Attack the “Successors”

In analyzing the paperwork in front of you, make sure you read every word and do not accept anything said at face value. A popular ruse by foreclosure mills is the use of the word “successor.” I have been saying that this word is used as a cover-up for “we don’t have title to the debt, note or mortgage.” That means they have no loss connected with a claimed scheduled payment that was not received by a “Servicer” who had no right to receive it in the first place.

Hat tip to Gary Dubin, Esq. and Shelley Erickson.

If they have no loss, they have no claim. You don’t have a claim payable to you if you simply know that your neighbor has skipped a payment to someone. You don’t have the right to declare a default. There could be numerous reasons why the payments stopped that are none of your business. In that scenario, any action undertaken as if you did have the claim would be illegal in both the criminal and civil arenas. Such actions would include notice of substitution of trustee, a notice of default, a notice of sale, summons and complaint, etc. The practical problem is that the longer you wait to contest such actions, the more it seems like the perpetrator does have a claim.

Very often, you will see “Successor” used when it makes no sense if you even give it a moment’s thought. For example, if U.S. Bank is recited as successor to Bank of America, that is literally impossible. U.S. Bank did not buy, acquire or purchase Bank of America. They are referring, of course, to the “sale” of the position of “trustee” (without any legal trust powers) from Bank of America to U.S. Bank after Bank of America acquired LaSalle Bank, which is after LaSalle Bank had been effectively acquired by the owners of ABN AMRO, who had merged with Citi.

The key question is whether the position of a trustee if it actually exists, could ever be sold by the trustee without the advice and consent of the beneficiaries and/or the trustor/settlor. Of course, if that was alleged, i.e., that U.S. Bank had acquired the rights to be trustee through purchase, it would then need to disclose the content of the agreement of purchase and sale, and that alone would involve showing the consent of beneficiaries.

Because of the erroneous assumption/presumption that the beneficiaries of a REMIC trust are the investors, it is assumed that they must have consented. But the real beneficiaries are shown in the actual trust agreement (not the PSA most of which is a statement of future intention and not past events).

The real beneficiaries are securities brokerage firms (“investment banks”) which would, in turn, reveal that the investment banks are the primary parties in control of administration, collection, and enforcement — despite the fact that the investment banks retained no financial stake in the outcome of any transaction that was labeled as a loan.

People ask me whether there are cases supporting my analysis. there are hundreds of them, but they are rarely reviewed, much less used, by any homeowner or lawyer. Here is one such example from 2019 that has never been overruled, citing many other cases:

Certo v. Bank of N.Y. Mellon, 268 So. 3d 901, 903 (Fla. Dist. Ct. App. 2019) (“On the other hand, it is insufficient for the plaintiff to rely on its acquisition of the other entity. See Fielding v. PNC Bank Nat’l Ass’n , 239 So.3d 140, 142-43 (Fla. 5th DCA 2018) ; Kyser v. Bank of Am., N.A. , 186 So.3d 58, 61 (Fla. 1st DCA 2016) (despite testimony of merger, witness gave no testimony as to what assets exactly were acquired); Fiorito v. JP Morgan Chase Bank, Nat’l Ass’n , 174 So.3d 519, 520-21 (Fla. 4th DCA 2015) (testimony one entity “took over” another is not sufficient); Lamb v. Nationstar Mortg., LLC , 174 So.3d 1039, 1041 (Fla. 4th DCA 2015) (listing cases). Similarly, listing party status as “successor by merger” or claiming a title is not sufficient; a plaintiff must support its claim by evidence. See Buckingham v. Bank of Am., N.A. , 230 So.3d 923, 924-25 (Fla. 2d DCA 2017) (holding words “successor by merger” were insufficient to “establish the merger, let alone that the [plaintiff] acquired all of [the successor’s] assets”); DiGiovanni v. Deutsche Bank Nat’l Trust Co. , 226 So.3d 984, 988-89 (Fla. 2d DCA 2017) (finding no standing where Deutsche presented no evidence “Bankers Trust had been renamed Deutsche Bank”); Murray v. HSBC Bank USA , 157 So.3d 355, 358-59 (Fla. 4th DCA 2015) (explaining “Option One California” was not “Option One Mortgage Corporation”); Verizzo v. Bank of N.Y. , 28 So.3d 976, 977, 978 (Fla. 2d DCA 2010) (explaining plaintiff listing itself as “successor trustee” was insufficient).”)

Certo v. Bank of N.Y. Mellon, 268 So. 3d 901, 903 (Fla. Dist. Ct. App. 2019) (“The trouble here, similar to the trouble in Conley , is Mellon’s link to Bank of NY and Bank of NY’s link to JP Morgan. Because the final special indorsement is to JP Morgan, Mellon needed to evidence how it obtained the Note or interest. It claims to have it because Bank of NY is a successor to JP Morgan and Mellon is the new Bank of NY. However, the record does not establish either of those necessary links.”)

The bottom line here is that there is no succession regardless of how many times they assert it. Attacking the pleadings, motions, and exhibits with your own motions, answers, affirmative defenses and potential counterclaims is probably a good tactical response to the assertion of this type of lie perpetrators use in the courts every day. Bernie Madoff got away with his Ponzi scheme for decades. It was in most ways identical to what the investment banks have done with what they called “residential lending.”
The banks called it “securitization” without ever selling a single loan to investors or any part thereof. Madoff called it options trading without ever trading a single option. It was all based upon the “hidden magic” and “genius” of some secret formula that nobody else could access. Compare it yourself. Madoff’s scheme, now exposed, reveals what was really happening with homeowner transactions, investor transactions, and “foreclosures” of nonexistent claims.
THE BIG QUESTION IS WHERE ARE THE REGULATORS? THEY MISSED IT WITH MADOFF DESPITE CLEAR SIGNS OF WRONGDOING AND THEY ARE DOING IT AGAIN WITH INVESTMENT BANKS TOUTING NONEXISTENT SECURITIZATION.
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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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DEUTSCH BANK Memo Reveals Documents and Policies Ripe for Discovery

This completely corroborates what I have been saying for years along with a chorus of lawyers and pro se litigants across the county. It simply is not true that the attorney represents the trust or the trustee. 

This “Advisory” shows that there are documents that are rarely in the limelight and that clarify claims of securitization in practice. Note that the memorandum cited below comes from Deutsch Bank National Trust Company, as trustee and Deutsch Bank Trust Company Americas, as trustee.

These names are often NOT used when foreclosure actions are initiated where the name of the alleged REMIC Trustee is Deutsch Bank. It is important to note that neither of the two trust entities actually have been entrusted with any loans on behalf of any trust. Their name is used, for a fee, as windows dressing.

In this memo, Deutsch is attempting to limit its liability beyond the absence of any duties or trustee powers whose absence is revealed by reading the Pooling and Servicing Agreement (PSA) which is the alleged Trust instrument.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Hat tip to Bill Paatalo

See Deutsche Bank Memorandum – July 2008

I have previously published and commented on parts of this memorandum. This is an expansion on my comments. This “advisory” obviously intends to bring alleged servicers back in line because it states in the introductory paragraph that the Trustee respectfully requests that all servicers review the First Servicing Memorandum and adhere to the practices it describes.”

None of this would have been necessary if the servicers were conforming to the directions and restrictions contained in the First Servicing Memorandum. We all know now that they were not conforming to anything or accepting instruction from anyone other than the alleged “Master Servicers” for NEITs (nonexistent  inactive trusts).

In discovery, one should ask for any servicer memoranda that exist including but not limited to the Memorandum to Securitization Loan Servicers dated August 30, 2007 a/k/a the First Servicer Memorandum, and all subsequent correspondence or written directions to servicers including but not limited to this “Advisory Concerning Servicing Issues Affecting Securitized Housing Assets.

Note also the oblique reference to the fact that the cut-off date actually means something.  It states that “typically” the REMICs (actually NEITs) take ownership of loans at the time the securitization trusts are formed. Thus discovery would include questions as to whether or not that occurred and if not, when did transfer of ownership occur and with what parties. Also one would ask for correspondence and agreements attendant to the alleged “transaction” in which the Trust allegedly purchased the loans with trust money that came from the proceeds of sales of certificates to investors. If the Trust did not pay value for the loans then it did not acquire the debt. It only acquired the paper instruments that are used as evidence of the debt.

Perhaps most importantly, the memo comes down hard on the use of powers of attorney, which are a favorite medium through which lawyers for the foreclosing parties typically try to patch obvious gaps in the chain of ownership or custody of the loan documents.

Then the memo provides foreclosure defense attorneys with the opportunity to attack the foundation laid for testimony and exhibits from robo-witnesses. It states that all parties must “Understand the mechanics of of relevant securitization transactions and related custodial practices in sufficient details to address such questions in a timely and accurate manner.” As any foreclosure defense lawyer will tell you, the robo-witness knows nothing about “the mechanics of of relevant securitization transactions and related custodial practices.” [The problem is that most borrowers and foreclosure defense lawyers don’t know either].

The inability of the robo-witness to describe the specific securitization practices in real life as it pertains to the subject loan gives rise to a cogent attack on the foundation for the rest of his testimony. With proper objections, perhaps motions in limine, and cross examination, this could lead to a defensive motion to strike the witnesses testimony and exhibits for lack of foundation. The following quote takes this out of the realm of theory and argument and into simple fact:

Servicers must ensure that loss mitigation personnel and professionals engaged by servicers, including legal counsel retained by servicers, understand the mechanics of relevant securitization transactions and related custodial practices in sufficient details to address such questions in a timely and accurate manner. In particular, servicing professionals [including “loss mitigation”] must become sufficiently familiar with the terms of the relevant securitization documents for each Trust for which they act to explain, and where necessary, prove those terms and resulting ownership interests to courts and government agencies.”

Note the assumption that lawyers are hired by servicers and not the Trustee or the Trust. Thus the servicers hire counsel and then order that foreclosure be brought in the name of the alleged trust. But if there is no trust or no acquisition of the debt, or authorization (remember powers of attorneys are not sufficient), the servicer is without legal authority to do anything, much less collect money from homeowners or bring foreclosure actions.

Paragraph (2) of the this “advisory” also gives guidance and foundation for what various people, especially attorneys, can say about who they represent and how.

“The Trustee believes that all persons retained by the servicer should specifically role or capacity in which they are acting. … One would be less accurate… if he or she claimed to be … attorney for the Trustee. A more accurate statement [attorney for servicer] acting for [Deutsch] as trustee of the Trust.”

This completely corroborates what I have been saying for years along with a chorus of lawyers and pro se litigants across the county. It simply is not true that the attorney represents the trust or the trustee.

 

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