Concealed Side Agreements Should be the Target of Discovery Demands by Homeowners

Posted on September 21, 2020 by Neil Garfield

Would you entrust all your money to some thinly capitalized company who wanted total control over all your assets? No you wouldn’t and neither does any bank in an industry that virtually define security and control.

So when I received a recent email regarding a “Power of Attorney” (POA) purportedly executed by Argent/Ameriquest to another company proclaiming itself to be a “servicer” my reply was don’t believe it.

I can virtually guarantee that Argent never executed any power of attorney and that the person who was the signatory was a contract laborer whose signature was stamped or forged. The reason is that no bank or other financial institution would ever sign such a document in earnest. It is all a sham.


This is where knowledge of the industry comes into play. When dealing with assets that are in 6-7 figures, financial institutions have all sorts of protective mechanisms to make sure that the money doesn’t disappear.

Servicing contracts, for example, are very specific if they are outsourced — and nobody gets to change the terms of any mortgage loan without express authority granted in writing by an officer of the creditor company who has been authorized by a corporate resolution from the board to perform that function. It doesn’t happen any other way and that is true for all residential loans regardless of what documents are presented by the lawyers who get them from the servicer who gets them from a document preparation service which is controlled by a central repository (Black Knight) who in turn is operating under strict restrictions imposed by its contract with investment banks or their intermediaries.


So when a modification is executed making it look like the “creditor” is the servicer, without any mention, warranty or representation about the identity of some other group or company that is the creditor, the servicer is not actually doing the modification, even though correspondence is going out on the Servicer’s “letterhead.”

And the servicer cannot then claim that the loan is owned by them because (a) it isn’t, (b) they are operating under restrictions in side agreements that are concealed and (c) the servicer does not actually have any opportunity to handle funds arising from payments from the borrower or from sales of the borrower’s home. All of that is a mirage.


Banks don’t sign or accept real POAs because they are subject to revocation, expiration and in the case of homeowner transactions they are actually quite vague. That is because there are other agreements in which the grantee of a POA agrees that its name can be used but that it won’t really be doing anything.

If that were not true then servicers could have and no doubt would have made off with hundreds of billions of dollars.

 
This is sleight of hand. They show you one document that looks facially valid, but there are other concealed documents that make it clear that the grantee has no such powers. Every PSA reads that way too. It looks on the front end that the trustee has something to do, but in the end the trustee has nothing it can do.

The side documents to the PSA or POA are the actual servicing agreements and the actual trust agreements that are always concealed. Those are the documents homeowners should be asking for. Accepting the POA or the PSA is a trap. 

*Neil F Garfield, MBA, JD, 73, is a Florida licensed trial attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.*

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Filed under: foreclosure | Tagged: , , , , | 1 Comment »

Another Sham: The Sudden Rise of Powers of Attorney in Foreclosure Cases

Posted on March 24, 2016 by Neil Garfield

The entire foreclosure mess has been predicated upon one huge false premise — that by fabricating reams of paper, each one tied to the other or apparently tied to others, rights are suddenly created where none existed. This has never been the law but it suddenly has become the underpinning of most decisions in favor of banks and servicers who are strangers to the transactions upon which they are making claims.

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Just want to point out that the reason why they are using a Power of Attorney (POA) instead of a servicing agreement is that the servicing rights are retained by the Master Servicer and sometimes even the subservicer. While the POA might appear to grant full authority it is missing the servicing functions including accounting for borrower payments and payments to the “investor(s)”. Especially when you add the element of entries made at or near the time of the transaction. This is another reason why homeowners who are alleged borrowers should be able to look at those transactions and see if the “business record” is correct. Once again we come back to discovery as the essential time to bring this up.

All of this makes it impossible for the latest entity to legally receive an application for modification. When you scratch the surface and actually ask the question the answer is always the same — that the “corporate representative” of the latest entity in the game of musical chairs can neither offer nor accept any modification and in fact is there purely for the purpose of getting the foreclosure judgment and forced sale of the property — an event that puts a judges order and a court clerk’s certificate on top what is in actuality a pile of empty, worthless paper.
The inability and/or unwillingness of the Plaintiff or its newest “attorney in fact” to show the actual money trail and actual deposits and disbursements, is a key factor in showing that other documents upon which the  banks and servicing are relying (using legal presumptions to fake their way through the process) are now suspect and thus not deserving of the application of the legal presumptions that ordinarily would apply to facially valid or recorded documents.
Remember the newest entity supplying records is NOT the Plaintiff. Judges tend to treat them as though they w ere the Plaintiff. This element of distraction by the lawyers for the banks and servicers has served them well. The Judge treats the newest entity as the Plaintiff when in fact they are not alleged to be holder, owner or have any interest or authority at all. And for good measure let’s not forget that the newest entity has no authority and possesses no “business records” (as an exception tot he hearsay rules of evidence) if it claims authority from an entity that has no power to give such authority. The entire foreclosure mess has been predicated upon one huge false premise — that by fabricating reams of paper, each one tied to the other or apparently tied to others, rights are suddenly created where none existed. This has never been the law but it suddenly has become the underpinning of most decisions in favor of banks and servicers who are strangers to the transactions upon which they are making claims.
The bottom line is that the party charged with enforcement is not a servicer but rather an enforcer. As an enforcer and since they do not have all the rights, obligations etc of a Master Servicer or subservicer, can their business records still be admissible? If they are only the enforcer and they are relying upon their stringent audit of the business records, that sounds more like a fact witness or even an expert witness than a party who has actual authority to service the loan.

The issue becomes split. The new entity that is not a servicer and therefore not charged with servicing duties, should not be able to claim that it has authority to bring the action in the name of another entity. The servicer clearly could but the attorney in fact is really a material witness whose sole function is to testify about the business records. The assumption is made that as the successor to prior alleged servicers, they can claim a chain of custody. But a company that in actuality is there for e the sole purpose of getting “business” records” into evidence is a fact witness who deserves no more presumptive credibility than any other witness.

The “servicer” claim by way of a POA is therefore a sham.

Filed under: foreclosure | Tagged: , , , , , , , , , | 18 Comments »

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