Miami Judge: No Transaction=Unclean Hands. Judgment for Homeowner with Sanctions.

It’s time to sit up and take notice. Judges are turning the corner and getting pretty angry about what passed before as evidence. In April this order seemed like a shot in the dark. But now, we are seeing more and more judges actually study the chain of alleged transactions relied upon those who seek forced sale of a residence. The motivation of those seeking foreclosure is gradually being revealed this year. Not surprisingly they are not in the least bit interested in the property or the loan. They want a foreclosure judgment because THAT is what has value for them — getting the judge to unwittingly ratify all the preceding illegal acts and frauds perpetrated on the borrower and the courts. Once again our friends at Ocwen are named as the culprits, but this judge goes further when she says

‘This Court finds the AOM [assignment of mortgage] created in 2012 does not document a transaction that occurred in 2005, as Plaintiff suggests. The transaction described in the AOM never legally occurred.There was never a transaction between MERS and/or Freemont Investment and Loan that sold Defendant’s loan directly to the Trust. Not in 2012, not in 2005, not ever.’ (e.s.)

see ocwen-order

HSBC v Buset, Case # 12-38811 CA 01 Decided 4/26/16 Hon Beatrice Butchko

For about 10 years now I have endured taunts from people representing the banks or themselves citing case after case saying I was wrong in my legal analysis. I persisted because I knew I was right. The reality of a transaction is far more important than the self serving paperwork that parties use to justify their illegal actions  — the last decade notwithstanding. If there was no purchase of the loan then the assignee received nothing.

But more important than that is something that Judge Butchko seemed to pick up on. She asks the simple question: why would Ocwen violate a mandatory discovery order that would prove the Plaintiff’s case? Instead they tried to plow through without the reality of a single transaction in which a loan was made, purchased or sold.

If the alleged loan was not sold then why were there any papers showing a transfer of the “loan.” And if each party in the chain was paying nothing to the party before them, why was the assignor signing an assignment without getting paid for it. And if that is true for all the assignments and endorsements then was the originator a lender? If the originator received nothing in a purchase transaction for the alleged loan, the only logical conclusion is that there was no loan by the originator and there might have been no loan at all.

With that conclusion why would a party with no money in the “game” be suing for foreclosure? The answer must be completely separate from the loan because that is obviously of no consequence to those participating parties that were getting fees for executing documents that pretended that there was a purchase and sale of the debt. The answer is that foreclosure is the ONLY way they could cover their tracks in the false sales of mortgage bonds issued by an empty non-operating trust. If you look at decisions like this and thousands of other cases the conclusion is inescapable — a foreclosure judgment is the first and only legal document is the entire chain.

Here are some quotes

The Court takes judicial notice that on July 25, 2008, Freemont Investment and Loan (“Freemont”) entered into a voluntary liquidation and closing which did not result in a new institution. https://www5.fdic.gov/idasp/confirmation_outside.asp?inCert1=25653. As such, the status of MERS as nominee for Freemont ended when Freemont closed on July 25, 2008, which renders the AOM created in 2012 void ab initio.

This endorsement is contrary to the unequivocal terms of the PSA, in evidence over Plaintiff’s objection, which required all intervening endorsements be affixed to the face of the note because there was ample room for endorsements on the face of the note. There is also no evidence the endorsement was affixed before the originator went out of business in 2008.

The Court also finds unclean hands in Plaintiff’s failure to comply with the Court’s Discovery Order of April 27, 2015.

17. In that order, the Court overruled plaintiff’s blanket objections and found no basis for Plaintiff to object to providing any discovery under Fla. Stat. 655.059.

18. The Court then ordered Plaintiff to provide (1) the final executed documents evidencing the chain of title for the subject loan; (2) all records of any custodian related to the chain of custody of the note; and (3) all records showing how and when the specific endorsement on the promissory note was created.

The Court fails to comprehend why Plaintiff would not fully comply with the Court’s Order compelling discovery when the evidence sought by the Defendant would actually assist Plaintiff in establishing the missing link in the chain of ownership in the endorsement and assignment of mortgage.

The Court hereby enters an Order to Show Cause why Plaintiff should not be Sanctioned for violating the Court’s order on April 27, 2015, after representing that it fully complied on or before January 14, 2016.

23. Moreover, the Court hereby enters an Order to Show Cause why Plaintiff should not be sanctioned for the reasons set forth in Defendant’s Motion for Sanctions Under the Court’s Inherent Contempt Powers for Fraud Upon the Court filed on March 16, 2016.

24. Defendant is hereby ordered to conduct further discovery in support of these orders to show cause and set an evidentiary hearing on them at the Court’s earliest convenience.

Ms. Keeley testified the loan boarding process involved two steps. First, Ocwen confirmed that the categories for each column of financial data from the prior servicer matched or corresponded to the same name Ocwen used for that same column of financial data. Second, Ocwen confirmed the figures from the prior servicer transferred over such that the top figure from Litton became the bottom figure for Ocwen. The court notes that when testifying about Ocwen’s boarding process, Ms. Keeley appeared to be merely repeating a mantra or parroting what she learned the so called boarding process is without being able to give specific details regarding the procedure itself. 1 Her demeanor at trial although professional, was hesitant and lacking in confidence in this court’s estimation as the trier of fact.

To support the court’s concern regarding the lack of foundation of the so called boarded records in this case, the Court takes Judicial Notice of the Consent Order entered in the matter of Ocwen Financial Corporation, Ocwen Loan Servicing, LLC by the New York State Department of Financial Services dated December 22, 2014. This Consent Order documents Ocwen’s practice of backdating business records that it failed to fully resolve “more than a year after its initial discovery.”

1 This Court estimates that it has presided over hundreds of foreclosure bench trials since being assigned to the Civil Division in 2011. The court has accordingly heard hundreds of bank witnesses testify regarding their company’s boarding process and has accepted thousands of documents into evidence pursuant to same. The boarding process and training of personnel regarding the boarding of documents varies greatly from one institution to another.

the Court noted that the first two default letters in the inch thick stack which Plaintiff sought to admit into evidence were inexplicably dated a week apart and had a $1,900 difference in the amount required to cure the default.

the admission of the default letters mailed by an outside entity not testifying in court creates a double hearsay problem as there is no evidence of a boarding process of that third party vendor’s mailing practices and procedures. Nor did the Ocwen representative testify that she had received training regarding the procedure used by the third party vendor in mailing the default letters.

Both the endorsement and the assignment omit the Depositor, Freemont Mortgage Securities Corporation, from the transaction which constitutes a fatal break in the chain of title.

The Court gives great weight as the trier of fact to the testimony of Defendant’s

expert witness, Kathleen Cully. Ms. Cully is a Yale Law School graduate that worked her entire career in structured finance transactions since 1985. She was extremely well versed in the Uniform Commercial Code. Among many other tasks and accomplishments, Ms. Cully testified that she led the Citigroup team that created the first pooling and servicing agreement ever. She led Citigroup’s Global Securitization strategy. The Court finds Ms. Cully eminently qualified as an expert witness in the area of securitized transactions and their interplay with the Model Uniform Commercial Code.

The Court applies Ms. Cully’s reasoned analysis as it relates to the note and mortgage for the subject loan and to Article 3 of Florida’s Uniform Commercial Code. However, it is axiomatic that all promissory notes are not automatically negotiable instruments.

This Court finds that the Note is non-negotiable as the amounts payable under the Complaint include amounts not described in the Note and as the Note does not contain an unconditional promise to pay.

66. The promise is not unconditional because the Note is subject to and/or governed by another writing, namely the Mortgage. Moreover, rights or obligations with respect to the Note itself—as opposed to the collateral, prepayment or acceleration—are stated in another writing, namely the Mortgage.

The Court grants Defendants’ Motion for Involuntary Dismissal and enters judgment in favor of the Defendants who shall go forth without day.

83. The Court reserves jurisdiction to award prevailing party attorney’s fees and to impose sanctions against Plaintiff under the inherent contempt powers of the court for fraud on the court, and such other orders necessary to fully adjudicate these issues.

84. Plaintiff is ordered to produce a corporate representative with most knowledge regarding its efforts to comply with the discovery order dated April 27, 2015, for deposition at the offices of Defendant’s counsel within 15 days from the entry of this order.

 

Livinglies Recalibrates Forensic and Litigation Support Services

Responding to specific requests from lawyers and homeowners, the livinglies store has changed its offering. Www.livingliesstore.com

You can still get the old Combo of just a title and securitization report, but we have added some levels and services to meet the demand for our services. Of course pricing has been adjusted to reflect the increased workload. Actual litigation support is provided throughout the country to any attorney by Garfield, Gwaltney, Kelley and White (GGKW) with offices now in Broward County and Leon County. We will soon have offices in the Florida Panhandle and Dade County. I’ll be posting separately on each office and the attorneys we have selected to litigate in accordance with our requirements.

GGKW represents homeowners throughout the state of Florida. Do not ask us to provide the full range of litigation support if you are a pro se litigant, even if your case is in Florida. You would be asking us to provide services that might be the unauthorized or unethical practice of law in states where we are not licensed. It would also be a bad idea because you cannot expect an attorney from another state to know the laws of your state, how they are applied in your courts, and the differences between individual judges. Sometimes local rules are dispositive of cases. Florida homeowners can get some additional assistance from GGKW or the livinglies store, but there is no good substitute for an attorney who knows and can argue rules of procedure and laws of evidence as they relate to your case.

The first additional the Combo offering is the Qualified Written Request and Debt Validation Letters. These are rising in importance and an increasing number of lawyers are asking us to prepare these. We can’t send them out but we can prepare them for the signature of the homeowner. We ask more pointed questions about whether the originator actually loaned money to the homeowner — that is, whether there was any transaction between the homeowner and the party stated on the note and mortgage (or deed of trust). This has grown in importance because of the absence of a fundamental allegation by the pretender lenders — that someone in their chain of paper actually entered into an actual transaction (offer, acceptance, consideration and execution) with the alleged borrower. It appears in many cases that the actual funding of the loan was a stranger to the paperwork and that the parties on the paperwork are strangers to the actual transaction.

We also are offering affidavits and declarations from the auditors or experts, including myself, together with a consultation to answer questions on the methods used and the conclusions to be drawn. Where an attorney for the homeowner is available during the consult, the homeowner will hear suggestions on specific strategies and tactics for the battle in court.

We are also just now adding to the package, Freedom of Information requests to the FDIC, OTS, OCC and the Federal Reserve, where applicable. In all likelihood the request you make about the results of their investigations against the banks that led to the Consent Orders and any filings after those orders were entered will be met with some sort of stonewalling. After all, the investigator grilled by Senator Warren admitted to finding thousands of wrongful Foreclosures but refused to tell her or anyone else in Congress which mortgages were effected or the names of homeowners who were illegally thrown out of their homes. It is important to note that these investigations, like the San Francisco study, found serious defects in which the foreclosure should never have happened.

The the response to FOIA requests will undoubtedly require you to push the agency in court to make the disclosures. And interrogatories directed at compliance with the Consent Orders may reveal the actual findings and the names of homeowners who are living outside the homes they still should ow and possess.

We recommend that the other companies providing these services follow our lead. We believe it will lead to better results and a more comprehensible presentation in Court.

Of course I need to remind you that nothing in this article nor the services and products on the store are a substitute for a licensed attorney. You should take no action at all without consulting with a licensed attorney, hopefully one that is familiar with the issues of securitized loans. Most of these cases are being resolved on the basis of the the rules of civil procedure and the laws of evidence. This is above the head of most pro se litigants. Failure to at least consult with an attorney licensed interest state in which your property is located could well result in losing a case you could have otherwise won.

ALL MAJOR FINANCIAL FEDERAL AGENCIES ENTER CEASE AND DESIST ORDER AGAINST MERS

CLE SEMINAR: SECURITIZATION WORKSHOP FOR ATTORNEYS — REGISTER NOW

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

ALL MAJOR FEDERAL AGENCIES JOIN IN ORDERING MERS TO STOP CURRENT PRACTICES

Just released. Thanks to Dan Edstrom our senior securitization analyst for alerting me.

SEE MERS_Cease_and_Desist_2011_04_13

MERS AND MERSCORP ENTERED INTO A CONSENT CEASE AND DESIST ORDER FINDING DEFICIENCIES IN THE PRACTICES AND PROCEDURES THAT POSE A RISK TO THE MEMBER BANKS.

ABSTRACT OF ORDER

The Agencies find, and MERS and MERSCORP neither admit nor deny, the following:
(1)    MERS is a wholly-owned subsidiary of MERSCORP. MERSCORP’s shareholders include federally regulated financial institutions that own and/or service residential mortgages, including Examined Members, and other primary and secondary mortgage industry participants.
(2)    MERSCORP operates a national electronic registry that tracks beneficial ownership interests and servicing rights associated with residential mortgage loans and any changes in those interests or rights. There are approximately 5,000 participating Members, of which 3,000 are residential mortgage servicers. Members register loans and report transfers, foreclosures, and other changes to the status of residential mortgage loans on the MERS System. There are currently approximately 31 million active residential mortgage loans registered on the MERS System. Examined Members receive a substantial portion of the services provided by MERSCORP and MERS.
(3)    MERS serves as mortgagee of record and nominee for the participating Members in local land records. MERS takes action as mortgagee through documents executed by “certifying officers” of MERS. MERS has designated these individuals, who are officers or employees of Members or certain third-parties who have contractual relationships with Members, as officers of MERS. By virtue of these designations, the certifying officers execute legal documents in the name of MERS, such as mortgage assignments and lien releases.
MERS Consent Order
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(4)    In connection with services provided to Examined Members related to tracking, and registering residential mortgage loans and initiating foreclosures (“residential mortgage and foreclosure-related services”), MERS and MERSCORP:
(a)    have failed to exercise appropriate oversight, management supervision and corporate governance, and have failed to devote adequate financial, staffing, training, and legal resources to ensure proper administration and delivery of services to Examined Members; and
(b)    have failed to establish and maintain adequate internal controls, policies, and procedures, compliance risk management, and internal audit and reporting requirements with respect to the administration and delivery of services to Examined Members.
(5)    By reason of the conduct set forth above, MERS and MERSCORP engaged in unsafe or unsound practices that expose them and Examined Members to unacceptable operational, compliance, legal, and reputational risks.
Pursuant to the authority vested in them by the Federal Deposit Insurance Act, as amended, 12 U.S.C. §§ 1818(b), the Bank Service Company Act, 12 U.S.C. § 1867(c)-(d), and the Federal Housing Enterprises Financial Safety and Soundness Act, 12 U.S.C. § 4631, the Agencies hereby ORDER that:
ARTICLE III COMPLIANCE COMMITTEE
(1)    Within twenty (20) days of this Order, the Boards of Directors of MERSCORP and MERS (the “Boards”) shall each establish and thereafter maintain a Compliance Committee of at least three (3) directors, of which at least two (2) may not be employees or officers of MERS or MERSCORP or any of their subsidiaries or affiliates. In the event of a change of the
MERS Consent Order
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membership, the name of any new committee member shall be submitted to the OCC Deputy Comptroller for Large Bank Supervision (“Deputy Comptroller”). The Compliance Committee shall be responsible for monitoring and coordinating MERS’ and MERSCORP’s compliance with the terms and provisions of this Order. The Compliance Committee shall meet at least monthly and maintain minutes of its meetings.
(2)    Within ninety (90) days of this Order, and within thirty (30) days of the end of each calendar quarter thereafter, the Compliance Committee shall submit a written progress report to the Boards setting forth in detail its actions taken to comply with each Article of this Consent Order, and the results and status of those actions.
(3)    The Boards shall forward a copy of the Compliance Committee’s report, with any additional comments by the Boards, to the Deputy Comptroller and the OCC Examiner-in- Charge within ten (10) days of receiving such report.
ARTICLE IV ACTION PLAN
(1)    Within ninety (90) days of this Order, MERS and MERSCORP shall jointly develop and submit to the Deputy Comptroller an acceptable plan containing a complete description of the actions that are necessary and appropriate to achieve compliance with the terms and provisions of this Order (“Action Plan”), as well as the resources to be devoted to the planned actions, with respect to services provided to Examined Members. In the event the Deputy Comptroller requests MERS or MERSCORP to revise the Action Plan, they shall immediately make the requested revisions and resubmit the Action Plan to the Deputy Comptroller. Following acceptance of the Action Plan by the Deputy Comptroller, MERS and
MERS Consent Order
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MERSCORP shall not take any action that would constitute a significant deviation from, or material change to the requirements of the Action Plan, or this Order, unless and until MERS or MERSCORP have received a prior written determination of no supervisory objection from the Deputy Comptroller.
(2)    The Boards shall ensure that MERS and MERSCORP achieve and thereafter maintain compliance with this Order, including, without limitation, successful implementation of the Action Plan. The Boards shall further ensure that, upon implementation of the Action Plan, MERS and MERSCORP achieve and maintain effective residential mortgage and foreclosure- related services on behalf of Examined Members, as well as associated risk management, compliance, quality control, audit, training, staffing, and related functions. In order to comply with these requirements, the Boards shall:
(a)    require the timely reporting by MERS and MERSCORP management of such actions taken to comply with this Order and/or directed by either Board to be taken pursuant to this Order;
(b)    follow-up on any compliance issues with such actions in a timely and appropriate manner; and
(c)    require corrective action be taken in a timely manner for any non- compliance with such actions.
(3)    The Action Plan shall address, at a minimum: (a)    the capability of the Boards and senior management to ensure that MERS
and MERSCORP are operated in a safe and sound manner in accordance with applicable laws, regulations and requirements of this Order;
MERS Consent Order
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(b)    development and implementation of a strategic plan to include a comprehensive review of business operations, including the risks associated with each business line, and recommendations to implement the strategic plan;
(c)    consistent with the strategic plan, development and implementation of a financial plan to ensure that MERSCORP and MERS have adequate financial strength to support business operations related to Examined Members. The financial plan, at a minimum, shall address:
capital;
and liquidity risk; and
(i)
(ii)
any need for additional capital, including the amount and source of
the identification, measurement, monitoring and control of funding
(iii) discretionary expenses and improve and sustain earnings, as well as maintain adequate reserves for contingency risks and liabilities;
(d)    development and implementation of a comprehensive litigation strategy to effectively manage lawsuits and legal challenges involving MERS and MERSCORP, regardless of whether MERSCORP or MERS is a named party, including early identification and tracking of such lawsuits and challenges;
(e)    development and implementation of a communication plan to communicate effectively and in a timely manner with MERSCORP’s shareholders, Members including Examined Members, and relevant external parties;
(f)    development and implementation of a compliance and quality assurance program for ensuring that Examined Members implement and follow all of the Rules, including
MERS Consent Order
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a profit and budget plan to include specific goals to reduce
adherence to the requirements set forth in MERS Announcement 2011-01, dated February 16, 2011;
(g)    development and implementation of a plan to ensure that MERS certifying officers are transitioned expeditiously onto the Corporate Resolution Management System (“CRMS”) in accordance with MERS’ current certifying officer policy and process;
(h)    development and implementation of appropriate standards to maintain separation of corporate functions between MERS and MERSCORP;
(i)    review of the effectiveness of the Rules, and related Procedures, Terms and Conditions to determine what, if any, additions, amendments, or deletions are appropriate;
(j)    development and implementation of enhanced information reporting practices to senior management from lower levels of each organization, and from senior management to the Boards to ensure that significant issues are properly identified and escalated, and that corporate actions are considered, taken in a timely fashion, and properly documented;
(k)    any Matter Requiring Attention in the OCC Supervisory Letter No. MERS 2011-01, dated January 19, 2011, that addresses an issue that is not otherwise covered by provisions of this Order; and
(l)    development of contingency plans to address issues that arise with respect to any of the foregoing elements of the Action Plan, including plans that address operational continuity issues in the normal course of business and in a stressed environment.
(4)    The Action Plan shall specify timelines for completion of each of the requirements of this Order. The timelines in the Action Plan shall be consistent with any deadlines set forth in this Order.

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