estoppel in a court of equity would clearly allow the award of fees to the homeowner who wins on the issue of standing.

None of this discounts my prime directive that there is no contract at all to enforce becasue the debt was never merged into the note and the mortgage only serves as collateral for the alleged obligations under the note. In the absence of merging the debt (owed to an undisclosed, unidentified third party) into the note, the note represents only a contingent liability — if the note ends up in the hands of a holder in due course who purchased the note in good faith and without knowledge of the borrower’s defenses.

I might add that in the case of the so-called purchase or transfer of loan documents in which the homeowner is already declared in default, the rights of any holder or any possessor of the note are dubious at best, since the note is no longer a negotiable instrument under the UCC.

The Affiant who googled Bank of New York Mellon had “Standing”

By William Hudson

Just because you can thread a needle and replace the button on your shirt, doesn’t mean you should attempt your own vasectomy. Furthermore, just because you faithfully read LivingLies on a daily basis doesn’t mean you should organize a national Qui Tam foreclosure defense action. Despite the sophisticated knowledge necessary to testify about complex financial matters, The Bank of New York Mellon called on servicer Wells Fargo’s “loan verification analyst” to testify about the Bank’s standing on a note bearing a blank indorsement. The loan verification analyst testified that she had learned about the transfer through research she had done “on the internet” and furthermore claimed that “the internet will illustrate the transfer occurred in 2006.” Like I said, it might be best to leave the heavy-financial analysis to the experts.

 
In SOSA v THE BANK OF NEW YORK MELLON | FL 4DCA – the extent of the witness’s knowledge on the subject of standing and holder status is what she claims she learned from a search on “the internet.” Although this type of evidence is insufficient to establish a bank’s standing (as nonholder in possession with the rights of a holder in this particular case) the trial court thought otherwise. Sadly, millions of people have lost their homes because a bank “employee” with no personal knowledge and who didn’t possess the necessary expertise is allowed to testify on matters they are unqualified to testify upon. In Sosa, the witness didn’t even work for the Bank or servicer and was unable to describe the relationship between the parties.

 
Attorneys who fail to challenge the testimony of such a witness, fail to file a motion to strike or allow an Affidavit to stand that is proffered by an unqualified individual- are not defending their client’s interests. In light of this case it might be wise to remember that an affidavit or declaration used to support or oppose a motion must be made on personal knowledge, should set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated. Specifically, an affidavit used to support or oppose a motion for summary judgment must be made on: a) personal knowledge b) must be based on facts that are admissible in evidence, and must c) show that the affiant or declarant is competent to testify on the matters stated in the affidavit.

 
Personal Knowledge
Absent personal knowledge, statements in an affidavit are hearsay and generally inadmissible as evidence. In the case of Sam’s Riverside, Inc. v. Intercon Solutions, Inc., 790 F. Supp. 2d 965 (S.D. Iowa 2011), outlines the significance of the personal-knowledge requirement for affidavit evidence in a trademark-infringement lawsuit. The judge in Sam’s Riverside rejected the plaintiff’s employee’s declaration that stated that Internet screen shots were true and accurate representations of certain web pages operated by the defendant because the affidavit did not establish the declarant’s personal knowledge of that information.

 

 

An employee testifying on behalf of a bank who glances at a computer screen does not possess the necessary personal experience to have an understanding of complex financial instruments as well as the private side of the mortgage transaction. The employee should be deposed and asked more than the usual, “Did you read the defendant’s account screen?” The court noted in Sam’s Riverside that the declaration did not state that the declarant had ever visited the web pages or that he had personal knowledge about the contents of the websites mentioned. Sam’s Riverside teaches that a good affidavit should not merely state that it is based on personal knowledge, but instead, it must show how the affiant obtained such personal knowledge. In the world of mortgage securitization- the people who created the system most likely couldn’t explain it to a judge, let alone an employee low on the totem pole.

 

 

It is well settled that statements in affidavits based “on information and belief” violate the personal-knowledge requirement of Rule 56(c). Other qualifying statements, however, like stating “to my knowledge” or “I believe,” cause confusion when assessing whether the personal-knowledge requirement is satisfied. Because of this “to my knowledge” qualifier, the court should hold that there is no admissible evidence to establish that most servicers own the debt and should be paid, let alone should summary judgment be issued in favor of a lender when the rules of evidence are not satisfied. Courts have uniformly ruled that the term “to my knowledge” is redundant and legally insignificant-especially when the bank employee has absolutely no knowledge about the complex financial transactions they are being called to testify upon.

 
Facts—Not Opinions
“‘The affidavit is no place for ultimate facts and conclusions of law.’” A.L. Pickens Co., Inc. v. Youngstown Sheet & Tube Co., 650 F.3d 118, 121 (6th Cir. 1981) (quoting 6 Moore’s Federal Practice, Part 2, ¶ 56.22(1) at 56-1316 (Supp. 1979)). Yet, too often an affidavit is based on opinions or false conclusions. An unqualified affiant’s opinion on legal questions should not be entitled to any weight whatsoever when it comes to testifying about a loan that was most likely never consummated and was securitized and delivered to a fictitious trust. Only the wire instructions or ledgers can legally demonstrated the transaction happened as reported. Unfortunately instead of compelling discovery so the homeowner can get to the actual facts, the homeowner will be stonewalled while the court relies on inaccurate and incompetent testimony in the form of a low-level bank employee.

 
Only when the testimony of an affiant is challenged by a knowledgeable attorney does the homeowner have a chance of refuting legal conclusions that are not supported by facts. Frequently, a judge will allow the bank employee to make legal conclusions or offer impermissible opinions, while the homeowner’s own attorney fails to defend against the false testimony. An affidavit, for example, should stay with the facts of a case. When an affiant declares, for example, that “the homeowner was in default” when there is no indication that the investor was not being paid by servicer advances, insurance proceeds or other coverage- the homeowner’s attorney must interject or forever let that testimony stand as fact.

 
Admissible Evidence
In federal courts, statements in an affidavit must be excluded if they do not comply with Federal Rules of Evidence. See:Reed v. Aetna Casualty and Surety Co., 160 F.R.D. 572, 575 (N.D. Ind. 1995). Hearsay statements in an affidavit are not admissible unless the statement complies with a recognized exception to the hearsay rule. A hearsay exception that is routinely used in morgage-tort cases is the business-record exception. Reliance on “business records” does not violate the personal-knowledge requirement, as long as the affiant is qualified to, and does, set forth the detailed foundation for the business-record exception to the hearsay rule. See Fed. R. Evid. 803(6). The issue in mortgage foreclosure cases is that the business records of loan servicers are seriously deficient as far as what is going on behind the scenes. Although the database may show the homeowner stopped paying, there is unlikely an actual default. The screenshot that banks usually rely as evidence is fatally defective and should be challenged. Until the attorney has the ledgers, confirmation that the servicer paid for the note, and other evidence nothing should be assumed. Relying on copies of documents that don’t exist- like notes that are created when the borrower goes into default should not be permissible.

 
The latest type of fraud on the court consists of the bank possessing a signature and other elements in a computer file that enable them to reconstruct a mortgage note that doesn’t actually exist until the loan goes into default. A technician than compiles the pieces together to recreate the note. The bank employee will then attest that they have in their possession the physical “wet-ink” note. When the homeowner compels the bank to see the note they claim to have in their possession, the note will then be reported lost. How convenient. It is much easier to explain away a lost note than it is to have actual evidence that a felony has been committed.

 
The affiant attesting to the foundation for the business-record exception should be compelled to explain how he or she obtained such knowledge and to explain indepth what the records mean starting at the beginning of the chain of assignments. The bank records, county records are often fabricated to create the illusion of assignment. However, if you look closely at the documents, inconsistencies can be found. It is also important that homeowners monitor affidavits submitted in their case. In a recent case the Lending Lies team is aware of, counsel for CitiMortgage altered an affidavit and forged an indorsement on a note contained in an appeal. Only after the judge based her ruling on the fraudulent Affidavit, did the homeowner discover that documents presented in the lower court had been altered and submitted in the appellee brief. The homeowner is proceeding with criminal charges against CitiMortgage and their counsel.

 
It is imperative that the homeowner and attorney leave no stone unturned in order to get to the “real story”. It is also important that both homeowner and attorney keep an eye on case documents to ensure the bank doesn’t resort to altering documents mid-trial. In most foreclosure defense cases the bank cannot meet the burden of proof if challenged and unless the judge accommodates an unqualified witness whose testimony will be used to foreclose on an unsuspecting homeowner.

 
Competent Witness
The affiant must establish that he or she is competent to lay the foundation or make the statements in the affidavit. See Fed. R. Evid. 602. Information regarding the affiant’s position with the company, job duties, and responsibilities, as well as that person’s knowledge of the company’s record-making and record-keeping practices should be documented. The witness should be examined on the company’s computer systems, how and when information is put into the computer system, and especially about the ledger, who the homeowner’s payments are forwarded to (if any) and if they are aware if the investors are being paid. Typically all a bank witness can testify about is a computer file containing information they have no control over.

 

Personal knowledge is often inferred by the judge based on an affiant’s position and the nature of the matters to which he or she testifies in the affidavit. For example, an employee who indorses mortgage notes as Vice President may be a contract employee with a rubber stamp. The majority of bank employees testifying on behalf of the bank are not competent to testify on complex legal and financial matters. An affiant’s personal knowledge and competence should not be presumed.

 

Challenging Affidavits
To challenge an affidavit that does not meet the standard requirements, requires that litigants file a motion to strike the affidavit in a timely manner and be specific as to the portions of the affidavit that are being challenged. See, e.g., Jones v. Owens-Corning Fiberglas Corp., 69 F.3d 712, 718 (4th Cir.1995). Failing to strike a motion waives your right to challenge the affidavit on appeal. This can be a fatal failure and all elements of an appeal should be vetted. An appeal that is too general can be struck. An affidavit made in bad faith or done to delay a case can result in an award including attorney’s fees (see: Fed. R. Civ. P. 56(h)). In the case of a fraudulent affidavit intended to deceive the court, sanctions and a judgment against the bank should be issued.

 
Merely alleging that documents have been robo-signed in order to obtain a new cause of action will not be granted, and attorneys who have attempted to do so have been unsuccessful. See, e.g., Me Lee v. LNV Corp., 2012 WL 1203403 (C.D. Cal. April 10, 2012-dismissing robo-signing allegations couched as an attempt to plead fraud claim). Singer v. BAC Home Loans Servicing, LP, 2011 WL 2940733, *2 (D. Ariz. July 21, 2011- holding that allegations of robo-signing do not constitute a plausible claim for relief). Homeowners must present more than bare allegations of ‘robosigning’ without any other factual support. Forensic document examiner Gary Michaels has built a successful practice finding document irregularities including digital alteration, forged signatures, metadata left on original documents and jpeg distortion that the naked eye cannot see. Again, when the homeowner obtains hard evidence of fraud, challenges bank affidavits and demands to see the actual evidence- the banks have a tendency to back down and start negotiating with the homeowner.

 
Conclusion
Obviously, it is critical for affidavit statements to be truthful, but it is equally important that the procedural aspects of obtaining evidence ensure its reliability and admissibility, especially with evidence that the banks are engaging in gross fraud to create the illusion of ownership through fraudulent documents and false affidavits. Banks that have taken shortcuts like the bank did in Sosa v. Bank of New York Mellon will lose if the affiant’s knowledge is challenged. Furthermore, banks that attempt to automate the process will eventually get sloppy and slip up if a competent foreclosure attorney authenticates documents, and attacks the witnesses qualifications. It is also important that an attorney ensure that the affiant is testifying on the documents submitted in the case, not a new set of documents that bank counsel slipped into the record unbeknownst to the homeowner. Conducting an investigation on the documents and affiant in a foreclosure case, now takes the skill of an attorney prosecuting a criminal. Also make sure the affiant has the documents properly notarized and that the affidavit is done under penalty of perjury.

 
In the case of Sosa v. Bank of New York Mellon, the judge ruled that the evidence submitted was not competent to establish the bank’s standing as nonholder in possession with the rights of the holder, but getting to this point took skill on the part of the attorney. Had the attorney allowed the affiant’s testimony to stand the homeowner would have lost on appeal. Judges May and Judge Gerber are judges that apparently understand that when the rule of law is followed the right party will prevail.
See more at: http://stopforeclosurefraud.com/2016/03/24/sosa-v-the-bank-of-new-york-mellon-fl-4dca-the-witnesss-entire-body-of-knowledge-on-the-subject-was-limited-to-what-the-witness-learned-from-a-search-on-the-internet-su/#sthash.BmGMLqB7.dpuf

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BONY/Mellon is among those who are attempting to use a Power of Attorney (POA) that they say proves their ownership of the note and mortgage. In No way does it prove ownership. But it almost forces the reader to assume ownership. But it is not entitled to a presumption of any kind. This is a document prepared for use in litigation and in no way is part of normal business records. They should be required to prove every word and every exhibit. The ONLY thing that would prove ownership is proof of payment. If they owned it they would be claiming HDC status. Not only doesn’t it PROVE ownership, it doesn’t even recite or warrant ownership, indemnification etc. It is a crazy document in substance but facially appealing even though it doesn’t really say anything.

The entire POA is hearsay, lacks foundation, and is irrelevant without the proper foundation be laid by the proponent of the document. I do not think it can be introduced as a business records exception since such documents are not normally created in the ordinary course of business especially with such wide sweeping powers that make no sense — unless you recognize that they are dealing with worthless paper that they are trying desperately to make valuable.

They should have given you a copy of the settlement agreement referred to in the POA and they should have identified the original PSA that is referred to in the settlement agreement. Those are the foundation documents because the POA says that the terms used are defined in the PSA, Settlement agreement or both. I want all documents that are incorporated by reference in the POA.

If you have asked whether the Trust ever paid for your loan, I would like to see their answer.

If CWALT, Inc. or CWABS, Inc., or CWMBS, Inc is anywhere in your chain of title or anywhere else mentioned in any alleged origination or transfer of your loan, I assume you asked for those and I would like to see them too.

The PSA requires that the Trust pay for and receive the loan documents by way of the depositor and custodian. The Trustee never takes possession of the loan documents. But more than that it is important to distinguish between the loan documents and the debt. If there is no debt between you and the originator (which means that the originator named on the note and mortgage never advanced you any money for the loan) then note, which is only evidence of the debt and allegedly containing the terms of repayment is only evidence of the debt — which we know does not exist if they never answered your requests for proof of payment, wire transfer or canceled check.

If you have been reading my posts the last couple of weeks you will see what I am talking about.

The POA does not warrant or even recite that YOUR loan or anything resembling control or ownership of YOUR LOAN is or was ever owned by BONY/Mellon or the alleged trust. It is a classic case of misdirection. By executing a long and very important-looking document they want the judge to presume that the recitations are true and that the unrecited assumptions are also true. None of that is correct. The reference to the PSA only shows intent to acquire loans but has no reference or exhibit identifying your loan. And even if there was such a reference or exhibit it would be fabricated and false — there being obvious evidence that they did not pay for it or any other loan.

The evidence that they did not pay consists of a lot of things but once piece of logic is irrefutable — if they were a holder in due course you would be left with no defenses. If they are not a holder in due course then they had no right to collect money from you and you might sue to get your payments back with interest, attorney fees and possibly punitive damages unless they turned over all your money to the real creditors — but that would require them to identify your real creditors (the investors who thought they were buying mortgage bonds but whose money was never given to the Trust but was instead used privately by the securities broker that did the underwriting on the bond offering).

And the main logical point for an assumption is that if they were a holder in due course they would have said so and you would be fighting with an empty gun except for predatory and improper lending practices at the loan closing which cannot be brought against the Trust and must be directed at the mortgage broker and “originator.” They have not alleged they are a holder in course.

The elements of holder in dude course are purchase for value, delivery of the loan documents, in good faith without knowledge of the borrower’s defenses. If they had paid for the loan documents they would have been more than happy to show that they did and then claim holder in due course status. The fact that the documents were not delivered in the manner set forth in the PSA — tot he depositor and custodian — is important but not likely to swing the Judge your way. If they paid they are a holder in due course.

The trust could not possibly be attacked successfully as lacking good faith or knowing the borrower’s defenses, so two out of four elements of HDC they already have. Their claim of delivery might be dubious but is not likely to convince a judge to nullify the mortgage or prevent its enforcement. Delivery will be presumed if they show up with what appears to be the original note and mortgage. So that means 3 out of the four elements of HDC status are satisfied by the Trust. The only remaining question is whether they ever entered into a transaction in which they originated or acquired any loans and whether yours was one of them.

Since they have not alleged HDC status, they are admitting they never paid for it. That means the Trust is admitting there was no payment, which means they were not entitled to delivery or ownership of the note, mortgage, or debt.

So that means they NEVER OWNED THE DEBT OR THE LOAN DOCUMENTS. AS A HOLDER IN COURSE IT WOULD NOT MATTER IF THEY OWNED THE DEBT — THE LOAN DOCUMENTS ARE ENFORCEABLE BY A HOLDER IN DUE COURSE EVEN IF THERE IS NO DEBT. THE RISK OF LOSS TO ANY PERSON WHO SIGNS A NOTE AND MORTGAGE AND ALLOWS IT TO BE TAKEN OUT OF HIS OR HER POSSESSION IS ON THE PARTY WHO TOOK IT AND THE PARTY WHO SIGNED IT — IF THERE WAS NO CONSIDERATION, THE DOCUMENTS ARE ONLY SUCCESSFULLY ENFORCED WHERE AN INNOCENT PARTY PAYS REAL VALUE AND TAKES DELIVERY OF THE NOTE AND MORTGAGE IN GOOD FAITH WITHOUT KNOWLEDGE OF THE BORROWER’S DEFENSES.

So if they did not allege they are an HDC then they are admitting they don’t own the loan papers and admitting they don’t own the loan. Since the business of the trust was to pay for origination of loans and acquisition of loans there is only one reason they wouldn’t have paid for the loan — to wit: the trust didn’t have the money. There is only one reason the trust would not have the money — they didn’t get the proceeds of the sale of the bonds. If the trust did not get the proceeds of sale of the bonds, then the trust was completely ignored in actual conduct regardless of what the documents say. Which means that the documents are not relevant to the power or authority of the servicer, master servicer, trust, or even the investors as TRUST BENEFICIARIES.

It means that the investors’ money was used directly for fees of multiple people who were not disclosed in your loan closing, and some portion of which was used to fund your loan. THAT MEANS the investors have no claim as trust beneficiaries. Their only claim is as owner of the debt, not the loan documents which were made out in favor of people other than the investors. And that means that there is no basis to claim any power, authority or rights claimed through “Securitization” (dubbed “securitization fail” by Adam Levitin).

This in turn means that the investors are owners of the debt but lack any documentation with which to enforce the debt. That doesn’t mean they can’t enforce the debt, but it does mean they can’t use the loan documents. Once they prove or you admit that you did get the loan and that the money came from them, they are entitled to a money judgment on the debt — but there is no right to foreclose because the deed of trust, like a mortgage, is made out to another party and the investors were never included in the chain of title because the intermediaries were  making money keeping it from the investors. More importantly the “other party” had no risk, made no money advance and was otherwise simply providing an illegal service to disguise a table funded loan that is “predatory per se” as per REG Z.

And THAT is why the originator received no money from successors in most cases — they didn’t ask for any money because the loan had cost them nothing and they received a fee for their services.

HOAs Retaliate Against Banks Skipping Out on Paying Maintenance Expenses

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Editor’s Comment: 

Having had the experience of representing Condominium Associations, Cooperatives and Homeowners Associations in Florida on a large scale, I am acutely aware of the pain they feel when “neighbors” don’t pay their monthly fees. The rest of the homeowners must pick up the slack and in many cases there were special assessments against the owners to pay for the shortfall.

The Banks, always playing the game, would get their Judgement of Foreclosure and then postpone the actual sale indefinitely because they could and because they didn’t want the liability of association dues, association compliance etc. So Florida actually had to pass a law that required the bank to start paying maintenance after they received a Final Judgment of foreclosure. Apparently, judging from the article below, that law has been rescinded or eviscerated by the intensive bank lobbying going on in all 50 state legislatures and in Congress.

With the foreclosure crisis desiccating entire neighborhoods, it sometimes comes down to a handful of homeowners who are paying the tab for the maintenance of the entire complex. So those homeowners, who were now on the Board of directors of the association jumped in and are now getting the benefits of self-help through renting abandoned homes and condos as though they owned it. In some cases they are turning a profit, attracting new buyers in and getting a pretty good bang for their buck — if they do it right.

You might remember the uproar that occurred when I reported that a number of people were making this situation  into a business model: by renting out at lower rates homes that were abandoned by both the homeowner and the “bank” or other pretender lender that put the home into default and foreclosure, these “entrepreneurs” are making money on assets that don’t belong to them.

That is a bad thing, right? Only if you are not a bank or pretender lender who are doing exactly the same thing. If a non-creditor took title to property by submitting a credit bid, then they don’t have real title. Whether they sell it or rent it out, they are making money off of an asset that was never owned by them and in which they never had any financial interest, risk or loss.

That of course is the problem with the corruption of our title system, and the failure of due process, especially in the non-judicial states where foreclosures are routinely processed on behalf of non-creditors who submit “credit bids” at auction. My answer as previously posted, is that the HOA and the homeowner should collude with each other the same way that the substituted trustees collude with the pretender lender. The  homeowner falls behind in payments causing the association to sue for those payments and to foreclose on the lien. The lawsuit names the homeowner and all other lenders on record reciting in the pleading that the existing mortgage on record has been satisfied or abandoned.

We all know that in many cases the lender of record is a sham corporation that was created to front as straw-man for the real lenders (investors). So the court enters a default against the lender of record, and then awards judgment to the association along with a sale date during which period the homeowner redeems the property with a settlement agreement in which the court quiets title to the homeowner.

At that point, if any party wishes to foreclose, whether they are in a judicial state or otherwise, they must proceed judicially by pleading and proving that they were a real party in interest and that they should have received notice of the foreclosure by the Association. In many cases, where it is institution versus association or another institution the same arguments advanced by homeowners are advanced by the association or institution.

The difference is that the argument coming from a creditor is taken far more seriously by the courts —- all the way up to the Supreme Court of the state (like the Landmark case in Kansas). In all such cases I have reviewed, the court found and was affirmed in its finding that the foreclosure by the first creditor to get to the mat won the case. This is one of several reasons why I have given my permission to start a national law firm rolling out into all 50 states. In a word, “if you want something done right, you have to do it yourself.”

Canceled foreclosure sales saddle neighbors, HOAs with expenses

By Mark Puente

Kathy Lane envisioned a picturesque neighborhood with tree-lined streets when she moved to FishHawk Ranch in 2004.

These days, she stares at an eyesore.

Two doors away, the back yard of an abandoned home overflows with trash; rain pours in open windows; weeds have overgrown the lawn. The pool, filled with black muck, draws swarms of bugs.

“I was expecting well-kept yards,” Lane said. “I live two doors from a dump. If it goes up in flames and catches our house on fire, who is responsible?”

The foreclosure crisis has littered the region with thousands of abandoned homes. The houses sit idle as banks have been slow to seize them in the final stage of the foreclosure process, the public auction.

Although recent headlines proclaim the worst of the housing crisis is over, the decrepit homes are a constant reminder that cleaning up the foreclosure mess remains a work in progress.

The house on Lane’s street in Lithia went into foreclosure in 2008 and has been vacant for more than a year. Aurora Loan Services had set an auction for February but canceled it.

It’s an oft-repeated pattern.

In the last 12 months, lenders have canceled auctions on 4,204 properties in Pinellas and Hillsborough counties. Sales have been canceled two, three, even nine times on some homes.

In many cases, banks delay seizures to avoid having to pay maintenance bills or homeowner association fees. Meanwhile, neighbors fend off vandals and thieves and worry about property values falling because of the deteriorating houses.

The repeated cancellations burden the court system.

“These never seem to go away,” said Thomas McGrady, chief judge of the Pinellas-Pasco County Circuit. “It’s a nuisance.”

Taxpayers also pay for the delays.

Hillsborough Circuit Judge Herbert Baumann Jr. said the Clerk of Courts’ workers spend hours filing paperwork when banks repeatedly cancel auctions.

“It does create more work,” he said. “Clerks do expend a lot of resources on this.”

• • •

No neighborhood is immune.

Even the tony streets in Tampa’s Avila and St. Petersburg’s Snell Isle have “lost houses.”

While the homes sit in limbo, homeowners associations lose money when lenders delay taking titles. The associations may mow lawns and make minor repairs, but that forces other residents to shoulder higher assessments.

Associations have few options to force lenders to sell the homes.

HOAs can seize properties through foreclosure when owners stop paying monthly assessments. Some go a step further by renting out the seized properties to recoup lost dues. Still, those actions cost the associations thousands in legal fees.

Lane, the FishHawk Ranch resident, is baffled by the banks’ inaction.

“Every day you expect a poltergeist,” she said. “We have to live here.”

She isn’t alone.

Tampa-based Rizzetta & Co. manages more than 100 community associations with 32,000 homes in Florida, including most associations in FishHawk Ranch. The firm has been deluged in recent years with calls about the abandoned homes and delinquent assessments.

Pete Williams, a Rizzetta manager, attributes the canceled auctions to money.

“The banks never want to take ownership,” he said. “They have to pay the fees going forward. The costs are considerable.”

Even McGrady, the Pinellas-Pasco judge, believes money is behind the canceled sales.

“After a while, you begin to question their motives,” the judge said.

• • •

On the flip side, some experts contend that the banks’ slowness helps stabilize the real estate market. Putting thousands of homes for sale at once could depress prices. Letting them trickle to the market brings higher prices.

And some cancellations occur because lenders and homeowners agree to loan modifications or because homeowners and defense attorneys find errors in bank documents.

The cancellations are currently down in Hillsborough and Pinellas. But that’s because lenders halted foreclosures in late 2010 amid allegations they used robo-signers and false documentation to speed up the foreclosure process.

Still, the delays have allowed some owners to live free for years and dodge assessments.

In June 2009, a Pasco judge granted U.S. Bank a final judgment to seize a home in the Valencia Gardens subdivision in Land O’Lakes. U.S. Bank scheduled the auction for September 2009 but has canceled it eight times. The most recent cancellation occurred last month.

The homeowners have lived in the home but have not paid dues to the Valencia Gardens Homeowners Association. The association is objecting to the cancellations and has asked a judge to order the bank to sell the home. Thirty-eight delinquent homeowners owe the association $56,000.

The shortfall has forced the HOA to convert water fountains into flower beds and to scale back on other projects, said Gail Spector, the president.

The group began cracking down on delinquent residents last year by threatening foreclosure lawsuits against them. Spector knows residents have lost jobs but said other homeowners shouldn’t be burdened with the unpaid dues.

“You have to treat everybody the same,” Spector said. “We are fixing and paying for everything. That’s not fair.”

Leonard J. Mankin, a Clearwater-based law firm, represents hundreds of associations across Florida. Attorney Brandon Mullis has asked a judge to sanction U.S. Bank and to force the sale of the home in Valencia Gardens.

It is now common, he said, for banks to cancel auctions seven or eight times in many foreclosure cases.

Mullis questions why lenders file court documents saying they are “negotiating or reviewing for possible loss mitigation options” when the houses have been vacant a year or longer.

He is fighting another case in Palm Harbor. The Bank of New York Mellon has canceled seven auctions — even though the homeowner defaulted on the mortgage in 2008. The bank canceled the seventh auction in February because it wanted to exhaust options to prevent the foreclosure.

Mullis scoffed.

“This action leaves the burden to fall on those neighboring residents who are forced to pay higher assessments while the property next door further deteriorates,” he said.

The Florida Bankers Association disagrees.

Anthony DiMarco, executive vice president, said lenders are overwhelmed with thousands of foreclosures and aren’t cancelling sales to skirt maintenance and assessments.

“They are trying to move cases forward,” he said. “We’d rather keep people in homes.”

AZ APPELLATE COURT REVERSES FORCIBLE DETAINER (EVICTION)

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see case decision BANK OF NEW YORK MELLON V PATRICIA DE MEO: CV100177(2)

COURTS MOVING CLOSER TO STRICT APPLICATION OF FEDERAL LAW

Only six months ago the courts were very dismissive of defenses field by homeowners and tenants despite the application of numerous Federal laws designed to protect consumers, borrowers, homeowners and tenants.

The significance of this case is simply that (a) it comes from an appeals court, not a trial court, so it has the power of precedent and persuasiveness (b) it reverses what was once a slam dunk for the pretender lenders and (c) the court is giving notice that self-serving representations by counsel, affidavits that do not conform with statute and anything else that does not conform with statute will be strictly construed because we are talking not about some minor event, but the removal of a person from where they live.

LAWYER ADMITS SIGNING DOCUMENTS AS OFFICER OF HIS CLIENT

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

EDITOR’S COMMENT: I’d like to see the expression of someone who sits on a Bar grievance committee that meets out discipline to lawyers, when they read this. In any situation, until the mortgage meltdown, if a lawyer signed documents and then presented them as his client’s “evidence” he would be subject to severe discipline if not disbarment. But as long as we have trillions of dollars at stake, nobody at the Bar associations is saying anything. Here we have, courtesy of stopforeclosurefraud.com, part of the transcript in which the lawyer testifies rather arrogantly, that “sure” he signed the documents, so what? No, he didn’t ever speak to anyone about doing it, no he never obtained permission or instructions,  he just did it. 

The bottom line is that as long as we delay applying the law as it was written and followed for hundreds of years concerning property rights, contract rights, lending and attorney misconduct, the foreclosures will continue, the housing mess will get larger, and the economy will continue to sag under the weight of 80 million mortgage transactions that in any other setting would be called grand theft. And as long as we continue to hear that correction and restoration of the wealth taken from investor-lenders and homeowners would be unfair to those who were not defrauded, we will continue to be subjected to Alice in Wonderland policies.

ROY DIAZ TRANSCRIPT

Full Deposition Transcript of ROY DIAZ Shareholder of Smith, Hiatt & Diaz, P.A. Law Firm

Excerpts:

Q. So through that corporate authority as
Exhibit 4 to this deposition, MERS assented to the terms
Of this assignment of mortgage?

A. Through me.

Q. So it was you that assented to the terms of
This assignment of mortgage.

A. The one in this case, yes.

Q. And no one else.

A. Correct

Q. And you signed as vice president of MERS
acting solely as a nominee for America’s Wholesale
Lender; is that correct?

A. Yes, it is.

Q. How did you know that MERS was nominee for
America’s Wholesale Lender?

A. By reviewing documentation.

Q. What documentation?

A. I don’t specifically recall what I reviewed
In this case to see that, to determine that, but I would
have reviewed either the mortgage or I would have
reviewed other documentation that would have established
that to me.

Q. So in this case you don’t remember a single
Document that you looked at that would establish the
Nominee status of MERS for America’s Wholesale Lenders;
Is that correct?

A. I don’t

Q. Did someone at America’s Wholesale Lender
Tell you that MERS was acting as the nominee?

A. No.

Q. Did someone at MERS tell you they were
Acting as Nominee for America’s Wholesale Lender?

A. NO.

Q. Was America’s Wholesale Lender in existence
On May 19, 2010?

A. don’t now.

Q. Did you check that before signing this
assignment of mortgage?

A. No.

<SNIP>

Q. Now, you’ve said you review the MERS
Website and you’ve seen documents like this, like
Composite Exhibit 6. Any reason why you wouldn’t review
the documents contained in Exhibit 6 before executing the
assignment of mortgage?

A. It’s not necessary.

Q. Why not?

A. Because it’s not. Because I decided it’s
not.

Q. You as vice president of MERS?

A. In every possible capacity as it relates to
This case.

Q. Did you sign this assignment of mortgage
after being retained as counsel for the plaintiff?

A. After my law firm was retained?

Q. (Nods head.)

A. Is that the question?

Q. Sure.

A. Yes.

Q. Okay. So you executed an assignment to be
Used as evidence in your case, correct?

A. Sure.

Q. Is that a yes?

A. It’s a sure.

Q. Is that a yes o a no?

A. You said sure earlier. Was that a yes or a
No?

Q. Okay. So…

A. It’s a yes.

Q. It’s a yes.

Funds Seek Countrywide, Bear Stearns Home Mortgage Buybacks $11.6 billion

SERVICES YOU NEED

Investors face an “obstacle course” of challenges in attempting to get banks to repurchase loans that failed to match their description in bond documents, Grais said

bondholders said they have the power to order the trustee for the securities to start probes because the investors own 25 percent of the debt in particular bond issues.

EDITOR’S NOTE ON DISCOVERY: FOLLOW THESE CASES — THEY ARE DOING OUR WORK FOR US!

Obviously the REAL LENDERS are getting pissed off. So the ankle biting is starting and there is an even playing field — both sides have the money to fight it out. The REAL issue for the real lenders (investors) is that the middlemen (investment banks et al) refuse to cooperate in accounting for the loans that were supposedly in the loan portfolios which were REPRESENTED to be in the pool. As stated numerous times on these pages, they are finding that the loans are non-existent, never made it into the pool or that the loans described by the pool managers are mis-characterizations of the actual loans.

That’s our point for the borrowers too. The REAL (SINGLE TRANSACTION) DEAL here was between these lenders and the homeowners with numerous intermediaries in between creating layers of “exotic” (fraudulent) documents, spreadsheets, the result of which was that the “borrower” was the special purpose vehicle – SPV (i.e., the pool, the trust or whatever you choose to call it which incidentally was never actually created in accordance with law) PLUS the co-obligors and guarantors PLUS the servicers PLUS the homeowners. Grais doesn’t want to go after the homeowners because he wants all the obligors to be liable, not just the homeowner who received part of the funds borrowed from investors. THAT is why investors are not kicking aside the intermediaries and going directly after the foreclosures.

These lenders could fire the trustee and fire the servicer and put in their own people to settle these foreclosures on far more favorable terms for both the lenders (investors) and the borrowers (homeowners) than the current process of foreclosures. But if they did that they would be letting deep pockets off the hook for the rest of the lost money. These lenders are getting VERY close to the truth of the matter — not only were the loans misrepresented, not only were the underwriting standards non-existent, not only were the loans never actually transferred legally into a legally organized pool, but there are two huge black holes into which a substantial portion of their money was poured, never to be seen again.

BLACK HOLES IN THE MONEY FLOW THAT ALL INVESTORS AND ALL HOMEOWNERS SHOULD PURSUE

The first black hole was the spread between the money received from the lenders for funding mortgage loans and the actual money used for that purpose. My estimate is that at least 30% of the money went off-shore into SIVs never to be seen again. That is the “Tier 2 Yield Spread Premium” I have been talking about which I believe both the homeowners and the investors have right to recover under different laws. How many investors would have parted with pension fund money if they were told “Thanks for the $100 million. We are going to take $30 million and put it in our pocket and then buy $30 million worth of mortgages, change their descriptions and sell them to you for $100 million when their nominal value is less than $70 million.” Somehow I think even the stupidest fund manager would have said “No” to that proposition, but that is exactly what they got.

The second black hole is the money received from insurance, guarantees and credit enhancements which was represented to be covering the investors’ money but in fact was payable to the intermediaries. It’s really simple. Taking the $30 million they never used to fund the mortgages described in the preceding paragraph, they took a portion of that money and made some wild bets — not like a stupid bet though, because they had total control over the outcome. It was like betting on a horse and then shooting all the others as the race begins. The Jockey could drag the horse over the finish line and still win. In the world of securitization, they created contracts in which the party receiving the insurance was the one who declared the loss and the loss could not be contested by the insurer. The terms of the contract were that if a certain percentage of the loans defaulted then the value of the entire portfolio would be written down to a level chosen by the insured — yes the party receiving the insurance money decides how much the claim is worth and the insurer can’t say a word. By loading the portfolio (pool) up with loans guaranteed to fail, where the payments would reset to twice the person’s income for example these intermediaries made a fortune on paper. But of course AIG and AMBAC couldn’t pay all that so the American Taxpayer did. So the investor took the loss, the intermediary took the money, took the hedge money that would have covered the loss, and is now in the process of taking the homes too.

Grais wants to recover that money and he will. The investors will be made whole or will settle the obligation. But despite these settlements, and despite the fact that in many cases the loan principal of a homeowner loan has been paid several times over the media and the government don’t see that the the reason the housing market is getting a hosing, the reason the taxpayer is getting a hosing and the reason the economy is getting a hosing along with the budgets of local, state and federal governments, is that the trillions paid by the American taxpayer and private companies actually went somewhere. And the homes were just pawns in the game. If you stop the foreclosures dead in their tracks right now, nobody would lose any money. All we want is a fair share of this money to be credited to the loan obligations — which automatically means a correction in the principal amount due and an opportunity to adjust the loan terms to the new reality of the real obligation due and real value of the property that was fraudulently appraised to begin with and fraudulently represented to the lenders and the homeowners.

The irony is that DISCOVERY is the least likely way of actually getting the information to prove the fraud but the most likely way of showing that the other side is uncooperative. The fact is that these “brilliant” intermediaries were so narrow in their perspective that they really don’t know the answers to the questions put to them in discovery, they don’t have the paperwork and they don’t know how to find it. The work being done on behalf of borrowers in the TITLE AND SECURITIZATION ANALYSES AND OTHER SERVICES here and elsewhere is what reveals essential facts that prove the fraud like: the Notice of Default when they were reporting to the investor that the loan was fully performing and actually paying the the investor thus decreasing the obligation due, or a foreclosure on behalf of a pool that had long since been dissolved unknown to either the homeowner or the investor.


Funds Seek Countrywide, Bear Stearns Home Mortgage Buybacks
By Jody Shenn – Sep 22, 2010 6:47 PM ET

Mortgage-bond trustees Bank of New York Mellon Corp., Bank of America Corp. and Wells Fargo & Co. should demand lenders buy back home loans underlying securities owned by two hedge funds, a lawyer for the investors said.

The funds sent separate requests to the three banks that serve as trustees for 14 securitizations at issue with $11.6 billion in outstanding debt, said David J. Grais, a partner in the law firm Grais & Ellsworth LLP. He declined to name the funds in a Sept. 20 interview at his New York offices.

An increasing number of investors are taking action after the worst housing recession since the 1930s sparked a record drop in the value of mortgage debt. Banks face as much as $51 billion in losses tied to loan repurchases from poorly performing securities, FBR Capital Markets Corp. analysts said in a Sept. 20 report.

“The loss of patience has taken longer than we expected,” said Grais, whose hedge-fund clients are using data from real estate researcher CoreLogic Inc. to press their cause with the trustees. Grais said he has “been endlessly surprised” that more investors haven’t moved faster to assert contract rights.

His hedge-fund clients are looking to recoup money on loans in bonds from issuers including Countrywide Financial Corp., now part of BofA, and a unit of Bear Stearns Co., which was bought by JPMorgan Chase & Co.

Grais also represents the Federal Home Loan Banks of San Francisco and Seattle and Charles Schwab Corp. in separate lawsuits against securities underwriters, as well as hedge funds Ellington Management Group LLC and Greenwich Financial Services LLC in suits involving the servicing of mortgages within bonds.

Can’t Sue Underwriters

The hedge funds he’s representing in the request sent about 45 days ago to bond trustees can’t sue the securities’ underwriters because the funds bought the mortgage bonds in the secondary market, Grais said.

Kevin Heine, a spokesman for Bank of New York Mellon, and Jerry Dubrowski, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment.

Elise Wilkinson, a spokeswoman for San Francisco-based Wells Fargo, and Tom Kelly, a spokesman for JPMorgan in Chicago, also declined to comment.

Investors face an “obstacle course” of challenges in attempting to get banks to repurchase loans that failed to match their description in bond documents, Grais said. The funds he represents that are seeking buybacks used data from Santa Ana, California-based CoreLogic to show the quality of specific loans didn’t meet sellers’ contractual promises, Grais said.

Scraping Data

CoreLogic’s data is culled from bond reports, tax records, property-valuation models and credit services, Grais said. Typically, only bond trustees can review actual mortgage files, seek loan repurchases and file lawsuits if the demands aren’t met.

Earlier this month, Houston-based law firm Gibbs & Bruns LLP said its clients had demanded Bank of New York investigate mortgages backing $26 billion of Countrywide-issued bonds, a request the bank denied because it said it failed to meet multiple requirements.

Kathy Patrick, a partner at Gibbs & Bruns, said her unnamed clients are evaluating the response.

Who Has Power

In that case, bondholders said they have the power to order the trustee for the securities to start probes because the investors own 25 percent of the debt in particular bond issues.

Grais’s clients are relying on a different approach, in part because they don’t own 25 percent in all the cases they are pursuing, he said. Some contracts require not only that investors demanding trustee action own 25 percent of the overall deal, but rather 25 percent of each class of securities in a given issuance, he said.

So far Grais’s clients are relying on CoreLogic’s data, which he said costs about $5 per loan, to make the case for them. Gibbs & Bruns’ Sept. 3 statement didn’t mention offering such research to the bank.

CoreLogic’s information on 48 securitizations showed about 28 percent of properties were valued at least 5 percent more than they should have been, Grais said. About 21 percent inaccurately described consumers as planning to live in homes rather than rent or flip them, which can be determined in part through where borrowers’ tax and other bills get sent, he said.

While Grais said he’s having a “constructive dialogue” with Wells Fargo, he expects the push will end in court as trustees either balk at the requests or complete probes and demand repurchases that the mortgage lenders then dispute.

The next step may be to file so-called derivative lawsuits on behalf of bondholders, which Grais said is an untested approach that would rely partly on court precedent involving family trust cases.

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net

To contact the editor responsible for this story: Alan Goldstein at agoldstein5@bloomberg.net

Bank of New York Slammed for Misrepresenting Standing

6.29.10Bank-of-New-York-v-Michael-Raftogainis[1]

Judge Todd also stated that additional discovery is to be produced when the foreclosure involves a securitization, lost note claims, or a holder in due course challenge (which may arise in the context of the purported assignment of a toxic loan to a securitized trust prior to the trustee of that trust instituting a foreclosure action, as well as any predatory loan claims against the original lender). Judge Todd recognized that there are dozens of legal issues and inquiries where a foreclosure involves a securitization, and that a borrower has both the right to know who owns the mortgage loan and whether a foreclosing party has the legal right to foreclose.

WHY TITLE AND SECURITIZATION REPORT IS SO IMPORTANT FOR FORECLOSURE DEFENSE

Posted on July 6, 2010 by Foreclosureblues

Editor’s Note….This case and outcome in favor of the homeowner was a direct result of obtaining an accurate title and securitization report from a qualified expert that contradicted the “alleged” evidence of the foreclosing plaintiff and provided substance that enabled the judge to rule in favor of the homeowner.

http://foreclosureblues.wordpress.com/

NEW JERSEY TRIAL COURT JUDGE ISSUES 53-PAGE OPINION DISMISSING FORECLOSURE COMPLAINT OF BANK OF NEW YORK AS SECURITIZED TRUSTEE: OPINION COULD PAVE THE WAY FOR AMENDMENTS TO NEW JERSEY RULES OF PROCEDURE REQUIRING FORECLOSURE COMPLAINTS TO BE CERTIFIED AND FOR FORECLOSING PARTIES TO PRODUCE SECURITIZATION DISCOVERY IN ORDER TO BE ABLE TO PURSUE FORECLOSURE

Today, July 06, 2010, 30 minutes ago

Jeff Barnes Esq.

July 6, 2010

In an extremely well-reasoned and detailed written opinion, New Jersey trial court Judge William C. Todd has issued a 53-page (yes, fifty-three page) Order dismissing a foreclosure action filed by Bank of New York as Trustee for Home Mortgage Investment Trust 2004-4 Mortgage-Backed Notes Series 2004-4, Docket No. F-7356-09, Atlantic County, New Jersey. The matter was decided on June 29, 2010 and the formal opinion was approved for publication this week after the matter was tried at the end of June, 2010.

The opinion sets forth an incredible analysis of a host of issues involving foreclosure in securitization contexts and highlights why a foreclosing plaintiff must comply with its obligations to prove standing in order to be able to pursue a foreclosure action. While we do not summarize the entire holding here, we do want to point out some of the significant findings.

The court found that there was no meaningful attempt by Bank of New York (hereafter “BONY”) to comply with applicable New Jersey procedural rules requiring a recitation of all assigments in the chain of title. BONY simple alleged that it had acquired possession of the note prior to the litigation being filed. However, the evidence at trial failed to establish this allegation, with the Court noting that there were missing documents incident to the securitization of the loan including the mortgage loan schedule that should have been attached to the mortgage loan purchase agreement. The Court also found that the “MERS assignment was potentially misleading”.

The Court found that there was a failure of proof as to BONY’s legal standing, warranting dismissal of the action and conditioning any refiling on a certification that the plaintiff is in possession of the original note at the time of filing. This is in line with the recent action of the Supreme Court of Florida which, as of February 11, 2010 by Administrative Order, requires all residential mortgage foreclosure complaints to be verified. It is no secret that Florida trial courts have and continue to dismiss foreclosure actions which do not comply with the verification requirement. It is hoped that the courts of New Jersey will adopt Judge Todd’s well-reasoned analysis and dismiss foreclosure complaints which do not comply with the New Jersey procedural rules requiring proof of legal standing to foreclose at inception and time of filing a Complaint for foreclosure.

Judge Todd also stated that additional discovery is to be produced when the foreclosure involves a securitization, lost note claims, or a holder in due course challenge (which may arise in the context of the purported assignment of a toxic loan to a securitized trust prior to the trustee of that trust instituting a foreclosure action, as well as any predatory loan claims against the original lender). Judge Todd recognized that there are dozens of legal issues and inquiries where a foreclosure involves a securitization, and that a borrower has both the right to know who owns the mortgage loan and whether a foreclosing party has the legal right to foreclose.

This incredibly significant decision will hopefully become the law in the state of New Jersey, and it is hoped that the Rules Committee for the New Jersey courts will soon adopt court rules requiring that all residential foreclosure complaints filed in New Jersey be accompanied by the filing of an appropriate Certification, and further requiring that all securitization discovery be produced in all foreclosure cases involving a securitized loan. We applaud and salute Judge Todd for his amazing effort to not only streamline foreclosure litigation in New Jersey, but also insuring that borrowers’ legal rights are protected as well.

Jeff Barnes, Esq., http://www.ForeclosureDefenseNationwide.com

Forensic Analysis: Unions Amass Armory of Research on Foreclosures of Securitized Mortgages

“We did not service the loan,” Mr. Dale said. “We did not originate the loan, and we were not the financial entity that placed it into foreclosure. Do you understand what a trustee does?”
Editor’s Note: Well, Yes Mr. Dale, we do understand what a trustee does and can do —- nothing. So why are you initiating foreclosures if you say that a trustee doesn’t do that?
Mr. Dale is reading from the end of the enabling documents instead of the first page where it looks like Trustee is really a trustee and that there really is a trust and that the trust holds assets. But by the time you read to the end of the document, the trustee is not a trustee, there is no trust and even if there was, there is nothing in the trust.
It is all an illusion. The “Trustee” is a “contingent agent” for a “conduit” (REMIC) that holds nothing. The enabling document is nothing more than the equivalent of an operating agreement in an LLC.
The “pool of loans” is owned by the investors who, as creditors, purchased mortgage backed derivative securities whose value is derived SOLELY from the promise to pay executed by the homeowners.
March 24, 2010

Unions Make Strides as They Attack Banks

By STEVEN GREENHOUSE and LOUISE STORY

When the city of Los Angeles started looking into its complex financial contracts with banks earlier this year, some council members turned to an unusual corner for financial advice: labor unions.

Turns out that union leaders had amassed an armory of research on derivatives, mortgage foreclosures and even Wall Street pay as part of their effort to hold bankers accountable for the economic pain they helped cause in Los Angeles and across the country.

Unions have criticized Wall Street before. But their attacks have taken on a new shape, both in ferocity and style, over the last 18 months, ever since the federal government doled out billions of dollars in bank bailouts.

Why? Labor leaders say the fortunes of banks and unions are linked more than people realize. Wall Street manages union pension portfolios worth hundreds of billions of dollars. Much of that is invested in financial institutions, giving unions a loud voice as shareholders.

Then there are all the unionized workers whose fates are indirectly shaped by the world of high finance. The jobs of hundreds of thousands of union members, like police officers and teachers, have been threatened by municipal budget cuts, made worse in some cases by exotic investments gone bad.

More abstractly, union leaders are framing their fight against Wall Street as a symbolic one, underscoring America’s large disparities in wealth and wages.

“Many unions see that they need to be responsible for not just members’ needs at the bargaining table, but other hardships in their lives, like foreclosures and high mortgage costs,” said Peter Dreier, a political science professor at Occidental College in Los Angeles.

Unions are holding up many of their own members as victims of the banks’ bad bets, like subprime mortgages, and are providing a steady stream of research in an effort to demystify the exotic financial products that they say are harming dozens of cities. Unions have also helped underwrite Americans for Financial Reform, a prominent group pushing for further bank regulation.

Labor leaders were among the first to call for the resignation of Bank of America’s chief executive, who did retire months later. Unions issued a scathing report on bank bonuses, months before the federal pay czar presented his findings, and they criticized Goldman Sachs’s bonus pool just before the bank said its chief would receive only stock.

This month, the A.F.L.-C.I.O., the nation’s main labor federation, has organized 200 protests nationwide to publicly shame bankers, calling for new taxes on bankers’ bonuses and on speculative short-term financial transactions — in the hope of collecting tens of billions of dollars to finance a job creation program.

“They played Russian roulette with our economy, and while Wall Street cashed in, they left Main Street holding the bag,” Richard L. Trumka, the A.F.L.-C.I.O.’s president, said last Friday at a rally in Philadelphia. “They gorge themselves in a trough of taxpayers’ dollars, while we struggle to make ends meet.”

Labor is directly at odds with Wall Street on unionization drives and many other matters. Banks and private equity firms own stakes in many businesses that unions would like to unionize, like nursing home chains and food service companies. Labor groups like the Service Employees International Union and the A.F.L.-C.I.O. are pressuring financial companies not to oppose union membership drives.

It is hard to know for certain whether the unions’ efforts have affected decisions made by Wall Street firms. But for cities like Los Angeles, feeling the squeeze of lower tax receipts, the service employees’ pressure campaign seemed to have had an impact.

“They knew more about our own water deal than I knew,” said Richard Alarcón, a Los Angeles councilman, referring to an interest-rate swap between the city’s water system and the Bank of New York Mellon that converted the system’s variable-rate bonds into bonds with a fixed rate. “They also knew the dynamics of swap deals, and they were very helpful.”

As the city faces a deficit of nearly $500 million, the council was unhappy that Los Angeles would have to pay Bank of New York millions of dollars a year.

“Our members don’t like it any more than other Americans when cities have less firefighters, less teachers or less police officers,” said Andy Stern, president of the service employees’ union.

The labor protests against the banks sometimes have murky targets. This month, service employees joined community leaders on the City Hall steps in Oakland, Calif., to denounce Goldman Sachs for arranging interest-rate swaps that have the city paying the bank millions a year.

After that rally, union leaders led a march to a local Citigroup branch. Goldman declined to comment, but a Citigroup representative scoffed.

“We weren’t even involved in those deals,” said Alex Samuelson, a Citigroup spokesman. “We were just a symbolic place to go and rail against Wall Street. You can’t go to a Goldman Sachs branch.”

Many bankers criticize the protests, saying they make lots of noise but often accomplish little. Steve Bartlett, president of the industry’s Financial Services Roundtable, who has been the target of several union-led protests, including one outside his home on a Sunday morning, said, “Protests can be misguided or even damaging to your cause.”

While union leaders say they are championing the concerns of Main Street, their antibank campaign has certainly advanced some of labor’s longtime objectives, like unionizing workers.

For instance, the S.E.I.U. has pressed several banks and private equity firms to agree to allow card check — a process that makes unionization easier — at companies in which they own stakes.

Service employees officials say they urged Goldman Sachs, which owns part of the food service company Aramark, to get Aramark to accept card check and not oppose an organizing drive. In December, the union’s president, Mr. Stern, even met with Goldman’s chief executive, Lloyd C. Blankfein, about universal health care and other labor-related issues.

Labor unions are using some of their members’ hard-luck stories to frame their battle as one between the haves and the have-nots, and in some cases that tactic is advancing the unions’ traditional goals in contract talks.

In February, for example, the service employees’ union publicized that one of its members cleaned the office of U.S. Bank’s chief in Minneapolis. That janitor, Rosalina Gomez, was facing foreclosure, and the union publicized that U.S. Bank had purchased her home in the foreclosure.

Steve Dale, a spokesman for the bank, said the union was attacking U.S. Bank even though JPMorgan Chase was the bank servicing Ms. Gomez’s mortgage. U.S. Bank, he said, was just the trustee, holding the loan for a mortgage bond.

“We did not service the loan,” Mr. Dale said. “We did not originate the loan, and we were not the financial entity that placed it into foreclosure. Do you understand what a trustee does?”

That aside, when the union threatened to have Ms. Gomez approach U.S. Bank’s chief, Richard K. Davis, at an awards luncheon, the bank rushed to set up a meeting between Ms. Gomez and JPMorgan. Fifty union supporters were at the site of the luncheon to conduct a silent vigil, with several reporters on hand.

Also at that time, the union was in contract negotiations with Ms. Gomez’s employer, the janitorial company that cleans U.S. Bank’s headquarters. Javier Morillo-Alicea, a leader of the union’s Minneapolis local, said its effort to embarrass the bank helped persuade the cleaning company to reach a contract that raised wages and provided better health insurance for the janitors.

“We put a lot of pressure on the bank,” he said, “and that led to a really good contract settlement in a tough economy.”

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