How to Undermine the Credibility of Deutsch, Wells Fargo et al.

The entire securitization strategy is thus predicated upon the ability to convince a judge to presume facts, even if they are untrue.

The pattern of misconduct revealed in the track record of the major banks could be used to undermine the legal presumptions and force the proof of the loan, purchase etc.

BUT the major banks don’t often appear as the claimant in foreclosure cases even though it is they who are pulling the strings and who will receive the proceeds of foreclosure and it is they who receive the proceeds of mortgage payments. Neither the investors nor the nonexistent trusts see one penny.

So the challenge is to tie in the major bank who is the underwriter of the certificates sold in the name of the fake trust and who also names itself as “Master Servicer” of the fake trust with essentially no duties.

This requires a sea change in how foreclosure defense is conducted. And it is a rough road.

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Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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[IN RESPONSE TO SOME QUESTIONS ABOUT THIS ARTICLE, I AM NOT DOING A 180. IN ITS SIMPLEST FORM WE ARE TALKING ABOUT TWO (2) BANKS — ONE WHO RENTS ITS NAME OUT TO BE USED “AS TRUSTEE” TO THE OTHER BANK WHO IS THE UNDERWRITER OR SUCCESSOR TO THE UNDERWRITER AND ALSO WHO SERVES AS “MASTER SERVICER” OF A NONEXISTENT TRUST. — THE UNDERWRITER IS NOT REALLY ACTING AS UNDERWRITER NOR AS MASTER SERVICER. IT IS STILL AN INTERMEDIARY BETWEEN INVESTORS AND BORROWERS BUT ASSUMES THE ROLE OF PRINCIPAL.]

Clients keep asking the same question: they point to the most recent news article detailing the corruption and malfeasance of the banks and ask how knowledge of such behavior could help their foreclosure defense. Remember that the news articles are not convictions proving they did what is alleged. So you would have to prove that the alleged acts in other cases were (a) actual and (b) relevant to your specific case in foreclosure.

People who go to court sounding off about the reportedly bad acts by their opponent gain nothing. In fact, it weakens their case because they sound like conspiracy theorists.

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However, I am working on a strategy of bringing in a pattern of bad acts to use as a prospective tool to defeat the legal presumptions on which the entire foreclosure claim rests. This requires a knowledge of the burden of proof. So in order to defeat the presumptions you only need to show that a reasonable inference can be made that the documents or testimony might be fabricated or misleading and that therefore the court should use no presumptions of fact or law and require actual proof from the claimant. This is possible.
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Such a ruling by the court will most certainly end the case because there are no facts in real life on which the claimants in most foreclosure can win the case. Their success rests solely on presumptions of validity, authenticity and conclusions.
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Legal presumptions can be applied as a convenience if the source of the document or act is credible. The challenge here is to show that the supposed evidence from which the legal presumptions are then applied is self-serving, not produced by a party who is neutral as to the outcome and having a pattern of malfeasance and negligence etc., such that there is a reasonable inference that documents produced by them in a foreclosure case are suspect, and therefore they are not entitled to the presumption. This is not a high bar.
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Hence they must actually prove the loan, the purchase of the loan the ownership, the right to service etc. And they must prove the actual existence of the foreclosing party — remembering that when a trust is implied as the foreclosing party it most likely does not exist and therefore could not possibly own anything much less your loan.
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Your opposition will fight tooth and nail to avoid such a ruling. They know that there is no case they can prove without employing the use of legal presumptions that results in implied findings of fact that are opposite to the true facts. The entire securitization strategy is thus predicated upon the ability to convince a judge to presume facts, even if they are untrue.
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Your strategy should be limited to undercutting those presumptions and raising reasonable inferences and questions about the self-serving documents that are being used by attorneys to lead the court into applying legal presumptions that should not be applied.
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Note to foreclosure defense lawyers: Deep down inside most of you believe that foreclosure defense consists of the use of technicalities to make mountains out of mole hills. You still believe that the debt is valid, your client owes it, your client defaulted and that the foreclosure is a valid exercise of collateral protection. So you don’t want to be associated with game-playing and delays because you think that it will negatively impact your standing in the legal community. What you are doing is erroneously applying the legal presumptions before you enter the courtroom. Take away those legal presumptions and look at the case from a real world prospective, not from what you think must be true. And think about your standing in the your legal community when you start winning these cases.

TONIGHT! How to confront legal presumptions and get to the real facts.

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

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

 

Foreclosure defense essentially boils down to three major categories. Procedural errors, lack of standing and absence of an actual creditor.
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Procedural errors involve improper notice, improper accounting, and inconsistent documents.
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As for no creditor and no party with standing, it all depends upon the burden of proof decided by the judge. If he/she says the forecloser must prove their case with facts and not presumptions, then you probably will win. If he/she says you must prove lack of standing and/or the absence of a creditor then you must file for discovery and hope that the judge won’t sustain objections.
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But there is a middle ground that I have been writing about. It’s all about legal presumptions regarding facially valid documents and self-authenticating signatures. The New York case I wrote about yesterday explains it better than I do.
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The bottom line is that in our system any party who makes an assertion must prove it and the party against whom such assertion is made must have an opportunity to challenge it. If it is not challenged by pleadings or objections then the “fact” is true for purposes of the case at hand.
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In certain circumstances certain facts are legally presumed to exist unless they are challenged with at least some credible evidence that shows the presumed facts may not be true.
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Tonight we talk about how to deal with those presumptions and how much proof you need to undermine the presumptions and thus force the foreclosing party (if it exists at all) to prove its case with real evidence, testimony and documents that are valid and authenticated.
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Based upon 12 years of experience with this issue I have concluded with complete certainty that the named foreclosers are pretenders and that they have no right, title or interest in the loans. More importantly I have concluded that the lawyers for the named foreclosers do not have witnesses nor documents that can be corroborated or authenticated.
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This leaves ownership of the debt in the winds. The fact that the court is not given the information necessary to conclude that the party who initiated foreclosure is not the creditor and that as far as the case is concerned  no creditor stepped forward is not a problem for homeowners. It is a problem for the banks who want the courts to grant foreclosure to whoever claims it.

Hawaii Supreme Court: Yes to wrongful foreclosure counterclaim BEFORE foreclosure is completed and no to”plausible” pleading

Now that the courts are no longer in fear of precipitating an economic meltdown, it’s time to return to legal decisions instead of political decisions. The Hawaii Supreme Court has done just that in a common sense decision that sweeps aside most of the Wall Street arguments against allowing homeowners to raise the fraudulent foreclosure issue. The decision goes back decades in reaffirming the law and the intent of the rules of civil procedure.

The bottom line is that homeowners must be allowed an opportunity to prove their claim at the same time they are defending a foreclosure action. This levels the playing field and hopefully is a harbinger of future decisions from the high court in each of the states.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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see Landmark Hawaii Supreme Court Case

BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP FKA COUNTRYWIDE HOME LOANS SERVICING LP, Respondent/Plaintiff-Appellee, vs. GRISEL REYES-TOLEDO, Petitioner/Defendant-Appellant,

Remember that while this decision could be used as persuasive authority, it is not binding authority over the courts of any state other than Hawaii.

There are several parts to this decision each consistent with the others.

  1. On a motion to dismiss, plausibility of the allegations are now irrelevant. The homeowner must be given the opportunity to prove the allegations of the complaint. As the Court correctly points out, the plausibility test requires some consideration of some facts that have not been proven or disproven. Hence the plausibility test conflicts directly with the presumption, on a motion to dismiss, that all allegations are true. “Notice pleading” is the law in Hawaii and purportedly is so in many other states where plausibility tests are nonetheless applied. This opinion may go a long way to reversing that erroneous trend.
  2. Notice pleading requires only a short plain statement of ultimate facts upon which the relief sought could be granted. But I would add that the rules about fraud and deceit are still in play, i.e., I don’t believe that any state, including Hawaii would allow a count sounding in fraud without giving some examples in the pleading of the misleading and/or deceitful way that the defendant(s) acted. This decision basically addresses violation of statute and similar kinds of actions.
  3. The implication of this decision is that the pleading should be short and that the homeowner must be given a fair chance to prove his/her allegations.
    1. I am quite certain that this Court would insist on allowing discovery to penetrate far more deeply that is currently generally allowed.
    2. The arguments that the actual transactions and the actual creditor’s identities are private, proprietary and remote was silly to begin with.
    3. This decision will be used by practitioners in Hawaii to demand access to records and to get it through court orders. This alone will result in a landslide of settled cases under seal of confidentiality — if lawyers for homeowners insist on such discovery.
  4. Further moving the ball forward, this Court decided emphatically that claims of wrongful foreclosure can be filed in a counterclaim against the parties involved with the  initiation of wrongful or illegal foreclosure proceedings. That means that contrary to California law and other states, the homeowner does not need to wait to file the claim.
    1. This is a two edged sword. It virtually mandates the filing of the wrongful foreclosure claim because the clock is probably ticking on the statute of limitations the moment the foreclosure is initiated by either judicial or nonjudicial means.
    2. The California doctrine has always been ridiculous and anti-consumer. By denying access to the courts for what is already known to be a wrongful foreclosure based upon false documentation they tie both hands behind the backs of attorneys representing homeowners in foreclosure cases.
    3. Knowing this, most lawyers are now declining representation of homeowners despite clear defects, lies and fabrication of documents relied upon by the lawyers supposedly representing a foreclosing party that many times does not even exist.
    4. Hence the doctrine that wrongful foreclosure claims ONLY arise after the foreclosure is complete produces an absurd result. Once the homeowner proves his/her claims they shouldn’t have lost their home, their life-style and their credit reputation, all based upon illegal acts that were known at the outset, the only remedy under that doctrine is money damages.
  5. The decision also addresses the very important issue of standing. Simply stated, if some party is designated as the foreclosing party, it is the duty of that party and the attorney representing that party to perform sufficient due diligence as to
    1. whether the entity exists,
    2. whether it has possession of the note,
    3. whether the note is endorsed to them by a party who owned the debt,
    4. whether the mortgage or deed of trust was assigned to them by a party that owned the mortgage and the debt, and
    5. whether the debt was in fact transferred from a party who owned the debt to the party claiming the right to foreclose.
  6. If they fail or refuse to perform that due diligence they are violating the law in Hawaii and most likely in dozens of other states. In Hawaii that alone gives rise to a cause of action for damages if damages can be proven, which in most cases is fairly easy. So they are liable for damages if they didn’t perform due diligence.
  7. If they did perform the due diligence and filed knowing that the threshold markers of legal standing are absent, it is malicious abuse of process, it is breach of statutory duties, and it is fraud because the filing of the the lawsuit is a representation that the due  diligence was completed and showed legal standing. And it is probably RICO.

Summary: While it is difficult to predict how and when other states will react to this opinion, it seems likely that this decision in the State of Hawaii will make jurists in other states very uncomfortable. The bias to rule for the alleged foreclosing party just received a blow to any rationality supporting that bias.

Sheila Bair Had a Plan to Make Banks Pay for Dishonest Dealing Causing the 2008 Crash

Sheila Bair (ex FDIC Chairwoman) has always understood. She was fired for understanding. It’s hard to understand that the TBTF banks were NOT speculating and never lost any money. Harder still to understand how they stole trillions of dollars from the US economy. And finally harder still to understand how “lenders” could cause a crash.

It’s really quite simple. Usually prices and values are within the same range. Fair market value has always been closely related to the ability of people to pay for housing — i.e., household income. Prices rise when demand becomes high OR, and this is the big one, when the big banks flood the market with money.

Like the 2008 crisis if you look at the Case Schiller Index, you will see that prices went through the roof by unprecedented increases while fair market value was flatlined. The crash was thoroughly predictable and was predicted on these pages and by many other economists and financial analysts.

For more than two decades, maybe three, the housing market has been floating on a sea of unsustainable debt because the investment banks became the “source” of funds in a marketplace where their principal objective was movement of money instead of management of risk. That is because investment banks do that while commercial banks and other lenders don’t — unless they are paid to act as though they are the lender in a transaction where they have no risk. Then they will advertise to people with low FICO scores and anyone else whose loan is likely to fail. They bet on the failure of the loan and the collapse of certificates issued as derivatives.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consent to many people and lawyers so they can spot the key elements of a scam. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

===========================

Hat tip Greg da Goose

https://www.huffingtonpost.com/entry/why-does-wells-fargo-still-exist_us_5b80148ee4b0729515126185

From Huffington Post:

“Wells Fargo may not even be the worst big bank out there. Citigroup, another merger monstrosity, is so poorly pieced together that today, Wall Street investors don’t even believe the bank is worth its liquidation price. JPMorgan Chase has notched 52 fines and settlements since the crash. Goldman Sachs has 16, three of them this year.

In a revealing interview with New York Magazine earlier this month, former FDIC Chair Sheila Bair said she wished regulators had broken up a bank after the crisis, probably Citigroup. [Editor’s note: Obama initially gave that order but Tim Geithner refused]. Forcing at least one institution to pay the ultimate corporate price would have put pressure on other major firms to clean up their acts.

Both the Bush and Obama administrations rejected Bair’s plan. And so today, the American banking system ― rescued by taxpayers a decade ago to protect the economy ― has transformed into a very large, very profitable criminal syndicate.”

So I ask the question again: “Why are foreclosure defense lawyers not more aggressive about challenging legal presumptions upon which the banks and judges rely?”
Legal presumptions are ONLY supposed to be used in cases where (1) the source of the document or testimony is credible and has no interest in the outcome of the litigation and (2) it serves “judicial economy.”
The banks have been publicly humiliated for acting like thieves, liars, fabricators, and the source of sophisticated mechanical forgeries. Neither they nor their puppet “servicers” are entitled to a presumption of anything. If they want to proffer a fact, make them prove it. These people are so not credible that we regularly talk about robosigners, robowitnesses and other people who are hired to say or write something about which they have no knowledge or understanding. Where is the credibility in that?
And equally where is the judicial economy? In all cases where the presumptions are used and the homeowner contests the foreclosure it would take FAR LESS time for the so-called lender to prove its case with actual facts (not presumed facts) than to spend years changing servicers, changing recorded documents, changing Power of Attorney, etc.
Where is the prejudice?  If the Defense raises issues as to the standing and facts alleged in the complaint or initiation of foreclosure proceedings, then the obvious answer is to have the “lender” prove their case with real facts in the real world that do not rely upon jsut testimony from robowitnesses or documents that have been robosigned.

TONIGHT! How to distinguish between legal presumptions of facts and the facts themselves

A client of our internet services store asked a simple question. He had asked the opposing side if they were a holder in due course. What he received was evasive and misleading and essentially never answered the question. Now what? Below is my answer to his question and what we will be discussing tonight on the The Neil Garfield Show

How the banks confuse judges, foreclosure defense lawyers and homeowners by wrongfully inoking legal presumptions.

Thursdays LIVE! Click in to the The Neil Garfield Show

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

 

You have already achieved the intermediate goal. At this point you can argue that you asked for the identity of the holder in due course and they were unable or unwilling to provide the information. The confusion emanates from the fact that a holder can sue on the note if it has the right to enforce the note, which right must come from the creditor.
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But the apparent rebuttable legal presumptions run against you. In every case the success of the foreclosure is entirely dependent upon the success of the foreclosure mill attorneys in invoking legal presumptions of fact because the actual facts differ from what is presumed by the Judge.
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But the one legal presumption that would wipe out virtually all borrower defenses is NEVER invoked — the status of holder in due course. Because that would mean proving that a purchase of the debt, note and mortgage occurred in which the foreclosing party is or was the purchaser in good faith and without knowledge of the borrower’s defenses. Instead the crafty lawyers get judges to presume that the foreclosing party should be treated as a holder in due course, thereby evading their true burden of proof.
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It’s no mystery why they don’t use the holder in due course allegation. But the absence of such an allegation simply and logically leads to a conclusion. One or more of the elements is missing. Which part? Is it the purchase, the good faith or knowledge?

Tonight! DISAPPEARING LEGAL PRESUMPTIONS on the Neil Garfield Show 6PM EDT With Charles Marshall, Esq. and Bill Paatalo

Just the Facts, Ma’am!

Thursdays LIVE! Click in to the The Neil Garfield Show

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

Charles Marshall, California attorney and Bill Paatalo, private investigator, discuss the implications of two Hawaii cases that are mirroring other decisions across the country.

Hawaii Schranz Case

Hawaii St. John Case

The above links go to two recent Hawaii cases dealing with legal standing. The fundamental fact of law is that standing must be ACTUAL NOT PRESUMED.

Specifically the issue is whether the foreclosing party actually had the original note at the time the foreclosure was commenced. Reasserting that standing is jurisdictional and therefore must be proven (with actual facts) present before a party takes any action, the courts here reversed (not for publication) Summary Judgments in favor of U.S. Bank and BONY Melon respectively.

The basis of the ruling is really that summary judgment could not have been granted based upon the submissions of so-called trustees of the probably nonexistent trust that never owned the debts. These decisions can be read as brushing aside presumptions and requiring actual proof of the facts that were heretofore assumed or presumed. The reason is simple. Standing is jurisdictional. Since any case that proceeds without jurisdictional is void and subject to being vacated, the proof must be actual and not presumed.

The interesting reasoning in these decisions is that many courts, including these decisions in Hawaii are starting to rethink their formal and informal presumptions. At the height of the tidal wave of foreclosures the courts took to the notion that the foreclosing party would not have filed if they were not the creditor or at least the possessor of the note with rights to enforce. The giant leap that came thereafter was a ruling that presumed the foreclosing party had possession of the note and the right to enforce it.

These decisions show that there is more movement toward requiring proof rather than the sue of legal presumptions. In plain language the courts are beginning to distrust the banks who bring these actions on behalf of alleged trusts.

Since there was question of fact, the summary judgment could not be granted. Thus the court decisions lay out the procedure, requiring actual proof of contested facts rather than resolving them strictly on the basis of applying legal presumptions which we all know leads to erroneous factual and legal conclusions.

Maine Case Affirms Judgment for Homeowner — even with admission that she signed note and mortgage and stopped paying

While this case turned upon an  inadequate foundation for introduction of “business records” into evidence, I think the real problem here for Keystone National Association was that they did not and never did own the loan — something revealed by the usual game of musical chairs that the banks use to confuse and obscure the identity of the real creditor.

When you read the case it demonstrates that the Maine Supreme Judicial Court was not at all sympathetic with Keystone’s “plight.” Without saying so directly the court’s opinion clearly reveals its doubt as to whether Keystone had any plight or injury.

Refer to this case and others like it where the banks treated the alleged note and mortgage as being the object of a parlor game. The attention paid to the paperwork is designed by the banks to distract from the real issue — the debt and who owns it. Without that knowledge you don’t know the principal and therefore you can’t establish authority by a “servicer.”

The error in courts across the country has been that the testimony and records of the servicer are admissible into evidence even if the authority to act as servicer did not emanate from the real party in interest — the debt holder (the party to whom the MONEY is due.

Note that this ended in judgment for the homeowner and not an involuntary dismissal without prejudice.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Hat Tip to Bill Paatalo

Keybank – maine supreme court

Here are some meaningful quotes from the Court’s opinion:

KeyBank did not lay a proper foundation for admitting the loan servicing records pursuant to the business records exception to the hearsay rule. See M.R. Evid. 803(6).

KeyBank’s only other witness was a “complex liaison” from PHH Mortgage Services, which, he testified, is the current loan servicer for KeyBank and handles the day-to-day operations of managing and servicing loan accounts.

The complex liaison testified that he has training on and personal knowledge of the “boarding process” for loans being transferred from prior loan servicers to PHH and of PHH’s procedures for integrating those records. He explained that transferred loans are put through a series of tests to check the accuracy of any amounts due on the loan, such as the principal balance, interest, escrow advances, property tax, hazard insurance, and mortgage insurance premiums. He further explained that if an error appears on the test report for a loan, that loan will receive “special attention” to identify the issue, and, “[i]f it ultimately is something that is not working properly, then that loan will not . . . transfer.” Loans that survive the testing process are transferred to PHH’s system and are used in PHH’s daily operations.

The court admitted in evidence, without objection, KeyBank’s exhibits one through six, which included a copy of the original promissory note dated April 29, 2002;3 a copy of the recorded mortgage; the purported assignment of the mortgage by Mortgage Electronic Registration Systems, Inc., from KeyBank to Bank of America recorded on January9, 2012; the ratification of the January 2012 assignment recorded on March 6, 2015; the recorded assignment of the mortgage from Bank of America to KeyBank dated October 10, 2012; and the notice of default and right to cure issued to Kilton and Quint by KeyBank in August 2015. The complex liaison testified that an allonge affixed to the promissory note transferred the note to “Bank of America, N.A. as Successor by Merger to BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP,” but was later voided.

Pursuant to the business records exception to the hearsay rule, M.R. Evid. 803(6), KeyBank moved to admit exhibit seven, which consisted of screenshots from PHH’s computer system purporting to show the amounts owed, the costs incurred, and the outstanding principal balance on Kilton and Quint’s loan. Kilton objected, arguing that PHH’s records were based on the records of prior servicers and that KeyBank had not established that the witness had knowledge of the record-keeping practices of either Bank of America or Countrywide. The court determined that the complex liaison’s testimony was insufficient to admit exhibit seven pursuant to the business records exception.

KeyBank conceded that, without exhibit seven, it would not be able to prove the amount owed on the loan, which KeyBank correctly acknowledged was an essential element of its foreclosure action. [e.s.] [Editor’s Note: This admission that they could not prove the debt any other way means that their witness had no personal knowledge of the amount due. If the debt was in fact due to Keystone, they could have easily produced a  witness and a copy of the canceled check or wire transfer receipt wherein Keystone could have proven the debt. Keystone could have also produced a witness as to the amount due if any such debt was in fact due to Keystone. But Keystone never showed up. It was the servicer who showed up — the very party that could have information and exhibits to show that the amount due is correctly proffered because they confirmed the record keeping of “Countrywide” (whose presence indicates that the loan was subject to claims of securitization). But they didn’t because they could not. The debt never was owned by Keystone and neither Countrywide nor PHH ever had authority to “service” the loan on behalf of the party who owns the debt.]

the business records will be admissible “if the foundational evidence from the receiving entity’s employee is adequate to demonstrate that the employee had sufficient knowledge of both businesses’ regular practices to demonstrate the reliability and trustworthiness of the information.” Id. (emphasis added).

 

With business records there are three essential points of reference when several entities are involved as “lenders,” “successors”, or “servicers”, to wit:

  1. The records and record keeping practices of the initial “lender.” [If there are none then that would point to the fact that the “lender” was not the lender.] Here you are looking for the first entries on a valid set of business records in which the loan and fees and costs were posted. Generally speaking this does not exist in most loans because the money came a third party source who knows nothing of the transaction.
  2. The records and record keeping practices of any “successors.” Note that this is a second point where the debt is separated from the paper. If a successor is involved there would correspondence and agreements for the purchase and sale of the debt. What you fill find, though, is that there is only a naked endorsement, assignment or both without any correspondence or agreements. This indicates that the paper transfer of any rights to the “loan” was strictly for the purpose of foreclosing and bore new relationship to reality — i.e., ownership of the debt.
  3. The records and record keeping practices of any “servicers.” In order for the servicer to be authorized, the party owning the debt must have directly or indirectly given authorization and come to an agreement on fees, as well as given instructions as to what functions the servicer was to perform. What you will find is that there is no valid document from an owner of the debt appointing the servicer or giving any instructions, like what to do with the money after it is collected from homeowners. Instead you find tenuous documentation, with no correspondence or agreements, that make assertions for foreclosure. The game of musical chairs has bothered judges for a decade: “Why do the servicers keep changing” is a question I have heard from many judges. The typical claims of authorization are derived from Powers of Attorney or a Pooling and Servicing agreement for an entity that neither e exists nor does it have any operating history.

Expired, Forged, Robo-Signed Notary: How to use it.

THE GOAL IS TO SHOW THAT THE ABSENCE OF A TRANSACTION, NOTWITHSTANDING THE REFERENCE IN A DOCUMENT.

While the defective notarization does not itself invalidate the document, it certainly suggests questions about how that happened and then to question whether the same thing happened with other documents or endorsements. If you can cast sufficient doubt as to the trustworthiness of documents (and the party proffering it to the Court) of then the laws of evidence require that the proffering party actually prove the transaction instead of having the Court presume that the transaction referenced in a document actually existed.

Get a consult! 202-838-6345

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

Whether an instrument is notarized or not it is still valid between the parties to the instrument. So a mortgage for instance is required to be notarized only to get it recorded, which is for the protection of the lender and not for the protection of the debtor. Whether it was recorded or not the mortgage becomes enforceable when it is signed.

So the problem is this: if the notary’s commission expired, then the instrument was not properly “RECORDED”. Theoretically there is an academic argument to challenge the procedural legitimacy of a foreclosure if the notary was forged or expired. But as a practical matter nothing changes in the end. However, if some judge is convinced that not having recorded it in county records means that the lien was not perfected, it could cause substantial delays in the process.

BUT all that said, the use of a notary that has expired suggests that the notary was robosigned. AND robosigning could be evidence that other documents are robosigning, which is a form of forgery. And robosigning itself suggests the possibility or even likelihood of fabrication of documents including the note, assignments, endorsements etc. CAUTION: You cant just say it. You most prove the possibility or even probability of forgery, fabrication and robo-signing.

Establishing relevant and sincere doubt is easier than proving the “defense” of defective instruments etc.

If the robo-signing and fabrication issue are properly highlighted at trial or in motions THEN you have cast doubt on the trustworthiness of all the documents (or at least the ones where robo-signing and forgery are put into question). THAT in turn suggests that legal presumptions arising from the apparent facial validity of an instrument would not apply. Check the laws of your state.

In Florida once sufficient doubt is cast upon the trustworthiness of the documents, the documents are no longer sufficient to prove the truth of the matter asserted — i.e., in a note that money was loaned to the homeowner, in an assignment that the debt was sold (not just a sale of the paper instrument). This would require the the party proffering said documents to go in reverse, which we are very confident they cannot do — i.e., they must first establish the transaction and then prove that the instrument is an accurate reflection of the actual financial transaction.

There is no “prejudice” to a foreclosing party if they must prove up the transactions, since they are asserting that those transactions occurred anyway. What has changed is that instead of presuming and assuming the transactions shown on the documents were real, they must simply prove that the transaction occurred by showing delivery of money in exchange for the note, or money in exchange for the assignment or money in exchange for the endorsement.

Attacking Legal Presumptions:”False in One, False in All”

Anyone defending a foreclosure these days should start with the assumption that the entire infrastructure of “loans” and foreclosures consists of lies. This assists in planning objections and cross examination. More importantly it provides the narrative that casts doubt on the trustworthiness of testimony and documentary evidence — which in turn can deprive the the foreclosing party of the essential ingredient to its case: legal presumptions.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Dan Edstrom, senior forensic analyst does a lot of legal research in addition to his work as a forensic analyst. He has reminded me of a concept that is neither a statute nor a legal doctrine, as such, but which is nonetheless applied in many different kinds of cases, I think he is right in his assertion that it ought to be utilized in foreclosure litigation.
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The basic premise of the case for foreclosure is that the homeowner received a loan from the originator and that the current party has purchased the loan. Neither assertion is true in most instances. So the foreclosing party relies on legal presumptions attached to facially valid documents and robo-witnesses that testify to the virtually nonexistent “boarding process.”
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Those legal presumptions are liberally applied in favor of the banks and servicers, who often bring the case in the name of a party who is a complete stranger to the alleged loan. But if the presentation of evidence is interrupted by appropriate objections and followed up with appropriate cross examination it is not uncommon that the witness is lying about the source and authenticity of business records and other documents that are used to “prove” the case for foreclosure.
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The next step, often missed, is to raise the issue of trustworthiness of the testimony and the documents such that the legal presumptions should not apply. Those presumptions, by all accounts, are to be applied in certain circumstances UNLESS there are indications of a lack of trustworthiness.
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Thus the case that should be made is to prove lack of trustworthiness, rather than the virtually futile attempt to prove facts that are almost certainly within the sole care, custody and control of the banks and servicers and who withhold that information because it would show that they are pretenders in their alleged roles. Exposing the lies requires cross examination revealing inconsistencies in the documents or the testimony or both.
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Hence the material necessary for victory could be in the evidence proffered by the the foreclosing party at trial. The more lies you expose, the less relevant are the legal presumptions. And there should be no prejudice to the the opposing side to being required to prove their case without legal presumptions — i.e., proving the loan and the subsequent sales of the loan.
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After exposing these lies then, the defender could move to strike the documents that were admitted based upon legal presumptions, thus requiring the foreclosing party to prove its case without legal presumptions. The motion also serves as a signal to the trier of fact that the evidence admitted over objection from the homeowner should be given little or no weight.
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Here is what Dan sent me, which provoked my writing this article:

The concept of false in one, false in all is frequently used across the country in jury instructions in regards to witness testimony. See California Civil Jury Instructions (“CACI”) 107. Witnesses; see also Book of Approved Jury Instructions (“BAJI”) 2.22; See Bandana Trading Co., Inc. v. Quality Infusion Care, Inc., 164 Cal. App. 4th 1440, 80 Cal. Rptr. 3d 495 (Ct. App. 2008). See also in a criminal case: State v. Ernst, 32 N.J. 567 (1960). More Civil cases: See Lawnton v. Virginia Stevedoring Co., 50 N.J. Super. 564, 581 (App. Div. 1958), Hargrave v. Stockloss, 127 N.J.L. 262, 266 (E.&A. 1941), Coleman v. Public Service Coordinated Transport, 120 N.J.L. 384, 387 (Sup. Ct. 1938). For a full discussion of the use and application of the maxim, see, Vol. 3A Wigmore on Evidence (1970) Sec. 1008 et. seq. “It should certainly not be of importance to tell the ordinary man of the world that he should distrust the statements of a witness whom he believes to be a liar.” (Wallace v. Pacific Electric Ry. Co. (1930) 105 Cal.App. 664, 671 [288 P. 834].)

BAJI 2.22: “A witness, who is willfully false in one material part of is or her testimony, is to be distrusted in others. You may reject the whole testimony of a witness who willfully has testified falsely as to a material point, unless, from all the evidence, you believe the probability of truth favors his or her testimony in other particulars.”

When the conduct of [Plaintiff] in this proceeding is viewed in its entirety, it compels the Court to invoke the ancient and venerable principle of “Falsus in uno, falsus in omni” (Latin; “false in one, false in all”) upon [Defendant] which, after review, is wholly appropriate in the context presented, Deering v. Metcalf 74 NY 501 (1878).

Here is footnote 35 from In re Telfair, 745 F. Supp. 2d 536 – Dist. Court, D. New Jersey 2010
Latin maxim “falsus in uno, falsus in omnibus” is neither a provision adopted by means of any United States statute, regulation, etc., nor a legal canon of any kind. Literally translated into English as “false in one thing, false in everything,” the maxim: (a) prompts logical caution as to the entirety of the position taken by the speaker who, as part of his/her position, misrepresents a certain fact; and, as such, (b) has been adopted into the panoply of policies of American jurisprudence related to the propriety of findings made by the trier of fact. See Kanawha & M.R. Co. v. Kerse, 239 U.S. 576, 581, 36 S.Ct. 174, 60 L.Ed. 448 (1916); Telephone Cases, 126 U.S. 1, 8 S.Ct. 778, 31 L.Ed. 863 (1888) (“[The falsus in uno, falsus in omnibus] rule does not necessarily mean that the man who falsifies once is a liar; but it means that justice will not rest on testimony a substantial part of which is proved to be false”); Hargrave v. Stockloss, 127 N.J.L. 262, 21 A.2d 820 (N.J. (Ct.E. & App.) 1941) (explaining that the maxim is not a rule of law but a guidance that – if testimony of a witness on a material issue is willfully false and given with an intention to deceive, the jurors may disregard the entirety of that witness’ testimony).
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Office: 916.207.6706

Wells Fargo CEO Forced Out Over Scam Customer Accounts

What is important to recognize is that the presumptions from the bench that the banks would not intentionally commit crimes or violations is wrong. It is important because all legal presumptions are predicated upon the supposition of trustworthiness of the party proffering evidence. This presumption is wrong. The banks have been fabricating accounts, “business records” and claims for years throwing the mortgage market and the economy into a deep recession from which we have still not recovered. We can;t recover until the fraud stops.

see http://www.nationalmortgagenews.com/news/compliance-regulation/wells-fargo-ceo-john-stumpf-steps-down-1088708-1.html

It was the CFPB who uncovered this fraud committed by Wells Fargo. AND by the way the CFPB was NOT ruled unconstitutional. The judge merely declared its structure to be unconstitutional because it was not subject to proper oversight. The same judge in the same opinion said that the agency would continue under oversight of the President.

The well-publicized case of Wells Fargo misconduct doesn’t prove anything as to any particular pending case. But it does point to the fact that Wells Fargo (like other TBTF banks) was and is perfectly willing to engage in false representations and creation of fabricated, forged and false documentation in order to increase the value of its stock. Apparently Wells Fargo decided that its stock price is more important than its brand. Other TBTF banks have done the same.

The creation of false accounts for retail bank customers is identical to the creation of false accounts from institutional investors who were led to believe that their money was being used to fund a new entity (an IPO) into which their their money would be placed for management. The entity was mostly a REMIC Trust that existed only on paper and never received the proceeds of sale of MBS instruments. The REMIC was supposed to acquire loans that had been properly originated and subject to the same underwriting standards as the banks would do if they were lending the money themselves. None of that happened.

The money from the MBS purchasers was instead diverted from the REMIC and used to secretly fund loans and to create the illusion of trading profits that were in actuality theft from those investors. The exorbitant fees arising out the “closing” of each mortgage loan was never disclosed. Had the MBS purchasers and homeowners known the truth, they would have known that the investment bank that created this illusion was diverting trillions of dollars away from the economy and which would be lost forever to both the MBS investors and the homeowners who were pawns in this scheme.

MBS purchasers believed they had accounts with their share of MBS issued by Trusts that were funded with investor money and which then acquired loans. In fact, all that happened, was that false end of month statements were delivered to the MBS purchasers lulling them into a sense of false security. The “closing” documents on the “loans” gave the MBS purchasers no interest in the debt, note or mortgage or deed of trust. The investors were left naked in the wind. The payments they were receiving were coming from part of their own money plus the part of the payments of borrowers. The investment bank and its chain of conduits reaped huge fees for these fictional accounts.

Ditching the CEO is just more PR. He still walks away with a king’s ransom.

“Lost” Note Found and Linda Green Assignments

Virtually none of the nonjudicial or judicial foreclosures can be won by banks without use of legal presumptions that lead the court to assume facts that are plainly untrue.

The bottom line is that the rules of evidence require proof of the transaction chain with no right to rely on legal presumptions. The banks can’t do that. Press hard on this issue and experience shows that at the very least a good settlement is in the offing and even a perfectly good judgment for the homeowner would be rendered.

The bottom line to keep your eye on the ball is that the Trust doesn’t own the note and never did; the same thing applies to nearly all bogus “beneficiaries” and “mortgagees.”

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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We have all known that the banks, servicers and trustees have been fabricated, back-dating and forging documents. And they continue to do it because they are getting away with it. In all but a few cases Judges uphold bank objections to reveal the transaction chain in which money is actually exchanged.
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So banks are winning cases based upon legal presumptions stemming from the facial “validity” of the documents. By admitting fabricated documents into evidence and applying, without proper objection, legal presumptions that remove the obligation to actually prove their case, the banks win.
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Homeowners are defenseless because even though they and their attorneys know this is a farce, they have no way to prove it except by access to the only entities that actually have records in which the absence of a real transaction that ever took place — including both the origination of the alleged loan and the presumed acquisition of the loan. .
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But there are several circumstances in which one can argue that the legal presumptions should not be applied and in the absence of the required proof, the party seeking foreclosure can be showed to lack standing. Take for example the lost note, later abandoned and the robo-signed assignment executed by a known robo-signer, which is also later abandoned.
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The lost note is intended to be straight forward — a pleading that says the note was lost, that due diligence has been performed, that the present claimant owns or holds the original note and that the note has not been otherwise negotiated.  It is a lie of course. They never had the note because ti was destroyed intentionally. But they also don’t want to be subject to discovery or requirements of proof as to the chain of possession and the chain of transactions that would prove that the present holder actually owns or holds the note.
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So the tactic employed is to “withdraw” the count stating that the note is lost. And there is where the opportunity for the homeowner comes into play. If they have admitted losing the note, they are admitting that the chain might be broken. By simply withdrawing the lost note count without explanation they have failed to explain how it was found, where it was found and why it was lost.
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In other words the possibility that the note has already been negotiated is still present and the possibility exists that the “original” note is not an original but rather a mechanical reproduction — which leaves the question of the banks either admitting they destroyed it (and explaining that in pleadings, proof at trial or both) or admitting that they cannot produce admissible evidence that they actually own the debt, loan, note or mortgage.
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This possibility is raised to a probability once you establish at least “probable cause” to believe that the foreclosing party is relying upon the utterance of false or fraudulent documentation, at which point they are stripped or should be stripped of the benefits of a legal presumptions that the documents upon which they are relying are true.
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Even if they can come up with the actual original “original” note, they have already put on record that they lost it. Now they withdraw Count I without any amendment to the complaint explaining what happened to the note with no certification of possession and no documents attached to the complaint showing endorsement or assignment at the time of the filing of the lawsuit except that the Linda Green “assignment” was supplied and later abandoned after all the publicity about her which is now in the records I have sent to you.

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So you have 2 “abandonments”: the allegation that the note was lost and the assignment executed by a robo-signer. The banks cover this deficiency by still more paper  — in which the banks file a “corrective” assignment that might withstand scrutiny in place of the original fabricated and forged assignment.
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They want the court to assume that since it is merely a “corrective” assignment that it relates back to the original assignment. But there is no legal presumption that covers that. So if they want to relate the assignment produced AFTER suit was filed with the bogus assignment dated BEFORE the lawsuit was filed then they should be required under the rules of evidence to show and when the assignment really related back to the time they of the transaction in which ownership and rights to enforce were transferred.
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The burden is on the banks to show they had standing before suit was filed or foreclosure was initiated. If they can’t prove by testimony and evidence of proof of payment that they had a transaction in which the loan, debt, note or mortgage was acquired by purchase and sale BEFORE the action was commenced, then they are stuck with their “Corrective” assignment which is obviously filed AFTER the foreclosure suit or forced sale was initiated. ( I need not explore here what they mean by :corrective” other than to say that naming it as a “corrective assignment” doesn’t make it relate back to the prior one.)
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So the only operative assignment is a “corrective” assignment that was filed AFTER the lawsuit was filed. We have no explanation of the chain of possession and there should be no presumptions about the chain of possession since it was their own pleadings that raised the issue.

The only way they reconcile this is by proving that they had an actual transaction resulting in the assignment (the equivalent of a bill of sale) BEFORE the lawsuit. But they have no records listed on their exhibit list showing that they intend to show they actually purchased the loan, debt, note or mortgage before suit was filed. The reason is simple — there was no such transaction. But this time they are not entitled to presumptions since the use of Linda Green’s signature (or some other robo-signor) that was clearly robo-signed has been abandoned and the trustworthiness of the documents are clearly in doubt.

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Under Florida Rules of Evidence on presumptions the proponent must now actually prove an actual transaction without benefit of the legal presumption where the document is at least dubious and does not scream out trustworthiness.

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This could be argued to the Judge as a simple burden of proof problem. The banks must prove their case. The banks have a history in this case of using a fabricated, forged document that they have tacitly admitted by their abandonment of the Linda Green assignment. Therefore they still have a possible case but they must prove the facts of the origination of the loan and the transfers of the loan without benefit of presumptions that those transactions actually took place.

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So you have two problems here that go against the Bank — the failure to explain chain of custody of the lost note and the failure to have an assignment before suit is filed.On both issues there is plenty of case law that says the banks lose in that scenario. But failure to object and I might add failure to educate the judge as to your theory of the case could be fatal.

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So I am suggesting to most lawyers who are not already doing that they file a pretrial memorandum outlining the issues for trial and why you think the court’s ruling’s on evidence should favor of the borrower. There is no real prejudice if the transactions actually took place.

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The only prejudice is that they need to spend a few more minutes showing that the bank, trustee, servicer or whoever paid for the acquisition fo the note and perhaps that the originator actually paid to fund the loan for which the originator is given credit on the note and mortgage.

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If the originator did not fund the loan, that would obviously explain the absence of an actual transaction in which the originator received consideration for the transfer of the loan papers improperly naming the originator as the lender. And it would explain the large fees paid to originator to engage in this pretense despite the Reg Z definition of table funded loans as “predatory per se.”

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Securitization for Lawyers: How it was Written by Wall Street Banks

For more information on foreclosure offense, expert witness consultations and foreclosure defense please call 954-495-9867 or 520-405-1688. We offer litigation support in all 50 states to attorneys. We refer new clients without a referral fee or co-counsel fee unless we are retained for litigation support. Bankruptcy lawyers take note: Don’t be too quick admit the loan exists nor that a default occurred and especially don’t admit the loan is secured. FREE INFORMATION, ARTICLES AND FORMS CAN BE FOUND ON LEFT SIDE OF THE BLOG. Consultations available by appointment in person, by Skype and by phone.

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Continuing with my article THE CONCEPT OF SECURITIZATION from yesterday, we have been looking at the CONCEPT of Securitization and determined there is nothing theoretically wrong with it. That alone accounts for tens of thousands of defenses” raised in foreclosure actions across the country where borrowers raised the “defense” securitization. No such thing exists. Foreclosure defense is contract defense — i.e., you need to prove that in your case the elements of contract are absent and THAT is why the note or the mortgage cannot be enforced. Keep in mind that it is entirely possible to prove that the mortgage is unenforceable even if the note remains enforceable. But as we have said in a hundred different ways, it does not appear to me that in most cases, the loan contract ever existed, or that the acquisition contract in which the loan was being “purchased” ever occurred. But much of THAT argument is left for tomorrow’s article on Securitization as it was practiced by Wall Street banks.

So we know that the concept of securitization is almost as old as commerce itself. The idea of reducing risk and increasing the opportunity for profits is an essential element of commerce and capitalism. Selling off pieces of a venture to accomplish a reduction of risk on one ship or one oil well or one loan has existed legally and properly for a long time without much problem except when a criminal used the system against us — like Ponzi, Madoff or Drier or others. And broadening the venture to include many ships, oil wells or loans makes sense to further reduce risk and increase the likelihood of a healthy profit through volume.

Syndication of loans has been around as long as banking has existed. Thus agreements to share risk and profit or actually selling “shares” of loans have been around, enabling banks to offer loans to governments, big corporations or even little ones. In the case of residential loans, few syndications are known to have been used. In 1983, syndications called securitizations appeared in residential loans, credit cards, student loans, auto loans and all types of other consumer loans where the issuance of IPO securities representing shares of bundles of debt.

For logistical and legal reasons these securitizations had to be structured to enable the flow of loans into “special purpose vehicles” (SPV) which were simply corporations, partnerships or Trusts that were formed for the sole purpose of taking ownership of loans that were originated or acquired with the money the SPV acquired from an offering of “bonds” or other “shares” representing an undivided fractional share of the entire portfolio of that particular SPV.

The structural documents presented to investors included the Prospectus, Subscription Agreement, and Pooling and Servicing Agreement (PSA). The prospectus is supposed to disclose the use of proceeds and the terms of the payback. Since the offering is in the form of a bond, it is actually a loan from the investor to the Trust, coupled with a fractional ownership interest in the alleged “pool of assets” that is going into the Trust by virtue of the Trustee’s acceptance of the assets. That acceptance executed by the Trustee is in the Pooling and Servicing Agreement, which is an exhibit to the Prospectus. In theory that is proper. The problem is that the assets don’t exist, can’t be put in the trust and the proceeds of sale of the Trust mortgage-backed bonds doesn’t go into the Trust or any account that is under the authority of the Trustee.

The writing of the securitization documents was done by a handful of law firms under the direction of a few individual lawyers, most of whom I have not been able to identify. One of them is located in Chicago. There are some reports that 9 lawyers from a New Jersey law firm resigned rather than participate in the drafting of the documents. The reports include emails from the 9 lawyers saying that they refused to be involved in the writing of a “criminal enterprise.”

I believe the report is true, after reading so many documents that purport to create a securitization scheme. The documents themselves start off with what one would and should expect in the terms and provisions of a Prospectus, Pooling and Servicing Agreement etc. But as you read through them, you see the initial terms and provisions eroded to the point of extinction. What is left is an amalgam of options for the broker dealers selling the mortgage backed bonds.

The options all lead down roads that are absolutely opposite to what any real party in interest would allow or give their consent or agreement. The lenders (investors) would never have agreed to what was allowed in the documents. The rating agencies and insurers and guarantors would never have gone along with the scheme if they had truly understood what was intended. And of course the “borrowers” (homeowners) had no idea that claims of securitization existed as to the origination or intended acquisition their loans. Allan Greenspan, former Federal Reserve Chairman, said he read the documents and couldn’t understand them. He also said that he had more than 100 PhD’s and lawyers who read them and couldn’t understand them either.

Greenspan believed that “market forces” would correct the ambiguities. That means he believed that people who were actually dealing with these securities as buyers, sellers, rating agencies, insurers and guarantors would reject them if the appropriate safety measures were not adopted. After he left the Federal Reserve he admitted he was wrong. Market forces did not and could not correct the deficiencies and defects in the entire process.

The REAL document is the Assignment and Assumption Agreement that is NOT usually disclosed or attached as an exhibit to the Prospectus. THAT is the agreement that controls everything that happens with the borrower at the time of the alleged “closing.” See me on YouTube to explain the Assignment and Assumption Agreement. Suffice it to say that contrary to the representations made in the sale of the bonds by the broker to the investor, the money from the investor goes into the control of the broker dealer and NOT the REMIC Trust. The Broker Dealer filters some of the money down to closings in the name of “originators” ranging from large (Wells Fargo, Countrywide) to small (First Magnus et al). I’ll tell you why tomorrow or the next day. The originators are essentially renting their names the same as the Trustees of the REMIC Trusts. It looks right but isn’t what it appears. Done properly, the lender on the note and mortgage would be the REMIC Trust or a common aggregator. But if the Banks did it properly they wouldn’t have had such a joyful time in the moral hazard zone.

The PSA turned out to be the primary document creating the Trusts that were creating primarily under the laws of the State of New York because New York and a few other states had a statute that said that any variance from the express terms of the Trust was VOID, not voidable. This gave an added measure of protection to the investors that the SPV would not be used for any purpose other than what was described, and eliminated the need for them to sue the Trustee or the Trust for misuse of their funds. What the investors did not understand was that there were provisions in the enabling documents that allowed the brokers and other intermediaries to ignore the Trust altogether, assert ownership in the name of a broker or broker-controlled entity and trade on both the loans and the bonds.

The Prospectus SHOULD have contained the full list of all loans that were being aggregated into the SPV or Trust. And the Trust instrument (PSA) should have shown that the investors were receiving not only a promise to repay them but also a share ownership in the pool of loans. One of the first signals that Wall Street was running an illegal scheme was that most prospectuses stated that the pool assets were disclosed in an attached spreadsheet, which contained the description of loans that were already in existence and were then accepted by the Trustee of the SPV (REMIC Trust) in the Pooling and Servicing Agreement. The problem was that the vast majority of Prospectuses and Pooling and Servicing agreements either omitted the exhibit showing the list of loans or stated outright that the attached list was not the real list and that the loans on the spreadsheet were by example only and not the real loans.

Most of the investors were “stable managed funds.” This is a term of art that applied to retirement, pension and similar type of managed funds that were under strict restrictions about the risk they could take, which is to say, the risk had to be as close to zero as possible. So in order to present a pool that the fund manager of a stable managed fund could invest fund assets the investment had to qualify under the rules and regulations restricting the activities of stable managed funds. The presence of stable managed funds buying the bonds or shares of the Trust also encouraged other types of investors to buy the bonds or shares.

But the number of loans (which were in the thousands) in each bundle made it impractical for the fund managers of stable managed funds to examine the portfolio. For the most part, if they done so they would not found one loan that was actually in existence and obviously would not have done the deal. But they didn’t do it. They left it on trust for the broker dealers to prove the quality of the investment in bonds or shares of the SPV or Trust.

So the broker dealers who were creating the SPVs (Trusts) and selling the bonds or shares, went to the rating agencies which are quasi governmental units that give a score not unlike the credit score given to individuals. Under pressure from the broker dealers, the rating agencies went from quality culture to a profit culture. The broker dealers were offering fees and even premium on fees for evaluation and rating of the bonds or shares they were offering. They HAD to have a rating that the bonds or shares were “investment grade,” which would enable the stable managed funds to buy the bonds or shares. The rating agencies were used because they had been independent sources of evaluation of risk and viability of an investment, especially bonds — even if the bonds were not treated as securities under a 1998 law signed into law by President Clinton at the behest of both republicans and Democrats.

Dozens of people in the rating agencies set off warning bells and red flags stating that these were not investment grade securities and that the entire SPV or Trust would fail because it had to fail.  The broker dealers who were the underwriters on nearly all the business done by the rating agencies used threats, intimidation and the carrot of greater profits to get the ratings they wanted. and responded to threats that the broker would get the rating they wanted from another rating agency and that they would not ever do business with the reluctant rating agency ever again — threatening to effectively put the rating agency out of business. At the rating agencies, the “objectors” were either terminated or reassigned. Reports in the Wal Street Journal show that it was custom and practice for the rating officers to be taken on fishing trips or other perks in order to get the required the ratings that made Wall Street scheme of “securitization” possible.

This threat was also used against real estate appraisers prompting them in 2005 to send a petition to Congress signed by 8,000 appraisers, in which they said that the instructions for appraisal had been changed from a fair market value appraisal to an appraisal that would make each deal work. the appraisers were told that if they didn’t “play ball” they would never be hired again to do another appraisal. Many left the industry, but the remaining ones, succumbed to the pressure and, like the rating agencies, they gave the broker dealers what they wanted. And insurers of the bonds or shares freely issued policies based upon the same premise — the rating from the respected rating agencies. And ultimate this also effected both guarantors of the loans and “guarantors” of the bonds or shares in the Trusts.

So the investors were now presented with an insured investment grade rating from a respected and trusted source. The interest rate return was attractive — i.e., the expected return was higher than any of the current alternatives that were available. Some fund managers still refused to participate and they are the only ones that didn’t lose money in the crisis caused by Wall Street — except for a period of time through the negative impact on the stock market and bond market when all securities became suspect.

In order for there to be a “bundle” of loans that would go into a pool owned by the Trust there had to be an aggregator. The aggregator was typically the CDO Manager (CDO= Collateralized Debt Obligation) or some entity controlled by the broker dealer who was selling the bonds or shares of the SPV or Trust. So regardless of whether the loan was originated with funds from the SPV or was originated by an actual lender who sold the loan to the trust, the debts had to be processed by the aggregator to decide who would own them.

In order to protect the Trust and the investors who became Trust beneficiaries, there was a structure created that made it look like everything was under control for their benefit. The Trust was purchasing the pool within the time period prescribed by the Internal Revenue Code. The IRC allowed the creation of entities that were essentially conduits in real estate mortgages — called Real Estate Mortgage Investment Conduits (REMICs). It allows for the conduit to be set up and to “do business” for 90 days during which it must acquire whatever assets are being acquired. The REMIC Trust then distributes the profits to the investors. In reality, the investors were getting worthless bonds issued by unfunded trusts for the acquisition of assets that were never purchased (because the trusts didn’t have the money to buy them).

The TRUSTEE of the REMIC Trust would be called a Trustee and should have had the powers and duties of a Trustee. But instead the written provisions not only narrowed the duties and obligations of the Trustee but actual prevented both the Trustee and the beneficiaries from even inquiring about the actual portfolio or the status of any loan or group of loans. The way it was written, the Trustee of the REMIC Trust was in actuality renting its name to appear as Trustee in order to give credence to the offering to investors.

There was also a Depositor whose purpose was to receive, process and store documents from the loan closings — except for the provisions that said, no, the custodian, would store the records. In either case it doesn’t appear that either the Depositor nor the “custodian” ever received the documents. In fact, it appears as though the documents were mostly purposely lost and destroyed, as per the Iowa University study conducted by Katherine Ann Porter in 2007. Like the others, the Depositor was renting its name as though ti was doing something when it was doing nothing.

And there was a servicer described as a Master Servicer who could delegate certain functions to subservicers. And buried in the maze of documents containing hundreds of pages of mind-numbing descriptions and representations, there was a provision that stated the servicer would pay the monthly payment to the investor regardless of whether the borrower made any payment or not. The servicer could stop making those payments if it determined, in its sole discretion, that it was not “recoverable.”

This was the hidden part of the scheme that might be a simple PONZI scheme. The servicers obviously could have no interest in making payments they were not receiving from borrowers. But they did have an interest in continuing payments as long as investors were buying bonds. THAT is because the Master Servicers were the broker dealers, who were selling the bonds or shares. Those same broker dealers designated their own departments as the “underwriter.” So the underwriters wrote into the prospectus the presence of a “reserve” account, the source of funding for which was never made clear. That was intentionally vague because while some of the “servicer advance” money might have come from the investors themselves, most of it came from external “profits” claimed by the broker dealers.

The presence of  servicer advances is problematic for those who are pursuing foreclosures. Besides the fact that they could not possibly own the loan, and that they couldn’t possibly be a proper representative of an owner of the loan or Holder in Due Course, the actual creditor (the group of investors or theoretically the REMIC Trust) never shows a default of any kind even when the servicers or sub-servicers declare a default, send a notice of default, send a notice of acceleration etc. What they are doing is escalating their volunteer payments to the creditor — made for their own reasons — to the status of a holder or even a holder in due course — despite the fact that they never acquired the loan, the debt, the note or the mortgage.

The essential fact here is that the only paperwork that shows actual transfer of money is that which contains a check or wire transfer from investor to the broker dealer — and then from the broker dealer to various entities including the CLOSING AGENT (not the originator) who applied the funds to a closing in which the originator was named as the Lender when they had never advanced any funds, were being paid as a vendor, and would sign anything, just to get another fee. The money received by the borrower or paid on behalf of the borrower was money from the investors, not the Trust.

So the note should have named the investors, not the Trust nor the originator. And the mortgage should have made the investors the mortgagee, not the Trust nor the originator. The actual note and mortgage signed in favor of the originator were both void documents because they failed to identify the parties to the loan contract. Another way of looking at the same thing is to say there was no loan contract because neither the investors nor the borrowers knew or understood what was happening at the closing, neither had an opportunity to accept or reject the loan, and neither got title to the loan nor clear title after the loan. The investors were left with a debt that could be recovered probably as a demand loan, but which was unsecured by any mortgage or security agreement.

To counter that argument these intermediaries are claiming possession of the note and mortgage (a dubious proposal considering the Porter study) and therefore successfully claiming, incorrectly, that the facts don’t matter, and they have the absolute right to prevail in a foreclosure on a home secured by a mortgage that names a non-creditor as mortgagee without disclosure of the true source of funds. By claiming legal presumptions, the foreclosers are in actuality claiming that form should prevail over substance.

Thus the broker-dealers created written instruments that are the opposite of the Concept of Securitization, turning complete transparency into a brick wall. Investor should have been receiving verifiable reports and access into the portfolio of assets, none of which in actuality were ever purchased by the Trust, because the pooling and servicing agreement is devoid of any representation that the loans have been purchased by the Trust or that the Trust paid for the pool of loans. Most of the actual transfers occurred after the cutoff date for REMIC status under the IRC, violating the provisions of the PSA/Trust document that states the transfer must be complete within the 90 day cutoff period. And it appears as though the only documents even attempted to be transferred into the pool are those that are in default or in foreclosure. The vast majority of the other loans are floating in cyberspace where anyone can grab them if they know where to look.

Bank of America Ordered to Pay $1.2 BILLION for Fraudulent Mortgages

“Given the current environment where robo-signing became institutionalized as a practice even though it is the equivalent of forgery and where fabrication of documents by law offices and “document processors” were prepared according to a published menu of prices, why would anyone, least of all a court of law, apply general principles surrounding presumptions when established fact makes it more likely than not that the presumptions lead to the wrong conclusions? Where is the prejudice to anyone in abandoning these presumptions in light of all the information in the public domain?” — Neil Garfield, livinglies.me

THEY ACTUALLY CALLED IT “HUSTLE”

U.S. District Judge Jed Rakoff in Manhattan ruled nine months after jurors found Bank of America and former Countrywide executive Rebecca Mairone liable for defrauding government-controlled mortgage companies Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) through the sale of shoddy loans by the former Countrywide Financial Inc in 2007 and 2008.

The case centered on a mortgage lending process known as “High Speed Swim Lane,” “HSSL” or “Hustle,” and which ended before Bank of America bought Countrywide in July 2008.

Investigators said the program emphasized quantity over quality, rewarding employees for producing more loans and eliminating checkpoints designed to ensure the loans’ quality. (see link below)

Now that an actual employee of the Bank has also been ordered to pay $1 Million, maybe others will start coming out of the woodwork seeking immunity for their testimony. There certainly has been a large exodus of employees and officers of Bank of America to other Banks and even other industries. They are all trying to distance themselves from the inevitable down fall of the Bank. Meanwhile the corrupt system is heavily engaged with financial news reporting. For every article pointing out that Bank of America might have hundreds of Billions of dollars in legal liabilities for their fraudulent practices in originating, acquiring, servicing and foreclosing mortgages, there are five articles spread over the internet telling investors that BOA is a good investment and it is advisable to buy the stock. I know how that system works. For favors or money some people will write anything.

THE BURDEN OF PLEADINGS AND PROOF MUST BE CHANGED

The question I continue to raise is that if there was an administrative finding of fraud by an agency of the government, which there was, and if there was a jury finding of fraud involved in the Countrywide mortgages (and other mortgages) why are we presuming in court that that the mortgage is valid?

I understand the statutory and common law presumptions arising out of certain instruments that appear to be facially valid. But I propose that lawyers challenge those presumptions based upon the widespread knowledge and information across the public domain that many if not most of the mortgages were procured by fraud, processed fraudulently, serviced fraudulently, and foreclosed fraudulently. In my opinion it is time for lawyers to challenge that presumption in light of the numerous studies, agency investigations and findings that the mortgages, from beginning to end, were fraudulently originated, acquired and processed.

Why should the filings of a pretender lender receive the benefit of the presumptions of validity just because it exists when we already know it is more likely than not that there are no underlying facts to support the presumptions — and knowing that there was probably fraud involved? Why should the burden remain on the borrowers who have the least access to the information about that fraud and who get nothing from the banks during discovery?

Forfeiture of the private residence of a person is the worst outcome of any civil litigation. It is like the death penalty in criminal litigation. Shouldn’t it require intense scrutiny instead of a rocket docket that presumes the validity of the mortgage and note, and presumes that a possessor of a note (that more likely than not was fabricated and forged by a machine) has the right to enforce?

In a REAL transaction in the REAL world, the originator of a loan would demand that all underwriting restrictions be applied, and confirmation of the submissions by the borrower. If anyone was buying the loan in the secondary market, they would demand the same thing and proof that the assignor, endorser or transferor of the loan had title to it in every conceivable way.

The buyer would demand copies of the actual documentation so that they could enforce the loan. These documents would exist and be kept in a vault because the fate of the investment normally depends upon the ability of the “lender” or “purchaser” of the loan to prove that the loan was properly originated and transferred for value in good faith without knowledge of any defenses of the borrower.

In short, they would demand that they receive proof of all aspects in the chain of title such that they would be considered a Holder in Due Course.

Today, nobody seems to allege they are a holder in due course and nobody seems to want to identify any party as a Holder in Due Course or even a creditor. They use the term “holder” with its presumptions as a sword against the hapless borrower who doesn’t have the information to know that his or her loan is likely NOT owned by anyone in the chain claimed by the foreclosing party.

If it were otherwise, all foreclosure cases would end with a thud — the loan would be produced in all its glory with everything in its place and fully disclosed. The only defense left would be payment. Instead the banks are waiting years to run the statute on TILA rescission and TILA violations before they start actively prosecuting a foreclosure.

What bank with a legitimate claim for foreclosure would want to wait before it got its hands on the collateral for a loan in default? Incredibly, these delays which often amount to five years or more, are ascribed to borrowers who are “buying time” without looking at the docket to see that the delay is caused by the Plaintiff foreclosing party, not the borrower who has been actively seeking discovery.

What harm would there be to anyone who is a legitimate stakeholder in this process if we required the banks to plead and prove in all cases — judicial and nonjudicial — the following:

  1. All closing documents with the borrower conformed with Federal and State law as to disclosures, Good Faith Estimate and appraisals.
  2. Underwriting and due diligence for approval of the loan application was performed by [insert name of party].
  3. The payee on the note loaned money to the borrower.
  4. The mortgagee on the mortgage (or beneficiary on the deed of trust) was the source of funds for the loan.
  5. The “originator” of the loan was the lender.
  6. No investor or third party was the creditor, investor or lender at the closing of the loan.
  7. Attached to the pleading are wire transfer receipts or canceled checks showing that the borrower received the funds from the party named on the settlement documents as the lender.
  8. Each assignment in the chain of title to the loan was the result of a transaction in which the loan was sold by the owner of the loan for value in good faith without knowledge of borrower’s defenses.
  9. Each assignment in the chain of title to the loan was the result of a transaction in which the loan was purchased by a bona fide purchaser for value in good faith without knowledge of borrower’s defenses.
  10. Attached to the pleading are wire transfer receipts or canceled checks showing that the seller of the loan received the funds from the party named on the assignment or endorsement as the purchaser.
  11. The creditor for this debt is [name the creditor]. The creditor has notice of this proceeding and has authorized the filing of this foreclosure [see attached authorization document].
  12. The date of the purchase by the creditor Trust is [put in the date]. Attached to the pleading are wire transfer receipts or canceled checks showing that the seller of the subject loan received the funds from the REMIC Trust named in the pleadings as the purchaser.
  13. The purchase by the Trust conformed to the terms and conditions of the Trust instrument which is the Pooling and Servicing Agreement [attached, or URL given where it can be accessed]
  14. The Creditor’s accounts show a deficiency in payments caused by the failure of the borrower to pay under the terms of the note.
  15. All payments received by the creditor (owner of the loan) have been posted whether received directly or received indirectly by agents of the creditor.
  16. The creditor has suffered financial injury and has declared a default on its own account. [See attached Notice of Default].
  17. The last payment received by the creditor from anyone paying on this subject loan account was [insert date].

When I represented Banks and Homeowner Associations in foreclosures against homeowners and commercial property owners, I had all of this information at my fingertips and could produce them instantly.

Given the current environment where robo-signing became institutionalized as a practice even though it is the equivalent of forgery and where fabrication of documents by law offices and “document processors” were prepared according to a published menu of prices, why would anyone, least of all a court of law, apply general principles surrounding presumptions when established fact makes it more likely than not that the presumptions lead to the wrong conclusions? Where is the prejudice to anyone in abandoning these presumptions in light of all the information in the public domain?

see http://thebostonjournal.com/2014/07/30/bank-of-america-ordered-to-pay-1-27-billion-for-countrywide-fraud/

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