For those exiting “Forbearance” or Moratoriums — Be Careful What You Write!

After a few extensions, the mortgage payment pause officially ended — or will be ending soon — for 1.2 million out of an estimated 1.7 million loans that remained in forbearance as of August, according to CoreLogic.

Wall Street is busy churning out even more disinformation than before because they are trying to avoid a mass revolution from consumers. The latest message is that some homeowners are struggling but “market conditions” will prevent a new tidal wave of foreclosures. The object is clearly to distract anyone in government from paying attention to this monster.


So they’re using this opportunity to (a) pretend there is no crisis and (b) engulf consumers in another round of deceit.

Wall Street wants you to “stay in touch with your lenders” because they want you to communicate with companies who are pretending to be lenders or servicers. They are neither lenders nor servicers. They’re not “Servicers” if “servicer” means a company that receives or disburses proceeds of scheduled payments. And they are not lenders if “lender” means someone who paid money to originate or acquire ownership of your underlying obligation.

Nearly every consumer transaction that offers a payment schedule is actually concealed securities scheme, Which means that for the apparent “lender” there is no loan. there is only payment to or on behalf of the consumer to inspire them to “sign” documents that launch or help launch a securities scheme that enables the participants in that scheme to get paid many times that amount of what the consumer is deceived into believing is a simple loan.

The bottom line of all that is there is nobody who maintains the “ledger” that is in the mind of the consumer. There is no loan account. There is no company that reduced its cash account and added it to its receivable account.

So maybe securitization is a true innovation. But as it stands it is illegal and unenforceable. If you were pursuing the same companies for payment you can bet that they would do what I am suggesting — refuse payment unless you could document proof of payment and the present existence of a loan or other debt.

That documentation must be from the records of the party named as the claimant — not from some company claiming to be a servicer. If the designated named claimant is not a creditor to whom the debt is actually owed then the self-serving unsigned claims of servicing authority are empty statements designed to deceive consumers, homeowners, and students to make payments that are being converted from debt to profit.

Every effort to bring pressure on a consumer to pay it is basically Suing For Profit. Even if the consumer pays, it won’t reduce any loan account because no such account exists — except the illusion of the account on the books of the “servicer” who is not serving anyone other than the investment banks on Wall Street and who handles no money.

So here are the general rules of all consumer transactions that end up with some scheduled payment:

  • Do not address the company claiming servicing rights as the servicer. Instead, challenge who they are and what they’re doing. You never made a deal with that company. Send a Debt Validation Letter and in the case of a mortgage, a Qualified Written Request. If you do admit they are a servicer you are reinforcing the illusion of a receivable account maintained by that company on behalf of some other entity who never actually shows up on anything. No officer or director of any REMIC trustee or other designated named creditor ever signs anything. The creditor is merely there as a hood ornament.
  • Do not admit you owe any money to the servicer or anyone else. You don’t know what happened to that account so stop pretending that you do know.
  • Do not admit you are delinquent or in default or that either the lawyer or servicer can declare you find default. Note that you will never receive a direct statement from the named designated creditor saying you are in default. They have simply rented out their name to maintain the illusion that the creditor is a financial isntiutiotion. It isn’t.
  • Do not concede that the payment history is accurate or is a legal or acceptable substitute for an account receivable on the books of a creditor. It isn’t.
  • But DO realize that every time you make life difficult for this vast game of suing for profit, you are helping not only yourself but millions of other consumers.

Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.
Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.



Neil F Garfield, MBA, JD, 74, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.

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Tonight! Don’t stop fighting or thinking about tomorrow! 3pm PDT 6PM EDT

Thursdays LIVE! Click in to the WEST COAST Neil Garfield Show

with Charles Marshall and Bill Paatalo

Or call in at (347) 850-1260, 6pm Eastern Thursdays


The 2008 crash may seem like 12 years ago. Yet the conditions persist – victimizing both homeowners and investors. Homeowners still have no frame of reference or education as to how they could receive a loan without anyone owning the debt and why anyone would be party to such a transaction. Arguably investors by this point should know better. The problem is money — stockbrokers get to call themselves investment banks and courtesy of the 2008 crash they created are now commercial banks too. They are making money hand over fist on every sale of a “certificate,” “derivative” and homestead.

Bill Paatalo will discuss on the Show today how he is taking the fight to the Defendants in his Oregon case, previously discussed on the Show, in which the Defendants are now seeking massive attorney’s fees, over six-figures. The same Defendants who managed to secure a judgment based on lack of subject matter jurisdiction, are claiming now this same Court has jurisdiction to bring an attorney’s fee motion never raised in previous pleadings. The game is on. The “banks” are taking the position that they can eat their cake and still have it.

Charles Marshall will discuss how the ongoing institutional bias issues long present in foreclosure law cases is stubbornly creating a messy and patchwork terrain for borrowers to navigate in the COVID-19 era, with a focus on California. He will address this through an update of particularly the latest California-based coronavirus-related developments in court access, foreclosures, and post-auction evictions.

Mortgage Meltdown: Defending Your Property: Strategies

Mortgage Meltdown: Defending Your Property — A Summary of Strategies

This post is for both homeowners and attorneys dealing with existing foreclosure, threatened foreclosure or distressed situations. There are many situations, particularly in government-backed loans, where the lender MUST negotiate to mitigate losses or they are subject to treble damages. This posting is not intended to be legal advice inasmuch as regulations are different and change from State to State. It is only intended to be a guide for those who wish to stop the threat  of foreclosure and eviction and might be useful even in auto loans and other forms of consumer credit including credit cards. 

There are specific remedies that you may wish to pursue including forbearance, modification, forgiveness, and others. Which one you choose, or whether you choose all of them as a shotgun method of deterring the lenders is a matter that you should seek and get competent legal counsel to advise you. Your goals should be the to stop the foreclosure and if possible stop the payments that are “due” because you were the victim of an organized system of fraud that was worldwide. Your exit strategy is a deal where you stay in your house, you get terms you can afford, you get damages where appropriate, and recover attorney fees and costs where appropriate. 

The filing of a lis pendens along with a counterclaim, and various requests for discovery will probably be an effective tool in turning the tables on the lenders. However, state law must be carefully checked along with Federal law with Federal agencies are involved, before filing a lis pendens or a counterclaim. 

A stay might be obtained where there is potential criminal liability in parallel investigations or pending prosecutions. Defendants have a right to invoke their fifth amendment privilege in criminal prosecutions without (theoretically) causing any prejudice to their case. In civil cases, a person or company may invoke the fifth amendment privilege against self incrimination, but the trier of fact is entitled to draw an inference of fact from the person’s refusal to answer — especially where the person or entity is the Plaintiff or Petitioner as in the case of most foreclosures.  

It is therefore likely that immediately upon filing a claim or counterclaim that alleges violations of criminal statutes, a party will ask for a stay of the proceedings. And in most cases, the Judge will be inclined to grant it. In the meantime, the owner/borrower remains in the house, and possibly gets to avoid making any payments while the litigation is pending — particularly where the counterclaim alleges compensatory, exemplary, punitive, and/or treble damages. 

In cases where bankruptcy or assignment for creditors occurs for the lender or one of the parties in the decision-making chain on the lender or investor side, it is entirely possible for the mortgage to “fall between the cracks.” Therefore a suit to quiet title should probably accompany the counterclaims for damages and other equitable relief.  

The assumption behind this guide is that the lenders and all the other players — developers, appraisers, construction lenders, banks, mortgage brokers, underwriters, lenders, investment bankers, retail brokerages, rating agencies and financial advisers all have potential liability in the mortgage meltdown. The general fact pattern assumed is that the borrower was steered into a purchase and loan arrangement under high pressure sales tactics and deceptive claims and that the buyers of collateralized debt obligations (CDO’s) were deceived as well in like fashion.

The principal claims are active, intentional deception, failure to adequately disclose the terms of the transactions, failure to disclose rebates, and yield spread premiums that went to various parties (including the sellers, the mortgage brokers and the lender), and failure to disclose the risks of the transaction. It may be fairly said that if borrowers were told the truth about what was in store for them, they would not have entered into the transaction. If they know the values were inflated, neither the borrowers nor the CDO investors would have entered into the transactions. 

The basic thrust of the strategy is to put the lenders and their co-conspirators on the defensive. The end goal is to save the property, keep it occupied, present a clear alternative (to the lender) to writing off huge losses, and mitigating the losses to ALL parties, whether they are culpable or not. If at all possible, these cases should be settled and not litigated through trial. We are now traveling at the rate of over 270 new class actions per year resulting from the credit crisis and the number is likely to get larger by far. This rate exceeds anything in American history. 

Remember to consider the original people involved in obtaining the construction loan to the developer. It is quite likely that these were the same people or had the same knowledge about what they were doing to the borrowers and the unsuspecting investors that they knew would get the brunt of this mess. 

In your pleadings, it should be stated that this scheme resulted in the largest currency devaluation in modern U.S. History, and affects every American, and every foreign person, government, agency, village or city that put money into pooled funds of the CDO’s. Check the news and you will see that local governments are cutting back on services, losing access to the money they had, and that both corporate and government pensions are at risk. This should be alleged as a perverse arrogant scheme with reckless disregard to the security of the country, as well as the criminal, civil and administrative laws applicable to these transactions. 

Do NOT, if you can avoid it, accept any loan modification that has any provision that even mentions inflation or any index on inflation. If hyperinflation sets in, this will mean a geometric increase in payments to the lenders even after you thought you had settled the issue. 

Additional forms for litigation, discovery, modifications, forbearance etc. are available by contacting and will be attached to Garfield’s HandBook for Attorneys in the Mortgage Meltdown due for publication in late March. Manuscripts and forms will be available in February for Download upon payment of $49.95 for digital download and $59.95 for hard copy including shipping and handling. Attorneys and borrowers and investors should give consideration to joining one of the many class action lawsuits that have already been filed. In addition, several investigations and prosecutions have begun in many states. In many cases state agencies and law enforcement are allowed to get more information than you can get in discovery in civil litigation. Cooperate closely with these agencies. 

Items to consider in lender liability: Most of these items can result in an award of attorney fees for the borrower’s attorney or the investor’s attorney depending upon whether you are representing one or the other. An interesting permutation of all this is that it is highly likely that a substantial number of people were borrowers under this scheme on one end, and were investors (at least indirectly) on the other end. In essence they were lending money to themselves and getting charged exorbitant fees for the privilege of doing so. Investors might not realize that their mutual fund, IRA, pension fund or whatever includes substantial CDO investments. They might not realize that their purchase of individual stocks might well have included financial and non-financial institutions that also have undisclosed substantial CDO risk. 


  1. TIL (Truth in Lending) disclosures: Did anyone actually read the provisions of the mortgage? Who advised the borrower about the future loan payments going up? Were the risks minimized in order to get the signature? Were the computations correct ( a mistake of even one cent anywhere on the documents gives you substantial leverage).
  2. ARM adjustment computations. There have already been several successful prosecutions and class actions against large lenders for computing and rounding numbers in their own favor when resetting the adjustable rate mortgages. A small mistake is grounds for stopping the foreclosure. 
  3. Aiding and abetting violation of securities laws: Don’t forget the investment houses that had the write-downs both here and abroad. The reason they stocked up on CDO portfolios is not that they thought it was such a good investment. The real reason was that they were having great success selling huge chunks of these securities to foreign governments, financial institutions, cities, state funds etc. They were accumulating inventory so that they could sell at a profit in addition to the fees.
  4. RICO: Pattern of behavior that constitutes organized criminal behavior: Treble damages and fees usually awarded. The theory here is that the incredible sophistication required to create these derivative securities and the the business model to market them belies the fact that each player in the scheme had to know they were not at risk. The only way they could know that they were not at risk was that they had covered themselves with self-serving valuation statements, letters of opinion from attorneys, ratings they had paid for from the major rating companies, and a tacit understanding that everyone would do their part in the scheme. It gave them “plausible deniability” as to any accusation that they knew the loans and the securities based on the loans were trash.
  5. Violation of state, federal and administrative laws and rules governing currency, banking and loans
  6. Fiduciary duty: superior position to borrower, reasonable reliance of the borrower on approval for loan, reasonable reliance on borrower on appraised value of him which was inflated, leading to controlling the borrower.
  7. Interference with contractual rights and obligations: Non-disclosed kickbacks contributed to inflating the prices and fees and steering the borrower into loans that were more expensive than lower priced loans for which the borrower qualified.
  8. Equitable subordination
  9. Duress
  10. Implied covenant of good faith and fair dealing
  11. Usury: Possible tie-in with credit card and other consumer debt
  12. Tying arrangements
  13. Deceptive Trade Practices
  14. Recharacterization of Transactions — changing the loan to (a) meet the reasonable expectations of the deceived borrower and (b) applying any damages awarded, attorneys fees, costs against balance due.
  15. Class Action Suits
  16. Stockholder derivative actions by the owners or equity interests or even debt instruments of corporations that participated in the deceptive scheme — remember to include the rating agencies — Moody’s, S&P, etc.
  17. Bankruptcy Actions: fraud actions and defenses can be initiated in bankruptcy court. When the lender attempts top get a relief from stay, they should be hit with the suit, asking for a stay of their right to relief from stay. 
  18. Preferential transfers and transfers in fraud of potential creditors: By moving the risk along a daisy chain to avoid liability, the parties knew they were creating multiple and confusing layers to avoid prosecution of criminal and civil claims. 
  19. Explore cram down options in bankruptcy. In the presence of fraud claims from the borrowers, cram down options might be more liberal than usual, depending upon the judge. 
  20. Discovery: Get access to emails, correspondence etc. dating back before the loan and relating to the creation of the loan product the borrower eventually was sold. Same for what they know of the other players — developer/seller, mortgage broker, appraiser, relations with investment bankers showing they knew they would not be carrying he risk of the loan ( shows they had not interest other than closing the deal without concern as to whether the deal went bad for borrower or lender). Get screen shots of websites and see if you have copies of web pages that were printed during the loan and sales process. Check for differences. If someone has been fired at the lender for the events leading up to the CDO and mortgage meltdown, get their deposition. Demand copies of drafts of documentation before it was presented to the borrower along with any emails or inter-office memos. Find out if anyone has consulted counsel for criminal exposure, employment litigation, or civil exposure. You can’t get the content of the conversation but you can get the answer to that question if you phrase it right.

Good Luck. More to Follow. GTC | Honor Website is in Construction. We are moving as fast as we can!

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