NEW LOAN CLOSINGS — BEWARE!!!— NonJudicial Deeds of Trust Slipped into New Mortgage Closings in Judicial States

Posted on December 29, 2014 by Neil Garfield

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IF YOU ARE HAVING A CLOSING ON A REFI OR NEW LOAN BEWARE OF WHAT DOCUMENTS ARE BEING USED THAT WAIVE YOUR RIGHTS TO CONTEST WRONGFUL FORECLOSURES — GET A LAWYER!!!

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EDITOR’S NOTE: It is no secret that the Bank’s have a MUCH easier time foreclosing on property in states that have set up non-judicial foreclosure. Banks like Bank of America set up their own “Substitute Trustee” (“RECONTRUST”) — the first filing before the foreclosure commences. In this “Substitution of Trustee” Bank of America declares itself to be the new beneficiary or acting on behalf of the new beneficiary without any court or agency verification of that claim. So in essence BOA is naming itself as both the new beneficiary (mortgagee) and the “Trustee” which is the only protection that the homeowner (“Trustor”). This is a blatant violation of the intent of the the laws of any state allowing nonjudicial foreclosure.
The Trustee is supposed to serve as the objective intermediary between the borrower and the lender. Where a non-lender issues a self serving statement that it is the beneficiary and the the borrower contests the “Substitution of Trustee” the OLD trustee is, in my opinion, obligated to file an interpleader action stating that it has competing claims, it has no interest in the outcome and it wants attorneys fees and costs. That leaves the new “beneficiary” and the borrower to fight it out under the requirements of due process. An Immediate TRO (Temporary Restraining Order) should be issued against the “new” Trustee and the “new” beneficiary from taking any further action in foreclosure when the borrower denies that the substitution of trustee was a valid instrument (based in part on the fact that the “beneficiary” who appointed the “substitute trustee” is not the true beneficiary. This SHOULD require the Bank to prove up its case in the old style, but it is often misapplied in procedure putting the burden on the borrower to prove facts that only the bank has in its care, custody and control. And THAT is where very aggressive litigation to obtain discovery is so important.
If the purpose of the legislation was to allow a foreclosing party to succeed in foreclosure when it could not succeed in a judicial proceeding, then the provision would be struck down as an unconstitutional deprivation of due process and other civil rights. But the rationale of each of the majority states that have adopted this infrastructure was to create a clerical system for what had been a clerical function for decades — where most foreclosures were uncontested and the use of Judges, Clerks of the Court and other parts of the judicial system was basically a waste of time. And practically everyone agreed.
There are two developments to report on this. First the U.S. Supreme Court turned down an appeal from Bank of America who was using Recontrust in Utah foreclosures and was asserting that Texas law must be used to enforce Utah foreclosures because Texas was allegedly the headquarters of Recontrust. So what they were trying to do, and failed, was to apply the highly restrictive laws of Texas with a tiny window of opportunity to contest the foreclosure in the State of Utah that had laws that protected consumers far better than Texas. The Texas courts refused to apply that doctrine and the U.S. Supreme court refused to even hear it. see WATCH OUT! THE BANKS ARE STILL COMING!
But a more sinister version of the shell game is being played out in new closings across the country — borrowers are being given a “Deed of Trust” instead of a mortgage in judicial states in order to circumvent the laws of that state. By fiat the banks are creating a “contract” in which the borrower agrees that if the “beneficiary” tells the Trustee on the deed of trust that the borrower did not pay, the borrower has already agreed by contract to allow the forced sale of the property. See article below. As usual borrowers are told NOT to hire an attorney for closing because “he can’t change anything anyway.” Not true. And the Borrower’s ignorance of the difference between a mortgage and a deed of trust is once again being used against the homeowners in ways that are undetected until long after the statute of limitations has apparently run out on making a claim against the loan originator.
THIS IS A CLEAR VIOLATION OF STATE LAW IN MOST JUDICIAL STATES — WHICH THE BANKS ARE TRYING TO OVERTURN BY FORCING OR TRICKING BORROWERS INTO SIGNING “AGREEMENTS” TO ALLOW FORCED SALE WITHOUT THE BANK EVER PROVING THEIR CASE AS TO THE DEBT, OWNERSHIP AND BALANCE. Translation: “It’s OK to wrongfully foreclose on me.”
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Foreclosure News: Who Gets to Decide Whether a State is a Judicial Foreclosure State or a Non-Judicial Foreclosure State, Legislatures or the Mortgage Industry?

posted by Nathalie Martin
Apparently some mortgage lenders feel they can make this change unilaterally. Big changes are afoot in the process of granting a home mortgage, which could have a significant impact on a homeowner’s ability to fight foreclosure. In many states in the Unites States (including but not limited to Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin), a lender must go to court and give the borrower a certain amount of notice before foreclosing on his or her home. Now the mortgage industry is quickly and quietly trying to change this, hoping no one will notice. The goal seems to be to avoid those annoying court processes and go right for the home without foreclosure procedures. This change is being attempted by some lenders simply by asking borrowers to sign deeds of trust rather than mortgages from now on.
Not long ago, Karen Myers, the head of the Consumer Protection Division of the New Mexico Attorney General’s Office, started noticing that some consumers were being given deeds of trust to sign rather than mortgages when obtaining a home loan. She wondered why this was being done and also how this change would affect consumers’ rights in foreclosure. When she asked lenders how this change in the instrument being signed would affect a consumer’s legal rights, she was told that the practice of having consumers sign deeds of trust rather than mortgages would not affect consumers’ rights in foreclosure at all. Being skeptical, she and others in her division dug further into this newfound practice to see if it was widespread or just a rare occurrence in the world of mortgage lending. Sure enough, mortgages had all but disappeared, being replaced with a deed of trust.
As a general matter, depending on the law in a state, a deed of trust can be foreclosed without a court’s involvement or any oversight at all. More specifically, the differences between judicial and non-judicial foreclosures are explained here in the four page document generated by the Mortgage Bankers’ Association. It is not totally clear whether this change will affect the legal rights of borrowers in all judicial foreclosure states, but AGs around the country should start looking into this question. Lenders here in New Mexico insist that this change in practice will not affect substantive rights but if not, why the change? The legal framework is vague and described briefly here.
Eleven lenders in New Mexico have been notified by the AG’s Office to stop marketing products as mortgages when, in fact, they are deeds of trust, according to Meyers and fellow Assistant Attorney General David Kramer. As a letter to lenders says: “It is apparent … that the wholesale use of deeds of trusts in lieu of mortgage instruments to secure home loans is intended to modify and abrogate the protections afforded a homeowner by the judicial foreclosure process and the [New Mexico] Home Loan Protection Act.”

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Alignment of Parties and Cancellation of VOID Instrument

Posted on October 23, 2012 by Neil Garfield

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DENY and DISCOVER: First you need to start with the premise that the origination (“closing”) documents were defective from the start. By naming the wrong payee and containing terms different from the terms agreed by the actual Lender (source of funds) specifically as to how the receivable is to be repaid, the note fails the essential tests required to be considered “evidence of the obligation.”

The defective note therefore cannot be reinvigorated into non-defective merely by mention in the collateral mortgage or deed of trust which is recorded to assure faithful performance by the Payor under the terms of the note.  Perhaps the reverse would be true if the mortgage or deed of trust disclosed the reality of a table funded transaction, but that is not apparent for any loan for which there are claims of securitization or assignment.

Hence, the cause of action for cancellation of a VOID instrument lies in the fact that although the mortgage or deed of trust was recorded, it should not have been recorded because it did not recite the basic requirements of a perfected lien. I would add the caveat that cancellation of the instrument probably does not apply to the note, but does apply to the mortgage or deed of trust.

The note is subject to a cause of action for return of the note as satisfied or cancelled if you allege and prove that the Lender was paid in full and that anyone other than the homeowner who paid it might have a cause of action for contribution but that (a) said cause of action is NOT before the court and (b) an action for contribution cannot be considered secured even by a valid mortgage that was satisfied, much less a mortgage or deed of trust that was never a perfected lien.

The cause of action is NOT in contribution if the allegation is that the “creditor” (after showing the details of the transaction in which money was exchanged) purchased the note and mortgage, which is different. In that case, an assignment would be required or some other bill of sale or other instrument in order to preserve a perfected lien. But the payment and even a transfer does not perfect a lien that is defective.

That bring us to the issue of evidence and the alignment of the parties. Nearly all pro se litigants and lawyers are using the above arguments as affirmative defenses or worse yet, merely as argument at hearings for demurrers, motions to dismiss, motions for summary judgment and motions to lift stay. This is understandable in the non-judicial states because of confusion and conflict in the rules of civil procedure.

In seeking a Temporary Restraining Order, the homeowner needs to bring the lawsuit, which is ridiculous when you thin about it because the information about the loan is in the hands of multiple parties, many of whom the known parties refuse to disclose the identity or status of said stakeholders.

Where I see attorneys getting traction in courts previously disposed to be dismissive of defenses and claims of borrowers, is precisely in this realm. First by denying the obligation, note and mortgage, that pouts the matter at issue. At that point it is universally agreed that the burden switches to the other side as to pleading and proof. People often ask me during seminars or conference calls
how do I prove that?”. The answer is that you don’t — you make them plead and prove their allegations. Non-judicial foreclosure was NEVER meant to be a vehicle to allow foreclosures to be completed when they would not have satisfied the statutory requirements of a judicial foreclosure.

This is what you cite: “Where the evidence necessary to establish a FACT that is ESSENTIAL to a CLAIM lies peculiarly within the knowledge and competence of one of the parties, THAT party has the BURDEN of going forward with the evidence on the issue even though it is NOT THE PARTY ASSERTING THE CLAIM.” [Garcia v Industrial Acc. Com (1953) 41 Cal.2d 689, 694; Wigmore Evidence 2d ed. 1940 Sec 2486; Witkin Cal. Evidence (1958) Sec 56(b).]

This doctrine is centuries old. You know something is true or you at least have good reason to believe a fact to be true but he other side has the proof. IN this case you know your denial of the essential elements of the judicial foreclosure forces the forecloser to come forward and prove their claim that they indeed have the right to foreclose.

Most Judges in most instances have realigned the parties and required the party claiming affirmative relief to plead as though they were the plaintiff even though the statute required the initiation of the lawsuit by the other side (the homeowner). It’s like some of the “negative” rulings against borrowers. There are plenty of people who can START a foreclosure, but only the creditor can finish it with a credit bid at auction.

California MEmo on ALignment and Cancellation of Note

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They Will Get You on Procedure Everytime

Posted on June 6, 2012 by Neil Garfield

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Madison v. MERS et al

Madison v MERS et al

Editor’s Comment:

The Madison decision from the Arizona Appellate Court is an example of two warnings that I have repeatedly stated on these pages, in my books and in my seminars.  First doing an appeal yourself without getting appropriate advice from competent licensed counsel is most likely to result in failure.  It is a rare layman who understands the Rules of Civil Procedure.  And it is even more rare that a layman understands the Rules of Appellate Procedure.

As a result, the Madison decision will be used as yet more ammunition against homeowners, borrowers, and lawyers to “prove” that their defenses are frivolous when in fact the court of appeals decision states the opposite – even while they rule against the borrower.  On appeal the only thing the appellate court is permitted to review are those items on the record.  This is further restricted by the items that are presented as issues on appeal.  The homeowner, appearing on her own behalf, missed two opportunities to force the pretender lenders into a contested adversary position.

Like many other states, Arizona has section 33-811[c]which mandates waiver of all defenses to a trustee’s sale if the objecting party fails to obtain an injunction before the sale date.  The problem here is that the statute is worded improperly but that issue was never raised.  Obtaining an injunction requires a lawsuit filed against the Trustee and the pretender lenders which results in the issuance of a Temporary Restraining Order and which the homeowner will result in the issuance of a permanent restraining order.

Virtually all non-judicial states have a similar provision.  The obvious problem with this provision which violates due process on its face is that it requires the homeowner to first prove his or her case in court before being allowed to assert and pursue defenses and counterclaims. 

This is precisely the issue addressed in the second edition Attorney’s Workbook regarding the realignment of parties.  In a judicial state all that a homeowner is required to do is deny the allegations of the pretender lender.  This puts the matter at issue and allows the homeowner/borrower to proceed with discovery and all other pre-trial motions.  The Arizona statute relied upon by the appellate court requires the homeowner to utilize a crystal ball to determine the allegations of the pretender lender and then win at a preliminary hearing on the merits of the defenses to a claim that has never been filed. 

The issuance of the TRO in non-judicial states is discretionary and not ministerial or mandatory.  Thus the burden of proof is improperly put on the defending party before the proponent seeking affirmative relief (taking the house) is required to file any pleadings or produce any evidence that could be subject to court scrutiny or challenge by the homeowner. 

As applied, Arizona Revised Statue 33-811 [c] is clearly unconstitutional and violates due process.  The homeowner should simply be permitted to deny the factual allegations contained in the Notice of Default and Notice of Sale.  The appropriate party to bring a lawsuit is not the borrower but either the Trustee or Beneficiary.  Once the borrower has denied the factual allegations, the matter should be converted to a judicial foreclosure which is provided for in Arizona Statutes.  In the absence of the beneficiary starting such a lawsuit, it is the trustee who should file an action in interpleader stating that the Trustee is an uninterested party with no stake in the outcome and alleging that there are two parties each of whom allege an interest in the subject matter of the lawsuit and which are in conflict with each other.  The Trustee, not having the power to conduct hearings (the Trustee is not a special master) has no choice but to take unresolved issues to the court and make its claim for attorney’s fees, costs and expenses to having had to file the interpleader.

Naturally Maidson failed to raise any of these issues. So the appellate court was left with a statue which is “on the books” and which operates to waive all defenses of the homeowner to the Trustee’s sale – in the event the homeowner fails to obtain an injunction before the sale date.  In the Madison case, needless to say, the homeowner failed to obtain and apparently failed to seek an injunction prior to the sale.  Therefore the appellate court was perfectly within its right to simply affirm the trial court’s decision that stated that the homeowner had no right in this instance to assert any defenses.

In such cases of such conflicts of obvious due process the ACLU and other such organizations have occasionally been successful in having an appellate court rule on an issue that was never presented in the trial court and may not even have been presented in the initial briefs of the parties on appeal. 

Hence the outcome of this case, like so many others, was a foregone conclusion simply based on the most simple application of statutory law and the rules of civil procedure as they are currently applied in Arizona. 

Failing to obtain the TRO is therefore the same as admitting all of the allegations of fact contained in the Notice of Default and Notice of Sale and all of the allegations that would have been pled in a judicial foreclosure.  The court affirmed the trial court’s decision to dismiss the homeowner’s lawsuit. 

The kicker in this case is that the appellate court went on to overrule the trial court for having declared Madison a vexatious litigant and further restricting her ability to file future lawsuits.  This was not only a violation of due process it was a demonstration of court bias and I invite attorneys who are committed to the movement to assist Madison in attacking the bias of the trail judge and getting the decision of the trial judge vacated thus rendering the appellate decision moot. 

It is plainly outrageous for any judge to declare that a litigant is vexatious or frivolous when they clearly have never been heard on the merits of any of their claims or defenses.  The retired judge who heard this case should be prevented from hearing any further cases involving foreclosures or related evictions or any other such cases. 

Without beating a dead horse the section of the opinion entitled “background” clearly shows that Madison failed to deny the essential elements of the foreclosure and therefore all of the obvious issues regarding the identity of the creditor, the status of the loan, the nature of the actual transaction, the substitution of beneficiary, the substitution of trustee, and all the other claims and defenses were deemed admitted by both the trial court and the appellate court.  If the case can be reopened on the basis of the bias of the judge and the bias can be shown to have predated the decision that was appealed and if that results in vacating the entire order the homeowner might have had an opportunity to obtain the injunction and assert the claims and defenses, and attack the statute as it is applied.

 This is the reason why I reluctantly agreed to start a national law firm to assist homeowners and borrowers and their lawyers.  I have been doing nothing but writing, educating, and consulting for 5 years only to see the work and analysis performed by me or my team to be presented improperly and after which most defenses and claims were waived.  In the GarfieldFirm.com all of the attorneys recruited will be required to follow appropriate professional standards in the research and advocacy of the positions of clients who sign up for representation. 

There is no guarantee of any result when you hire any attorney or any professional.  The only guarantee is that they will apply their best efforts on your behalf.  The GarfieldFirm.com is a operating under a business model which requires a 50-state rollout to oppose all of the foreclosure mills who currently act in concert with each other.  Their opposition will now be an organized and consistent challenge to the fraudulent proffers of false, forged and fabricated facts and evidence in and out of court.  As I have stated before, we are only halfway through this mighty contest.  Until now we have been taking all the punches.  Now it is our turn.

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Recording and Auctions: AZ Maricopa County Recorder Meets with Homeowners

Posted on May 23, 2012 by Neil Garfield

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Phoenix, May 23, 2012: Last night we had the pleasure of meeting with Helen Purcell, Maricopa County Recorder, after having met with Tom Horne, AZ Attorney General and Ken Bennett, the AZ Secretary of State on issues relating to mortgages, robo-signing, notary fraud, etc.  Many thanks again to Darrell Blomberg whose persistence and gentle demeanor produced these people at a meeting downtown. See upcoming events for Darrell on the Events tab above.

The meeting was video recorded and plenty of people were taking notes. Purcell described the administrative process of challenging documents. By submitting a complaint apparently in any form, if you identify the offending document with particularity and state your grounds, again with particularity, the Recorder’s office is duty bound to review it and make a determination as to whether the document should be “corrected” by an instrument prepared by her office that is attached to the document.

If your complaint refers to deficiencies on the face of the document, the recorder’s office ought to take action. One of the problems here is that the office handles electronic recording via contracts who sign a Memorandum of Understanding with her office and become “trusted submitters.” Title companies, law offices, and banks are among the trusted sources. It appears to me that the mere submission of these documents in electronic form gives rise to the presumption that they are valid even if the notarization is plainly wrong and defective.

If the recording office refuses to review the document, a lawsuit in mandamus would apply to force the recorder to do their job. If they refer matters to the County Attorney’s office, the County Attorney should NOT be permitted to claim attorney client privilege to block the right of the person submitting the document or objection from know the basis of the denial. You have 10 years to challenge a document in terms of notary acknowledgement which means that you can go back to May 24, 2002, as of today.

One thing that readers should keep in mind is that invalidating the notarization does not, in itself, invalidate the documents. Arizona is a race-notice state though which means the first one to the courthouse wins the race. So if you successfully invalidate the notarization then that effectively removes the offending document as a recorded document to be considered in the chain of title. Any OTHER document recorded that was based upon the recording of the offending document would therefore NOT be appropriately received and recorded by the recording office.

So a Substitution of Trustee that was both robo-signed and improperly notarized could theoretically be corrected and then recorded. But between the time that the recorder’s correction is filed (indicating that the document did not meet the standards for recording) and the time of the new amended or corrected document, properly signed and notarized is recorded, there could be OTHER instruments recorded that would make things difficult for a would-be foreclosure by a pretender lender.

The interesting “ringer” here is that the person who signed the original document may no longer be able to sign it because they are unavailable, unemployed, or unwilling to again participate in robosigning. And the notary is going to be very careful about the attestation, making sure they are only attesting to the validity of the signature and not to the power of the person signing it.

It seems that there is an unwritten policy (we are trying to get the Manual through Darrell’s efforts) whereby filings from homeowners who can never file electronically, are reviewed for content. If they in any way interfere with the ability of the pretender lender to foreclose they are sent up to the the County Attorney’s office who invariably states that this is a non-consensual lien even if the word lien doesn’t appear on the document. I asked Ms. Purcell how many documents were rejected if they were filed by trusted submitters. I stated that I doubted if even one in the last month could be cited and that the same answer would apply going back years.

So the county recorder’s office is rejecting submissions by homeowners but not rejecting submissions from banks and certain large law firms and title companies (which she said reduced in number from hundreds to a handful).

What the pretenders are worried about of course, is that anything in the title chain that impairs the quality of title conveyed or to be covered by title insurance would be severely compromised by anything that appears in the title record BEFORE they took any action.

If a document upon which they were relying, through lying, is then discounted by the recording office to be NOT regarded as recorded then any correction after the document filed by the homeowner or anyone else might force them into court to get rid of the impediment. That would essentially convert the non-judicial foreclosure to a judicial foreclosure in which the pretenders would need to plead and prove facts that they neither know or have any evidence to support, most witnesses now being long since fired in downsizing.

The other major thing that Ms Purcell stated was that as to MERS, she was against it from the beginning, she thought there was no need for it, and that it would lead to breaks in the chain of title which in her opinion did happen. When asked she said she had no idea how these breaks could be corrected. She did state that she thought that many “mistakes” occurred in the MERS system, implying that such mistakes would not have occurred if the parties had used the normal public recording system for assignments etc.

And of course you know that this piece of video, while it supports the position taken on this blog for the last 5 years, avoids the subject of why the MERS system was created in the first place. We don’t need to speculate on that anymore.

We know that the MERS system was used as a cloak for multiple sales and assignments of the same loan. The party picked as a “designated hitter” was inserted by persons with access to the system through a virtually non-existence security system in which an individual appointed themselves as the authorized signor for MERS or some member of MERS. We know that these people had no authorized written  instructions from any person in MERS nor in the members organization to execute documents and that if they wanted to, they could just as easily designated any member or any person or any business entity to be the “holder” or “investor.”

The purpose of MERS was to put a grand glaze over the fact that the monetary transactions were actually off the grid of the claimed securitization. The single transaction was between the investor lenders whose money was kept in a trust-like account and then sued to fund mortgages with the homeowner borrower. At not time was that money ever in the chain of securitization.

The monetary transaction is both undocumented and unsecured. At no time was any transaction, including the original note and mortgage (or deed of trust) reciting true facts relating to the loan by the payee of the note or the secured party under the mortgage or deed of trust. And at no time was the payee or secured holder under the mortgage or deed of trust ever expecting to receive any money (other than fees for pretending to be the “bank”) nor did they ever receive any money. At no time did MERS or any of its members handle, disburse or otherwise act even as a conduit for the funding of the loan.

Hence the mortgage or deed of trust secured an obligation to the payee on the note who was not expecting to receive any money nor did they receive any money. The immediate substitution of servicer for the originator to receive money shows that in nearly every securitization case. Any checks or money accidentally sent to the originator under the borrower’s mistaken impression that the originator was the lender (because of fraudulent misrepresentations) were immediately turned over to another party.

The actual party who made the loan was a large group of institutional investors (pension funds etc.) whose money had been illegally pooled into a PONZI scheme and covered over by an entirely fake and fraudulent securitization chain. In my opinion putting the burden of proof on the borrower to defend against a case that has not been alleged, but which should be (or dismissed) is unfair and a denial of due process.

In my opinion you stand a much greater chance of attacking the mortgage rather than the obligation, whether or not it is stated on the note. Admitting the liability is not the same as admitting the note represents the deal that the borrower agreed to. Counsel should object immediately, when the pretender lender through counsel states that the note is or contains a representation of the deal reached by the borrower and the lender. Counsel should state that borrower denies the recitations in the note but admits the existence of an obligation to a lender whose identity was and remains concealed by the pretender in the foreclosure action. The matter is and should be put at issue. If the Judge rules against you, after you deny the validity of the note and the enforceability and validity of the note and mortgage, then he or she is committing reversible error even if the borrower would or probably would lose in the end as the Judge would seem to predict.

Trial is the only way to find out. If the pretenders really can prove the money is owed to them, let them prove it. If that money is theirs, let them prove it. If there is nobody else who would receive that money as the real creditor, let the pretender be subject to discovery. And they MUST prove it because the statute ONLY allows the actual creditor to submit a “credit bid” at auction in lieu of cash. Any auction in which both the identity of the creditor and the amount due was not established was and remains in my opinion subject to attack with a motion to strike the deed on foreclosure (probably on many grounds) based upon failure of consideration, and anyone who bids on the property with actual cash, should be considered the winner of the auction.

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DON’T Leave Your Money on the Table

Posted on May 22, 2012 by Neil Garfield

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Editor’s Comment:

The number of people passing up the administrative review process is appallingly low, considering the fact that many if not most homeowners are leaving money on the table — money that should rightfully be paid to them from wrongful foreclosure activity (from robo-signing to outright fraud by having non-creditors take title and possession).

The reason is simple: nobody understands the process including lawyers who have been notoriously deficient in their knowledge of administrative procedures, preferring to stick with the more common judicial context of the courtroom in which many lawyers have demonstrated an appalling lack of skill and preparation, resulting in huge losses to their clients.

The fact is, administrative procedures are easier than court procedures especially where you have mandates like this one. The forms of complaints and evidence are much more informal. It is much harder for the offending party to escape on a procedural technicality without the cause having been heard on the merits. 

The banks were betting on two thngs when they agreed to this review process — that people wouldn’t use it and that even if they used it they would fail to state the obvious: that the money wasn’t due or in default, that it was paid and that only a complete accounting from all parties in the securitization chain could determine whether the original debt was (a) ever secured and (b) still existence. They knew and understood that most people would assume the claim was valid because they knew that the loan was funded and that they had executed papers that called for payments that were not made by the borrower.

But what if the claim isn’t valid? What if the loan was funded entirely outside the papers they signed at closing? What if the payments were not due? What if the payments were not due to this creditor? And what if the payments actually were made on the account and the supposed creditor doesn’t exist any more? Why are you assuming that the paperwork at closing was any more real than the fraudulent paperwork they submitted during foreclosure?

People tend to think that if money exchanged hands that the new creditor would simply slip on the shoes of a secured creditor. Not so. If the secured debt is paid and not purchased then the new debt is unsecured even if the old was secured. But I repeat here that in my opinion the original debt was probably not secured which is to say there was no valid mortgage, note and could be no valid foreclosure without a valid mortgage and default.

Wrongful foreclosure activity includes by definition wrongful auctions and results. Here are some probable pointers about that part of the foreclosure process that were wrongful:

1. Use the fraudulent, forged robosigned documents as corroboration to your case, not the point of the case itself.

2. Deny that the debt was due, that there was any default, that the party iniating the foreclosure was the creditor, that the party iniating the foreclosure had no right to represent the creditor and didn’t represnet the creditor, etc.

3. State that the subsitution of trustee was an unauthorized document if you are in a nonjudicial state.

4. State that the substituted trustee, even if the substitution of trustee was deemed properly executed, named trustees that were not qualified to serve in that they were controlled or owned entities of the new stranger showing up on the scene as a purported “creditor.”

5. State that even if the state deemed that the right to intiate a foreclosure existed with obscure rights to enforce, the pretender lender failed to establish that it was either the lender or the creditor when it submitted the credit bid.

6. State that the credit bid was unsupported by consideration.

7. State that you still own the property legally.

8. State that if the only bid was a credit bid and the credit bid was invalid, accepted perhaps because the auctioneer was a controlled or paid or owned party of the pretender lender, then there was no bid and the house is still yours with full rights of possession.

9. The deed issued from the sale is a nullity known by both the auctioneer and the party submitting the “credit bid.”

10. Demand to see all proof submitted by the other side and all demands for proof by the agency, and whether the agency independently investigated the allegations you made. 

 If you lose, appeal to the lowest possible court with jurisdiction.

Many Eligible Borrowers Passing up Foreclosure Reviews

By Julie Schmit

Months after the first invitations were mailed, only a small percentage of eligible borrowers have accepted a chance to have their foreclosure cases checked for errors and maybe win restitution.

By April 30, fewer than 165,000 people had applied to have their foreclosures checked for mistakes — about 4% of the 4.1 million who received letters about the free reviews late last year, according to the Office of the Comptroller of the Currency. The reviews were agreed to by 14 major mortgage servicers and federal banking regulators in a settlement last year over alleged foreclosure abuses.

So few people have responded that another mailing to almost 4 million households will go out in early June, reminding them of the July 31 deadline to request a review, OCC spokesman Bryan Hubbard says.

If errors occurred, restitution could run from several hundred dollars to more than $100,000.

The reviews are separate from the $25 billion mortgage-servicing settlement that state and federal officials reached this year.

Anyone who requests a review will get one if they meet certain criteria. Mortgages had to be in the foreclosure process in 2009 or 2010, on a primary residence, and serviced by one of the 14 servicers or their affiliates, including Bank of America, JPMorgan Chase, Citibank and Wells Fargo.

More information is at independentforeclosurereview.com.

Even though letters went to more than 4 million households, consumer advocates say follow-up advertising has been ineffective, leading to the low response rate.

Many consumers have also grown wary of foreclosure scams and government foreclosure programs, says Deborah Goldberg of the National Fair Housing Alliance.

“The effort is being made” to reach people, says Paul Leonard, the mortgage servicers’ representative at the Financial Services Roundtable, a trade group. “It’s hard to say why people aren’t responding.”

With this settlement, foreclosure cases will be reviewed one by one by consultants hired by the servicers but monitored by regulators.

With the $25 billion mortgage settlement, borrowers who lost homes to foreclosure will be eligible for payouts from a $1.5 billion fund.

That could mean 750,000 borrowers getting about $2,000 each, federal officials have said.

For more information on that, go to nationalmortgagesettlement.com.

Filed under: foreclosure | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 40 Comments »

State by State Foreclosure Procedures

Posted on January 24, 2012 by Neil Garfield

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COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary CLICK HERE TO GET COMBO TITLE AND SECURITIZATION REPORT

EDITOR’S NOTE: All non-judicial states have a provision that allows for judicial foreclosure. It is one of the things that is often overlooked. My point has always been that the non-judicial statutes are unconstitutional only if they don’t allow judicial foreclosures and especially if the foreclosing party is allowed to prevail in a case in which the forecloser would otherwise not prevail in a judicial foreclosure. the trustee in non-judicial foreclosure case is a substitute for the court and must act with due diligence — another fact that is often overlooked.

The implication is that the trustee must act some independence for the protection of both the debtor and creditor. That is impossible when the new creditor appearing on the scene essentially files a substitution of trustee in which the “creditor” is appointed as trustee — a very common scenario that is not apparent on its face. The substitute trustee is often not a trustee and doesn’t qualify because it is controlled or even owned (Recontrust owned by BOA) by the new putative creditor.

The reference to “primarily” simply means that the rules of non-judicial foreclosure or the complexities of the case  make it such that a judicial foreclosure is the only way to resolve the issues of the case. Also commercial foreclosures are usually only allowed as judicial. Check the State statutes and see what they provide — the conditions under which non-judicial is permitted and the conditions under which judicial is mandated.

State by State Foreclosure Procedures

This is a general guide only, laws change and you need to check your state statutes for accurate, up to date procedures. Foreclosure type will most often be either judicial or non-judicial, if you have a specific question about a state process, you can ask it on the discussion board. Months to foreclose include the legal minimum required and the probable time length once foreclosure has begun. Deficiency judgments are available in some states if the lender loses money through the foreclosure process, if it is not practical for the lender to enforce a judgment, it will be listed. Homeowner redemption after foreclosure is possible in some states, the time periods are listed where available.

STATE TYPE OF FORECLOSURE MONTHS TO FORECLOSE
MINIMUM/EXPECTED		 DEFICIENCY JUDGMENT REDEMPTION PERIOD
Alabama Primarily Non-Judicial 1/3 Possible and Practical 12 Months
Alaska Both 3/4 Not Practical None
Arizona Both 3/4 Not Practical None
Arkansas Both 4/5 Possible and Practical None
California Primarily Non-Judicial 4/4 Not Practical None
Colorado Primarily Non-Judicial 2/5 Possible and Practical None
Connecticut Judicial/Strict 5/6 Possible and Practical None
Delaware Judicial 3/7 Possible and Practical None
District of Columbia Non-Judicial 2/4 Possible and Practical None
Florida Judicial 5/5 Possible and Practical None
Georgia Primarily Non-Judicial 2/2 Possible and Practical None
Hawaii Primarily Non-Judicial 3/4 Not Practical None
Idaho Non-Judicial 5/6 Possible and Practical None
Illinois Judicial 7/10 Possible and Practical None
Indiana Judicial 5/7 Possible and Practical 3 Months
Iowa Both 5/6 Not Practical 6 Months,if judicial
Kansas Judicial 4/4 Possible andPractical 6-12 Months
Kentucky Judicial 6/5 Possible and Practical None
Louisiana Judicial 2/6 Possible and Practical None
Maine Primarily Judicial 6/10 Possible and Practical None
Maryland Judicial 2/2 Possible and Practical None
Massachusetts Non-Judicial 3/4 Possible and Practical None
Michigan Both 2/2 Possible and Practical 6 Months
Minnesota Both 2/3 Not Practical 6 Months
Mississippi Primarily Non-Judicial 2/3 Possible and Practical None
Missouri Primarily Non-Judicial 2/2 Possible and Practical None
Montana Primarily Non-Judicial 5/5 Not Practical None
Nebraska Judicial 5/6 Possible and Practical None
Nevada Primarily Non-Judicial 4/4 Possible and Practical None
New Hampshire Primarily Non-Judicial 2/3 Possible and Practical None
New Jersey Judicial 3/10 Possible and Practical 10 Days
New Mexico Judicial 4/6 Possible and Practical None
New York Judicial 4/8 Possible and Practical None
North Carolina Non-Judicial 2/4 Possible and Practical None
North Dakota Judicial 3/5 Not Possible 60 Days
Ohio Judicial 5/7 Possible and Practical None
Oklahoma Primarily Judicial 4/7 Possible and Practical None
Oregon Non-Judicial 5/5 Not Practical None
Pennsylvania Judicial 3/9 Not Practical None
Rhode Island Both 2/3 Possible and Practical None
South Carolina Judicial 6/6 Not Practical None
Tennessee Non-Judicial 2/2 Possible and Practical None
Texas Non-Judicial 2/2 Possible and Practical None
Utah Both 4/5 Possible and Practical None
Vermont Both 7/10 Possible and Practical None
Virginia Non-Judicial 2/2 Possible and Practical None
Washington Non-Judicial 4/5 Not Practical None
West Virginia Non-Judicial 2/2 Possible and Practical None
Wisconsin Judicial varies/10 Not Practical None
Wyoming Non-Judicial 2/3 Possible and Practical 3 Months

 

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , , , , , | 39 Comments »

COUNTY RECORDERS MULL MERS PLAN WITH LUMINAQ-LIVINGLIES TO RECOVER LOST REVENUE

Posted on February 25, 2011 by Neil Garfield

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

COUNTY RECORDERS TO IMPOSE FEES AND FINES FOR FAILURE TO RECORD

AUTHORIZED COUNTY GOVERNMENT OFFICIALS:

EMAIL YOUR NAME TO

LUMINAQ.COUNTYRECORDERS@GMAIL.COM

YOUR TITLE

YOUR TELEPHONE NUMBER

YOUR EMAIL TO WHICH YOU WANT THE TELECONFERENCE INVITATION SENT

BILLIONS OF DOLLARS TARGET FOR RECOVERY TO COUNTY REVENUE: We have had several discussions with the County recorder in many states wherein a plan has emerged, with our help, to recover recording fees, documentary stamps, fines, penalties and damages from parties filing foreclosure actions under “cover” of supposed securitization.

The emerging plan takes each foreclosure action and computes the number of intermediaries that were the alleged recipients of an interest in the mortgage or deed of trust and than computes the recording fees and other costs that should have been paid in those transactions. The plan only applies to those cases where the property is in foreclosure proceedings, and is being examined by both judicial and non-judicial state recording offices.

LUMINAQ WWW.LUMINAQ.COM is the new site for the Livinglies store. ProTitleUSA, a partner in LUMINAQ, recently completed a massive project for the FDIC involving thousands of homes. LUMINAQ will provide a tailored COMBO title and securitization report that provides the necessary documentation to support the County Recorder’s claim. A tailored loan level accounting report will assess the fees, costs and penalties.

For those properties currently in foreclosure, clear title cannot be obtained by the bidder or any subsequent holder without proof of payment of the outstanding amounts due. While the foreclosing parties might resist the imposition of these costs, the resistance is likely to be tepid at best, because of the delays in completing the foreclosure and the ability to pass on the costs in the computing the bid for the property at sale. Local rules provide the enforcement mechanism.

For those properties which have already been subject to a foreclosure sale, clear title cannot be obtained by a subsequent buyer without payment of the outstanding amounts due.

LUMINAQ WILL PROCESS THE DATA, BUT ALL MONEY WILL BE PAID DIRECTLY TO THE COUNTY RECORDER’S OFFICE. THE AMOUNT TO BE RECOVERED IS ESTIMATED TO BE IN EXCESS OF $60 BILLION.

With Wisconsin and other states going  into gridlock and turmoil over budget disputes, it is projected that the recovery will significantly ease the budget short-falls on the local level. On State levels, Attorney Generals and Treasurers are taking a sharp look at their tax codes and considering similar plans for the recovery of even more money for unpaid income taxes, intangible taxes, registration fees, penalties, fines and other costs.

A SECURE CONFERENCE CALL WILL BE CONDUCTED IN WHICH AUTHORIZED REPRESENTATIVES OF COUNTY GOVERNMENTS WILL BE ABLE TO PARTICIPATE WITHOUT COST TO GET DETAILS OF THE PLAN AND HOW TO PARTICIPANT.

AUTHORIZED COUNTY GOVERNMENT OFFICIALS (LIMIT 2 PER COUNTY)

EMAIL YOUR NAME TO

LUMINAQ.COUNTYRECORDERS@GMAIL.COM

YOUR TITLE

YOUR TELEPHONE NUMBER

YOUR EMAIL TO WHICH YOU WANT THE TELECONFERENCE INVITATION SENT

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , | 26 Comments »

non-judicial sale is NOT an available election for a securitized loan

Posted on May 28, 2010 by Neil Garfield

NON-JUDICIAL STATES: THE DIFFERENCE BETWEEN FORECLOSURE AND SALE:

FORECLOSURE is a judicial process herein the “lender” files a lawsuit seeking to (a) enforce the note and get a judgment in the amount owed to them (b) asking the court to order the sale of the property to satisfy the Judgment. If the sale price is lower than the Judgment, then they will ask for a deficiency Judgment and the Judge will enter that Judgment. If the proceeds of sale is over the amount of the judgment, the borrower is entitled to the overage. Of course they usually tack on a number of fees and costs that may or may not be allowable. It is very rare that there is an overage. THE POINT IS that when they sue to foreclose they must make allegations which state a cause of action for enforcement of the note and for an order setting a date for sale. Those allegations include a description of the transaction with copies attached, and a claim of non-payment, together with allegations that the payments are owed to the Plaintiff BECAUSE they would suffer financial damage as a result of the non-payment. IN THE PROOF of the case the Plaintiff would be required to prove each and EVERY element of their claim which means proof that each allegation they made and each exhibit they rely upon is proven with live witnesses who are competent — i.e., they take an oath, they have PERSONAL KNOWLEDGE (not what someone else told them),personal recall and the ability to communicate what they know. This applies to documents they wish to use as well. That is called authentication and foundation.

SALE: Means what it says. In non-judicial sale they just want to sell your property without showing any court that they can credibly make the necessary allegations for a judicial foreclosure and without showing the court proof of the allegations they would be required to make if they filed a judicial foreclosure. In a non-judicial state what they want is to SELL and what they don’t want is to foreclose. Keep in mind that every state that allows non-judicial sale treats the sale as private and NOT a judicial event by definition. In Arizona and many other states there is no election for non-judicial sale of commercial property because of the usual complexity of commercial transactions. THE POINT is that a securitized loan presents as much or more complexity than commercial real property loan transactions. Thus your argument might be that the non-judicial sale is NOT an available election for a securitized loan.

When you bring a lawsuit challenging the non-judicial sale, it would probably be a good idea to allege that the other party has ELECTED NON-JUDICIAL sale when the required elements of such an election do not exist. Your prima facie case is simply to establish that the borrower objects the sale, denies that they pretender lender has any right to sell the property, denies the default and that the securitization documents show a complexity far beyond the complexity of even highly complex commercial real estate transactions which the legislature has mandated be resolved ONLY by judicial foreclosure.

THEREFORE in my opinion I think in your argument you do NOT want to concede that they wish to foreclose. What they want to do is execute on the power of sale in the deed of trust WITHOUT going through the judicial foreclosure process as provided in State statutes. You must understand and argue that the opposition is seeking to go around normal legal process which requires a foreclosure lawsuit.

THAT would require them to make allegations about the obligation, note and mortgage that they cannot make (we are the lender, the defendant owes us money, we are the holder of the note, the note is payable to us, he hasn’t paid, the unpaid balance of the note is xxx etc.) and they would have to prove those allegations before you had to say anything. In addition they would be subject to discovery in which you could test their assertions before an evidentiary hearing. That is how lawsuits work.

The power of sale given to the trustee is a hail Mary pass over the requirements of due process. But it allows for you to object. The question which nobody has asked and nobody has answered, is on the burden of proof, once you object to the sale, why shouldn’t the would-be forecloser be required to plead and prove its case? If the court takes the position that in non-judicial states the private power of sale is to be treated as a judicial event, then that is a denial of due process required by Federal and state constitutions. The only reason it is allowed, is because it is private and “non-judicial.” The quirk comes in because in practice the homeowner must file suit. Usually the party filing suit must allege facts and prove a prima facie case before the burden shifts to the other side. So the Judge is looking at you to do that when you file to prevent the sale.

Legally, though, your case should be limited to proving that they are trying to sell your property, that you object, that you deny what would be the allegations in a judicial foreclosure and that you have meritorious defenses. That SHOULD trigger the requirement of re-orienting the parties and making the would-be forecloser file a complaint (lawsuit) for foreclosure. Then the burden of proof would be properly aligned with the party seeking affirmative relief (i.e., the party who wants to enforce the deed of trust (mortgage), note and obligation) required to file the complaint with all the necessary elements of an action for foreclosure and attach the necessary exhibits. They don’t want to do that because they don’t have the exhibits and the note is not payable to them and they cannot actually prove standing (which is a jurisdictional question). The problem is that a statute passed for judicial economy is now being used to force the burden of proof onto the borrower in the foreclosure of their own home. This is not being addressed yet but it will be addressed soon.

Filed under: CASES, CORRUPTION, Eviction, expert witness, Fannie MAe, foreclosure, foreclosure mill, Forensic Analysis Workshop, GTC | Honor, HERS, investment banking, Investor, MODIFICATION, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, STATUTES, trustee, workshop | Tagged: , , , , , , , , , , , , , , , | 7 Comments »

Prima Facie Case and Burden of Proof

Posted on May 14, 2010 by Neil Garfield

In Court, a prima facie case is, in plain English, the completion of a party’s burden of proof. That means if you are seeking AFFIRMATIVE relief from the Court, then you have the burden of proving your case. In order to prove your case you must present evidence. Your evidence must conform to the legal requirements or elements of your lawsuit. So for example if you want to prove a case for damages, you must prove a duty, breach of duty and damages related to the breach of that duty. If you want to prove a case for breach of contract, then you must prove up the contract, the breach of the contract and the damages from that breach. If you are seeking to have the court make the other party do something, like pay you damages, then you are seeking affirmative relief.

In judicial states, there is no issue of who has the burden of establishing a prima facie case. In non-judicial states the issue is muddled because the borrower is required to file a lawsuit even  though it is the “lender” or “creditor” who is seeking affirmative relief. For reasons expressed below, it is my opinion that the prima facie burden in ALL states lies with the the party presuming to be the “lender” or “creditor.” So in all situations in all courts, federal or state, bankruptcy or civil, the burden is on the party seeking to enforce the note or foreclose on the property because when all is said and done, the party actually seeking affirmative relief is the party seeking to recover money or property or both.

Legally, tactically and strategically, it is a mistake and perhaps malpractice to ignore this point because it is at the threshold of the courtroom that the case might be won or lost. If you ignore the point or lose the argument, you are stuck with going beyond the simple position of the homeowner — denial of the claim of the opposing party. Even the petition for temporary restraining order should be translated as the homeowner’s denial of the claim of of the “creditor” and a demand that the creditor prove up its claim.

In other words, once a homeowner denies the claim, the case automatically becomes judicial simply because the parties are in court. At that point the court must adjust the orientation of the parties such that the party claiming affirmative relief becomes the plaintiff and the homeowner becomes the defendant notwithstanding the initial pleading that brought them into court.

The essential legal question is first, what is the prima facie case, and who has the burden of proof? The party seeking affirmative relief is the party seeking to enforce the note and deed of trust (mortgage). That would be the beneficiary under the deed of trust and the party to whom the note is payable. The note is payable legally and equitably to the investors if the securitization of the note was successful. The beneficiary is also the investors, making the same presumption. The party seeking negative relief (i.e., seeking to avoid the enforcement) is the homeowner who may or may not be considered a “borrower” or “debtor” depending upon the outcome of a presentation of facts that include an accounting of ALL receipts and disbursements related to or allocable to the specific loan in question.

It is obvious that in plain language, the party initiating a non-judicial sale is seeking affirmative relief and that in cases where there is an adversary judicial proceeding, the homeowner wishes to deny the claim of the creditor. In non-judicial states where the sale is essentially a private sale NOT based upon judicial proceedings, the mistake made by judges and lawyers alike is that they become confused by the fact that homeowner brought the suit to stop the sale.

That homeowner lawsuit is actually in substance no more than a denial of the claim by the alleged beneficiary under the deed of trust. In practice, the error is compounded by making the homeowner prove a “case” based upon the homeowner’s denial. In effect, this practice presumes the existence of a prima facie case by the alleged creditor or beneficiary, which is a denial of due process. Due process means that first you make a claim, second you prove it and ONLY AFTER the claim and the proof does the opposing party have ANY obligation to offer ANY proof.

Further compounding this error in process, many such states have rules that prevent the homeowner from contesting an eviction (unlawful detainer, writ of possession) even though that is the FIRST TIME the case has been in court. In effect, the Court is making the presumption that legal process has been completed, and giving the Private Sale the status of a judicial order — and then inappropriately and without realizing it, applying the doctrine of res judicata or collateral estoppel in a case where there was no other proceeding, order, adversary hearing or any hearing on law or fact.

Therefore, in my opinion, the party who must establish a prima facie case is the party assuming the position of “creditor” or substitute lender, notwithstanding the apparent orientation of parties in the pleadings. Or, the prima facie case of the homeowner would consist of a denial that the opposing party is a creditor or that any money is due or that a default has occurred. Thus the burden would shift to the party actually seeking affirmative relief anyway. The prima facie case for the party seeking affirmative relief would require the following elements:

  • Establishment of the originating transaction
  • Establishment of chain of title as to homeowner
  • Establishment of chain of title as to obligation
  • Establishment of chain of title as to note
  • Establishment of chain of title as to deed of trust or mortgage
  • Establishment of chain of securitization documents
  • Establishment of acceptance of subject loan into each successive loan pool
  • Establishment of true party in interest and standing
  • Establishment of 1st party payments
  • Chain of 1st party payments step by step to the true party in interest
  • Chain of 3rd party payments step by step to the true party in interest
  • Establishment of allocation of 3rd party payments and receipts to subject loan
  • Accounting for all receipts and disbursements from all sources
  • Establishment of default date
  • Establishment of current status of the loan
  • Establishment of balance due
  • Establishment of encumbrance and status
  • Allocation of encumbrance to the property (if encumbrance covers future payments other than principal and interest — like taxes and insurance payable to 3rd parties, then the court must allocate a monetary value to the encumbrance for the benefit of the beneficiary)

The above elements would only be satisfied by the Court’s acceptance of testimony and documents with adequate foundation to be admitted into evidence. It would require actual persons with actual knowledge based upon personal observation, participation or experience with whatever aspect of the transaction is within the scope of their direct examination proffered by the party seeking affirmative relief. By virtue of the confusing panoply of documents, events and facts applicable to a securitized loan, it is my opinion that no legal presumptions would apply with respect to the obligation, note, encumbrance or default.

Hence, non-payment by the payor shown on the note would not give rise to the presumption of a default because of the explicit reference to third party payments, insurance and credit enhancements in the securitization documents. The party seeking affirmative relief would be required to proffer the testimony of a competent witness (probably someone from the investment banker that created the securitization chain and/or someone from the trading desk of the investment bank) that would provide a record and status of third party payments, receipts and disbursements allocable to the loan pool in which the subject loan was securitized. Failure to do so would lead to the conclusion of a failure of proof, or, in the court’s discretion, requiring the homeowner to cross examine each witness offered by the party seeking affirmative relief with the following question: “So you don’t know whether any third party made payments that would offset losses or principal in the loan pool, is that right?”

Filed under: CDO, CORRUPTION, Eviction, expert witness, foreclosure, Forensic Analysis Workshop, GTC | Honor, Investor, Mortgage, Motion Practice and Discovery, securities fraud, Securitization Survey, Servicer, STATUTES, trustee, workshop | Tagged: , , , , , , , , , , , | 40 Comments »

Foreclosure Defense and Offense: Conversion of Non-Judicial Steamroller to Judicial Process Where Your claims are Heard on the Merits

Posted on October 15, 2008 by Neil Garfield

If you are living in a state with non-judicial procedures, it also allows judicial procedures. The ONLY time the non-judicial procedure should be used is in slam dunk cases, of which there are nearly none, so the Trustee on teh Deed of Trust is violating his fiduciary duty to the homeowner when he fails to do due diligence, discovering the securitization and chain of title problem with the note and mortgage.

If your state does not have a specific procedure for converting the process to judicial, then you must do one of two things — either file suit or file an affidavit of non-compliance with TILA, RESPA and State and other Federal Laws in the county where the property is located in the recording offices where deeds and mortgages are filed. This will cloud the title and hopefully require the “lender” to step into the light and prove his case, saving you the expense and time of filing your complaint.

By forcing the “lender” to start judicial foreclosure proceedings it means that they will be required tof ile and seve a lawsuit on you. In that lawsuit they need to make certain allegations regarding the ownership of the note and mortgage and attach copies of what theya re talkilng about. IN some cases, the lender might just disaapear if you file anything in the county records that would require them to make allegations and submit documents that are fraudulent.

Filed under: CDO, currency, Eviction, foreclosure, GTC | Honor, Mortgage | Tagged: , , , , | 11 Comments »

Mortgage Meltdown: Don’t wait for the Cavalry

Posted on February 29, 2008 by Neil Garfield

It isn’t coming. Practicality is being trumped by ideology and politics. Help will not arrive in time to help you. You must help yourself. Whether you have a lawyer to help or not, you need to aggressively defend, refuse to cooperate and demand judicial fairness. If you all pile into the court system, the court system will not have the personnel or infrastructure to accommodate you. You force the hand of the judges, clerks and other members of the judicial system to come up with procedures that give you your day in court. You are entitled to be heard in a court of law and they cannot and will not take that away from you. 

It doesn’t matter whether you have a sub-prime mortgage, a standard mortgage, purchased a new home or purchased an existing home. Prices, terms and mortgages were unfairly and fraudulently inflated.  

Even if the nay-sayers were right that it was your own fault for not being educated enough, not being sophisticated enough, being too trustful, and that you should have known better, you will be doing a disservice to yourself, your family, your neighborhood, state and your country by rolling over and letting them take your house. 

The simple fact is that more than 20 million homeowners are going to be subject to severe consequences as a result of the stagflation, recession and depression that is already underway. That means more than 60 million people are going to be negatively impacted by an economy that was torpedoed by industries that were supposed to be properly regulated and were not. 

Write a letter, file a motion and go down to the courthouse and ask the clerk for any file that has a contested foreclosure in it. Copy the motions, copy the discovery requests, and add to them as you see fit. Get copies of discovery from other case files. get friendly with the clerks and enlist their aid.

Find out the rules about serving discovery requests and motions and follow them. When the lender stonewalls the discovery, file Motions to Compel and motions for Contempt.  Make this your second job if you have another one. 

In discovery make sure you get copies of all internal emails, documents, and presentations made to third parties who were prospectively going to purchase or re-market the risk element of the loan. 

Get a hold of the business plan outlined internally on how this plan would work. Find references or emails to appraisers, mortgage brokers, real estate brokers, developers, etc. and include them in your suit if you can. 

Have someone competent audit your mortgage to see if there are differences between disclosures and the actual amounts they charged you. There are usually differences that will put the lender on the defensive. 

Find out the names and contact information of those who were decision-makers (file interrogatories asking for this information) and get every document they have and take their deposition to see what they knew about your deal and others like your deal. Ask them what their instructions were on approving loans. Ask them if they had any personal doubts about the rapidly rising prices of housing. 

File a counterclaim for fraud. Google it up and you’ll find many examples. File a counterclaim for rescission. File a claim for breach of fiduciary duty (lenders have that duty to borrowers). Make it expensive and embarrassing for the lender to foreclose. It is never too late. File an appeal if you can. 

File an emergency petition in Federal Court alleging denial of due process, violation of your civil rights through improper application of state action. Foreclosure may be an appropriate remedy in normal circumstances but not where you were knowingly and intentionally tricked into a deal where you reasonably relied upon the misrepresentations of a group of conspirators giving you the misleading impression, upon which you relied, that the property was worth what you were paying for it and that the mortgage had been reviewed by experts who concluded that your financial circumstances were such that you could pay for it. 

You tried and failed because of factors well-known to the lenders who were selling off the risk to unsuspecting investors and therefore did not care whether you defaulted or not. 

The lenders were motivated strictly by greed without any sense of or actual accountability. They enlisted the tacit and overt agreements in conspiracy with appraisers, mortgage brokers, developers, closing agents and others who all contributed their part in misleading you into a deal that was false, misleading, damaging to your finances, damaging to your health, and damaging to your financial reputation, FICO score etc. 

Their behavior fulfills the requirements of racketeering, fraud, and crimes against local, state and federal government. You are entitled to damages and you are entitled to equitable relief. You not only lost everything you put into that house at closing, you lost the value of the improvements, furnishings, landscaping and appliances you added after closing. 

You are entitled to the benefit of the bargain, to wit: you were promised a house that you could afford and that was worth what you paid for it. The proper remedy is NOT for you to move out and the lender to take over the investment. The proper remedy is for the lender to adjust the mortgage, pay you damages and give you the payment schedule that you could afford. 

Go to your local property appraiser’s office and file forms to get your house deceased in appraised value. It will reduce your taxes and serve as proof of the true value of your house. Fight for the lowest level you can get. Use auction values in your neighborhood and short sales.  

If you want to settle the claim with the lender, get help. But here are some talking points for you. There are others, but this will get you started.

1. Reduction of mortgage note to 80% of current fair market value. Use an arbitrary formula we have come up with in the GTC|Honors program: Take the original purchase price and reduce it 25%.

2. Adjustment of payment to Fed Funds rate plus 1% fixed 30 year amortization

3. Allow lender to participate in increased fair market value at the time of refinance or sale to recover the downward adjustment of the principal on the mortgage note. I would suggest that they get 25% of the increase in value starting with the date of your settlement and ending with 30 days prior to the refinance or sale. If the value increases to an amount higher than the original purchase price, then let the lender participate at a rate of 75% of the increase over the original purchase price up to the amount of the adjustment they agreed to in the settlement without interest accruing on the adjustment. 

4. Get a moratorium on payments for 3-6 months so you can get on your feet again. But you’ll still have to pay for taxes and insurance. 

5. Delete the PMI provision if you have one and if you want to. Don’t delete it if you can afford it.

6. Insert a 60 day grace period for payments under the new plan.

7. Both parties agree to general release of all other claims.

8. No additional financial disclosure required. This is not anew loan. This is the loan you should have received when they first agreed to give you financing. 

9. If you can’t stay in the house because of inability to make even minimum payments, get some payment for damages.

10. In all cases get a letter from the lender that says you are are not and never were in default that you can send into the credit reporting agencies. 

And make sure you keep track of your attorney fees, costs and expenses and get a payment for that from the lender even if you compromise and add it to the back end of the mortgage (tacked on without interest accruing).

Bankruptcy IS an option but it should be avoided if possible. A lot of the rules are stacked against you now after the recent changes. But in bankruptcy you can file an adversary proceeding that will bring up the same issues and you could get favorable treatment. bankruptcy judges are usually quite sophisticated and very sympathetic to those seeking relief. Litigation in federal Court is more complex than state court litigation. Make sure you get help.

 

Filed under: bubble, CDO, community banks, credit unions, currency, Eviction, foreclosure, GTC | Honor, interest rates, Investor, Mortgage, Obama, politics, securities fraud | Tagged: , , , , , , , , | 1 Comment »

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