The US BANK-BOA-LaSalle-CitiGroup Shell Game

‘The bottom line is that the notice of substitution of Plaintiff in judicial states, or notice of substitution of Trustee in non-judicial states should be the first line of battle. Neither one of them is valid and in both cases you have a stranger to the transaction being allowed to name itself as creditor, name its own controlled entity or subsidiary as trustee, and then ignore the realities of the money paid to the real creditor. They are claiming damages from the borrower — all for a debt that in the ordinary course of things has already been paid several times over. But it is true that it wasn’t paid to THEM because THEY were never and are not now the creditor fulfilling the definition of a creditor who could bid at the foreclosure auction. It is not that the borrower doesn’t owe money when he borrows it, it is that he doesn’t owe it to any of the people who are claiming it. And that is what gives rise to liability of law firms to borrowers.” Neil F Garfield,

If our information can be corroborated through discovery with a corporate representative of US BANK or Chase Bank as the servicer, it is possible that a solid cause of action can be filed against the law firm that brought the action, particularly if the law firm took its instructions from the Desktop system of LPS.

In that system law firms are instructed to file foreclosures without contact with the actual client. We saw several cases where sanctions were levied against lawyers and their alleged clients, but none so stark as the one in Florida where the lawyer for US Bank as Trustee for XXX, when faced with questions he couldn’t answer admitted that he had never spoken with anyone from U.S> Bank and didn’t know who had retained his firm.

The law firm that brought the foreclosure action and especially the law firm that is demanding an assignment of rent to protect a creditor who has already been paid through non stop servicer advances was most likely not authorized to demand the assignment of rents which might be why there was no written demand as required by statute. I am considering the possibility of an actual lawsuit against one such law firm for interference with contract on both the foreclosure and the assignment of rents issue.

The Banks are being very cagey about this system — one which they would never use for their own portfolio loans, which begs the question of why they would have two entirely different system of accounting and legal process. But the long and the short of it is that LPS in Jacksonville, Florida is used much the same way as MERS. It maintains a database service that requires a user name and password and that gives unlimited access to the client folders. Anyone can go in and authorize the foreclosure based upon a default that is invested by the person entering the data. They leave out any servicer advances or other third party payments and arrive at an amount to reinstate that is just plain wrong. So virtually all notices of default are wrong which means that the required notice is defective.

You should know that many judges appear unimpressed that there was no valid assignment of the mortgage. I think that it is clearly reversible error. The assignment frequently is clearly fabricated and back-dated because of references to events that happened a year after the assignment was executed. The assignment clearly did not exist at the time of the lawsuit and the standing issue is clear under Florida law although some courts are balking at the idea that standing cannot be cured after the lawsuit. The reasoning is quite simple — if it were otherwise, you could file suit against a grocery store for a slip and fall, and the go over to the store to have your slip and fall.

In one of my cases involving multiple properties, they have an assignment that was prepared and executed by Shapiro and Fishman supposedly dated in 2007 —- but it refers to Bank of America as successor by merger to LaSalle. it is backdated, fabricated and fictional, which is to say, fraudulent.

The assignment has two problems –— FACIALLY DEFECTIVE FABRICATION OF ASSIGNMENT:  the first problem is that the alleged BOA merger with LaSalle could not have happened before 2008 — one year after the assignment was executed. So the 2007 assignment refers to a future event that was not reported by BOA until 2008, and was not approved by the Federal Reserve until 2008. On its face, then, based upon public record, the assignment is void as a total fabrication.

The second problem is that it is unclear as to how the merger could have occurred between BOA and La Salle, to wit:. you might need to read this a few times to understand the complexity of the issues involved — issues that few judges or lawyers are interested enough to master.

Since neither entity vanished in the deal it is an acquisition and not a merger. LaSalle and ABN AMRO did a reverse merger in 2007.

That means that while LASalle was technically the acquirer, because it “bought” ABN AMRO, and ABN AMRO became a subsidiary — the reality is that LaSalle issued so many shares for the acquisition of ABN AMRO that the ABN AMRO shareholders received the overwhelming majority of LaSalle Shares compared to the former owners of LaSalle shares.

Hence in substance LaSalle Bank was a subsidiary of ABN AMRO and the consolidated financial statements show it. But in form it appears as the parent.

So if someone, like BOA, was to say they merged with or acquired LaSalle, they would also be saying that included its subsidiary ABN AMRO — and they would have to do the deal with the shareholders of ABN AMRO because those shareholders control LaSalle Bank, which brings us to CitiGroup —-

CITIGROUP MERGER WITH ABN AMRO: Also in 2007, CitiGroup announced and continues to file sworn statements with the SEC that it had merged with ABN AMRO, which means, if you followed the above, that CitiGroup actually owned LaSalle. It looks more like an acquisition than a merger to me but the wording makes it unclear. This would mean that LaSalle still technically exists as a subsidiary of  CitiGroup.

ALLEGED BOA MERGER WITH LASALLE: In 2008 the Federal Reserve issued an order approving the merger of BOA and LaSalle, in which case LaSalle vanishes — but ABN AMRO is the one with all the assets. BUT LaSalle is named as Trustee of the asset pool. And the only other allowable trustee would be another bank that merged with LaSalle as a successor without the requirement of filing more papers to be a Trustee and BOA clearly qualifies on all counts for that. Section 8.09 of PSA.

But the Federal Reserve order states that the identities of ABN AMRO and LaSalle are the same and the acquisition of one is the acquisition of the other — thus unintentionally ratifying CitiGroup’s apparent position that it owns ABN AMRO and thus LaSalle.

Findings of fact by an administrative agency are presumptively true although subject to rebuttal.

Here is the kicker: there is no further mention in any SEC filings of a merger between BOA and LaSalle, unless I missed it. There is no reference to the fact that CitiGroup controlled LaSalle and ABN AMRO at the time of the Federal Reserve order approving the BOA merger with LaSalle Bank in 2008.

CitiGroup has not, to my knowledge ever reported the sale or loss or merger of LaSalle. Since Citi made the acquisition before BOA, and since BOA apparently did not buy LaSalle from Citi, how could BOA claim to be a successor by merger with LaSalle?

Hence there are questions of fact as to whether BOA ever consummated any transaction in which it acquired or Merged with LaSalle, which while technically possible, makes no business sense. UNLESS the OBJECTIVE was to transfer the interest of LaSalle as trustee to BOA, as a precursor to a much wider deal in which BOA then sold its position as Trustee to US Bank as a  commodity and then filed in the Kalam cases a notice of substitution of Plaintiff without amending the pleadings.

US BANK Notice of Substitution of Plaintiff without Any Motion to Amend Pleadings: The reason they filed it as a notice was that they obviously did not want to allege the purchase of “being a trustee”, which would have been a contested issue in the pleadings. But the amendment is required in my opinion and there should be a motion to strike the notice of substitution of Plaintiff without amendment. The motion to strike should state that no objection to granting the order to amend, but that the circumstances should be pled and we should be able to respond with a denial and affirmative defenses if you choose.



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

Ethan C. Nobles writes in First Arkansas News:

    • The U.S. Bankruptcy Court for the Eastern District of Arkansas, Jonesboro Division, ruled on a case at the end of September that may well have a substantial impact on non-judicial foreclosure proceedings in the state.
    • Before getting into that, it’s worth mentioning that Arkansas is one of about half of the state in the Union that allow non-judicial foreclosures. All states, of course, allow a creditor to foreclose on a home through the courts system, but not all of them have non-judicial procedures in place.
    • Non-judicial foreclosures are, indeed, less costly for lenders and expedited. For those reasons, the non-judicial foreclosure process has become the most popular route for lenders to take when they deem it necessary to take homes from defaulting borrowers.
    • According to companies dealing with foreclosures, the case of In Re Johnson (case nos. 3:10-bk-19119, 3:11-bk-10602 and 3:10-bk-16541 in the Eastern District of Arkansas, Jonesoboro Division) has caused the number of foreclosure proceedings to drop significantly since the court issued its ruling on Sept. 28.
    • In a nutshell, the court found that lenders not authorized to do business in Arkansas can’t properly utilize the state’s Statutory Foreclosure Act as codified in Ark. Code Ann. §§ 18-50-101 through 18-50-117.(1)
  • The aforementioned non-judicial foreclosure act requires all companies wanting to take back homes under that act must be authorized to do business in the state — a real problem for mortgage companies located out-of-state that are servicing loans paid on by Arkansans.

For more, see Bankruptcy court throws wrench in non-judicial foreclosure proceedings.

See also, Bankruptcy court ruling slows down foreclosure sales in state, indicating that national title insurers may be beginning to slam the brakes on Arkansas realty sales involving homes recently foreclosed in non-judicial proceedings.

For the court ruling, see In Re Johnson, Case Nos. 3:10-bk-19119, 3:11-bk-10602, 3:10-bk-16541 (Bankr. E.D. Ark., Jonesboro Div. September 28, 2011).

Editor’s Note: Buried in footnote 4 of the court ruling is this point of interest:

  • The Court notes that counsel for the Debtors argued that a determination that the statute had been violated would make any sale under the Statutory Foreclosure Act void ab initio. No property sales actually resulted from the foreclosure proceedings in these cases. The sole dispute in these cases is whether the foreclosure fees and costs incurred through use of Arkansas’ non-judicial foreclosure process are owed.

(1) According to the court:

  • Absent compliance with Ark. Code Ann. § 18-50-117, J.P. Morgan’s avenue for foreclosing on these properties was that of judicial foreclosure through the courts, not through Arkansas’ non-judicial foreclosure process.

The court also made this observation on the Arkansas statutory provisions authorizing the use of non-judicial foreclosure procedings in the state:

  • These statutory provisions must be strictly construed. See Robbins v. M.E.R.S., 2006 WL 3507464, at *1 (Ark. Ct. App. 2006) (“It is also true that the Arkansas Statutory Foreclosure Act, being in derogation of common law, must be strictly construed.”)

Posted by Home Equity Theft Reporter at 12:07 AM   E



DON’T TAKE ANYTHING FOR GRANTED. Just because the NAME WELLS FARGO APPEARS, IT MIGHT NOT BE QUALIFIED. If the entity named is a Wells Fargo subsidiary or other entity that is NOT a bank or other institution described here, then they can’t be a trustee. If they can’t be a Trustee, the Trust deed is probably no better than a nominee beneficiary which would be void or voidable.

Note SECTION B also — that the trustee cannot have a conflict of interest with the beneficiary. If they show up in court in one case claiming rights as as a beneficiary in a similar transaction involving the same pool, they are creating a question of fact that can only be resolved in a judicial foreclosure. And in the case of a substitution of trustee who facially or factually does not qualify, the substitution of trustee may be void or voidable.

33-803. Trustee of trust deed; qualifications

A. Except as provided in subsection B, the trustee of a trust deed shall be:

1. An association or corporation doing business under the laws of this state as a bank, trust company, savings and loan association, credit union, insurance company, escrow agent or consumer lender. [Question: what if they ARE a bank but not qualified under State law to conduct business as a bank in this particular state? Or to be more esoteric, what if they are qualified to do business as a bank but hey are not acting as a bank in this transaction?]

2. A person who is a member of the state bar of Arizona.

3. A person who is a licensed real estate broker under the laws of this state.

4. A person who is a licensed insurance producer under the laws of this state.

5. An association or corporation that is licensed, chartered or regulated by the federal deposit insurance corporation, the comptroller of the currency, the federal home loan bank, the national credit union administration, the farm credit administration, the federal reserve board or any successors.

6. The parent corporation of any association or corporation referred to in this subsection or any corporation all the stock of which is owned by or held solely for the benefit of any such association or corporation referred to in this subsection.

B. An individual trustee of a trust deed who qualifies under subsection A shall not be the beneficiary of the trust, but such restriction shall not preclude a corporate or association trustee that qualifies under subsection A and while acting in good faith from being the beneficiary, or after appointment from acquiring the interest of the beneficiary by succession, conveyance, grant, descent or devise.

C. A trustee of a trust deed who qualifies under subsection A shall not lend or delegate the trustee’s name or corporate capacity to any individual or entity that does not qualify as a trustee of a trust deed. An individual, company, association or corporation shall not circumvent the requirements of subsection A by acting in concert with a nonqualifying trustee.

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