Hawaii Supreme Court: Bond on Appeal Should be Based Upon Evidence of Potential Loss Pending Appeal, Not the Value of the Property.

Posted on July 6, 2020 by Neil Garfield

Many thanks again to Attorney Gary Dubin for bringing this to my attention.

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The current hodgepodge of decisions that I have always maintained were merely vehicles to discourage appeals is taken to task in this well-reasoned decision.

In Hawaii the rule is now no bond pending appeal or low bond pending appeal.

The Hawaii Supreme Court has merely applied principales that are already stated in all US jurisdictions and applied it to limit the discretion of the trial court or even an appellate court to set an arbitrary amount to stay the effect of an adverse judgement.

But this does not mean that a stay order will always be granted.

see Kelepolo Hawaii decision 2020-scwc-18-0000138

The reason that judges abuse their discretion in setting bond for appeals is that they have already made a decision and they don’t want it reversed. Reversals look bad on a judge’s record and too many reversals can impede their ambitions to be on higher courts or higher political office.

And up until now the court’s have been reluctant to intrude upon the wide discretion allowed to trial courts and appellate courts (either one can grant a stay and set bond).

Finally an element stated but rarely used as the basis for a decision on whether the lower courts based their discretion has been elevated to where it belongs, to wit: courts may not use high bond to discourage appeals.

Just because the property is worth $1 million does not mean that the bond should be set at $1 million — unless there is clear and convincing evidence that the entire value of the property will be lost pending appeal.

In a rising market it is perfectly acceptable to have no bond, particularly where bond causes undue hardship (like bankruptcy) on the appealing party.

While authoritative in Hawaii this case may be cited as persuasive and linked to the state specific decisions of every state in the U.S. It merely states the results of the doctrines already used in all states.

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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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Filed under: appeals, discovery, Eviction, evidence, foreclosure, Motions | Tagged: , , , | 1 Comment »

Where is the Loan Receivable? Invitation to Investors Who Bought Mortgage Bonds

Posted on October 18, 2012 by Neil Garfield

INVESTORS READ CAREFULLY

IF YOU BOUGHT MORTGAGE BONDS DURING THE MELTDOWN

As for the Borrower, we have the obligation, then the note supposedly evidence of the obligation, and then the mortgage which pledges the home as collateral for faithful performance as per the terms of the note.

As for the investor/lenders we also have a mortgage bond, supposedly backed by loans, in which repayment terms are vastly different from the note signed by the borrower.

This problem could have been alleviated if the investment bankers had simply placed the name of the REMIC on the note and mortgage but they had other ideas about trading with and on claims of ownership of the note, hence MERS and other intermediaries were introduced so that ownership would be obscured, thus creating unenforceable notes and mortgages as several investor suits have stated.

In accounting terms if a bank or other entity or institution provides a loan to someone, it would adjust its books and records to reflect (a) a loan receivable and (b) a reserve for bad debt against that loan receivable. The loan receivable goes into assets, and the reserve for bad debt goes on the liability side of the balance sheet.

After 6 years of this craziness I have come to the opinion that it is virtually certain that no entity, person or institution EVER had a loan receivable on their books with respect to most loans (96%) that were all subjected to false claims of securitization and assignments. What does that mean for the loan?

Assuming that the failure of any institution to properly record the loan was intentional, which it was, it undermines any claim on the documents or instruments in the fake chain of securitization and assignments. The most I have ever seen is a category in the asset section of the balance sheet called “Held for sale” which basically encompassed 96% on average of all loans on the books of originators, even if they were banks.

So what is the difference and how can this be used? What does it show? Is this something the Judge can understand? Yes, if you understand it and explain it correctly.

  1. The borrower signed a note to which the lender was not a party.
  2. The lender accepted a bond to which the borrower was not a party.
  3. The note only suggests one obligor — the borrower and provides for use of proceeds of payments on that note.
  4. The note only provides for one creditor — the payee on the note payable to the party the borrower THOUGHT was the lender, but wasn’t.
  5. The note and riders provide for the method and manner of repayment.
  6. The bond suggests multiple obligors and the record shows that the subservicer, master servicer, insurers, credit default swap counterparties, and diversion of payments from one tranche to another and one loan to another all cover the repayment of the interest and principal on the bond.
  7. The bond has a different interest rate than the note.
  8. The bond provides for cross collateralization and overcollateralization which is a fancy way of commingling multiple payments received from multiple parties and allocated them in a manner that appears to be exclusively determined by the Master Servicer.
  9. The bond provides for continued payment by the subservicer of the monthly payment whether or not the original borrower makes a payment.
  10. The note does not contain or even refer tot hose terms. In fact the note contradicts the bond in that the proceeds of payment made or allocated to the subject loan must be utilized in specific ways expressed in the note — ways that are far different than the ways the money is to be used when it comes to paying some lenders and not others.
  11. The lender advances funds, part of which are used to fund the loan but the lender’s interests are not protected by the closing documents that the borrower signs.
  12. The borrower signs the documents without receiving disclosure required by Federal and state laws as to the identity of the lender and terms of compensation, repayment etc.
  13. In short, the note doesn’t match the bond. If the glove doesn’t fit, you must acquit, like it or not.
  14. Neither the note nor the bond match the common law obligation between the borrower and the lender(s).
  15. Thus three sets of repayment schedules are presented — those in the note, those in the bond, and the common law demand repayment.
  16. If the note was payable to the lender, it could be secured by a mortgage. Since it was not made payable to the lender, the mortgage recorded is subject to cancellation of instrument.
  17. The bond is not secured obviously because the lender was not party to the documents signed by the borrower.
  18. The common law obligation appears to be the only valid obligation or debt that could be collected by providing the loan to borrower. The presumption would be that it is a demand loan but obviously unsecured by a mortgage signed by the borrower.

Thus when all is said and done and reality is introduced to most of these foreclosures, judicial, non-judicial or in bankruptcy courts or otherwise, you are left with an undocumented demand loan that is unsecured and which can be discharged in bankruptcy.

But most homeowners would be more than happy to negotiate in good faith just as the hundreds of thousands of people who applied for loan modifications believing the servicer was actually authorized when it wasn’t.

If you sweep away all the debris, the investors/lenders are NOT at risk for being fraudulent lenders but are the victims of securities fraud. And the borrowers are victims of deceptive lending practices, fraud and a host of other causes of action against virtually everyone except the actual lender. All of this is true only if you accept the premises described above which I consider to be unavoidable.

Thus the obvious answer is for a clearinghouse arrangement to be established by which the borrowers could communicate with investor lenders, unless the investors simply want to stick with their claims against the investment bank for selling them trash described as bonds.

I submit that the borrowers would enter into a true, non-defective mortgage directly with the investors to mitigate the investors loss and that the amount borrowers are willing to offer as the loan balance exceeds the value of the property and far exceeds the value of the proceeds on foreclosure.

I offer the services of my various technology platforms to be the intermediary through which the investors’ claims are collated into distinct groups which may or may not match up with the REMICs that were described in the prospectus because those REMICs were never funded.

Having done that we can provide investors with proof of how their money was misused and at the same time mitigate their losses.

This platform would match borrowers to groups of investors who would set forth the guidelines for accepting modification, given the current market conditions and the fact that the obligation is not secured.

Several managed funds have expressed some interest in this idea. I need to hear from more of you. If any managed fund or other investor in mortgage bonds would like to discuss this further, please call our customer service number 520-405-1688 and you will either receive an immediate call back or a  telephone appointment for a teleconference will be set up for you and/or your colleagues. We are looking for groups of fund managers because I don’t want to have 300 conversations when I could have just 5-6.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , | 97 Comments »

SUPERSEDEAS BOND USED AS WEAPON AGAINST HOMEOWNERS TO STIFLE CLAIMS

Posted on August 12, 2011 by Neil Garfield

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COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

JUDGES: ASSUME THE BORROWER IS WRONG

So you have denied the claims of the pretenders and put that in issue. You have even alleged fraud, forgery and fabrication and the catch-word “robosigning”. But the Judge, alleging that he did not want to “make new law” (which wasn’t true) or allegedly because he didn’t want to start an avalanche of litigation interfering with judicial economy (and therefore allowing fraud and theft on the largest scale ever known to human history) has not only denied your claims and motions, but refused to even put the matter at issue, thus enabling you to at least use discovery to prove your point.

So the pretenders have their way: no evidence has been introduced into the record. You have proffered, they have proffered, but somehow their proffer means something more than your proffer even though no proffer is evidence.

Attorneys recognize this as low hanging fruit on appeal, where the trial judge is going to get the case back on remand with instructions to listen to the evidence and allow each side to produce real evidence, not proffers from counsel, and allow each side to conduct discovery. It’s not guaranteed but it is very likely. And the pretenders know that if it ever gets down to real evidence as opposed to arguments of counsel, they are dead in the water, subject to sanctions and liability for slander of title and other claims.

So they have come up with this strategy of setting supersedeas bond higher and higher so that the order appealed from goes into effect and they are able to kick the can down the road with a foreclosure sale, more transfers etc in the title chain, thus enabling them to argue the deed is done and the “former” homeowner must be relegated to only claiming damages, not the home itself. People can be kicked out by eviction proceedings that typically are conducted in courts of limited jurisdiction where in most states you are not allowed to even allege that the title is not real or that it was illegally obtained.

Initially supersedeas bond was set at levels that could be met by homeowners — sometimes as little as $500 or a monthly amount equal to a small fraction of the former monthly payment. Now, Judges who are heavily influenced by banks and large law firms, especially chief Judges who stick their noses into cases not assigned to them, are making sure that the case does NOT go to jury trial and essentially influencing the presiding Judge ex parte, to set a high supersedeas bond thus preventing the homeowner from obtaining a stay of execution on the eviction or the final judgment regarding title.

Of course it is wrong. But it is happening. You counter this by (1) making the record on appeal as to the merits of the appeal (2) adding to the record actual affidavits and testimony as to value, rental value etc. and (3) of course demanding and evidential hearing on the proper amount of the bond. Here you want to search out and produce the bond set in similar cases in the county in which your case is pending. Make sure you have a court reporter and a transcript on appeal and that the record on appeal is complete. It is not uncommon for certain documents to get “lost” or allegedly not “introduced” so when the appellate court gets it you can be met with the question of “what document?”

The other reason they are increasing supersedeas bond is because of a misconception by many pro se litigants and even some attorneys. They have the impression that the appeal is over if the bond is NOT posted with the clerk. And they have the impression that they can’t challenge the amount of bond set, or even go to the appellate court just on that issue and ask the appellate court to set bond — something they might not do but when they remand it, it is usually with instructions to the trial judge to hear evidence on the relevant issues — again something the pretenders don’t want.

Supersedeas bond ONLY applies to execution of the order or judgment that you are appealing. You can AND should continue with the appeal and if you win, the Judgment might be overturned — which means by operation of law you probably get your house back.

All these things are technical matters. Listening to other pro se litigants or even relying upon this other sites intended to  help you is neither wise nor helpful. Before you act or fail to act, you should be in close contact with an attorney licensed in the jurisdiction in which your property is located. Local rules can sometimes spell the difference between the life or death of your case.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , , , , | 24 Comments »

UNDISCLOSED MIDDLE: Repurchase Obligation in the Mortgage Loan Purchase Agreement

Posted on September 17, 2010 by Neil Garfield

FROM ANONYMOUS, MY FAVORITE CONTRIBUTOR 🙂

EDITOR’S NOTE: I would be better off and so would our readers if I could be as succinct in my writing as Anonymous. Somehow it always takes me longer to say what he does in a few sentences. Use HIS version instead of mine whenever possible. My version is more academic and runs the risk of putting the Judge to sleep.

  • This piece written by Anonymous underscores the BASIC point that needs to be made from the start: the TOTAL agreement between lender and borrower consists of far more than the loan closing documents.
  • The fact that the rest of the documents were withheld doesn’t mean they weren’t involved, signed, executed and delivered. It means they were not disclosed when the applicable federal and state statutes as well as common law required them to be disclosed.
  • The old school Judges and lawyers are confused ONLY because they fail to recognize this basic truth.
  • Once they accept the fact that the borrower signed a note but the lender received a bond from a party not involved in the borrower’s closing, it all falls into place.
  • There is no nexus between borrower and lender without recognizing the obvious — there were parties, documents, agreements and corresponding duties and obligations existing in the UNDISCLOSED MIDDLE.
  • The single transaction rule once applied, clears up all confusion. No money from investor – NO DEAL. No borrower to accept loan — NO DEAL. SINGLE TRANSACTION if there ever was one.
  • But perhaps the single most important point Anonymous makes is that the alleged assignment, transfer, endorsement etc of the note never took actually place which means that the title (encumbrance — mortgage or deed of trust) is and remains in the name of the originating “lender” to whom no money is owed. A classical case of an unperfected security interest.

From Anonymous: “Repurchase and stipulations is contained within the same Mortgage Loan Purchase Agreement – it is not a separate contract – it is the same document and contract under the stated Trust and SEC filings. Thus, none of the note endorsements were actually “without recourse.”

However, many of the repurchase demands were not executed because the banks often looked the other way – until they became massive – and the originators were shut down.

Most of the endorsements were in blank – only when they knew there was no longer any recourse, are the notes actually endorsed to the trustee. But, they did not know this at the time of the trust set-up.

And, the notes are executed before foreclosure – they are sold at steep discounts to the servicer and removed from the trust – at this point there is no recourse..

It is at the inception of the trust – that the notes were not actually negotiable. Thus, the trust never actually owned the notes – they did not have to – because only the receivables are passed-through.

If there was a separate contract for Repurchases – it would have had to have been filed with the SEC – along with other documents. There was no separate contract – the Repurchase agreement was part of the Mortgage Loan Purchase Agreement – they were one and the same.

Filed under: CDO, CORRUPTION, Eviction, evidence, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, medical insurance, Mortgage, Motions, Pleading, securities fraud, Servicer, STATUTES, taxes, trustee | Tagged: , , , , , , | 28 Comments »

New Workshop on Motion Practice and Discovery

Posted on May 6, 2010 by Neil Garfield

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VISIT LIVINGLIES STORE FOR FREE VIDEOS AND OTHER RESOURCES

START WINNING CASES!!

May 23-24, 2010 2 days. 9am-5pm. Neil F Garfield. CLE credits pending but not promised. Register Now. Seating limited to 18. INCLUDES LUNCH AND EXTENSIVE MANUAL OF FORMS, NARRATIVE AND CASES. An in-depth look at securitized residential mortgages and deeds of trust. Latest cases on standing, nominees, splitting note from security instrument, bankruptcy strategies, expert declarations, forensic analysis reports.

Lawyers, paralegals, experts, forensic analysts will all benefit from this. This workshop includes monthly follow-up teleconferences and continuing on-going support with advance copies of articles, cases and analysis.

  1. STRATEGIC REVIEW: WHY THESE CASES ARE BEING WON AND LOST IN MOTION PRACTICE.
  2. SECURITIZATION REVIEW
  3. USE OF FORENSIC REPORTS AND EXPERT DECLARATIONS
  4. RAISING QUESTIONS OF FACT IN CREDIBLE MANNER
  5. SETTING UP AN EVIDENTIARY HEARING
  6. FOLLOW THE MONEY
  7. OBLIGATION, NOTE, BOND, MORTGAGE, DEED OF TRUST ANALYSIS
  8. TILA, RESPA, QWR, DVL AND RESCISSION — WHY JUDGES DON’T LIKE TILA RESCISSION AND HOW TO OVERCOME THEIR RESISTANCE.
  9. NOTICE OF DEFAULT, TRUSTEE, STANDING, REAL PARTY IN INTEREST EXAMINED AND REVIEWED
  10. INVESTORS, REMICS, TRUSTS, TRUSTEES, BORROWERS, CREDITORS, DEBTORS, HOMEOWNERS
  11. FACT EVIDENCE ON MOTIONS
  12. FORENSIC EVIDENCE ON MOTION
  13. EXPERT EVIDENCE ON MOTION
  14. ORAL ARGUMENT
  15. WHAT TO FILE
  16. WHEN TO FILE
  17. EMERGENCY MOTIONS — MOTION TO LIFT STAY, MOTION TO DISMISS, TEMPORARY RESTRAINING ORDERS, MOTION TO COMPEL DISCOVERY
  18. DISCOVERY: INTERROGATORIES, WHAT TO ASK FOR, HOW TO ASK FOR IT AND HOW TO ENFORCE IT. REQUESTS TO PRODUCE. REQUESTS FOR ADMISSIONS. DEPOSITIONS UPON WRITTEN QUESTIONS.
  19. FEDERAL PROCEDURE
  20. STATE PROCEDURE
  21. BANKRUPTCY PROCEDURE
  22. ETHICS, BUSINESS PLANS, AND PRACTICAL CONSIDERATIONS

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, HERS, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 5 Comments »

Regulation and Prosecution on Wall Street

Posted on April 20, 2010 by Neil Garfield

In my opinion, the growing anger at Wall Street is giving Lloyd Blankfein and Jamie Dimon another chance at misdirection. They are using the current popular angst to steer the debate into whether derivatives and synthetic CDOs should be banned. In the end they will win that debate, and they should win it. What they should lose is their freedom in a judicial forum where they are prosecuted like Ken Lay and Bernie Ebbers, and where it is proven beyond a reasonable doubt that they committed criminal fraud and securities fraud.

The fact that we had a bad experience with derivatives is not a reason to ban them. The fact that they were abused and that people were cheated and that the entire financial system was undermined is another story.

There is nothing wrong with any transaction if the playing field is relatively level and if the imbalances are addressed by law and regulation. That is what the Truth in lending Act is all about and the Real Estate Settlement Procedures Act is meant to address.

When the big guys use their superior knowledge to trick consumers into deadly transactions, the big guys should pay the price. We have the SEC to take care of that on the other end protecting investors. Licensing laws and administrative sanctions against those licensed by state or federal agencies are well-equipped to step in and deal with these abuses. But they didn’t.

Complaints sent to the Federal Trade Commission, Office of Thrift Supervision and Office of the Controller of the Currency have gone unheeded even to this day. The only answer you get is similar to the answer we get from sending short or long Qualified Written requests or Debt Validation Letters — short shrift of legitimate complaints that by law are required to be investigated, verified (not just restated) and corrected.

The inconvenient truth is that our regulators were not employing the tools given to them. Everyone knew it. In part it was because of undue influence and in part it was because they were deferring to larger “smarter” institutions like the Federal Reserve. But the biggest reason the Federal and state agencies didn’t do their job is that we, as a society, bought into the non-regulation philosophy which has failed so spectacularly. We didn’t support appropriate funding, training and resources for these agencies. If we had done what we should have done — elect people who were committed to government protecting and serving the people — this mess would never have mushroomed to the point where Wall Street issued proprietary currency equal to 12 times times the amount of government currency — all in a span only 25 years.

The simple truth is that there was nothing inherently wrong about securitizing residential mortgages. In theory, spreading the risk out created much greater liquidity for small and large consumers of credit. What was wrong and remains wrong is that the use of these instruments was for an illegal purpose — to defraud investors and borrowers alike. And they did it in an illegal manner — by denying and withholding information essential to the decision-making on both sides of these transactions.

On one side you had a creditor who was willing to loan money for residential mortgages under terms and conditions that were “explained” in mind-numbing prospectuses and guaranteed by “insurance” that wasn’t really insurance and which was appraised by government licensed rating agencies who issued investment grade appraisals that were so wrong that it strains credibility to assume they didn’t know they were part of a larger criminal enterprise. This creditor lent money and received a bond, whose terms referenced other documents in the securitization chain that imposed conditions, co-obligors, and protections to the intermediaries that completely changed the loans that were signed by borrowers far, far away.

On the other side, you had borrowers, homeowners, who put their largest or only investment in the world at risk in a transaction that they could not understand because the information required to understand it was withheld. But even Alan Greenspan admitted he didn’t understand the transactions with the help of 100 PhD’s. These borrowers relied upon the sanctity of an underwriting process that no longer existed. Verification of property value, quality, affordability etc. were no longer in the mix.

These borrowers undertook an obligation to repay and signed a note that was evidence of the obligation but was payable to someone other than the party(ies) who loaned the money. That note was only a tiny part of the obligation to the creditor as evidenced by the mortgage backed bond they received.

The creditor was bilked out of a dollar and contrary to the expectations of the creditor, less than 2/3 of each dollar was actually used to fund mortgages. The creditor never actually received or even saw the note but ownership of the note was conveyed to the investor along with many other terms — terms that were entirely different from the note the borrower signed as to interest payments, principal, fees etc.

In between were the dozens of intermediaries who treated the documentation like a hot potato because nobody wanted to be stuck with it — knowing that misrepresentation and bad appraisals were the root of the instruments signed by creditors and debtors. These intermediaries kept possession of the note, kept the security instrument and kept the money and most of the insurance proceeds, received the federal bailout and now are proceeding to repackage the junk they already sold and through “resecuritization” are selling them again.

In my opinion there is nothing theoretically wrong with anything described above except for one thing — they lied. Fraud is fraud. If they had educated the creditors and debtors, if they had complied with local property and contract law, if they had been transparent disclosing everything much the same way as the prospectus in an IPO, then two things are true: (a) transactions that were completed would have been done because both sides knew the risks and were willing to take the loss and (b) transactions that were NOT completed (which would have been nearly all of them) would been rejected because the costs were too high, the risks were too high, and the consequences too dire.

But none of that happened because we allowed our regulators to be co-opted by the industries they were supposed to regulate. So tell your legislators and government agencies that you’ll allow them the resources to properly regulate and that you expect to hold them and the elected officials who put them there fully accountable.

Don’t throw the baby out with the bathwater. It isn’t derivatives that are wrong it is the people who used them and the way they were used that is wrong. Killing derivatives would lead to stagnation of what once was our greatest asset — the engine of liquidity for access to capital that has kept our economy growing.


Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 2 Comments »

Discovery, Forensic Analysis and Motion Practice: The Prospectus

Posted on March 26, 2010 by Neil Garfield

USE THIS AS A GUIDE FOR DISCOVERY, FORENSIC ANALYSIS AND MOTION PRACTICE TO COMPEL DISCLOSURE

see for this example SHARPS%20CDO%20II_16.08.07_9347

Comments in Red: THIS IS A PARTIAL ANNOTATION OF THE PROSPECTUS. IF YOU WANT A FULL ANNOTATION OF THIS PROSPECTUS OR ANY OTHER YOU NEED AN EXPERT IN SECURITIZATION TO DO IT. THERE ARE THREE OBVIOUS JURISDICTIONS RECITED HERE: CAYMAN ISLANDS, UNITED STATES (DELAWARE), AND IRELAND WITH MANY OTHER JURISDICTIONS RECITED AS WELL FOR PURPOSES OF THE OFFERING, ALL INDICATING THAT THE INVESTORS (CREDITORS) ARE SPREAD OUT ACROSS THE WORLD.

Note that the issuance of the bonds/notes are “non-recourse” which further corroborates the fact that the issuer (SPV/REMIC) is NOT the debtor, it is the homeowners who were funded out of the pool of money solicited from the investors, part of which was used to fund mortgages and a large part of which was kept by the investment bankers as “profit.”There is no language indicative that anyone other than the investors own the notes from homeowner/borrowers/debtors. Thus the investors are the creditors and the homeowners are the debtors. Without the investors there would have been no loan. Without the borrowers, there would would have been no investment. Hence, a SINGLE TRANSACTION.

If you read carefully you will see that there is Deutsch Bank as “initial purchaser” so that the notes (bonds) can be sold to pension funds, sovereign wealth funds etc. at a profit. This profit is the second tier of yield spread premium that no TILA audit I have ever seen has caught.

The amount of the “LEVEL 2” yield spread premium I compute on average to be approximately 30%-35% of the total loan amount that was funded FOR THE SUBJECT LOAN on average, depending upon the method of computation used.Thus a $300,000 loan would on average spawn two yield spread premiums, “level 1” being perhaps 2% or $6,000 and “level 2” being 33% or $100,000, neither of which were disclosed to the borrower, a violation of TILA.

The amount of the yield spread premium is a complex number based upon detailed information about the what actually took place in the sale of all the bonds and what actually took place in the sale of all the loan products to homeowners and what actually took place in the alleged transfer or assignment of “loans” into a master pool and what actually took place in the alleged transfer or assignment of “loans” into specific SPV pools and the alleged transfer or assignment of “loans” into specific tranches or classes within the SPV operating structure.

Here is the beginning of the prospectus with some of the annotations that are applicable:

Sharps CDO II Ltd., (obviously a name that doesn’t show up at the closing with the homeowner when they sign the promissory note, mortgage (or Deed of Trust and other documents. You want to ask for the name and contact information for the entity that issued the prospectus which is not necessarily the same company that issued the securities to the investors) an exempted company (you might ask for the identification of any companies that are declared as “exempted company” and their contact information to the extent that they issued any document or security relating to the subject loan) incorporated with limited liability you probably want to find out what liabilities are limited) under the laws of the Cayman Islands (ask for the identity of any foreign jurisdiction in which enabling documents were created, or under which jurisdiction is claimed or referred in the enabling documentation) (the “Issuer”) (Note that this is the “issuer” you don’t see don’t find about unless you ask for it), and Sharps CDO II Corp., (it would be wise to check with Delaware and get as much information about the names and addresses of the incorporators) a Delaware corporation (the “Co-Issuer” and together with the Issuer, the “Co-Issuers”), pursuant to an indenture (don’t confuse the prospectus with the indenture. The indenture is the actual terms of the bond issued just like the “terms of Note” specify the terms of the promissory note executed by the borrower/homeowner at closing) (the “Indenture”), among the Co-Issuers and The Bank of New York, as trustee (Note that BONY is identified “as trustee” but the usual language of “under the terms of that certain trust dated….etc” are absent. This is because there usually is NO TRUST AGREEMENT designated as such and NOT TRUST. In fact, as stated here it is merely an agreement between the co-issuers and BONY, which it means that far from being a trust it is more like the operating agreement of an LLC) (the “Trustee”), will issue up to U.S.$600,000,000 Class A-1 Senior Secured Floating Rate Notes Due 2046 (the “Class A-1 Notes”), U.S.$100,000,000 Class A-2 Senior Secured Floating Rate Notes Due 2046 (the “Class A-2 Notes”), U.S.$60,000,000 Class A-3 Senior Secured Floating Rate
Notes Due 2046 (the “Class A-3 Notes” and, together with the Class A-1 Notes and the Class A-2 Notes, the “Class A Notes”), U.S.$82,000,000 Class B Senior Secured Floating Rate Notes Due 2046 (the “Class B Notes”), U.S.$52,000,000 Class C Secured Deferrable Interest Floating Rate Notes Due 2046 (the “Class C Notes”), U.S.$34,000,000 Class D-1 Secured Deferrable Interest Floating Rate Notes Due 2046 (the “Class D-1 Notes”) and U.S.$27,000,000 Class D-2 Secured Deferrable Interest Floating Rate Notes Due 2046 (the “Class D-2 Notes” and, together with the Class D-1 Notes, the “Class D Notes”). The Class A Notes, the Class B Notes, the Class C Notes and the Class D Notes are collectively referred to as the “Senior Notes.” The Class A-2 Notes, the Class A-3 Notes, the Class
B Notes, the Class C Notes and the Class D Notes and the Subordinated Notes (as defined below) are collectively referred to as the “Offered Notes.” Concurrently with the issuance of the Senior Notes, the Issuer will issue U.S.$27,000,000 Class D-2 Secured Deferrable Interest Floating Rate Notes Due 2046 (the “Class D-2 Notes” and, together with the Class D-1 Notes, the “Class D Notes pursuant to the Indenture and U.S.$45,000,000 Subordinated Notes due 2046 (the “Subordinated Notes”) pursuant to the Memorandum and Articles of Association of the Issuer (the “Issuer Charter”) and in accordance with a Deed of Covenant (“Deed of Covenant”) and a Fiscal Agency Agreement (the “Fiscal Agency Agreement”), among the Issuer, The Bank of New York, as Fiscal Agent (in such capacity, the “Fiscal Agent”) and the Trustee, as Note Registrar (in such capacity, the “Note Registrar”). The Senior Notes and the Subordinated Notes are collectively referred to as the “Notes.” Deutsche Bank Aktiengesellschaft (“Deutsche Bank”), New York Branch (“Deutsche Bank AG, New York Branch” and, in such capacity, the “TRS Counterparty”) will enter into a total return swap transaction (the “Total Return Swap”) with the Issuer pursuant to which it will be obligated to purchase (or cause to be purchased) the Class A-1 Notes issued from time to time by the Issuer under the circumstances described herein and therein. (cover continued on next page)

It is a condition to the issuance of the Notes on the Closing Date that the Class A-1 Notes be rated “Aaa” by Moody’s Investors Service, Inc. (“Moody’s”) and “AAA” by Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. (“Standard & Poor’s,” and together with Moody’s, the “Rating Agencies”), that the Class A-2 Notes be rated “Aaa” by Moody’s and “AAA” by Standard & Poor’s, that the Class A-3 Notes be rated “Aaa” by Moody’s and “AAA” by Standard & Poor’s, that the Class B Notes be rated at least “Aa2” by Moody’s and at least “AA” by Standard & Poor’s, that the Class C Notes be rated at least “A2” by Moody’s and at least “A” by Standard & Poor’s, that the Class D-1 Notes be rated “Baa1” by Moody’s and “BBB+” by Standard & Poor’s, that the Class D-2 Notes be rated “Baa3” by Moody’s and “BBB-” by Standard & Poor’s.
This Offering Circular constitutes the Prospectus (the “Prospectus”) for the purposes of Directive 2003/71/EC (the “Prospectus Directive”). Application has been made to the Irish Financial Services Regulatory Authority (the “Financial Regulator”) (you could ask for the identification and contact information of any financial regulator referred to in the offering circular, prospectus or other documents relating to the securitization of the subject loan), as competent authority under the Prospectus Directive for the Prospectus to be approved. Approval by the Financial Regulator relates only to the Senior Notes that are to be admitted to trading on the regulated market of the Irish Stock Exchange or other regulated markets for the purposes of the Directive 93/22/EEC or which are to be offered to the public in any Member State of the European Economic Area. Any foreign language text that is included within this document is for convenience purposes only and does not form part of the Prospectus.
Application has been made to the Irish Stock Exchange for the Senior Notes to be admitted to the Official List and to trading on its regulated market.
APPROVAL OF THE FINANCIAL REGULATOR RELATES ONLY TO THE SENIOR NOTES WHICH ARE TO BE ADMITTED TO TRADING ON THE REGULATED MARKET OF THE IRISH STOCK EXCHANGE OR OTHER REGULATED MARKETS FOR THE PURPOSES OF DIRECTIVE 93/22/EEC OR WHICH ARE TO BE OFFERED TO THE PUBLIC IN ANY MEMBER STATE OF THE EUROPEAN ECONOMIC AREA.
SEE “RISK FACTORS” IN THIS OFFERING CIRCULAR FOR A DESCRIPTION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE NOTES. THE SENIOR NOTES ARE NON-RECOURSE OBLIGATIONS OF THE CO-ISSUER AND THE NOTES ARE LIMITED
RECOURSE OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY FROM THE COLLATERAL DESCRIBED HEREIN.
THE NOTES DO NOT REPRESENT AN INTEREST IN OR OBLIGATIONS OF, AND ARE NOT INSURED OR GUARANTEED BY, THE TRUSTEE, DEUTSCHE BANK SECURITIES INC., DEUTSCHE BANK OR ANY OF THEIR RESPECTIVE AFFILIATES. Note that you have more than one trustee without any specific description of where one trustee ends and the other begins. It is classic obfuscation and musical chairs. NOTE ALSO THAT TRUSTEE DISCLAIMS ANY INTEREST IN THE BONDS BEING ISSUED [REFERRED TO AS “NOTES” JUST TO MAKE THINGS MORE CONFUSING].

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, HERS, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 14 Comments »

TRUSTS + NON RESIDENT COST BOND = BIG PROBLEM FOR MILLS

Posted on January 6, 2010 by Neil Garfield

THANK YOU FLORIDA DEFENSE TEAM!!!

TRUSTS + NON RESIDENT COST BOND = BIG PROBLEM FOR MILLS

Is Mortgage Held in a trust? Pin them down in Discovery to answer if they’re complying with State Law. Compel if need be. Admission will be damning. Avoidance will be telling. A Motion to Dismiss for failure to file a Non Resident Cost Bond (FS 57.011) gives them 20 days to do so. Plaintiffs attorneys no doubt will become a surety on behalf of there client. Sun Tzu says not so fast. Obtain a copy of the cost bond and file motion for sanctions: Under Florida law an attorney cannot become a surety on any bond of his client in any judicial proceeding. Section 454.20, Florida Statutes; Rule 2.060(f), Florida Rules of Judicial Administration. For good measure here is the Florida Bar ethics opinion:

 Link to : Florida Bar

Here is the State Law (Florida) on Trusts:
(State law requires trust companies to register, maintain notice of offices and officers, pay registration fees and make deposits of funds in proportion to the volume of trust business in the state.

Link: Law Office of Matt Weidner Some good stuff BUT we disagree HAMP and so called “Loan Mod” is the answer…loan mod is a farce.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , | 18 Comments »

From FAQ: I have received a five day notice. Do I have to leave?

Posted on September 12, 2008 by Neil Garfield

QUESTION: I have received a five day notice. Do I have to leave?

ANSWER: Technically the answer would be yes, you are being ordered to leave. As a practical matter however, there are several procedural steps that the Trustee or “lender” must take before they can actually remove you from the premises. And of course in most cases, it is my belief that the Trustee or “lender” doesn’t have the authority to tell you to leave because they didn’t have the authority to foreclose your property in the first place. I have seen people delay the process for many months by entering into negotiations for cash for keys, or some other deal. Also there are filings you can make in court contesting the unlawful detainer or eviction action which might include an emergency petition to stay the proceedings because the sale of your property was improper, a sham, and constituted theft of your property (because the lender had already been paid by a third party, etc.). Motions for stay are not usually granted unless you also file an actual claim against the Trustee or lender for your TILA and other claims.

You might be faced with a demand for bond, which sometimes is zero and sometimes is as much as $10,000, but upon payment of a fee you can possibly make arrangements with a fidelity bond company to put the money up.

And there is always the bankruptcy route which if done properly, might challenge the Trustee or lender very effectively, particularly if you show the house as YOUR asset, based upon a disputed claim (and therefore of unknown value) and you show the “lender” has an unsecured creditor for an unliquidated amount that is in dispute.

Filed under: Eviction, foreclosure, GTC | Honor, Mortgage | Tagged: , , , , | 1 Comment »

Foreclosure Offense and Defense: Lis Pendens, Usury and California Exemption for “Banks”

Posted on September 8, 2008 by Neil Garfield

LIS PENDENS — see usury, Temporary Restraining Order, Lawsuit, Burden of Proof

(1) Latin for “a suit pending.” The term may refer to any pending lawsuit. (2) A written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it. The notice is usually filed in the county land records office. Recording a lis pendens against a piece of property alerts a potential purchaser or lender that the property’s title is in question, which makes the property less attractive to a buyer or lender. After the notice is filed, anyone who nevertheless purchases the land or property described in the notice takes subject to the ultimate decision of the lawsuit.

IN THE CONTEXT OF FORECLOSURE OFFENSE AND DEFENSE, the significance of this filing is profound and potentially complex.

  • The filing of the Notice of Sale by the Trustee in non-judicial states is the equivalent of a lis pendens in is effect.
  • All judicial states (states where the filing of a foreclosure lawsuit is required before the property can be scheduled for sale) require a lis pendens to be filed by the lender along with the suit.
  • However, in ALL cases, non-judicial or judicial, where the defensive and offensive strategies promoted by this blog are involved, it probably would be a good idea for the borrower to file a lis pendens along with any suit or emergency petition for temporary restraining order (TRO).
  • It is possible that the lis pendens, especially where a TRO is sought, will be met with a demand for bond. However, the bond requirement should be nominal since the property is already in existence and presumably will be maintained.
  • No lis pendens can be filed unless there is a “suit pending” — but once there is a pleading from the borrower seeking affirmative relief from a court of competent jurisdiction, the filing of a lis pendens cannot be stopped.
  • The foreclosing party must step forward and request that the lis pendens be removed. They will do that because any bid at the foreclosure sale will be subject to your claims in the suit you filed against the “lender” at al.
  • This is another opportunity to “win at the beginning” since the “lender” is now required to justify the its authority to have given notice of delinquency, notice of acceleration, notice of default and notice of sale. In order to do that they must file a petition or motion with the court which will be gingerly and creatively written if they understand the stakes or taken from some form if they do not understand the issues.
  • They will plead (make allegations) that can now be denied. You have effectively converted the non-judicial sale to a judicial proceeding and forced the burden of proof onto the alleged foreclosing party. Take nothing for granted, and assume nothing.
  • The attorneys for the foreclosing party probably have very little information — less than you have — and if you hit hard enough right at the beginning, you might, like thousands of other cases across the United States, find yourself walking out with an order that cancels the sale, dismisses the claims of the “lender” and perhaps the Judge’s order will even be “with prejudice, which would be the equivalent of a quiet title action, which you might pursue immediately after receiving a favorable ruling with or without prejudice.

REMEMBER, AS IN USURY, CONTRARY TO THE IMPRESSION CREATED BY THE TRUSTEE OR THE ‘LENDER’ YOUR OBJECTIVE IS TO SMOKE OUT THE FACT THAT THE ORIGINAL LOAN TRANSACTION IN WHICH THE BORROWER SIGNED THE PAPERS WAS A SMOKE SCREEN FOR A REAL “LENDER” THAT WAS NOT REGISTERED TO DO BUSINESS IN THE STATE, THAT WAS NOT CHARTERED OR AUTHORIZED AS A BANK OR LENDING INSTITUTION AND THAT THEREFORE WAS A PRIVATE LENDER, THUS FORTIFYING YOUR CLAIM FOR USURY, VIOLATION OF THE DISCLOSURE REQUIREMENTS FOR TILA, FRAUD, BREACH OF FIDUCIARY DUTY ETC.

IT IS THIS STRATEGY THAT COULD ENABLE YOU TO CLAIM USURY BASED UPON INFLATED APPRAISAL OF THE PROPERTY — EVEN IN STATES LIKE CALIFORNIA WHERE THE CONVENTIONAL WISDOM IS THAT USURY DOES NOT APPLY BECAUSE BANKS ARE EXCLUDED.

  • YOUR ARGUMENT IS THAT THE BANK WAS MERELY A STAND-IN, CONDUIT OR MORTGAGE BROKER, NONE OF WHICH BRINGS THEM WITHIN THE EXEMPTIONS FOR USURY. THE REAL LENDER WAS NOT A BANK AND WAS HIDING BEHIND A FINANCIAL INSTITUTION TO CREATE THE APPEARANCE OF BANK INVOLVEMENT.
  • BY NOT RECORDING PROPER ASSIGNMENTS, STATE LAW REGARDING TRANSFER OF INTERESTS IN REAL PROPERTY WERE VIOLATED, STATE LAWS REQUIRING THE PAYMENT OF FEES AND TAXES FOR RECORDING INSTRUMENTS ON REAL PROPERTY WERE VIOLATED, AND STATE LAWS REQUIRING REGISTRATION AND CHARTERS TO DO BUSINESS WERE VIOLATED WITH THE WILLING COMPLICITY OF THE “LENDER”.
  • THUS A COMPLAINT WITH THE STATE BANKING COMMISSION AGAINST THE “LENDER” WOULD BE APPROPRIATE FOR FRAUDULENTLY REPRESENTING ITSELF TO BE THE REAL LENDER AND BEING A CONSPIRATOR IN AN ILLEGAL SCHEME TO ISSUE UNREGULATED SECURITIES.

NOTE: Most of what is said here assumes that securitization was involved. In situations where the “lender” retained the loan, only some of these strategies apply.

Filed under: CDO, currency, Eviction, foreclosure, GTC | Honor, Mortgage | Tagged: , , , , | 6 Comments »

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