Danielle Kelley Looks at New Florida Law: Pitfalls and Possibilities

Posted on June 18, 2013 by Neil Garfield
The fundamental paradigm shift that is coming is that the banks are the deadbeats, not the borrowers. The borrowers are seeking to enforce a fair deal; the banks are seeking to steal and lie their way through the PONZI scheme we called “Securitization.” —Neil F Garfield, Livinglies.me
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SEE ALSO: http://WWW.LIVINGLIES-STORE.COM

The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available TO PROVIDE ACTIVE LITIGATION SUPPORT to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Danielle Kelley, Esq. is a partner in Garfield, Gwaltney, Kelley and White located in Tallahassee. She has been a constant contributor to the dialogue on wrongful foreclosures and has been quoted recently in a number of articles in mainstream media. For further information on the firm’s services please call 850-765-1236.

Editor’s Comment: The Florida bill was clearly meant to speed up the “inevitable” foreclosure process, which is the wrong assumption right off the bat. If the foreclosures are wrongful we are not talking about some “i” that wasn’t dotted or some “t” that wasn’t crossed. We are talking about foreclosures that (a) didn’t need to happen and (b) couldn’t happen legally if the party  bringing the foreclosure had no right to do so.
The fundamental paradigm shift that is coming is that the banks are the deadbeats, not the borrowers. The borrowers are seeking to enforce a fair deal; the banks are seeking to steal and lie their way through the PONZI scheme we called “Securitization.”

Verification of the complaint has taken another bizarre turn. In reading the testimony and affidavits of those who “verified” the complaint, it turns out they signed the verification but knew nothing about the case. The only thing they verified was that the complaint contained information that was given to her or him by unknown parties through computer via a computer monitor.

Banks are using the verification aspect to bolster their false claims to the business records exception of hearsay. They are wrong and any judge who rules that is wrong if the verifier or affiant (a) is not the records custodian and (b) had no basis for personally knowing the truth. Pressed to give an accounting for how they know what they know, the verifier will answer “it’s in the complaint.” They often express confidence that it wouldn’t be in the complaint if it wasn’t true. Talk about circular logic!

The recent revelations about Bank of America are the tip of the iceberg of lying and deception that started when the first mortgage bond was sold and the first loan application was taken within the scope of the PONZI scheme that required bonds to be sold in order to make payments to the investors.

The fact that BOA told its employees to lie to customers in order to get them into foreclosure is enough to infer the truth, to wit: the goal was foreclosures and not financial recovery. How is that possible? What bank would not want the most it could get in mitigation of a “loss” it supposedly incurred as a result of a “default” by a “borrower” on a “debt” that was owed to the bank because the bank funded the origination or acquisition of the loan?

The questions answer themselves. If the Bank had a real loss they would want to mitigate the loss as quickly as possible. In the past that has always meant some sort of workout when that possible. Now we find out that BOA was paying its employees to lie and deceive the “borrowers” for the express purpose of getting the property into foreclosure even though that means getting a lot less money for the “creditor” than any modification, settlement or workout. So the answer is that they had no real loss and they must want the foreclosure for some other reason.

The “other reason” is simply that foreclosure is the cover-up for the PONZI scheme. And the government feels stuck by assurances it gave the large banks (see statements of future whistle blowers) when they forced the banks to acquire the investment banks, the aggregators and other players in this scheme, before the government knew that the scheme existed. So the government is buying up worthless mortgage bonds with no loans backing them and pretending that the bonds are really worth something. This is supposed to shore up the financial system by avoiding massive failures of the largest banks — something that is eventually going to happen anyway because the $ trillions that were siphoned off from from investors were then siphoned off from the banks and management now controls that money.

If you look at the merger and bond activity you can see the banks acquiring other institutions in order to provide a safety valve through which part of the ill-gotten gains from the PONZI scheme can be repatriated and the “earnings” of the bank can be seen as stable or increasing even while the rest of the world goes to hell in a hand basket. (see below). The rest of the money is being controlled by a handful of people (see future whistle blowers) who are actually controlling world events by controlling the purse strings of all world economies.

Sounds like a conspiracy theory, doesn’t it. Maybe a little less crazy now that we know that BOA was rewarding employees for lying to customers. And maybe a little less so now that we know the bonus was paid with a Target gift card. If it was a legitimate bonus, why use Target as the intermediary? Answer: the auditors of the bank probably would not like seeing bonuses paid to people who were supposedly working with borrowers on modification or settlement of the loan — especially when the record shows that the bonus was for getting the case into foreclosure rather than settlement.

As you can read for yourself below, the pace of foreclosures is picking up and is going to accelerate under the new Florida law. They are in a rush to hush up any further whistle blowers who might blow the whole thing wide open. But the carrot they held out to homeowners might be the bank’s undoing if the borrower moves promptly and fights the foreclosure on the basis of ownership of the loan. There is only one way to really own a loan and that is by paying for it. The argument has been rejected by many judges, but now it is right in the statute that the proof of ownership must be present as a condition precedent which means that the real burden of proof is switching back to the banks, where it belongs.

————————————————-

Danielle Kelley, Esq. June, 2013

The banks wanted this bill – so let’s take a look at the “consumer friendly” portions and get ready.  Keep in mind the act is remedial in nature.  All complaints filed after June 7, 2013 will be subject to a motion to dismiss if the plaintiff does not meet the requirements of the new bill:

1) they must give affirmative allegations that at the time foreclosure is filed they are the holder of the original note, allege with specificity the factual basis by which they are entitled to enforce the note under 673.3011 (no more either/or pleading),

3) a plaintiff given authority to sue (i.e. servicer or someone coming in with a POA like we’ve been seeing) – the Complaint shall describe their authority and identify with specificity the document that gives them authority to act on behalf of the Plaintiff.

Given what we know about how they verify complaints, they will have a hard road showing they can verify the plaintiff actually “has” the original note.  I won’t settle for anything less than a declaration that they have seen it in person – not on a computer screen.  The bill states, “The term “original note” or “original promissory note” means the signed or executed promissory note rather than a copy thereof.”  I don’t want to hear about a janitor who was adopted as assistant vice president through corporate resolution and is verifying they saw the “original note” on a screen.  Keep in mind that they executed the complaints filed this month months ago – they sign right after they send off for verification usually. 

If they file a lost note count they must attach an affidavit under penalty of perjury to the Complaint that
1) details a clear chain endorsements, transfers, or assignments Note;
2) set forth facts showing the Plaintiff is entitled to enforce the lost instrument (Note); and
3) attach documents to the affidavit such as copies of the Note, allonges, audit reports, or other evidence of acquisition, ownership, and possession.  
 
Relevant portions of the bill below:
(2) A complaint that seeks to foreclose a mortgage or other lien on residential real property, including individual units of condominiums and cooperatives, designed principally for  occupation by from one to four families which secures a  promissory note must:
(a) Contain affirmative allegations expressly made by the plaintiff at the time the proceeding is commenced that the plaintiff is the holder of the original note secured by the mortgage; or
(b) Allege with specificity the factual basis by which the plaintiff is a person entitled to enforce the note under s. 673.3011.
(3) If a plaintiff has been delegated the authority to institute a mortgage foreclosure action on behalf of the person entitled to enforce the note, the complaint shall describe the authority of the plaintiff and identify, with specificity, the document that grants the plaintiff the authority to act on behalf of the person entitled to enforce the note. This subsection is intended to require initial disclosure of status and pertinent facts and not to modify law regarding standing or real parties in interest. The term “original note” or “original promissory note” means the signed or executed promissory note rather than a copy thereof. The term includes any renewal, replacement, consolidation, or amended and restated note or instrument given in renewal, replacement, or substitution for a previous promissory note. The term also includes a transferable record, as defined by the Uniform Electronic Transaction Act in s. 668.50(16).
(4) If the plaintiff is in possession of the original promissory note, the plaintiff must file under penalty of perjury a certification with the court, contemporaneously with the filing of the complaint for foreclosure, that the plaintiff is in possession of the original promissory note. The certification must set forth the location of the note, the name and title of the individual giving the certification, the name of the person who personally verified such possession, and the time and date on which the possession was verified. Correct copies of the note and all allonges to the note must be attached to the certification. The original note and the allonges must be filed with the court before the entry of any judgment of foreclosure or judgment on the note.
(5) If the plaintiff seeks to enforce a lost, destroyed, or stolen instrument, an affidavit executed under penalty of perjury must be attached to the complaint. The affidavit must:
(a) Detail a clear chain of all endorsements, transfers, or assignments of the promissory note that is the subject of the action.
(b) Set forth facts showing that the plaintiff is entitled to enforce a lost, destroyed, or stolen instrument pursuant to s. 673.3091. Adequate protection as required under s. 673.3091(2) shall be provided before the entry of final judgment.
(c) Include as exhibits to the affidavit such copies of the note and the allonges to the note, audit reports showing receipt of the original note, or other evidence of the acquisition, ownership, and possession of the note as may be available to the plaintiff.
(6) The court may sanction the plaintiff for failure to comply with this section.
SEE ALSO
Unnatural Disaster How mortgage servicers are strong-arming the victims of the Moore, Oklahoma tornado (among others)
http://www.newrepublic.com/article/113496/moore-oklahoma-tornado-victims-strong-armed-mortgage-servicers
HAMP Extension 2015 Could Help Millions More Avoid Foreclosure, LoanLove.com Reports
http://www.sys-con.com/node/2700128

Bank of America gave bonuses for hitting foreclosure quotas, suit alleges
http://www.bizjournals.com/orlando/morning_call/2013/06/bank-of-america-gave-bonuses-for.html

Filed under: CDO, CORRUPTION, Eviction, foreclosure, forms, GARFIELD GWALTNEY KELLEY AND WHITE, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , | 14 Comments »

Recording and Auctions: AZ Maricopa County Recorder Meets with Homeowners

Posted on May 23, 2012 by Neil Garfield

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 22 Comments »

DON’T Leave Your Money on the Table

Posted on May 22, 2012 by Neil Garfield

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Editor’s Comment:

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

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

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

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

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

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

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

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

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

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

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

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

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

7. State that you still own the property legally.

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

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

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

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

Many Eligible Borrowers Passing up Foreclosure Reviews

By Julie Schmit

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

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

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

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

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

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

More information is at independentforeclosurereview.com.

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

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

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

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

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

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

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

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

NC APPELLATE COURT: POSSESSION OF NOTE IS NOT ENOUGH

Posted on May 9, 2011 by Neil Garfield

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

FORECLOSING PARTY MUST BE HOLDER OF VALID DEBT

5.09.2011-North-Carolina-Appeals-Court-Decision[1]

North Carolina Appellate Decision Raises New Chain of Title Issue
Today, May 09, 2011, 8 hours ago | Yves Smith
A potentially important North Carolina appeals court case, In re
Gilbert, has not gotten the attention it warrants.

In very short form, the borrowers, who were unable to obtain a loan
modification, tried to halt a foreclosure by arguing that the lenders
had failed to make required disclosures under the Truth in Lending Act
(which they hoped would allow for recission of the loan, and that the
party seeking to foreclose had not proved that it was the holder of
the Note with the right to foreclose under the instrument. The judges
nixed the TILA argument, affirming lower court decisions, but reversed
the superior court on the question of the standing of the petitioner.

In Re Gilbert May 3, 2011 North Carolina Appeals Court Decision

What is interesting is the logic of the decision, which blows a hole
in one of the pet arguments of the American Securitization Forum, that
possession of a note will suffice. We have argued that the contracts
that govern the securitization, the pooling and servicing agreement,
sets the requirements for conveyance as is contemplated in the Uniform
Commercial Code (its Article 1 allows for parties to make their own
arrangements as long as certain conditions are met). But if the
parties to a case do not argue that the PSA trumps the UCC (and many
do not), most judges will reason from the UCC, and securitization
attorneys have blithely assumed this will get them out of trouble.
This is the position asserted in the ASF’s white paper last fall:

Under the UCC, the transfer of a mortgage note that is a negotiable
instrument is most commonly effected by (a) indorsing the note, which
may be a blank indorsement that does not identify a person to whom the
mortgage note is payable or a special indorsement that specifically
identifies a person to whom the mortgage note is payable, and (b)
delivering the note to the transferee (or an agent acting on behalf of
the transferee). As residential mortgage notes in common usage
typically are “negotiable instruments,” this is the most common method
to transfer the mortgage note. In addition, even without indorsement,
the transfer can be effected by transferring possession under the UCC.
Moreover, the sale of any mortgage note also effects the transfer of
the mortgage under Article 9. Securitization agreements often provide
both for (a) the indorsement and transfer of possession to the trustee
or the custodian for the trustee, which would constitute a negotiation
of the mortgage note under Article 3 of the UCC and (b) an outright
sale and assignment of the mortgage note. Thus, regardless of whether
the mortgage notes in a securitization trust are deemed “negotiable”
or “non-negotiable,” the securitization process generally includes a
valid transfer of the mortgage notes to the trustee in accordance with
the explicit requirements of the UCC.

The North Carolina judges blew a hole in that theory. This particular
foreclosure had some of the irregularities that are all too common,
but the borrowers were deemed to have abandoned the related arguments.
However, the judge focused on a specific failure in this deal which is
pervasive in securitizations: the final endorsement was to the
trustee, not the particular trust. The judges in the case goes through
multiple deficiencies in the transfer process: some transfers were
made by parties that did not have clear authority to do so, the
affidavits were unreliable (as in they were in some cases non-factual
and separately made inappropriate conclusions of law), and there was
no evidence provided that the securitization trust was the owner and
holder of the note (as in the not exactly compelling endorsements
ending with a trustee and not a particular trust were inadequate). The
most important part was this statement:

…the Allonge in the record contains no indorsement to Deutsche Bank
Trust Company Americas as Trustee for Residential Accredit Loans, Inc.
Series 2006-QA6

Few courts have questioned whether the final endorsement needs to be
to the trust rather than the trustee; we’ve argued that that is
necessary because the trusts elect to be governed by New York law and
case law has long stipulated that endorsement to a particular trust is
necessary. Interestingly, the North Carolina judges came to a similar
conclusion independently. We expect this argument to be made in other
courts. Given that endorsement to a specific trust seems to be very
rare, this could prove to be a potent argument.
Comments (7)

—
Jake Naumer
Resolution Advisors
3187 Morgan Ford
St Louis Missouri 63116
314 961 7600
Fax Voice Mail 314 754 9086

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , | 6 Comments »

MERS Discovery Items

Posted on April 5, 2010 by Neil Garfield

From Eric Mesi

MERs has a manual and I included some of it below regarding foreclosures. But who would know if their manual is correct? Of course they will write it to protect their selves.
Section 2: (a) If a Member chooses to conduct foreclosures in the name of Mortgage Electronic Registration Systems, Inc., the note must be endorsed in blank and in possession of one of the Member’s MERS certifying officers. If the investor so allows, then MERS can be designated as the note-holder.
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Section 1. MERS shall within two (2) business days forward to the appropriate
Member or Members, in the form prescribed by and otherwise in accordance with the
Procedures, all properly identified notices, payments, and other correspondence received by MERS with respect to mortgage loans registered on the MERS® System for which Mortgage Electronic Registration Systems, Inc. serves as mortgagee of record.
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Section 2. MERS shall provide to Members certain standard reports concerning
information contained on the MERS® System, as specified in the Procedures, and such other reports as MERS may determine from time to time.
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(b) In non-judicial foreclosure states, if the Member chooses to foreclose in MERS name under the power of sale provision in the security instrument and is not seeking a deficiency judgment, then the note does not need to be in the possession of the Member’s MERS Certifying Officer when commencing the foreclosure action; provided, however, that under no circumstances may the Member allege that the note is in their possession unless it so possesses.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, expert witness, foreclosure, GTC | Honor, HERS, Investor, Mortgage, securities fraud, Servicer | Tagged: , , , , , , , , , , , , , , , | 7 Comments »

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