Expert Testimony and Expert Reports

Homeowners are dismayed and even claim court bias when the report of a self-proclaimed expert is barred from evidence. Or they become equally incensed when the court allows the report into evidence but gives it zero weight in rendering a decision. But the court is, to that extent, merely following the rules that govern what Judges should or should not do.

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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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It goes without saying that any report that has not been read and any testimony that has not been heard will be disregarded as a practical matter and in many cases as a legal matter. The Internet has been awash in offers of “magic bullet” analyses and reports that either directly or indirectly make the false promise of relief from foreclosure. Nearly all of the forensic analysts are self-proclaimed, unlicensed in any field requiring a license, inexperienced and untrained. What they are seem to share in common is the hope or belief that once a Judge lays eyes on the report, the decision will be rendered swiftly in favor of the homeowner.
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Forensic analysis can theoretically be performed by anyone, which of course means that they are predominantly worthless even in their inception. Most analysts are looking for the wrong things and/or looking for things that are irrelevant and/or looking for things that will not be admitted into court record as evidence. Even an unopposed expert declaration or affidavit will either not be admitted into evidence by written report or oral testimony if it is delivered by such analysts. Homeowners are dismayed and even claim court bias when the report of a self-proclaimed expert is barred from evidence. Or they become equally incensed when the court allows the report into evidence but gives it zero weight in rendering a decision. But the court is, to that extent, merely following the rules that govern what Judges should or should not do.
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The one thing in which most “successful” forensic analysts excel is selling. They tell homeowners what they want to hear when they need to hear it. It’s akin to imbibing a libation or drug to take the edge off for the moment but it doesn’t change a thing.
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So let’s go to the other end of the spectrum. Does it matter if the analyst is unlicensed? NO. But if the analyst is unlicensed he or she will need to spend a lot more time giving testimony about how they acquired their expertise and how their work is based upon established frameworks of prior work in teases and other sources — and not merely a theory in their own head.
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But the interesting thing is that when such experts do survive the challenges under Daubert or Frye (see below) the seemingly less qualified analyst frequently is able to explain to the court how he or she arrived at an opinion and then explains both the opinion and the basis of the opinion in clearer language than most “qualified” experts with far superior credentials.
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Further the Banks’ Ostrich Strategy appears to have been working for the last 10 years. After tens of thousands of reports and expert declarations have been filed or served on behalf of homeowners, there are no reported instances in which an expert from the banks or servicers ever filed an affidavit or declaration in opposition to the experts who execute expert declarations for the homeowners. In fact, there are few instances in which the “expert” is even deposed, which thus removes the ability of the banks to challenge the expert. The end result has been that expert testimony is nearly always discounted or completely ignored. If the banks ignore it in litigation then so does the court.
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But the unwillingness to make an issue of the expert declarations filed by homeowners may well have a downside, especially as more and more Motions for Summary Judgment are filed. As the courts are gradually changing course to consider the possibility that homeowners should win and that banks should lose, the time has come to file a motion for partial summary judgment on issues specifically raised and supported in a properly drafted expert declaration.
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In the absence of an opposing affidavit, the court has little choice but to take the assertions as true as stated in the expert declaration for the homeowner. That leaves only the legal argument of whether the homeowner is entitled to the entry of summary judgment on the issues raised, inasmuch as the homeowner has effectively eliminated the issue or issues to be heard at trial.
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For example suppose the expert’s opinion is that the trust was never funded, that the trust has no legal authority to administer the alleged loan because the loan was not in the trust, and that the trust therefore could never have purchased the debt or the note or the mortgage, and that the “servicer” appointed as servicer in the trust instrument (PSA) has no authority because the property (i.e., the loan) was never transferred into the trust and that the Trustee named in the trust instrument (PSA) also has no power over the subject loan because the trust never purchased the loan, the debt, the note or the mortgage, and perhaps also that the foreclosure is a grand illusion in which the banks and servicers are completing a scheme of civil theft of the investors’ money, and perhaps that the debtor-creditor relationship consists of the homeowner and the investors whose identities have been withheld by the banks.
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In order to take those conclusions seriously, the court must hear that those conclusions are supported by understandable evidence that is based upon widespread axioms; since the conclusion is counterintuitive, it is important that the declaration be credible.
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Hence the expert must bring in corroboration as part of the explanation of the reasoning in the expert declaration. Corroboration could be direct evidence (by the way, hearsay is allowed in expert testimony) or clear deductive reasoning that eliminates anything else as an alternative explanation; (e.g., if the trust had actually entered into a transaction in which it purchased the alleged loan or some part of it, then it would not assert that it was a holder but rather, as is custom and practice in the industry the trust would declare itself to be a holder in due course or the actual owner of the debt (not just the note and mortgage) and would gleefully have proven the purchase by offering a canceled check or wire transfer receipt into evidence).
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By elimination of the elements of “good faith” and lack of knowledge of the borrower’s defenses (e.g. lack of consideration, non-merger of debt and note etc.) the only missing element would be that the Trust was not a successor to the original creditor regardless of whether the original creditor(s) was or were victims of theft or the actual payee on the note. Thus the conclusion that the Trust is not a holder in due course and should not be treated as one. And if it was the agent for an actual creditor, the Trust had failed to identify the creditors fro whom it was acting as agent. Note that such an admission would crash the entire trust and its beneficiaries under the weight of several violations of the Internal revenue Code turning all money handled by the “REMIC” into ordinary revenue and income.
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One trick often used to bar such expert testimony is the 11th hour challenge either the day before or during trial. One New Jersey appellate court correctly assessed the situation has revealed in the following article:
Appeals Court Reverses Grant of “11th Hour” Motion to Strike Expert

Parties will frequently seek to strike the opinions offered by their adversaries’ experts as legally insufficient. While there are a variety of bases for such motions—including that the report does not set forth the “whys and wherefores” of the expert’s opinion, or that it does not satisfy other evidentiary rules for its admissibility—the strategic purpose is clearly to weaken or even destroy the opposing party’s case by barring key testimony. These limiting, or in limine, motions typically will be brought just before trial after the expert’s opinions have been discovered and often after the expert has given deposition testimony about the support for the opinion. A recent New Jersey Appellate Division case now seems to suggest that due process requires that (1) such a limiting motion must be made with enough time for the opponent to respond adequately, and (2) the trial judge must conduct a hearing prior to deciding to exclude the challenged expert’s opinions.

The issues arose in a lawsuit over a failed real estate deal, Berman, Sauter, Record & Jardim, P.C. v. Robinson, Dkt. No. A-5650-11T3 (App. Div., Nov. 17, 2016). The plaintiff law firm sued a seller claiming that it wrongfully breached a purchase agreement and caused the law firm’s loss of fees from the deal. The defendant seller then counterclaimed and filed a third-party claim alleging that the plaintiff and third-party defendant law firms had committed legal malpractice by failing to include an express termination clause in the purchase agreement, a claim supported by the opinion of a legal malpractice expert. The plaintiff law firm filed a pre-trial motion to strike the expert’s testimony because the expert did not explain the bases for his legal malpractice conclusion and his testimony was therefore an inadmissible “net opinion.” One week before trial, the pre-trial judge denied that motion “so that the trial judge can hear the testimony and determine whether the expert’s opinions—which seem to set forth the whys and wherefores at least in their reports—were [legally] sufficient[ ] . . .” Because the pretrial judge was not going to be available for the entire trial, a different judge presided over the trial. After jury selection, the trial judge decided to revisit the court’s prior in limine ruling on the expert. Without taking testimony, he concluded the expert had rendered a net opinion and thus excluded the testimony. Because the defendant was left without an expert to support its case, the trial judge also entered an order dismissing the legal malpractice claim and the remainder of the lawsuit quickly settled.

The Appellate Division reversed. The appeals court first noted that the motion to strike the expert was “nothing more than a thinly veiled summary judgment motion” because it essentially was dispositive of the defendant’s claims. The court recognized that the notice provisions for summary judgment motions were meant to satisfy due process by giving parties an opportunity to be heard at a meaningful time and in a meaningful matter. In addition to failing to provide the 28-day notice required for summary judgment motions, the motion did not give the “one week in advance of trial” notice required for an in limine motion, leaving the defendant with no opportunity to present written opposition. And, because the trial judge had not ruled on the earlier summary judgment motions in the case, he did not have the defendants’ opposition to that motion.

The appeals court held that the trial court should not have granted a motion that was dispositive of the plaintiff’s claim without holding a hearing under Rule 104 of the New Jersey Rules of Evidence. The trial court had decided the motion in a way that was “fundamentally unfair” to the defendant. Fairness required the trial court have conducted a hearing before “barring an expert’s testimony based upon a report, particularly if doing so will be dispositive of a case, when the expert has not had the opportunity to explain his opinions through testimony.” Slip op. at 10. The court left it to the trial court’s discretion whether to conduct the hearing before or during the trial.

The importance of the Berman, Sauter decision is that trial counsel can no longer leave to the last minute in limine motions that seek to exclude expert testimony or any other evidence that could be dispositive of the lawsuit. If trial counsel believes that expert’s opinions are inadmissible, it must give sufficient notice to the court and its adversary—and the Appellate Division suggested that it might not be enough just to comply with the one week notice provision if the in limine motion would have the same effect as a summary judgment motion. Berman, Sauter will make trial judges more likely to order pre-trial hearings when an in limine motion seeks to preclude the expert’s opinions and virtually a certainty if such a motion is made without the expert having given deposition testimony explaining his or her opinions.

Held Hostage by a Home: The Devastation of Foreclosure

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Held Hostage by a Home

Depending on reader response- this column may become an ongoing Sunday feature on LivingLies. Let us know what you think.
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Although Neil Garfield eloquently describes the legal dynamics of foreclosure, there is also a human battle waged in millions of homes nationwide that remains hidden behind walls of shame, fear and anger. Families are torn apart by the stress and uncertainty that financial burdens bring. A home, no matter how modest or grand, is a foundation of family life- and when it is torn away by companies without legal standing to do so- the pain is compounded because of the injustice.
Most families who fall behind on their debts, do not do so deliberately. Usually financial debt is caused by job loss, illness, divorce, or simply being induced into obtaining more credit than the family can service-by companies who carry no risk (due to securitization). Most families would embrace the opportunity to have one second chance to pay back any outstanding balance on their home and make good on their debts-but loan servicers have no incentive to work with the homeowner.
Unfortunately, the way the mortgage industry works, it is no longer beneficial for the servicer to service your loan- when they can foreclose instead. A huge financial windfall awaits a servicer that can engineer a default. Instead of receiving approximately .125% of the monthly payment, the servicer is entitled to keep all fees, late interest, and other default charges (and the entire proceeds if they are collecting on behalf of a trust that does not exist). Until loan servicing issues are addressed, servicers will continue their predatory tactics to push homeowners into foreclosure. I should know because I am the victim of a predatory servicer. This is my story.
I am being held hostage by my home. The red brick and mortar of the quintessential American home has become my prison. For the past seven years I have had the rope of the commercial code truss my freedom, happiness, career and dreams. The blindfold has been removed but I still can’t trust what I see- banks that operate like organized crime syndicates supported by courts that refuse to acknowledge the fraud. I have been gagged and silenced by a bank, as my story, like millions of others goes unheard. Hopefully, the ability to warn others what a bank is capable of- will be cathartic.
What most people don’t understand before taking on foreclosure is that unless you have unlimited wealth, you will be taken hostage during litigation. The Notices of Default filed against you will keep you from repurchasing a different house, will destroy your credit, may prevent you from obtaining employment, may cause creditors to rescind credit extended, and may exhaust all of your savings and retirement. Your neighbors will likely shun you and your “friends” may distance themselves from you. Your opportunities to rebuild and recover from a financial setback will be compromised. I won’t even get into the emotional costs (divorce, volatile home environment, stressed parenting). Rarely is a case settled at the trial level. Most cases that should be settled with two or three years may go on for a decade or so if you continue to battle on.
Eight years ago, If I had been told what my future would hold if I dared to challenge my loan servicer- I would have held a block party for the bank and handed them the keys to the house. My greatest regret in life is that I decided to hold the bank accountable for reneging on my loan modification. It has cost me my life savings, my health, my marriage, and worst of all- instead of enjoying the childhoods of my children- I have spent every day depressed and anxious while battling a soul-less banking cartel with unlimited financial resources and power. My children have no idea who I am, or who I was before my life became a war game and I took up the position of General. In fact, I have no idea who I am outside of being held hostage by my home.
Why don’t I walk away? Surely losing 13 years of my life would be better than another decade? Because I am a fool. Because I have sacrificed and lost almost everything- to quit would be even worse than to go down defeated. There becomes a point in time- when you can’t turn back. For 13 years I have spent over 200k in order to receive an answer to one very simple question: WHO OWNS MY NOTE???? My servicer and the courts believe I have no right to an answer.
There are thousands of unconscionable foreclosure stories in America- that are unfathomably egregious and completely unnecessary- mine included. I had the ability and desire to pay the bank any amount they requested. I only wanted to sell my home and move on with my life. However, the bank did not want payment- they wanted the house. Neil Garfield has stated that the reason the banks want the foreclosure more than they want payment is because not only does the bank profit handsomely from a foreclosure, but it allows them to neatly tie up the fraud and seal the deal. Once a home is foreclosed upon- rarely does the homeowner sue for wrongful foreclosure.
The ordeal of foreclosure is by design, created by banks to cause the maximum amount of damage- both financially and emotionally. There is absolutely no good faith that arises when the bank can profit from a foreclosure. I have often wondered how people who work in the foreclosure industry sleep at night. Ayn Rand thought about these people also and wrote in Atlas Shrugs, “The man who lies to the world, is the world’s slave from then on…There are no white lies, there is only the blackest of destruction, and a white lie is the blackest of all.” To live knowing you have destroyed the lives of families and committed moral crimes in order to receive a paltry paycheck, would be a worse hell than even I have faced.
Last week the Center of Disease Control and Prevention (CDC) reported that the suicide rates for middle-age whites jumped an alarming 40 percent from 1999 to 2010. The suicide rate for both younger and older Americans remained virtually unchanged, however, the rate spiked for those in middle age (35 to 64 years old) with a 28 percent increase from 1999 to 2010. According to the CDC, there were more than 38,000 suicides in 2010 making it the tenth leading cause of death in America overall. Among African Americans, Hispanics and even the oldest white Americans, death rates have continued to fall. What could be responsible for this drastic change in suicide demographics?
The middle-class suicide spike began with the onset of the tech bubble implosion where middle-class families saw their retirement funds evaporate. Locked into company 401ks where the funds are illiquid, many 401ks don’t allow the ability to place stop-losses. A stop-loss is an order that is placed, usually on a stock, to sell when the price declines to a certain level. So while the wealthy and knowledgeable were able to stop some of the bleed, mid-level employees in company-sponsored retirement programs were disproportionately impacted.
By 2008 the middle class found themselves mired in home loans that were unaffordable, in houses where they owed more than the home was worth, and subjected to a volatile job market and economy. In effect, the middle class died in 2008 and has not rebounded.  Consider the way life has changed since 2001. We are under surveillance all day, we pay a disproportionate amount of our income to taxes that go to support wars and programs most of us do not want, the economy is rigged in favor of the wealthy, and the cost of living has skyrocketed while wages remain flat. Most people in this demographic went to college, both partners work full-time jobs, and are responsible for raising their own children while caring for aging parents on limited incomes.

 

When you face foreclosure or bankruptcy this often pushes people over the tipping point. This was not the life that most middle-class people contemplated and are ill equipped to deal with. The middle class bought into the premise if you go to college and work hard you will gain financial security- not knowing the system was rigged. These individuals were also typically raised in middle class homes and were unprepared for the financial struggles not typically equated with the middle class.
“It’s a loss of hope, a loss of expectations of progress from one generation to the next,” said Angus Deaton, a Nobel Prize–winning economist who had studied the data. The middle class is not only being financially impacted by the economy but the strain on the middle class is psychological. The study noted that white women between 25 and 55 have been dying at accelerating rates over the past decade, a spike in mortality not seen since the AIDS epidemic in the early 1980s. According to recent studies of death certificates, the trend is worse for women in the middle of the United States, even worse in rural areas, and worst of all for those in the lower middle class. Drug and alcohol overdose rates for working-age white women have quadrupled. Suicides are up by as much as 50 percent.
According to the Federal Reserve, 47 percent of those who responded to a recent survey said they are living so close to financial ruin that they couldn’t come up with $400 to meet an emergency, not without first borrowing the money or selling something. Almost half of all Americans are fighting a losing battle to keep their heads above water.
This situation was the subject of a paradigm shifting article in the May issue of Atlantic magazine, “The Secret Shame of the Middle Class,” that was written by Neal Gabler, a well-known book author and film critic. Gabler reveals that despite his successful career, impressive resume and outward appearance of prosperity, he is financially insolvent and must often “juggle creditors to make it through the week.”
The writer attempts to provide reasons for the crisis. He lists predatory credit card companies, the ever-rising cost of living, wage stagnation, poor decision-making, bad luck and a national plague of financial illiteracy. But one cash depleting issue Gabler overlooks is taxation — and the fact that the middle class that pays almost 50% of their income to some type of tax- while the wealthy are able to exploit the system and pay very little if any tax.
Rising health-care costs, job insecurity, climbing foreclosures, and rising energy costs are decimating the middle class. The middle class American now “leases” their lives and most will have no assets to show upon their deaths. They are tenants in their own homes (read your Mortgage- you are a tenant), lease their cars, and are dependent on their employer who is likely facing financial troubles of their own. The housing markets are starting to look a lot like they did in 2007 (except there are more renters now). It is easy to see why the middle class that provides the support for both upper and lower classes is at its breaking point.
Signs of Big Trouble
Families with no savings, piles of credit card debt, and mortgages on homes they should not have been qualified for coupled with flat-lining incomes, low-paying jobs, skyrocketing health-care costs and exorbitant college costs are in dire straits. Wall Street banks with complicit buy-ins from the courts and law enforcement have created an untenable situation where the middle class has nowhere to turn. The banks prey on the vulnerability of people who suffered a temporary setback but are doing everything in their power to correct the situation in good faith. Homeowners are a small obstacle to big banks with unlimited financial resources who retain the best attorneys in the country to defend their predatory and illegal schemes.

It is evident that the government and courts are either unable or unwilling to rein in the powerful banks. Home ownership has dropped to its lowest rate since 1967, and one in every three American families is dealing with a debt collector. One more major recession and the suicide rates will further skyrocket. Without the middle class who is going to take care of the lower classes? The middle class is fighting for its life- and when all else fails apparently they take their own lives.
People are angry, people are desperate and people want solutions. If the middle class really wants to do something to stop this downward trajectory- the first thing to do would be to close your accounts with the major banks that service loans (Wells Fargo, CitiMortgage, Bank of America). If able, refinance your home with a credit union who holds your mortgage in-house and does not securitize loans. The middle class could effectively starve the beast that oppresses them if they would unite.
There are economic indicators that the housing market is reverting back to the 2007 lending policies that were the norm prior to the bubble that popped in 2008. Many banks are offering zero-down loans while Fannie Mae and Freddie Mac have lowered their loan qualifications in an attempt to spur on the lower and middle class housing market. The banks are resorting to desperate tactics as homebuyers have stopped purchasing. There can be no doubt that those who have lived through a foreclosure or the foreclosure of a family member will ever trust a big bank again. I know that personally, I will NEVER borrow from a big bank again.
The suicide report showed a marked increase in mortality of middle-aged white non-Hispanic men and women in the United States between 1999 and 2013 was unique to the United States; no other rich country saw a similar event. Self-reported declines in health, mental health, and ability to conduct activities of daily living, and increases in chronic pain and inability to work, as well as clinically measured deteriorations in liver function, all point to growing distress in this population. Research confirms that this situation is due to economic causes and life quality deterioration. All indications show that economic conditions are even worsening for the middle class.
It is noteworthy that other countries have had similar financial problems that mirror the United States, however, the suicide rates and middle-class morbidity have not increased in any other developed country but the United States. The American capitalist machine is feeding off the hopes and dreams of the middle class and yet the middle class is unable to obtain any relief through government agencies or access due process within the courts. This reality is impacting the lives of millions of Americans who deserve much better.

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The graph is shocking. And for obvious reasons I’m very interested in the mortality of white Americans in the 45-54 age range since I am in this class. If anyone knows about the costs of fighting an unlawful foreclosure it is me. I have filed three bankruptcies during 13 years of ongoing litigation to save my home (despite simply wanting to sell the home that I no longer resided in and cash out my equity). The bank has also filed at least 9 Notices of Default (destroying my ability to obtain credit for over a decade) and illegally foreclosed on me once (in violation of an automatic stay). I have spent every single discretionary dollar I have had believing that the courts would honor the rule of law. I was so confident when I set out to settle the illegal acts by my servicer that I naively believed the situation would be remedied within a year (when it could still take up to another decade to settle this issue).
I was raised in a white upper-middle class family. Your credit score was considered as important as your IQ and success was measured by your position and income. However, by 2001 I found out it doesn’t matter how successful you are- if you are dependent on an employer- it can all be snatched out of your hands (I was fired while on an approved medical leave from a large pharmaceutical company just to add irony). Unable to replace my high salary I fell into financial arrears. I lost my friends, my social standing, my ability to obtain credit, and my ability to rebuild. Even more tragically, the stress decimated my family and destroyed my marriage. I have never recovered. I hope that I don’t become one of these statistics but there are no guarantees I won’t.
Fighting a foreclosure is ugly, ugly business. Unfortunately, in our society, litigation is reserved for those well enough off to fight back. The majority of low-income households have literally no hope of fighting back without competent and aggressive legal counsel (and legal counsel is expensive). Both middle and lower classes are extremely vulnerable to any fluctuation of the economy. A job loss can result in losing everything and purchasing a house you can’t afford further exacerbates your financial stress.
It appears the banks deliberately started giving out loans like candy to anyone with a pulse, knowing they would securitize these debts, keep the investors’ money meant to fund the loan, collect the monthly payments and then foreclose- while knowing very few in the lower and middle classes would be able to fight back. The researchers state they can only hypothesize why records of white middle class Americans are committing suicide in increasing numbers? Although my statistical skills are sub-par I can tell you exactly what is behind the statistics- the illusion of the American dream has been exposed and not one elected official is willing to do what is necessary to correct the situation while the elite are still able to milk the market while it climbs and crashes. This is a tragedy not seen since people jumped off of skyscrapers with the stock market crash in 1929- it is just more subtle and stealth.
One theory about what is causing rising mortality among whites is the “dashed expectations” hypothesis. According to Johns Hopkins University sociologist Andrew Cherlin, whites today are more pessimistic than their forebears about their opportunities to advance in life. They are also more pessimistic than their black and Hispanic contemporaries.
“The idea that today’s generations will do better than their parents’ generation is part of the American Dream. It has always been true until now,” Cherlin said. “It may still be true for college-educated Americans, but not for the high-school-educated people we used to call the working class.”  The demise of the middle class is broad in its effects, but it appears to be culminating in places that are particularly vulnerable — such as cities where the drinking water is polluted with lead for years, or a small city that saw its biggest manufacturer move overseas, or in a household destroyed by job loss and foreclosure. It’s no big mystery why the wounded middle class is turning to Trump and his anti-establishment rhetoric and hitting a nerve.
Things aren’t going to get better for sometime due to the apathy and disconnect of Washington and your elected officials. Before you pursue litigation please consider if you possess the endurance needed to fight a bank with unlimited sources. In almost every successful case- an Appeal will be necessary. Consider the evidence you possess- is it enough to defeat the servicer’s claims? Do you have the financial means to finish the fight? Can you detach enough from the outcome that when your due process rights are trampled and the banks resort to forgery to defeat you- you won’t fall apart?
As much as I hate to say this- most people who have viable cases end up in some type of modification or agreement. The costs become too high for most homeowners to endure. Sadly the judges are now unfazed by forgeries, falsified documents, and fraud on the court- and there is nothing unusual about dummied up documents (although the banks are committing felonies with impunity). It is up to the people who have the means and temperament to fight foreclosure to do so on behalf of those whose voices have been silenced. Going the distance also requires that you don’t give in and sign a confidentiality agreement. Precedents in favor of the homeowner are desperately needed.
Every case you have read on Living Lies was because an attorney and the client refused to give in and both incurred serious losses in order to prevail. In cases like these, both attorney and client looked under every rock and crevice for evidence, they studied every law, act and statute. There are few attorneys who are willing to stand up for the homeowner and take the case all the way to trial. These world-class attorneys have sometimes faced ridicule by their peers but can’t be deterred. South Florida has some of the best foreclosure attorneys in the country including Neil Garfield, Tom Ice, Patrick Giunta, James “Randy” Ackley, Matthew Weidner, Mark Stopa, Bruce Jacobs and others (please read the blogs of these attorneys). Through the professionalism, proficiency and passion of these attorneys- the judges are now becoming wise to court manipulation and the fraudulent deeds of the banks.
With the knowledge Neil Garfield has shared with his readers on Living Lies- YOU have a better chance of prevailing than most Americans do who rely solely on their attorneys to take care of every aspect of their case (attorneys simply do not have the time). Eric Mains wrote a blog for Living Lies entitled “Why your Foreclosure Attorney Just became Your Business Partner”. The post provides excellent information for people who are willing and able to take on their loan servicers.
There is no doubt that the banks must receive much harsher monetary penalties to dissuade them from engaging in criminal conduct. It is also time that the representatives of the banks and foreclosure mills they employ be criminally prosecuted for the destruction they have caused to millions of families by fabricating documents, deliberately deceiving homeowners (through disinformation, false modifications, refusal to accept payments) and intentionally setting homeowners up to fail.
My advice to anyone contemplating foreclosure would be to NEVER allow a bank to steal your happiness or harm your family- walk away.  If you decide to pursue litigation your eyes will be opened that the attorneys for the banks are no different than college-educated thugs and that the courts are owned and paid for by the big banks. This lesson in itself will completely shake your belief system to the core. I would recommend in most cases that you save your family, your sanity and your money and go fight a war you can win.
Not to discourage you- but I have now been held hostage for 13 years. I have no home (except the house that has sat empty during 6 years of litigation now), no retirement, no marriage and my physical health is now starting to suffer (my mental suffering endures). I have wasted the best years of my life fighting a heartless bank with unlimited power and unlimited resources- because I actually believed our judicial system guaranteed my due process rights (wrong).  My ONLY hope is that the judge overhearing my case can put his own biases aside, apply the rule of law- and allow a jury of my peers to hear what a bank hell-bent on orchestrating the theft of my home is capable of.
They haven’t stolen my home-yet, but they may have stolen my life.

Update: March 25, 2018: If you have been victimized by a predatory foreclosure attorney- please write me at lendingliesconsulting@gmail.com.  I would like to hear your story.

 

Florida Supreme Court Considers Clearing up Conflicts on Statute of Limitations

For further information please call 954-495-9867 or 520-405-1688

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http://www.dailybusinessreview.com/home/id=1202719316326/Florida-Supreme-Court-to-Visit-LenderFriendly-Foreclosure-Rulings?mcode=1202617073880&curindex=0&slreturn=20150203104522

“Kafaesque” is the term being applied to the state of Florida law on foreclosures. If you have commercial property then you have rights, but if it is your home, then maybe you don’t. Due process has been shattered for homeowners while complete strangers take their homes with the cooperation of Judges who are struggling with the caseload and their own bias about how damaging it would be if debts were not paid. What they are missing is that none of the people foreclosing own any debt and nobody is going to get paid as a result of the foreclosure except third parties with breadcrumbs, if any, left to the actual source of funds for the origination or acquisition of the loans.

Depending upon where you live in Florida the results are different. If you beat the foreclosing party in court, then at least one court thinks that the “bank” can re-foreclose on a subsequent default on a loan and default they failed to prove. Florida’s rule HAD BEEN clear. Banks get one chance to foreclose and if the case goes against them, they get nothing in foreclosure and if the statute of limitations has run they can’t collect on the note either. They can’t come back over and over again until they a get a judge who thinks they got it right. And it didn’t matter before whether the property was commercial or residential.

So now because various districts have interpreted the law differently, the Supreme Court must decide what it had already decided. It is reviewing teh Bartram case and will consider the arguments of all sides. For me, the issue is simple. If the borrower wants to file claims against the lender and he is barred by the statute of limitations, he is done regardless of the merits. What is good for the goose was good for the gander until the courts starting bending the rules to the breaking point. They should be corrected by the Florida Supreme Court.

Holder in Due Course and Due Process

The first thing I want to do is add to my previous comments. I believe there is an implicit admission of failure of consideration in any case where a holder in due course is not identified. In addition, where a REMIC trust not alleged or asserted to be a holder in due course it means by definition that they did not purchase the loan for value in good faith without knowledge of the defense of the “borrower” (maker of the note).

 

I believe that what this means is that any court that enters an order or judgment against the homeowner, who was the maker of the note, is implicitly entering an order or judgment against the trust beneficiaries and the trust, resulting in a loss of favorable tax status and just as importantly an economic loss directly resulting from being forced to accept a loan that is presumed to be in default. The failure of the trust to pay for the loan and receive delivery of the loan documents to the depositor leaves one with the question of “what is the relationship of the Trust to the subject loan?”

 

The same logic would apply regardless of whether the citizens trust is in dispute or not. There is circular logic in the argument of the bank. On the one hand they want to be seen as a holder with rights to enforce but on the other hand they don’t want to disclose, alleged, assert, or prove the foundation or source of the right to enforce.

 

Based upon the provisions and restrictions of the pooling and servicing agreement, the investors who purchased mortgage backed securities issued by the Trust were intended to be the collective creditor for loans that were accepted into the Trust. The acceptance is stated in the pooling and servicing agreement and the exhibits to the pooling and servicing agreement should have the loans that were accepted. After the cutoff period, the only way a loan could be accepted was by acceptance by the Trustee. And the only way there could be acceptance by the trustee would be upon receipt of an opinion letter from counsel for the trust stating that they would be no adverse effect on the beneficiaries. The adverse effects are clear. One is the loss of advantageous tax treatment and the other is the economic loss from accepting a loan does not conform to the types of loans that are acceptable to the trust, as per the terms of the pooling and servicing agreement.

 

Pooling and servicing agreement is the trust instrument. Since the pooling and servicing agreement is governed under the laws of the state of New York, a violation of the restrictions and provisions of the trust is void, not voidable. The acceptance of a loan that is in default is not possible. The acceptance of any transaction that would violate the terms of the Internal Revenue Code sections on REMIC Trusts is not possible.

 

Thus the hidden issue here is that the real parties in interest who will be affected by the outcome of the litigation have not been given any notice of the pendency of the action. And the provisions of the pooling and servicing agreement prevent the trust beneficiaries from knowing or even inquiring about the status of any particular loan.

 

The confusion comes from the fact that the investors are indeed the creditors in practice. But because the trust was actually not utilized in the transaction they are direct creditors whose money was used to fund origination or acquisition of loans, contrary to the subscription agreement which promised that their money would be given to the issuer of the mortgage-backed securities that were being issued and purchased by the investors.

 

It seems obvious that the trust cannot be held to have acted in bad faith. It is equally obvious that the trust would have no knowledge of the borrower’s defenses. As the only element left for a holder in due course is the purchase for value. Since there is no allegation that the trust is a holder in due course, the bank is admitting that the trust never purchased the loan. It may be presumed that the trust might have originated or purchased the loan if it had received the proceeds of sale of the mortgage-backed securities issued by the trust. The logical assumption is that the trust never received those proceeds. The logical assumption is that the underwriter used the funds in ways that were never contemplated by the investors.

 

A further logical assumption would be that the underwriter kept the funds in its own name or in the accounts of entities controlled by the underwriter and is operating contrary to the interests of the investors.

 

The logical conclusion would be that the underwriter conducted a series of disguised sales of the same loan to multiple parties. Since the mortgage-backed securities were issued in the name of the underwriter as nominee (“street name”) they were able to trade on the loan and securities in their own name and receive the benefits without accounting to the investors or the borrower. The allocation of third-party funds (servicers, insurers, guarantors etc.) cannot be determined except by reference to books and records in the exclusive care, custody and control of the parties involved in the claims of securitization. It may be fairly concluded that such claims are false.

 

Now I will address the issues presented as to constitutional disposition of the case. It has long been judicial doctrine to avoid constitutional issues if the case can otherwise be decided on other grounds. It is also true that equal protection has proved more difficult than due process as the basis of any relief.

 

The problem in foreclosure litigation is that it must in my opinion include a claim for both due process and equal protection. The claim for lack of due process is not technically true. The true claim, in my opinion, would be lack of sufficient due process.

 

In actuality due process varies from state to state and even from county to county. If a party has been heard in court and presented arguments, then it may be fairly concluded that some due process was provided to that party. If presumptions arise against that party that give rise to orders and judgments that are contrary to the actual facts, a claim for denial of due process could be present. But the better claim, in my opinion, is to look at the state appellate decisions to show that more due process is allowed to debtors who are not involved in foreclosure litigation. I think this is a more accurate description of the actual situation.

 

The due process argument is simple: presumptions are used as shorthand for the facts. In this case the facts don’t match up with the presumptions. The only question is whose burden of proof is it. If the allegation was that a holder in due course was known and identified there is no doubt that anything the borrower had to say would be an affirmative defense, and thus after a prima facie case was made showing payment in good faith without knowledge of borrower’s defenses, the burden would shift to the alleged borrower who definitely was the maker of the note even if they were not the borrower in a loan transaction with the designated “lender.”

 

But, this is not the case at bar. The foreclosing party is asserting “holder” status, with dubious rights to enforce that are denied by the maker/homeowner. Absent is any allegation of status of a holder in due course, and of course noticeably absent is any allegation of the expenditure of funds or other consideration in exchange for delivery of the loan to the Depository designated in the PSA to receive the delivery. Thus neither the purchase nor the delivery are alleged. While being a holder might raise the presumption of being a holder with rights to enforce, it does not remove the burden of proving that said rights to enforce have been delivered from a party who definitely had the right to enforce — i.e., the holder in due course or “owner” of the loan.

 

The absence of the HDC allegation is an admission that the Trust did not buy the loan. The fact that the Trust did not buy the loan means that it is not and cannot be in the pool owned by the trust, with fractional shares owned by the investors who bought the MBS issued by the Trust. And that can ONLY mean that the right to enforce cannot be delivered or conveyed by the Trust because the Trust never received delivery and never had a right to receive delivery because they didn’t pay for the loan.

 

Thus on the face of the pleading it is up to the foreclosing party to prove its right to enforce the note by showing the identity of the party for whom the loan is being enforced, the fact that the party for whom it is being enforced owned the loan at the time the right to enforce was granted, the current balance ON THE BOOKS OF THE CREDITOR, the presence of a default ON THE BOOKS OF THE CREDITOR, and that the loan is still owned by the party who owns the loan (i.e., the HDC). Hence the burden is on the foreclosing party to reach the point where the borrower assumes the burden of refuting the case against him or her. The maker of the note is in an exclusive position of being shut out of the facts that would either corroborate or refute this narrative.

 

If the burden is placed on the borrower, it would be the equivalent of a murder on video in possession of the murderer but the State and the heirs of the victim are charged with proving the case without the video. The facts suggest here that the Trust paid nothing because it had no money to pay for a loan. The facts suggest that if it were otherwise, the Trust would have paid for the loan and be most anxious to plead HDC status. And thus the facts show that the foreclosing party cannot claim the right to enforce based upon a presumption without violating the due process rights of the homeowners here. Only the foreclosing party and its co-venturers have in their care, custody and control, the necessary information to refute or prove the facts behind the presumptions they are attempting to raise.

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Lawyers in Nonjudicial States Should File Constitutional Challenge

I have been receiving increasingly urgent and frustrated messages from lawyers in nonjudicial cases. They are dismayed that the most basic components of proof are not required from “new” trustees on deeds of trust and “new” beneficiaries on the deed of trust, all self proclaimed and presumed valid even if the borrower denies it. Here is my answer:

I think what is missing is a plan for presentation. AND a decision about whether to go to Federal or State Court, or the California Supreme Court or even directly to the 9th Circuit if that is possible. Your case is really against the whole state of California (or whichever state the property is located) for violation of equal protection — debtors whose loans were mortgaged are treated differently from other debtors potentially including the debtors whose cars were mortgaged. Debtors who are subject to non judicial process are not given the same rights and procedures for debtors who are sued in judicial foreclosures. The normal process is if you want to allege a debt that requires a judicial judgment to enforce it, you are required to sue. That is why the decisions in and out of nonjudicial states say that due process requirements must be strictly construed. But in contested nonjudicial foreclosures, it is so loosely construed that complete strangers to the loan transaction can win the house. (See San Francisco study, Baltimore study etc.).
The argument that it is an agreement is cute but not right. Yes it is an agreement and anyone can contract with terms they agree to. But the exception is whether the contract violates law or public policy. Any agreement that violates public policy or to violate state or federal law is void. All Deeds of trust are arguably unconstitutional. But what will fly is a challenge to the nonjudicial scheme as to those cases where the borrower has made the proceeding a contested proceeding by denial of the essential elements of the nonjudicial procedure.

The “agreement” exists ONLY because of a statutory scheme that allows it and the only reason that statutory scheme exists is because of the original presumption behind such a scheme. If the foreclosure is truly uncontested, then it is hard to argue that the due process rights of the homeowner have been diminished. Thus repossession or forced sale at “auction” (another issue to be considered) might be the most expeditious way of handling it without clogging the courts.

But if the homeowner contests all aspects (including that he is a debtor and that the beneficiary is in fact the creditor) — the substitution of trustee, the naming of the beneficiary, the notice of default, the notice of sale etc. THEN the question becomes whether the “contract” (deed of trust) is valid and in particular whether the statutes allowing non judicial foreclosure are being APPLIED in an unconstitutional manner.

A non-creditor stranger who wins this procedure is allowed to place a “credit bid” at “auction” (which are really not conducted as public auctions) gets title to the property spending only the money required to pay for costs of filing.

Specifically, under normal circumstances, if the Trustee on the deed of trust was to receive a notice from the borrower that everything he has received from the wrong beneficiary has incorrect information and that the loan is not in default — the Trustee would ordinarily be required to file an interpleader action. The interpleader would say that he has a duty to both parties and there is a contested matter. The trustee asks for fees and costs because they have no vested interest in the outcome. Then the parties file pleadings about why they should get their way. But this doesn’t happen in practice. And the truth is, if the borrower is right, the substitution of trustee is invalid and the old trustee is still the trustee on the deed of trust. With that on record, how can anyone actually get clear title?

The problem in non-judicial states is that in practice (and in particular in the context of a contested loan which is subject to claims of successors or securitization) the self-declared beneficiary is not required to file substantive pleadings asking for specific relief. This would require the “beneficiary” to state that they are a beneficiary and to plead facts in support of that, attaching various exhibits, and that the loan is in default, and then they would be required to prove it. This would give them a prima facie case to prove. And the borrower would be required to answer the complaint of the beneficiary, file affirmative defenses and counterclaims. That is the very essence of due process in civil action and it should be strictly construed in foreclosures which consists of a forfeiture of the homestead — the virtual equivalent of the death penalty in civil litigation.

But in practice, the State of California doesn’t do any of that. In fact, they do the reverse. If a homeowner wishes to contest the substitution of trustee et al, the homeowner must file a complaint for TRO. And because they are the complainant, they are treated as having the burden of pleading and proof. This statutory scheme was conceived before multiple claims of successors and securitization were known. In practice it needs to be corrected by the courts until the legislature closes the loopholes that make the nonjudicial procedure unconstitutional in practice in certain types of cases.

This flips the rules of civil procedure and evidence on its head. In practice borrowers are not only required to plead that they deny the substitution of trustee et al was valid but to prove it — thus reversing the procedure that would be required in a judicial foreclosure, which is a second equal protection argument. Why are borrowers with other secured collateral (autos, e.g.) treated differently from borrowers with homes as collateral? Why are mortgagors treated differently in proceedings arising from non judicial process than in judicial process?

So the current practice requires the borrower to deny allegations that have not been filed and then prove that their denial is valid. That makes no sense and is an obvious denial of due process. The way the process works in practice is a stranger to any transaction with the borrower says “You owe me money” and then the borrower has the burden of saying “No I don’t” and then the defendant has the burden of pleading and proving that he doesn’t owe the money when he doesn’t know what the stranger is talking about. The only way the borrower can prevail on meritorious claims and defenses is by proving a negative. This is the opposite of due process.

This is why I have said since early 2008, that an action needs to be brought directly to the California Supreme Court or in Federal court or perhaps a special action to the 9th Circuit in which the application of the non judicial statutory scheme is challenged for those cases where the borrower denies the rights of substitution of trustee, denies the status of the self appointed new beneficiary and denies the default, denies the loan, etc. If the question is put to the court I feel confident that the decision will be in favor of borrowers. But any attempt to declare the non judicial scheme unconstitutional as a whole will fail.

Weidner: Perjury is Acceptable Practice

I am a fan of Matt Weidner. Like a breath of fresh air he understands the full implications of the false claims of securitization, the fraudulent foreclosures, the fraudulent reporting by banks to regulatory agencies and the false statements of financial condition they report to the SEC. Best of all he has maintained his sense of outrage at the banks, at the regulators, at law enforcement and the courts.

If you read his article, you can see why he is so angry. We know as lawyers what SHOULD be required in litigation. The fact that basic standards not being met in foreclosure litigation is a present problem for everyone who is involved or affected by the title and money issues; but it is also a future problem for all of us in the decisions, opinions and actions by the courts using a presumption that in the end it doesn’t make any difference how many ways the banks lied, cheated and stole money and title, the homeowner should be the one to bear the full burden of the problem.

This is why I am seriously entertaining a lawsuit in Federal court against the State of Florida for creating a new and wholly dysfunctional standard for the introduction of evidence and the burden of proof in foreclosure cases versus all other civil cases.

Weidner Takes Court System to Task

Discovery and Due Process in California

I produced a memorandum as an expert witness and consultant in litigation support for a lawyer in California that after re-reading it, I think would be helpful in all foreclosure litigation. I have excerpted paragraphs from the memo and I present here for your use.

Plaintiff/Appellant has pre-empted the opposing parties with a lawsuit that seeks to determine with finality the status and ownership of her loan. She has received, in and out of court, conflicting answers to her questions. The Defendant/Appellees continue to stonewall her attempt to get simple answers to simple questions — to whom does she owe money and how much money does she owe after all appropriate credits from payments received by the creditor on her mortgage loan.

 

She does not take the position that money is not owed to anyone. She asserts that the opposing parties to this litigation are unable and unwilling to provide any actual transaction information in which the subject loan was originated, transferred or acquired. If she is right none of them can issue a satisfaction and release of mortgage without further complicating a tortuous chain of title — and none of them had any right to collect any money from her. A natural question arising out of this that Plaintiff/Appellant seeks to answer is who is the creditor and have they been paid? If they have been paid or their agents have been paid, how much were they paid and on what terms if the payments were from third parties who were strangers to the original loan contract between the Plaintiff/Appellant and the apparent originator.

 

She asserts that based upon the limited information available to her that the original debt that arose (by operation of law) when she received the benefits of a loan was mischaracterized from the beginning, and has changed steadily over time. She asserts that the “originator” was a sham nominee and the closing documents were both misrepresented as to the identity of the lender, and incomplete because of the failure to disclose the real terms of a loan that at best would be described as partially represented on a promissory note and partially represented on a certificated or uncertificated “mortgage bond.”

 

Neither the actual lender/investors nor the homeowner/borrower were parties to the contract for lending in which the Plaintiff/Appellant was a real party in interest.  And the homeowner/borrower in this case was not party to the promise to repay issued to the actual lenders (investors) who advanced the money. The investor/lenders were party to a bond indenture, prospectus and pooling and servicing agreement, while the borrower was party to a promissory note and deed of trust. It is only by combining the two —- the bond and the note — that the full terms of the transaction emerge — something that the major banks seek to avoid at all costs.

 

When it suits them they characterize it as one cloud of related transactions in which there is a mysterious logic, and when it suits them otherwise they assert that the transactions and documents are not a cloud at all but rather a succession of unrelated individual transactions. Hence they can foreclose under the cloud theory, but under the theory of individual (step) transactions, they don’t have to account for the receipt of exorbitant compensation through tier 2 yield spread premiums, the receipt of insurance, servicer advances, credit default swaps, over-collateralization, cross collateralization, guarantees and other hedge contracts; under this theory they were not acting as agents for the investors (whom they had already defrauded) when they received payments from third parties who thought that the losses on the bonds and loans were losses of the banks — because those banks selling mortgage bonds, while serving as intermediaries, created the illusion that the trillions of dollars invested in mortgage bonds was actually owned equitably and legally by the banks.

 

Plaintiff/Appellant seeks to resolve this conflict with finality so she can move on with her life and property.

 

 If she is right, several debts arose out of the subject transaction and probably none of them were secured by a valid deed of trust or mortgage. If she is right the issues with her mortgage debt have been mitigated and she can settle that with finality and it is possible that she owes other parties on unsecured debts who made payments on account of this loan, by reason of contracts to which the Plaintiff/Appellant was not a party but which should have been disclosed in the initial loan contract. In simply lay language she wants an accounting from the real creditor who would lose money if they did not receive payment or credit toward the balance due on the loan for principal and interest.

 

If she is wrong, then the loan is merely one debt, secured by a valid deed of trust. But one wonders why the banks have steadfastly stonewalled any attempts to establish this as a simple fact by producing the actual record of transactions and passage of money exchanging hands in real transactions that support any appearance or presumption of validity of the documents that are being used by her opposition to claim the right to collect on the loan that she freely admits occurred. Why did the bank oppose her attempts at discovery before litigation and after litigation began?

 

If she is wrong and no third party payments were made, then the bookkeeping and accounting entries of the opposition would show that the loan was posted as loan receivable, with an appropriate reserve for default on the balance sheet, and there would be an absence of any documentation showing transfer or attempted transfer of the loan to a party who actually was the source of funds for the origination or acquisition of the loan. The same books and records would show an absence of any entries that reduce the balance due on the loan. And the loan file correspondence of the opposition would not have any reference to fees earned for servicing the loan on behalf of a third party and the income statement would have no underlying bookkeeping entries for receiving fees for acting as the lender, acting as the servicer or acting as a trustee.

 

In some ways this is an ordinary case regarding a deprivation of due process in connection with the potential forfeiture of property and present denial of access to the courts. She is left with both an inability to determine the status of her title, whether it is superior to any claim of encumbrance from the recorded deed of trust, the status of the ownership of her loan where she could obtain a satisfaction of mortgage from a party who either was the creditor or properly represented the creditor, or whether her existing claims evolve into other claims under tort or contract — i.e., a consequent forfeiture of potential claims against the Appellant’s opposing party. For example, by denying the Plaintiff/Appellant’s motions to compel discovery, Plaintiff/Appellant was denied access to information that would have either settled the matter or provided Plaintiff/Appellant with the information with which to prove her existing claims and would most likely have revealed further causes of action. The information concerning the ownership status of her loan, and the true balance of her loan is essentially the gravamen of her claim.

 

But if, as she suspects and has alleged, the parties purporting to be the lender or successor to the lender have engaged in no actual transactions in which the loan was originated or acquired, then the claims and documents upon which her opposition relies, are obviously a sham. This in turn prevents her from being able to contact her real lender for satisfaction, refinance, or modification of her loan under any factual scenario — because the parties with whom she is dealing are intentionally withholding information that would enable her to do so. Hence their claims and documents would constitute the basis for slander of title if she is right about the actual status and balance of her loan.

 

Her point is not that this Court should award her a judgment — but only the opportunity to complete discovery that would act as the foundation fro introduction of appropriate testimony and evidence proving her case. The trial court below essentially acted in conflict with itself. While upholding her claims as being sufficient to state causes of action, it denied her the ability to conduct full discovery to prove her claim.

 

Hagar v. Reclamation Dist., 111 U.S. 701, 708 (1884). “Due process of law is [process which], following the forms of law, is appropriate to the case and just to the parties affected. It must be pursued in the ordinary mode prescribed by law; it must be adapted to the end to be attained; and whenever necessary to the protection of the parties, it must give them an opportunity to be heard respecting the justice of the judgment sought. Any legal proceeding enforced by public authority, whether sanctioned by age or custom or newly devised in the discretion of the legislative power, which regards and preserves these principles of liberty and justice, must be held to be due process of law.” Id. at 708; Accord, Hurtado v. California, 110 U.S. 516, 537 (1884).

685 Twining v. New Jersey, 211 U.S. 78, 101 (1908); Brown v. New Jersey, 175 U.S. 172, 175 (1899). “A process of law, which is not otherwise forbidden, must be taken to be due process of law, if it can show the sanction of settled usage both in England and this country.” Hurtado v. California, 110 U.S. at 529.

686 Twining, 211 U.S. at 101.

687 Hurtado v. California, 110 U.S. 516, 529 (1884); Brown v. New Jersey, 175 U.S. 172, 175 (1899); Anderson Nat’l Bank v. Luckett, 321 U.S. 233, 244 (1944).

Non-Judicial Proceedings.—A court proceeding is not a requisite of due process.688 Administrative and executive proceedings are not judicial, yet they may satisfy the due process clause.689 Moreover, the due process clause does not require de novo judicial review of the factual conclusions of state regulatory agencies,690 and may not require judicial review at all.691 Nor does the Fourteenth Amendment prohibit a State from conferring judicial functions upon non-judicial bodies, or from delegating powers to a court that are legislative in nature.692 Further, it is up to a State to determine to what extent its legislative, executive, and judicial powers should be kept distinct and separate.693

The Requirements of Due Process.—Although due process tolerates variances in procedure “appropriate to the nature of the case,”694 it is nonetheless possible to identify its core goals and requirements. First, “[p]rocedural due process rules are meant to protect persons not from the deprivation, but from the mistaken or unjustified deprivation of life, liberty, or property.”695 Thus, the required elements of due process are those that “minimize substantively unfair or mistaken deprivations” by enabling persons to contest the basis upon which a State proposes to deprive them of protected interests.696 The core of these requirements is notice and a hearing before an impartial tribunal. Due process may also require an opportunity for confrontation and cross-examination, and for discovery; that a decision be made based on the record, and that a party be allowed to be represented by counsel.

688 Ballard v. Hunter, 204 U.S. 241, 255 (1907); Palmer v. McMahon, 133 U.S. 660, 668 (1890).

 

Here it is: Nonjudicial Foreclosure Violates Due Process in Complex Structured Finance Transactions

No, there isn’t a case yet. But here is my argument.

The main point is that we are forced to accept the burden of disproving a case that had not been filed — the very essence of nonjudicial foreclosure. In order to comply with due process, a simple denial of the facts and legal authority to foreclosure should be sufficient to force the case into a courtroom where the parties are realigned with the so-called new beneficiary is the Plaintiff and the homeowner is the Defendant — since it is the “beneficiary” who is seeking affirmative relief.

But the way it is done and required to be done, the Plaintiff must file an attack on a case that has never been alleged anywhere in or out of court. The new beneficiary anoints itself, files a fraudulent substitution of trustee because the old one would never go along with it, and then files a notice of default and notice of sale all on the premise that they have the necessary proof and documents to support what could have been an action in foreclosure brought by them in a judicial manner, for which there is adequate provision in California law.

Instead nonjudicial foreclosure is being used to sell property under circumstances where the alleged beneficiary under the deed of trust could never prevail in a court proceeding. Nonjudicial foreclosure was meant to be an expedient method of dealing with the vast majority of foreclosures when the statute was passed. In that vast majority, the usual procedure was complaint, default, judgment and then sale with at least one hearing in between. Nearly all foreclosures were resolved that way and it become more of a ministerial act for Judges than an actual trier of fact or judge of procedural rights and wrongs.

But the situation is changed. The corruption on Wall Street has been systemic resulting in whole sale fraudulent fabricated forged documents together with perjury by affidavit and even live testimony. Contrary to the consensus supported by the banks, these cases are complex because the party seeking affirmative relief — i.e., the new “beneficiary” is following a complex script established long before the homeowner ever applied for a loan or was solicited to finance her property.

The San Francisco study concluded, like dozens of other studies across the country that most of the foreclosures were resolved in favor of “strangers to the transaction.” By definition, the use of several layers of companies and multiple sets of documents defining two separate deals (one with the investor lenders and one with the borrower, with the only party in common being the broker dealer selling mortgage bonds and their controlled entities) has turned the mundane into highly complex litigation that has no venue. In non-judicial foreclosures the Trustee is the party who acts to sell the property under instructions from the beneficiary and does so without inquiry and without paying any attention to the obvious conflict between the title record, the securitization record, the homeowner’s position and the prior record owner of the loan.

The Trustee has no power to conduct a hearing, administrative or judicial, and so the dispute remains unresolved while the Trustee proceeds to sell the property knowing that the homeowner has raised objections. Under normal circumstances under existing common law and statutory authority, the Trustee would simply bring the matter to court in an action for interpleader saying there is a dispute that he doesn’t have the power to resolve. You might think this would clog the court system. That is not the case, although some effort by the banks would be made to do just that. Under existing common law and statutory law, the beneficiary would then need to file a complaint, verified, sworn with real exhibits and that are subject to real scrutiny before any burden of proof would shift to the homeowner. And as complex as these transactions are they all are subject to simple rules concerning financial transactions. If there was no money in the alleged transaction then the allegation of a transaction is false.

It was and remains a mistake to allow such loans to be foreclosed through any means other than strictly judicial where the “beneficiary” must allege and prove ownership and the balance due on the loan owed to THAT beneficiary. Requiring homeowners with zero sophistication in finance and litigation to bear the initial burden of proof in such highly complex structured finance schemes defies logic and common sense as well as being violative of due process in the application of the nonjudicial statutes to these allegedly securitized loans.

By forcing the parties and judges who sit on the bench to treat these complex issues as though they were simple cases, the enabling statutes for nonjudicial foreclosure are being applied unconstitutionally.

Rocket Dockets Undermine Faith In Judicial System

Having now personally participated in the “expedited” processes that are now invoked in many states, it has become apparent that they are all deficient. Citizens who find themselves in the court system are fast losing faith that it is a rubber stamping system if they are accused of anything, and an obstacle to justice if they are seeking compensation for damages sustained as a result of breach of duty or obligation. My main observation is that in the civil dockets, equal protection is intentionally thrown out the window. If the opposing parties are on equal footing on a socio-economic scale, they might have a better chance of being “heard”, which is the essence of due process; but if there is a disparity in their perceived position in our society, they are more likely to see undue process — which is to say there is a presumption of guilt of the person on the lower scale and a presumption that the larger, higher party is more credible.

The credibility of banks and their attorneys ought to be greeted with a healthy dose of skepticism from the start. They have been accused of the most heinous economic crimes of their own doing and accessory to the crimes of others, found guilty in many cases by administrative agencies, and yet are treated with deference by judges in contested actions. So far they have paid collectively around $200 Billion in fines and settlements for conduct that is illegal, improper and outside the bounds of anything that could be called accepted industry standards. And that total represents what we know about. The amount of private settlements with the real parties to mortgage loans — homeowners and investors — is presumably much higher, but sealed under confidentiality.

The result of all this is that the banks are getting exactly what they want — keeping their ill-gotten gains and getting still more money called “profit” with their payments of fines, damages and penalties being pennies on the dollar. And they get an added bonus. Homeowners could avoid foreclosure if they raised the right defenses in the right way. But they are still giving up and leaving their keys on the kitchen counter. So far 15 Million people have been displaced by the foreclosure process. The very people who should be an army of revolt in the Courts are so intimidated by their opposition and what they see happening in the courts that they give up their largest investment, their lifestyle, their neighborhood because they are demoralized by a rigged legal system.

The rigging comes from the starting position that the origination and acquisition of loans actually occurred and therefore, no matter how you cut it, the homeowner is a borrower and the bank that sued them or put their home up for sale is accordingly entitled to do so, because the borrower stopped paying “the debt”. And in most cases that is true, the record of payments shows that the borrower was making payments to some Servicer and then stopped. The conclusion is that foreclosure is inevitable and that due process is due in name only and not in substance — even where the creditor named as such in the foreclosure process is receiving and accepting full payments from third parties, which is to say that homes are foreclosed and sold without any default on the books of the creditor.

My review of thousands of closings leads me to an avoidable, inescapable conclusion that the premise behind rocket dockets is untrue and can never be proven otherwise. The “debt” was the product of absolute fraud deserving of punitive damages and I intend to push that point until I get it — hopefully in a verdict instead of the thousands of sealed settlements I know about. The fraud started with theft of pension fund money by the investment banks and conversion of pension fund assets (the note and mortgage or deed of trust) by the investment banks.

The money loaned to homeowners was not originated or acquired by a REMIC trust. It came from stolen money — money that was never deposited into the trust account of the REMIC trust). The homeowner was further fraudulently induced to sign documents that converted investor money and documents to the broker dealers (investment banks). The property was never encumbered by a valid mortgage or the encumbrance became unenforceable when the loan was supposedly “acquired” in a fictitious transaction. The missing or late assignment of the “debt” was fictitious (note there was no debt because none of the parties had ever loaned any money nor paid any value to acquire it — but the real debt still existed without documentation and without any collateral). But the pile of paper, ever growing, is taken by judges to mean that the greater “weight” of the pile of meaningless documents creates a presumption in favor of the fraudulent allegations of the co-conspirators.

The answer is simple. The real debt was created by the lending of real money by a real lender to a real borrower. That is what the laws says and that is what common sense will tell you. THAT loan really happened, but because of the interference of the banks and servicers, the money of the lender investor (pension fund) and the paperwork documenting the transaction were hijacked. And that is why investors are getting settlements, agencies are getting verdicts, and the banks are continuing to pay hundreds of billions of dollars to protect TRILLIONS of dollars in ill-gotten gains.

Back in 2007 I proposed a way of settling this with amnesty for all and a share of the risk of loss by everyone. I will soon write about the doctrine of ASSUMPTION OF RISK which is a way of apportioning the real risks at the time of the defective mortgage originations and acquisitions. It is like the old doctrine of comparative negligence and it is good law aimed at a just result.

Assumption of Risk is an affirmative defense that arises by operation of law. It is based upon facts that show that the projected loss of the Plaintiff occurred, at least in part, because they impliedly agreed to assume the risk of loss upon certain events. For example, if the household income was $50,000 at the time was originated, then by most standards the maximum total payment of PITI should have been between $15,000 and $20,000 per year (or around $1250-$1600 per month). Any loan calling for payments above that level triggers the Assumption of Risk defense to the extent that the payment exceeds the level set by industry standards. The simple reality is that the “lender” (whether real or fictitious) accepted the probability that the loan would default at the moment the payment reset to an amount that was known to be impossible.

So if you look at those “pick a payment” or teaser payment loans, you can see how this would apply. The initial payment might have been $500 per month, but the payment eventually resets to $4,000 per month. Since the payment resets to an amount equal to the entire household income, it is impossible for the loan to succeed. And in fact the the new rules that went into effect this month from the Consumer Financial Protection Board are considered to be merely “back to basics” where such a loan would never be allowed. If we use Assumption of Risk as an affirmative defense, then the “blame” gets shared. A jury or judge would decide the comparative risks assumed or agreed by the parties regardless of what was in the written agreements. In this case the decision might be that the maximum payment to be assessed against the homeowner would be $1,600. The other $2,400 per month supposedly due under the note would be offset. The offset might result in the reformation or modification of the loan.

There are dozens of ways and hundreds of case scenarios in which assumption of risk could be used. Of course this would mean taking cases off the rocket docket and putting them into general civil or complex litigation dockets.

Finally: Federal Judge Challenges Consitutionality of Colorado Foreclosure Law

In a case that is bound to be watched and probably the first of many to come, a Federal Judge found that the constitutionality of the greased lightening judicial sale is probably unconstitutional and cancelled the sale of a home in foreclosure.

U.S. District Judge William Martinez issued a preliminary injunction against the sale of Lisa Kay Brumfiel’s four-bedroom home, scheduled for Wednesday in Arapahoe County, until the judge can decide whether parts of state law are unfair to homeowners facing the loss of their house.

The part of the law that the Judge finds troublesome and that the rest of us find is absurd is that in lieu of actually providing the court with evidence, lawyers can assert that their client has the right to foreclose, thus delegating the function of the Judge to the lawyer for the bank. When I first saw that I said it was nuts and would never stand up. Now we’ll see what the Judge does, but my bet is that there is no way for him or the bank’s attorney to justify that obvious breach of basic  rights of due process. That takes us back to Salem where an accusation could get someone killed for being a witch.

 

Federal judge questions constitutionality of Colorado foreclosure law
http://www.denverpost.com/breakingnews/ci_23184955/federal-judge-questions-constitutionality-colorado-foreclosure-law

Florida Legislature Shredding Bill of Rights Under Guidance of the Banks

FLORIDA CITIZENS MUST CALL AND WRITE

THEIR STATE SENATOR AND STATE REPRESENTATIVE

PAY UP OR SHUT UP: FLORIDA BILL WOULD REQUIRE DEPOSITING MORTGAGE BALANCE INTO COURT REGISTRY EVEN IF THE PLAINTIFF IS NOT ENTITLED TO THE MONEY!!

Under the guise of facilitating mortgage foreclosure litigation, the Florida state Senate is attempting to destroy the rights, defenses, and counterclaims of homeowners without due process; and this is simply because the banks cannot win their foreclosure cases  without cheating.

S.B. 1666 Is the bill that has been proposed and which should be opposed by every citizen including those who have no interest in foreclosure litigation. It sets a dangerous example and precedent for restricting access to the courts and creating an insurmountable burden on homeowners to defend their property against illegal foreclosures. It also lays the groundwork for permanent corruption of title chains in the state of Florida such that the marketplace can never be a place where transactions are complete. This is obviously the handiwork of the banks.

Having failed to achieve the upper hand by virtue of congressional authority at the federal level, the banks are spending hundreds of millions of dollars in lobbying expenses and campaign contributions to protect their  ill-gotten gains.  Any Florida state senator or representative who votes for this bill should be known as someone who has sold out to the banks and whose interest is in protecting the banks rather than the state of Florida or its citizens.

 The new provisions on notice of the pending foreclosure proceedings makes a mockery of both notice and service of process. The new provisions allow for substitute service by publication on a website that nobody other than the banks are likely to visit. It is therefore publication without notice. This is something which is absurd on its face.

The new provisions would allow and encourage retired judges to determine whether an order should be issued for the homeowner to show cause why a final judgment should not be entered. This process is to be conducted without a hearing, notice, or any evidence or argument. It is not just the equivalent of nonjudicial foreclosure, it is far worse.

The hidden rationale behind this proposed legislation is to place the burden of persuasion on the homeowner before the homeowner has any opportunity to conduct discovery. It allows the judge to essentially overrule denials by the homeowner. It would require the homeowner to  make allegations  and attach documents,  most of which are in the sole care custody and control of parties that can only be reached through the power of subpoena.

Despite the facts and findings of multiple agencies and independent examiners wherein the conclusion was drawn that most foreclosures involve strangers to the transaction who are neither creditors nor authorized representatives of creditors, and despite the facts and findings in multiple cases and multiple agencies showing the fabrication and forgery of documents for the purpose of obtaining a foreclosure deed on behalf of an entity that paid nothing for the origination or transfer of the loan, the Florida Senate is considering a bill whose premise is that the loans are valid, the mortgage lien is perfected, the borrower has defaulted, the note accurately describes a transaction even though consideration was absent, and that the foreclosure is presumptively valid.

This bill has nothing to do with the functionality or bottleneck in the court system. It is highly likely that the bill will not get past the Florida Supreme Court, but it should be defeated long before it has an opportunity to be reviewed by that court. If anyone was truly serious about the functionality of the court system and bottlenecks caused by foreclosures they would start at the beginning rather than the middle of the litigation process.

 If the legislature wants to have a review process to determine the viability of litigation and the position of one party over another, it should start at the beginning with the pleading and attachments of the party seeking foreclosure. The proposed bill once again refers to the “holder” instead of the owner of the loan. The difference is monumental. And judges seem to attach considerable significance to the allegation that the would-be forecloser  is a holder instead of requiring that the party seeking foreclosure allege and prove that it is the owner or that it represents the owner of the loan.

 Thus this bill  seeks to allow and encourage retired judges to use presumptions even if they are contrary to the facts. These judges should not be charged with the responsibility of determining the viability of the defenses without first determining  the viability of the initial claim. This is not a technical problem. It is pure common sense. If a party wishes to foreclose on property it must be able to show proof of payment and proof of loss. We all need to understand that the foreclosure mess created by Wall Street changes the entire rationale of making loans and enforcing them.

The courts are being used as a vehicle to commit further fraud on both the investors and the homeowners who received loans from the investors but who executed documentation that raises the presumption that the payee on the note and the secured party on the mortgage actually made the loan when in fact the funding for the loan came directly from investors whose investment was diverted from the REMIC Trusts that issued the bogus mortgage backed bonds.

 If this bill is passed  it will allow any stranger to any transaction to make a claim of ownership or rights in that transaction despite their complete absence from the transaction and despite the complete absence of any reference to them as a third-party or third-party beneficiary. This precedent is something that the state of Florida will pay for many times over. As we have already seen for years in Senate hearings, the media,  and multiple reports published in every conceivable way, the opportunity for moral hazard is not only present, it is actually operating as we speak. Each time another foreclosure is approved it probably is allowing a stranger to the transaction to obtain ownership of the loan or of the house without having invested any money in the origination or transfer of the loan.

Every Florida citizen should be calling and writing their Florida State Sen. and their Florida state representative about this bill voicing their opposition to the banking oligarchy.

SB1666

California Bar Throws Baby Out with Bathwater

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For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Hat tip to Darrel Blomberg who brought Mandelman’s article (below) to my attention.

Editor’s Analysis: In case you you ever wondered where that expression came from, it is pretty simple. It was once the practice to allow the man to bathe first, then the wife then the children in order of their age — all in the same tub without changing the water. By the end of this process the water was so murky that it was actually possible to throw the baby out with the bathwater.

The banks are attempting every maneuver to keep the mortgage and foreclosure process as murky as possible with considerable success, especially when it comes to modification where they are required to “consider” modifications although they are not required to accept a modification proposal.

The truth is they don’t consider it, they intentionally “lose” the paper work a half dozen times before they realize that the person is likely to escalate to litigation, and then they send a notice of rejection.

This rejection, few people realize, is subject to challenge if your allegation is that they rejected it without considering it. If your allegations contain proper pleading about the details you submitted with your modification proposal, including the proceeds to investor under your plan versus foreclosure, and it is an obvious no-brainer, I have evidence that such suits are settled very quickly usually along the same terms as those proposed in the original modification proposal from the borrower.

Now it is true that hundreds of companies have started claiming to do modifications without being able to spell it, and without any license that provides any evidence that they know anything about property rights, mortgages, notes,  lending, HARP, HAMP, TARP, TILA or RESPA and it is equally true that these bogus companies have compounded predatory lending with predatory services (fraud). So the states have enacted various laws that ignore the real problem and did what the banks want — prevent access to those who are licensed and who can effectively advocate for their client, before, during or after modification attempts, foreclosure or eviction.

The basic thrust of most such laws is to prevent any such company from collecting fees until the end of their services which means that such companies would need to invest in a mortgage deal, the benefits of which go solely to their client.

The proper way of handling this is through the existing web of lawyers, HUD counselors, realtors etc. who are all properly regulated and if they charge fees that are too high or fail to do the work, their license if disciplined with fines, suspension and even revocation. There are hundreds of thousands of such professionals around that would gladly assist homeowners, but who have no interest in loaning the expenses of representation to clients whom they barely know.

California has now extended this idiotic approach to lawyers as well, which means if the retainer smells like there is a modification possible, they are not allowed to charge any fees until the end. This obviously denies the homeowner from access to counsel, access to the courts, due process and equal protection under the law. Hopefully that rule, passed around November 12, 2012 will be brought before the California Supreme Court will be treated summarily. It’s bad for homeowners, lawyers, and all other licensed professionals who could provide valuable services in litigation, settlements, modifications, short-sales and wrongful foreclosure suits.

So right now, in California, the banks and pretender lenders can all use attorneys, realtors and others and pay then up front, salary, or anything else but the people against whom they are pressing illegal foreclosures are not allowed to hire such professionals because it could end up in a modification, which everyone agrees is the proper end to this mess.

PRACTICE HINT: Any lawyer or group of lawyers may file a rule challenge which MUST go to administrative  hearing and then (after exhaustion of administrative remedies) can go to court for contest or confirmation. Hearing officers are not ordinarily allowed to rule on constitutional issues, so you’ll end up in court pretty quick.

http://mandelman.ml-implode.com/2012/12/california-state-bar-recent-decision-to-cause-more-harm-to-homeowners-in-foreclosure/

Vacate the Substitution of Trustee

“The Bottom Line is that if the REMIC transactions were real, they would have been named on the note and mortgage. The fact that they never were named or disclosed demonstrates clearly that something else was going on besides funding mortgages with REMIC money from investors. Nobody would loan money without putting their name as payee on the note, their name as lender on the note and mortgage and their name as beneficiary. The Wall Street explanation that MERS and other obscurities were necessary to securitize the loans is in fact directly contrary to the fact that the loans were never securitized, that the mortgage bonds were bogus obligations from empty REMICs with no bank account and no active manager or trustee.” Neil F Garfield, livinglies.me

A recent case I reviewed, resulted in a full analysis, and my suggestions for strategy, tactics, pleading and oral argument. It involved Bank of America,  Recontrust and BONY/Mellon.

What is again so interesting is that we are dealing with BOA in SImi Valley, CA (supposedly) with Reconstrust in in in Richardson, TX. What is interesting is that the response to my letter which was addressed only to Recontrust came from BOA. This is evidence of the fact that Recontrust are one and the same entity. It doesn’t prove it but it is evidence of it. Thus the challenge to the substitution of trustee comes under the heading that a beneficiary cannot name itself as the trustee. The statute says the TRUSTOR names the trustee on the deed of trust not the beneficiary. And while the beneficiary may change the trustee there is nothing in the statute that even suggests that a beneficiary could name itself as the new trustee. The statute says that the trustee is to substitute for a court of law and that it is to exercise (See Hogan decision and others) a fiduciary duty toward both the Trustor and the beneficiary.

In most cases, the appearance of Bank of America as a beneficiary is via “merger with BAC” which was created to take the servicing rights from Countrywide (not the ownership of the loan). Yet the debt validation letter causes a response to show that the creditor is Bank of America while the Notice of Default shows as having a REMIC as the creditor, which would make the REMIC the beneficiary. So we have a conflict of creditors that comes from the same source.

Since the REMIC is required by law and contract to be closed out within 90 days with the loans in it, and since we know they didn’t do that, the money from the investors was beyond any reasonable doubt channeled through  conduits controlled by the investment banker and not the account of the REMIC because there was no trust account, bank account or any account through which the investor money was channeled and then sued to fund or buy loans. This leads to the inevitable conclusion that the entire scheme is a smoke screen for what really occurred.

Based upon what we know, the REMIC structure was actually ignored when it came to the movement of money. Based upon what we know, Quicken Loans and others acted as “originators”, which is a word that is not really defined legally but it would imply that it was the sales entity to reel in borrowers for a deal. While Quicken Loans was shown as payee on the note and lender on the note and mortgage (deed of trust), Quicken had neither loaned any money nor secured the loan through any legal nexus between Quicken and the investors. MERS was inserted as a placeholder for title purposes. Quicken was thus inserted as a placeholder for payment purposes — all without ad  equate disclosure of the compensation received by MERS or QUICKEN in the deal (a clear violation of TILA and RESPA).

Immediately after the closing of the loan the borrower was informed that the servicing rights had been transferred to Countrywide, and thereafter BAC emerged as the servicer. BAC was formed as a wholly owned subsidiary of bank of America and then merged with Bank of America for unknown reasons, and thus the servicing of the loan was assumed to be the right of Bank of America. But what was there to service?

If Quicken did not advance the funds for the loan nor did Quicken or any of its “successors” advance money for the purchase of a perfectly performing loan, then who did? The answer comes from irrefutable logic. We know the REMIC was ignored so the money didn’t come from the REMIC. If there was an intermediary who was acting as agent for the REMIC it had to be the Trustee for the REMIC who has no trust account or bank account to show for it. Thus the money came from another source and the money taken from investors may or may not have been used to fund the borrower’s loan in this case or more likely, a larger pool of investor funds was used as the source of funding but was NOT documented with the usual promissory note and mortgage (deed of trust) signed by the borrower.

The legal conclusion I reach is that the mountain of paperwork starting with the “origination” of the loan is worthless paper unsupported by either consideration (funding the loan) and whose recitations of facts are at variance with (1) the actual trail of money and (2) the provisions of the documents upon which Bank of America now relies requiring assignment of the loan in recordable form into the REMIC within 90 days while it was still performing. But they couldn’t assign it into the trust because (1) the trust had no money or account with which to pay for the loan and (2) this would have prevented the investment bank from trading the loan and the loan portfolios as if it were the property of the investment bank.

Thus Bank of America is attempting to appear as the new beneficiary based upon a complete lack of any chain of transactions that would make it so. And they are using the cover of BONY as “trustee” as cover for their false and fraudulent representations knowing full well that neither BONY nor the REMIC ever received a dime from investors, borrowers or anyone else and that instead the flow of money was entirely outside the sham paper transactions upon which BOA now relies.

Having covered up an incomplete unexecuted contract without funding the loan, the securitization participants proceeded to act as though the loan transaction with Quicken was real. If they relied upon the original trustee, the original trustee would have required sufficient title and other information from BOA before taking any action against the Trustor borrower.

Thus Bank of America names Reconstrust as the substitute trustee, that will “play ball” with them because Recontrust is owned and controlled by Bank of America. The challenge, as we have said, should be to the substitution of trustee as not having named an objective third party and instead being the equivalent of the beneficiary naming itself as trustee. BY definition, the new trustee is neither likely nor able to exercise due diligence and act in a responsible manner with a  fiduciary duty to the trustor and beneficiary, if they can determine the  identity of the beneficiary.

Thus any TRO or other action should be directed against the substitution of trustee as being outside the intent of the statute and violative of due process since it provides the beneficiary with unfettered ability to sell property merely on a whim.  In order to demonstrate compliance with the requirements of constitutional dude process the legislature had to show that there was a different procedure in place that would allow for the claims of all stakeholders to be heard. Even if the substitution of trustee was valid, the mere denial of the claims of the beneficiary and accusations of fraud, false assignments, and a closing at which the mortgage lien was not perfected, on a note that did not  name the proper payee nor state the same terms of repayment that the investors received when they “bought” the bogus mortgage bonds.

Bottom Line: The Pile of paperwork is worthless and does not create nor provide evidence of an actual transaction that took place wherein the named payee and lender ever fulfilled its part of the bargain — lending money to the borrower. Nor does it present even the possibility of a perfected mortgage lien. Thus foreclosure is impossible. The trustee was and is under an obligation in contested cases to file an interpleader action where the stakeholders’ claims may be heard on the merits. The primary trustee on the deed of trust may have violated its fiduciary duties by allowing the practice that it, of all entities, would or should have known was both illegal and improper. For both procedural and substantive reasons, the notice of default and notice of sale should be vacated and purged from the county records.

Getting the RIGHT Report: Rebutting the Presumptions That the Original Note and Transfers Had Any Legal Effect

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Editor’s Comment: The biggest problem to knocking the banks on their ass is the feeling deep down inside the homeowner that the loan is valid and so is the mortgage. So people are thinking in terms of buying time rather than winning the case. Lawyers are saying the same things to themselves even as they take your money to represent you which is why I started www.garfieldfirm.com — so we would have lawyers who are NOT thinking that way and to get hundreds of other firms to compete with passion in their hearts that the homeowner is the victim.

The current state of affairs is that in most cases, misguided Judges are forcing investors to take bad loans that do not conform with their agreement (e.g. cutoff required under Internal revenue Code and express PSA terms and conditions) in a process that  does not conform to the process of origination and transfer expressly stated in the PSA (as expressed in the prospectus and Pooling and Servicing Agreement), thus enabling the investment bank to throw the loss onto the investor in a newly fabricated (see Congress decision from June 8 in Alabama Appellate Court) — and the kicker is that investor knows nothing about the transaction or litigation and is presumed to have accepted the assignment of a non-existent loan. The borrower is being forced to pay on a non-existent loan or lose his or her house. And still the borrowers persist on thinking they are getting what they deserve, thus leaving the banks with the money while the investors and homeowners get nothing.

Only 2% of the mortgage loans are contested in any meaningful way and 80% go about it in the wrong way. I mean to change that 2% to 75% of the mortgages being contested, and reduce the number of mistakes such that only a small fraction of mortgage contests are done incorrectly.

Have you heard the term “Master Servicer”. Yes, well they are the ones actually orchestrating events on behalf of the investment bank that put up this illusion that we call securitization. They sold the pension funds on what? The pension funds advanced money to the investment banking firm which was placed into a super fund account from which closing money found its way to the closing table with the so-called borrower.

The real reports and accounting are those that are given to the creditor, not the borrower. The reports to the creditor come from the Master Servicer whereas the reports to the borrower come from the subservicer which doesn’t  have access to to creditor’s accounts so it is in no position to report, account or testify through affidavit or in person what the creditor’s ending balance is as of the day of the declaration of default or the day of the testimony. The subservicer’s proffer of testimony should be subject to voir dire in which they admit that there is a master servicer that keep the accounts for the creditor and the subservicer has no knowledge or access tot hat.

This is followed by an objection to the competency of the witness to testify as to anything other than transactions in which it received money from the borrower and transactions (never included) in which it paid out those moneys to the creditor.

Take great care here not to suddenly find yourself carrying the burden of proof on facts that are exclusively within the hands of the pretender or the agents of the pretender. Your motion should be directed at the incompetency of the witness to tesify as to the conclusion that there was a default and the fact that they declared the default without gaining access to the information from the Master Servicer. Hence the objection also to any documents being proffered to the court as evidence, since they clearly do not and cannot by definition establish the default. 

You don’t want to find youself in the position of having the Judge rule that the proffer of that evidence is sufficient for a prima facie case and that if you wish to rebut it you must come forward with proof of other payments. Since THEY are the party seeking affirmative relief, the burden should ALWAYS be on them to produce all relevant accounting and reports nefore they take the home away from a homeowner.

What the borrower and the Courts are getting are simple subservicer reports which amount to no more than a printout from a computer that may or may not have the right data, the right loan or the right starting figures. It may or may not have charges that are permissible or not permissible against the account. But the real information about the account balance is what the creditor is showing on its books and that information comes from the distribution reports and discovery of the accounting records of the Master Servicer and the Tax statements for the creditor.

But here is the kicker. The investment bank (Master Servicer) is NOT reporting the receipt of proceeds from insurance, credit default swaps, and other credit enhancements — not even to the investor. So they are manufacturing (fabricating) a loss that does not exist, at least in part. This is relevant to everything in a foreclosure including the identity of the creditor who is allowed to declare the default, and the identity of the creditor and the amount due so that real creditor can submit a real bid that is called a credit bid because it is the equivalent of the amount due ON THE ACCOUNT.

The magic sleight of hand trick being played is that the subservicer is giving the court an accounting of transactions with the alleged borrower when in fact the creditor is getting a completely different report, many of which show continuing payment from the subservicer or Master Servicer.

The borrower and borrower’s counsel are unaware and in most cases don’t even know enough to ask for these reports. The creditor is entitled to payment on his account — once and only once.  The fact is that insurance and credit default swaps are right there in the pooling and servicing agreements, and so are credit enhancements like overcollateralization and cross collateralization.

That is money that (a) should be reported and paid to the investor creditors and (b) allocated to the loan accounts’ principal reduction as an additional payment. In many cases the creditor’s balance is zero because the creditor has been paid off in total, settled or traded the bogus mortgage bonds for something else of value — which is to say that the “pool” or “trust” proffered by the attorney fro the pretender lender does not even exist anymore.

All this money came from “players” who knew the Wall Street game and were gambling with pension money, depositors money etc, contrary to law and common sense. In no way was any homeowner even mentioned by name much less offered the opportunity to look at the terms offered to the lender, which were substantially different that the terms offered to the homeowner. The homeowners’ signature on “loan papers” was in actuality the issuance of a security that was traded furiously even if it was procured by fraud in the inducement and fraud in the execution.

The result of this frenzy is that through multiple channels including the Federal discount window and the TARP bailout, together with the maiden-lane disposal of toxic waste loans, the creditors were satisfied leaving the homeowner owing nothing to the creditor that loaned him the money. The insurer and the issuer of the credit default swap expressly waived any right to enforce against the homeowner.

AND the homeowner was the innocent bystander who thought he was borrowing money from one party, received it from another and then issued negotiable paper that was filled with misrepresentations. So the pretenders have nothing but dirty hands and the borrowers are clean.

So there is an obligation out there that the homeowner might owe — but the debt that was created at the time of receipt of the funds was never described in any document. In fact, the debt described in the promissory note and mortgage never arose because there was no loan transaction between the homeowner and the originator. This actual debt arising out of an actual transaction in which money was received by or on behalf of the borrower came from a pipeline outside the transactions described in the origination documents and outside the scope of transactions referred to in allonges, assignments and endorsements all fabricated in order to keep the Judge’s eye on the wrong ball.

The real transaction was NOT subject to, described in or referred to in any deed of trust or mortgage and therefore was not secured. If not secured, no valid foreclosure could occur without some sort of waiver by the homeowner that was clear and unequivocal or some order of the court based upon a judicial proceeding in which the terms of the loan are established by court order as of a date that the order says it is effective. Every document relied upon by the pretender lenders was a lie. It described transactions that never occurred. Thus every foreclosure based upon such documents was also a lie.

Interrogatories, requests for Admission and especially requests to produce (not just the documents but the financial records showing that consideration was paid by the party or to the party stated in the instrument), Motions to set aside, vacate, recuse, remove counsel, sanctions, discovery, and reconsideration are being filed to (a) obtain relief and (b) allow the record to be created for appellate review. Without a good record on appeal, the appellate court is hamstrung to affirm a decision it thinks was wrong.

Distribution reports are your first clue that they left out an accounting that they had and we didn’t and they refused to give up. Notice that WF is the party reporting and disclaims the accuracy. Then who DOES know what went on, where are they and was the loan balance even computed on the day that the loan was declared in default — i.e., what did the CREDITOR (not the subservicer) show as the balance due? Getting the “accounting” from the subservicer is useless. If you had 10 children and you gave them each $100 with the responsibility to account for the money, why would you only take the accounting from one of them?

 

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Information vs. Evidence: Challenge to Affidavit in Support of Summary Judgment

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Editor’s Comment:

I’ll be appearing soon at one of Darrell Blomberg’s Strategy Meetings (which take place every Tuesday evening at Macayo Restaurant in Central Phoenix) to do a session on evidence on June 19. The analysis below is the type of thing I do to support lawyers and litigants when the pretender lender submits a bogus “affidavit” in support of some action, usually a Motion for Summary Judgment. Among other things this is what we’ll be talking about on June 19 and this will be subject of much more discussion on July 26 at my 1/2 day seminar overview for Lawyers.

Analysis of Declaration in Support of Motion for Summary Judgment

  1. “These facts are personally known to me to be true.” How does he know them? — was he there, did he hear, did he see or was he told and he believes them and therefore he means “personally known” as meaning he knows the people who told him the facts. NOTE: if he was a supervisor of a specific department dealing with the past factual issues leading up to the foreclosure and related issues, and if he can prove that the documents or statements were made in the ordinary course of business and at that time they had no fear or thought of being used in litigation, then it MIGHT be an exception to the hearsay rule.
  2. Otherwise anything he was told or shown are excluded because they (OBJECTION:) lack FOUNDATION because he is not a competent witness to establish the authenticity of the document nor the truth of the matters asserted therein.
  3. In this case the entire affidavit should be struck, it should not be considered to support the motion for summary judgment, and the motion for summary judgment MUST be denied unless they have other affidavits timely filed from people who can establish that they have personal knowledge.
  4. He is the President which most likely means that he had nothing to do with any of the facts of this case and only became aware of the the existence of the case when he was called to execute an affidavit. In fact he identifies himself as the President of a company whose function was to be (1) the “foreclosure trustee” and (2) limited signing agent for the beneficiary under “the deed of trust” without identifying the deed of trust.
  5. Unless he was doing the work himself he is admitting that he is relying upon the word and work of others and is subject to a hearsay objection.
  6. The business records exclusion to the hearsay rule must be proven by the proponent of the exemption, not the objector which means he must prove with documents and testimony how the facts upon which he is testifying became known to him in the ordinary course of business which means that he reviews all documents as they come in, which of course he does not. Neither does he perform the work involved. The trap door to avoid here is that even if he were to satisfy all the requirements, which he obviously cannot, his knowledge is ALL limited to events that occurred before the decision was made to foreclose and there fore the receipt of an accounting from the sub-servicer, no account from the master-servicer and no accounting or instruction or authority from the creditor to go ahead with the foreclosure and submit a credit bid in the name of the identified creditor.
  7. Since his company is the “foreclosure trustee” he is admitting that they only have knowledge on their own as to matter that occurred AFTER they received the file or instructions and we ought to know which it was — the file or the instructions.
  8. Since he identifies his company as the foreclosure trustee he is admitting that the sole purpose of the company, even though it was called a trustee, was to foreclose on the property after the substitution of trustee.
  9. They were ordered to foreclose and NOT to perform due diligence or to take any action to protect BOTH the homeowner and the purported creditor, who in this case is a stranger to the transaction as required by statute.
  10. The Trustee is a substitute for the court and if the facts are in dispute the trustee has no power to decide the merits of competing claims (trustee is a not a special master who can conduct hearings and rule on evidence or make recommendations of findings to the court), which means that the his company was duty bound, upon learning of competing claims, to take the matter to court if the parties could not resolve their differences.
  11. Specifically the “trustee” should have filed an interpleader action in which the trustee would have stated that they had no stake in the transaction (something that was untrue since they were a controlled or owned entity by the party pretending to be the creditor) and that that there is a dispute of facts concerning the procedure and substance of the foreclosure and that the court must rule on the competing claims of the parties — after BOTH have submitting pleadings stating their positions and then proving the claims in accordance with the rules of civil procedure, due process and the rules of evidence and the doctrines concerning the burden of proof.
  12. If you sign this response as an affidavit, then the burden shifts to them to show that they are truly a trustee and not just an agent of the pretender creditor.
  13. Since the party seeking affirmative relief is the pretender creditor seeking to take the house using a credit bid instead of cash when they are not the creditor, the pretender creditor would be required first to submit the pleading and exhibits upon which they depend, and second the homeowner would be required to file responsive pleading — motion to dismiss, motion to strike, etc. or answer, affirmative defenses and counterclaim.
  14. He identifies the COMPANY as the limited signing agent for the beneficiary. There is no definition of limited signing agent. A review of statutes and common law reveals that this term has never been used in any legal document or case EXCEPT where it refers to a notary who is identified by name and license number. It does NOT refer to the authority of any company or person to sign on behalf of another party or company without a separate document providing said authority properly executed and binding under the laws of the state in which the grantor is located and the laws in which the document is to be used. LIke MERS was a naked nominee and the “lender” was a “naked nominee” a limited signing agent is a naked nominee meaning, in the parlance of the industry a bankruptcy remote vehicle that will perform acts which might otherwise subject the principals to criminal or civil liability. It is also used to conceal the the identity of the principals.
  15. Which deed of trust? The one allegedly executed by the homeowner which may or may not be the one produced as the original but without scrutiny cannot be authenticated as anything more than a fabricated document utilizing modern technology and a color printer?
  16. “I have personally reviewed the files.” This phrase has been repeatedly thrown out as establishing the business record exception. The fact  is that somehow he saw documents without establishing how they came into his possession and who the parties are (why are THEY not testifying?) and what knowledge THEY had, who prepared the documents in the file, what security was used for the posting of data to the files, and what security was employed in maintaining the security of the files?
  17. This is layers upon layers of hearsay without any valid exemption. Motion to strike the affidavit.
  18. Motion to remove NDEX as trustee,
  19. Motion to void the substitution of trustee and install the original trustee as the trustee on the deed of trust or some other actually independent party.
  20. Objection in title registry office to the recording of the substitution of trustee because they knew that NDEX was not a trustee but rather was the foreclosure agent, as admitted by this affidavit, masquerading as the substituted trustee
  21. Motion for sanctions and cause of action for slander of title for filing false substitution of trustee directed at parties named on the substitution of trustee and the parties who prepared it and the lawyers who presented it knowing that it was a falsified, fabricated and forged fraudulent document.
  22. “My experience as the officer of the company provides the foundation for my knowledge referenced herein.” This is an outright admission and should be the leading the point. He is saying that he has been in the business a long time so looking at the the records of the homeowner in this case is like looking at the records of thousands of others where he made the same decision (but we must emphasize that he undoubtedly did not and specifically does not say that he reviewed other documents). It is an admission that he has NO PERSONAL KNOWLEDGE of the documents, that therefore the affidavit is worthless, and that therefore the affidavit is not the required foundation for admission of the documents because he, the affiant is not a  competent witness (look up competent witness in CA statutes and common law requiring OATH, PERSONAL perception sight,hearing etc., MEMORY and the ABILITY to COMMUNICATE. In fact, he has disqualified his entire firm as a foundation witness since by definition (foreclosure trustee) they received the documents after the decision was made by parties outside the chain of title to foreclose.
  23. “I have personal knowledge of the accuracy of the records.” He already said he doesn’t and that he (a) received the documents when they were to be foreclosed and (b) relied upon his experience when he reviewed the documents, but still fails to state who prepared the data or documents, how they were kept, when they were kept, where they were kept and who was involved. ALl of this could be easily resolved had they chosen the people who actually DID have knowledge, But they didn’t do that. Why? Because either those people refuse to testify to the facts that they want or those people are MIA after being downsized.
  24. At no time does he say that his company acted as the servicer, creditor, or master servicer. He merely says that they received data and documents from unknown undisclosed sources AFTER the decision to foreclose was already made. By definition neither he nor his company would be competent to testify to facts or documents or data that occurred PRIOR to the time that his company was the “foreclosure trustee”
  25. There is no reason to believe that any unauthorized person had access. Nor is there any reason to believe that unauthorized access didn’t occur on a regular basis, just like MERS.
  26. The rest of the paragraphs say what I said above — he knows nothing, saw nothing, heard nothing and was never in any contract with borrower or anyone else as a servicer, never handled any money, and posting, or anything else.
  27. Paragraph 16 is a particularly interesting because to corroborates the argument that they were NOT acting as trustee, they were acting as agent. He says that his company acts ONLY as a limited signatory agent to sign and record the Notice of Default (why doesn’t the creditor do that if this company is not the service nor the conduit or collector of any funds) and that the ONLY other function was to serve as “foreclosure trustee.”
  28.  The last paragraph says it all. They foreclosed because they acted on instructions from the loan servicer without any regard for what the homeowner had to say in objection to the allegations of the loan servicer. (see discussion on interpleader above).

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Information vs. Evidence

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Editor’s Comment:

I’ll be appearing soon at one of Darrell Blomberg’s Strategy Meetings (which take place every Tuesday evening at Macayo Restaurant in Central Phoenix) to do a session on evidence. And in fact, I am thinking about a half-day seminar on evidence, with Darrell as a co-presenter, he may not be a lawyer but he gets it — there is a huge difference between information (data) and evidence. And there is a huge difference between evidence and admissible evidence. And in discovery, you have the right to pursue information in interrogatories, requests for admissions and requests to produce for INFORMATION that might lead to the “discovery” of admissible evidence.

I am adding this overview into the 2d edition Workbook, Treatise and Practice manual. I want to get this lesson out to lawyers and litigants as quickly as possible. And the reason is that these people have forgotten or never knew the difference and they certainly are confused about the procedure. Take a look at the appeals court decisions that slap down the borrower. There is almost always a statement in the opinion that appellant argues XYZ but we don’t see X or Y in the record. In the absence of X and Y being in the record, the appellate court has no authority to find Z and rule in favor of the appellant (borrower).

Every appellate case I have read that ruled against the homeowner falls into this category. Every one of them has a recitation of “facts”, “history” or “background” that is simply untrue but has been made part of the record and which is regarded as “evidence” because it is in the record.

Example: The primary recital in these appeals usually says something like, “The appellant is John Jones. John Jones applied for and received a loan from Mama’s Money Farm on October 16, 2008 in the amount of $869,000. Jones promised to repay the money in monthly installments as set in the promissory note and mortgage (or Deed of Trust) which he signed. Wells Fraudgo is the current holder of that note and seeks enforcement through the power of sale (or in judicial states, through a foreclosure lawsuit) seeking collection of the money due and sale of the home at auction to the extent that the borrower is unable to make the required payments. Jones defaulted on the note by failing to comply with the schedule of payments in the note he executed for the loan he received, to wit: he stopped making the payments that were due under the note on January 1, 2009.”

How did this recital get into the record so that the appellate court could include it in its opinion justifying the affirmation of the trial court’s decision throwing the borrower out of court and even telling the borrower they were “vexatious” etc (Madison v. MERS et al see previous blog post 6-6-2012 entitled “They Will Get You on Procedure Every time”)?  It got there without any evidentiary hearing or without any hearing in which the borrower’s claims and defenses could be given a fair hearing, with full rights of discovery etc.

This could only happen if the litigant was quiet while the lawyer for the pretender lender “proffered” these facts in his opening narrative of each hearing and the homeowner or his attorney failed to object immediately. “Wait your turn” is the polite way of saying let the other guy talk. But if you let the other guy talk and THEN bring up your defenses and claims, your procedural objections, the Judge has already formulated an opinion about the nature of this case. You might buy some time with procedural irregularities but you won’t win the case, force the other side into a settlement, mediation or modification and you certainly won’t get rid of the mortgage that is recorded in the county title registry.

You will be treated like a deadbeat because you have inadvertently confessed to being a dead beat. You have agreed, without realizing you agreed, that everything the lawyer for the pretender lender has said is true, which means that the statements (proffers) of the other lawyer are now evidence in the record, and the rest of the case was you saying “yes but….”

Trial note 101: Never let go of the narrative regardless of who is speaking but always be polite, courteous and respectful in your words even if you make various faces and expressions that the court reporter is missing. Oh yes — if you want a record on appeal you need a court reporter. Your statements about what the Judge said or what happened in court in your appellate brief is useless and will be properly disregarded by any court reviewing the actions in the court below.

So here is what you want the appellate court to see in the record. First a Notice of filing of everything you would offer into evidence that might be rejected by the court. This would include my expert declaration (although I think we found a couple more people with the right credentials to survive as experts located in Maryland) and all exhibits to the reports, opinions and affidavits that you have showing that that you have some reason (not necessarily proof) for denying the debt, denying the default, denying the note, denying the mortgage and denying that the pretender lender is either the lender or anyone who purchased the loan.

Second, a Motion to set discovery schedule together with a SHORT version of your discovery requests.

Third, a transcript showing continual interruptions with proper objections like “Objection your Honor, we demand proof of authority to represent. In cases all over the country this pretender lender and others are represented by lawyers who never speak with the client, don’t get retained by the client and who only know that someone gave them a file that was recently minted from the fabrication factory of fake, forged and fraudulent documents.”

“Objection your honor, counsel is attempting to proffer facts that are not in evidence and that are vehemently denied by the homeowner who is being improperly identified as the borrower.”

“Objection your honor, counsel is attempting to proffer facts or even testify as to matters that are not in the record. If counsel wants to testify then let’s get him sworn in and put in a witness chair where I can cross examine him as to the foundation for his pretender personal knowledge regarding this bogus loan and fraudulent foreclosure.”

Objection: “Counsel is attempting to get into the record that which he could never get into evidence were this an evidentiary hearing. The homeowner vehemently denies that the application on file was filled out by him or that he authorized it. My client denies the signature is valid either because it was forged or it was procured by fraud in the execution in which case he thought he was signing something else while hands covered the true nature of the document.”

“Objection your honor.  Counsel is trying to proffer information into the record that will be perceived as evidence. My client rejects that recital and denies that he ever received a loan from Mama’s Loan Kitchen, denies that the promissory note correctly recited the terms of the loan and therefore denies that the mortgage lien was properly perfected. He further denies that there was any default on any loan and therefore denies that any assignment from Mama to Fraudgo could have been valid. He further denies that the assignments stating “for value received” involved any transaction where any value was received and therefore failed for lack of consideration. He further denies that even if the documents relied upon by the Fraudgo were valid, there would still be no default because the creditor was being paid without interruption according to their very own Pooling and Servicing Agreement and he denies there ever was a meeting of the minds (although the Fraudgo agents from Mama’s Money Kitchen made it appear to the homeowner that the proper disclosures were made, that the lender agreed to these terms) when in fact the lender (the actual source of funds) agreed to an entirely different set of terms for repayment.”

“Your honor it is our position that the promissory note described a transaction that never occurred and that the mortgage was an encumbrance based upon the false representations of the note. This is like one lying and the other swearing to it. If they are not afraid of proving their allegations then by all means we don’t want to deprive the pretender lender of an opportunity to be heard in court. But the homeowner is entitled to the same consideration under the requirements of due process. The homeowner denies that he failed to make any payment that was due and he denies that the obligation to the real lenders (creditors) in this case is currently in default.”

Evidence is whatever the Court lets in as evidence in which case the court says it is letting the information in as evidence to prove that ABC happened. Or, as is usually the case in these foreclosure cases, evidence comes from silence of the lambs.

So if you want to box in the trial judge and the appellate court let there be a record that shows you followed the rules, there were genuine issues of material fact and the trial court still would not allow the homeowner to proceed. That’s enough to eventually get a ruling that allows discovery to proceed.   And Discovery is the magic key to the kingdom of settlement — but probably not until after 5-6 motions to compel answers or better answers to our discovery requests.

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Az Statute on Mortgage Fraud Not Enforced (except against homeowners)

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Editor’s Comment:

With a statute like this on the books in Arizona and elsewhere, it is difficult to see why the Chief Law Enforcement of each state, the Attorney General, has not brought claims and prosecutions against all those entities and people up and down the fraudulent securitization chain that brought us the mortgage meltdown, foreclosures of more than 5 million people, suicides, evictions and claims of profits based upon the fact that the free house went to the pretender lender.

Practically every act described in this statute was committed by the investment banks and all their affiliates and partners from the seller of the bogus mortgage bond (sold forward, which means that the loans did not yet exist) all the way down to the people at the closing table with the homeowner borrower.

I’d like to see a script from attorneys who confront the free house concept head on. The San Francisco study and other studies clearly show that many if not most foreclosures resulted in a “sale” of property without any cash offered by the buyer who submitted a credit bid when they had not established themselves as creditors nor had they established the amount due. And we now know that they failed to establish themselves as creditors because they neither loaned the money nor purchased the loan in any transaction in which they parted with money. So the consideration for the sale was not present or if you want to put it in legalese that would effect those states that allow review of the adequacy of consideration at the auction.

I’d like to see a lawyer go to court and say “Judge, you already know it would be wrong for my client to get a free house. I am here to agree with you and state further that whether you rule for the borrower or this pretender lender here, you are going to give a free house to somebody.

“Because this party initiated a foreclosure proceeding without being the creditor, without spending a dime on the loan or purchase of the loan, and without any right to represent the multitude of people and entities that should be paid on this loan. This pretender, this stranger to this transaction stands in the way of a mediated settlement or HAMP modification in which the borrower is more than happy to do a traditional workout based upon the economic realities.

“And they they maintain themselves as obstacles to mediation or modification because they have too much to hide about the origination of this loan.

“All I seek is that you recognize that we deny the loan on which this party is pursuing its claims, we deny the default and we deny the balance. That puts the matter at issue in which there are relevant and material facts that are in dispute.

“I say to you that as a Judge you are here to call balls and strikes and that your ruling can only be that with issues in dispute, the case must proceed.”

“The pretender should be required to state its claim with a complaint, attach the relevant documents and the homeowner should be able to respond to the complaint and confront the witnesses and documents being used. And that means the pretender here must be subject to the requirements of the rules of civil procedure that include discovery.

“Experience shows that there have been no trials on the evidence in all the foreclosures ever brought during this period and that the moment a judge rules on discovery in favor of the borrower, the pretender offers settlement. Why do you think that is?”

“If they had a good reason to foreclose and they had the authority to allege the required the elements of foreclosure and they had the proof to back it up they would and should be more than willing to put a stop to all these motions and petitions from borrowers. But they don’t allow any case to go to trial. They are winning on procedure because of the assumption that the legitimate debt is unpaid and that the borrower owes it to the party making the claim even if there never was transaction with the pretender in which the borrower was a party, directly or indirectly.”

“Neither the non-judicial powers of sale statutes nor the rules of civil procedure based upon constitutional requirements of due process can be used to thwart a claim that has merit or raises issues that have merit. You should not allow the statute and rules to be applied in a manner in which a stranger to the transaction who could not even plead a case in good faith would win a foreclosed house at auction without court review and a hearing on the merits.”

Residential mortgage fraud; classification; definitions in Arizona

Section 1. Title 13, chapter 23, Arizona Revised Statutes, is amended by adding section 13-2320, to read:
13-2320.

A. A PERSON COMMITS RESIDENTIAL MORTGAGE FRAUD IF, WITH THE INTENT TO DEFRAUD, THE PERSON DOES ANY OF THE FOLLOWING:

  1. KNOWINGLY MAKES ANY DELIBERATE MISSTATEMENT, MISREPRESENTATION OR MATERIAL OMISSION DURING THE MORTGAGE LENDING PROCESS THAT IS RELIED ON BY A MORTGAGE LENDER, BORROWER OR OTHER PARTY TO THE MORTGAGE LENDING PROCESS.
  2. KNOWINGLY USES OR FACILITATES THE USE OF ANY DELIBERATE MISSTATEMENT, MISREPRESENTATION OR MATERIAL OMISSION DURING THE MORTGAGE LENDING PROCESS THAT IS RELIED ON BY A MORTGAGE LENDER, BORROWER OR OTHER PARTY TO THE MORTGAGE LENDING PROCESS.
  3. RECEIVES ANY PROCEEDS OR OTHER MONIES IN CONNECTION WITH A RESIDENTIAL MORTGAGE LOAN THAT THE PERSON KNOWS RESULTED FROM A VIOLATION OF PARAGRAPH 1 OR 2 OF THIS SUBSECTION.
  4. FILES OR CAUSES TO BE FILED WITH THE OFFICE OF THE COUNTY RECORDER OF ANY COUNTY OF THIS STATE ANY RESIDENTIAL MORTGAGE LOAN DOCUMENT THAT THE PERSON KNOWS TO CONTAIN A DELIBERATE MISSTATEMENT, MISREPRESENTATION OR MATERIAL OMISSION.

Those convicted of one count of mortgage fraud face punishment in accordance with a Class 4 felony.  Anyone convicted of engaging in a pattern of mortgage fraud could be convicted of a Class 2 felony


MERS $100M MICHIGAN CLASS ACTION COMPLAINT GOOD MODEL OF PLEADING

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WILLFUL CIRCUMVENTION OF JUDICIAL PROCESS GIVES RISE TO SUIT FOR DAMAGES

110509-MERS-Class-Action-Complaint

This pleading has several elements worthy of note and seem well-pleaded. Some of the “juicier” ones are toward the end. The key concept is that under recent decisions, any foreclosure and/or dispossession by MERS is VOID AB INITIO (FROM THE START, WHICH MEANS TREAT IT AS THOUGH IT NEVER HAPPENED].

Michigan had been a tough state, which is why the writers of this complaint went  to the unusual step of quoting a recent case. The issue at hand that lawyers are bringing to the attention of the courts is that there are, at a minimum, some 5 million transactions that took place relating to foreclosures that were nothing more than wild deeds.

The mistake made by the banks is that they are reassuming “what’s done is done” will take care of the title problem. Title problem don’t go away by magic. The ONLY solution to the title problem in those transactions (probably closer to 15-20 million when you consider resales and refi’s) is by getting the original homeowner’s signature ratifying the foreclosure.

Because under law, as it should be, the title registry at the county recorder’s coffice gives notice to the world the identity of the owner of the property. Were it not for political and economic pressure, no title examiner would even consider the title to be in any name other than the homeowner despite the foreclosure. Not even Wall Street can make this go away. If they get their way, Wall Street’s pernicious effect on the marketplace will become enlarged geometrically because it would mean that nobody would know if they were actually getting title on property they were buying and nobody would know if they were getting a lien on property they were financing.

Michigan was a difficult state to plead a case against MERS until April of this year. This class action, in which the damages probably are vastly understated, goes the extra step of quoting decisional law to justify revisiting the MERS question, as every state MUST do if they want to solve the puzzle of corrupted title.

“On April 21, 2011, the State of Michigan, Court of Appeals in the consolidated case of Residential Funding Co., LLC v. Gerald Saurman, (Residential Funding Co, LLC v. Saurman, 290248, 291443 (MICA)), issued a ruling stating in pertinent part that in cases where MERS did not own the underlying indebtedness, did not own an interest in the indebtedness secured by the mortgage, or did not service the mortgage, MERS was therefore unable to comply with the statutory requirements of MCL 600.3201(1)(d), and subsequently had no right to foreclose by advertisement.

“The Court of Appeals continued, and ruled that in those such cases where MERS did foreclose by advertisement upon the foregoing conditions rendered those foreclosure proceedings void ab initio.”

The causes of action are the following:

  1. INJUNCTIVE RELIEF AND DECLARATORY ORDER: Plaintiffs and Class Members request an appropriate order of this Court declaring the foreclosure actions of Defendant MERS as described herein void ab initio. [ab initio means from the start, which is to say it should be treated as though the foreclosures never happened. That means the homeowner who was “foreclosed” is still the woner and rightful possessor of the property, a result which I believe to be absolutely inevitable and necessary to preserve the sancity of the rule of law].
  2. FRAUD AND MISREPRESENTATION: Defendant MERS did misrepresent facts, or purposely fail to disclose material facts, in prosecution of non-judicial foreclosure.
  3. CONVERSION: Defendant MERS and others engaged in a continual course of conduct, pursuant to which they wrongfully dispossessed and/or disposed of the real property of the Plaintiffs and Class Members. Defendant MERS and others converted these properties into cash which they received through the sale of the subject real properties or by their acquiring title thereto.
  4. TRESPASS: MERS trespass and invasion of Plaintiffs and Class Members rights and property was willful, wanton, reckless and malicious.
  5. THEFT: MERS through their acts and omissions did commit theft upon the Plaintiffs and Class Members, whereby they fraudulently took the property of Plaintiffs and Class Members, without their consent, intending to deprive them of the value of their property, and to appropriate said property to their own use or that of a MERS member.
  6. WRONGFUL FORECLOSURE: Defendant MERS through their acts and omissions did wrongfully and illegally foreclose upon Plaintiffs and Class Members through the means of a non-judicial foreclosure.
  7. VIOLATION OF MICHIGAN CONSUMER PROTECTION ACT: Through their acts and omissions in the commission of their illegal foreclosures, Defendant MERS did violate the Michigan Consumers Protection Act MCL 445.901 et seq.
  8. VIOLATION OF THE FAIR DEBT COLLECTIONS PRACTICES ACT: (Federal) The acts and omissions of Defendant MERS involved transactions which were primarily for personal, family or household purposes. In the collection of a debt Defendant MERS did utilize means, methods and conduct which served to harass, oppress and abuse Plaintiffs and Class Members.
    97. In the collection of a debt Defendant MERS did utilize means, methods and conduct which were false, deceptive and/or misleading.
    98. In the collection of a debt Defendant MERS did threaten and utilize unlawful and prohibited actions.
    99. In the collection of a debt Defendant MERS did utilize unfair and/or unconscionable collections means.
    100.    In the collection of a debt Defendant MERS did fail to provide required written notices to Plaintiffs and Class Member.

 [PIERCING OF THE CORPORATE VEIL MIGHT BE VERY EASY IN THE CASE OF MERS, THUS ALLOWING A JUDGMENT AGAINST MERS AND COLLECTION AGAINST THE OWNER-MEMBERS.]

  1. ACTION TO SET ASIDE FORECLOSURES AND QUIET TITLE
    DEMAND FOR PUNITIVE DAMAGES:  taking PROPERTY pursuant to foreclosures by advertisement against Plaintiffs and Class Members was unauthorized, without right, illegal and in violation of MCL 600.3201, et seq. Such taking by MERS, or any other party, places a cloud upon the title ownership to the affected real property.
  2. ACTION FOR POSSESSION/REPOSSESSION: Any title relative to the affected real property to the mortgagor Plaintiffs and Class Members obtained by MERS, or any other party, pursuant to attendant sheriff sale is void ab initio per the ruling of the Michigan Court of Appeals dated April 21, 2011.
  3. INTERFERENCE WITH POSSESSORY INTEREST: Defendant MERS did illegally and without authorization, substantially interfere and negatively affect Plaintiffs and Class Members rights and interest in the affected real property. Pursuant to common law and MCL 600.2918, …. illegal acts and omissions, Plaintiffs and Class Members are entitled to damages in an amount in excess of One Hundred Million Dollars ($100,000,000.00) and possession/repossession of their affected real property.
  4. UNJUST ENRICHMENT: Due to Defendant MERS acts of wrongful foreclosure, Defendant MERS has been unjustly enriched through wrongful possession and the receipt of the proceeds of sale of Plaintiffs and Class Members affected real property. Due to Defendant MERS acts of wrongful foreclosure, Defendant MERS has been unjustly enriched by their willful circumvention of the requisite judicial foreclosure process.

Unconstitutionality of a Power of Sale

THIS IS FROM REUBEN NIEVES. IT IS A GOOD PIECE OF WORK AND HE WANTS COMMENTS AND CONTRIBUTIONS. HE HAS A FINELY MADE POINT HERE AND IT IS SELF-EXPLANATORY.

I have always said that the power of sale raises constitutional questions — namely, that no  person should be deprived of life, liberty or property without due process of law. The fiction is that you can waive that right by contract. That premise is questioned here. But in addition, this piece raises the stronger point that even if one were to conclude that it is possible to contract away your most basic constitutional rights (like agreeing to be a slave), the manner in which it is being applied in the era of securitized loans is clearly unconstitutional.

There is also the fiction that use of the power of sale is not state action and THAT evades the issue of constitutionality. The answer to that argument is that if there is no state action then there is no sale, there is no new owner, and there is no new deed. The proponents speciously argue that you can take one part of the foreclosure process out of the courts and call that private while the rest is state action rubber stamping a foreclosure sale without due process under a set of presumptions that in most cases no longer apply.

The arguments for judicial economy and waste of money that lay at the foundation of the statutes permitting non-judicial sale simply are not present anymore. The obvious identities of the proper parties, accounting for the entire transaction, and the inevitability of the foreclosure by default without any real meritorious defenses that existed when these statutes were passed, do not pass even the smell test in today’s environment.

But the court need not reach the constitutional question. It is also a matter of breach of contract, jurisdictional standing and procedural due process. Once the borrower OBJECTS to the sale on the grounds that he denies the default, or denies the default as to the pretender lender, or denies the standing of the would-be forecloser as a creditor at all, the question should be resolved in the courts with all the usual trappings of proper pleading by the party seeking affirmative relief (the one seeking foreclosure). The requirements of good faith pleading and joining issues to be tried according to the normal rules of evidence should apply.

As it stands now, the power of sale is being used as an end-run around the requirements that the borrower even owe anything, much less to the party seeking foreclosure.

PLEASE KEEP US IN THE LOOP OF THIS DISCUSSION.

REUBEN NIEVES: As an addendum to my prior comment on the unconstitutionality of a power of sale provision in a mortgage contract with respect to federally chartered bank corporations created for public and national purposes I am submitting my research to this site and invite any opposition or legal commentator to dispel or affirm my research

The issue is one of First Impression because the Supreme Court of the United States has never decided whether a federally chartered bank corporation created under an act of Congress to provide an important public and national purpose could use a non- judicial procedure that allows the taking of a property interest without a hearing thus violating the 5th Amendment. The Court, however, has made numerous decisions which would have been relevant in determining whether non-judicial procedures were applicable given the nature of these corporations. Though several appellate courts have had occasion to determine the constitutionality of non-judicial procedures in the form of a trustee sale provision, none have vetted the corporations seeking this remedy. The issue goes to the core of the nature of federally chartered corporations created under special law for public and national purposes. This issue deals with the right of these corporations to put such a provision in a contract and rests on whether the act of foreclosure is a governmental act or a proprietary act. It is an issue which, in the context of the current economic crisis and massive foreclosures, sweeps the breadth of this nation like a plague destroying families and communities as it spreads, swelling the homeless population in its wake. This issue involves a constitutional right affecting the lives of millions of families across this nation.
It would allow homeowner a level playing field with the banks to negotiate loan modification. If the bank had to take them to court, the homeowner could raise affirmative defenses and a right to a jury trial. I ask that you look at the arguments proffered in this letter to make your decision and that you act quickly.
ARGUMENT
I. BANK’S USE OF NON-JUDICIAL FORECLOSURES
IS NOT WITHIN THE SCOPE OF A LAW OF CONGRESS
To resolve the issue of the constitutionality of a trustee sale by National banks and federal savings associations , we must first identify the nature of the corporations . NATIONAL BANKS AND FEDERAL SAVINGS ASSOCIATIONS are federally chartered corporations created under acts of Congress (The Homeowner Loan Act (HOLA) and the National Bank Act(NBA) for a public and national purposes. In Conference of Federal Savings and Loan Associations et al v. Alan L. Stein et al. 604 F.2d 1256 (9th Circuit) (1979) the court related the history of HOLA and the reason for its’ creation:
The Home Owners’ Loan Act of 1933, 12 U.S.C. §§ 1461 Et seq. (HOLA), was the result of congressional dissatisfaction with state law and practice in the financing of home construction.
….. The Federal Home Loan Bank Board (the Bank Board) was created with extremely broad powers to promulgate rules and regulations. 12 U.S.C. § 1464(a) provides in part:
…[T]he Board is authorized, under such rules and regulations as it may prescribe, to provide for the organization, incorporation, examination, operation, and regulation of associations to be known as ‘Federal Savings and Loan Associations’ * * * and to issue charters therefore, giving primary consideration to the best practices of local mutual thrift and home-financing institutions in the United States.” [bold added]

A. BANKS CAN BE A GOVERNMENTAL
ACTOR IN VIOLATION OF THE 5TH AMENDMENT
National banks and federal savings banks are agencies of the United States created to promote its fiscal policies. National banks and federal savings banks benefit by not paying state taxes, avoiding state predatory lending laws through the concept of Federal preemption, allowing them to export high interest for the credit card thus avoiding the state usury laws. Federal Savings banks also have the same benefits and are no less instrumentalities of the federal government than national banks whose purpose is to promote its fiscal policies. Alexander Hamilton argued that the Central Bank was necessary to the nation in cases of emergency such as the financing of war… Hamilton believed that there was a symbiotic relationship between agriculture, commerce, and manufacturing, and that progress in each of these sectors was necessary for America’s economic development. (In the Report of Credit II, Dec. 1790)

B. A PARTY MUST STATE FACTS
SUFFICIENT TO STATE A EITHER A
5th or 14th AMENDMENT DUE PROCESS CLAIM
Non-judicial foreclosures have been the subject of a flurry of cases including the most current Apao v. San Diego Home Loans, Inc.,324 F3d 1091, Ninth Circuit (2002) a California corporation. Margaret Apao lost her home to a foreclosure and sale under Hawaii’s non-judicial foreclosure statute. The federal district court dismissed the complaint for failure to state a claim and that the sale was a purely private remedy. Apao appealed to the Ninth Circuit. The Ninth Circuit affirmed the district court’s decision on the grounds that previous decisions of appellate courts upheld the constitutionality of similar non-judicial procedures. The Ninth Circuit held in Apao that the case of Charmicor v. Deaner, 572 F2nd 694 “was controlling” although the consumers in Apao attempted to distinguish it. In Charmicor, the consumers claimed that the statute offended due process by failing to provide a pre-sale hearing and that it offends civil rights statutes and the equal protection clause by discriminating against appellant’s shareholders, who are black. The court in Charmicor noted that the “complaint failed to state a claim for relief under the civil rights statutes, because the record was utterly barren of any facts or allegations that could support a claim under the equal protection clause”, the Ninth Circuit affirmed. The court in these cases made no reference to several Supreme Court decisions which examined the nature of corporations created under an act of Congress and were content with the notion that Congress could adopt the local customs on debtor creditor relations without further analysis. The fact of the matter is that the issue should be determined under federal law.

C. NATIONAL BANKS ARE PUBLIC
NOT PRIVATE CORPORATIONS

In Easton v. Iowa,188 U.S.220 (1903) the Court said of national banks:
. . .[W]e cannot concur in the suggestions that national banks, in respect to the powers conferred upon them, are to be viewed as solely organized and operated for private gain.
The Court in Easton went on to say at 188 U.S. 220 at p. 230 that the principles enunciated in McCullough v Maryland, 17 U.S. 316(1819), and in Osborn v Bank of United States, 22 U.S.738 (1824), though expressed in respect to banks incorporated directly by acts of Congress, were still applicable to the later and present system of national banks. The Court cited with approval the holding of the latter as expressed by Chief Justice Marshall:
The bank is not considered as a private corporation whose principal object is individual trade and individual profit, but as a public corporation created for public and national purposes. That the mere business of banking is, in its own nature, a private business, and may be carried on by individuals or companies having no political connection with the government, is admitted, but the bank is not such an individual or company. It was not created for its own sake or for private purposes. It has never been supposed that Congress could create such a corporation.[bold and italics added]

The court in Easton goes on to say:

‘National banks are instrumentalities of the Federal government, created for a public purpose, and as such necessarily subject to the paramount authority of the United States. It follows that an attempt by a state to define their duties or control the conduct of their affairs is absolutely void, wherever such attempted exercise of authority expressly conflicts with the laws of the United States, and either frustrates the purpose of the national legislation or impairs the efficiency of these agencies of the Federal government to discharge the duties for the performance of which they were enacted.

Our conclusions, upon principle and authority, are that Congress, having power to create a system of national banks, is the judge as to the extent of the powers which should be conferred upon such banks, and has the sole power to regulate and control the exercise of their operations…[bold, underline and italics added]
In view of the holding in Osborn which Justice Marshall held that banks were public and not private bank corporations, which was approved and held applicable to later national bank corporations not directly created by Congress by the Supreme Court in Easton, why should we now consider national banks private corporations? And why not consider them “agencies of the Federal government” as referred to in Easton? And why should the same reasoning not apply to FEDERAL SAVINGS ASSOCIATIONS .
In Osborn at p. 22 U.S. 823 the court said of these national banks:
The charter of incorporation not only creates it, but gives it Every faculty which it possesses. The power to acquire rights of any description, to transact business of any description, to sue on those contracts, is given and measured by its charter, and that charter is a law of the United States. Take the case of a contract, which is put as the strongest against the Bank. . . [H]as this being a right to make this particular contract? .. . .[T]his question, too, depends entirely on a law of the United States [underline added]

The court in Osborn at p. 823, made it clear that federally chartered corporations created under acts of Congress could “. . .acquire no right, make no contract, bring no suit, which is not authorized by a law of the United States. It is not only itself the mere creature of law, but all its actions and all its rights are dependent on the same law”.[underline and bold added]
In an excerpt from Shoshone Mining Co. v. Rutter, 177 U.S. 505,509,510 ,citing Osborn, the court said:
A corporation has no powers and can incur no obligations except as authorized or provided for in its charter. Its power to do any act which it assumes to do, and its liability to any obligation which is sought to be cast upon it, depend upon its charter, and when such charter is given by one of the laws of the United States there is the primary question of the extent and meaning of that law;[underline & bold added]

In Runyan v. Lessee of Coster, 39 U .S. 122 , p. 129 (1840) the court Said:

…[T]hat a corporation “possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence. That corporations created by statute must depend for their powers and the mode of exercising them, upon the true construction of the statute.
… The corporation must show that the law of its creation gave it authority to make such contracts.” . [underline and bold added]
Did the law of its creation (HOME OWNER LOAN ACT or NATIONAL BANK ACT ) give National banks and federal savings associations the right to make this contract with this provision?
Can it then be said that the provision in a mortgage contract requiring a mortgagor to transfer his rights to a trustee with a power of sale for the non-payment of a mortgage is authorized by the federal charter? Is this not the right to foreclose on an owner without resort to judicial process and a hearing? Is this not the right to deprive a person of procedural due process? We must then ask the question: Is the act of the national or federal savings association in foreclosing non-judicially within the scope of a law of Congress? Can the government by way of a federal charter authorize a right to a bank to do what it is forbidden to do itself? It is fundamentally clear that the government can impart no greater power through a charter than they possess themselves. The power to deny a person of procedural due process is denied to the government under the 5th Amendment and is equally denied to the banks. As John Locke said nearly 300 years ago: “…Nobody can transfer to another more power than he has in himself “ [John Locke, TWO TREATISE OF GOVERNMENT, BOOK II] The courts in Osborn and Shoshone and Runyan show us that the conduct of banks in pursuit of non-judicial foreclosures must be done under the authority of the federal charter which is a “law of the United States” and therefore “under color of federal law”. Thus National banks and federal savings associations Mortgage fsb could be considered a “governmental actor” like the assumption made by the First Circuit in Gerena v Puerto Rico Legal Services, Inc., 697 F. 2d 447(1st Cir. 1983)

D. CONGRESS CANNOT AUTHORIZE OR
DELEGATE A RIGHT OR POWER THAT
IT CANNOT EXERCISE ITSELF
If all the acts, rights and obligations of corporations with federal charters must be done under the authority of the federal charter and a law of the United States, including rights created in contract, how can Congress authorize a provision that it could not exercise itself? The provision can only be validated by what it represents and the constitutional implications it may give rise to. In United States v Grimaud, 220 U.S. 506 (1911) the Supreme Court decided that very issue and the court citing Justice Marshall at 220 US pg. 517 said.

It will not be contended that Congress can delegate to the courts, or to any other tribunals, powers which are strictly and exclusively legislative. But Congress may certainly delegate to others powers which the legislature may rightfully exercise itself. [underline bold & italics added]

E. A POWER OF SALE PROVISION UPON DEFAULT IS
ULTRA VIRES AND NULL AND VOID
As the Supreme Court said in Concord First Nat’l Bank v Hawkins 174 U.S. 364 p. 371:
The doctrine of ultra vires, by which a contract made by a corporation beyond the scope of corporate powers is unlawful and void and will not support an action, rests as the Court has often recognized and affirmed, upon three distinct grounds: the obligation of anyone contracting with a corporation to take notice of the legal limits of its powers, the interest of the stockholders not to be subject risks which they have never undertaken, and above all, the interest of the public that the corporation shall not transcend the powers conferred upon it by law.[bold added]
The powers of a corporation are express and incidental. Runyan at p. 129 supra. If Congress cannot confer the power to foreclose non judicially to National banks and federal savings associations then the provision is ultra vires and void.

II. THE LENDING FUNCTIONS OF
OF NATIONAL BANKS AND FEDERAL SAVINGS ASSOCIATIONS ARE GOVERNMENTAL
In Federal Land Bank v. Bismarck Co. of St. Paul, 314
U. S. 95 (1941) the court was faced with determining
whether the lending functions were proprietary or governmental. The court said:
The argument that the lending functions of the federal land banks are proprietary, rather than governmental, misconceives the nature of the federal government with respect to every function which it performs. The federal government is one of delegated powers, and from that it necessarily follows that any constitutional exercise of its delegated powers is governmental. Graves v. New York ex rel. O’Keefe, 306 U. S. 466, 306 U. S. 477. It also follows that, when Congress constitutionally creates a corporation through which the federal government lawfully acts, the activities of such corporation are governmental. (cites)
As part of their general lending functions, the land banks are authorized to foreclose their mortgages and to purchase the real estate at the resulting sale. They are “instrumentalities of the federal government, engaged in the performance of an important governmental function.”(cites)
In Federal Land Bank v. Board of Kiowa County., 368 U.S. 146 the court said :

“the Federal Government performs no ‘proprietary’ functions. If the enabling Act is constitutional and if the instrumentality’s activity is within the authority granted by the Act, a governmental function is being performed.”
It is well settled that the enabling Act, Home Owner Loan Act (HOLA) is constitutional . Pittman v. Home Owners’ Loan Corp., 308 U. S. 21. Like federal land banks, the lending functions including foreclosures of federal savings assn’s/federal savings banks, such as National banks and federal savings associations Mortgage fsb, a federal instrumentality , should be treated as governmental just as the court in Bismarck held. Federal Land Bank v. Bismarck Co. of St. Paul, 314 U. S. 95, p. 102 (1941)
A. GOVERNMENT CANNOT EVADE ITS MOST SOLEMN CONSTITUTIONAL OBLIGATIONS BY SIMPLY RESORTING TO THE CORPORATE FORM
Can Congress divest itself of its identity with a corporation created and participated in for a public purpose sufficiently to allow the corporation to use a procedure that does not allow a hearing? That question was asked and answered in Lebron v National Railroad Passenger Corporation. 513 U.S. pgs 374, 375 when the court said:
c) There is a long history of corporations created and participated in by the United States for the achievement of governmental objectives. Like some other Government corporations, Amtrak’s authorizing statute provides that it “will not be an agency or establishment of the United States Government,” [cite]
(d) Although § 541 is assuredly dispositive of Amtrak’s governmental status for purposes of matters within Congress’s control–e. g., whether it is subject to statutes like the Administrative Procedure Act-and can even suffice to deprive it of all those inherent governmental powers and immunities that Congress has the power to eliminate-e. g., sovereign immunity from suit-it is not for Congress to make the final determination of Amtrak’s status as a Government entity for purposes of determining the constitutional rights of citizens affected by its actions. The Constitution constrains governmental action by whatever instruments or in whatever modes that action may be taken…
(e) Amtrak is an agency or instrumentality of the United States for the purpose of individual rights guaranteed against the Government by the Constitution. This conclusion accords with the public, judicial, and congressional understanding over the years that Government-created and -controlled corporations are part of the Government itself.(cites) ; A contrary holding would allow government to evade its most solemn constitutional obligations by simply resorting to the corporate form, Bank of United States v. Planters’ Bank of Georgia, 9 Wheat. 904, 907, 908 (other cites).
Like Amtrak, national banks and federal savings associations are federal instrumentalities and members in banking systems created for a public purposes and controlled by the director of The Office of Thrift Supervision and the director of the Comptroller of the currency. Like Amtrak it is not for Congress to make the final determination of the status of these corporations as government entities for purposes of determining the constitutional rights of citizens affected by its actions. Consumers are citizens whose constitutional rights are affected when non- judicial foreclosures are exercised by federally chartered corporations like National banks and federal savings associations . To paraphrase an old saying, “that with great power comes great obligations.” This is no less true when Congress confers enumerated and incidental powers on a corporation it creates for an important governmental function. It must follow that with the immunities from taxation and state laws that frustrate the activities of corporations for which an act of Congress was enacted, the constitutional obligations of the government must also attach. For as Justice Scalia said in Lebron, at p. 399:
But it does not contradict those statements to hold that a corporation is an agency of the Government for purposes of the constitutional obligations of Government rather than the “privileges of the government,” when the State has specifically created that corporation for the furtherance of governmental objectives, and not merely holds some shares but controls the operation of the corporation through its appointees.
In this case control of the operations is exercised by the director of the Office of Thrift Supervision and the director of the Office of the Comptroller of Currency independent federal regulatory agencies vested with plenary authority to administer the Home Owners’ Loan Act of 1933 (HOLA) and the National Bank Act, The Director of the OTS is appointed by the President, by and with the advice and consent of the senate. (12 USC §1462c) The Director of the Comptroller of the Currency is appointed by the President, by and with the advice and consent of the senate.(12 USC § 2) The issue of the government’s control over the operations of federal savings associations is clarified by the court in Fidelity Fed. S. & L. v. De la Cuesta, 458 U.S. 141 (1982) at p. 161 when the court said:
The broad language of § 5(a) expresses no limits on the Board’s authority to regulate the lending practices of federal savings and loans. As one court put it, “[I]t would have been difficult for Congress to give the Bank Board a broader mandate.” [cites] And Congress’ explicit delegation of jurisdiction over the “operation” of these institutions must empower the Board to issue regulations governing mortgage loan instruments.

In National Banks the governments control was made clear in Easton when the court said:
Our conclusions, upon principle and authority, are that Congress, having power to create a system of national banks, is the judge as to the extent of the powers which should be conferred upon such banks, and has the sole power to regulate and control the exercise of their operations…[bold, underline and italics added]

B. THE POWER TO FORECLOSE IS AN
INCIDENTAL POWER OF THE NATIONAL BANKS
AS WELL AS FEDERAL SAVINGS BANKS
The history of national banking legislation has been “one of interpreting grants of both enumerated and incidental `powers’ to national banks” as well as federal savings associations[which include savings banks]. Bank of America et al v City of San Francisco et al 309 F.3d 551 (Ninth Circuit) (2002) Consider this hypothetical. The California legislature would makes a law that as a matter of public policy foreclosures of any kind will not be permitted on a homeowner’s primary residence. The OTS is charged with the supervision of the Home Owner Loan Act like the Office of the Controller of Currency is ”charged with supervision of the National Bank Act” NationsBank of N.C.N.A. v Variable Annuity Life Ins. Co. 513 U.S. 252, 256(1995) The OTS and the OCC would promulgate rules allowing the banks to foreclose on the homes that have defaulted and in concert with the banks claim that the power to foreclose was an incidental power of national banks and also federal savings banks and therefore would preempt state law. The State would challenge that decision in court. Both Acts are silent on the necessity of banks foreclosures to secure the residential property in the event of default. The Acts, however, do bestow upon banks the authority to exercise by its board of directors, or duly authorized officers or agents, subject to law, all such incidental powers as necessary to carry on the business of banking. . .”12 U.S.C.§24(Seventh). The OTS authority to preempt state laws affecting its lending practices lies in 12 cfr §560.2. Because these sections are not explicit on the limits of “incidental powers”, an inquiry as to whether the NBA or HOLA would support the use of either one or both methods of foreclosures (Judicial foreclosures and/or non-judicial foreclosure) would be necessary. The holding in United States v. Grimaud, 220 U.S. 506(1911) would apply. The NBA or HOLA could authorize the former but not the latter because the government could not exercise the power to foreclose non-judicially itself.
C. NATIONAL BANKS AND FEDERAL SAVINGS ASSOCIATIONS MORTGAGE FSB CAN BE
CONSIDERED “AGENCIES” OF THE GOVERNMENT
In Acron Investments, Inc. et al v Federal Savings and Loan Insurance Corporation , 363 F.2nd 236 (9th Circuit, 1966) the court was given the task of determining if the Federal Savings & Loan Insurance Corporation (FSLIC) was an “agency”. After reviewing all the relevant code sections the court concluded that the corporation was an “agency” under 28 USC 451 because the control of the government over the corporation was more than custodial or incidental. In Acron at paragraphs 27 & 28 the court said:
…[T]he Reviser’s Note under 18 U.S.C. § 6 states that “The phrase `corporation in which the United States has a proprietary interest’ is intended to include those governmental corporations in which stock is not actually issued, as well as those in which stock is owned by the United States. It excludes those corporations in which the interest of the Government is custodial or incidental.” (Emphasis added.) 28 …Since the control which Congress and the United States exercise over the Corporation is clearly more than “custodial or incidental,” it would appear that the Corporation fits within the definition of “agency” of 28 U.S.C. § 451 and thus within the terms of 28 U.S.C. § 1345. [bold added]
Under the Ninth Circuit’s own test national banks and federal savings associations are “agencies”. Any doubt as to government’s control over the “operations” as being “custodial or incidental” is dispelled in Fidelity Fed. S. & L. v. De la Cuesta, 458 U.S. 141 (1982) at p. 161 when the court said:
The broad language of § 5(a) expresses no limits on the Board’s authority to regulate the lending practices of federal savings and loans. As one court put it, “[I]t would have been difficult for Congress to give the Bank Board a broader mandate(cites) And Congress’ explicit delegation of jurisdiction over the “operation” of these institutions must empower the Board to issue regulations governing mortgage loan instruments

With respect to National Banks the holding in Easton would apply as the court said:
Our conclusions, upon principle and authority, are that Congress, having power to create a system of national banks, is the judge as to the extent of the powers which should be conferred upon such banks, and has the sole power to regulate and control the exercise of their operations…[bold, underline and italics added]

CONCLUSION
The subject corporations cited share a common heritage with National banks and federal savings associations. They are corporations federally chartered and created under acts of Congress for important public and national purposes for which the Supreme Court has ruled on that premise in a number of cases that their activities were governmental. Thus in Bismarck the Court ruled that the lending functions were governmental not proprietary; and that foreclosure was part of the general lending functions. In Lebron, the Court ruled that the corporation was part of the government for the purpose of determining its constitutional obligations toward the rights of citizens affected by its actions.
The Ninth Circuit and other appellate courts have yet to apply the settled principles enunciated by these Supreme Court cases which lead to one conclusion— that National banks and federal savings associations’ use of a Trustee Sales(non-judicial foreclosures) must be a governmental acts and a 5th amendment violation of due process.
Constitutional powers conferred on a corporation should not be used to produce an unconstitutional result. The fallacy is that state law cannot determine the manner of foreclosure, but federal law with respect to the corporations created under acts of Congress. And federal law cannot authorize a non-judicial foreclosure , nor can the Constitution allow it.
Respectfully submitted,

___________¬¬¬¬¬¬¬¬________ Date:___________, 2010
Reuben Nieves

GMAC v Visicaro Case No 07013084CI: florida judge reverses himself: applies basic rules of evidence and overturns his own order granting motion for summary judgment

Having just received the transcript on this case, I find that what the Judge said could be very persuasive to other Judges. I am renewing the post because there are several quotes you should be using from the transcript. Note the intimidation tactic that Plaintiff’s Counsel tried on the Judge. A word to the wise, if you are going to use that tactic you better have the goods hands down and you better have a good reason for doing it that way.

Fla Judge rehearing of summary judgement 4 04 10

5035SCAN4838_000 vesicaro Briefs

Vesicaro transcript

Posted originally in April, 2010

RIGHT ON POINT ABOUT WHAT WE WERE JUST TALKING ABOUT

I appeared as expert witness in a case yesterday where the Judge had trouble getting off the idea that it was an accepted fact that the note was in default and that ANY of the participants in the securitization chain should be considered collectively “creditors” or a creditor. Despite the fact that the only witness was a person who admitted she had no knowledge except what was on the documents given to her, the Judge let them in as evidence.

The witness was and is incompetent because she lacked personal knowledge and could not provide any foundation for any records or document. This is the predominant error of Judges today in most cases. Thus the prima facie case is considered “assumed” and the burden to prove a negative falls unfairly on the homeowner.

The Judge, in a familiar refrain, had trouble with the idea of giving the homeowner a free house when the only issue before him was whether the motion to lift stay should be granted. Besides the fact that the effect of granting the motion to lift stay was the gift of a free house to ASC who admits in their promotional website that they have in interest nor involvement in the origination of the loans, and despite the obviously fabricated assignment a few days before the hearing which violated the terms of the securitization document cutoff date, the Judge seems to completely missed the point of the issue before him: whether there was a reason to believe that the movant lacked standing or that the foreclosure would prejudice the debtor or other creditors (since the house would become an important asset of the bankruptcy estate if it was unencumbered).

If you carry over the arguments here, the motion for lift stay is the equivalent motion for summary judgment.

This transcript, citing cases, shows that the prima facie burden of the Movant is even higher than beyond a reasonable doubt. It also shows that the way the movants are using business records violates all standards of hearsay evidence and due process. Read the transcript carefully. You might want to use it for a motion for rehearing or motion for reconsideration to get your arguments on record, clear up the issue of whether you objected on the basis of competence of the witness, and then take it up on appeal with a cleaned up record.

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