Walls Continue to CLose in On Banks in Courts Once Hostile to Borrower Defenses

McDonald v OneWest

This case should be read more than once

When I started writing about legal defenses to foreclosures that appeared patently fraudulent to me, I thought it might only take a few months for things to catch on. About the timing I have been consistently wrong. About the substance I have been consistently right.

Here again, the party seeking foreclosure not only failed in its current effort to do so, but was ordered to pay $25,000 within 7 days for forcing the homeowner’s attorney to fight tooth and nail for items that were or should have been at their fingertips, they had no reason to withhold, and should have been anxious to supply if the foreclosure was real.

The only potential error I see in the homeowner’s case is that  there appears to be an admission that Indy Mac was indeed the party who was the source of the loan — a fact which is nearly universally presumed and virtually always wrong in today’s foreclosures. Not knowing the actual facts of the case I can only speculate that this was an oversight, but it is possible that it wasn’t an oversight and that Indy Mac did in fact make the loan, booked it as a loan receivable, and then sold it into the secondary market for securitization.

There are several very important issues discussed rationally and without bias in this very well-written decision:

  1. Dates DO Matter: If the authorization to sign something is received after the signature is executed it isn’t any good. Lying about it and then fabricating documents to cover up the first lie are grounds for sanctions.
  2. Allegations of holder status are no substitute for facts and evidence. The supposed right to request it is not the same as holding, possessing or owning the note. Execution and recording of substitution of trustee, notice of default, notice of sale are all void if the party stated as the holder is not the holder.
  3. Ownership counts, which means that in order to submit a credit bid at a foreclosure action, the books and records of all the  relevant parties must be open to inspection and review to determine what balance, if any, exists, on the records of the owner of the debt — i.e., the party who would actually lose money if the loan was not paid, and the amount of the principal and accrued interest due, if any, after deductions for all receipts.
  4. Agency either exists or it doesn’t. And the paramount element of agency is control by the principal of the agent. There is, however, contractual obligations that come into play here. So if the investment bank received payments to mitigate damages on loans it either did so as agent for the investor or because they were contractually bound to do so as a vendor thus reducing the balance due on the bond. Either way, the balance due is reduced as to that creditor. It might be shifted to the party who paid who in turn might have a right of contribution unless they waived that right (which the insurance companies and CDS counterparts did in fact waive), but either way the new debt is no secured unless there was a purchase of the loan.
  5. Rules of Civil Procedure do matter and are “not optional.” If discovery requests, qualified written requests, debt validation letters are sent, answers are expected and due. The fact that the QWR is long does not mean it is invalid.
  6. Damages are possible, but you need to plead and prove them and that pretty much goes to whether these parties ever had any right to collect any money or enforce any note or any debt or enforce any mortgage against the homeowner. If the answer is yes, that if they get their act together, they can foreclose, there will likely be no damages. If the answer is no, which more likely than not is the case in current foreclosures, then damages properly pleaded and proven are easily sustained.
  7. Discovery is not a toy. The answer or the production is due.
  8. Hearsay is inadmissible and the business records exception, as stated by dozens of courts before this one, where the witness or declarant testifed for  “defendants chose to offer up what can only be described as a “Rule 30(b)(6) declarant” who regurgitated information provided by other sources” then we are taking hearsay and turning it into  evidence without any personal knowledge or testing of the truth of the matter asserted.
  9. Judges are not stupid. They know a lie when they hear it. But what happens after that depends upon the trial experience and knowledge of the lawyer. Don’t expect the Judge to go into orbit and give you everything just because he found that the other side lied. You still have a case to prove.

Washington J Lasnik Order Regarding MSJS

CONSUMER ACTION REQUIRED NOW!!! Banks Try for Amnesty at State level in Florida

Editor’s Note: Matt hits the nail on the head so there is no need to do a whole essay on the problem — just read his piece shown below. The Banks are getting itchy because like the economic crash they see a political crash coming. The Florida legislature is looking to “expedite” foreclosures. Republican controlled it is more likely that the banks will have their way with them — unless you do something NOW!

The whole premise, as Matt points out, is completely wrong. The problems with the pace of foreclosures is not that there are dilatory tactics being used by borrowers. In fact in many cases, it is the borrower who is more aggressive than the forecloser in pursuing an end to the case. The length of time it takes a process a foreclosure is caused by the illegal paperwork submitted by the banks. And the reason why they need to resort to doing something illegal is that they already did something illegal and are trying to cover it up.

If a borrower actually owes money on a loan, it should be clear in any setting how much money is owed to each stakeholder. The Florida legislation ignores this basic premise. AND if the paperwork was procured by fraud in the inducement, fraud in the execution or forgery followed by perjury of a “witness,” then nobody should be surprised why it takes so long. Requests for discovery are met with stonewalling. Before the mortgage meltdown, the lender would have been only too happy to lay down everything in their books and challenge the borrower to admit or deny it.

If it wasn’t for the deficient debts, notes and mortgages, the courts would not be clogged with foreclosures that should never have been initiated. Disclosure of the receipts and disbursements from an identified creditor (and their agents) who has proof of payment and proof of loss would end the foreclosure mess in a flash. But the banks refuse to do that because they can’t come up with a credible injured party with standing and they don’t want to reveal how much they took out of the flow of money advanced by investors in a PONZI scheme.

If you really want to stop foreclosures then pass a law that merely encapsulates what is already law in evidence, procedure, real estate and contracts — identify the creditor, show proof of payment, show proof of loss, proof of default to the CREDITOR and show documents that link up the borrower with the party who is injured.

Proof of loss and proof of payment can ONLY be established by producing a witness providing foundation for a copy of the wire transfer receipt or cancelled check. This is essential unless we are going to have two trials — one whether the foreclosure is valid on its face and the other whether the initiator of the foreclosure is a creditor (injured party) and the extent to which they were injured — or else they can’t submit a credit bid at the foreclosure auction.

If those conditions precedent to filing for foreclosure are required, either the borrower will drop out when those items are produced and alleged in the foreclosure complaint, or the case will not be filed at all. Case Over.

Send your email or letter now and by the way, send a copy to AG Bondi.

Posted by Matthew Weidner, Esq.

Every citizen who cares about justice, public policy and the rule of law should take an interest in what’s happening in Tallahassee.

The Florida House Subcommittee on Civil Justice will hear, and will likely pass, House Bill 87, a bill that aims to speed up foreclosures.  CALL THESE MEMBERS NOW AND URGE THEM NOT TO SUPPORT THIS BILL! This bill is wrong for many reasons, but let’s start first with the premise upon which it is founded….a premise which is totally false and misleading:

As a preliminary matter, public policy decisions should not be made relying upon data and information from industry sources, particularly when the methods and meaning of said data is not revealed.  In the house report on House Bill 87, they cite heavily to RealtyTrac data and other data which is not properly explained or put into proper context.  For instance, the report reads:

The average length of time between the first foreclosure filing and bank repossession is 853 days.

This statement ignores the fact that the primary reason for banks not completing foreclosures is the federal lawsuits into their crimes and wrongdoing and the related holds.

The banks, either because of the litigation or for their own business purposes are reviewing many more files for modification than before and many of the foreclosures that are “stalled” are not moving because the homeowner is in a long term modification.  A foreclosure case that has a loan that is in modification will just be “stalled” out, not moving at all in court, but this is not at all reflected in the case progress.

Current law provides for an alternative procedure that is designed to speed up the foreclosure process in uncontested cases or cases where there is no legitimate defense.

This is correct, there already exists an expedited procedure that the banks could use if they chose to….but they are choosing not to….and they cannot be forced to use this process.  Currently there are a significant portion of the foreclosure caseload for which the homeowner has not responded.  In these cases, a bank could move for judgment and get title in a matter of 60-90 days.  Before voting on this bad bill, members should consult with their chief judge and find out what percentage of cases currently pending could be quickly moved to judgment because it is investment or abandoned property or property for which no homeowner has responded to the lawsuit.

If the property is not residential real estate, the plaintiff may request a court order directing the defendant to show cause why an order to make payments during the pendency of the proceedings or an order to vacate the premises should not be entered.

This already exists in statute, but it is not being used.  Why add to a statute that the industry chooses not to use?  What percentage of current foreclosure filings in a circuit use this process currently and why has it not been used?  Why add a companion to this existing if the industry does not use it?

Provides finality of a mortgage foreclosure judgment for certain purchasers of a property at a foreclosure sale while allowing for damages in some instances.

The title insurance industry was more than willing to accept premiums knowing full well that many of their agents were engaging in improper conduct.  To allow the title insurance industry to evade their existing contracts and responsibilities to policy holders is misguided. And you cannot replace property which is unique, with any amount of money. This is a backdoor bailout to the title insurance industry and it rewards conduct that was either criminal, reckless or grossly  improper.
Amends the expedited foreclosure process to allow all lienholders to use the procedures, instead of just the mortgagee; reduces the number of hearings from 2 to 1; and prohibits service by publication when using the expedited process, unless the property is abandoned.

Only a party who initiates the litigation can make that litigation proceed.  There is no way that a junior lienholder can force the primary plaintiff to proceed with their case to judgment if they choose not to.  It is the Plaintiff’s case to proceed as it choose, and the existing law and court resources permit them to do so.
Allows any party to request a case management conference to expedite the lawsuit.

Any party to litigation may already demand that a court have case management, and the courts will do so…the court already has resources and the law gives them tools to move cases along.  And while a party cannot be forced to take a judgment, a judge can impose sanctions or enter orders that move cases toward resolution…..IF THAT’S WHAT THE PLAINTIFFS WANT!

Defines adequate protections where there is a lost, destroyed or stolen note.

The Uniform Commercial Code, adopted across the United States, and in Florida already provide protections.  This is totally unnecessary

Florida has the largest share of foreclosure inventory of any state in the nation, with 305,766 properties in some stage of foreclosure or bank-owned as of the end of 2012.1 Seven of the top 10 highest foreclosure markets in the nation are in Florida, with Palm-Bay-Melbourne-Titusville having the highest rate of foreclosure of any metro area in the nation.2
Foreclosing on a mortgage in Florida is an unusually long process. Florida trails only New York and New Jersey in terms of the length of time between the first foreclosure filing and bank repossession, at 853 days. The national average is less than half that, at 414 days.3.

Relying on all this data from RealtyTrac, which data is not adequately explained and which contains other factors and reasons should be disfavored.  Our state policy makers should only rely on data that comes from our judges and from Clerks of Courts.

Upon proper notice of default to the defendant, the mortgage servicer files a foreclosure complaint, which must allege that the plaintiff is the present owner and holder of the note and mortgage, [Editor’s Note: what happens if the allegation is made but the borrower denies it?]

Unfortunately, the underlined statement is wrong….the appellate courts across this state have made a disaster of the distinction between Owner and Holder such that it is not uniformly required anymore…this is a major problem….but this legislation does not address this….if the legislation were to change making that element a requirement would be positive

This bill is just wrong in so many ways, and making policy decisions based on flawed, and unclear data just makes no sense….call your representative and tell them to reject the bill.

ANALYSIS HERE

Email Them Here:

Larry…@myfloridahouse.govBill….@myfloridahouse.govCynthia….@myfloridahouse.govJim….@myfloridahouse.gov,Mike.Clelland@myfloridahouse.govDaniel.Davis@myfloridahouse.govTom.G…@myfloridahouse.govJose….@myfloridahouse.gov,Kathleen.Passidomo@myfloridahouse.govJose.Rodriguez@myfloridahouse.govRoss….@myfloridahouse.gov,Charlie.Stone@myfloridahouse.govJim.Waldman@myfloridahouse.gov

MASS SUPREME COURT CLARIFIES: YOU CAN’T SELL WHAT YOU DON’T OWN — MISSING HOMEOWNER WINS CASE WITHOUT KNOWING IT

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

WRONGFUL FORECLOSURE IS NOT THE FOUNDATION FOR TITLE

PROSPECTS FOR TITLE PROBLEMS ACROSS THE NATION ARE MUSHROOMING

EDITOR’S NOTE: Likening the claims of the bank and the person who received a “quitclaim” deed to a Brooklyn Bridge transaction, the Court simply stated the most basic law: you can’t sell what you don’t own. But the reasoning of this Supreme Court decision, citing cases from long ago that are as valid to day as when they first decided, also goes directly to the issue of whether title can be challenged in an eviction arising from a foreclosure case.

The rule that a tenant cannot challenge the title of his landlord in an eviction case makes sense — if it is a landlord tenant case. But foreclosure cases are not landlord tenant cases. The fallacy of applying the rule to foreclosure cases is obvious and just as simple as the Massachusetts Supreme Court decision itself.

In a landlord-tenant case the allegation is that the defendant is a tenant under a lease and that they didn’t pay their rent under the lease terms. To allow title challenges that frankly are not really relevant would be to clog the courts with unnecessary litigation and stretch out the time a tenant  could stay without paying rent. Thus the rule that says you can’t raise defects in title in an eviction action between landlord and tenant. The allegation is made that by the Landlord that he is the Landlord, that the defendant is a tenant and that there is a lease, with the payment due of $x dollars per month  or per week and that the tenant did not pay — which has caused the landlord damage and therefore they need the possession of the property back so they can receive rent again to pay the mortgage, maintenance etc.

Foreclosure cases are much different. Here the allegation is that the Plaintiff is the owner, not a landlord as in the landlord-tenant case. Further, the allegation is that the occupant was the owner and isn’t anymore. The allegation MUST be that the change occurred as a result of a foreclosure that was duly prosecuted and in which there was a proper sale in which the Plaintiff obtained title and in which the rights to ownership and thus possession by the homeowner were foreclosed.

In civil procedure EVERYWHERE what is alleged is presumed to be true only in a motion to dismiss. If the allegations are denied, then there must be evidence from the plaintiff proving their allegations. In this case in Massachusetts as is the case in thousands of other instances, the evidence clearly shows that US bank was not the mortgagee when it initiated foreclosure.

Therefore US BANK could not foreclose. But it did anyway. And because they received a deed, they say that is enough. But a homeowner need only deny the allegations of the foreclosure and the sale and force the Plaintiff to prove it obtained real title in proper form and substance. Here is where US Bank fails and therefore the case was dismissed (in this case not an eviction, but a suit to quiet title against a homeowner who cannot be found).

If the allegation supporting the eviction action is faulty and cannot be proven, then the occupant wins. Those are the rules. If you make an allegation you must prove it with real evidence — not with presumptions that would allow people to sell the Brooklyn Bridge 100 times and make claims of presumption of title.

SEE 10.18.2011 Mass Sup Ct Bevi;aqua

Nemo Dat Trumps Bona Fide Purchaser

posted by Adam Levitin

The Massachusetts Supreme Judicial Court just handed down a second
major mortgage foreclosure ruling, Bevilacqua v. Rodriguez.  The case
was an Ibanez follow-up dealing with the rights of a purchaser at an
invalid foreclosure sale. I thought this was a no brainer case and
said so in an amicus brief co-authored with some of the Credit Slips
crew. As the trial court noted, the foreclosure sale purchaser has to
lose otherwise I could actually sell you the Brooklyn Bridge or some
other property I don’t own.

What was cool about this case from an academic perspective was that it
pitted two heavyweight, Latin-inscribed principles of commercial law
against each other:  the nemo dat quod non habet principle (you can’t
give what you don’t have) and the bona fide purchaser principle (one
who takes in good faith for value and without notice of defect will
get legal protection against claims). While these are both venerable
principles of commercial law, there should have been no question that
nemo dat prevails. It is arguably the foundational principle of
commercial law:  the most one party can transfer to another are the
rights it has.
We have one critical carve-out to that principle, the
holder-in-due-course doctrine, but the holder-in-due-course is much
like the bona fide purchaser:  it only applies if you take in good
faith and without notice of defect. And if you’re buying at a
non-judicial foreclosure sale, you’ve got notice of possible defect
(and one might argue about good faith). It’s a little like the problem
of finding a bargain when shopping–if it’s too good of a deal, it
could be a fraudulent transfer.

And so the Massachusetts Supreme Judicial Court held.  If the
foreclosure was done improperly, the foreclosing party didn’t have
title to the property and thus couldn’t transfer title to the
purchaser. The court didn’t dismiss the suit with prejudice, so Mr.
Bevilacqua could get the property–if the foreclosure is done right in
the first place, but that means starting over again.

A lot of people think that the ruling in Bevilacqua will kill the REO
market. I doubt it. It might make it a bit harder to get title
insurance, but the title insurers have to keep issuing titles because
they need the cash flow. If there’s a widespread problem, they’re
already insolvent, so why not keep on doing business? There’s no tort
of deepening insolvency (at least in Delaware).

As with Ibanez, the Supreme Judicial Court merely upheld very sensible
principles that shouldn’t be controversial:  you need to be the
mortgagee to foreclose and you can’t sell what you can’t deliver.
What’s kind of astounding is that the banks have had the chutzpah to
challenge these basic principles of commercial law, as if centuries of
commercial law jurisprudence should suddenly bend to their
convenience. This is the same sort of arrogance that engendered the
creation of MERS and the Article 9 mortgage transfer process.

There’s a third case awaiting decision from the Massachusetts Supreme
Judicial Court, Eaton v. Fannie Mae, which deals with the question of
whether a “naked mortgagee”–a mortgagee that isn’t the
noteholder–can foreclose. I filed an amicus arguing no way no how,
but we’ll see how the court rules.

Re-Orienting the Parties to Clarify Who is the Real Plaintiff

The procedural motion missed by most lawyers is re-orienting the parties. Just because you are initially the plaintiff doesn’t mean you should stay that way. Once it is determined that the party seeking affirmative relief is seeking to sell your personal residence and that all you are doing is defending, they must become the plaintiff and file a lawsuit against you which you have an opportunity to defend. A Judge who refuses to see that procedural point is in my opinion committing clear reversible error.

If the would-be forecloser could not establish standing and/or could not prove their case in a judicial foreclosure action, there is no doubt in my mind that the ELECTION to use the power of sale is UNAVAILABLE to them. They must show the court that they have a prima face case and the homeowners must present a defense. But that can only be done if the parties are allowed to conduct discovery. Otherwise the proceedings are a sham, and the Judge is committing error by giving the would-be forecloser the benefit of the doubt (which means that the Judge is creating an improper presumption at law).

If the Judge says otherwise, then he/she is putting the burden on the homeowner. But the result is the same. Any contest by the would-be forecloser should be considered under the same rules as a motion to dismiss, which means that all allegations made by the homeowner are taken as true for purposes of the preliminary motions.

Some people have experienced the victory of a default final judgment for quiet title only to have it reversed on some technical grounds. While this certainly isn’t the best case scenario, don’t let the fight go out of you and don’t let your lawyer talk you into accepting defeat. Reversal of the default doesn’t mean anyone won or lost. It just means that instead of getting the ultimate victory by default, you are going to fight for it. The cards are even more stacked in your favor with the court decisions reported over the last 6 months and especially over the last two weeks. See recent blog entries and articles.

All that has happened is that instead of a default you will fight the fight. People don’t think you can get the house for free. Their thinking is based upon the fact that there IS an obligation that WAS created.

The question now is whether the Judge will act properly and require THEM to have the burden of proof to plead and prove a case in foreclosure. THEY are the party seeking affirmative relief so they should have the burden of pleading and proving a case. Your case is a simple denial of default, denial of their right to foreclose and a counterclaim with several counts for damages and of course a count for Quiet Title. As a guideline I offer the following which your lawyer can use as he/she sees fit.

The fact that you brought the claim doesn’t mean you have to plead and prove their case. Your case is simple: they did a fraudulent and wrongful foreclosure because you told them you denied the claim and their right to pursue it. That means they should have proceeded judicially which of course they don’t want to do because they can’t make allegations they know are not true (the note is NOT payable to them, the recorded documentation prior to sale doesn’t show them as the creditor etc.).

I don’t remember if MERS was involved in your deal but if it was the law is getting pretty well settled that MERS possesses nothing, is just a straw man for an undisclosed creditor (table funded predatory loan under TILA) and therefore can neither assign nor make any claim against the obligation, note or mortgage.

Things are getting much better. Follow the blog — in the last two weeks alone there have been decisions, some from appellate courts, that run in your favor. There is even one from California. So if they want to plead a case now in foreclosure they must first show that they actually contacted you and tried to work it out. Your answer is the same as before. I assume you sent a qualified written request. Under the NC appellate decision it is pretty obvious that you do have a right of action for enforcement of RESPA. They can’t just say ANYONE contacted you they must show the creditor contacted you directly or through an authorized representative which means they must produce ALL the documentation showing the transfers of the note, the PSA the assignment and assumption agreement etc.

They can’t produce an assignment dated after the cutoff date in the PSA. They can’t produce an assignment for a non-performing loan. Both are barred by the PSA. So there may have been an OFFER of assignment  but there was no authority to accept it and no reasonable person would do so knowing the loan was already in default. And they must show that the loan either was or was not replaced by cash or a substitute loan in the pool, with your loan reverting back to the original assignor. Your loan probably is vested in the original assignor who was the loan aggregator. If it’s in the pool it is owned by the investors, collectively. There is no trust nor any assets in the trust since the ownership of the loans were actually conveyed when the investors bought the mortgage backed securities. They don’t want you going near the investors because when you compare notes, the investors are going to realize that the investment banker did not invest all the money that the investor gave the investment banker — they kept about a third of it for themselves which is ANOTHER undisclosed yield spread premium entitling you to damages, interest and probably treble damages.

The point of all this is that it is an undeniable duty for you to receive disclosure of the identity of the creditor, proof thereof, and a full accounting for all receipts and disbursements by the creditor and not just by the servicer who does not track third party payments through insurance, credit default swaps and other credit enhancements. It’s in federal and state statutes, federal regulations, state regulations and common law.

The question is not just what YOU paid but what ANYONE paid on your account. And even if those payments were fraudulently received and kept by the investment banker and even if the loan never made it through proper assignment, indorsement, and delivery, those payments still should have been allocated to your account, according to your note first to any past due payments (i.e., no default automatically, then to fees and then to the borrower). That is a simple breach of contract action under the terms of the note.

Again they don’t want to let you near those issues in discovery or otherwise because the fraud of the intermediaries would be instantly exposed. So while you have no automatic right to getting your house free and clear, that is often the result because they would rather lose the case than let you have the information required to prove or disprove their case in foreclosure. The bottom line is that you don’t want to let them or have the judge let them (Take an immediate interlocutory appeal if necessary) use the power of sale which is already frowned upon by the courts and use it as an end run around the requirements of due process, to wit: if you think you have a claim you must plead and prove it and give the opposition an opportunity to defend.

The procedural motion missed by most lawyers is re-orienting the parties. Just because you are initially the plaintiff doesn’t mean you should stay that way. Once it is determined that the party seeking affirmative relief is seeking to sell your personal residence and that all you are doing is defending, they must become the plaintiff and file a lawsuit against you which you have an opportunity to defend. A Judge who refuses to see that procedural point is in my opinion committing clear reversible error.

The worst case scenario if everything is done PROPERLY is that you get the full accounting, you are not in default (unless there really were no third party payments which is extremely unlikely) and they must negotiate new terms based upon all the money that is owed back to you, which might just exceed the current principal due on the loan — especially once you get rid of the fabricated fees and costs they attach to the account (see Countrywide settlement with FTC on the blog).

Jury Demand: Should You or Shouldn’t You

Since this question keeps popping up I figured I would take a shot at it.

The theory is that by asking for a jury verdict you are taking the matter out of the hands of a politicized judge and putting it in the hands of what is likely to be a very angry jury pool itching to whack the Wall Street players. I think that’s right, theoretically.

My problem with the theory is that in practice I don’t see much mileage in it. These cases don’t seem to EVER get to trial which is the only place a jury will hear anything. In the meantime you still have the the same politicized judge making all the preliminary rulings about whether your case will survive, much less get to trial.

The other problem I have with the Jury Demand is that you only have a right to trial by jury on money damages, not equitable relief, like an injunction or some mandate against the players. So the jury demand won’t have much effect on the main issue: whether the foreclosure is right or wrong and whether the money is owed and if so to whom, and whether the party seeking to foreclose has any right to do so.

And the last problem I have with it is the issue of bifurcation. If you ask for a jury trial the Judge might split the case into two cases — first the case involving the legality of the foreclosure and second, the damage case that will go to the jury. This creates the appearance that the Judge is “protecting” your right to be heard on your claims while “protecting” a secured creditor (who is neither a creditor nor secured) from further losses on a “legitimate” obligation.

So obviously I think that a jury demand takes the focus off whether the party you are fighting is a creditor, has standing or is just trying to steal the property. But I could be wrong. This isn’t a legal opinion, it is just a knee-jerk reaction.

TRUSTS + NON RESIDENT COST BOND = BIG PROBLEM FOR MILLS

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.

NOTICE OF DEFAULT: REAL OR FAKE?

First I want to thank the readers and the lawyers for climbing aboard this train on a highly improbable journey of turning the tide on Wall Street. Many of you are doing an outstanding job in this homeowner’s war to protect your property and our way of life. I am blessed to have been the recipient of so much help.

In discussions with lawyers I have come to realize that there is some confusion with my admonition to challenge everything and assume nothing. And it flies on the back of the deep guilt that most homeowners carry because they know they have not made a payment. Bottom Line: The mere fact that a payment wasn’t made doesn’t mean you are in default. Read that again. A default is a failure to make a payment that is due and it must also be a failure to pay the party to whom it is due. The fact is that from our vantage point here reviewing hundreds if not thousands of cases, we do not see the party to whom a payment could be due. Just as importantly, the parties suing in foreclosure, sending out notices of default, or notices of sale lack the knowledge to know whether a default exists or not. That is because they are layering the process so they can later claim plausible deniability when they are caught with their hand in the cookie jar, seeking title to property for which they have not contributed one dime other than the enforcement process itself.

Lack of payment is not a default. If you refinance your property, sell it or otherwise prepay your mortgage or, very importantly, if the Federal government or some insurance carrier has paid off your debt, your payment is either not due at all or it is due to an entirely different party than the one pretending to be a lender. When you sell your house and the old mortgage is paid off you stop making payments. Is that a default? Obviously not. So if the obligation has been partially or entirely paid by some third party in the securitization chain you are clearly entitled to know (a) who is holding the ownership rights to that loan, if anyone and (b) how much money they have already been paid and by whom.

The pretender lenders are bluffing their way through the process by having some company with an institutional sounding name send you a notice of default. A Notice of Default doesn’t create the default. Nor does a notice of default mean a default exists if it comes from a party you know lacks authority, knowledge, or standing.

The basic premise then of the process whether it is in judicial or non-judicial environments is not whether there is a “statutory scheme for the handling of these mortgages” but remains whether the loan is actually in default and if so what party is suffering financially as a result of the default (standing).

Bottom Line: If you concede the point that there is a default you are conceding your case away. Whether it is in a non-judicial or judicial proceeding, your effort should be to require the party seeking the real affirmative relief — the pretender lender — to prove that a default exists. That would require them to produce an accounting for every penny that was given to anyone in connection with your loan all the way up to the investor, and beyond, if a payment was made to or on behalf of the investor. This isn’t rocket science. In the old days, your mortgage lender would produce a payment record, show the court the original documentation and produce a witness that actually is the bookkeeper and records custodian on your loan. Both you and the court would see every penny they received from anyone in connection with the loan and every penny that was paid out under the terms of the note and mortgage. This is very basic stuff. But if you let them get away with it, they will bluff their way through it creating the presumption that you are in default and that presumption will be used against you unless you object and deny the allegation.

Practice TIP: In all probability the lawyer on the other side has never spoken with anyone outside his firm about your case. He therefore cannot represent anything factual to the court. In any event, the lawyer has no right to be representing facts to the Judge unless it is already admitted into evidence. That is virtually never the case since these motions come up before the first piece of evidence is even introduced, let alone admitted. If the lawyer starts blustering and making allegations of fact, he should be interrupted with an objection that he is either testifying or referring to facts that are not in evidence.

If he is testifying he is a witness and not the lawyer and is subject to cross examination and if you actually get that chance you’ll ask him what personal knowledge he has from his own perceptions regarding your loan account, the answer will be none, and he will disqualified as a witness because he lacks competence to testify. If he representing facts not in evidence, then he needs to allege them in a pleading and prove them with a competent witness. And the fact that he ac tually did not talk with anyone or otherwise make any effort to verify the default, means that he didn’t fulfill his obligation of due diligence to assure that the representations he is arguing in court are in fact supported by facts.

Foreclosure Offense and Defense: DISCOVERY OF Insurance Policies and Applications Reveal ALL

The simple mortgage on a home had been broken into many pieces (tranches — See Special Purpose Vehicle (SPV)) each having characteristics of entities unto themselves. The term “borrower” was severed from the the obligation to pay. The term “lender” was severed from the risk of loss and the right to payment from the borrower. The term “investor” was severed from the actual ownership of any asset, except one deriving its value from conditions existing between a myriad of third parties, but which nonetheless carried with it a right to receive payments from many different entities and people, the “borrower” being just one of many.

 

In the Mortgage Meltdown context, the challenge is to prove the point that this was a fraudulent scheme, a Ponzi arrangement that was a financial pandemic. You get that information through discovery, but unless you know what you are looking for, you will merely come up with volumes of paper that do not, in and of themselves reveal all the points you need to make — but they WILL lead to the discovery of admissible evidence (the gold standard of what is permitted in discovery) if you understand the scheme.

The nucleus of the scheme is the virtually unregulated creation of the Special Purpose Vehicle (SPV), which is a corporation formed by the investment banker to “own” certain rights to the loans and mortgages and perhaps other assets that were packaged for insertion into the SPV. The SPV issues securities and those securities are sold to investors with fake ratings and “assurances” and insurance that is falsely procured, but where the insurers or assurers were under common law, state law and/or federal law, required to perform their own due diligence, which they did not (in the mortgage meltdown). The proceeds of the sale of ABSs (CDO/CMO) go into the SPV.

The directors and officers of the SPV entity order the disbursement of those proceeds. (see INSURANCE in GARFIELD’s GLOSSARY).

The recipients are a large undisclosed pack of feeding sharks all claiming plausible deniability as to inflated appraisals of the residential dwelling, the borrower’s ability and willingness to pay, the underwriting standards applied (suspended because the lender was selling the risk rather than assuming it), and the inflated appraisal of the ABS (CDO/CMO) for all the same reasons — direct financial incentives, coercion (give us the appraisal we want or we will never do business with you against and neither will anyone else) or even direct threats of challenges to professional licenses.

In order to get this information, you must find the name of the SPV, which is probably disclosed in filings with the SEC along with the auditor’s opinion letter (see INSURANCE in GARFIELD’s GLOSSARY). You might get lucky and find it just by asking. Then demand production of the articles of incorporation and the minutes, agreements, signed and correspondence between the SPV and third parties and between officers and directors of the SPV. The entire plan will be laid out for you as to that SPV and it might reveal, when you look at the actual insurance contracts, cross collateralization or guarantees between SPV’s. Those cross agreements could be as simple as direct guarantees but will more likely take the form of hedge products like credit default swaps (You by mine and I’ll by yours — by express agreement, tacit agreement or collusion). 

You will most likely find that once you perform a thorough analysis of the break-up (“Spreading”) of the risk of loss, the actual cash income stream, the ownership of the note, the ownership of the security instrument (mortgage) and the ownership and source of payment for insurance and other contracts, that all roads converge on a single premise: this was a deal between the borrowers (collectively as co-borrowers) and the investors (collectively as co-investors). Everyone else was a middle man pretending to be NOT part of the transaction while they were collecting most of the proceeds, leaving the investor and the borrower hanging.

And there is no better place to start than with the insurance underwriting process — getting copies of applications, investigations, analysis, correspondence etc. Combined with the filings with the SEC you are likely to find virtual admissions of the entire premise and theme of this entire blog. I WOULD APPRECIATE YOU SENDING ME THE RESULTS OF YOUR ENDEAVORS.

INSURANCE — DEFINED

promise of compensation for specific potential future losses in exchange for a periodic payment. Insurance is designed to protect the financial well-being of an individual,company or other entity in the case of unexpected loss. Some forms of insurance are required by law, while others are optional. Agreeing to the terms of an insurance policycreates a contract between the insured and the insurer. In exchange for payments from the insured (called premiums), the insurer agrees to pay the policy holder a sum of money upon the occurrence of a specific event. In most cases, the policy holder pays part of the loss (called the deductible), and the insurer pays the rest. IN FORECLOSURE OFFENSE AND DEFENSE, YOU WILL FIND ERRORS AND OMISSIONS POLICIES COVERING THE OFFICERS AND DIRECTORS OF THE INVESTMENT BANKING FIRM, THE SPV THAT ISSUED THE ASBs, THE RATING AGENCY FOR THE ASB (CMO/CDO), THE LENDER, THE MORTGAGE BROKER, THE REAL ESTATE AGENT, ETC. YOU WILL FIND MALPRACTICE INSURANCE FOR THE AUDITORS OF THE SAME ENTITIES WHICH RESULTED IN FALSE REPRESENTATIONS CONCERNING THE FINANCIAL CONDITION OF THE ENTITY. YOU WILL FIND LOSS COVERAGE FOR DELINQUENCY, DEFAULT OR NON-PAYMENT THAT MAY INURE TO THE BENEFIT OF THE BORROWER. By joining the borrower and the investor as victims in the fraudulent Ponzi scheme creating money supply with smoke and mirrors, it may be argued that the insurance premiums were paid by and equitably owned by the borrower and/or the investor. 

Foreclosure Offense: Quiet Title and Rescission (TILA and otherwise)

HERE IS AN OUT-OF-THE BOX OFFENSIVE PROCEDURE WE PROPOSE. YOUR COMMENTS APPRECIATED. IT IS BASED UPON THE ASSUMPTION THAT THE LENDER ASSIGNED OR TRANSFERRED OR SOLD THE MORTGAGE AND NOTE RIGHT AFTER THE CLOSING ON YOUR TRANSACTION. LOGICALLY THEN THE PERSON TO WHOM YOU WOULD ADDRESS YOUR TILA, FRAUD, AND DECEPTIVE AND UNFAIR PRACTICES CLAIMS WOULD BE ADDRESSED TO THE NEW OWNER OF THE MORTGAGE AND NOTE. BUT YOU DON’T KNOW WHO THAT IS. AND IN THE TILA AUDIT, IF IT IS DOEN PROPERLY, THE DOCUMENTS ARE REQUESTED AND USUALLY IGNORED. SOOOOOO……

QUIET TITLE:

In essence the reverse of a traditional foreclosure where the owner of the property forecloses the claim of the people against whom he he has filed suit claiming the property free and clear of all encumbrances. 

The significance in foreclosure OFFENSE is that the loan has been assigned, sold and transferred multiple times and broken up into thousands of pieces along with many others that were intermingled in portfolios, sometimes with cross guarantees from one portfolio to another. 

This process started before the first payment was due on the mortgage loan and before the victim/borrower came to know the real facts of the loan withheld from him in an asymmetric information environment (see asymmetric information) in an inter-temporal transaction (see inter-temporal transaction). 

Thus the true owner, against whom rescission could be claimed became unknown to the victim/borrower. The quiet title action sues “John Doe” identified as all persons having an ownership interest in the mortgage lien on the subject property. The allegation is made that while the victim/borrower has been notified of a transaction, the victim/borrower, petitioner has not been advised of who the entities or people are who own this interest. And since there are TILA and other fraudulent violations, the victim/ borrower/petitioner wishes to rescind. Efforts to determine the true owners have led the Petitioner to determine that there may be thousands of entities or owners, none of whom have been disclosed to Petitioner despite attempts to secure said information (contained in the TILA report and demand). 

SERVICE OF PROCESS IS BY PUBLICATION.

If the court demands that the mortgage servicing company be named as nominal Defendant or Respondent, the mortgage servicing company has only one job: to produce information and proof of ownership of the loan. It is doubtful that anyone, least of all the mortgage servicing entity will be able to fulfill this condition. 

Thus the default judgment will be entered, the victim stops paying the mortgage, and has a recorded judgment relieving his property of any mortgage lien and offsetting the note with the refunds and damages payable to the victim, thus satisfying the entire principal of the note and awarding attorney fees to the victim/petitioner.

RESCISSION:

The right to reverse the transaction. Ordinarily rescission involves giving back everything you received in exchange for getting back everything you gave. In this setting it means the right to get back ALL the interest, points, closing costs and attorney fees and other costs at or after closing that you incurred as a result of the transaction. Rescission rights exist under Federal Statutory Law (Truth in Lending Act – TILA, State Deceptive Business practice Acts, and at common law. Remember that rescission doesn’t mean you give back the house. It doesn’t even mean you have to give back the money to the lender against whom you are rescinding — THAT obligation commences AFTER the lender admits to the rescission or it is otherwise decreed and then it is reduced by the refunds of points, interest, closing costs you paid plus damages and attorney fees you suffered as a result of the issues raised in this post. Rescission might not even mean you owe any money at all to the lender. It could mean that the mortgage lien is extingunished and so is the note. It could convert a secured debt, non-dischargeable in bankruptcy to an unsecured debt wholly dischargeable in bankruptcy. And unless the party coming into court or the auction as a “representative” of the lender can prove that they have received their instructions and authorization from a party who is authorized to give those instructions, then they lack authorization, they lack legal standing and they are probably committing a fraud on you, the court and everyone else. 

companion tranche

A specific tier or segment of REMIC security. A REMIC tranche that is structured to absorb a disproportionate amount of the volatility caused by variations in the prepayments of the underlying collateral. Companion tranches are created to be more volatile so that other tranches in the same REMIC, called PAC or TAC tranches, may have more stable cash flows. Hence the name companion. Also called support tranches. The significance in Foreclosure defense is that this is one of the devices used in the covenants or indentures of ASBs that assures payment to the holder of the security. Since the holder of the security is the “owner” of the mortgage and note, it is reasonable to assume that either the holder of the mortgage has been paid by a third party or that a third party assumed the liability.

compliance risk

One of nine risks defined by the Office of the Comptroller of the Currency (OCC). The risk to earnings or capital arising from violations of or nonconformance with laws, rules, regulations, prescribed practices, or ethical standards. This risk is incorporated in the Federal Reserve definition of legal risk. Participants in the Mortgage Meltdown of 2001-2008 were virtually all out of compliance and upon filing of an administrative complaint to the OCC, could be prosecuted for violations.

conventional mortgage

A mortgage loan based solely upon the value of the mortgaged real estate and the creditworthiness of the borrower. A mortgage loan without insurance or guarantees from a government agency. The significance is that with securitization of the loans there is (a) insurance to the holder of the CLO (b) guarantees of payment from third parties and (c) in practice, guarantees from the Federal Government (witness the Federal Reserve bailout of Bear Stearns and the Federal Reserve policy of allowing investment bankers who are holding CLOs to use those CLOs for loans at the Fed window). The securitized transactions thus converted the original transaction from a conventional loan to a complex consumer credit, insured, guaranteed, pooled security transaction falling far outside of the TILA exemption regarding residential home mortgages eligibility for rescission. 

INTER-TEMPORAL TRANSACTIONS:

Transactions in which the commencement of the terms at the execution of the deal contains terms, risks or provisions that differ from a later time. The significance of this insider term in the MORTGAGE MELTDOWN is a classic real story: the victim is a black man with a perfect (800) FICO score has lived in his house many years and has only 5% left to pay off on his mortgage. He is approached by carefully trained predatory salesman for subprime lender — a lender that the victim had no need for because his credit, finances and personal reputation were excellent. Victim could therefore have qualified for any conventional loan on conventional terms. Victim does not know because it is not disclosed to him that he is being approached with a subprime lending program and that he qualifies for much better terms that are being offered to him — nor that he would be better off NOT refinancing since he is so close to paying off his house. He is convinced to get a new mortgage for interest only payments set at 1% while another 9% accrues. $20,000 in mortgage broker and yield spread premium rebates (kickbacks) are paid up front along with the mortgage proceeds. Within a few months he starts getting notices of increases in his payments which eventually are larger than his entire income. Qualification of the loan by the “lender” was at the payment rate at 1% interest, not at the future rates that would be applied, for which his income would NOT qualify. Victim ends up with risk of foreclosure and blemished credit score. Happy ending. Legal aid stepped in and unwrapped the deal. Many borrowers are seduced into accepting these deals believing that the extra money they are getting out of the mortgage proceeds will help them indefinitely to make future payments. It is the lender’s obligation to disclose that this is not the case, that the borrower’s income does not cover the amount of future payments which the lender understands and the borrower does not (see asymmetric information). 

MORTGAGE MELTDOWN:

An series of events (stemming from the 1983 introduction of derivative securities) created by a tacit cartel of investment bankers and other financial institutions in which borrowers were (approved) “loaned” money on purchase money mortgages based upon false appraisals in the context of contemporaneous securitized transactions where the investment capital was procured by fraud in unregulated security offerings to “qualified” investors, based upon false assurance, false ratings, false insurance backing, and false appraisals of underlying property, income of borrowers and many other factors. The logistics of this scam were revealed in pieces and have threatened the very existence of many financial institutions and the financial markets themselves. Indexes, such as LIBOR, were indirectly manipulated by U.S. financial institutions to hide the true facts. Despite a brief period in which certain arcane “auction markets” froze up (in places and events unknown to the public, business has resumed as usual. The lack of regulation from a responsible, accountable agency or group of agencies has spawned hundreds of lawsuits and millions of foreclosures, many producing counterclaims for far more than the original mortgage and note. No immediate fundamental change is in process in the regulatory scheme, hence it may be expected that the mortgage meltdown will replay in one form or another shortly. 

NINJA LOAN

NO INCOME, NO JOB, NO ASSETS: NO DOCUMENTS, NO VERIFICATION, NO REVIEW BY RISK ANALYSIS COMMITTEE.

Mortgage Meltdown: Moral Blindness Needed


Thanks everyone for the comments. Just to clarify some nuances that are peculiar to this situation, here are some more thoughts.

1. No lender is going to file anything against this plan unless it forces them to take more of a loss today than they already are looking at. EVERY lender will do anything that gives them a reasonable prospect at curbing or stopping the losses.

 

2. EVERY lender is going to want a device that will enable them to reinstate the loan and thus avoid their indemnification liability to the buyers of the collateralized debt obligations. 

3. The buyers of the CDOs are not going to worry about the smell test because it already stinks. They wrote off the CDOs or wrote down the CDOs which is what precipitated this crisis — by writing down the value of the CDOs under current “gaap” rules promulgated by the FASB, Fed Rules, FDIC rules and the SEC, their currency reserves were slashed into nothingness and worse still, caused a violation of reserve requirements which technically puts the financial institution into “insolvency.” 

4. That is what happened at Bear Stearns which went into the toilet when the rumor spread they were insolvent. Technically, they were. Everyone showed up at the window to ask for their money. Bear Stearns already was in violation of reserve capitalization and obviously did not have the cash on hand to satisfy the demands of clients and depositors. So the Bear had to either tell people they can’t have their money (something that NOBODY wanted to hear including competitors who would suffer similar runs on their institutions with similar consequences) or they had to reassure people that they were NOT insolvent even if it meant going to another institution that was also technically insolvent (but nobody has figured that out yet because they haven’t reported yet — that is March 31). 

But that’s OK because Morgan’s deal is that the Fed will pick up the slack which in the view of investors and depositors is still good for its word. (THAT is a questionable assumption for the time being, but it hasn’t come to the front burner yet, because the Fed still looks like it has money and still looks like it has credibility). 

5. If they are able to reinstate the “value” of the CDOs, then their balance sheets improve. Combined with the decrease in the reserve requirement announced this morning, that would open up a considerable amount of money which is sitting in reserves or marked off as “lost value” and allow for lending to recommence. 

That would increase salability and pricing of houses, which would tend to reassure both owners of homes and owners of CDOs that their investment is not so upside-down after-all. 

6. All of this is important because you must realize that the proposal I am making, although an obvious target for endless litigation, is going to be greeted with enthusiasm by everyone. It stops the foreclosures and evictions which keeps people in the homes, keeps people other than the lender doing and paying the maintenance, utilities etc on the home, keeps the property from becoming abandoned and stripped by vandals of everything inside including the now valuable copper wiring, stops the creation of ghost towns, reinstates the full value of the mortgage even if there might be a write-off later, restores the value and reverses the capital write-downs that caused the crisis, and provides the owners of the CDOs an opportunity to recover some or at least more of their investment than they are currently looking at.

7. As for government, they will pass anything the Supreme Court asks them to if industry and consumers are both behind it. It doesn’t matter whether it is constitutional. Ask FDR. You put it in place until it is declared invalid. Meanwhile the benefits are won. 

Municipal governments, County governments would pile on this plan like flies on poop — it represents their only chance to stem the bleeding from their budgets. They know the Federal government is not going to give them the money to rebuild and re-sell their neighborhoods. They know they can’t get tax revenue and maintain services unless values stabilize and then go up.

8. Of course you can’t take a foreclosed piece of property and force the new owner to give it back and put the old owner back in the house. But you can open the door to do just that if BOTH SIDES want it. THAT is the idea here. 

9. This isn’t a matter of what or who is right and whether buyers were stupid or greedy or lenders were stupid or greedy or worse. This is a solution that turns a blind moral eye on the entire problem and addresses the stark truth and deals with it effectively. The stark truth is that, as Alan Greenspan so subtly put it yesterday, the U.S. is headed for the worst economic times since the end of WW II. This plan won’t stop the downslide completely but it will it slow it down and probably provide a more shallow grave than what is otherwise in store for us.  

10. Anyone in government, industry or the consumer sector that argues against this is arguing for their own financial death. 

Mortgage Meltdown: Supreme Court Petition

Cut, paste, fill in the blanks and send it in along with your request that the filing fee be waived because of financial hardship. Just google the Supreme Court of your state and send it in.

xxxxxxxxxxxx, Sui Juris

Citizen of the State of Arizona

Address.

City, State ZIP

                    SUPREME COURT OF ARIZONA

                          

IN RE: People of Arizona )  Case Number #320831

ex relatione             )

XXXXXX SSSSSSSSS,

AND ALL OTHERS SIMILARLY

     SITUATED            )         VERIFIED PETITION

                         )  FOR EMERGENCY CHANGES TO RULES

          Petitioner,    )

                         )  OF CIVIL PROCEDURE FOR FORECLO-                                 SURES AND EVICTIONS

_________________________)

The People of Arizona state send greetings:

TO:  SUPREME COURT OF ARIZONA

                              FACTS

     This is an original filing with the Supreme Court inasmuch as the this Court is the sole rule-making authority for the rules of civil procedure in the State of Arizona and an immediate danger exists for the citizens of Arizona, its counties, cities, towns, businesses, financial institutions and working men and women. The problem can only be ameliorated or mitigated by immediate action changing the rules of Civil procedure such that the number of foreclosures is processed in an orderly manner, allowing the protections of due process for all parties, and permitting the already overtaxed facilities of the State’s court system, to provide appropriate relief tot eh appropriate parties.

The current rules, while under normal circumstances might be considered expeditious in processing foreclosures and evictions never contemplated a circumstance where thee entire economy of the State might be jeopardized by the ruinous acts of people whose objective was greed at all costs and whose actions have reduced the wealth of every citizen of the State of Arizona and decreased the ability of every homeowner to make the payments, refinance, or sell their property.

FACTS PERTAINING TO THIS PETITIONER AND ALL OTHER PURCHASERS OF RESIDENTIAL REAL ESTATE FROM 2001-2007:

ON XX/XX/200X, your Petitioner attended a closing in which she purchased a residential dwelling in the City of XXXXXXX, County of XXXXXXXXX, State of Arizona.

The purchase price and closing settlement statements all reflect a purchase price of $XXXXXXXXXX, with a mortgage note indebtedness of $XXXXXXXXXX.

The contract with the Sellers, the acceptance by the Buyer/Petitioner and the Petitioner’s agreement to the terms of the purchase price and the terms of mortgage and note were all based upon a presumption that the terms were based upon the fair market value of the home at the time of contract and at the time of the closing.

Your Petitioner relied upon the appraisal, the lender’s evaluation, the mortgage broker, the underwriter of the mortgage and note, and general knowledge in accepting the apparent fair market value of the home. 

Petitioner reasonably assumed that the lender would not approve a mortgage, note and fair market value appraisal unless there was reasonable and competent data in support thereof, and based upon the assumption that the lender was accepting a risk based on the fair market value and the risks of future market conditions.

In fact, the Lender knew it had no risk, encouraged and provided a variety of incentives to all OTHER parties who participated in the closing to complete the transaction, and received compensation from third parties for doing so, all without any disclosure to your Petitioner and without complying with the disclosure requirements of the Truth in Lending Act, and other applicable laws, rules and regulations.

In fact, the Lender knew that it would sell the note to a third party investment bank who would in turn sell aggregated packages of similar notes and and mortgages to third party investors, who would purchase these collateralized debt obligations (CDOS) because they were Triple-A rated (A RATING THAT WAS PROBABLY FRAUDULENTLY OBTAINED), insured (BY COMPANIES THAT ARE NOW INSOLVENT) and were being sold by “reputable” investment banking and retail brokerage companies, WHICH ARE NOW GOING OUT OF BUSINESS.

Thus the normal market forces in sharing risk were perverted and twisted without disclosure to the two classes of people or entities that would bear the brunt of the risk and the losses — buyers of the homes and buyers of the CDOs.

Within a matter of weeks the actual fair market value of the house became apparent to your Petitioner, having fallen by some 20% thus wiping out a down payment of $130,000. Within months the situation has worsened. 

The above scenario is being played out across the State of Arizona in an inexorable March toward ruin of people’s lives, finances, and housing. The ruin of entire Arizona neighborhoods is in process, with attendant plummeting tax revenues and services, as the rate of foreclosures and attendant evictions soars beyond the State’s capacity to handle them because of lack of time, adequate procedures to provide due process to victims of the fraudulent scheme, knowledge or financial resources on the part of buyers were duped by a transnational scheme — a scheme that is in the process of destroying the economy of the State of Arizona, as well as the Federal Government, other States of the Union and even other sovereign nations and municipalities in those nations which are cutting back services as a result of losses incurred in their purchase of “cash equivalent” CDOs, WHICH ARE NOW EITHER WORTHLESS OR SUBSTANTIALLY REDUCED IN VALUE IN THE SAME WAY THAT THE HOUSING “VALUES” BECAME SUBSTANTIALLY REDUCED IN VALUE.

It is now apparent that the lenders are now in the position of being required to foreclose on properties that they do not want to own, which is causing a cascading process of housing price devaluation, and that the impact of the CDo devaluation, amounting to trillions of dollars in the aggregate, is having a proportionate effect on the value of the U.S. dollar, which is legal tender in the State of Arizona, and that this devaluation, combined with efforts to increase credit (monetary liquidity) are resulting in skyrocketing inflation, whose rate is increasing weekly. Thus the effect on the State and its citizens, all of whom receive incomes that are not indexed to real inflation, will be catastrophic unless the process of foreclosure and eviction is brought under control.

Accordingly, your Petitioner Prays that this Honorable Court take emergency action for the purpose of slowing the rush to foreclosure and evictions, giving parties adequate opportunity to present and defend their claims and providing a mechanism in which the parties may settle their competing claims through mediation. It is contemplated that emergency appointments of mediators along with the creation of mediated settlement templates would be helpful to stem the flow while at the same time restoring value and order to the housing and securities marketplace. Such templates can be created quickly by individuals with banking, finance and housing experience and expertise and would serve only as a guide for settlement.

Wherefore, Petitioner proposes the following emergency rule changes, subject to any changes, alterations, modifications, deletions or additions the Court deems fit:

Emergency Provisional Rules

Mortgage Foreclosures

These emergency rules of civil procedure apply to all foreclosures on all property, real or personal, initiated on or before January 1, 2007. No Judgment shall be executed, or if already executed, enforced, and no order of removal or eviction or seizure related to foreclosure shall be executed, or if already executed, enforced unless a Court of competent jurisdiction shall have executed an order finding as a matter of law and fact that the foreclosing party(ies) have complied with each and every provision contained herein.

1. Every Petition for Foreclosure and/or every action undertaken by a foreclosing party prior to seeking recovery or seizure, or occupancy of property, shall require the foreclosing party(ies) to file a verified complaint or affidavit alleging the facts supporting the claim for relief, executed by a person with actual knowledge of all facts alleged. The executing party on said verified Petition or affidavit shall affirmatively allege and actually be available for the taking of testimony by deposition or at an evidentiary hearing in the jurisdiction in which the property is located.

2. Each such Petition or Affidavit shall state the names and addresses of all parties involved in the loan transaction and shall be served under the rules governing service of process upon each of said parties as third party non-party litigants, if such parties were not the lender or borrower.

3. Each such Petition or Affidavit shall account for all funds that were passed through or to each party named in the action, the disposition thereof, and the manner and time in which the passage of said funds were dispersed, together with a citation to the mortgage documentation, including a quote of the relevant passages in the body of the Petition or Affidavit wherein said funds are disclosed and wherein said funds are authorized. 

4. Each such Petition or Affidavit shall state with particularity whether any changes occurred after the closing of the subject loan transaction in which parties or persons were changed including the names and addresses of all parties and persons related to the transactions subject to the mortgage.

5. With respect to sale or assignment or any joint or sharing arrangements concerning ownership, distribution of risk, or securitization in which the subject loan was referenced as collateral or otherwise, each such Petition shall state with particularity the details of each such transaction, the distribution or re-distribution of funds, and the documents employed by said parties after said closing.

6. Each and every such Petition or Affidavit shall affirmatively state that the foreclosing party(ies) have standing and authority to bring the action, defend counterclaims and answer affirmative defenses. The signature of the attorney on said pleading shall be mandatory and shall constitute a representation to the COURT that the filing attorney has performed proper due diligence to ascertain the truth of the allegations of legal standing and all other allegations.

7. Each such Petitioner or Affidavit shall be accompanied by attachments of the referenced documents to be included with the first service of such Petition or Affidavit.

8. Each such Petition or Affidavit shall state with particularity and specificity each disclosure made to the borrower and any third parties involved in the transaction under the Truth in Lending Act and the corresponding provision of the mortgage documents executed by the borrower which supports said disclosure.

9. Each such Petition or Affidavit shall state with particularity and specificity each disclosure made to the borrower and any third parties involved in the transaction under the Truth in Lending Act and the corresponding provision of the mortgage documents executed by the borrower which does not support said disclosure. If any allegation other than “none” is made under this paragraph, the foreclosing party(ies) shall state with specificity the law or fact upon which they should be excused from compliance.

10. Each such Petition or Affidavit shall attach a full and complete accounting of all money, value or funds transmitted, paid or or promised between all parties involved in the loan transaction before or after the loan transaction. In the event the borrower has been overcharged, undercharged, or charged correctly, the Petition or Affidavit shall so state affirmatively, providing a full accounting of said funds. 

11. No answer or response from the borrower shall be due unless and until the foreclosing party(ies) are in complete and full compliance with the provisions of these rules. Any prior answer or response may be amended by the borrower after a determination is made that the foreclosing party(ies) are in full compliance. No prior Judgement, order or other document or rule shall prevent the borrower from filing a response or answer after the foreclosing party(ies) are found to be in compliance with these rules.

12. In the event that the foreclosing party(ies) fails or refuses to comply with these rules, the foreclosure shall be barred with prejudice and until the terms of the mortgage are determined with certainty by the Court by clear and convincing evidence, no payments to the mortgagee shall be due. This provision that not apply to payment to taxing authorities. In such event of delay caused by the the foreclosing party(ies) the court may fashion such equitable remedies as the Court deems fit in its discretion. for example, the Court could apply delinquent payments to the end of the mortgage, thus extending the terms. 

13. In the event of non-compliance with these rules wherein the foreclosing party(ies) demonstrate to the Court the probability that they could amend their filing to conform to the requirements herein, the foreclosing party(ies) shall file an amended Petition or Affidavit on or before thirty (30) days from the date of the order of the Court allowing the amendment. Failure to file within said thirty period shall be grounds for a mandatory immediate dismissal with prejudice. 

14. In the event of the filing of a verified amended Petition or Affidavit, Borrower shall have sixty (60) days in which to answer or respond. Failure to answer or respond shall not relieve the burden of proof of the foreclosing party(ies) in compliance with state, local and Federal law, and in compliance with these rules.

15. The Court may grant attorney fees and costs to the prevailing party in each case where a motion or other filing occurs, wherein a determination is made in an adversary proceeding that the filing is in or out of compliance. 

16. In the event a foreclosure has already been completed and all subsequent and customary actions have occurred and no bona fide third party has taken control or occupancy of the property, these rules may applied retroactively. 

17. Once compliance has been established and the issues are joined, the Court shall enter an order requiring the parties to enter into a process of mediation. The purpose of the mediation shall be to fashion a settlement which provides relief and incentives to all affected parties, including non-party litigants. Mediation shall take place no earlier than thirty (30) days after the entry of the mediation order, and not later than is reasonably possibly given the volume of cases and the availability of competent mediators.

These rules are subject to review by the Court but are effective immediately. Comments and applications to be heard shall be available in keeping with the usual and customary methods of proposed rule changes. Said rules shall be effective unless and until stated otherwise by the Court.

                          VERIFICATION

I, xxxxxxxxxxxxxxxxxxxxxxxxxxxx, Sui Juris, hereby verify, under penalty of perjury,  under the  laws of  the United  States  of  America, without the  “United States” (federal government), that the above statements of  fact are  true and  correct, to  the  best  of  My current information,  knowledge, and  belief.

Dated:  xx/xx/2008

Respectfully submitted,

/s/ xxxxxxxxxxxxxxxxxxxxx

                       PROOF OF SERVICE

I, xxxxxxxxxxxxxxxxxxxxxxxxxx, Sui Juris, hereby certify, under penalty of perjury,  under the  laws of the State of Arizona and the United  States  of  America, that I am at least 18 years of age, a Citizen  of one  of the  United States  of America,  and that I personally served the following document(s):

       EMERGENCY PETITION FOR CHANGES TO RULES OF CIVIL PROCEDURE RELATING TO FORECLOSURES AND EVICTIONS

by placing one true and correct copy of said document(s) in first class United  States Mail,  with  postage  prepaid  and  properly addressed to the following:

Attorney General, State of Arizona

/s/ XXXXXXXXX SSSSSSSSSSSSSSSSSSS

_____________________________________

XXXXXXXXXXX, SSSSSSSSSSSSSSS, Sui Juris

                         

       

Mortgage Meltdown: Send this to your State Supreme Court and Local Court

The problem for homeowners is that however many ideas are put forward they won’t be effective in time to save most people, they won’t be in time to save the economy, and they won’t be in time to save our currency from further wrenching devaluation. It is the fierce urgency of now that cannot even wait to the election or January 20, 2009. There is only one place where immediate relief can be achieved — the Court System. There are constitutional impediments to interference with the mortgage foreclosure process. Yet there is authority in the judicial system to change the rules as long as it does not significantly impede or in this case, it should enhance access to the courts and the ability to mount a credible defense to foreclosures on predatory or fraudulent loans. 

These are the rules that could be enacted by each court in the land that would [a] slow down the process and [b] protect borrowers from the steamroller of lender foreclosures and [c] protect lenders, investment bankers and investors from themselves. These rules preserve and enhance due process so that the unsophisticated borrower is not wiped out again by his or her lack of knowledge. 

 

Emergency Provisional Rules

Mortgage Foreclosures

These emergency rules of civil procedure apply to all foreclosures on all property, real or personal, initiated on or before January 1, 2007. No Judgment shall be executed, or if already executed, enforced, and no order of removal or eviction or seizure related to foreclosure shall be executed, or if already executed, enforced unless a Court of competent jurisdiction shall have executed an order finding as a matter of law and fact that the foreclosing party(ies) have complied with each and every provision contained herein.

1. Every Petition for Foreclosure and/or every action undertaken by a foreclosing party prior to seeking recovery or seizure, or occupancy of property, shall require the foreclosing party(ies) to file a verified complaint or affidavit alleging the facts supporting the claim for relief, executed by a person with actual knowledge of all facts alleged. The executing party on said verified Petition or affidavit shall affirmatively allege and actually be available for the taking of testimony by deposition or at an evidentiary hearing in the jurisdiction in which the property is located.

2. Each such Petition or Affidavit shall state the names and addresses of all parties involved in the loan transaction and shall be served under the rules governing service of process upon each of said parties as third party non-party litigants, if such parties were not the lender or borrower.

3. Each such Petition or Affidavit shall account for all funds that were passed through or to each party named in the action, the disposition thereof, and the manner and time in which the passage of said funds were dispersed, together with a citation to the mortgage documentation, including a quote of the relevant passages in the body of the Petition or Affidavit wherein said funds are disclosed and wherein said funds are authorized. 

4. Each such Petition or Affidavit shall state with particularity whether any changes occurred after the closing of the subject loan transaction in which parties or persons were changed including the names and addresses of all parties and persons related to the transactions subject to the mortgage.

5. With respect to sale or assignment or any joint or sharing arrangements concerning ownership, distribution of risk, or securitization in which the subject loan was referenced as collateral or otherwise, each such Petition shall state with particularity the details of each such transaction, the distribution or re-distribution of funds, and the documents employed by said parties after said closing.

6. Each and every such Petition or Affidavit shall affirmatively state that the foreclosing party(ies) have standing and authority to bring the action, defend counterclaims and answer affirmative defenses. The signature of the attorney on said pleading shall be mandatory and shall constitute a representation to the COURT that the filing attorney has performed proper due diligence to ascertain the truth of the allegations of legal standing and all other allegations.

7. Each such Petitioner or Affidavit shall be accompanied by attachments of the referenced documents to be included with the first service of such Petition or Affidavit.

8. Each such Petition or Affidavit shall state with particularity and specificity each disclosure made to the borrower and any third parties involved in the transaction under the Truth in Lending Act and the corresponding provision of the mortgage documents executed by the borrower which supports said disclosure.

9. Each such Petition or Affidavit shall state with particularity and specificity each disclosure made to the borrower and any third parties involved in the transaction under the Truth in Lending Act and the corresponding provision of the mortgage documents executed by the borrower which does not support said disclosure. If any allegation other than “none” is made under this paragraph, the foreclosing party(ies) shall state with specificity the law or fact upon which they should be excused from compliance.

10. Each such Petition or Affidavit shall attach a full and complete accounting of all money, value or funds transmitted, paid or or promised between all parties involved in the loan transaction before or after the loan transaction. In the event the borrower has been overcharged, undercharged, or charged correctly, the Petition or Affidavit shall so state affirmatively, providing a full accounting of said funds. 

11. No answer or response from the borrower shall be due unless and until the foreclosing party(ies) are in complete and full compliance with the provisions of these rules. Any prior answer or response may be amended by the borrower after a determination is made that the foreclosing party(ies) are in full compliance. No prior Judgement, order or other document or rule shall prevent the borrower from filing a response or answer after the foreclosing party(ies) are found to be in compliance with these rules.

12. In the event that the foreclosing party(ies) fails or refuses to comply with these rules, the foreclosure shall be barred with prejudice and until the terms of the mortgage are determined with certainty by the Court by clear and convincing evidence, no payments to the mortgagee shall be due. This provision that not apply to payment to taxing authorities. In such event of delay caused by the the foreclosing party(ies) the court may fashion such equitable remedies as the Court deems fit in its discretion. for example, the Court could apply delinquent payments to the end of the mortgage, thus extending the terms. 

13. In the event of non-compliance with these rules wherein the foreclosing party(ies) demonstrate to the Court the probability that they could amend their filing to conform to the requirements herein, the foreclosing party(ies) shall file an amended Petition or Affidavit on or before thirty (30) days from the date of the order of the Court allowing the amendment. Failure to file within said thirty period shall be grounds for a mandatory immediate dismissal with prejudice. 

14. In the event of the filing of a verified amended Petition or Affidavit, Borrower shall have sixty (60) days in which to answer or respond. Failure to answer or respond shall not relieve the burden of proof of the foreclosing party(ies) in compliance with state, local and Federal law, and in compliance with these rules.

15. The Court may grant attorney fees and costs to the prevailing party in each case where a motion or other filing occurs, wherein a determination is made in an adversary proceeding that the filing is in or out of compliance. 

16. In the event a foreclosure has already been completed and all subsequent and customary actions have occurred and no bona fide third party has taken control or occupancy of the property, these rules may applied retroactively. 

17. Once compliance has been established and the issues are joined, the Court shall enter an order requiring the parties to enter into a process of mediation. The purpose of the mediation shall be to fashion a settlement which provides relief and incentives to all affected parties, including non-party litigants. Mediation shall take place no earlier than thirty (30) days after the entry of the mediation order, and not later than is reasonably possibly given the volume of cases and the availability of competent mediators.

These rules are subject to review by the Court but are effective immediately. Comments and applications to be heard shall be available in keeping with the usual and customary methods of proposed rule changes. Said rules shall be effective unless and until stated otherwise by the Court.

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