Another Countrywide Sham Goes Down the Drain

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

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

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

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

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

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

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

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

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

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

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

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

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




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