DiTech: The Pretense Continues

DiTech was not a lender. It was a sales agent or loan broker. Nonetheless a new agreement has been executed in which major creditors of DiTech are resurrecting the illusion that the current use of the DiTech name is sufficient to establish ownership of the debt, note or mortgage on any loan that was “originated” by DiTech. This is nothing less than a brazen attempt to attach orphan loans (no known creditor) to a newly conceived entity bearing little or no resemblance to the entity that once sold loans to the public  under the advertising banner of “lost another one to DiTech.” It’s a lie.

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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.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
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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 DiTech RSA

Courtesy of Philip Koebel, Esq. and Charles Cox, here is a list of the entities involved in the consolidated DiTech Bankruptcy, which was only kept alive because it representing a legacy name that could be used to reconstitute apparent ownership of loans. The creditors are basically reversing the transactions and writing off nearly $1 billion in “debt” and then miraculously allowing orphan loans to appear as though  DiTech was the lender the whole time. It never was the lender. It didn’t own loans at the time of the bankruptcy. It never owned the loans. But the current deal allows the emga banks to use DiTEch as a vehicle of illusion and deception.

Schedule 1
Debtor Case Number Tax ID Number Date Filed District
Green Tree Credit LLC 19-10411 (JLG) 75-3115864 February 11, 2019 S.D.N.Y
Ditech Holding Corporation 19-10412 (JLG) 13-3950486 February 11, 2019 S.D.N.Y
DF Insurance Agency LLC 19-10413 (JLG) 30-0936918 February 11, 2019 S.D.N.Y
Ditech Financial LLC 19-10414 (JLG) 41-1795868 February 11, 2019 S.D.N.Y
Green Tree Credit Solutions LLC 19-10415 (JLG) 27-1311565 February 11, 2019 S.D.N.Y
Green Tree Insurance Agency of Nevada, Inc. 19-10416 (JLG) 88-0187331 February 11, 2019 S.D.N.Y
Green Tree Investment Holdings III LLC 19-10417 (JLG) 20-0031008 February 11, 2019 S.D.N.Y
Green Tree Servicing Corp. 19-10418 (JLG) 20-0843552 February 11, 2019 S.D.N.Y
Marix Servicing LLC 19-10419 (JLG) 56-2646101 February 11, 2019 S.D.N.Y
Mortgage Asset Systems, LLC 19-10420 (JLG) 87-0798148 February 11, 2019 S.D.N.Y
REO Management Solutions, LLC 19-10421 (JLG) 27-2377787 February 11, 2019 S.D.N.Y
Reverse Mortgage Solutions, Inc. 19-10422 (JLG) 77-0672274 February 11, 2019 S..D.N.Y
Walter Management Holding Company LLC 19-10423 (JLG) 86-1059818 February 11, 2019 S.D.N.Y
Walter Reverse Acquisition LLC 19-10424 (JLG) 46-0928837 February 11, 2019 S.D.N.Y

 

If you don’t challenge the smoke and mirrors the smoke becomes law and the mirrors become an inescapable nightmare.

Bottom Line: Failure to attack the facial validity of the documents is virtually hanging the homeowner letting him/her twist in the wind. Without such a relentless attack based upon scrutiny of the exact wording on documents revealing that nobody is actually identified as a real party in interest, you will be trapped by an endless cascade of legal presumptions against the homeowner.

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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.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
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Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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In response to an email from a fellow attorney asking me about bankruptcy (BKR), the statute of limitations (SOL) adn renewing the debt after BKR discharge or renewing the payment by acknowledging it after BKR, I wrote the following.

  1. If the loan was scheduled as secured in favor of a particular creditor it is probably incorrect. If the loan was subject to a valid encumbrance at all, it almost certainly was not in favor of the current claimant, who has not purchased the debt and therefore no debt was transferred in fact despite paperwork appearing to state the contrary. Nor has the current claimant obtained authorization from the real owner of the debt as agent or representative.
  2. SOL: You are right but courts got tricky with this and they rule, like in Florida, that the statute ran out only on payments that were due and that there is a presumption of deceleration at some point. Check NY law. Florida is changing back to the old rule slowly which supports your view.
  3. Any payment on a debt can restart the statute running. Check Federal BKR law and NY Law. Payment while in BKR presents problems if not done with court approval.
  4. Under “modification” there are several problems. First every such modification is in actuality the transfer of the debt from an old pretender to a new pretender (servicer). In most respects it is a new loan agreement entirely, probably subject to TILA disclosure requirements because the old chain of title is being abandoned and a new one is being started — all without any reference to or formal grant of authority from the actual owner of the debt.  Payments under such a “modification” agreements are not really payments on the debt because the payment is neither going to the owner of the debt nor anyone formally authorized by the owner of the debt. Such payments could be construed as a new and probably unenforceable obligation.
  5. Acknowledgment by borrower of the debt owed to Pretender A directed to Pretender B is not acknowledgment of the debt if neither of them was the owner of the debt or an authorized representative or agent of the owner of the debt. But unless you attack the facial validity of the instruments, the law of the case will slide toward treating both pretenders as real. Once final that becomes irreversible.
  6. BKR discharge operates by law and not individual action. See BKR law and procedure. A promise to pay AFTER discharge might subject both the pretender creditor and the borrower to sanctions.
  7. An unconditional promise is just that and it is enforceable if supported by consideration. But there is no consideration.
  8. At a minimum there should be disclosure to the court and possibly seek court approval for agreements signed. But if you do that you are again creating law of the case that essentially requires treatment of the pretenders as real parties.

Why Everyone (except SCOTUS) is Wrong About TILA Rescission

All contrary arguments are erroneous since they would insert a contingency where the statute contains no room for any contingency. The language of the statute bars any such contingency when it says that the TILA Rescission is effective upon delivery, by operation of law. If anyone wants the statute to say or mean anything different they must get their remedy from the legislature, not the courts, who have no authority whatsoever to interpret the statute otherwise. The status of any case involving foreclosure is that it does not exist. Hence the court is left ONLY with the power to perform the ministerial act of dismissing the case for lack of jurisdiction.

Let us help you plan your TILA RESCISSION strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

Purchase now Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations. Presenters: Attorney and Expert Neil Garfield, Forensic Auditor Dan Edstrom, Attorney Charles Marshall and and Private Investigator Bill Paatalo. The webinar and materials are all downloadable.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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So in answer to questions about putative “modifications”, eviction or unlawful detainer, bankruptcy, and TILA Rescission this is what I have written in response to some inquiries.

Should the rescission be recorded? Not necessarily but

YES. I would like to see it recorded. You need to check with the clerk in the recording office or an attorney who understands recording procedure. Generally recording a document with an old date must be attached to an affidavit that is recorded with the notice of rescission attached. The affidavit explains that the attachment was inadvertently not recorded at the time it was created.

*

Should a copy of the notice of rescission be filed in the court record also?

YES. If there is any way to get the recorded document into the court record, it should be pursued.

This presents title issues because if you are recording this long after events have transpired, some of which are also recorded as memorializing transactions, fake or real. Any recorded instruments that purports to be a memorialization of a transaction before the rescission was recorded would generally be given priority.
*
The lawyer sent me an answer to my notice of rescission. Now what?
Either file to enforce the duties to be performed (if you are within one year of the date of delivery of the notice of rescission), or file a quiet title action if the one year has expired. There are several different scenarios actually, but this is the one I would focus upon.
*
I am getting kicked out of bankruptcy court. Now what?
Getting “kicked out” of BKR court probably means that you are back in the state court system which might open some opportunities for you to get more into the court record. (Like an old rescission).
*
My property is being sold. Does that mean that I have to get out?
*
They can’t get you out without filing an unlawful detainer (eviction in some jurisdictions) based upon an asserted change of title. There might be a period of time between the sale and the attempt to get you out of the home (eviction or unlawful detainer). If the property is sold to a “third party” they want want rent from you, which could allow you to stay.
The unlawful detainer action presents another opportunity to raise the issue of rescission, since the entire action is based upon a valid change of title. It also sets off potentially another round for appeal, especially on the issue of rescission. Res Judicata and Collateral Estoppel do not apply to jurisdictional issues. If the rescission was mailed then by operation of the law the note and mortgage are void.
The defense is ordinarily that the “sale” was a fabrication based upon fictional claims and was contrary to the notice of rescission, which voided the note and mortgage upon which they were relying. The time for challenging the rescission has long passed. Hence all enforcement actions after the date of the 2009 rescission are void since they were based upon various claims attendant to paper instruments that were void, effective the day of delivery of the rescission.
Note that delivery of TILA Rescission notice is complete when dropped in a USPS mailbox and your testimony that it was sent via US Postal Service is all that is necessary as foundation.
I sent 2 notices of rescissions. Is that better or worse for me?
If I was defending against your claim of rescission I would argue that sending the 2016 rescission was either an admission that the earlier one had not been sent or that it was a concession that, for whatever reason, the 2009 rescission notice had been abandoned.
Hence I suggest you put very little emphasis on the new rescission and maximum emphasis on the old rescission.
*
I sent the rescission less than 3 years after the modification but more than 3 years since the alleged consummation. Hoes my rescission affect my loan in that instance?
In most cases “modifications” are not treated as new loans. But the fact that something is called a modification and it really changes everything including the “lender” it may be possible to characterize it as a new loan subject to TILA Rescission. TILA Rescission hinges on whether the “modification” was a new loan — a fact, we would argue — that must be determined by trial. Since intent is part of the analysis of a contract, this could present another opportunity to force them to admit they don’t know the identity or intent of the creditor and whether said creditor had given them authority to make a new contract.
And the underlying narrative for this approach is that as a new contract, the “lender” was required to comply with disclosure requirements at the time of the new contract, thus triggering the three day right of rescission and the the three year limitation. Under my theory, based on Jesinoski, it doesn’t matter whether the three years has expired or not.
We know for certain that the notice of rescission is effective upon mailing; it is not based upon some contingent event or claim or court order. The date of consummation is itself a factual issue that can be in the pleading of the creditor (who is the only one with standing, the note and mortgage having been rendered void) claiming that the notice of rescission should be vacated based upon the three years, the date of consummation etc. 
Any alternative theory that puts the burden on the property owner would be contrary to the express wording of the statute and the SCOTUS ruling in Jesinoski. The statute 15 USC §1635 and SCOTUS are in complete agreement: there is no law suit required to make rescission effective. It would make the statutorily defined TILA Rescission event indefinite, requiring a court ruling before any rescission would be treated seriously. In other words, the opposite of what the statute says and the opposite of what SCOTUS said in Jesinoski. 
All contrary arguments are erroneous since they would insert a contingency where the statute contains no room for any contingency. The language of the statute bars any such contingency when it says that the TILA Rescission is effective upon delivery, by operation of law. If anyone wants the statute to say or mean anything different they must get their remedy from the legislature, not the courts, who have no authority whatsoever to interpret the statute otherwise. The status of any case involving foreclosure is that it does not exist. Hence the court is left ONLY with the power to perform the ministerial act of dismissing the case for lack of jurisdiction.
All this is important because we ought to be heading toward any defensive strategy that reveals the absence of a creditor. We are betting that the fight to conceal the name of the creditor is a cover for not knowing the the identity of the creditor, hence fatally undermining the authority as holder, servicer, trustee or anything else.
*
What if consummation never occurred?
It may turn out that consummation between the parties to the note and mortgage never occurred. It’s important to remember that would mean the rescission is irrelevant since the loan contract does not exist. But such a finding by a court of competent jurisdiction would negate the legal effect of the note and mortgage; this is true as long as the note was not purchased for value in good faith by a buyer without knowledge of the borrower’s defenses.
In that case, the burden does shift to the homeowner and it is entirely possible that under that scenario there could be no consummation but nevertheless homeowner liability would continue on the falsely procured note and potentially the mortgage as well. The reason is simple: that is what the State statute says under Article 3 and Article 9 of the UCC, as adopted by all 50 states. The homeowner’s remedy in such a scenario would be limited to actions for damages against the intermediaries who perpetrated the the fraudulent and fictitious “transaction” in which the named lender failed to loan anything.

No Surprise: Ocwen & US Bank Hit by $3.8 Million Verdict in Chicago Federal Trial For Violations in Fake Foreclosure

“The jury, after deliberating for approximately 7 hours, determined that Ocwen breached its contract, violated RESPA for failing to adequately respond to Saccameno’s Qualified Written Request, violated the FDCPA and committed both unfair and deceptive acts in violation of the Illinois Consumer Fraud Act.  Monette Saccameno was awarded $500,000.00 in compensatory damages, $70,000.00 in non-economic damages, $12,000.00 in economic damages and $3,000,000.00 in punitive damages. Nicholas Heath Wooten, Esq.Ross Michael Zambon, Esq., and Mohammed Omar Badwan, Esq. led the litigation team on behalf of Saccameno.”

And I ask again: WHY DO OCWEN DOCUMENTS AND “BOARDING PROCESS” GET ANY LEGAL PRESUMPTION ON SCANT TESTIMONY AND EVIDENCE THAT WOULD NOT BE ACCEPTED AS FOUNDATION IN ANY COURT OTHER THAN ONE IN FORECLOSURE PROCEEDINGS? With this verdict and dozens of other verdicts, settlements, lawsuits and whistleblower  news stories has establishing a crystal clear pattern of conduct of fake foreclosures based upon false documentation, false posting of payments and a clear mission to seek foreclosure whether the homeowner is current in payments or not.

The many cases akin to this one against OCwen and US Bank should be served up to judges hearing foreclosure cases with a single message: the foreclosures you are allowing are wrongful. Your decisions are giving rise to many lawsuits for damages.

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Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 954-451-1230 or 202-838-6345. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

GO TO WWW.LENDINGLIES.COM OR https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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Hat Tip Greg da’ Goose

Case Number: 1:16-cv-05278
Court: Illinois Northern
Nature of Suit: 423(Bankruptcy Withdrawl)
Companies:
Ocwen Financial Corporation
U.S. Bancorp

see OCWEN BANGED WITH $3.8 MILLION VERDICT

This case shows that juries are still angry about the 2008 meltdown and that the entire burden was shifted to homeowners and taxpayers — who “bailed out” financial institutions that had no losses.

And it also shows that lawyers can get rich by charging contingency fees in wrongful foreclosure actions that most lawyers avoid or rush to settlement. It provides ample encouragement for homeowners to sue and for lawyers to take the cases.

So for those of you who are  contemplating filing a wrongful foreclosure action against Ocwen, or U.S. Bank or any of the other players that are acting in concert with Ocwen, here is a case that no doubt will be settled under “seal of confidentiality” (like thousands of others). I think it is high time for borrowers to pool their complaints in either a class action or mass joinder action.

And here are some of the causes of action that could be filed that a federal jury found were reasons enough to award $500,000 in compensatory damages and $3 Million in punitive damages:

  1. Breach of contract
  2. RESPA violation (failure to respond to QWR)
  3. FDCPA violations
  4. Violation of state law — Illinois Consumer Fraud Act: Unfair and deceptive acts.

There are many other causes of action that could be filed. Each case needs to be evaluated as to which causes of action are most appropriate for the subject “loan”, most of which have resulted in substantial verdicts.

And don’t forget the role of US Bank whose name is used as trustee of a trust that  either doesn’t exist, doesn’t own the debt or both. US Bank is paid a fee to pose as trustee not to BE trustee.

See also

https://www.prnewswire.com/news-releases/atlas-consumer-law-secures-3-582-000-jury-verdict-obtained-by-monette-saccameno-a-resident-of-cook-county-illinois-and-against-ocwen-loan-servicing-llc-a-national-mortgage-loan-servicer-300628541.html

https://cookcountyrecord.com/stories/511388869-jury-awards-3-5m-to-woman-who-claimed-loan-servicer-mishandled-mortgage-during-after-chapt-13-bankruptcy

Ocwen (OCN) Receives Daily News Sentiment Rating of 0.15
https://www.thelincolnianonline.com/2018/04/13/ocwen-ocn-receives-daily-news-sentiment-rating-of-0-15.html

https://www.leagle.com/decision/infdco20180410901

Saccameno v. Ocwen Loan Servicing, LLC et al, No. 1:2015cv01164 – Document 265 (N.D. Ill. 2018)
DEFENDANTS’ MOTION FOR JUDGMENT AS A MATTER OF LAW Document #: 265 Filed: 04/09/18
https://www.gpo.gov/fdsys/pkg/USCOURTS-ilnd-1_15-cv-01164/pdf/USCOURTS-ilnd-1_15-cv-01164-3.pdf

Saccameno v. Ocwen Loan Servicing, LLC et al, No. 1:2015cv01164 – Document 231 (N.D. Ill. 2018)
MEMORANDUM Opinion and Order Signed by the Honorable Joan B. Gottschall on 3/9/2018
https://cases.justia.com/federal/district-courts/illinois/ilndce/1:2015cv01164/306387/231/0.pdf?ts=1520678019

Saccameno v. Ocwen Loan Servicing, LLC et al, No. 1:2015cv01164 – Document 152 (N.D. Ill. 2017)
MEMORANDUM Opinion and Order Signed by the Honorable Joan B. Gottschall on 11/8/2017
https://cases.justia.com/federal/district-courts/illinois/ilndce/1:2015cv01164/306387/152/0.pdf?ts=1517249686

Saccameno v. Ocwen Loan Servicing, LLC et al, No. 1:2015cv01164 – Document 75 (N.D. Ill. 2015)
MEMORANDUM Opinion and Order Signed by the Honorable Joan B. Gottschall on 11/19/2015
https://cases.justia.com/federal/district-courts/illinois/ilndce/1:2015cv01164/306387/75/0.pdf?ts=1448015323

US Government Publishing Office
15-1164 – Saccameno v. Ocwen Loan Servicing, LLC et al
https://www.gpo.gov/fdsys/granule/USCOURTS-ilnd-1_15-cv-01164/USCOURTS-ilnd-1_15-cv-01164-0

Another Countrywide Sham Goes Down the Drain

Banks use several ploys to distract the court, the borrower and the foreclosure defense attorney from the facts. One of them is citing a merger in lieu of presenting documents of transfer of the debt, note or mortgage. We already know that the debt is virtually never transferred because the transferor never had any interest in the debt and thus had no authority to administer the debt (i.e., as servicer).

So the banks have successfully pulled the wool over everyone’s eyes by citing a merger, as though that automatically transferred the note and mortgage from one party to another. Mergers come in all kinds of flavors and here the 5th Circuit in Florida recognizes that simple fact and emphatically states that the relationship between the parties must be proven along with proof that the note, or authority to enforce the note, must be proven by competent evidence.

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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 Green v Green Tree Servicing Countrywide Home Loans et al 5D15-4413.op

*Judgment for Borrower (Involuntary Dismissal)
*Failure to provide evidence to explain relationships in mergers
*Failure to provide evidence of the terms of the merger and the transfer of the subject loan
* Failure to to provide evidence of standing at commencement of the lawsuit

An interesting side note to this case is that it never mentions the debt, which is the third rail of all claims of transfers and securitization. The opinion starts off with a recital of facts that differs from most other cases, to wit: it talks about how the homeowner signed the note and mortgage, and does not reference a loan made to him by the originator, Countrywide Home Loans (CHL).

The court remains strictly in the confines of who owns, controls or has the right to enforce the note — a fact that is relevant only if the note is evidence of an underlying debt. If no such debt exists between CHL and the homeowner, then the note is irrelevant — unless a successor possessor actually paid for it, in which case the successor could claim that it is a holder in due course and that the risk of loss shifts to the maker of the note under such circumstances.

The Green case here stands for the proposition that the banks may not paper over ownership or control or the right to enforce the note with vague references to a merger. The court points out that a merger might not include all the assets of one party or the other. More particularly, a merger, if it occurred must be proven along with some transfer of the subject note and mortgage.

And very specifically, the court says that entities may not be used interchangeably. The foreclosing party must explain the relationship between the parties affiliated with the “merged” entities.

[NOTE: Bank of America did not directly acquire CHL. CHL was merged into Red Oak Merger Corp., controlled by BofA. One of the reasons for doing it that way is to segregate questionable assets and liabilities from the rest of the BofA. BofA claimed ownership of CHL, and changed the name of CHL to BAC Home Loans. But it didn’t just change the name; it also made assertions, when it suited BofA that BAC was a separate entity, possibly an independent entity, which is also not true. So the Court’s objection to the lack of evidence on the merger is very well taken].

The Court also takes note of the claim that DiTech Financial was formerly known as Green Tree Servicing. That is not true. The DiTech name has been used by several different entities, been phased out, then phased in again. Again a reason why the court insists upon evidence that explains the actual relationship between actual entities, and not just names thrown around as though that meant anything.

Ultimately Green Tree, which no longer existed, was made the Plaintiff in the action. Some certificate of merger was introduced indicating a merger again, this time between DiTech Financial and GreenTree. In this lawsuit Green tree was presented as the surviving entity. But in all other cases DiTech Financial is presented as the surviving entity — or at least the DiTech name survived. There is considerable doubt whether the combination of Green Tree was anything more than rebranding an operation merging out of the Ally Financial bankruptcy and ResCap operations.

A sure sign of subterfuge is when the lawyer for the foreclosing party attempts to lead the court into treating multiple independent companies as a single entity. That, according to this court, would ONLY be acceptable if there was competent evidence admitted into the court record showing a clear line of succession such that a reasonable person could only conclude that the present successor company in fact encompasses all of the business activities and assets of the predecessors or, at the very least, encompasses a clear chain of possession, title and authorization of the subject loan.

[PRACTICE NOTES: Discovery of actual merger documents and documents of transfer should be vigorously pursued against expected opposition. Cite this case as mandatory or persuasive authority that the field of inquiry is perfectly proper — as long as the foreclosing entity is attempting tons the mergers and presumptive transfers against the homeowner.]

 

 

 

BofA Slammed with $45 Million Sanction for Violation of BKR Stay Order

LAWYERS WAKE UP! THERE IS GOLD IN THESE HILLS!

The Sundquist decision stands out as the clearest denunciation of Bank of America yet. In this colorfully written opinion Judge Klein in California burst out of a shell of false orthodoxy plaguing the courts and gave us rays of sunshine.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see sundquist-opinion

Wikipedia says that Franz Kafka, a Czech writer at the turn of the 20th century,  “fuses elements of realism and the fantastic,[3] typically features isolated protagonists faced by bizarre or surrealistic predicaments and incomprehensible social-bureaucratic powers, and has been interpreted as exploring themes of alienation, existential anxiety, guilt, and absurdity.”

Judge Klein starts his opinion with “Franz Kafka lives. This automatic stay violation case reveals that he works at Bank of America.” What he then describes is virtually identical for all the banks who make claims based upon (or related to) the patently false premise of securitization.

In short, this is another case where bank representatives were given a script in which they lured homeowners into default by misinforming them that the only way they could modify is if they were at least 90 days behind in payments. Any lawyer who has practiced for at least a year defending foreclosures knows this story — over and over again. Despite volumes of evidence corroborating this fact pattern, Judges have persisted in disregarding such evidence as so much bulls–t.

But lately as you have seen on these pages, judges are taking this more seriously. And many judges might find themselves in a bind when they are reversed on appeal, to wit: when the appellate court points out that there was no evidence that contradicted the testimony of the homeowner. Of course the reader is reminded that on appeal a decision can be affirmed anyway if the appellate panel finds that the judgment would have been granted on other grounds anyway — so be careful how you phrase this and use this.

Here you have a fact pattern that is all too common. The homeowners are not rich but they are struggling to get by. They are current on the payments as stated in the note.

[NOTE: The court assumes that the transfers were all the result of actual transactions, which is erroneous].

Then starts the nightmare of bobbing and weaving and making homeowners crazy enough to give up a home in which they made a down payment in 6 figures. They are “current.” They are told that they should stop paying in order to qualify for consideration of a modification. The bank’s plan is simple, to wit: lure the homeowner into default and drag it out long enough so that the bank’s claim for “servicer advances” piles up — along with the “arrearage” accruing from the the date the homeowner stopped paying. If you wait long enough the “recovery” of “servicer advances” (actually paid from the investors’ own money) becomes quite a chunk of change. And the amount required to reinstate slowly falls out of reach of the homeowners who stopped paying the bank and started paying professionals to help them through the modification process.

Judge Klein does not deal with the issue of real party in interest arising from the false claim for “recovery” of “servicer advances.” Instead he focuses on something more important — the persistent  absurdity and unreality of the world in which Bank of America acted as though they WERE the law, not subject to it. He is addressing the twilight zone in which the banks and servicers are operating.

But another major issue corroborates what I have been suggesting fro years. Keep a journal and record, as best you can, word for word, the content of your conversation and interaction with the bank or servicer. Judge Klein found that the homeowner’s record of conversations were “non-hearsay statements by an opposing party” and accordingly admitted them under Fed R Evid 802.(d)91). Without that ruling on evidence the case would have turned out much differently. The problem appears to be that with exception of Judge Klein, very few judges know or care about those rules of evidence which make or break the homeowner’s case.

This case also contains under the same rules of evidence that were allowed into evidence the admission by a BOA employee that mortgage modification is “not real.” Some readers will remember that the BOA manager in Massachusetts was heard to say that the goal was foreclosure, not modification. “we are not in the modification business. We are in the foreclosure business.”

Then comes the trespassing, the harassing and frightening — all to inflict pain on the homeowners so they will give up. And most homeowners do exactly that because there are too few lawyers who are willing to fight for them.

READ THE DECISION — TWICE OR MORE IF NECESSARY.

 

 

About Those PSA Signatures

What is apparent is that the trusts never came into legal existence both because they were never funded and because they were in many cases never signed. Failure to execute and failure to fund the trust reduces the “trust” to a pile of ashes.

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

—————-
From one case in which I am consulting, this is my response to the inquiring lawyer:

I can find no evidence that there is a Trust ever created or operational by the name of “RMAC REMIC Trust Series 2009-9”. In my honest opinion I don’t think there ever was such a trust. I think that papers were drawn up for the trust but never executed. Since the trusts are phantoms anyway, this was consistent with the facts. The use of the trust as a Plaintiff in a court action is a fraud upon the court and the Defendants. The fact that the trust does not exist deprives the court of any jurisdiction. We’ll see when you get the alleged PSA, which even if physically hand-signed probably represents another example of robo-signing, fabrication, back-dating and forgery.

I think it will not show signatures — and remember digital or electronic signatures are not acceptable unless they meet the terms of legislative approval. Keep in mind that the Mortgage Loan Schedule (MLS) was BY DEFINITION  created long after the cutoff date. I say it is by definition because every Prospectus I have ever read states that the MLS attached to the PSA at the time of investment is NOT the real MLS, and that it is there by way of example only. The disclosure is that the actual loan schedule will be filled in “later.”

 

see https://livinglies.me/2015/11/30/standing-is-not-a-multiple-choice-question/

also see DigitalSignatures

References are from Wikipedia, but verified

DIGITAL AND ELECTRONIC SIGNATURES

On digital signatures, they are supposed to be from a provable source that cannot be disavowed. And they are supposed to have electronic characteristics making the digital signature provable such that one would have confidence at least as high as a handwritten signature.

Merely typing a name does nothing. it is neither a digital nor electronic signature. Lawyers frequently make the mistake of looking at a document with /s/ John  Smith and assuming that it qualifies as digital or electronic signature. It does not.

We lawyers think that because we do it all the time. What we are forgetting is that our signature is coming through a trusted source and already has been vetted when we signed up for digital filing and further is backed up by court rules and Bar rules that would reign terror on a lawyer who attempted to disavow the signature.

A digital signature is a mathematical scheme for demonstrating the authenticity of a digital message or documents. A valid digital signature gives a recipient reason to believe that the message was created by a known sender, that the sender cannot deny having sent the message (authentication and non-repudiation), and that the message was not altered in transit (integrity).

Digital signatures are a standard element of most cryptographic protocol suites, and are commonly used for software distribution, financial transactions, contract management software, and in other cases where it is important to detect forgery or tampering.

Electronic signatures are different but only by degree and focus:

An electronic signature is intended to provide a secure and accurate identification method for the signatory to provide a seamless transaction. Definitions of electronic signatures vary depending on the applicable jurisdiction. A common denominator in most countries is the level of an advanced electronic signature requiring that:

  1. The signatory can be uniquely identified and linked to the signature
  2. The signatory must have sole control of the private key that was used to create the electronic signature
  3. The signature must be capable of identifying if its accompanying data has been tampered with after the message was signed
  4. In the event that the accompanying data has been changed, the signature must be invalidated[6]

Electronic signatures may be created with increasing levels of security, with each having its own set of requirements and means of creation on various levels that prove the validity of the signature. To provide an even stronger probative value than the above described advanced electronic signature, some countries like the European Union or Switzerland introduced the qualified electronic signature. It is difficult to challenge the authorship of a statement signed with a qualified electronic signature – the statement is non-reputable.[7] Technically, a qualified electronic signature is implemented through an advanced electronic signature that utilizes a digital certificate, which has been encrypted through a security signature-creating device [8] and which has been authenticated by a qualified trust service provider.[9]

PLEADING:

Comes Now Defendants and Move to Dismiss the instant action for lack of personal and subject matter jurisdiction and as grounds therefor say as follows:

  1. The named plaintiff in this action does not exist.
  2. After extensive investigation and inquiry, neither Defendants nor undersigned counsel nor forensic experts can find any evidence that the alleged trust ever existed, much less conducted business.
  3. There is no evidence that the alleged trustee ever ACTUALLY conducted any business in the name of the trust, much less a purchase of loans, much less the purchase of the subject loan.
  4. There is no evidence that the Trust exists nor any evidence that the Trust’s name has ever been used except in the context of (1) “foreclosure” which has, in the opinion, of forensic experts, merely a cloak for the continuing theft of investor money and assets to the detriment of both the real parties in interest and the Defendants and (2) the sale of bonds to investors falsely presented as having been issued by the “trust”, the proceeds of which “sale” was never received by the trust.
  5. Upon due diligence before filing such a lawsuit causing the forfeiture of homestead property, counsel knew or should have known that the Trust never existed nor has any business ever been conducted in the name of the Trust except the sale of bonds allegedly issued by the Trust and the use of the name of the trust to sue in foreclosure.
  6. As for the sale of the bonds allegedly issued by the Trust there is no evidence that the Trust ever issued said bonds and there is (a) no evidence the Trust received any funds ever from the sale of bonds or any other source and (b) having no assets, money or bank account, there is no possible evidence that the Trust acquired any assets, business or even incurred any liabilities.
  7. Wells Fargo, individually and not as Trustee, has engaged in a widespread pattern of behavior of presenting itself as Trustee of non existent Trusts and should be sanctioned to prevent it or anyone else in the banking industry from engaging in such conduct.

WHEREFORE Defendants pray this Honorable Court will dismiss the instant complaint with prejudice, award attorneys fees, costs and sanctions against opposing counsel and Wells Fargo individually and not as Trustee of a nonexistent Trust for falsely presenting itself as the Trustee of a Trust it knew or should have known had no existence.

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

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https://www.vcita.com/v/lendinglies to schedule, leave message or make payments.

The Chase-WAMU Illusion

In the mortgage world “successor by merger” is simply a living lie that continues as you read this article. Like many other major illusions in our world economy, the Chase-WAMU merger was nothing more than illusion

The reason for the rebellion showing up as votes for Sanders and trump and the impending exit of the UK from the European Union is very simple — every few decades the populace gets a ahead of their elected leaders and yanks their leash so hard that some of them choke.

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

—————-

see FDIC_ Failed Bank Information – WASHINGTON MUTUAL BANK – Receivership Balance Sheet Summary (Unaudited)

see wamu_amended_unsealed_opinion

When Bill Clinton was asked how he balanced the budget and came out with a $5 Trillion surplus when he left office his reply was unusually laconic — “Arithmetic.” And he was right, although it wasn’t just him who had put pencil to paper. Many Republican and Democrats had agreed that with the rising economy, the math looked good and that their job was not to screw it up. THAT was left to the next president.

I’m not endorsing Clinton or Trump nor saying that Democrats or Republicans are better that the other. Indeed BOTH major political parties seem to agree on one egregiously erroneous point — the working man doesn’t matter.

The people who matter are those with advanced degrees and who reach the pinnacle of the economic medal of honor when they are dubbed “innovators.”

The reason for the rebellion showing up as votes for Sanders and Trump and the impending exit of the UK from the European Union is very simple — every few decades the populace gets a ahead of their elected leaders and yanks their leash so hard that some of them choke. To say that the BREXIT vote was surprising is the height of arrogance and stupidity. People round the world are voicing their objection to an establishment that doesn’t give a damn about them and measures success by stock market indexes, money supply and GDP activity that is manipulated at this point that it bare little if any resemblance to the GDP index we had come to rely upon, albeit that index was also arbitrarily and erroneously based on the wrong facts.

The fact that large percentages of the populace of many countries around the world are challenged to put food on the table and a roof over their heads doesn’t matter as long as the economic indices are up. But truth be told even when those indices go down, the attitude is the same — working people don’t matter. They are merely resources like gold, coal and oil from which we draw ever widening gaps between the people who run the society and the economy and those who drive the economy and society with their purchases.

In the mortgage world “successor by merger” is simply a living lie that continues as you read this article. Like many other major illusions in our world economy, the Chase-WAMU merger was nothing more than illusion — just like BOA’s merger with BAC/Countrywide (see Red Oak Merger Corp); Wells Fargo’s merger with Wachovia who had acquired World Savings; OneWest’s acquisition of IndyMac;  CitiMortgage acquisition of ABN AMRO, CPCR-1 Trust;  BOA’s merger with LaSalle; Ditech’s acquisition by multiple entities GMAC, RESCAP, Ally,  Walter investment etc.) when DiTech was dead and the name was the only this being traded, and so much more. All these mergers bear one thing in common — they were cover screen for one simple fact: they had not in one instance acquired any loans but then relied on the illusion of the merger to call themselves “successors by mergers.”

Let’s take the example of WAMU. When they went broke they had less than $3 Billion in assets (see link above). This totally congruent with the $2 billion committed by Chase to acquire the WAMU estate form the FDIC receiver Richard Schoppe (located in Texas) and the US Trustee in bankruptcy — especially when you consider the little known fact that Chase received 1/3 of a tax refund due to WAMU.

That share of the Tax refund was, as you might already have guessed, MORE than the $2 billion committed by Chase. whether Chase ever actually paid the $2 billion is another question.But in any event, pure arithmetic shows that the consideration for the purchase of WAMU by Chase was LESS THAN ZERO, which means we paid Chase to acquire WAMU.

This in turn is completely corroborated by the Purchase and Assumption Agreement between WAMU, the FDIC Receiver, the US Trustee in Bankruptcy and of course Chase. On the first page of that agreement is a express recital that says the consideration for this merger is “-$0-.” But before you look up the “Reading Room on the FDIC FOIA cite, here is one caveat: some time after the original agreement was published on the site, a “different” agreement was posted long after WAMU was dead, the US Trustee had been discharged, and the FDCI receiver was discharged as a receiver. The “new” agreement implies that loans were or may have been acquired but does not state which loans or how much was paid for these loans. The problem with the new agreement of course is that Chase paid nothing and was not entitled to nothing, except the servicing rights on some fo those loans.

The so-called new agreement placed there by nobody knows, also stands in direct contrast of the interview and depositions of Richard Schoppe — that if there were loans to sell the principal amount would have been hundreds of billions of dollars for which Chase need pay nothing. I dare say there are millions of people and companies who would have taken that deal if it was real. But Schoppe states directly that the number of assignments was NONE, zero, zilch.

Schoppe also stated that the total amount of loan originations was just under $1 Trillion. And he said that the loan portfolio might have been, at some time, around 1/3 of the total loans originated. Putting pencil to paper that obviously means that 2/3 of all originated loans were either pre-funded in table funded “loans” or that they were immediately sold into the secondary market for securitization. All evidence points to the fact that WAMU never owned the loans at all — as they were table funded  through multiple layers of conduits none of whom were disclosed as required under the Truth in lending Act.  Because the big asset that WAMU retained were (a) the servicing rights and (b) the right to claim recovery for servicer advances. It could be said that the only way they could perfect their claim for “recovery” of “servicer” “Advances” was by acquiring WAMU since Chase was the Master servicer on nearly all WAMU originations.

The interesting point of legal significance is that Chase emerges as the real party in interest even though it it appeared only as the servicer in the background after subsequent servicers were given “powers” of attorney to prevent the new “servicer” (actually an enforcer) from claiming a recovery  for “servicer” “Advances.,” that are recoverable not from the borrower, not from the investor, and not from the trust but in a foggy chaos in which the property was liquidated.

So the assets of WAMU at the time it went belly up was under $3 Billion which means that after you deduct the brick and mortar locations and the servicing rights Chase still got the deal of a lifetime — but one thing doesn’t add up. If WAMU had less than $3 Billion in assets and 99% of that were conventional bank assets excluding loans, then the “value” of the loan portfolio, using FDIC Schoppe estimates was $3 Million. If the WAMU loan portfolio implied by the a,test antics of Chase was true — then Chase acquired $300 BILLION in loans for $3 MILLION. Even the toxic waste loans were worth more than one tenth of one percent.

Chase continues to assert ownership with impunity on an epic scale of fraud, theft and manipulation of the courts, investors and borrowers. The finding that Chase NOT assumed repurchase obligations in relation to the originated loans goes further to corroborate everything I had written here. There seems to be an oblique reference to attempted changes in the “P&A” Agreement, and the finding that the original deal cannot be changed, but the actual finding of two inconsistent agreements posted on the FDIC site is worth investigating. I can assure the reader that I have found and read both.

And lastly I have already published numerous articles on victories in court (one fo which was mine and Patrick Giunta) for the borrower based upon the exact principles and facts written in this article — where the judge concluded that US Bank had never acquired the loan, that the “servicer” in court testifying through a robo-signer had no power over the loan because their power was  derived from Chase who was named as servicer for a REMIC Trust that never acquired the loan nor any rights to the loan.

The use of powers of attorney were found to be inadequate simply because the party who executed the POA had no rights to the money, the enforcement of the loan nor any collection or foreclosure. If Chase had acquired the loan from WAMU they would have won. Their total reliance on deflective legal presumptions based upon presumed fact that were untrue completely failed.

BOTTOM LINE: CHASE ACQUIRED NO LOANS FROM WAMU. Hence subsequent documents of transfer or powers (Powers of attorney) are void.

Schedule A Consult Now!

Table Funded: The Student Loan Scam

The essential question I pose is this: if the student loan was table funded (and it does appear to me that they were, in many cases), then why is the originator/broker receiving the government guarantee and the exemption from discharge? By definition they didn’t loan any money to the student. It seems to me that government, lawyers, and courts are overlooking the fact that many banks (large and small) have been acting as brokers and not as lenders.

Like the so-called mortgage loans, the underwriting decisions lie outside of the organization that “granted” the alleged loan from an undisclosed third party. Yet they claim and receive and sell government benefits as though they were lenders.

My theory under current law is that if the loan was funded from the sale of student debt pools there are two outcomes, to wit: (1) the government guarantee does not attach because there is no loan or risk of loss to guarantee and because the actual lender is not the broker, pretender who appears on the note, (i.e., they were not entitled to the government protections because they brokered the transaction instead of loaning the money) and (2) since the government guarantee and other conditions are no longer involved, there is no reason to prevent discharge in bankruptcy.

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

—————-

see http://www.rollingstone.com/politics/news/how-wall-street-profits-from-student-debt-20160414

Wall Street is like that closet in your house where you throw everything in that you probably won’t need for a while or maybe not at all. When you open the closet door everything falls out on top of you. In this case it is $1.2 Trillion on student debt with “default” rates rising sharply and interest rates rising into double digits. We are in effect making it impossible for the brightest minds to get the education we need for the sake of our society. Anyone want a doctor or lawyer who has been poorly education or not educated at all?

It’s all about money in education. Like medical insurance, the more distance you put between the consumer and the the actual delivery of the service, the less people think about it and the the more the vendors charge. In the end education becomes a process of justifying the cost of a commodity rather than creating the best possible education possible.

Somehow the banks managed to intervene between students and institutions of higher learning, such that they enjoy very high interest rates (after the student completes education) and a guarantee from the Federal government or at least a guarantee that the debt cannot be discharged in bankruptcy.

The government loans work the way they are intended and there are many programs to provide relief to students who in many cases are burdened for life with student debt. But the private loans, which now dominate the marketplace, are putting a drag on our prospects as a nation — but still great business for the banks. Most other countries do not allow graduating students to be burdened by this debt; and those countries that provide free tuition (up to a point) or who pay for their citizens to travel and learn in countries who have quality institutions for higher learning, end up with an increasing GDP stemming from the contribution and productivity of highly educated, trained people who became employees, officers and leaders.

But here is the rub — banks making student loans in most cases  enjoy immunity from bankruptcy and so they use all sorts of sales techniques to get the prospective student to borrow as much as possible for tuition and”expenses.” They do this for the same reasons that homeowners or home buyers were encouraged to put as much into  their alleged mortgage loan as possible — landscaping and other improvements to the house that did not raise the value of the home.

The game, once again, is securitization. Even if we assume that the claims of securitization of these loans are true, we see a basic inconsistency in the choices the banks make as to how to deal with the risk of loss. The answer, like the mortgage loans, is that they have no risk of loss. They have already sold the student loans into a secondary market for securitization. That being true, the premise behind the exclusion of student debt from the benefits of bankruptcy is false.

The first premise is that banks would not provide funding for higher education without the guarantee that the loans cannot be discharged in bankruptcy and, in other cases, without the guarantee of repayment by the government. This is not true. By securitizing the loans (or at least subjecting them to claims of securitization in the secondary market), the banks are making tons of money as brokers and conduits without any risk of loss whatsoever. Our previous system of public loans for high learning worked far better than the current one in which private lenders dominate the market despite the “reforms” that have been enacted.

The second premise is that both the loans and these government guarantees are salable to “investors.” This is the controversial part. Given the premise behind the government guarantees, why should a broker be able to sell that government guarantee at a profit? What gives them the right to sell government promises? The object was to provide capital to students — not to increase the number of arcane financial products in the marketplace. If the loans are not salable without those government guarantees, it is because (as we know from the mortgage market) the loans make no sense. These are flawed financial products based upon the same “bad underwriting” we have seen in the continuing mortgage crisis.

Thus my premise and my question are the same: why should a bank or other “lender” make a profit on a bad loan? Why should banks be freed from the risk of loss that the government guarantees are meant to cover? Why have we strayed from existing law in which the “banks” (which we have all presumed to be “lenders”) are the party primarily responsible for the viability of the loan? Why should these bad loans be subject to sale to “investors” whose only interest in the student loans is the elimination of risk because the government has guaranteed benefits? Why should young people, before they get their education, be held to a higher standard of responsibility than the banks who are setting them up for failure?

My proposed legal theory is that once a bank makes the election to sell the student loan into the secondary market, the government guarantees should vanish. My theory under current law is that if the loan was funded from the sale of student debt pools there are two outcomes, to wit: (1) the government guarantee does not attach because there is no risk of loss to guarantee and because the lender is not the broker, pretender who appears on the note, (i.e., they were not entitled to the government protections because they brokered the transaction instead of loaning the money) and (2) since the government guarantee is no longer involved, there is no reason to prevent discharge in bankruptcy.

Then we will have close attention paid to the value of the loans and the manner in which they were sold. Once sold, these loans should be dischargeable in bankruptcy. Once sold these loans should offer no safe haven to investors that the loan will be paid by the U.S. government. Whether this can be done in the courts under current law is debatable. But it can and should be done through Congress and state legislatures. Without these reforms we are essentially eating our young.

MISSION CREEP NOTICE: Wall Street is now looking to “Securitize” health care loans. There is hardly anything they are not claiming to securitize.

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The Beginning or the End for Loan Servicer Ocwen?

By William Hudson
Ocwen Financial, one of the largest subprime mortgage servicers in America, has big problems. Analysts predict that Ocwen will be forced to file bankruptcy as the SEC opens up two more investigations into the loan servicers business practices while the stock goes into free-fall.

A further hurdle will befall homeowners if Ocwen files for bankruptcy protection because another shield is placed between the homeowners and the banks who are the culprits- but just happen to control all of the “loan” information. As Neil Garfield would say, “They have plenty of bodies to throw under the bus.” To date, homeowners and their attorneys in litigation have been frustrated by attempts to discover who the true creditor is especially when the servicer hides behind bankruptcy, mergers and receivership (Fannie and Freddie).

Ocwen reported a $247 million annual loss while revenues tumbled 17.5% last week at the same time the SEC is continuing to scrutinize their shoddy and abusive servicing practices. Despite the fact that Ocwen previously settled with multiple government regulators upon findings of fraudulent servicing practices, apparently it is business as usual for Ocwen as authorities continue to investigate their business practices- without administering any penalty with teeth or consequences.

Only a month ago, Ocwen settled with the SEC for misstating their 2013 and 2014 financial results and were fined a paltry $2 million dollar fine for poor internal controls and failing to disclose the financial conflicts of their former CEO Bill Erby. In 2014 alone, Ocwen would pay a $100 million civil monetary penalty to the New York Department of Financial Services for violations and non-compliance with a prior consent order with a regulator. Last year they paid an additional $2.5 million fine to the California Department of Business Oversight on their servicing practices that ultimately led to Ocwen being barred from acquiring new Mortgage Servicing Rights in the state of California. Predictably, although the Department of Business Oversight had threatened to revoke their mortgage license- and should have- they failed to do so.

On the upside for Ocwen, is that they will remain in the business of servicing Ginnie Mae loans and will also continue to originate and service new Fannie and Freddie loans. My advice would be to steer clear of GSE loans like Fannie Mae and Freddie Mac if at all possible since it presents one more ‘layer’ to navigate if at a future time you suspect fraud may have been involved in your loan. Both Fannie Mae and Freddie Mac are quasi-governmental institutions that are immune to Freedom of Information Requests and federal transparency, while still benefiting from being private corporations. The GSE’s have a cushy little deal where they appear to exist outside of both governmental and corporate regulations.

Last year Ocwen demonstrated that they couldn’t effectively service government guaranteed loans, and was forced to sell $45 billion in mortgage servicing rights (MSRs) on loans originated by Fannie Mae to JPMorgan Chase. Ocwen was also forced to sell a total of $34.8 billion in MSR’s on Fannie Mae and Freddie Mac loans to competitor Nationstar Mortgage in two separate deals to unwind servicing legacy agency loans. Although I could go on and on about the abusive servicing practices that have resulted in Ocwen being financially fined and forced to sell its servicing rights, let’s just say these issues are indicative of the regulatory and investor pressures the servicing giants are now facing- across the board. At present, bondholders have requested that Ocwen be removed from servicing 119 different residential mortgage backed securities trusts with more requesting removal weekly.

Last Monday Ocwen was notified that the SEC would launch a new SEC probe into its servicing operations. The SEC is investigating Ocwen’s use of collection agents by the company’s various mortgage loan servicers, a practice that Ocwen has argued is a standard practice across the servicing industry. President Ronald Faris commented that their practices and fees are considered standard and should be of no concern. Faris is correct in that Ocwen’s illegal practices of using forged and fraudulent documents presented to courts across the country in order to foreclose is standard practice among loan servicing agents. However, Faris is delusional if he believes these practices should be of no concern. To whom? The shareholder who has no idea the loans Ocwen services are owned by phantom entities with no standing to foreclose, or the homeowner who is subjected to predatory servicing and foreclosure tactics? If the government agencies would do their jobs- Ocwen would cease to exist tomorrow.

The SEC has opened an investigation into the fees and expenses the company charges in connection with its management of liquidating mortgage loans and real estate properties in different RMBS trusts. Unfortunately, Ocwen is not being investigating for violations against consumers, but only because investors have complained and when investors complain the regulators and government take notice. Groups of investors have a tendency to get better results when they go up against a large corporation and can retain the best representation that money can buy. A homeowner in a small town outside Des Moines with an attorney specializing in family law doesn’t pose much of a threat or incite the same action.

It is unusual for the SEC to investigate business practices. Typically the SEC will only investigate the integrity of financial statements. CEO Ronald Faris spoke on a conference call Monday evening and addressed the investigation. He said what all good CEO’s say to distance themselves from controversy, “I can’t really comment except to say that we feel confident that the fees that are part of the servicing business that are either assessed to borrowers or passed on to RMBS investors are – they’re monitored closely by master servicers and trustees and others. We’ve had various third parties look at them. We have a good sense as to what other servicers have done since we’ve acquired a lot of servicing portfolios and been able to see what industry practice has been. And we feel comfortable that our process is within industry practice. So, we can’t comment on what exactly a regulator may be looking for, but we do believe that our processes are appropriate.” Faris confirms that he is simply going along with industry “best practices”. Best practices that have been revealed to include falsifying affidavits and forging mortgage documents in order to create the illusion of having standing to foreclose.

In January, Ocwen announced that Phyillis R. Caldwell joined the Board of Directors. Caldwell previously served as Chief of the Homeownership Preservation Office at the U.S. Department of the Treasury where she was responsible for oversight of the U.S. housing market stabilization, economic recovery, and foreclosure prevention initiatives established through the Troubled Asset Relief Program (TARP). Since Caldwell did such an outstanding job with TARP what could go wrong? Under TARP millions of TPP modification agreements were extended and revoked for no reason while the homeowner was in compliance with the terms of the agreement.

Upon announcing Ocwen’s director, the company issued a press release stating, “Phyllis’ character, deep experience in the housing and mortgage markets, and commitment to borrowers and communities makes her the right choice to move Ocwen forward and emerge as a stronger company with the highest standards in our industry.” Unfortunately, we know what commitment to borrowers and communities’ means for homeowners under Ocwen. It means that investors will be able to come in, purchase properties for pennies on the dollar and displace families while Ocwen alters legal instruments to give the illusion of standing and forecloses on properties. Becoming a stronger company refers to cashing in a few favors she has coming her way so Ocwen can escape extinction. Caldwell’s appointment is disturbing and it is obvious what type of ‘help’ she will provide to Ocwen (cronyism and assistance covering their fraud scheme).

Remember, Ocwen was issued a consent order from the CFPB in every state but Oklahoma last year that illustrated the “continued, systemic abuse of the American homeowner.” Ocwen was accused of “violating consumer financial laws at every stage of the mortgage servicing process,” according to CFPB Director Richard Cordray. However, under that settlement, Ocwen executives faced no criminal charges, did not pay the majority of penalties themselves, and were not forced to admit wrongdoing in the case.
Ocwen, like JPMorgan Chase, Citicorp, Bank of America and other bank servicers settled cases of mortgage servicing abuse in the National Morgan Settlement back in 2012 for 25 billion dollars. The banks paid a nominal fine, and transferred or sold their servicing operations to non-bank servicers like Ocwen.

As a non-bank servicer, Ocwen doesn’t own any of the loans. They merely service loans, collecting monthly payments and dealing with loan modifications and foreclosures, for investors who purchased them as part of mortgage-backed securities.  Ocwen makes the erroneous assumption that the loans they are servicing actually made it into the trusts they claim to. Ocwen has no way to verify if the note is where it is supposed to be but makes false assertions that it is simply because the bank “says so”.
Although Ocwen is not a bank, they have engaged in the exact same servicing practices as the big banks. Eric Mains who is suing CitiMortgage likes to call this game of passing around servicing rights while also claiming creditor rights, “Whack-a-Mole.” The entire servicing industry, by design, is about keeping the homeowner in the dark until they can properly execute the foreclosure action. Servicers change, account numbers change, customer service representatives provide account disinformation and banks routinely fail to comply with any statute meant to protect the homeowner from this type of exploitation and predation.

“Too often trouble began as soon as a loan transferred to Ocwen,” said CFPB Director Cordray when he announced the enforcement action last year. Ocwen was accused of charging borrowers more than stipulated in the mortgage contract; forcing homeowners to buy unnecessary insurance policies; charging borrowers unauthorized fees; providing inaccurate information to borrowers when questioned about excessive and unauthorized fees; lying about loan modification options; misplacing documents and ignoring or losing loan modification applications, deliberately causing homeowners to slip into foreclosure; illegally denying eligible borrowers loan modifications, and then lying to cover up their crimes. These activities result in foreclosures and a windfall of profits to the loan servicer who will then reap a free house, insurance proceeds and other undisclosed rewards granted for successfully foreclosing on a home. I wouldn’t be surprised if Ocwen had a Pirate of the Week award that includes a parking spot upfront near the CEO.

Finally, if Ocwen goes into bankruptcy, homeowners who have loans serviced by Ocwen will face further hardships attempting to unravel who their creditor is, if the loan was legitimately transferred, while being subjected to some unsavory servicing practices that appear to be designed to ensure the appearance of homeowner non-compliance. It is time that Ocwen ADMIT wrongdoing so that their executives will not be protected from legal consequences. Ocwen also needs to be forced to pay any penalties with their own money, not the investors. To date, Ocwen has only faced trivial administrative fines while foreclosing on thousands of homeowners under false pretenses, with fraudulent documents, by predatory means. Until the government regulators take real action- this is business as usual for the loan servicers.

 

 

Wells Fargo Skewered by Federal Judge For Forgery as a Pattern of Conduct

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

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http://nypost.com/2015/01/31/ny-federal-judge-slams-wells-fargo-for-forged-mortgage-docs/

COURT FINDS PRESUMPTIONS CAN BE REBUTTED BY A SHOWING OF SOME EVIDENCE THAT THE INSTRUMENT AND/OR SIGNATURE IS NOT AUTHENTIC

What I like about the Federal Judge decisions is that they express the reasons for their orders and judgments with much greater specificity than State Court judges tend to do — probably because they have a lighter case load and when they get promoted it can go pretty high (like the US Supreme Court). So it should come as no surprise that a New York Federal Bankruptcy Judge issued a 30 page opinion that essentially said what people have been saying since 2007 — the entire foreclosure process is an exercise in illegal patterns of conduct to the detriment of the homeowners. Since he also made clear that the debt remains, we have yet to get a definitive opinion from a Judge that questions whether the original closing was valid and enforceable. for that we still need to wait.

But by ruling on the specifics of how to rebut presumptions that are used in cases involving negotiable instruments, this Court has definitely opened the door to requiring the banks to do something that he suspects and I know the banks cannot do — prove the loan transaction, and the loan transfers with actual transactions in which a purchase and sale occurred and money exchanged hands after which there was delivery of the paper. Once THAT cat is out of the bag, the banks are doomed. People are going to start asking the question they have been asking for years — except this time it won’t be a rhetorical question: “If the originator didn’t loan the money then who did? And if there was no consideration for the transfer of the loan documents then whose money was used to originate or acquire the loan?” The answers will surprise even veterans of this war.

see franklin-opinion

Excerpts—

The debtor herein (the “Debtor”) has objected to a claim filed in this case by Wells Fargo Bank,

NA (“Wells Fargo”), Claim No. 1‐2, dated September 29, 2010 (amending Claim No. 1‐1), on the basis that Wells Fargo is not the holder or owner of the note and beneficiary of the deed of trust upon which the claim is based and therefore lacks standing to assert the claim.1 This Memorandum of Decision states the Court’s reasons, based on the record of the trial held on December 3, 2013 and the parties’ pre‐ and post‐trial submissions, for granting the Claim Objection….

(i) how could Wells Fargo or Freddie Mac assert a claim under the Note when the Note was neither specifically indorsed to either of them nor indorsed in blank (and was specifically indorsed to ABN Amro, although ABN Amro had subsequently assigned its interest therein to MERS as nominee for Washington Mutual Bank, FA), and (ii) how could Wells Fargo properly assert any rights under the July 12, 2010 Assignment of Mortgage when the person who signed the Assignment of Mortgage from MERS in its capacity “as nominee for Washington Mutual Bank, FA” to Wells Fargo was an employee of Wells Fargo (as well as of MERS),3 and there was no evidence that Washington Mutual Bank, FA authorized MERS to assign…….

if Freddie Mac was the owner of the loan, as both Wells Fargo and Freddie Mac contended, why was Claim No. 1‐1 filed by Wells Fargo not as Freddie Mac’s agent or servicer, but, rather, in its own name? (The ownership/agency issue had practical as well as possible legal consequences because counsel for Wells Fargo contended that Freddie Mac guidelines precluded Wells Fargo from considering loan modification proposals for the Debtor.)….

the parties engaged in discovery disputes that resulted in an order compelling the deposition of John Kennerty, who by then no longer worked for Wells Fargo, see Kennerty v. Carrsow‐Franklin (In re Carrsow‐Franklin), 456 B.R. 753 (Bankr. D. S.C. 2011), and Wells Fargo’s production of a woefully unqualified initial Rule 30(b)(6) witness…..

Wells Fargo responded that it did not need to be the owner of the loan in order to enforce the Note and a secured claim for amounts owing under it. Instead, Wells Fargo relied, under Texas’ version of Article 3 of the Uniform Commercial Code (the “U.C.C.”), solely on being the “holder” of the Note indorsed in blank by ABN Amro that appeared for the first time as an attachment to Claim No. 1‐2.7…

In a bench ruling on March 1, 2012, memorialized by an order dated May 21, 2012, the Court agreed with Wells Fargo, concluding that, under Texas law, if Wells Fargo were indeed the holder of the Note properly indorsed in blank by ABN Amro, Wells Fargo could enforce the Note and the Deed of Trust even if it was not the owner or investor on the Note or properly assigned of Deed of Trust,8 citing SMS Fin., Ltd. Liab. Co. v. ABCO Homes, Inc., 167 F.3d 235, 238 (5th Cir. 1999) (under Texas law, “[t]o recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note; and (4) that a certain balance is due and owing on the note”) (emphasis added), and In re Pastran, 2010 Bankr. LEXIS 2237, ….

Perhaps wary of relying on an assignment by the assignee to itself without authorization by the purported assignor, Wells Fargo has waived reliance on the July 12, 2010 Assignment of Mortgage to establish its right to assert Claim No. 1‐2, looking only to its status as a holder of the Note. It indeed appears that Mr. Kennerty’s signature on the Assignment of Mortgage was improper in either of his capacities, as an officer of Wells Fargo or as an officer of MERS, without further authorization from Washington Mutual Bank, FA, because ABN Amro assigned MERS the Deed of Trust solely in MERS’ capacity as nominee for Washington Mutual Bank, FA, without the power of foreclosure and sale in its own right and not for its own successors and assigns as well as Washington Mutual Bank, FA’s; and MERS (through Mr. Kennerty) executed the Assignment of Mortgage solely as nominee for Washington Mutual Bank, FA. Compare Kramer v. Fannie Mae, 540 Fed. Appx. 319, 320 (5th Cir. 2013), cert. denied, 134 S. Ct. 1310, 188 L. Ed. 2d 305 (2014) (MERS could assign deed of trust made out to it that specifically granted MERS the power to foreclose and assign its rights); Silver Gryphon, L.L.C. v. Bank of Am. NA, 2013 U.S. Dist. LEXIS 168950, at *11‐12 (S.D. Tex. Nov. 7, 2013) (same); Richardson v. CitiMortgage, Inc., 2010 U.S. Dist. LEXIS 123445, at *3, *13‐14 (E.D. Tex. Nov. 22, 2010) (same), and Nueces County v. MERSCORP Holdings, Inc., 2013 U.S. Dist. LEXIS 93424, at *20 (S.D. Tex. July 3, 2013); In re Fontes, 2011 Bankr. LEXIS 1792, at *11‐13 (B.A.P. 9th Cir. Apr. 22, 2011); and In re Weisband, 427 B.R. 13, 20 (Bankr. D. Az. 2010) (MERS as mere “nominee” of mortgage holder lacks power to transfer enforceable mortgage)…..

Because it is undisputed that (a) the Debtor signed the Note (and received the loan proceeds)11 and (b) a properly recorded lien on the Property secures the Debtor’s obligation under the Note (albeit that Wells Fargo does not rely independently on the Deed of Trust assigned to ABN AMRO and then

10 See Supplement to Emergency Motion to Reopen and for Leave to Propound Additional Discovery to Defendant for Additional Evidence Withheld Prior to Trial, dated March 11, 2014.

11 See Trial Tr. at 95‐6 (testimony of the Debtor).

9

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assigned to MERS as nominee for Washington Mutual Bank, FA (none of which has filed a proof of claim) or the Assignment of Mortgage to sustain its claim), the only issue addressed by the parties is whether Wells Fargo has standing to enforce the Note, and, thus, assert Claim No. 1‐2.12 This is because, as stated above, Texas follows the majority rule that “[w]hen a mortgage note is transferred, the mortgage or deed of trust is also automatically transferred to the note holder by virtue of the common‐law rule that ‘the mortgage follows the note.’” Campbell v. Mortg. Elec. Registration Sys., Inc., 2012 Tex. App. LEXIS 4030, at *11‐12 (Tex. App. Austin May 18, 2012), quoting J.W.D., Inc. v. Fed. Ins. Co., 806 S.W.2d 327, 329‐30 (Tex. App. Austin 1991). See also Kiggundu v. Mortg. Elec. Registration Sys., Inc., 469 Fed. Appx. 330, 332; Richardson v. Ocwen Loan Servicing, LLC, 2014 U.S. Dist. LEXIS 177471, at *13 n.4 (N.D. Tex. Nov. 21, 2014); Nguyen v. Fannie Mae., 958 F. Supp. 2d 781, 790 n.11 (S.D. Tex. 2013); Trimm v. U.S. Bank., N.A., 2014 Tex. App. LEXIS 7880, at *14 (Tex. App. Fort Worth July 17, 2014)…..

Wells Fargo’s right to enforce the Note, and thus its standing to assert Claim No. 1‐2, derives from the Note’s status as a negotiable instrument under Texas’ version of the U.C.C. See Tex. Bus. & Com. Code § 3.104(a). The Debtor has not disputed that the Note is negotiable, and the Note in any event satisfies the requirements of a negotiable instrument under Texas law, as it is “an unconditional promise . . . to pay a fixed amount of money . . . payable to . . . order at the time it [was] issued; . . . payable . . . at a definite time; and does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money” except as permitted by the statute. Id. See also Farkas v. JP Morgan Chase Bank, 2012 U.S. Dist. LEXIS 190194, at *6‐7 (W.D. Tex. June 22, 2012), aff’d, 544 Fed. Appx. 324 (5th Cir. 2013), cert. denied, 134 S. Ct. 628, 187 L. Ed. 411

12 One might argue, although Wells Fargo has not, that the parties’ pre‐bankruptcy course of dealing, including the Loan Modification Agreement signed by the Debtor on February 12, 2008 and attached to Claim No 1‐2 (See also Trial Tr. at 96‐104), would independently support Wells Fargo’s right to assert Claim No. 1‐2; however, if the blank ABN Amro indorsement were forged, the Loan Modification Agreement and course of dealing would ultimately improperly derive from Wells Fargo’s fraudulent assertion of the right to enforce the Note and Deed of Trust.

10

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(2013); Steinberg v. Bank. of Am., N.A., 2013 Bankr. LEXIS 2230, at *12‐14 (B.A.P. 10th Cir. May 30, 2013)…..

“The presumption rests upon the fact that in ordinary experience forged or unauthorized signatures are very uncommon, and normally any evidence is within the control of, or more accessible to, the defendant.”15 Official Comment to Tex. Bus. & Com. Code § 3.308 (“Off. Cmt.”). The presumption is effectively incorporated into Fed. R. Evid. 902(9), which provides that no extrinsic evidence of authenticity is required to admit “[c]ommercial paper, a signature on it, and related documents, to the extent allowed by general commercial law,” and it is loosely analogous to the rebuttable presumption of the prima facie validity of a properly filed proof of claim under Fed. R. Bankr. P. 3001(f).

While Tex. Bus. & Com. Code §§ 3.308(a) and 1.206(a) provide that the presumption of an authentic signature applies “unless and until evidence is introduced that supports a finding of nonexistence,” they do not state the quantum of evidence to overcome the presumption. The Official Comment to § 3.308, however, refers to “some evidence” and to “some sufficient showing of the grounds for the denial before the plaintiff is required to introduce evidence,” and then states, “[t]he defendant’s evidence need not be sufficient to require a directed verdict, but it must be enough to support the denial by permitting a finding in the defendant’s favor.” Off. Cmt. 1 to § 3.308.16 This suggests that the required evidentiary showing to overcome the presumption is similar to that needed to defeat a summary judgment motion: the introduction of sufficient evidence so that a reasonable trier of fact in the context of the dispute could find in the defendant’s favor. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587‐88 (1986); 11 Moore’s Fed. Prac. 3d § 56.22[2] (2014). Because of the general factual context described in the Official Comment, which recognizes that “in ordinary experience forged or unauthorized signatures are very uncommon,” Off. Cmt. 1 to § 3.308, courts have nevertheless required a significant amount of evidence to overcome the presumption. See In re Phillips, 491 B.R. 255, 273 n. 37 (Bankr. D. Nev. 2013) (“This evidence was inconclusive at best. Against this background, the court is prepared to believe that it is more likely that [the claimant] negligently failed to copy the Note and First Allonge when it filed its [first] Proof of Claim rather than it forged the First Allonge later on. In short, when both are equally likely, the court picks sloth over venality.”); see also Congress v. U.S. Bank. N.A., 98 So. 3d 1165, 1169 (Civ. App. Ala. 2012) (referring to requirement of substantial, though not clear and convincing, evidence to rebut the presumption under U.C.C. §§ 3‐308(a) and 1‐206(a), although directing trial court on remand to apply preponderance‐of‐ the‐evidence standard to whether the presumption was overcome)….

See People v. Richetti, 302 N.Y. 290, 298 (1951) (“A presumption of regularity exists only until contrary substantial evidence appears. . . . It forces the opposing party (defendant here) to go forward with proof but, once he does go forward, the presumption is out of the case.”). Thus, in In re Phillips, 491 B.R. at 273 n. 37, quoted above, if the presumption had been overcome by a preponderance of the evidence and the burden shifted and forgery and negligence were found to be equally likely, the holder of the note should lose.

Because Wells Fargo does not rely on the Assignment of Mortgage to prove its claim, the foregoing evidence is helpful to the Debtor only indirectly, insofar as it goes to show that the blank indorsement, upon which Wells Fargo is relying, was forged. Nevertheless it does show a general willingness and practice on Wells Fargo’s part to create documentary evidence, after‐the‐fact, when enforcing its claims, WHICH IS EXTRAORDINARY…..

Wells Fargo has not carried that burden. To do so, it offered only Mr. Campbell’s testimony and, through him, certain exhibits copied from Wells Fargo’s loan file. That testimony was not helpful to it. Mr. Campbell was not involved in the administration of the Debtor’s loan until he became a potential witness in 2013. Trial Tr. at 37. He was not involved in the preparation of Claim No 1‐2. Id. at 37. He had nothing to say about the circumstances under which the blank ABN Amro indorsement appeared on the Note attached to Claim No. 1‐2, with the exception that he located the earliest entry in the electronic loan file where that version of the Note was recorded, pulled up its image and compared it to the original shown him by Wells Fargo’s counsel. Id. at 33, 36, 49‐50. He was offered, therefore, only to qualify Wells Fargo’s proposed exhibits, copied from Wells Fargo’s loan file, as falling within Fed. R. Evid. 803(6)’s business records exception to a hearsay objection under Fed. R. Evid. 802 and to testify that a copy of the Note with the blank ABN Amro indorsement appears in Wells Fargo’s electronic records before the preparation of Wells Fargo’s initial proof of claim in this case….

In large measure, Mr. Campbell was not up to that task (and Wells Fargo offered no other evidence to meet that standard, were the Court to impose it). Mr. Campbell did not know whether there was any person overseeing the accuracy of how the records in the system were stored and maintained. Id. at 32, 40, 42‐3. He did not know who controlled access to the system or the procedure for limiting access, except to say “[A]ccess is granted as needed.” Id. at 40‐1. He did not know of any procedures for backing up or auditing the system. Id. at 42. He stated, “I am not a technology person” and was not able to answer what technology ensures the accuracy of the date and time stamping of the entry of documents into the imaging system. Trial Tr. at 22. In his deposition, he testified that he did not know whether the dates and times of the entry of documents in the system could be changed, but at trial he stated that, after his deposition, “I attempted to look into this, and, to my knowledge, I am not aware of any way to change or remove attachments into the imaging system,” id. at 43, which, given his general lack of knowledge about how the system works and failure to explain the basis for his assertion, did not inspire confidence….

Moreover, in addition to the fact that the specially indorsed version of the Note appears on its own in the file on March 27, 2007, and not as part of an “origination file,” Wells Fargo has offered no explanation, let alone evidence, of who else, if not Wells Fargo, held the original of the Note with the blank ABN Amro indorsement before December 28, 2009, if, in fact, such a version then existed. The file provided by the transferor should have included it, if it did exist during that period, because Washington Mutual Bank, FA would not have been able to enforce the Note, either, without the blank indorsement, and the Assignment of Deed of Trust attached to the proofs of claim states that both the Note and Deed of Trust were transferred to MERS as nominee for Washington Mutual Bank, FA on June 20, 2002, effective November 16, 2001. In other words, why would only an outdated and unenforceable version of the Note have been logged in by Wells Fargo when it took over the file in February 2007 if the only enforceable version of the Note had in fact existed at that time (and should have existed since 2002)? The far more likely inference, instead, is that when the loan was transferred to Wells Fargo, the Note with the blank ABN Amro indorsement did not exist.

Why would the Note with the blank ABN Amro indorsement have appeared in Wells Fargo’s file only on December 28, 2009, twenty‐two months later? Wells Fargo has not provided an explanation, supported by evidence, replying only that the question is irrelevant. All that matters, Wells Fargo contends, is that the enforceable document was imaged into its records before the Debtor’s counsel started raising questions about Claim No 1‐1.

 

BAP Panel Raises the Stakes Against Deutsch et al — Secured Status May be Challenged

Fur Further Information please call 954-495-9867 or 520-405-1688

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ALERT FOR BANKRUPTCY LAWYERS — SECURED STATUS OF ALLEGED CREDITOR IS NOT TO BE ASSUMED

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I have long held and advocated three points:

  1. The filing of false claims in the nonjudicial process of a majority of states should not result in success where the same false claims could never be proven in judicial process. Nonjudicial process was meant as an administrative remedy to foreclosures that were NOT in dispute. Any application of nonjudicial schemes that allows false claims to succeed where they would fail in a judicial action is unconstitutional.
  2. The filing of a bankruptcy petition that shows property to be encumbered by virtue of a deed of trust is admitting a false representation made by a stranger to the transaction. The petition for bankruptcy relief should be filed showing that the property is not encumbered and the adversary or collateral proceeding to nullify the mortgage and the note should accompany each filing where the note and mortgage are subject to claims of securitization or a “new” beneficiary.
  3. The vast majority of decisions against borrowers result from voluntary or involuntary waiver, ignorance and failure to plead or object on the basis of false claims based on false documentation. The issue is not the signature (although that probably is false too); rather it is (a) the actual transaction which is missing and the (b) false documentation of a (i) fictitious transaction and (ii) fictitious transfers of fictitious (and non-fictitious) transactions. The result is often that the homeowner has admitted to the false assertion of being a borrower in relation to the party making the claim, admitting the secured status of the “creditor”, admitting that they are a creditor, admitting that they received a loan from within the chain claimed by the “creditor”, admitting the default, admitting the validity of the note and admitting the validity of the mortgage or deed of trust — thus leaving both the trial and appellate courts with no choice but to rule against the homeowner. Thus procedurally a false claim becomes “true” for purposes of that case.

see 11/24/14 Decision: MEMORANDUM-_-ANTON-ANDREW-RIVERA-DENISE-ANN-RIVERA-Appellants-v.-DEUTSCHE-BANK-NATIONAL-TRUST-COMPANY-Trustee-of-Certificate-Holders-of-the-WAMU-Mortgage-Pass-Through-Certificate-Series-2005-AR6

This decision is breath-taking. What the Panel has done here is fire a warning shot over the bow of the California Supreme Court with respect to the APPLICATION of the non-judicial process. AND it takes dead aim at those who make false claims on false debts in both nonjudicial and judicial process. Amongst the insiders it is well known that your chances on appeal to the BAP are less than 15% whereas an appeal to the District Judge, often ignored as an option, has at least a 50% prospect for success.

So the fact that this decision comes from the BAP Panel which normally rubber stamps decisions of bankruptcy judges is all the more compelling. One word of caution that is not discussed here is the the matter of jurisdiction. I am not so sure the bankruptcy judge had jurisdiction to consider the matters raised in the adversary proceeding. I think there is a possibility that jurisdiction would be present before the District Court Judge, but not the Bankruptcy Judge.

From one of my anonymous sources within a significant government agency I received the following:

This case is going to be a cornucopia of decision material for BK courts nationwide (and others), it directly tackles all the issues regarding standing and assignment (But based on Non-J foreclosure, and this is California of course……) it tackles Glaski and Glaski loses, BUT notes dichotomy on secured creditor status….this case could have been even more , but leave to amend was forfeited by borrower inaction—– it is part huge win, part huge loss as it relates to Glaski, BUT IT IS DIRECTLY APPLICABLE TO CHASE/WAMU CASES……….Note in full case how court refers to transfer of “some of WAMU’s assets”, tacitly inferring that the court WILL NOT second guess what was and was not transferred………… i.e, foreclosing party needs to prove this!!

AFFIRMED- NO SECURED PARTY STATUS FOR BK PROVEN 

Even though Siliga, Jenkins and Debrunner may preclude the

Riveras from attacking DBNTC’s foreclosure proceedings by arguing

that Chase’s assignment of the deed of trust was a nullity in

light of the absence of a valid transfer of the underlying debt,

we know of no law precluding the Riveras from challenging DBNTC’s assertion of secured status for purposes of the Riveras’ bankruptcy case. Nor did the bankruptcy court cite to any such law.

We acknowledge that our analysis promotes the existence of two different sets of legal standards – one applicable in nonjudicial foreclosure proceedings and a markedly different one for use in ascertaining creditors’ rights in bankruptcy cases.

But we did not create these divergent standards. The California legislature and the California courts did. We are not the first to point out the divergence of these standards. See CAL. REAL EST., at § 10:41 (noting that the requirements under California law for an effective assignment of a real-estate-secured obligation may differ depending on whether or not the dispute over the assignment arises in a challenge to nonjudicial foreclosure proceedings).
We must accept the truth of the Riveras’ well-pled
allegations indicating that the Hutchinson endorsement on the
note was a sham and, more generally, that neither DBNTC nor Chase
ever obtained any valid interest in the Riveras’ note or the loan
repayment rights evidenced by that note. We also must
acknowledge that at least part of the Riveras’ adversary
proceeding was devoted to challenging DBNTC’s standing to file
its proof of claim and to challenging DBNTC’s assertion of
secured status for purposes of the Riveras’ bankruptcy case. As
a result of these allegations and acknowledgments, we cannot
reconcile our legal analysis, set forth above, with the
bankruptcy court’s rulings on the Riveras’ second amended
complaint. The bankruptcy court did not distinguish between the
Riveras’ claims for relief that at least in part implicated the
parties’ respective rights in the Riveras’ bankruptcy case from
those claims for relief that only implicated the parties’
respective rights in DBNTC’s nonjudicial foreclosure proceedings.

THEY REJECT GLASKI-

Here, we note that the California Supreme Court recently

granted review from an intermediate appellate court decision
following Jenkins and rejecting Glaski. Yvanova v. New Century
Mortg. Corp., 226 Cal.App.4th 495 (2014), review granted &
opinion de-published, 331 P.3d 1275 (Cal. Aug 27, 2014). Thus,
we eventually will learn how the California Supreme Court views
this issue. Even so, we are tasked with deciding the case before
us, and Ninth Circuit precedent suggests that we should decide
the case now, based on our prediction, rather than wait for the
California Supreme Court to rule. See Hemmings, 285 F.3d at
1203; Lewis v. Telephone Employees Credit Union, 87 F.3d 1537,
1545 (9th Cir. 1996). Because we have no convincing reason to
doubt that the California Supreme Court will follow the weight of
authority among California’s intermediate appellate courts, we
will follow them as well and hold that the Riveras lack standing
to challenge the assignment of their deed of trust based on an
alleged violation of a pooling and servicing agreement to which
they were not a party.

BUT……… THEY DO SUCCEED ON SECURED STATUS

Even though the Riveras’ first claim for relief principally

relies on their allegations regarding the assignment’s violation
of the pooling and servicing agreement, their first claim for
relief also explicitly incorporates their allegations challenging
DBNTC’s proof of claim and disputing the validity of the
Hutchinson endorsement. Those allegations, when combined with
what is set forth in the first claim for relief, are sufficient
on their face to state a claim that DBNTC does not hold a valid
lien against the Riveras’ property because the underlying debt
never was validly transferred to DBNTC. See In re Leisure Time
Sports, Inc., 194 B.R. at 861 (citing Kelly v. Upshaw, 39 Cal.2d
179 (1952) and stating that “a purported assignment of a mortgage
without an assignment of the debt which it secured was a legal
nullity.”).
While the Riveras cannot pursue their first claim for relief
for purposes of directly challenging DBNTC’s pending nonjudicial
foreclosure proceedings, Debrunner, 204 Cal.App.4th at 440-42,
the first claim for relief states a cognizable legal theory to
the extent it is aimed at determining DBNTC’s rights, if any, as
a creditor who has filed a proof of secured claim in the Riveras’
bankruptcy case.

TILA CLAIM UPHELD!—–

Fifth Claim for Relief – for violation of the Federal Truth In Lending Act, 15 U.S.C. § 1641(g)

The Riveras’ TILA Claim alleged, quite simply, that they did
not receive from DBNTC, at the time of Chase’s assignment of the
deed of trust to DBNTC, the notice of change of ownership
required by 15 U.S.C. § 1641(g)(1). That section provides:
In addition to other disclosures required by this
subchapter, not later than 30 days after the date on
which a mortgage loan is sold or otherwise transferred
or assigned to a third party, the creditor that is the
new owner or assignee of the debt shall notify the
borrower in writing of such transfer, including–

(A) the identity, address, telephone number of the new

creditor;

(B) the date of transfer;

 

(C) how to reach an agent or party having authority to

act on behalf of the new creditor;

(D) the location of the place where transfer of

ownership of the debt is recorded; and

(E) any other relevant information regarding the new

creditor.

The bankruptcy court did not explain why it considered this claim as lacking in merit. It refers to the fact that the
Riveras had actual knowledge of the change in ownership within
months of the recordation of the trust deed assignment. But the
bankruptcy court did not explain how or why this actual knowledge
would excuse noncompliance with the requirements of the statute.
Generally, the consumer protections contained in the statute
are liberally interpreted, and creditors must strictly comply
with TILA’s requirements. See McDonald v. Checks–N–Advance, Inc.
(In re Ferrell), 539 F.3d 1186, 1189 (9th Cir. 2008). On its
face, 15 U.S.C. § 1640(a)(2)(A)(iv) imposes upon the assignee of
a deed of trust who violates 15 U.S.C. § 1641(g)(1) statutory
damages of “not less than $400 or greater than $4,000.”
While the Riveras’ TILA claim did not state a plausible
claim for actual damages, it did state a plausible claim for
statutory damages. Consequently, the bankruptcy court erred when
it dismissed the Riveras’ TILA claim.

LAST, THEY GOT REAR ENDED FOR NOT SEEKING LEAVE TO AMEND

Here, however, the Riveras did not argue in either the bankruptcy court or in their opening appeal brief that the court should have granted them leave to amend. Having not raised the issue in either place, we may consider it forfeited. See Golden v. Chicago Title Ins. Co. (In re Choo), 273 B.R. 608, 613 (9th Cir. BAP 2002).

Even if we were to consider the issue, we note that the

bankruptcy court gave the Riveras two chances to amend their
complaint to state viable claims for relief, examined the claims
they presented on three occasions and found them legally
deficient each time. Moreover, the Riveras have not provided us
with all of the record materials that would have permitted us a
full view of the analyses and explanations the bankruptcy court
offered them when it reviewed the Riveras’ original complaint and
their first amended complaint. Under these circumstances, we
will not second-guess the bankruptcy court’s decision to deny
leave to amend. See generally In re Nordeen, 495 B.R. at 489-90
(examining multiple opportunities given to the plaintiffs to
amend their complaint and the bankruptcy court’s efforts to
explain to them the deficiencies in their claims, and ultimately
determining that the court did not abuse its discretion in
denying the plaintiffs leave to amend their second amended
complaint).

Now that you have won your “free “house, what happens next?

For further information please call 954-495-9867 or 520-405-1688. We provide litigation support in all 50 states.

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On an upbeat note, we are getting more and more communication from homeowners who have won their cases outright and not subject to confidentiality agreements. Fortunately these happy homeowners have realized that the fight is not yet over but that they are obviously in control of the narrative. A word of caution about the case cited in yesterday’s article where the Judge granted a “free house” to a homeowner. The New Jersey bankruptcy case is potentially persuasive but legal authority that the Judge in your case must obey.

Banks have gone to great lengths in framing the narrative on these mortgages and these foreclosures. Almost everywhere you hear the phrase “free house.” Of course nobody really knows what anyone means by that phrase. “free houses” are a myth, just like the trusts, the assignments and the “holders” of the note and mortgage. Preventing the mortgagee from enforcement does NOT give a free house to anyone, regardless of the circumstances. It is a rare circumstance that the buyer of the new house does not expend thousands of dollars or tens of thousands of dollars or even hundreds of thousands of dollars on the house that they think they now own.

I know thousands perhaps millions put a down payment into a house thinking that their payment was equity they would retrieve when the house was sold or refinanced. A typical case I have witnessed is a home purchased for $500,000 with $100,000 down payment —- 20% of the purchase price based upon appraisals that wildly speculative and untrue.

Then the house gets sold in a short sale for $300,000. If that homeowner had fought the bank and the bank was found not to be the owner of the mortgage or note or debt and the mortgage was found to be unenforceable or even void, did that homeowner get the house for free. $100k down, plus $50k in improvements, furnishings etc. The homeowner is out $150,000 no matter what happens and that is not free. There is no such thing as a free house and there never was. But mortgages and notes are sometimes ab initio (from the start), unenforceable or void and in today’s market most of them fall somewhere in that category.

And there is an area of confusion between property law, bankruptcy law and contract law. Which brings us to the case decided in New Jersey by a bankruptcy court judge. It is the case of Washington versus specialized loan servicing and the Bank of New York Mellon as trustee for the certificate holders of an allegedly asset-backed trust.

This case is far from a cure all that will fix all other foreclosures. I doubt the Judge had jurisdiction to declare the mortgage void. And therein lies a potential problem for the homeowner that won here. The homeowner might lose on appeal or still have a problem even if the bank’s appeal is turned down.

I will point out again that Bank of New York Mellon represents itself as trustee for the certificate holders and old minutes any representation for the trust itself. One might conclude that the trust does not exist and that the certificate holders who obviously are the investors are the real parties in interest as I have repeatedly stated for more than seven years.
And by the way, NJ does not have a homestead exemption, so the debt, which is real and if it can be computed after giving credit for all payments to the creditors from all sources, is still owed and the homestead can still be foreclosed based upon a money judgment. So a free house is just not the right term to describe any of this.

I don’t think the judge realized that the investors were being directly represented by Bank of New York Mellon and that the reference to the bank as a trustee was merely a self-serving statement by the bank in order to block any inquiry into the identity of the certificate holders who were the obvious real parties in interest. In the months and years to come the distinction which I am drawing here will become increasingly important in court rooms across the country.

The bankruptcy judge carefully analyzed the statute of limitations and concluded that there was no way that the loan could be enforced and that therefore the claim in bankruptcy was void. The judge that he didn’t like to give anyone a free house but that was what he had to do in this case in New Jersey.

The foreclosure case in the state court was dismissed for lack of prosecution without prejudice. The effect of that dismissal was one of the things that was in dispute that the bankruptcy judge decided. The bad news is that I am not so sure this decision will be upheld if it is appealed. But even if it is upheld I’m not so sure that the homeowner actually received the free house that the judge expressly said was being given to him by the judges decision. Bankruptcy Judges are known to have an inflated view of their jurisdictional authority. The District Court Judge above him in the same courthouse might have been able to declare the mortgage void, but I doubt if a bankruptcy judge has that authority. But the decision to prevent enforcement of the mortgage in the bankruptcy proceeding and the decision to cause the alleged creditor to be unsecured instead of secured (which is what I have been advocating for 7 years) is probably valid.

The judge decided that both the note and mortgage were unenforceable. He also decided that because they were unenforceable that Bank of New York Mellon did not have a secured claim for purposes of the bankruptcy proceeding. The judge went further than that by stating that the underlying lien is deemed void pursuant to 11 USC 506(a)(1) and (d). So for purposes of that bankruptcy proceeding court made a determination that Bank of New York Mellon did not have secured status. The Court also seemed to accept the agreement of both size that Bank of New York Mellon or a specialized loan servicing had the original note and mortgage.

The Question I have is the same question that Is being asked in many circles today. When all is said and done the mortgage still is present in the county records — it was recorded so it still exists in the county records of the County recorder in the jurisdiction in which the property is located. My question is whether in the absence of a court order stating that the mortgage is void or nullified, and in the absence of the recording of such an order at the county recorders office, will this homeowner be legally correct in assuming that the mortgage will not affect his title and that no payment will be required at the time the homeowner seeks to sell or refinance the property.

It may seem like splitting hairs and maybe It is. But I think there’s a difference between a lien that is in the county records and therefore encumbers the title answer the question of the enforceability of the lean. When you pull up the title chain by hand or by computer, the mortgage will be there. Would you buy that property without getting rid of that mortgage? Would you lend money on that property? In this case the Bankruptcy judge has decided for purposes of the bankruptcy proceeding that the secured status of Bank of New York Mellon did not exist.

I question whether that decision automatically means that the mortgage was in fact nullified or void unless the County recorder accepts the court order for recording and the recorded order is interpreted as nullification unemployed mortgage document. And THAT basically means you need to file a quiet title action, which bring you back to attacking the initial loan transaction ab initio (from the beginning). Unless you can say that the note and mortgage should never have been released from the closing table, much less recorded, I think there is a potential problem lurking in the shadows. The homeowner might be prevented from selling or refinancing the home without the AMGAR program or something like it.

Otherwise what it comes time to sell or refinance the property, the homeowner may find that he still must deal with either paying off somebody claiming to own the mortgage or the homeowner is required to file a quiet title action to resolve the question. Of course the longer the homeowner waits before taking any action to sell or refinance the property, more likely it is that the homeowner will in fact end up with the property unencumbered by the mortgage. My point is that I don’t think that question has been answered and I don’t think that the answer will be consistent across the country.

It is my opinion that nullification of the mortgage as a void instrument that never should’ve been released much less recorded is first required for the Court can consider of cause of action to quiet title in favor of the homeowner and specifically against the encumbrance filed in the county records as a mortgage. I would also Council caution on applying this bankruptcy case to other cases in the State judicial system even in New Jersey.

But I would also say that the distaste of people sitting on the bench for hey results that benefits the homeowner signals bias for which there is no proper foundation. There is no question that these loans, debts, notes, mortgages, assignments and transfers. collection modification and foreclosures are all clouded in obscure schemes created by the banks and not the borrowers. 50 million borrowers did not wake up one morning and meet in some stadium with the idea of defrauding the banks and the federal government and insurers, guarantors and investors. But a handful of Wall Street titans who had become accustomed to their power, did in fact arrogantly pursue a scheme that did defraud borrowers, investors, insurance companies and the U.S. government.

To say that nobody can file a foreclosure is not to say that the debt cannot be enforced. There are causes of action based solely on common law or the note. If a real creditor could step forward showing a real advance of funds, they would probably prevail in at least establishing that the debt is owed from the homeowner and possibly get a money judgment. In states that have little or no homestead exemption the lien can be recorded, attaches the chain of title for the house and can be foreclosed as a judgment lien. But of course that would require the party seeking to enforce the debt to show that they actually advanced the money as a creditor. And THAT is the problem for the banks. If they had that evidence there would be no argument over the enforceability of the alleged loan documents that I call worthless.

They would have produced it long ago if the notes and mortgages were valid documents. They didn’t, they can’t, and that is why Elizabeth Warren is absolutely right in demanding that the principal balance of the debt be corrected downward. And it is stink and no crime for a Judge to apply the law evenly and allow the chips to fall where they may. If that means nobody gets to enforce the mortgage it doesn’t mean the homeowner received a free house.

The debt is due, after all adjustments, and it could be enforced by other means — unless the truth is that the borrowers ARE off the hook because the original debt, upon which all other debts deals rely as their foundation, has already been paid off. Then the homeowner doesn’t owe the money on the original debt and if somebody wants to make a case against the homeowner for recovery of what they actually lost then let them bring that action. Otherwise too bad. If the original debt is paid off through any third party payment (i.e., if the certificate holders have received payment in full directly or indirectly on their investment), then there should be no possibility of a mortgage foreclosure because that is the only debt that is allegedly secured by a mortgage. Other parties who have been lurking in the shadows would have to come into the limelight and allege and prove their case including the allegation that they are losing money as a result of these complex and obscure transactions.

The banks started this and they should suffer the consequences. There is plenty of blame to go around. To have homeowners pay the full price for the bank’s misbehavior, for the servicer’s fraud, and the Wall Street bank’s greedy method of siphoning the life out of our economy is just plain wrong. Even if we want to treat the loan documents as real, the consequences should be spread around and not on banks who are reporting higher and higher profits from aggressive release of reserves that comes from money they stole from investors —- a fact that is now dawning upon securities analysts as they downgraded Wells Fargo and other banks.

“FREE HOUSE” in NJ Bankruptcy Court

For further information and assistance please call 954-495-9867 and 520-405-1688. We will be covering this decision on the Neil Garfield show tonight.

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Click in to tune in at The Neil Garfield Show

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

see http://stopforeclosurefraud.com/2014/11/18/in-re-washington-bankr-court-d-new-jersey-morris-county-homeowner-gets-a-free-house/

also see Senator Elizabeth Warren Ramping Up Attack: When Will “Principal reduction” become a reality?

This case is notable for several reasons:

  1. The Judge expresses outright that it is general judicial bias that homeowner should not prevail in foreclosure litigation.
  2. Nevertheless this Judge trashes the the claim of SPS (Specialized Loan Services) and BONY (Bank of New York) Mellon leaving the homeowner with what the Judge calls a free house.
  3. The Judge concludes that the mortgage was unenforceable and that the note was unenforceable after a careful examination of the statute of limitations under New Jersey law.
  4. The Judge concludes that the mortgage is void, not just unenforceable, thus clearing title.

While we can be pleased with the result, some of the reasoning might not withstand an appeal, if the foreclosers take the risk of filing one.

Here are some interesting excerpts:

“No one gets a free house.” This Court and others have uttered that admonition since the early days of the mortgage crisis, where homeowners have sought relief under a myriad of state and federal consumer protection statutes and the Bankruptcy Code. Yet, with a proper measure of disquiet and chagrin, the Court now must retreat from this position, as Gordon A. Washington (“the Debtor”) has presented a convincing argument for entitlement to such relief. So, with figurative hand holding the nose, the Court, for the reasons set forth below, will grant Debtor’s motion for summary judgment.
The Defendants accelerated the maturity date of the loan to the June 1, 2007 default date, as acknowledged in the Assignment (dkt. 7, Exhibit L).[10] Moreover, neither the Debtor nor the Defendants have taken any measures under the note or mortgage, or under the Fair Foreclosure Act, to de-accelerate the debt, and the Defendants have further failed to file a foreclosure complaint within 6 years of the accelerated maturity date as required by N.J.S.A. § 2A:50-56.1(a). Accordingly, the Defendants are now time-barred from filing a foreclosure complaint and from obtaining a final judgment of foreclosure.

11 U.S.C. § 502(b)(1) (emphasis added). 11 U.S.C. § 506 controls the allowance of secured claims and provides that, if the claim underlying the lien is disallowed, then the lien is void:

(a)(1) An allowed claim of a creditor secured by a lien on property in which the estate has an interest, or that is subject to setoff under section 553 of this title, is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property, or to the extent of the amount subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor’s interest or the amount so subject to setoff is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest.

(d) To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void, unless [conditions not relevant here exist].
As explained above, by application of N.J.S.A. § 2A:50-56.1(a) and (c), the Defendants are time-barred under New Jersey state law from enforcing either the note or the accelerated mortgage. As a result, Defendants’ proof of claim 7 must be disallowed under 11 U.S.C. § 502(b)(1) as unenforceable against the Debtor or against Debtor’s property under applicable state law. Having determined that Defendants do not have an allowed secured claim, the underlying lien is deemed void pursuant to 11 U.S.C. §§ 506(a)(1) and (d).[11]
In light of Defendants’ acceleration of the maturity date of the underlying debt as of June 1, 2007, and because neither Debtor nor Defendants took any action under either the mortgage instruments, or the Fair Foreclosure Act, to de-accelerate the maturity date, Defendants’ right to file a foreclosure complaint expired 6 years after the June 1, 2007 acceleration date under N.J.S.A. § 2A:50-56.1(a). Given that Defendants’ putative secured claim is unenforceable under 11 U.S.C. § 502(b)(1), by applicable New Jersey statute, their mortgage lien is void under 11 U.S.C. § 506(d), and the Debtor retains the property, free of any claim of the Defendants. Debtor is to submit a form of judgment. The Court will proceed to gargle in an effort to remove the lingering bad taste.
11] In as much as the Court finds that the Defendants are time-barred from enforcing the note or the mortgage, it is not necessary to address Debtor’s arguments that Defendants lack standing to enforce the note and mortgage based on alleged defects in the Assignment or the alleged impact of a Settlement Agreement.

National Honesty Day? America’s Book of Lies

Today is National Honesty Day. While it should be a celebration of how honest we have been the other 364 days of the year, it is rather a day of reflection on how dishonest we have been. Perhaps today could be a day in which we say we will at least be honest today about everything we say or do. But that isn’t likely. Today I focus on the economy and the housing crisis. Yes despite the corruption of financial journalism in which we are told of improvements, our economy — led by the housing markets — is still sputtering. It will continue to do so until we confront the truth about housing, and in particular foreclosures. Tennessee, Virginia and other states continue to lead the way in a downward spiral leading to the lowest rate of home ownership since the 1990’s with no bottom in sight.

Here are a few of the many articles pointing out the reality of our situation contrasted with the absence of articles in financial journalism directed at outright corruption on Wall Street where the players continue to pursue illicit, fraudulent and harmful schemes against our society performing acts that can and do get jail time for anyone else who plays that game.

It isn’t just that they escaping jail time. The jailing of bankers would take a couple of thousand people off the street that would otherwise be doing harm to us.

The main point is that we know they are doing the wrong thing in foreclosing on property they don’t own using “balances” the borrower doesn’t owe; we know they effectively stole the money from the investors who thought they were buying mortgage bonds, we know they effectively stole the title protection and documents that should have been executed in favor of the real source of funds, we know they received multiple payments from third parties and we know they are getting twin benefits from foreclosures that (a) should not be legally allowed and (b) only compound the damages to investors and homeowners.

The bottom line: Until we address wrongful foreclosures, the housing market, which has always led the economy, will continue to sputter, flatline or crash again. Transferring wealth from the middle class to the banks is a recipe for disaster whether it is legal or illegal. In this case it plainly illegal in most cases.

And despite the planted articles paid for by the banks, we still have over 700,000 foreclosures to go in the next year and over 9,000,000 homeowners who are so deep underwater that their situation is a clear and present danger of “strategic default” on claims that are both untrue and unfair.

Here is a sampling of corroborative evidence for my conclusions:

Senator Elizabeth Warren’s Candid Take on the Foreclosure Crisis

There it was: The Treasury foreclosure program was intended to foam the runway to protect against a crash landing by the banks. Millions of people were getting tossed out on the street, but the secretary of the Treasury believed the government’s most important job was to provide a soft landing for the tender fannies of the banks.”

Lynn Symoniak is Thwarted by Government as She Pursues Other Banks for the Same Thing She Proved Before

Government prosecutors who relied on a Florida whistleblower’s evidence to win foreclosure fraud settlements with major banks two years ago are declining to help her pursue identical claims against a second set of large financial institutions.

Lynn Szymoniak first found proof that millions of American foreclosures were based on faulty and falsified documents while fighting her own foreclosure. Her three-year legal fight helped uncover the fact that banks were “robosigning” documents — hiring people to forge signatures and backdate legal paperwork the firms needed in order to foreclose on people’s homes — as a routine practice. Court papers that were unsealed last summer show that the fraudulent practices Szymoniak discovered affect trillions of dollars worth of mortgages.

More than 700,000 Foreclosures Expected Over Next Year

How Bank Watchdogs Killed Our Last Chance At Justice For Foreclosure Victims

The results are in. The award for the sorriest chapter of the great American foreclosure crisis goes to the Independent Foreclosure Review, a billion-dollar sinkhole that produced nothing but heartache for aggrieved homeowners, and a big black eye for regulators.

The foreclosure review was supposed to uncover abuses in how the mortgage industry coped with the epic wave of foreclosures that swept the U.S. in the aftermath of the housing crash. In a deal with the Office of the Comptroller of the Currency and the Federal Reserve, more than a dozen companies, including major banks, agreed to hire independent auditors to comb through loan files, identify errors and award just compensation to people who’d been abused in the foreclosure process.

But in January 2013, amid mounting evidence that the entire process was compromised by bank interference and government mismanagement, regulators abruptly shut the program down. They replaced it with a nearly $10 billion legal settlement that satisfied almost no one. Borrowers received paltry payouts, with sums determined by the very banks they accused of making their lives hell.

Investigation Stalled and Diverted as to Bank Fraud Against Investors and Homeowners

The Government Accountability Office released the results of its study of the Independent Foreclosure Review, conducted by the Office of the Comptroller of the Currency and the Federal Reserve in 2011 and 2012, and the results show that the foreclosure process is lacking in oversight and transparency.

According to the GAO review, which can be read in full here, the OCC and Fed signed consent orders with 16 mortgage servicers in 2011 and 2012 that required the servicers to hire consultants to review foreclosure files for efforts and remediate harm to borrowers.

In 2013, regulators amended the consent orders for all but one servicer, ending the file reviews and requiring servicers to provide $3.9 billion in cash payments to about 4.4 million borrowers and $6 billion in foreclosure prevention actions, such as loan modifications. The list of impacted mortgage servicers can be found here, as well as any updates. It should be noted that the entire process faced controversy before, as critics called the IFR cumbersome and costly.

Banks Profit from Suicides of Their Officers and Employees

After a recent rash of mysterious apparent suicides shook the financial world, researchers are scrambling to find answers about what really is the reason behind these multiple deaths. Some observers have now come to a rather shocking conclusion.

Wall Street on Parade bloggers Pam and Russ Martens wrote this week that something seems awry regarding the bank-owned life insurance (BOLI) policies held by JPMorgan Chase.

Four of the biggest banks on Wall Street combined hold over $680 billion in BOLI policies, the bloggers reported, but JPMorgan held around $17.9 billion in BOLI assets at the end of last year to Citigroup’s comparably meager $8.8 billion.

Government Cover-Up to Protect the Banks and Screw Homeowners and Investors

A new government report suggests that errors made by banks and their agents during foreclosures might have been significantly higher than was previously believed when regulators halted a national review of the banks’ mortgage servicing operations.

When banking regulators decided to end the independent foreclosure review last year, most banks had not completed the examinations of their mortgage modification and foreclosure practices.

At the time, the regulators — the Office of the Comptroller of the Currency and the Federal Reserve — found that lengthy reviews by bank-hired consultants were delaying compensation getting to borrowers who had suffered through improper modifications and other problems.

But the decision to cut short the review left regulators with limited information about actual harm to borrowers when they negotiated a $10 billion settlement as part of agreements with 15 banks, according to a draft of a report by the Government Accountability Office reviewed by The New York Times.

The report shows, for example, that an unidentified bank had an error rate of about 24 percent. This bank had completed far more reviews of borrowers’ files than a group of 11 banks involved the deal, suggesting that if other banks had looked over more of their records, additional errors might have been discovered.

Wrongful Foreclosure Rate at least 24%: Wrongful or Fraudulent?

The report shows, for example, that an unidentified bank had an error rate of about 24 percent. This bank had completed far more reviews of borrowers’ files than a group of 11 banks involved the deal, suggesting that if other banks had looked over more of their records, additional errors might have been discovered.

http://www.marketpulse.com/20140430/u-s-housing-recovery-struggles/

http://www.csmonitor.com/Business/Latest-News-Wires/2014/0429/Home-buying-loses-allure-ownership-rate-lowest-since-1995

http://www.opednews.com/articles/It-s-Good–no–Great-to-by-William-K-Black–Bank-Failure_Bank-Failures_Bankers_Banking-140430-322.html

[DISHONEST EUPHEMISMS: The context of this WSJ story is the broader series of betrayals of homeowners by the regulators and prosecutors led initially by Treasury Secretary Timothy Geithner and his infamous “foam the runways” comment in which he admitted and urged that programs “sold” as benefitting distressed homeowners be used instead to aid the banks (more precisely, the bank CEOs) whose frauds caused the crisis.  The WSJ article deals with one of the several settlements with the banks that “service” home mortgages and foreclose on them.  Private attorneys first obtained the evidence that the servicers were engaged in massive foreclosure fraud involving knowingly filing hundreds of thousands of false affidavits under (non) penalty of perjury.  As a senior former AUSA said publicly at the INET conference a few weeks ago about these cases — they were slam dunk prosecutions.  But you know what happened; no senior banker or bank was prosecuted.  No banker was sued civilly by the government.  No banker had to pay back his bonus that he “earned” through fraud.

 

 

Don’t Admit the Default

Kudos again to Jim Macklin for sitting in for me last night. Excellent job — but don’t get too comfortable in my chair :). Lots of stuff in another mini-seminar packed into 28 minutes of talk.

A big point made by the attorney guest Charles Marshall, with which I obviously agree, is don’t admit the default in a foreclosure unless that is really what you mean to do. I have been saying for 8 years that lawyers and pro se litigants and Petitioners in bankruptcy proceedings have been cutting their own throats by stating outright or implying that the default exists. It probably doesn’t exist, even though it SEEMS like it MUST exist since the borrower stopped paying.

There is not a default just because a borrower stops paying. The default occurs when the CREDITOR DOESN’T GET PAID. Until the false game of “securitization started” there was no difference between the two — i.e., when the borrower stopped paying the creditor didn’t get paid. But that is not the case in 96% of all residential loan transactions between 2001 and the present. Today there are multiple ways for the creditor to get paid besides the servicer receiving the borrower’s payment. the Courts are applying yesterday’s law without realizing that today’s facts are different.

Whether the creditor got paid and is still being paid is a question of fact that must be determined in a hearing where evidence is presented. All indications from the Pooling and Servicing Agreements, Distribution Reports, existing lawsuits from investors, insurers, counterparties in other hedge contracts like credit default swaps — they all indicate that there were multiple channels for payment that had little if anything to do with an individual borrower making payments to the servicer. Most Trust beneficiaries get paid regardless of whether the borrower makes payment, under provisions of the PSA for servicer advances, Trustee advances or some combination of those two plus the other co-obligors mentioned above.

Why would you admit a default on the part of the creditor’s account when you don’t have access to the money trail to identify the creditor? Why would you implicitly admit that the creditor has even been identified? Why would you admit a payment was due under a note and mortgage (or deed of trust) that were void front the start?

The banks have done a good job of getting courts to infer that the payment was due, to infer that the creditor is identified, to infer that the payment to the creditor wasn’t received by the creditor, and to infer that the balance shown by the servicer and the history of the creditor’s account can be shown by reference only to the servicer’s account. But that isn’t true. So why would you admit to something that isn’t true and why would you admit to something you know nothing about.

You don’t know because only the closing agent, originator and all the other “securitization” parties have any idea about the trail of money — the real transactions — and how the money was handled. And they are all suing the broker dealers and each other stating that fraud was committed and mismanagement of the multiple channels of payments received for, or on behalf of the trust or trust beneficiaries.

In the end it is exactly that point that will reach critical mass in the courts, when judges realize that the creditor has no default in its business records because it got paid — and the foreclosure by intermediaries in the false securitization scheme is a sham.

In California the issue they discussed last night about choice of remedies is also what I have been discussing for the last 8 years, but I must admit they said it better than I ever did. Either go for the money or go for the property — you can’t do both. And if you  elected a remedy or assumed a risk, you can’t back out of it later — which is why the point was made last night that the borrower was a third party beneficiary of the transaction with investors which is why it is a single transaction — if there is no borrower, there wold be no investment. If there was no investment, there would have been no borrower. The transaction could not exist without both the investor and the borrower.

Bravo to Jim Macklin, Dan Edstrom and Charles Marshall, Esq. And remember don’t act on these insights without consulting with a licensed attorney who knows about this area of the law.

Bankruptcy Lawyers: it starts in the schedules — admission of secured debt is deadly

I was traveling and re listening to an older lecture given by 2 Bankruptcy judges generally held in high esteem. The largest point was that naming a party as the creditor and checking the right boxes showing they are secured basically ends the discussion on the motion to lift stay and restricts your options to either filing an adversary lawsuit attached to the administrative bankruptcy petition or filing an action in state court which is where you will be if you don’t follow this same simple direction. If you file schedules attached to your petition for bankruptcy relief, as you are required to do, these are basically the same as sworn affidavits. They will be used against you in any contested hearing.

So the judge lifts the stay and then often mistakenly enters additional language in the order ending the issue of whom is the real lender. After all, that is who you were making the payments to, right, so they must be a creditor. And this is all about a mortgage foreclosure so they must, in addition to being a creditor, they must be a secured creditor. And if the collateral is worth less than the claim, there is not much else to talk about it is simple to these Judges because nobody has shown them differently and one of the Judges is retired now. By definition when the Bankruptcy Judge says in the order who is the creditor, he or she has gone beyond their jurisdiction and due process because there was no evidentiary hearing.

This all results from a combination of technology (garbage in, garbage out), inexperience with securitized mortgages, laziness and failure to do the research to determine what is the truth and what is not. If you are a bankruptcy practitioner who uses one of the desktop bankruptcy programs, then the questions, boxes, and fill-ins are intuitively placed in the schedule that your client swears to. No problem unless the schedules are wrong. And they are wrong where the debt runs from the Petitioner to the REMIC trust beneficiaries and is unsecured by any mortgage that the homeowner borrower petitioner ever signed or meant to sign.

The first point is that the amount if the debt is unknown and we now this for a fact because there are multiple offsets for Third party payment (like Servicer advances) that must be examined one by one. It could be zero, it could be there is money due to the borrower, it could be more or less what is being demanded by the Servicer or trustee. Another thing we know is that neither the Servicer or trustee is likely to know the amount of their claim. So send out a QWR to all addresses for the Servicer and the REMIC trustee.

If you get several different payment histories it is a fair bet they came off of different records, different systems and require the records custodian to authenticate each Servicer’ rendition, of beginning balance, ending balance and every transaction in between. The creditor who filed a proof of claim has the burden of showing a color able right to enforce the mortgage. That can only come from the pooling and servicing agreement. The parties to the PSA are the REMIC Trust, the REMIC Trust beneficiaries and the broker dealer who sold the bonds issued by the REMIC trust.

But if there is no trust or the REMIC trust never actually acquired the subject loan, then the appointed Servicer in the PSA draws no power from a PSA for a nonexistent or empty trust (at least empty of the subject loan.) it is not the Servicer by right, it has become the Servicer by its intervention into the contractual right between the borrower homeowner and the lender (the REMIC trust beneficiaries). The “apparent authority” of the Servicer will only take it so far.

And every transactions means that as a Servicer they were paying or passing on the borrower’s payments . Where are those records — missing. Does the corporate representative know about those payments? Who was the creditor paid. When did the payments from Servicer start and when did they stop — or are they still on-going right up to and including trial, foreclosure sale auction and final disposition of proceeds from an REO sale.

So from the perspective of the Petitioner he might have made payments to an entity that claimed to be the Servicer and those payments are due back not the bankruptcy estate. OOPS but that is what happens when a company arrogated unto itself the powers of a Servicer for loans that are claimed to be in a trust — where the trust doesn’t own the loan, note or mortgage (deed of trust). Thus the Servicer would be owed zero but you would show them in the unsecured column, unliquidated and disputed. This could have a substantial income on the amount of the claim, whether part or all of it is secured.

But no matter, if you fail to take a history from the client, get the closing documents, title and securitization report together with loan level analysis, you are going to do a disservice to your client. We provide litigation support and analysis to give you the data to make an informed decision, fight the POC, MLS, turnover of rents, etc. Then you might avoid the dreaded call of calling your insurance carrier who will probably tell you neither paid for nor received a tail on your claims made policy.

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What to Do When the “Original” Note is Proferred

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The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.
There are two issues when the other side presents original documents. First is that they say these are originals and they do not accompany it with an affidavit from someone with actual personal knowledge of the transactions or the high bar for business records exceptions to hearsay. My experience is that 50-50, the documents are original or fabricated by use of Photoshop and a laser printer or dot matrix printer. So what you need to do is to go down to the clerk’s office and see what they filed. It would not be unusual for them to file a copy saying it was the original. Second, on that same point, the original can be examined. When the signatures are heavy there should be indentations on the back. Also a notary stamp tends to bleed through the paper to the back.

The second major point is the issue of holder v owner. The owner of the debt is entitled to the ultimate relief, not the note-holder unless the other side fails to object. So along with the proffering of the “originals” they must tell the story, using competent foundation testimony, how they came into possession of the note. In discovery this is done by asking to see proof of payment and proof of loss. Which is to say that you want to see the canceled check or wire transfer receipt that paid for the “transaction” in which the possessor of the note became a holder under UCC and is entitled to a rebuttable presumption that they are the owner. If there is no transaction for value, then the note was not negotiated under the terms of the UCC.

Since they possess the note there is a hairline allowance that they may sue for the collection on a note in which they have no financial sake but there is no ability to win if the borrower denies they received the money or that the possessor of the note obtained the note for purposes of litigation and is not the creditor — i.e., the party who could properly submit a credit bid at auction by a creditor as defined by Florida statutes, nor are they able to execute a satisfaction of mortgage because even upon the receipt of the money they have no loss, and under the terms of the note itself the overpayment is due back to the borrower.

And just as importantly, they cannot modify the mortgage so any submission to them for modification is futile without them showing proof of payment, proof of loss and/or authority to speak for and represent the interests of an identified creditor.

An identified creditor is not merely a name but is a report of the name of the owner of the debt, the contact person and their contact information. Then you can contact the owner and ask for the balance and how it was computed. So the failure to identify the actual owner is interference with the borrower’s right to seek HAMP or HARP modifications — potentially a cause of action for intentional interference in the contractual relations of another (asserting that the note and mortgage incorporated existing law) or violation of statutory duties since the Dodd-Frank act includes all participants in the securitization scheme as servicers.

The key is the money trail because that is the actual transaction where money exchanged hands and it must be shown that the money trail leads from A to B to C etc. The documents would then be examined to see if they are in fact relating to the transaction or a particular leg of the chain.

If the documents don’t conform to the actual monetary transaction, then the documents are refuted as evidence of the debt or any right to enforce the debt. What we know is that in nearly all cases the documents at origination do NOT reflect the actual monetary transaction which means they (a) do not show the actual owner of the debt but rather a straw-man nominee for an undisclosed lender contrary to several provisions of the Truth in Lending Act. The same holds true for the false securitization” chain in which documents are fabricated to refer to transactions that never occurred — where there was a transfer of the debt on paper that was worthless because no transaction took place.

One last thing on this is the issue of blank endorsements. There is widespread confusion between the requirements of the UCC and the requirements of the Pooling and Servicing Agreement. It is absolutely true that a blank endorsement on a negotiable instrument is valid and that the holder possesses all rights of a holder including the presumption (rebuttable) of ownership.

But hundreds of Judges have erred in stopping their inquiry there. Because the UCC says that the agreement of the parties is paramount to any provision of the act. So if the PSA says the endorsement and assignment must be in a particular form (recordable) made out to the trust and that no blank endorsements will be accepted, then the indorsement is an offer which cannot be accepted by the asset pool or the trustee for the asset pool because it would violate an express prohibition in the PSA.

And that leads to the last point which is that a document calling itself an assignment is not irrefutable evidence of an actual transfer of the loan. If the assignee does not agree to take it, then the transaction is void.  None of the assignments I have seen have any joinder and acceptance by the trustee or anyone on behalf of the pool because nobody on the trustee level is willing to risk jail, even though Eric Holder now says he won’t prosecute those crimes. If you take the deposition of the trustee and ask for information concerning the trust account, they will get all squirrelly because there is no trust account on which the trustee is a signatory.

If you ask them whether they accepted the assignment of a defaulted loan and if so, what was the basis for them doing so they will get even more nervous. And if you ask them specifically if they accepted the assignment which you attach to the interrogatory or which you show them at deposition, they will have to say that they did not execute any document accepting that assignment, and then they will be required to agree, when you point out the PSA provisions that no such assignment or endorsement would be valid.

Prommis Holdings LLC Files for Bankruptcy Protection

I have not followed Prommis Holdings closely but I can recall that some people have sent in reports that Prommis was the named creditor in some foreclosure proceedings. The reason I am posting this is because the bankruptcy filings including the statement of affairs will probably give some important clues to the real money story on those mortgages where Prommis was involved. I’m sure you will not find the loan receivables account that are mysteriously absent from virtually all such filings and FDIC resolutions.

And remember that when the petition for bankruptcy is filed it must include a look-back period during which any assignments or transfers must be disclosed. So there is a very narrow window in which the petitioner could even claim ownership of the loan with or without any fabricated evidence.

US Trustees in bankruptcy are making a mistake when they do not pay attention to alleged assignments executed AFTER the petition was filed and sometimes AFTER the plan is confirmed or the company is liquidated. Such an assignment would indicate that either the petitioner lied about its assets or was committing fraud in executing the assignment — particularly without the US Trustee’s consent and joinder.

The Courts are making the same mistake if they accept such an assignment that does not have US Trustees consent and joinder, besides the usual mistake of not recognizing that the petitioner never had a stake in the loan to begin with. The same logic applies to receivership created by court order, the FDIC or any other “estate” created.

That would indicate, as I have been saying all along, that the origination and transfer paperwork is nothing more than paper and tells the story of fictitious transactions, to wit: that someone “bought” the loan. Upon examination of the money trail and demanding wire transfer receipts or canceled checks it is doubtful that you find any consideration paid for any transfer and in most cases you won’t find any consideration for even the origination of the loan.

Think of it this way: if you were the investor who advanced money to the underwriter (investment bank) who then sent the investor’s funds down to a closing agent to pay for the loan, whose name would you want to be on the note and mortgage? Who is the creditor? YOU! But that isn’t what happened and there is nothing the banks can do and no amount of paperwork can cover up the fact that there was consideration transferred exactly once in the origination and transfer of the loans — when the investors put up the money which the investment bank acting as intermediary sent to the closing agent.

The fact that the closing documents and transfer documents do not show the investors as the creditors is incompatible with the realities of the money trail. Thus the documents were fabricated and any signature procured by the parties from the alleged borrower was procured by fraud and deceit — causing an immediate cloud on title.

At the end of the day, the intermediaries must answer one simple question: why didn’t you put the investors’ name or the trust name on the note and mortgage or a “valid” assignment when the loan was made and within the 90 day window prescribed by the REMIC statutes of the Internal Revenue Code and the Pooling and Servicing Agreement? Nobody would want or allow someone else’s name on the note or mortgage that they funded. So why did it happen? The answer must be that the intermediaries were all breaching every conceivable duty to the investors and the borrowers in their quest for higher profits by claiming the loans to be owned by the intermediaries, most of whom were not even handling the money as a conduit.

By creating the illusion of ownership, these intermediaries diverted insurance mitigation payments from investors and diverted credit default swap mitigation payments from the investors. These intermediaries owe the investors AND the borrowers the money they took as undisclosed compensation that was unjustly diverted, with the risk of loss being left solely on the investors and the borrowers.

That is an account payable to the investor which means that the accounts receivables they have are off-set and should be off-set by actual payment of those fees. If they fail to get that money it is not any fault of the borrower. The off-set to the receivables from the borrowers caused by the receivables from the intermediaries for loss mitigation payments reduces the balance due from the borrower by simple arithmetic. No “forgiveness” is necessary. And THAT is why it is so important to focus almost exclusively on the actual trail of money — who paid what to whom and when and how much.

And all of that means that the notice of default, notice of sale, foreclosure lawsuit, and demand for payments are all wrong. This is not just a technical issue — it runs to the heart of the false securitization scheme that covered over the PONZI scheme cooked up on Wall Street. The consensus on this has been skewed by the failure of the Justice department to act; but Holder explained that saying that it was a conscious decision not to prosecute because of the damaging effects on the economy if the country’s main banks were all found guilty of criminal fraud.

You can’t do anything about the Holder’s decision to prosecute but that doesn’t mean that the facts, strategy and logic presented here cannot be used to gain traction. Just keep your eye on the ball and start with the money trail and show what documents SHOULD have been produced and what they SHOULD have said and then compare it with what WAS produced and you’ll have defeated the foreclosure. This is done through discovery and the presumptions that arise when a party refuses to comply. They are not going to admit anytime soon that what I have said in this article is true. But the Judges are not stupid. If you show a clear path to the Judge that supports your discovery demands, coupled with your denial of all essential elements of the foreclosure, and you persist relentlessly, you are going to get traction.

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