Is that Mortgage or Deed of Trust Void or Just Unenforceable?

Proving that an instrument is unenforceable does not void the instrument unless it is unenforceable by anyone. Better to prove that it should never have been written.

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The DOT could only be void if it was not facially or actually valid. That, in my opinion, means that the the DOT should never have been written, should never have been executed and should never have been recorded. It must the equivalent of uttering a false instrument and have the qualities of being a wild deed.
You need to look at your state statute that authorizes the use of a Deed of Trust. Look for the elements. If they are present, the DOT is not void on its face. If the elements are falsely presented then the  instrument can still be proven void. 
Proving that an instrument is not enforceable by the party trying to enforce it does NOT prove that nobody could enforce it. Hence it isn’t void until you can show that there is nobody who can or will enforce it. You must show that the DOT should never have been presented, signed and certainly not recorded.
That isn’t easy. And it is nearly impossible without investigation and discovery in which some party claiming to have an interest admits that there are fatal defects in the DOT. Defects in assignments or legal standing do not prove that the original instrument is void.
Put yourself in the shoes of a party whose money was used to give you the loan. Would you want your collateral wiped out because your servicer did something wrong in enforcement?
So in Washington DC the operative statute says as follows:

§ 42–801. Execution, acknowledgment, and recordation in same manner as deeds.

Mortgages and deeds of trust to secure debts, conveying any estate in land, shall be executed and may be acknowledged and recorded in the same manner as absolute deeds; and they shall take effect both as between the parties thereto and as to others, bona fide purchasers and mortgagees and creditors, in the same manner and under the same conditions as absolute deeds.

So then we are referred to the execution of absolute deeds. That statute says as follows:

§ 42–401. Effective date of deeds; exception.

Any deed conveying real property in the District, or interest therein, or declaring or limiting any use or trust thereof, executed and acknowledged and certified as provided in §§ 42-10142-121 to 42-123 [repealed], 42-306, and 42-602 and delivered to the person in whose favor the same is executed, shall be held to take effect from the date of the delivery thereof, except that as to creditors and subsequent bona fide purchasers and mortgagees without notice of said deed, and others interested in said property, it shall only take effect from the time of its delivery to the Recorder of Deeds for record.

And you may have trouble with this one:

§ 42–403. Defective grants recorded on or after April 27, 1994.

Any instrument recorded in the Office of the Recorder of Deeds on or after April 27, 1994, shall be effective notwithstanding the existence of 1 or more of the failures in the formal requisites listed in § 42-404, unless the failure is challenged in a judicial proceeding commenced within 6 months after the instrument is recorded.

But look at this —-

§ 42–404. Failures in formal requisites of an instrument.

(a) The failures in the formal requisites of an instrument that may be cured by this act are:

(1) An omission of an acknowledgment or a defective or improper acknowledgment;

(2) A failure to attach a clerk’s certificate;

(3) An omission of a notary seal or other seal; or

(4) An omission of an attestation.

(b) Nothing in this act shall be construed to eliminate the requirement that a deed be under seal. Any deed accepted for recordation without a seal but made effective by operation of this act shall be deemed a sealed instrument.

(c) Nothing in this act shall be construed to validate any instrument with respect to which there was any misrepresentation, fraudulent act, or illegal provision in connection with its execution or acknowledgment.

(d) Any person convicted of a fraudulent act, in connection with the validation of any instrument under §§ 42-10142-40242-403, and 42-602 shall be subject to the penalties set forth in § 22-3222.


So putting it all together you probably cannot prove that the instrument is facially invalid but you can prove that it is invalid for misrepresentation of the lender and the terms of the loan referenced by the DOT by its reference to the promissory note. The actual terms were that a remote undisclosed party would sell the borrower’s signature multiple times reaping huge rewards without any application of sale proceeds to the borrower’s account. 
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The part about the wrong name being inserted as the lender is a good one. But that could be theoretically corrected by an affidavit of scrivener’s error, although supporting such an affidavit would be nearly impossible. 
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But since the statute speaks to the commission of a fraudulent act you might be able to invalidate the the DOT without appearing to invalidate the debt. Or you could attempt to reform the DOT to name the actual lender, which I think might be a more productive tack, since it completely avoids the appearance of seeking a free house. 
Remember thought that fraud must be specific: You need a representation that was false, which the party knew was false, for the purpose of getting you to reasonably rely on the representation to your detriment and to their advantage. I think you have that here.
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And remember that once you prove by clear and convincing evidence that the DOT was void for being part of a fraudulent scheme, any assignments of the mortgage or assignments of the beneficial interest in the void deed of trust are equally void because assignments convey only the interest possessed — they do not create interests. 

 

LAWYER BONANZA!: Wells Fargo Foreclosing on Homeowner Who Made all Payments and Paid Extra

WELLS FARGO MAKES HUGE ERROR ADMITTING LACK OF POWER TO BIND CREDITOR TO MODIFICATIONS OR SETTLEMENTS

The simple truth is that the banks are not nearly as interested in the property as they are in the foreclosure. It is the foreclosure sale that creates the illusion of a stamp of approval from the state government that the entire securitization scheme was valid and it creates the reality of a presumption of the validity of the deed issued at the so-called auction of the property upon submission of  false credit bid from a non-creditor who is a stranger (not in privity) to the transaction alleged. — Neil F Garfield, livinglies.me

see also http://livinglies.me/2013/05/16/estoppel-when-the-bank-tells-you-to-stop-making-payments/

Editor’s Comment and Analysis: Wells Fargo is foreclosing on a man who has made his payments early and made extra payments to pay down the principal allegedly due on his mortgage. In response to media questions as to their authority to foreclose, the response was curious and very revealing. Wells Fargo said that the reason was that the securitization documents contain restrictions and prohibitions that prevent modifications of mortgage.

The fact that Wells Fargo offered a particular payment plan and the homeowner accepted it together with the fact that the homeowner made the required payments and even added extra payments, all of which was accepted by Wells Fargo and cashed  doesn’t seem to bother Wells Fargo but it probably will bother a judge who sees both the doctrine of estoppel and a simple contract in which Wells Fargo had the apparent authority to make the offer, accept the payments, and bind the actual creditors (whoever they might be).

It also corroborates our continuing opinion that when Wells Fargo and similar banks received insurance and creditable swap payments, they should have been applied to the receivable account of the investors which in turn would have resulted by definition in a reduction of the amount owed. The reduction in the amount owed would obviously decrease the amount payable by the borrower. If we follow the terms of the only contract that was signed by the borrower then any overpayments to the creditor beyond account receivable held by the creditor would be due and payable to the borrower. It is a violation of the spirit and content of the federal bailout to allow the banks to keep the money that is so desperately needed by the investors who supplied the money and the homeowners whose loans were paid in whole or in part by insurance and credit default swaps.

The reason I am interested in this particular case and the reason why I think it is of ultimate importance to understand the significance of the Wells Fargo response to the media is that it corroborates the facts and theories presented here and elsewhere that the original promissory note vanished and was replaced by a mortgage bond, the terms of which were vastly different than the terms of the promissory note signed by the homeowner.

Wells Fargo seeks to impose the terms, provisions, conditions and restrictions of the securitization documents onto the buyer without realizing that they have admitted that the original promissory note signed by the homeowner and therefore the original mortgage lien or deed of trust were never presented to the actual lenders for acceptance or approval of the loan.

CONVERSION OF PROMISSORY NOTE TO MORTGAGE BOND WITHOUT NOTICE

In fact, Wells Fargo has now admitted that the terms of the loan are governed strictly by the securitization documents. How they intend to enforce securitization documents whose existence was actively hidden from the borrower is going to be an interesting question.  If the position of the banks were to be accepted, then any creditor could change the essential terms of the debt or the essential terms of repayment without notice or consent from the borrower despite the absence of any reference to such power in the documents presented to the borrower for the borrower’s signature.

 But one thing is certain, to wit: the closing documents presented to the borrower  were incomplete and failed to disclose both the real parties in table funded loans (making the loans predatory per se as per TILA and Reg Z) and the existence and compensation of intermediaries, the disclosure of which is absolutely mandatory under federal law. Each borrower who was deprived of knowledge of multiple other parties and intermediaries and their compensation has a clear right of action for recovery of all undisclosed fees, interest, payments, attorney fees and probably treble damages.

This case also clearly shows that despite the representations by counsel and “witnesses” Wells Fargo has now admitted the basic fact behind its pattern of conduct wherein they claim to be the authorized sub servicer fully empowered by the real creditors and then claim to have no responsibility or powers with respect to the loan or the real creditors (which appears to include the Federal Reserve if their purchase of mortgage bonds had any substance).

Wells Fargo, US Bank, Bank of New York and of course Bank of America have all been sanctioned with substantial fines of up to seven figures so far in individual cases where they clearly took inconsistent positions and the judge found them to be in contempt of court because of the lies they told and levied those sanctions on both the attorneys and the banks.

It was only a matter of time before this entire false foreclosure mess blew up in the face of the banks. You can be sure that Wells Fargo will attempt to bury this case by paying off the homeowner and any other people that have been involved who could blow the whistle on their illegal, fraudulent and probably criminal behavior.

This is not the end of the game for Wells Fargo or any other bank, but it is one more concrete step toward revealing basic truth behind the mortgage mess, to it: the Wall Street banks stole the money from the investors, stole the ownership of the loans from the “trusts” and have been stealing houses despite the absence of any monetary or other consideration in the origination or acquisition of any loan. This absence of consideration removes the paperwork offered by the banks from the category of a negotiable instrument. None of the presumptions applicable to negotiable instruments apply.

Once again I emphasize that in practice lawyers should immediately take control of the narrative and the case by showing that the party seeking foreclosure possesses no records of any actual or real transaction in which money exchanged hands. This means, in my opinion, that the allegations of investors in lawsuits against the investment banks on Wall Street are true, to wit: they were entitled to an forcible notes and enforceable mortgages but they didn’t get it. That is an admission in the public record by the real parties in interest that the notes and mortgages are fabricated because they referred to commercial transactions that never occurred.

Going back to my original articles when I started this blog in 2007, the solution to the current mortgage mess which includes the corruption of title records across the country is that the intermediaries should be cut out of the process of modification and settlement. A different agency should be given the power to match up investors and borrowers and facilitate the execution of new promissory notes new mortgages or deeds of trust that are in fact enforceable but based in reality as to both the value of the property and the viability of the loan. It is the intermediaries including the Wall Street banks, sub servicers, Master servicers, and so-called trustees that are abusing the court process and clogging the court calendars with false claims. Get rid of them and you get rid of the problem.

http://4closurefraud.org/2013/05/16/wells-fargo-forecloses-on-florida-man-who-paid-on-time-early/

SEPARATION OF DEED OF TRUST FROM NOTE: Bellistri Opinion

There is a lot of conflicting opinions about this. My opinion is that the confusion arises not from the law, not from application of the law and not from what is written on the note or deed of Trust. If you look at the Bellistri Missouri case the issue is well settled. And the problem is not what is written, it is what is assumed to be written. The Bellistri case, 284SW 3d 619, (Missouri Appeal, cert. reportedly denied) coupled with its quote from Restatement 3rd is simple: put one name on the note and another on the DOT as beneficiary (particularly when the beneficiary is MERS and therefore an undisclosed principal) and you have direct evidence that the intention of the parties was to separate the note from the mortgage. The burden of proof thus shifts to the alleged creditor.

Conflict comes not from the law or the wording on the instruments but from the inherent question of “why would anyone want to do that?” There are of course many answers to that question in a securitized mortgage context. But it is the existence of the question that causes people to lean toward the idea that no reasonable person would have intended that and to assume that the parties, including the borrower, would never have intended WHAT WAS WRITTEN.

I think the point of the Bellistri case is simple: factually, the note and DOT are split and according to the Restatement 3rd, they can never be put back together again. The note, while still enforceable as an instrument by itself, is no longer secured by an encumbrance on the property. The “mistake” is that of the drafter of the instruments. They want to say, much later in time, what we NOW mean is that the beneficiary is X, who is not the payee on the note,, but X has received an assignment of the note. Thus NOW the beneficiary and the payee are the same which means we can foreclose.

So the question put to the Judge is can a note and security instrument, initially made out to two different parties be LATER joined and if so, what does that mean for enforcement. My first comment is that once you have established that facially the note and DOT were split, your prima facie case is met and the burden goes to the “lender” to prove they are the creditor along with a whole bunch of other things that are not unlike the elements of proving up a lost or destroyed note. You can’t just say it happened. You must explain and prove HOW it happened.

But the simple answer to the question as per the Restatement 3rd, is “NO.” The reason why they cannot be joined later is not just because Restatement 3rd says so, it is the reason Restatement 3rd says that, to wit: if you allowed, particularly in a non-judicial setting, parties not named on the note and not named as beneficiary to later act because of a claim as being both, you are introducing uncertainty into the marketplace which is the precise reason we have the law of contracts, property records and such. The moral hazard is raised from possibility to near certainty when you KNOW from the beginning that the payee and the beneficiary are two different parties and the beneficiary is not the real party so the knowledge includes, from the beginning, that there is at least one additional undisclosed party.

Let’s take the simplest example we can given the complexity of securitized residential mortgages. ABC is named the Payee on the note. MERS is named the beneficiary. MERS obviously has some understanding with a third party DEF not to make a claim on the loan (according to their website). So we must presume that they have that understanding and that maybe it is in writing in some general type of contract which was neither disclosed nor revealed to exist at the time of the closing with the borrower. DEF defaults in its payment obligations to MERS. MERS now says we refuse to perform under our contract with DEF. Borrower knows nothing of DEF nor of DEF’s payment default to MERS. Borrower pays the note in full to ABC. ABC returns the note as paid in full. Borrower wants a release and reconveyance (satisfaction) so the title record is clear.

Now it MIGHT be that DEF=ABC. But we don’t know that. So for purposes of your case, you MUST assume that DEF is simply an undisclosed third party. Borrower asks MERS for the release and reconveyance.  MERS refuses because it wasn’t paid by DEF and because it has no idea whether you paid the right person. With MERS refusing to execute a document releasing the lien, Borrower now has a defect in title that is unmarketable.

Borrower files a quiet title suit against MERS. MERS says it was named as beneficiary but that the DOT clearly states it serves only as nominee and therefore has no power to do anything. Now you have, on record, that the beneficiary is not MERS but the undisclosed third party DEF. The court MIGHT grant the final judgment, but it would then be adjudicating the rights of other parties who are not present in court, thus leaving the title clouded and possibly still unmarketable.

Another possibility is that the Court would inquire or allow discovery to allow the identification of DEF. Assuming MERS wishes to comply, there is still a problem. Data entry is NOT performed by MERS employees. Data entry is performed by “members” with passwords and user ID’s. Thus all MERS can say is that at a particular point in time MERS computer records show DEF, which was assigned to ABC or perhaps yet another party. The assignment is executed by Jane Jones as “limited signing officer” for MERS. MERS can’t say they know Jane Jones or anything about her because she doesn’t work for MERS. Therefore the only competent evidence from MERS is the data in fields populated by unknown sources of data input, and references to documents that were never seen or kept by MERS. The evidence from MERS thus has little or no probative value.

So now the Court or borrower goes to DEF and says “Who is Jane Jones?” DEF replies they don’t know because the assignment document was prepared by a foreclosure processing firm in Jacksonville, Florida named DOCX. DOCX has no contract with ABC or DEF or MERS. They were just following orders from yet a fourth party who is unidentified, and whose instructions were relayed through a fifth firm that serves as the correspondent or document manager once the loan goes into foreclosure (perhaps ordered by the servicer, BAC).

Thus the reason that a note and DOT can never be joined at any time other than the creation of those documents and executed contemporaneously with the funding of the obligation is that the contract and its performance is not based upon a condition subsequent (because such a condition would render the contract inchoate until the condition subsequent arrived or which would extinguish the obligation, note and mortgage). For there to be enforceability there must be certainty in the contract. Certainty can only be achieved if the terms and parties who are expected to perform are identified with sufficient clarity that any reasonable person would say they are known.

A borrower who signs papers without having a known party who is required by law to execute a satisfaction (release and reconveyance) has in effect executed documentation without a counterparty. The document is therefore void. Since the document (note, DOT, etc.) is only evidence of the obligation that arose because the borrower did in fact receive a benefit from the funding of the loan, the obligation survives while the note and/or DOT do not. However, in order to achieve certainty in the marketplace, the obligation is not secured unless and until some party identifies itself as the creditor and establishes a subsequent encumbrance through judgment lien, equitable or constructive trust or some other means.

Such a creditor action would be subject to rigorous requirements of pleading and proof. In the context of a securitized residential mortgage, the creditor can only be the party(ies) who advanced actual money, from which money the borrower’s loan was funded. In the context of mortgage-backed securities, a creditor who pleads that he expected a secured loan, must also plead all the documents and transactions that gave rise to advancing the money. This would mean that the creditor would be required to disclose and account for credit enhancements, insurance, credit default swaps, over-collateralization, cross-collateralization, and payments received from all sources pursuant to the terms under which the creditor advanced said funds.

Those terms are included in the prospectus and bond indenture which incorporate the pooling and service agreement, Depositor Agreement, Assignment and Assumption Agreements etc. In other words, the actual terms upon which the creditor advanced money were different from the actual terms accepted by the borrower. A court in equity would thus be required to allocate equity and liability for the various unpaid and paid obligations of multiple parties whose existence was unknown to borrower at the time of the loan closing, and whose existence even now would be at best dimly understood by the borrower or any other person who was not extremely well-versed in the securitization of credit.

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