Substitution of Trustee | Livinglies's Weblog

JUDICIAL NOTICE IS BEING USED AS A SUBSTITUTE FOR PROOF OF FACTS THAT ARE CONTESTED

Posted on April 24, 2018 by Neil Garfield

The entire playbook of the banks and servicers consists of one underlying theme: to obtain foreclosures based upon presumptions that are contrary to the facts.

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see Judicial Notice in Florida 90.202

and notice these provisions that are common to most if not all Judicial Notice statutes specifically state that judicial notice is ONLY for facts not subject to dispute.

Get up to speed on judicial notice. It is a ruse in the context of foreclosures and especially evictions or unlawful detainer actions filed after a supposed sale. They are seeking to avoid the requirement of proving that which they cannot prove unless the court not only accepts the document has having been judicially noticed but also that what is written on the document is presumptively true.

This is one place where the burden does not shift so easily. As I read the law, once you make the assertion contained in the document a question of fact, then the burden does not shift to you unless and until they introduce testimony (not legal argument) that is the foundation for introducing the document into evidence. It seems crystal clear that they cannot do this because the facts point in an entirely different direction.

You might want to consider filing your own motion for summary judgment on the premise that if all they have is a plea for judicial notice and they can’t otherwise prove the truth of the matters asserted in the documents submitted for judicial notice, then they have nothing and there are no issues of fact left to be tried, the burden does not shift to you, and judgment should be entered against the party seeking possession through eviction.

In your argument you should cite specific case law and statutes on judicial notice. Judicial notice is not meant to be a vehicle for skating around the truth. It is meant to streamline admission of evidence that comes from an independent third party with no interest in the outcome of litigation and is therefore presumptively true — because it is 100% credible.

First judicial notice is only good for proving the fact that the document exists. Second, what is written on the document is presumed true UNLESS you deny or object — so they must still prove that what is written on the document is true with other evidence. Third, judicial notice mostly applies to government generated documents — not self serving documents that are recorded or uploaded somewhere for the sole purpose of invoking judicial notice.

The entire reason why judicial notice exists is judicial economy — why require someone to prove something that everyone already knows is true or is contained in government agency files or website wherein the information is generated by an independent third party with no interest in the outcome of the litigation? Such documents are inherently credible.

They will try to say that they took title by virtue of the deed that was issued. The fact that they are seeking the court to admit into evidence as true is that the deed was valid. You contest that the deed was valid. Therefore it is up to them, apart from the deed, to show facts that the deed was valid and that means that the property was sold by a properly authorized trustee on behalf of an actual beneficiary who was either the obligee of the contested debt or the authorized agent for the obligee.

If the property was “sold” on behalf of a party who was not an obligee on the debt then it was sold by a non-beneficiary. And the filing of a substitution of trustee was void. And the “credit bid” was a false statement equivalent to perjury.

Filed under: burden of persuasion, burden of pleading, BURDEN OF PROOF, CORRUPTION, discovery, evidence, Fabrication of documents, foreclosure, Motions | Tagged: beneficiary, credit bid, judicial economy, judicial notice, Substitution of Trustee, TRUTH | 2 Comments »

Breaking it Down: What to Say and Do in an Unlawful Detainer or Eviction

Posted on December 21, 2017 by Neil Garfield

Homeowners seem to have more options than they think in an unlawful detainer action based upon my analysis. It is the first time in a nonjudicial foreclosure where the foreclosing party is actually making assertions and representations against which the homeowner may defend. The deciding factor is what to do at trial. And the answer, as usual, is well-timed aggressive objections mostly based upon foundation and hearsay, together with a cross examination that really drills down.

Winning an unlawful detainer action in a nonjudicial foreclosure reveals the open sores contained within the false claims of securitization or transfer.

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HAT TIP TO DAN EDSTROM

Matters affecting the validity of the trust deed or primary obligation itself, or other basic defects in the plaintiffs title, are neither properly raised in this summary proceeding for possession, nor are they concluded by the judgment.” (Emphasis added.) (Cheney v. Trauzettel (1937) 9 Cal.2d 158, 159-160.) My emphasis added

So we can assume that they are specifically preserving your right to sue for damages. But also, if they still have the property you can sue to get it back. If you do that and file a lis pendens they can’t sell it again. If a third party purchaser made the bid or otherwise has “bought” the property you probably can’t touch the third party — unless you can show that said purchaser did in fact know that the sale was defective. Actual knowledge defeats the presumptions of facially valid instruments and recorded instruments.

The principal point behind all this is that the entire nonjudicial scheme and structure becomes unconstitutional if in either the wording of the statutes or the way the statutes are applied deprive the homeowner of due process. Denial of due process includes putting a burden on the homeowner that would not be there if the case was brought as a judicial foreclosure. I’m not sure if any case says exactly that but I am sure it is true and would be upheld if challenged.

It is true that where the purchaser at a trustee’s sale proceeds under section 1161a of the Code of Civil Procedure he must prove his acquisition of title by purchase at the sale; but it is only to this limited extent, as provided by the statute, that the title may be litigated in such a proceeding. Hewitt v. Justice’ Court, 131 Cal.App. 439, 21 P.(2d) 641; Nineteenth Realty Co. v. Diggs, 134 Cal.App. 278, 25 P.(2d) 522; Berkeley Guarantee Building & Loan Ass’n v. Cunnyngham, 218 Cal. 714, 24 P.(2d) 782. — [160] * * * In our opinion, the plaintiff need only prove a sale in compliance with the statute and deed of trust, followed by purchase at such sale, and the defendant may raise objections only on that phase of the issue of title

So the direct elements are laid out here and other objections to title are preserved (see above):

The existence of a sale under nonjudicial statutes
Acquisition of title by purchase at the sale
Compliance with statutes
Compliance with deed of trust

The implied elements and issues are therefore as follows:

Was it a Trustee who conducted the sale? (i.e., was the substitution of Trustee valid?) If not, then the party who conducted the sale was not a trustee and the “sale” was not a trustee sale. If Substitution of Trustee occurred as the result of the intervention of a party who was not a beneficiary, then no substitution occurred. Thus no right of possession arises. The objection is to lack of foundation. The facial validity of the instrument raises only a rebuttable presumption.
Was the “acquisition” of title the result of a purchase — i.e., did someone pay cash or did someone submit a credit bid? If someone paid cash then a sale could only have occurred if the “seller” (i.e., the trustee) had title. This again goes to the issue of whether the substitution of trustee was a valid appointment. A credit bid could only have been submitted by a beneficiary under the deed of trust as defined by applicable statutes. If the party claiming to be a beneficiary was only an intervenor with no real interest in the debt, then the “bid” was neither backed by cash nor a debt owed by the homeowner to the intervenor. According there was no valid sale under the applicable statutes. Thus such a party would have no right to possession. The objection is to lack of foundation. The facial validity of the instrument raises only a rebuttable presumption.

The object is to prevent the burden of proof from falling onto the homeowner. By challenging the existence of a sale and the existence of a valid trustee, the burden stays on the Plaintiff. Thus you avoid the presumption of facial validity by well timed and well placed objections.

” `To establish that he is a proper plaintiff, one who has purchased property at a trustee’s sale and seeks to evict the occupant in possession must show that he acquired the property at a regularly conducted sale and thereafter ‘duly perfected’ his title. [Citation.]’ (Vella v. Hudgins (1977) 20 Cal.3d 251,255, 142 Cal.Rptr. 414,572 P.2d 28; see Cruce v. Stein (1956) 146 Cal.App.2d 688,692,304 P.2d 118; Kelliherv. Kelliher(1950) 101 Cal.App.2d 226,232,225 P.2d 554; Higgins v. Coyne (1946) 75 Cal.App.2d 69, 73, 170 P2d 25; [*953] Nineteenth Realty Co. v. Diggs (1933) 134 Cal.App. 278, 288-289, 25 P2d 522.) One who subsequently purchases property from the party who bought it at a trustee’s sale may bring an action for unlawful detainer under subdivision (b)(3) of section 1161a. (Evans v. Superior Court (1977) 67 Cai.App.3d 162, 169, 136 Cal.Rptr. 596.) However, the subsequent purchaser must prove that the statutory requirements have been satisfied, i.e., that the sale was conducted in accordance with section 2924 of the Civil Code and that title under such sale was duly perfected. {Ibid.) ‘Title is duly perfected when all steps have been taken to make it perfect, i.e. to convey to the purchaser that which he has purchased, valid and good beyond all reasonable doubt (Hocking v. Title Ins. & Trust Co, (1951), 37 Cal.2d 644, 649 [234 P.2d 625,40 A.L.R.2d 1238] ), which includes good record title (Gwin v. Calegaris (1903), 139 Cal. 384 [73 P. 851] ), (Kessler v. Bridge (1958) 161 Cal.App.2d Supp. 837, 841, 327 P.2d 241.) ¶ To the limited extent provided by subdivision (b){3) of section 1161a, title to the property may be litigated in an unlawful detainer proceeding. (Cheney v. Trauzettel (1937) 9 Cal.2d 158, 159, 69 P.2d 832.) While an equitable attack on title is not permitted (Cheney, supra, 9 Cal.2d at p. 160, 69 P.2d 832), issues of law affecting the validity of the foreclosure sale or of title are properly litigated. (Seidel) v. Anglo-California Trust Co. (1942) 55 Cai.App.2d 913, 922, 132 P.2d 12, approved in Vella v. Hudgins, supra, 20 Cal.3d at p. 256, 142 Cal.Rptr. 414, 572 P.2d 28.)’ ” (Stephens, Partain & Cunningham v. Hollis (1987) 196 Cai.App.3d 948, 952-953.)

Here the court goes further in describing the elements. The assumption is that a trustee sale has occurred and that title has been perfected. If you let them prove that, they win.

acquisition of property
regularly conducted sale
duly perfecting title

The burden on the party seeking possession is to prove its case “beyond all reasonable doubt.” That is a high bar. If you raise real questions and issues in your objections, motion to strike testimony and exhibits etc. they would then be deemed to have failed to meet their burden of proof.

Don’t assume that those elements are present “but” you have a counterargument. The purpose of the law on this procedure to gain possession of property is to assure that anyone who follows the rules in a bona fide sale and acquisition will get POSSESSION. The rights of the homeowner to accuse the parties of fraud or anything else are eliminated in an action for possession. But you can challenge whether the sale actually occurred and whether the party who did it was in fact a trustee.

There is also another factor which is whether the Trustee, if he is a Trustee, was acting in accordance with statutes and the general doctrine of acting in good faith. The alleged Trustee must be able to say that it was in fact the “new” beneficiary who executed the substitution of Trustee, or who gave instructions for issuing a Notice of Default and Notice of sale.

If the “successor” Trustee does not know whether the “successor” party is a beneficiary or not, then the foundation testimony and exhibits must come from someone who can establish beyond all reasonable doubt that the foreclosure proceeding emanated from a party who was in fact the owner of the debt and therefore the beneficiary under the deed of trust.

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Filed under: burden of persuasion, BURDEN OF PROOF, Eviction, foreclosure, Trail Objections, Unlawful Detainer | Tagged: beneficiary, credit bid, duly perfected title, Eviction, foreclosure sale, owner of the debt, Substitution of Trustee, the debt, TRIAL OBJECTIONS, trustee, TRUTH, Unlawful Detainer | 22 Comments »

1st DCA CA: Not so Fast on Rubber Stamping Foreclosures

Posted on August 8, 2017 by Neil Garfield

As we have seen for months there have been a steady stream of cases in which the courts have turned back to the fundamental requirements of due process and the rule of law. Here the court reminds (again) that judicial notice is not a substitute for foundation of facts in dispute AND that the homeowner’s right to sue for wrongful foreclosure is NOT to be dismissed even if it is poorly worded.

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See CUPP v FNMA 8/2/17

Cupp v. Fannie Mae

While once again we see the regretable tendency to keep essential decisions out of public records, we also see that the court now comprehends the basic fallacy behind “loans” subject to false claims of transfer, securitization, sale and purchase.

And once again the court states with clarity the basic elements of procedural law. The fact that you owe money doesn’t mean you owe it to anyone who sues you. If the party initiates a nonjudicial sale they will subject to the same rigor as in judicial cases. Nonjudicial procedure was not meant to allow strangers to win cases they would lose if they were required to file suit.

Significant quotes:

The nonjudicial foreclosure system is designed to provide the lender- beneficiary with an inexpensive and efficient remedy against a defaulting borrower, while protecting the borrower from wrongful loss of the property and ensuring that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.” (Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919, 926 (Yvanova).)

The elements of a tort cause of action for wrongful foreclosure are: “`(1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale (usually but not always the trustor or mortgagor) was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering.'” (Miles v. Deutsche Bank National Trust Co. (2015) 236 Cal.App.4th 394, 408.) Grounds satisfying the first element include: when the trustee did not have the power to foreclose, when the borrower did not default, and when the deed of trust is void. (Lona v. Citibank, N.A. (2011) 202 Cal.App.4th 89, 104- 105.) “A foreclosure initiated by one with no authority to do so is wrongful” and satisfies the first element. (Yvanova, supra, 62 Cal.4th at p. 929.)

our Supreme Court observed that the trustee of a deed of trust “acts merely as an agent for the borrower- trustor and lender-beneficiary” and, under section 2924, subdivision (a)(1), may initiate nonjudicial foreclosure “only at the direction of the person or entity that currently holds the note and the beneficial interest under the deed of trust—the original beneficiary or its assignee—or that entity’s agent.” (Yvanova, supra, 62 Cal.4th at p. 927.) “[I]f the borrower defaults on the loan, only the current beneficiary may direct the trustee to undertake the nonjudicial foreclosure process.” (Id. at pp. 927-928.) However, the court also recognized that promissory notes and deeds of trust are negotiable instruments that may be sold by a lender without any notice to the borrower and “that a borrower can generally raise no objection to the assignment of the note and deed of trust.” (Id. at p. 927.) The Yvanova court concluded:

“If a purported assignment necessary to the chain by which the foreclosing entity claims that power is absolutely void, meaning of no legal force or effect whatsoever [citations], the foreclosing entity has acted without legal authority by pursuing a trustee’s sale,” and the borrower would have standing to sue for wrongful foreclosure in the case of such an unauthorized sale. (Id. at p. 935.)

The logic of defendants’ no-prejudice argument implies that anyone, even a stranger to the debt, could declare a default and order a trustee’s sale—and the borrower would be left with no recourse because, after all, he or she owed the debt to someone, though not to the foreclosing entity. This would be an `odd result’ indeed.” (Id. at p. 938.) “A homeowner who has been foreclosed on by one with no right to do so has suffered an injurious invasion of his or her legal rights at the foreclosing entity’s hands. No more is required for standing to sue.” (Id. at p. 939.) The court disapproved a line of Court of Appeal decisions that had reached contrary conclusions. (Yvanova, at p. 939, fn. 13; see Jenkins v. JPMorgan Chase Bank, N.A. (2013) 216 Cal.App.4th 497; Siliga v. Mortgage Electronic Registration Systems, Inc. (2013) 219 Cal.App.4th 75; Herrera v. Federal National Mortgage Assn. (2012) 205 Cal.App.4th 1495 (Herrera); Fontenot v. Wells Fargo Bank, N.A. (2011) 198 Cal.App.4th 256 (Fontenot).)

The trial court appears to have agreed with respondents’ contention they could conclusively establish that RTC did hold the beneficial interest at the time of the 1995 Assignment. In its preamble, the 1995 Assignment recites that, in June 1993, the Office of Thrift Supervision appointed RTC as receiver for WFSL. It further recites that, in September 1994, the Office of Thrift Supervision replaced the conservator of WFSB with RTC. Finally, the preamble states that RTC, as receiver for WFSB, “is the current beneficiary under the Deed of Trust.”

The trial court could properly take notice of the fact the 1995 Assignment was recorded, the date of its execution, the parties to the transaction, and its legal effect if that effect is undisputed and clear from the face of the document. (See Intengan v. BAC Home Loans Servicing LP (2013) 214 Cal.App.4th 1047, 1055; Fontenot, supra, 198 Cal.App.4th at pp. 264-265.) However, contrary to respondents’ repeated assertion, we cannot take judicial notice of the truth of hearsay recitations of fact contained within the 1995 Assignment. (See Yvanova, supra, 62 Cal.4th at p. 924, fn. 1; Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1369, 1375 [trial court improperly took judicial notice of truth of hearsay recitation, within assignment, that a particular entity held beneficial interest under deed of trust before its assignment]; Intengan, at pp. 1055, 1057; Fontenot, at p. 265.) Cupp clearly disputes the notion that RTC held the beneficial interest at the time of the 1995 Assignment. We conclude the trial court erred in taking judicial notice that RTC held the beneficial interest in the Deed of Trust at the time of the 1995 Assignment.[8]

Filed under: foreclosure | Tagged: Allaince Mortgage, EVerbank, Fannie MAe, Home Savings, Resolution Trust Corp, RTC, Substitution of Trustee, Trustee Corp, Western federal, Wrongful foreclosure elements | 3 Comments »

Wilmington-Christiana Fail in Back-door Attempt to Have “Trust” Identified as the Owner of Debt, Note and Mortgage

Posted on July 10, 2017 by Neil Garfield

If they had been successful the entire question of whether the Trustee could be named as the foreclosing party would have been off the table — if other courts followed suit. And the entire question of “debt purchasing” could never have been raised despite obvious flaws and defects in fabricated paperwork.

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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 and others

see below for case opinion Blackstone v Sharma v Marvastian, Maryland Special Appeals Court

In their never ending quest to validate illegal acts, misrepresentation and fraud, the banks are throwing as much legal theory against the wall in hopes that some of it will stick. This one starts with the fact that “debt purchasers” are still “debt collectors” regardless of how they self-describe themselves.

There has been a trend in which “debt purchasers” step in front of the pile off fabricated documents and then make the claim for foreclosure or enforcement of the debt. By calling themselves “debt purchasers” they once again are using self-serving descriptions that are designed to confuse homeowners, lawyers and the courts. The truth is that no debt, note or mortgage was purchased by anyone. If there had been a purchase the foreclosing party would merely refer to EVIDENCE that they paid money for a “loan” that was “owned” by the preceding party. Instead they rely upon legal presumptions carried in fabricated documents.

Despite there having been no movement of the debt by virtue of an actual purchase and sale they continue to call themselves “debt purchasers.” They are not and the implication that the debt was purchase thus morphs into we MUST have purchased it because we now “hold” the note and mortgage.

This case highlights the issues with “substitution of trustees,” and fabricated transfer documents. It also provides guidance on the “substitution of plaintiffs” in non-judicial states. There is no difference.

The Trustee on a deed of trust cannot be fired and replaced by anyone other than the ACTUAL beneficiary.

The Plaintiff in a judicial foreclosure case cannot change unless the attorneys are wiling to amend their pleading to show how the fabricated documents were transferred from the old Plaintiff (which never owned the debt, note or mortgage) to the newly designated Plaintiff.

Both reveal that the actual party in interest in the foreclosure is the subservicer and Master Servicer for a trust that doesn’t really exist and which does not own any assets, have any liabilities nor conduct any business.

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KYLE BLACKSTONE, ET AL.,
v.
DINESH SHARMA, ET AL.
TERRANCE SHANAHAN, SUBSTITUTE. TRUSTEE, ET AL.,
v.
SEYED MARVASTIAN, ET AL.

Nos. 1524, 1525 Consolidated Case, September Term, 2015.

Court of Special Appeals of Maryland.

Filed: June 6, 2017.

Wright, Shaw Geter, Salmon, James P., (Senior Judge, Specially Assigned), JJ.

Opinion by SALMON, J.

This consolidated appeal originates from two foreclosure cases filed in the Circuit Court for Montgomery County. In both cases, substitute trustees (collectively, “appellants”) acting on behalf of Ventures Trust 2013-I-H-R (“Ventures Trust”), a statutory trust formed under the laws of the State of Delaware, filed orders to docket foreclosure suits against homeowners in the State of Maryland. The circuit court judges who considered the cases dismissed the actions, determining that pursuant to the Maryland Collection Agency Licensing Act (“MCALA”), codified at Maryland Code (1992, 2015 Repl. Vol.), Business Regulation Article (“B.R.”) § 7-101, et seq., Ventures Trust was required to be licensed as a collection agency and, because Ventures Trust had not obtained such a license, any judgment entered as a result of the foreclosure actions would be void. The dismissal of these foreclosure actions, without prejudice, presents us with two questions:

1. Under the MCALA, does a party who authorizes a trustee to initiate a foreclosure action need to be licensed as a collection agency before filing suit?

2. If the answer to question one is in the affirmative, does the licensing requirement apply to foreign statutory trusts such as Ventures Trust?

We shall answer “yes” to both questions and affirm the judgments entered by the Circuit Court for Montgomery County.

BACKGROUND

Appeal No. 1524

On August 4, 2006, Dinesh Sharma, Santosh Sharma, and Ruchi Sharma^[1]^{(collectively “the Sharmas”) executed a deed of trust that encumbered real property in Potomac, Maryland, in order to secure a $1,920,000 loan. Washington Mutual Bank, FA was the lender. The Sharmas, in December 2007, defaulted on the loan by failing to make payments when due.}

Ventures Trust, by its trustee MCM Capital Partners, LLC (“MCM Capital”), acquired ownership and “all beneficial interest” of the loan on October 9, 2013. The substitute trustees^[2]^{appointed by Ventures Trust filed an order to docket, initiating the foreclosure action, on November 25, 2014. The Sharmas owed $3,008,536.23 on the loan as of November 25, 2014.}

The Sharmas responded to the foreclosure action by filing a counterclaim which was later severed by order of the circuit court. They also filed a motion to dismiss or enjoin the foreclosure sale pursuant to Md. Rule 14-211.^[3]^{The substitute trustees moved to strike the Sharmas’ motion, which the court granted on May 7, 2015. The Sharmas filed a motion to alter or amend the May 7th order. On June 22, 2015 the court vacated its May 7th order, denied the substitute trustees’ motion to strike the Sharmas’ motion to dismiss, and set a hearing date for arguments concerning the motion to dismiss.}

Following a hearing, the court, on August 28, 2015, issued an opinion and order granting the motion to dismiss the foreclosure action without prejudice. In its written opinion the circuit court determined that, pursuant to the MCALA, Ventures Trust was a collection agency and was therefore required to be licensed before attempting to collect on the deed of trust. The circuit court ruled that because Ventures Trust was not licensed as a collection agency, it had no right to file a foreclosure action. In its written opinion, the court also rejected Ventures Trust’s contention that it was a “trust company” and was therefore exempt from MCALA’s licensure requirements. The substitute trustees noted a timely appeal.

Appeal No. 1525

On June 23, 2006, Seyed and Sima Marvastian executed a deed of trust on property in Bethesda, Maryland in order to secure a $1,396,500 loan. Premier Mortgage Funding, Inc. was the lender. The Marvastians defaulted on the loan by failing to make payments when due in December 2012.

Ventures Trust by its trustee MCM Capital acquired the Marvastians’ loan in February 2014. On October 20, 2014, the substitute trustees filed an order to docket, initiating the foreclosure process. At the time of filing, the substitute trustees alleged that the Marvastians owed $1,632,303.26 on the loan.

The Marvastians responded by filing a counterclaim, which was severed by order of the circuit court. They also filed a motion to dismiss or stay the foreclosure sale pursuant to Md. Rule 14-211. Following extensive briefing and a hearing, the court granted the Marvastians’ motion to dismiss, albeit without prejudice. The judge’s reasons for dismissing the case were exactly the same as those given for dismissing the foreclosure case that is the subject of Appeal No. 1524.

I.

STANDARD OF REVIEW

[B]efore a foreclosure sale takes place, the defaulting borrower may file a motion to stay the sale of the property and dismiss the foreclosure action. In other words, the borrower, may petition the court for injunctive relief, challenging the validity of the lien or . . . the right of the [lender] to foreclose in the pending action. The grant or denial of injunctive relief in a property foreclosure action lies generally within the sound discretion of the trial court. Accordingly, we review the circuit court’s denial of a foreclosure injunction for an abuse of discretion. We review the trial court’s legal conclusions de novo.

^{Hobby v. Burson,} 222 Md. App. 1, 8 (2015)^{(internal citations and quotation marks omitted). See also}^{Svrcek v. Rosenberg,} 203 Md. App. 705, 720 (2012)^{. In the two cases that are the subject of this appeal, the trial judges based their rulings on their legal conclusions. Thus we review those conclusions de novo.}

II.

In ^{Finch v. LVNV Funding, LLC,} 212 Md. App. 748, 758-64 (2013)^{we stated that without a license, a collection agency has no authority to file suit against the debtor. Accordingly, a “judgment entered in favor of an unlicensed debt collector constitutes a void judgment[.]” Id. at 764. See also}^{Old Republic Insurance v. Gordon,} 228 Md. App. 1, 12-13 (2016)^{(footnote omitted).}

Maryland Code B.R. § 7-101(c) defines a collection agency as follows:

“Collection agency” means a person who engages directly or indirectly in the business of:

(1)(i) collecting for, or soliciting from another, a consumer claim; or

(ii) collecting a consumer claim the person owns, if the claim was in default when the person acquired it;

(2) collecting a consumer claim the person owns, using a name or other artifice that indicates that another party is attempting to collect the consumer claim;

(3) giving, selling, attempting to give or sell to another, or using, for collection of a consumer claim, a series or system of forms or letters that indicates directly or indirectly that a person other than the owner is asserting the consumer claim; or

(4) employing the services of an individual or business to solicit or sell a collection system to be used for collection of a consumer claim.

(Emphasis added.)

As used in the Business Regulations Article, “person” means “an individual . . . trustee . . . fiduciary, representative of any kind, partnership, firm, association, corporation, or other entity.” B.R. § 1-101(g). B.R. 7-101(e) defines a “consumer claim” as meaning a “claim that: 1) is for money owed or said to be owed by a resident of the State; and 2) arises from a transaction in which, for a family, household, or personal purpose, the resident sought or got credit, money, personal property, real property, or services.”

Before the law was amended in 2007, MCALA applied only to businesses that collected debts owed to another person. ^{Old Republic,} 228 Md. App. at 16^{. In 2007, the statute was broadened to include persons who engage in the business of “collecting a consumer claim the person owns, if the claim was in default when the person acquired it[.]” B.R. § 7-101(c)(1)(ii).}

The legislative history of the 2007 amendment, insofar as here pertinent, was set forth in Old Republic as follows:

[T]he legislative history makes clear that the General Assembly enacted the 2007 amendments to regulate “debt purchasers,” who were exploiting a loophole in the law to bypass the MCALA’s licensing requirements.

The Senate Finance Committee Report on House Bill 1324 explained:

House Bill 1324 extends the purview of the State Collection Agency Licensing Board to include persons who collect consumer claims acquired when the claims were in default. These persons are known as “debt purchasers” since they purchase delinquent consumer debt resulting from credit card transactions and other bills; these persons then own the debt and seek to collect from consumers like other collection agencies who act on behalf of original creditors.

Charles T. Turnbaugh, Commissioner of Financial Regulation and Chairman of the Maryland Collection Agency Licensing Board offered the following testimony:

[T]he evolution of the debt collection industry has created a “loophole” used by some entities as a means to circumvent current State collection agency laws. Entities, such as “debt purchasers” who enter into purchase agreements to collect delinquent consumer debt rather than acting as an agent for the original creditor, currently collect consumer debt in the State without complying with any licensing or bonding requirement. The federal government has recognized and defined debt purchasers as collection agencies, and requires that these entities fully comply with the Federal Fair Debt Collection Practices Act.

This legislation would include debt purchases within the definition of “collection agency,” and require them to be licensed by the Board before they may collect consumer claims in this State. Other businesses that are collecting their own debt continue to be excluded from this law.

Susan Hayes, a member of the Maryland Collection Agency Licensing Board, submitted the following in support of the bill:

The traditional method of dealing with distressed accounts has been for creditors to assign these accounts to a collection agency. These agencies, operating under a contingency fee arrangement with the creditor, keep a portion of the amount recovered and return the balance to the creditor. Today, a different option is available — selling accounts receivables to a third party debt collector at a discount.

* * *

HB 1324 closes a loophole in licensing of debt collectors under Maryland law. Just because a professional collector of defaulted debt “purchases” the debt, frequently on a contingent fee basis, should not exclude them from the licensing requirements of Maryland law concerning debt collectors.

Id. at 19-20.

Ventures Trust is in the business of buying from banks, at a discount, mortgages and deeds of trust that are in default. In the cases here at issue, there is no dispute that: 1) when Ventures Trust purchased the loans in question, the loans were in default; and 2) Ventures Trust, by filing (through its agents — the trustees) the foreclosure actions it was attempting to collect “consumer debt.”

As we said in Old Republic, the legislative history of the 2007 amendments to the MCALA make it “clear that the General Assembly had a specific purpose in mind in adopting the 2007 amendments, i.e., including [under the Act] debt purchasers, people who purchased defaulted accounts receivable at a discount, within the purview of MCALA.” Id. at 21. Money owed on a note secured by a deed of trust or a mortgage certainly qualifies as an account receivable. And Ventures Trust is in the business of buying up defaulted mortgages or deeds of trust and instituting foreclosure actions to obtain payment.

Appellants contend that the MCALA does not require a party to be licensed as a collection agency in order to file a foreclosure action. They support that contention with the following argument:

Foreclosures are not mentioned [in B.R. § 7-101(c)], although the Legislature clearly knew how to do so if it had wished. There is no specific statement in the MCALA to the effect that “doing business” as a “collection agency” includes actions taken to enforce a security interest, such as foreclosing on a deed of trust, nor is there any specific statement that such actions would fall into the definition of “collecting” a consumer claim. Neither this Court nor the Court of Appeals has ever ruled that pursuing a foreclosure proceeding amounts to “doing business” in Maryland as a “collection agency” under the Act, and for good reason. As the Legislature has made clear in numerous statutes, a foreign entity — including a statutory trust such as Ventures Trust — pursuing foreclosure is not “doing business” in Maryland[.]

Appellants emphasize that Md. Code (2014 Repl. Vol.), Corporations and Associations Article § 12-902(a) requires any foreign statutory trust doing business in Maryland to register with the State Department of Assessments and Taxation (“SDAT”). Section 12-908(a)(5) provides, however, that “[f]oreclosing mortgages and deeds of trust on property in this State” is not considered “doing business.”

According to appellants, because of “the Legislature’s” express decision to make clear that a foreclosure proceeding brought by a foreign statutory trust is by definition, not doing business in Maryland, a foreign trust does not need to be licensed as a collection agency to file a Maryland foreclosure action. That argument would be strong were it not for the fact (relied upon by both circuit court judges who ruled against appellants below) that section 12-908(a) of the Corporations and Associations Article expressly states that the “doing business” exception granted to foreign trusts is “for the purposes of this subtitle[.]” In other words, the foreign trust exception does not apply to the MCALA.

It is true, as appellants point out, that no Maryland appellate court has ever held that a foreign trust needs a license under the MCALA to file a foreclosure action. But the matter has simply not been addressed by any Maryland appellate court.

Judge Ellen Hollander, in ^{Ademiluyi v. PennyMac Mortgage Investment Trust Holdings I, LLC, et al.,} 929 F.Supp.2d 502, 520-24 (D. Md. 2013)^{did hold that a MCALA license was needed to bring a foreclosure action based on the allegations set forth in the complaint filed in that case. In Ademiluyi, the holder of the mortgage (PennyMac), filed a foreclosure action on a mortgage even though (it was alleged) that PennyMac purchased the mortgage after it was in default and did not have a debt collection license. Id. at 520. The issue in that case was whether, based on the allegations in the complaint, PennyMac needed a license prior to bringing a foreclosure action. Id.}

After a lengthy discussion, Judge Hollander said:

I am persuaded that, even if actions pertinent to mortgage foreclosure are taken in connection with enforcement of a security interest in real property, such actions may constitute debt collection activity under the MCALA. Therefore, based on the facts alleged by plaintiff, PennyMac Holdings may qualify as a collection agency under the MCALA with respect to mortgage debt it seeks to collect, including through judicial foreclosure proceedings or other conduct pertinent to foreclosure.

Id. at 523.

Support for Judge Hollander’s conclusion can be found in a twenty-one page order, dated December 8, 2013, signed by Gordon M. Cooley, Chairperson of the Maryland State Collection Agency Licensing Board.^[4]^{Mr. Cooley ordered several entities, including NPR Capital, LLC, to stop attempting to collect consumer debts by filing foreclosure actions. At page 17 of his order, the Acting Commissioner determined, inter alia, that NPR Capital violated the provisions of the MCALA (specifically B.R. § 7-401(a)) by attempting to collect a debt by filing a foreclosure action at a time when it was not licensed as a collection agency.}

When interpreting the MCALA, the ruling by Commissioner Cooley is of consequence because, as the Court of Appeals recently said, it is well established that appellate courts “should ordinarily give `considerable weight’ to `an administrative agency’s interpretation and application of the statute'” it is charged with administering. ^{Board of Liquor License Commissioners for Baltimore City v. Kougl,} 451 Md. 507, 514 (2017),^(quoting^{Maryland Aviation Administration v. Noland,} 386 Md. 556, 572 (2005)^{). As can be seen, the Board that administers the MCALA statute is of the view that the MCALA covers persons who attempt to collect consumer debt by filing a foreclosure action.}

In support of their position, appellants point out, accurately, that nowhere in the legislative history of the 2007 amendment to the MCALA, is there any mention of foreclosure actions. From this, appellants ask us to infer that the General Assembly did not intend that persons who purchase defaulted mortgages or deeds of trust and then file foreclosure actions needed to purchase a debt collection license. In our view, the absence of a specific reference in the legislative history is not dispositive because, insofar as the issue here presented is concerned, the MCALA is unambiguous.

With exceptions not here relevant except the one discussed in Part III, infra, “a person must have a license whenever the person does business as a collection agency in the State.” B.R. § 7-301(a). The definition of a “collection agency” has five elements. ^{Old Republic,} 228 Md. App. at 23 (Nazarian, J. dissenting)^{. Those elements are:}

“[a] a person who [b] engages directly or indirectly in the business of . . . collecting a [c] consumer claim the [d] person owns, [e] if the claim was in default when the person acquired it.” BR § 7-101(c)(ii).

Id.

Ventures Trust admits that it meets elements (a), (c), (d) and (e). It argues, however, that element (b) is not met because it does not “engage in the business of collecting” debt by filing foreclosure actions. Boiled down to its essence, appellants’ “not in the business” argument is based on the contention that the General Assembly intended to exempt from the MCALA persons who attempt to collect consumer debt by bringing foreclosure actions. We can find no such intent in the words of the statute or in anything in the Act’s legislative history. We therefore reject that contention and hold that unless some exception to the MCALA is applicable, the licensing requirements of the MCALA applies to persons who attempt to collect a consumer debt by bringing a foreclosure action.

III.

The MCALA states: “This title does not apply to . . . a trust company[.]” B.R. § 7-102(b)(8). The statute does not define “trust company.” See B.R. § 7-101. Appellants claim that even if the MCALA licensing requirement applies to a person who brings a foreclosure action in order to enforce a consumer debt, the MCALA does not apply to Ventures Trust because it is a “trust company.” Black’s Law Dictionary (10th ed. 2014) defines “trust company” as “[a] company that acts as a trustee for people and entities and that sometimes also operates as a commercial bank.” The appellants claim that Ventures Trust meets that definition because, purportedly, Ventures Trust “certainly holds and maintains trust property.”

We pause at this point to discuss what the record reveals about Ventures Trust. In appellants’ filing with the Montgomery County Circuit Court, appellants’ counsel stated that Ventures Trust is the holder of the notes at issue, and that it is a statutory trust formed in Delaware under 12 DEL. CODE § 3801(g). Ventures Trust has two trustees. They are MCM Capital and Wilmington Federal Savings Fund Society, FSB doing business as Christiana Trust. In Appeal No. 1525, counsel for the substitute trustees orally told the motions judge that Ventures Trust was “like an account at Christiana Bank” and that Christiana Trust was the trustee of Ventures Trust. That representation was also made by counsel for the substitute trustee in that case in a supplemental memorandum where it was said: “Ventures Trust. 2013-I-H-R…, is the holding of a Federal Savings Bank[,] which serves as its co-trustee….”

Using the Black’s Law Dictionary (10th edition) definition of “trust company” set forth above, Ventures Trust does not fit within that definition. It does not act as a bank. Moreover, other entities act as trustees for it. There is nothing in the record that shows that Ventures Trust acts as a trustee for anyone.

Appellants also suggest that we use the slightly different definition of “trust company” set forth in Black’s Law Dictionary (5th ed. 1979) because that edition of Black’s was published “around the time of the 1977 amendment” that exempted trust companies from the MCALA. Black’s 1979 definition of “trust company” was as follows: “a corporation formed for the purpose of taking, accepting, and executing all such trusts as may be lawfully committed to it, and acting as testamentary trustee, executor, guardian, etc.” There is no indication in the record that Ventures Trust is a corporation or, as already mentioned, that it acts as a trustee for anyone. Therefore, Ventures Trust does not meet that definition either.

The words “trust company” is defined in Md. Code (2011 Repl. Vol.), Financial Institutions Article (“Fin. Institutions”) § 3-101(g) as meaning “an institution that is incorporated under the laws of this State as a trust company.” But that definition only applies to matters set forth in the Fin. Institutions Article section 3-101(a). In Fin. Institutions §3-501(d), governing common trust funds, the term “trust companies” is defined as including a national banking association that has powers similar to those given to a trust company under the laws of “this State.” That definition, however, only applies to subtitle 5 of the Financial Institutions Article. Md. Code (2011 Repl. Vol.), Estates and Trusts Article§ 1-101(v) also contains a definition of “Trust Company” but it applies only to laws governing the “estates of decedents.” See Estates & Trusts Article § 1-101(a). Lastly, the term “statutory trust” is defined in Md. Code (2011 Repl. Vol.), Corporations and Associations Article § 12-101(h) as meaning: an unincorporated business, trust, or association:

(i) Formed by filing an initial certificate of trust under § 12-204 of this title; and

(ii) Governed by a governing instrument.

(2) “Statutory trust” includes a trust formed under this title on or before May 31, 2010, as a business trust, as the term business trust was then defined in this title.

Ventures Trust admits that it does not fit within any of the above definitions of “trust company” or “statutory trust.” Moreover, even if it did meet one or more of those definitions, there is no indication that the legislature, in 1977, when it exempted “trust companies” from the MCALA, intended those definitions to be used. As appellants concede, we are thus left with the general definition of “trust company” as set forth in Black’s Law Dictionary. See ^{Ishola v. State,} 404 Md. 155, 161 (2008)^{(Dictionary definitions help clarify the plain meaning of a statute.).}

The circuit court judge who dismissed the foreclosure action that is the subject of Appeal 1524 reached the following legal conclusion with which we are in complete accord:

MCALA expressly limits the scope of its license requirement exemptions to those “… provided in this title….” Md. Code Ann., Bus. Reg. § 7-301(a) (emphasis added). MCALA does not explicitly exempt “foreign statutory trusts” that bring foreclosure actions from its licensing requirements. See Bus. Reg. § 7-102(b). In fact, the term “foreign statutory trust” never appears in MCALA. See Bus. Reg. § 7-101, et seq. Thus, the General Assembly expressed a clear intent to subject foreign statutory trusts that bring foreclosure actions in Maryland, like Ventures Trust, to MCALA’s licensing requirements.

CONCLUSION

A debt purchaser that attempts to collect a consumer debt by bringing a foreclosure action is required to have a license unless some statutory exemption applies. Contrary to appellants’ contention, Ventures Trust is not a “trust company” within the meaning of the MCALA and must therefore obtain a debt collection license in accordance with the provisions of the MCALA before bringing a foreclosure action. Because Ventures Trust had no such license, it was barred from filing, through its agents, the two foreclosure actions here at issue.

JUDGMENTS AFFIRMED; COSTS TO BE PAID BY APPELLANTS.

Filed under: foreclosure | Tagged: Christiana, DEBT COLLECTOR, debt purchasers, MCALA, Pennymac, substitution of plaintiff, Substitution of Trustee, trust companies, trustee, Ventures Trust, Wilmington | 5 Comments »

Are Foreclosure Trustees Debt Collectors?

Posted on May 31, 2017 by Neil Garfield

Such rulings from appellate courts undermine confidence in the judicial system for those who are victims of wrongdoing and reinforce the confidence and arrogance of those committing the wrongs that they will get away with it.

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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see 9th Circuit Foreclosure Trustee not a debt collector 10-56884

The entire “Substitution of Trustee” scheme is performed with two purposes only — (1) to record a self servicing document that will be considered facially valid establishing a “new” beneficiary and (2) the selection of an entity whose sole purpose is to facilitate foreclosure.

As a Trustee on a deed of trust it has obligations set forth in state statutes allowing the use of non-judicial foreclosure proceedings. The old beneficiary, frequently a title company, would follow the requirements of the statutes and common sense. The “new” one is “appointed” by a self-proclaimed beneficiary with instructions to foreclose. Hence the new trustee is obviously selected because of the likelihood that it will follow instructions from the self-proclaimed “successor” beneficiary and thus “establish” the validity of the new beneficiary and the data from the new beneficiary indicating the existence of a default. That is why it is described as “the foreclosure trustee.” The old one might require more information and documentation to establish the authenticity of the successor beneficiary.

The 9th Circuit here amending its prior opinion, rules out the foreclosure trustee as a debt collector because it is only selling collateral and not seeking recovery of money. Never mind the default letter that gives the amounts required for reinstatement or the redemption rights of any borrower. Playing right into the hands of the banks, the 9th Circuit has simply failed to deal with realities and instead has arrived at a result that this is as remote from the realities of today’s foreclosures as any Dickensian portrayal of the courts (see “Bleakhouse“).

The dissenting opinion from which I quote below sums up the weakness of this decision:

The suggestion in Hulse that a foreclosure proceeding is one in which “the lender is foreclosing its interest in the property” is flatly wrong. A foreclosure proceeding is one in which the interest of the debtor (and not the creditor) is foreclosed in a proceeding conducted by a trustee who holds title to the property and who then uses the proceeds to retire all or part of the debt owed by the borrower. See Cal. Civ. Code § 2931; Yvanova v. New Century Mortg. Corp., 365 P.3d 845, 850 (Cal. 2016). Any excess funds raised over the amount owed by the borrower (and costs associated with the foreclosure) are paid to the borrower. See Cal. Civ. Code § 2924k; see also Jesse Dukeminier & James E. Krier, Property 590 (2d ed. 1988). Thus, contrary to the holding in Hulse, “[t]here can be no serious doubt that the ultimate purpose of foreclosure is the payment of money.” Glazer, 704 F.3d at 463. Nor, because the FDCPA defines a “debt collector” as one who collects or attempts to collect, “directly or indirectly,” debts owed to another, 15 U.S.C. § 1692a(6), does it matter that the money collected at a foreclosure sale does not come directly from the debtor.

But even this fairly clear rendition of foreclosures recites “facts” that are in an alternate universe, to wit: that “the money collected at a foreclosure sale does not come directly from the debtor.” Where else did it come from? It came from the sale of the alleged debtor’s homestead which is property owned by the debtor and which can only be stopped by payment of the amount demanded or a lawsuit challenging the Substitution of Trustee, the status of the supposed successor beneficiary and the presence of a default between the homeowner, on the one hand, and the new beneficiary on the other hand. Either way the money comes from the debtor.

Add to that the obvious fact that Recontrust and other entities similarly situated are simply controlled entities of the large banks. In a word, they are appointing themselves as beneficiary and as successor trustee through the use of a sham entity that has no interest nor any power to act like a true trustee. The analytical issue appears to be that taken collectively, the Foreclosure Trustee, the self proclaimed successor beneficiary and the self proclaimed or appointed “servicer” are aiming for foreclosure under the guise of a quest for money.

Filed under: foreclosure | Tagged: beneficiary, DEBT COLLECTOR, foreclosure trustee, servicer, Substitution of Trustee | 7 Comments »

“Credit Bid” Comes Under Scrutiny in 9th Circuit

Posted on September 16, 2016 by Neil Garfield

As I have been writing and talking about the forced judicial sales, my opinion has always been that in most cases there is an absence of evidence that the party making the credit bid was in fact the creditor thus entitled to make a “credit bid” at the auction. The credit bid is an allowance for the creditor to bid up to the amount of the debt owed to them without paying cash at the sale. This has been ignored since I first started writing about it. I think the credit bid is void and fraudulent if a non-creditor submits a credit bid when it is not the creditor. In nonjudicial states this is an easier proposition than in judicial states where a Final Judgment has been rendered.

This case is also notable because it finally addresses the issue of the liability of the Trustee on a deed of trust, concluding that if the party claiming to be the beneficiary was in fact not the beneficiary, and there is no evidence to suggest otherwise, the trustee is potentially liable. It would be helpful to pursue discovery against the Trustee, since it is always a “substituted trustee” that is in fact under the thumb or owned by the parties who are making self-serving declarations of their status as “beneficiaries” under the deed of trust. THAT of course provides grounds to object and challenge the substitution of trustee and everything that follows. If the self-proclaimed beneficiary is a nonexistent entity or otherwise does not conform to the statutory definition of a beneficiary, then it has no power to substitute a new trustee. And everything that the trustee does after that point is void. In discovery look for the agreement that says the new Trustee is indemnified and held harmless for all claims, violations etc. It’s there — but you need to force the issue.

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER. ALSO NOTE THAT THIS IS NOT YET PUBLISHED AND THEREFORE IS NOT MANDATORY AUTHORITY YET.

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Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.

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see 9th Circuit decision, Jacobsen v. Aurora Loan Services, Case No. 12-17021

Wrongful foreclosure. We reverse the district court’s grant of summary judgment in favor of Aurora on the wrongful foreclosure claim. In California, the elements of a wrongful foreclosure action are (1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering. Sciarratta v. U.S. Bank Nat’l Ass’n, 202 Cal. Rptr. 3d 219, 226 (Ct. App. 2016). The district court erred by granting summary judgment on the ground that it found nothing wrong with the foreclosure sale.

First, the district court failed to review the record in the light most favorable to the non-movants when the district court assumed that the form of Aurora’s bid at the foreclosure sale was a cash bid. On appeal, the parties now agree that the form of the bid was a credit bid.

Second, a genuine dispute of material fact remains regarding whether Aurora properly made a credit bid. California law permits “present beneficiary of the deed of trust” to credit bid at the foreclosure sale. Cal. Civ. Code § 2924h(b). However, it is not uncontroverted that Aurora was the present beneficiary of the deed of trust. A deed of trust is “inseparable from the note it secures.” Yvanova v. New Century Mortg. Corp., 365 P.3d 865, 850 (Cal. 2016); see also Domarad v. Fisher & Burke, Inc., 76 Cal. Rptr. 529, 536 (Ct. App. 1969) (“[A] deed of trust has no assignable quality independent of the debt, it may not be assigned or transferred apart from the debt, and an attempt to assign the deed of trust without a transfer of the debt is without effect.”). The record contains evidence that Aurora did not “own” O’Brien’s loan before the foreclosure. ER 19-20, 136-38, 181. However, the record also contains evidence that Aurora is “currently in possession” of the original promissory note, which was endorsed in blank, although it is not clear from Aurora’s declaration when Aurora became the holder of the note.^[4] [ER 179-80; 185-195]. It appears that there remains a question of fact whether Aurora was the “beneficiary” of the deed of trust at the time of the foreclosure and thus whether it was entitled to make a credit bid at the foreclosure sale, and we remand for the district court to address this issue in the first instance.

Moreover, in order to prevail on their claim of wrongful foreclosure, Plaintiffs must also show that they suffered prejudice or harm as a result of irregularities or illegalities in the foreclosure sale. Sciarratta, 202 Cal. Rptr. 3d at 226. Because the district court granted summary judgment to Aurora on a different ground, the court did not address the element of prejudice or harm. In the circumstances, we also deem it prudent to remand this claim to the district court to consider the prejudice question in the first instance. We therefore reverse the district court’s grant of summary judgment on the wrongful foreclosure claim and remand for further proceedings.^[5]

AFFIRMED IN PART AND REVERSED AND REMANDED IN PART. The parties shall bear their own costs on appeal.

[**] The Honorable James V. Selna, United States District Judge for the Central District of California, sitting by designation.

[*] This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.

[1] The district court did not address standing. However, “[w]e may affirm on any ground supported by the record, even it if differs from the rationale used by the district court.” Buckley v. Terhune, 441 F.3d 688, 694 (9th Cir. 2006) (en banc).

[2] We GRANT both parties’ requests for judicial notice.

[3] In their reply, Plaintiffs suggest that their cancellation of instruments claim survives their contention that the note and deed of trust were void ab initio. Because this argument was first raised in the reply brief, we deem it waived. Delgadillo v. Woodford, 527 F.3d 919, 930 n.4 (9th Cir. 2008).

[4] Note that in today’s modern mortgage world, the “owner” of the underlying debt (that is, the entity who will receive the ultimate economic benefit of payments from the note, less a servicing fee) and “holder” of the note (the party legally entitled to enforce the obligations of the note) are not always one and the same. See, e.g., Brown v. Wash. State Dep’t of Commerce, 359 P.3d 771, 776-77 (Wash. 2015) (discussing modern mortgage practices and the secondary market for mortgage notes; “Freddie Mac owns [borrower’s] note. At the same time, a servicer . . . holds the note and is entitled to enforce it.“)(emphasis added). It thus appears possible that the “beneficiary” under the deed of trust would follow with the note (and with the entity “currently entitled to enforce [the] debt”), rather than the income stream. See Yvanova, 365 P.3d at 850-51; see also Hernandez v. PNMAC Mortg. Opp. Fund Investors, LLC, 2016 WL 3597468, *6 (Cal. Ct. App. June 27, 2016) (unpublished) (if the foreclosing party “could properly and conclusively establish . . . that it did hold the Note at the [time of foreclosure], that would be dispositive and preclude a wrongful foreclosure cause of action because a deed of trust automatically transfers with the Note it secures—even without a separate assignment.”)(citing Yvanova).

[5] We also reverse the district court’s grant of Cal-Western’s motion to dismiss the wrongful foreclosure claim. The trustee must conduct the foreclosure sale “fairly, openly, reasonably, and with due diligence” “to protect the rights of the mortgagor and others.” Hatch v. Collins, 275 Cal. Rptr. 476, 480 (Ct. App. 1990). Here, the complaint alleges that Cal-Western’s acceptance of a void credit bid was unlawful. If the credit bid was void and the acceptance of the credit bid was unlawful, Cal-Western failed to conduct the foreclosure sale with due diligence, and thus the complaint states a claim against Cal-Western.

Filed under: foreclosure | Tagged: beneficiary under deed of trust, cash bid, credit bid, deedof trust, foreclosure defense, fraud, securitization, Substitution of Trustee, wrongful foreclosure | 8 Comments »

Now You See Them, Now You Don’t

Posted on September 6, 2016 by Neil Garfield

ARE LAW FIRMS CROSSING THE LINE FOR BANKS WHO WILL THROW THEM UNDER THE BUS?

It is a chaotic circular round of documents emanating ultimately by, for and from the same parties. And somehow it is becoming custom and practice to allow law firm employees to sign important documents that transfer possession, delivery, ownership and servicing rights from one party to another while those parties themselves sign nothing.

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

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I can’t help thinking about whether there is a motion in California and other nonjudicial states that allows you to challenge the right of the attorney to be the attorney of record when the law firm is a fact witness on issues that are central to the case. Having signed the proof of claim, being the trustee (who supposedly represents the party who signs a proof of claim), etc., the question is whether they are acting on their own behalf or on behalf of a third party who might indeed have some objections against the law firm representing the interests of parties whose interests might be antithetical to their own.

In a deed of trust you have the trustor (homeowner) and the Trustee in the middle between the trustor and the beneficiary who presumably is the creditor. By now we know that original beneficiary probably did not make the loan and that the alleged new beneficiary didn’t buy it. The beneficiaries’ claims are only as good as the words on the fabricated paper on which they are written and certain legal presumptions that are routinely misapplied.

So the first sign of trouble is the “Substitution of Trustee” wherein a “New” beneficiary executes a document appointing a new Trustee on the Deed of Trust. Why? What was wrong with the old one if everything was on the up and up? They substitute because they know the original Trustee won’t accept the instructions from the new party because the original Trustee has no objective reason to believe that the new “party” is a “beneficiary”. Who signs that “substitution of Trustee”?

It is usually someone who has been given instructions to sign it on the promise and premise that they have been appointed attorney in fact for the “new beneficiary.” In fact, in many cases their only job is signing documents that they have received instructions to sign. But the actual person signing knows absolutely nothing about the deal and has no knowledge about the facts behind the business of signing such documents — assuming their signature was not forged or robo-signed.

So in this and many if not nearly all cases, the actual signature is supplied by a third party who will then fabricate a power of attorney to do it — still without any facts about why the Trustee needs to be replaced. In most cases it is an employee of the law firm who by definition (?) has no actual interest in the loan, the debt, the note or the mortgage (Deed of Trust). This makes the person who signed it a fact witness and watch how the law firm fights to prevent that person from testifying at deposition or trial. In many cases they will assert that the person is no longer employed and they don’t know where he or she is now located.

And then you have the new Trustee who often turns out to be the same law firm who signed the Substitution of Trustee, making it a double self-serving document for which no legal presumptions should apply since there is no foundation in evidence that establishes the law firm as a real party in interest — and if such evidence existed the law firm would be disqualified from representing the allegedly new beneficiary and from being the Trustee AND advocate against the Trustor. If the legislature meant to allow that sort of thing they would have been violating the due process clause of the U.S. Constitution making the entire nonjudicial statutory scheme unconstitutional.

Who signs the power of attorney once it is fabricated? It is either the law firm employee or an employee who works for a “servicer” who in most cases is not named in any document as servicer. Who signs the validation of the foreclosure? Same person. It is a chaotic circular round of documents emanating ultimately by, for and from the same parties. And somehow it is becoming custom and practice to allow law firm employees to sign important documents that transfer possession, delivery, ownership and servicing rights from one party to another while those parties themselves sign nothing.

That is what they are talking about when they refer to “remote” vehicles. It is a situation where actions are taken and the people for whom the action was taken cannot be tied into the transaction in case someone needs to go to jail, or pay a fine or sanctions. But somehow the Courts have twisted this into meaning that what is good for the goose is not good for the gander. The banks can distance themselves from liability for a fabricated transaction but they also can receive the benefits of the fabrication as though they were present.

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.

Filed under: foreclosure | Tagged: beneficiary, conflict of interest, DEED OF TRUST, law firm, non-judicial, Power of Attorney, Substitution of Trustee, validation, verification | 5 Comments »

How “Standing” Is Causing the Longest Economic Recovery Since the Great Depression

Posted on July 22, 2014 by Neil Garfield

THE PERFECT CRIME: THE VICTIMS DON’T KNOW ANYTHING

WHY INVESTORS AND BORROWERS SHOULD GET RID OF THE SERVICERS AND REPLACE THEM WITH SERVICING COMPANIES THEY CAN TRUST TO MITIGATE THE LOSSES CAUSED BY INVESTMENT BANKS

HOW? It is simple: since the perpetrators ignored the REMIC trust, didn’t fund them and never intended to actually have the REMIC trusts own the loans, the investors can go directly to homeowners or through their own servicers to settle and modify mortgages. This would leave the investors with claims against the investment banks for the balance of the losses, plus punitive damages, interest and court costs. It is the same logic as piercing the corporate veil — if you pay your grocery bills using the account of your limited liability corporation, the corporate entity is ignored.

Vasquez v Saxon (Arizona supreme Court) revisited

Assume the following facts for purposes of analogy and analysis:

John Jones is a Scammer, previously found to have operated outside the law several times. He conceives of yet another PONZI scheme, but with the help of lawyers he has obscured the true nature of his next scheme. He creates a convoluted scheme that ultimately was never understood by regulators.
The first part of his scheme is to offer shares in a company where the money will be held in trust. The money will be disbursed based upon standards that are promised to incoming investors.
The new company will issue the shares based upon the receipt of money from investors who are buying those shares.
Jones approaches Jason Smartguy, who manages a pension fund for 3,000 employees of ABC Company, a Fortune 500 company.
Jason Smartguy manages the pension funds under strict restrictions. A pension fund is a “stable managed fund” whose investments must be at the lowest risk possible and whose purpose is capital preservation.
John Jones promises Jason Smartguy that the new company will invest in assets that are valuable and stable, and that these investments will pay a return on investment higher than what Jason Smartguy is getting for the pension fund under his management. Jason likes the idea because it gives him employment security and probably bonuses for increasing the rate of return on the funds managed for the pension fund.
The lawyers for John Jones have concealed the PONZI nature of the scheme (paying back investors with their own money and with money from new investors) by disclosing the existing of a reserve fund — consisting entirely of money from Jason Smartguy.
Jason advances $100 Million to John Jones who says he is acting as a broker between the new Company (the one issuing the shares) and the Pension fund managed by Jason Smartguy.
The new Company never receives the money. Instead the money is placed in accounts controlled by people who have no relationship with the new Company.
The new Company never receives title or any documentation showing they own shares of the money pool now controlled by John Jones when it should be controlled by the new Company.
John Jones uses the money to bet against the new Company, insurance on the value of the shares of the new Company, and the proceeds of other convoluted transactions — mostly based on the assumption that John Jones owns the money in the pool and based entirely on the assumption that any assets of the pool therefore belong to John Jones — not the new Company as promised.
John Jones also uses the money to buy assets, so everything looks right as long as you don’t get too close.
The assets Jones buys are designed to look good on paper but are pure trash — which is why John Jones bet against the pool and shares in the pool.
Everyone is fooled. The investors get monthly statements from John Jones along with a check showing that the investment is working just as was planned. They don’t know that the money they are receiving comes entirely from the reserve pool and the meager actual returns from the assets. The insurance company believes that Jones is the owner of the money and the assets purchased with money from the pool created by Jason Smartguy’s advance from the pension fund.
John Jones goes further. He pretends to own the shares of the new Company that actually belong to the pension fund managed by Jason Smartguy. He insures those shares naming himself as the insurance beneficiary and naming himself as the receiver of proceeds from his bets that the shares in the new Company would crash, just as he planned.
While the assets are proving as worthless as John Jones had planned, Jason Smartguy receives payments to the pension fund exactly as outlined in the Prospectus and the Operating Agreement for the New Company. Unknown to Jason, the assets are increasingly proving worthless, as a whole and the income is declining. So Jason buys more shares in the new Company, thus providing Jason with a larger “reserve” fund and more “assets” to bet against and more “shares’ to bet against.
John Jones sets out to “acquire” assets that will fail, so his bets will pay off. He buys assets whose value is low (and getting worse) and he creates fictitious transactions in which it appears as though the new Company has bought the assets at a much higher price than their value. The “sales” to the Company are a sham. The Company has no money because Jason Smartguy’s pension money never was made to the new Company in exchange for the new Company issuing shares of the company to Jason’s pension fund.
The difference between the real value of the assets and the price “sold” to the pool is huge. In some cases it is 2-3 times the actual value of the asset. John Jones treats these sales as “proprietary trading profits” for John Jones,when in fact it is an immediate loss to Jason’s pension fund. The shares of the new Company are worthless because it never received any money nor title to any assets. John Jones as “broker” took all the money and assets.
Meanwhile John Jones continues to pay Jason’s pension fund along with distribution reports showing the assets are in great shape and the income is just fine. In reality the assets are virtually worthless and the income is declining just as John Jones planned. John Jones is taking money hand over fist and calling it his own. His bets on the whole thing crashing are paying off handsomely and he is not reporting to Jason how much he is making by taking Jason’s managed money and calling part of it proprietary profits.
The beauty of John Jones PONZI scheme is in the BIG LIE told not only to Jason Smartguy but also to Henry Homebody, who owns a home in Tucson Arizona. Henry is easier to sell on a stupid scheme than Jason Smartguy because Jason requires proof of independent appraisals (ratings), proof of insurance and various other aspects of the investment. Henry Homebody trusts the “lenders” and considers them to be banks, some with reputations and brands that go back 150 years.
Henry Homebody’s house has been in the family for 6 generations and is fully paid off. He pays only insurance and taxes. Unknown to him, he is a special target for scammers like Merendon Mining, whose operators are now in jail. Merendon got homeowners with unencumbered houses to “invest” in a mirage (gold shares) thus putting the fantastic equity in their homes to work. Henry is flown to Canada, wined and dined, and has a very good time, just before he agrees to take out a loan using his family home as collateral, which will provide an income to him of $16,000 over month (which is about ten times his current income).
Henry is approved for a loan equal to twice the value of the property and in which the mortgage broker (now on the run from the law) used projected income from the speculative investment in Merendon mining. This act by the mortgage broker was illegal but worth the risk because the broker was part of the Merendon Mining scam. (look up Merendon Mining and First Magnus Funding).
Henry makes Payments on the mortgage principal, interest, taxes and insurance (all higher because of the false appraisal that was used for the property). He is able to do this because some of the money from the “loan” was given to him and he was able to make payments until the magnificent returns started to come in from his Merendon Mining shares. But those shares were worded in such a way that they were not exactly the ownership of gold that Henry thought he was getting. In fact, it was another pool with options on gold. And of course the money never materialized and neither did the gold. (Note 1996-2014: more than 50% of all loans were “refi’s” in which the home was fully paid or nearly so).
Henry’s lender turned out to be a party pretending to lend him money, using MERS as a nominee for trading purposes, and naming the originator as lender when in fact they were also just a nominee.
Henry’s mortgage and note recite terms that are impossible to meet unless Merendon Mining pays off.
Henry believes at closing that First Magnus was the lender and that some entity called MERS is hanging in the background. Nobody explains anything to him about the lender or MERS. And of course he was told not to get an attorney because nothing can be changed anyway.
Henry did not know that John Jones had spread out Jason’s money into several entities and then used Jason’s money to fund the origination of Henry’s loan.
Jason does not know that the note and mortgage were never executed in the name of the pension fund or the new Company that was supposed to own the loan as an asset.
Eventually the truth starts coming out, the market crashes and prices of homes return to actual value. Merendon Mining is of course a bankrupt entity as is First Magnus, whose operator appears to be on the run.
Henry can’t make the payments after the extra money they gave him runs out. He has $2 million in loans and the “guaranteed” investment in Merendon Mining has left him penniless.
John Jones fabricates and forges dozens of documents to piece together a narrative wherein an “independent” company would claim ownership of Henry’s loan despite the complete absence of any real transactions between any of the companies because the loan was fully funded using Jason Smartguy’s pension money.
Henry knows nothing about the scam John Jones pulled on Jason Smartguy and certainly doesn’t know that the new Company was involved in his loan (because it wasn’t). Henry doesn’t understand that First Magnus and MERS never loaned him any money and that he never owed them money. And Henry knows nothing about John Jones, whose name appears on nothing.
John Jones, the PONZI operator goes about the business of finishing the deal and making sure that the multiple people who bought into Henry’s loan (without knowing of the other sales and bets placed by John Jones) don’t start asking for refunds.
John Jones MUST get a foreclosure or there will be auditing and reporting requirements that most everyone will overlook as long as this looks like just another loan gone bad. His PONZI scheme will be revealed if the true facts become known so he makes sure that nobody sees the actual money trail except him. He might go to jail if the truth is discovered.
The lawyers for John Jones have told him that even fabricated, forged, non-authentic, falsely signed, and falsely notarized documents carry a presumption of validity. Thus the lawyers and Jones concocted a PONZI scheme that would most likely succeed because even the borrower, Henry, still thinks he owes money to First Magnus or its “successors”, whose identity he doesn’t really care about because he knows he took the loan. He doesn’t know that First Magnus and several other entities were involved in collecting fees and making profits the moment he signed the papers, and possibly before.
Meanwhile Jason Smartguy, manager of the pension fund is starting to get disturbing reports about the assets that were purchased. Jason still doesn’t know that the money he gave John Jones never went into the New Company, that the Company never engaged in any transactions, and that John Jones was claiming “losses” that were really Jason’s losses (the pension fund).
John Jones was collecting money from multiple sources without any of them knowing about each other and that he had no losses, he had only profits, and even got the government to lend him more money so he wouldn’t go out of business which might ruin the economy.
Most of all John Jones never made a loan to Henry Homeowner; but that didn’t stop him from saying he did make the loan, and that the paperwork between John Jones and Jason Smartguy’s pension fund was irrelevant — the borrower got a loan and stopped paying. Thus judicial or non judicial process was available to sell the home that had been in Henry’s family for 6 generations.
But the weakness in John Smith’s PONZI scheme is that his entire strategy is based upon presumptions of validity of his false documentation. If courts start applying normal rules and require Jones to disclose the money trail, he is cooked. There can be no foreclosure if a non-creditor initiates it by simply declaring that they are the creditor and that they have rights to enforce the debt — when the only proof of that is that Jason Smartguy, manager of the pension fund, has not yet put the pieces together and demanded ownership of the loan, settled the cases with modifications and went after John Jones for the balance of the money that was skimmed off the deal.
And since Henry’s house is in Tucson, Az, he is subject to non-judicial foreclosure and he is in big trouble. He has no reason to believe the “servicer” is unauthorized, that the debt that is subject to correspondence and monthly statements does not exist, nor that the mortgage or deed of trust was void for lack of consideration — none of the “lenders” at closing ever loaned him a dime. The money came from Jason but Henry didn’t, and possibly still doesn’t know it.
John Jones files a document called “Substitution of Trustee.” In this false document Jones declares that one of his many entities is the “new beneficiary” (mortgagee). Jones holds his breath. If Henry objects to the substitution of trustee he might have to reveal that the new trustee is not independent, it is a company controlled by John Jones.
John Jones has made himself the new trustee. If the substitution of trustee is nullified in a court proceeding, NOTHING can be done by John Jones or his controlled companies.
If the old trustee realizes that they have received no information on the validity of the claim and might still be the trustee, they might file an “interpleader” action in which they say they have received competing claims, demand attorney fees and costs along with their true statement that as the trustee named on the deed of trust, they have no stake in the outcome.
If that happens Jones is cooked, broiled and boiled. He would be required to allege and prove that the “new beneficiary” is in fact the creditor in the transaction by succession, purchase or otherwise. he can’t because it was Jason who gave the money, it was Jason who was supposed to get evidence of ownership of the loan, and it is Jason who should be deciding between foreclosure (which John Jones MUST have to escape enormous civil and criminal liability).
Jones doesn’t file documents for recording unless and until the case goes into foreclosure. That is because he continuing to trade and make claims of losses on “bad loans.”
In fact, just to be on the safe side, he doesn’t file the fabricated, forged perjurious assignment of the loan at all if nobody makes him. He only files the assignment when he absolutely must do so, because he knows each filing is false and potentially proof of identity theft from the pension fund and from the homeowner.
So it often happens that despite laws in each state requiring the filing of any transfer of an interest in real property for recording, Jones files the assignment when there is the least probability and least likelihood that the PONZI scheme will be revealed. Jones knows the mortgage is void and should never have been recorded, as a matter of law.
Henry brings suit against Jones seeking justice and relief. But he really doesn’t know enough to get traction in court. Jones filed the assignment after the notice of default, after the notice of sale, and after the notice of substitution of trustee.
The Judge who knows nothing about the presence of Jason, who still does not know this is going on, rules for Jones saying that it is irrelevant when the assignment was recorded because it is still a valid assignment between the parties to the assignment.
Jason knows nothing about how the money from his pension fund was handled.
Jason knows nothing about how each foreclosure seals the doom and affirms the illegal windfall to intermediaries who were always playing with OPM (other people’s money).
The Court doesn’t know that that the assignment was just on paper, that there was no business reason for it to be executed, that there was no purchase of the loan from Jason’s pension fund, to whom the actual loan was payable. Thus the Judge sees this as much ado about nothing.
Starting from the premise that Henry owed the money anyway, that there were no real defenses, and that since nobody else was making a claim it was obvious that Jones was the creditor, the Arizona Supreme Court says that anyone can can foreclose on an undated, backdated fabricated assignment forged and robo-signed with no real transaction; and they can execute a substitution of trustee even if they are complete strangers to the loan transaction and once they file that, they can foreclose on property that was never used as collateral for the real loan.

Because there are hundreds of John Jones characters in this tragedy, the entire marketplace has been decimated. The middle class is permanently stalled because their only net worth has been stolen from them The borrowers would gladly execute a real mortgage for real value with real terms that make sense 95% of the time, but they need to do it with the owner of the debt — the pension fund. The pension fund the borrower need to be closely aligned on the premise that the loans can be modified for better terms that forced sales, the housing market could recover, and money would start flowing back to the middle class who drives 70% of our consumer based economy.

They are all wrong and are opening the door for more PONZI schemes and even better ways to steal money and get away with it. The Arizona Supreme Court in Vasquez as well as all other decisions from the trial bench, appellate courts, regulators and law enforcement are all wrong. The burden of proof in due process is on the party seeking affirmative relief. Anyone who wants the death penalty equivalent in civil litigation (forfeiture of homestead), should be required to prove beyond all reasonable doubt or by clear and convincing evidence that the mortgage was valid and should have been recorded.

If they didn’t make the loan they had no right to record the mortgage or do anything with the note or mortgage except give it back to the borrower for destruction. If they didn’t make disclosure of the real nature of the loan and all the profits that would arise from the borrower signing an application and the loan documents, those profits are due back to the borrower.

Each time the assumption is made that there are no valid defenses for the borrower, we are cheating investors and screwing the homeowners. And as for the windfall proposition we know who gets it — the John Jones PONZI operating banks that started all of this. Exactly how can this lead anyway other than a continued drag on our economy?

Vasquez v saxon Az S Ct CV110091CQ

For more information call 954-495-9867 or 520-405-1688

Filed under: AMGAR, CORRUPTION, evidence, expert witness, foreclosure, foreclosure defenses, GTC | Honor, investment banking, Investor, MBS TRUSTEE, MODIFICATION, Mortgage, originator, Pleading, Servicer, Title, TRUST BENEFICIARIES, trustee | Tagged: ARIZONA, assignment fabricated, First Magnus, foreclosure, lender, Merendon Mining, Saxon, Substitution of Trustee, Vasquez | 25 Comments »

Here it is: Nonjudicial Foreclosure Violates Due Process in Complex Structured Finance Transactions

Posted on February 21, 2014 by Neil Garfield

No, there isn’t a case yet. But here is my argument.

The main point is that we are forced to accept the burden of disproving a case that had not been filed — the very essence of nonjudicial foreclosure. In order to comply with due process, a simple denial of the facts and legal authority to foreclosure should be sufficient to force the case into a courtroom where the parties are realigned with the so-called new beneficiary is the Plaintiff and the homeowner is the Defendant — since it is the “beneficiary” who is seeking affirmative relief.

But the way it is done and required to be done, the Plaintiff must file an attack on a case that has never been alleged anywhere in or out of court. The new beneficiary anoints itself, files a fraudulent substitution of trustee because the old one would never go along with it, and then files a notice of default and notice of sale all on the premise that they have the necessary proof and documents to support what could have been an action in foreclosure brought by them in a judicial manner, for which there is adequate provision in California law.

Instead nonjudicial foreclosure is being used to sell property under circumstances where the alleged beneficiary under the deed of trust could never prevail in a court proceeding. Nonjudicial foreclosure was meant to be an expedient method of dealing with the vast majority of foreclosures when the statute was passed. In that vast majority, the usual procedure was complaint, default, judgment and then sale with at least one hearing in between. Nearly all foreclosures were resolved that way and it become more of a ministerial act for Judges than an actual trier of fact or judge of procedural rights and wrongs.

But the situation is changed. The corruption on Wall Street has been systemic resulting in whole sale fraudulent fabricated forged documents together with perjury by affidavit and even live testimony. Contrary to the consensus supported by the banks, these cases are complex because the party seeking affirmative relief — i.e., the new “beneficiary” is following a complex script established long before the homeowner ever applied for a loan or was solicited to finance her property.

The San Francisco study concluded, like dozens of other studies across the country that most of the foreclosures were resolved in favor of “strangers to the transaction.” By definition, the use of several layers of companies and multiple sets of documents defining two separate deals (one with the investor lenders and one with the borrower, with the only party in common being the broker dealer selling mortgage bonds and their controlled entities) has turned the mundane into highly complex litigation that has no venue. In non-judicial foreclosures the Trustee is the party who acts to sell the property under instructions from the beneficiary and does so without inquiry and without paying any attention to the obvious conflict between the title record, the securitization record, the homeowner’s position and the prior record owner of the loan.

The Trustee has no power to conduct a hearing, administrative or judicial, and so the dispute remains unresolved while the Trustee proceeds to sell the property knowing that the homeowner has raised objections. Under normal circumstances under existing common law and statutory authority, the Trustee would simply bring the matter to court in an action for interpleader saying there is a dispute that he doesn’t have the power to resolve. You might think this would clog the court system. That is not the case, although some effort by the banks would be made to do just that. Under existing common law and statutory law, the beneficiary would then need to file a complaint, verified, sworn with real exhibits and that are subject to real scrutiny before any burden of proof would shift to the homeowner. And as complex as these transactions are they all are subject to simple rules concerning financial transactions. If there was no money in the alleged transaction then the allegation of a transaction is false.

It was and remains a mistake to allow such loans to be foreclosed through any means other than strictly judicial where the “beneficiary” must allege and prove ownership and the balance due on the loan owed to THAT beneficiary. Requiring homeowners with zero sophistication in finance and litigation to bear the initial burden of proof in such highly complex structured finance schemes defies logic and common sense as well as being violative of due process in the application of the nonjudicial statutes to these allegedly securitized loans.

By forcing the parties and judges who sit on the bench to treat these complex issues as though they were simple cases, the enabling statutes for nonjudicial foreclosure are being applied unconstitutionally.

Filed under: CORRUPTION, education, escrow agent, Eviction, evidence, expert witness, Fannie MAe, foreclosure, foreclosure defenses, foreclosure mill, GARFIELD KELLEY AND WHITE, GTC | Honor, investment banking, Investor, MBS TRUSTEE, MODIFICATION, Mortgage, Pleading, securities fraud, Servicer, STATUTES, TRUST BENEFICIARIES, trustee | Tagged: beneficiary, BURDEN OF PROOF, complex litigation, due process, interpleader, judicial foreclosure, new beneficiary, nonjudicial foreclosure, structured finance, Substitution of Trustee, Trustee on deedof trust, trustee on MBS | 266 Comments »

Vacate the Substitution of Trustee

Posted on September 17, 2012 by Neil Garfield

“The Bottom Line is that if the REMIC transactions were real, they would have been named on the note and mortgage. The fact that they never were named or disclosed demonstrates clearly that something else was going on besides funding mortgages with REMIC money from investors. Nobody would loan money without putting their name as payee on the note, their name as lender on the note and mortgage and their name as beneficiary. The Wall Street explanation that MERS and other obscurities were necessary to securitize the loans is in fact directly contrary to the fact that the loans were never securitized, that the mortgage bonds were bogus obligations from empty REMICs with no bank account and no active manager or trustee.” Neil F Garfield, livinglies.me

A recent case I reviewed, resulted in a full analysis, and my suggestions for strategy, tactics, pleading and oral argument. It involved Bank of America, Recontrust and BONY/Mellon.

What is again so interesting is that we are dealing with BOA in SImi Valley, CA (supposedly) with Reconstrust in in in Richardson, TX. What is interesting is that the response to my letter which was addressed only to Recontrust came from BOA. This is evidence of the fact that Recontrust are one and the same entity. It doesn’t prove it but it is evidence of it. Thus the challenge to the substitution of trustee comes under the heading that a beneficiary cannot name itself as the trustee. The statute says the TRUSTOR names the trustee on the deed of trust not the beneficiary. And while the beneficiary may change the trustee there is nothing in the statute that even suggests that a beneficiary could name itself as the new trustee. The statute says that the trustee is to substitute for a court of law and that it is to exercise (See Hogan decision and others) a fiduciary duty toward both the Trustor and the beneficiary.

In most cases, the appearance of Bank of America as a beneficiary is via “merger with BAC” which was created to take the servicing rights from Countrywide (not the ownership of the loan). Yet the debt validation letter causes a response to show that the creditor is Bank of America while the Notice of Default shows as having a REMIC as the creditor, which would make the REMIC the beneficiary. So we have a conflict of creditors that comes from the same source.

Since the REMIC is required by law and contract to be closed out within 90 days with the loans in it, and since we know they didn’t do that, the money from the investors was beyond any reasonable doubt channeled through conduits controlled by the investment banker and not the account of the REMIC because there was no trust account, bank account or any account through which the investor money was channeled and then sued to fund or buy loans. This leads to the inevitable conclusion that the entire scheme is a smoke screen for what really occurred.

Based upon what we know, the REMIC structure was actually ignored when it came to the movement of money. Based upon what we know, Quicken Loans and others acted as “originators”, which is a word that is not really defined legally but it would imply that it was the sales entity to reel in borrowers for a deal. While Quicken Loans was shown as payee on the note and lender on the note and mortgage (deed of trust), Quicken had neither loaned any money nor secured the loan through any legal nexus between Quicken and the investors. MERS was inserted as a placeholder for title purposes. Quicken was thus inserted as a placeholder for payment purposes — all without ad equate disclosure of the compensation received by MERS or QUICKEN in the deal (a clear violation of TILA and RESPA).

Immediately after the closing of the loan the borrower was informed that the servicing rights had been transferred to Countrywide, and thereafter BAC emerged as the servicer. BAC was formed as a wholly owned subsidiary of bank of America and then merged with Bank of America for unknown reasons, and thus the servicing of the loan was assumed to be the right of Bank of America. But what was there to service?

If Quicken did not advance the funds for the loan nor did Quicken or any of its “successors” advance money for the purchase of a perfectly performing loan, then who did? The answer comes from irrefutable logic. We know the REMIC was ignored so the money didn’t come from the REMIC. If there was an intermediary who was acting as agent for the REMIC it had to be the Trustee for the REMIC who has no trust account or bank account to show for it. Thus the money came from another source and the money taken from investors may or may not have been used to fund the borrower’s loan in this case or more likely, a larger pool of investor funds was used as the source of funding but was NOT documented with the usual promissory note and mortgage (deed of trust) signed by the borrower.

The legal conclusion I reach is that the mountain of paperwork starting with the “origination” of the loan is worthless paper unsupported by either consideration (funding the loan) and whose recitations of facts are at variance with (1) the actual trail of money and (2) the provisions of the documents upon which Bank of America now relies requiring assignment of the loan in recordable form into the REMIC within 90 days while it was still performing. But they couldn’t assign it into the trust because (1) the trust had no money or account with which to pay for the loan and (2) this would have prevented the investment bank from trading the loan and the loan portfolios as if it were the property of the investment bank.

Thus Bank of America is attempting to appear as the new beneficiary based upon a complete lack of any chain of transactions that would make it so. And they are using the cover of BONY as “trustee” as cover for their false and fraudulent representations knowing full well that neither BONY nor the REMIC ever received a dime from investors, borrowers or anyone else and that instead the flow of money was entirely outside the sham paper transactions upon which BOA now relies.

Having covered up an incomplete unexecuted contract without funding the loan, the securitization participants proceeded to act as though the loan transaction with Quicken was real. If they relied upon the original trustee, the original trustee would have required sufficient title and other information from BOA before taking any action against the Trustor borrower.

Thus Bank of America names Reconstrust as the substitute trustee, that will “play ball” with them because Recontrust is owned and controlled by Bank of America. The challenge, as we have said, should be to the substitution of trustee as not having named an objective third party and instead being the equivalent of the beneficiary naming itself as trustee. BY definition, the new trustee is neither likely nor able to exercise due diligence and act in a responsible manner with a fiduciary duty to the trustor and beneficiary, if they can determine the identity of the beneficiary.

Thus any TRO or other action should be directed against the substitution of trustee as being outside the intent of the statute and violative of due process since it provides the beneficiary with unfettered ability to sell property merely on a whim. In order to demonstrate compliance with the requirements of constitutional dude process the legislature had to show that there was a different procedure in place that would allow for the claims of all stakeholders to be heard. Even if the substitution of trustee was valid, the mere denial of the claims of the beneficiary and accusations of fraud, false assignments, and a closing at which the mortgage lien was not perfected, on a note that did not name the proper payee nor state the same terms of repayment that the investors received when they “bought” the bogus mortgage bonds.

Bottom Line: The Pile of paperwork is worthless and does not create nor provide evidence of an actual transaction that took place wherein the named payee and lender ever fulfilled its part of the bargain — lending money to the borrower. Nor does it present even the possibility of a perfected mortgage lien. Thus foreclosure is impossible. The trustee was and is under an obligation in contested cases to file an interpleader action where the stakeholders’ claims may be heard on the merits. The primary trustee on the deed of trust may have violated its fiduciary duties by allowing the practice that it, of all entities, would or should have known was both illegal and improper. For both procedural and substantive reasons, the notice of default and notice of sale should be vacated and purged from the county records.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: Bank of America, Bony/Mellon, consideration, countrywide, due process, funding, Quicken, RECONSTRUST, REMIC, subsitution of trustee, Substitution of Trustee, trustee | 22 Comments »

Cancellation of Void Instrument

Posted on September 4, 2012 by Neil Garfield

Consider this an add-on to the workbook entitled Whose Lien is It Anyway also known as Volume II Workbook from Garfield Continuum Seminars.

Several Attorneys, especially from California are experimenting with a cause of action in which an instrument is cancelled — because it throws the burden of proof onto the any party claiming the validity or authenticity of the instrument.

I have been researching and analyzing this, and I think they are onto something but I would caution that your pleadings must adopt the deny and discover strategy and that you must be prepared to appeal. There is also a resurgence of tacit procuration doctrines, in which the receiver of communication has a definite duty to respond.

Here is Part I of the analysis: There will be at least one more installment:

Cancellation of Void Instrument

In most cases loans that are later subject to claims of securitization (assignment) are equally subject to cancellation. There are potential defenses to the motion or pleading demanding cancellation of the instrument; but if framed properly, the motion or pleading could be utilized as an advanced discovery tool leading to a final order. This is particularly true if a RESPA 6 (Qualified Written Request) precedes the motion or pleading.

Cancellation of a void instrument is most often directed at a Mortgage or Deed of Trust that is recorded. The elements of cancellation of an instrument include that the document is void (not just the recording). That means that what you are saying is that there is nobody in existence with any legal right, justification or excuse to attempt to use or enforce the document.

I believe that it requires the pleader to allege that the parties on the instrument are unknown to the Pleader in that there never was a financial transaction between the pleader and the the other parties mentioned and accordingly the recording of the document is at best a mistake and at worst, fraud. The element of fraud usually is involved whether you plead it or not. However the same principles and elements might well apply to the following:

Substitution of Trustee
Notice of Default
Notice of Sale
Deed recorded as a result of foreclosure auction
Judgment for Eviction or Unlawful Detainer
Mortgage Bond
Unrecorded instruments like promissory notes, pooling and servicing agreements, and mortgage bonds, credit default swaps etc.

Another word of caution: an existing document carries a certain amount of the appearance of authenticity and validity. That appearance may rise to an informal presumption by a Judge who believes he understands the “facts” of the case. The informal presumption might be elevated by state or federal statute that may describe the presumption as rebutable, or presumed to be rebuttable. In some cases, the rebutable presumption could be elevated to an irrebutable presumption, which might mean that nobody is permitted to challenge the validity or authenticity of the document. But even irrefutable presumptions are subject to challenge if they are procured by deceit or fraud in the inducement, or fraud in the execution.

The scenario assumed here is that no loan receivable was legally created because there was no financial transaction between the homeowner and whoever is on the note, mortgage or whatever document you are seeking to cancel. Where appropriate, the pleader can allege that they deny ever having signed the instrument to that it was signed with expectation that the parties designated as lender, beneficiary or payee never completed the transaction by funding.

It is probably fair to say that presumptions are only successfully challenged if the allegations involve fraud or at least breach of presumed facts or promises. A note is evidence of an obligation and is presumed to validly recite the terms of repayment of a legitimate debt. But it also possible that the note might be evidence of the amount of the obligation, but not its terms of repayment if the facts and circumstances show that the offer was unclear or the acceptance was unclear. In the case of so-called securitized loans, accepting the allegations made by foreclosers, the offer of the loan contained terms that were never communicated to the borrower. This is because an instrument containing the terms of repayment was at material variance with the terms recited in the note. The instrument received by the lender was a mortgage bond. And most importantly the lender and the borrower were never in direct communication with one another.

The interesting effect of the substitution of the mortgage bond for a loan receivable is that the mortgage bond is NOT signed by the homeowner and is no payments of principal and interest are due to the investor except from the REMIC issuing entity that never received any enforceable documents from the homeowner.

Nor were the terms for repayment ever disclosed to the homeowner. And the compensation of the intermediaries was not disclosed as required under TILA. This constellation of factors throws doubt, at the very least, as to whether the closing was ever completed even without the the funding. The fact that the funding never took place from the designated payee or “lender” more or less seals the deal.

You must have at the ready your clear argument that if the “trust” was the lender or any of its investors then the note should have said so and there would be no argument about funding, or whether the note or mortgage were valid instruments. But Wall Street had other plans for “ownership” of the loan and substituted a series a naked nominees or straw-men for their own financial benefit and contrary to the terms expressed to the investor (pension fund) and the homeowner (borrower).

Wire Transfer instructions to the closing agents tell another story. They do not show any indication that the transfer to the closing agent was for the benefit of the designated lender, whose name was simply borrowed by Wall Street banks in order to trade the “loans” as if they were real and as if the banks owned the bonds instead of the trusts or the investors. This could only have been accomplished by NOT having the investors money travel through the REMIC trust. Hence the moment of origination of the obligation took place when the homeowner received the money from the investors through accounts that were maintained by the banks not for the REMICS but for the investors. This means that investors who believe their rights emanate from the origination documents of the trust are mistaken because of the false statements by the banks when they sold the bogus mortgage bonds.

If that is the case, their is no perfected lien, because the only mortgage or deed of trust recorded shows that it is to protect the payee “lender” (actually a naked nominee) in the vent the borrower fails to make payments and otherwise comply with the terms of the note and mortgage. But the note and mortgage relate to an unfunded transaction in which at not time was any party in the alleged securitization chain the source of funds for origination, and at not time was there ever “value received” for any assignments, bogus or otherwise, robo-signed or otherwise.

It also means that the investors must be disclosed and that for the first time the homeowners and pension funds who actually were involved in the transaction, can compare notes and decide on the balance of the obligation, if any, and what to do about it. Allowing the banks to foreclose as servicer, trustee of an asset-backed trust, or in any other capacity is unsupported by the evidence. The homeowner, as in any mortgage foreclosure, is entitled to examine the loan receivable account from the item of origination through the present. If there is agreement, then the possibility of a HAMP or other modification or settlement is possible.

Allowing the servicers to intermediate between the investors and the homeowners is letting the fox into the hen-house. If any deal is struck, then all the money they received for credit de fault swaps and insurance might be due back to the payors, since the mortgages declared in default are actually still performing loans AND at present are not secured by any perfected lien.

Cancellation of the note does not cancel the obligation. In most cases it converts the obligation from one that provided for periodic payments to a demand loan. Success of the borrower could be dangerous and lead the borrower to adopt portions of the note as evidence of the terms of repayment while challenging other parts of the recitals of the note. Cancellation of the note would also eviscerate the promise of collateral which is a separate agreement that offers the home as collateral to secure the faithful performance of the terms of the note. Hence the mortgage or deed of trust would be collaterally canceled merely by canceling the note.

If the note is cancelled, the action can move on to cancel the mortgage instrument. In the context of securitized loans it seems unlikely that there could be any success without attacking both the mortgage, as security, and the note, as evidence of an obligation. In its simplest form, the attack would have the highest chance of success by successfully attacking the obligation. If a lender obtains a note from a borrower and then fails to fund the loan, no obligation arises. It follows logically that the recitals of the note would then be meaningless as would the recitals in the mortgage. Having achieved the goal of proving the instrument as invalid or meaningless, the presence of the instrument in the county recorder’s office would naturally cause damage to other stakeholders and should be cancelled.

If the mortgage is in fact cancelled, then the next logical step might be a quiet title action that would have the court declare the rights and obligations of the stakeholders, thus eliminating any further claims based upon off-record transactions or the absence of actions presumed to be completed as stated in the instrument itself.

It must be emphasized that this is not a collateral attack or a flank attack on the obligation based upon theories of securitization, the pooling and servicing agreement or the prospectus. cancellation of an instrument can only be successful if the party who would seek to use the instrument under attack cannot substantiate that the instrument is supported by the facts.

The facts examined usually include the issues of offer, acceptance and consideration at the time of origination of the instrument under attack. A later breach will most likely not be accepted as reasons for cancellation unless the later event is payment of a debt. Failure to return the cancelled note would be a proper subject of cancellation if the allegation was made that the the obligation was completely satisfied. The presence of the original note after such payment and refusal or inability to return the note as cancelled is reason enough for the court to enter an order canceling the note. Any attempt to sell the note or assign it would be ineffective as against the maker of the note and could subject the assignor to both civil and criminal penalties.

Both payment and origination issues arise in connection with the creation of loan documents. The originator (and any successors) must be able to establish offer, acceptance and consideration. The signature element missing from most of the document chains subjecting all deeds of trusts, notes, mortgages and assignments to cancellation is the lack of consideration.

In a money transaction, consideration means money. If money was not tendered by the originator of the documents despite the requirements to do so as set forth in the documents, the putative borrower or debtor who executed the documents is entitled to cancellation.
In the case of securitized loans, the appearance of propriety is created by reams of documents that cover up the origination documents, giving the appearance that numerous parties agreed that the proper elements were present at the time of the origination of the loan. This has successfully been used by banks to create the informal presumption that the essential elements were present at origination — offer, acceptance and consideration.

The originator (or its successors) can easily avoid cancellation by simply establishing the identity of itself as the lender, the signature of the borrower, and the proof of a cashed check, wire transfer or ACH confirmation showing the payment by the originator to the borrower. In loans subject to claims of securitization and multiple assignments, they cannot do this because the original transaction was never completed.

The issue in securitized loans is that while wire transfer instructions exist and might even mention the borrower by name and could even make reference to the originator, the instructions always include directions on where to send the surplus funds, if any exist. Those funds are clearly not to be given or sent to the originator but rather back to the undisclosed lender, which makes the transaction a table funded loan defined as illegal predatory practices under the Federal Truth in Lending Act.

If the documents named the actual lender, then the offer, acceptance and consideration could be shown as being present. Originators may not “borrow” consideration from a deal between the borrower and another party and use it to establish the consideration for the closing loan documents with the originator. That would create two obligations — the one evidenced by the note and the other evidenced by the mortgage bond, that asserts ownership of the obligation.

Borrowers and creditors are restricted by one simple fact. For every dollar of principal borrowed there must be a dollar paid on that obligation. Putting aside the issue of interest on the loan, the creditor is entitled only to one dollar for each dollar loaned, and the borrower is only required to make a payment on an obligation that is due. The obligation becomes due the moment the borrower accepts the money or the benefits of the money, regardless of whether any documents are drafted or executed. The converse is also true — the creation, and even execution of documents does not create the obligation. It is only the actual money transaction that creates the obligation.

Stripping away all other issues and documentation at the time of origination of the loan, it can fairly assumed that in most of the subject cases of “securitization” that the originator was either not a depository institution or was not acting under its charter as a depository or lending institution. If it was not a lending institution, then it loaned money to the borrower out of its borrowed or retained capital — with the source of funds coming from their own bank account. Based upon a review of hundreds of wire transfer instructions, none of the non-lending institutions was the source of funds, yet their name was used specifically recited in the note as “lender.” The accompanying disclosure documents and settlement statement describes the “lender” as being the named originator. Hence, without funds, no consideration was present. If there was an absence of consideration for the documents that were putatively executed, then the documents are worthless.

The originator in the above scenario lacked two capacities: (1) it could not enforce the note or mortgage because it lacked a loan receivable account that would suffer financial damage and (2) it could not legally execute a satisfaction, cancellation or release of the obligation or the putative lien. Such an originator at the moment of closing is therefore missing the necessary elements to survive a request to cancel the instrument at that time or any other time. No assignments, allonges, indorsements, or even delivery of the loan documents can improve the survival of the loan documents originated, even if some assignee up the chain paid for it.

Yet at the same time that there was no consideration from the originator, there was a loan received by the borrower. If it didn’t come from the originator, and the money actually arrived, the question is properly asked to identify the source of funds and whether that party had the capacity to enforce collection of the loan and could execute a release or satisfaction or cancellation of the note and mortgage. Here is where the hairs split. The source of funds is owed the money regardless of whether there was a note or mortgage or settlement documents or disclosures — simply because they do have a loan receivable that would be damaged by non-payment. But that loan receivable is not supported by any documentation that one would ordinarily find in a mortgage loan.

The creation of documents reciting a false transaction, “borrowing” the fact that the homeowner did receive funds from another source, does NOT create a second obligation. Hence the note, mortgage (Deed of trust) and obligation presumed in favor of the named originator must be cancelled.

Since the sources of funds are neither the owner of the loan, the payee on the note, the lender identified on the note, mortgage and settlement documents, they lack the power to enforce any of those documents and secondly, lack the power to cancel, release or satisfy a note or mortgage on which they are not the payee or secured party. Hence the fact that the borrower received funds gives rise to a demand obligation against the borrower to repay the loan. All the funding source needs is evidence of the payment from their bank account and the receipt by the borrower.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: cancellation of instrument, DEED OF TRUST, discovery, incomplete transactions, Mortgage, note, perfected lien, quiet title, Substitution of Trustee, unfunded obligation | 16 Comments »

Still Pretending the Servicers Are Legitimate

Posted on May 30, 2012 by Neil Garfield

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Editor’s Comment:

I keep waiting for someone to notice. We all know that the foreclosures were defective. We all know that in many cases independent auditors found that strangers to the transaction submitted credit bids that were accepted by the auctioneer, and that in the non-judicial states where substitutions of trustees are always used to replace an independent trustee with one owned or controlled by the “new creditor” the “credit bid” is accepted by the creditor’s agent even if the trustee has notice from the borrower that neither the substitution of trustee nor the foreclosure are valid, that the borrower denies the debt, denies the default and denies the right of the “new creditor” to do anything.

In the old days when we followed the law, the trustee would have only one option: file an interpleader lawsuit in court claiming two stakeholders and that the trustee is not a stakeholder and should be reimbursed for fees and costs. Today instead of an interpleader, it is a foreclosure because the “creditor” is holding all the cards.

So why is anyone surprised that modifications are rejected when in the past the debtor and borrower always worked things out because foreclosure was not as good as a work-out?

Why do the deeds found to be lacking in consideration with false credit bids still remain on the books? Why hasn’t the homeowner been notified that he still owns the property and has the right to possession?

And why are we so sure that the original mortgage has any more validity than the false documents to support fraudulent foreclosures? Is it because the borrower’s signature is on it? OK. If we are going to look at the borrower’s signature then why do we not look at the rest of the document and the facts alleged to have occurred in those documents. The note says that the payee is the lender. We all know that isn’t true. The mortgage says the property is collateral for payment to the payee on the note. What first year law student would fail to spot that if the note recited a loan transaction that never occurred, then the mortgage securing the payments on the false transaction is no better than the note?

So if the original transaction was defective and the servicer derives its status or power from the origination documents, then who is the servicer and why is he standing in your living room demanding payment and declaring you in default?

If any reader of this blog somehow convinced another reader of the blog to sign a note and mortgage, would the note and mortgage be valid without any actual financial transaction. No. In fact, the attempt to collect on the note where I didn’t make the loan might be considered fraud or even grand theft. And rightfully so. I am told that in some states the Judges say it is the absence of anyone else making an effort to collect on the note that proves the standing of the party seeking to enforce it. Really?

This sounds like a business plan. A lends B money. B signs papers indicating the loan came from C and C gets the mortgage. B is delinquent by a month and having lost his job he abandons the property. D comes in and seeks to enforce the mortgage and note and nobody else is around. The title record is still clear of any foreclosure activity. D says he has an assignment and produces a false forged assignment. Nobody else shows up. THAT is because the parties in the securitization chain are using MERS instead of the public record title registry so they didn’t get any notice. D gets the foreclosure after substituting trustees in a non-judicial state or doing absolutely nothing in a judicial state. The property is auctioned and D submits a credit bid which is accepted by the auctioneer. The clerk or trustee issues D a deed upon foreclosure and D immediately transfers the property to XYZ corporation that he formed the day before. XYZ sells the property to E for $300,000. E pays D $60,000 down payment and gets a mortgage from ABC Lending Corp. for the other $240,000. ABC Lending Corp. sells the note and mortgage into the secondary market where it is sliced and diced into parcels that are allocated into one or more REMIC special purpose vehicles.

Now B comes back and finds out that he was never foreclosed on by his lender. C wakes up and says they never released the mortgage. D took the money and ran, never to be heard from again. The investors in the REMIC trusts are told they bought an invalid mortgage or one in which the mortgage has second priority instead of first priority. E, who bought the property with $60,000 of his own money is now at risk, and when he looks at his title policy and makes a claim he is directed to the schedules of exclusions and exceptions that specifically cover this event. So no title carrier is going to pay. In fact, the title company might concede that B still owns the property and that C has the first mortgage on it, but that leaves E with two mortgages instead of one. The two mortgages together total around $500,000, a price that E’s property will never reach in 20 years. Sound familiar?

Welcome to USA property law as it was summarily ignored, changed and enforced for the past 10 years? Why? Especially when it turns out that the investment broker that sold the mortgage bonds of the REMIC knew about the whole story all along. Why are we letting this happen?

Filed under: foreclosure | Tagged: auctioneer, borrower, credit bids, foreclosures, homeowner, interpleader lawsuit, investors, loan transaction, MERS, modifications, Mortgage, non-judicial, note, Payee, REMIC, securitization chain, servicers, Substitution of Trustee, sutbstituting trustees, trustee | 42 Comments »

Discussion Started Between Livinglies and AZ Attorney General Tom Horne

Posted on May 29, 2012 by Neil Garfield

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Editor’s Comment:

Dear Kathleen,

Thank you very much for taking my call this morning.

The question that Neil F. Garfield, Esq. had asked AZ Attorney General Tom Horne at Darrell Blomberg’s meeting was:

Why is the Arizona Attorney General not prosecuting the banks and servicers for corruption and racketeering by submitting false credit bids from non-creditors at foreclosure auctions?

Please feel free to browse Mr. Garfield’s web blog, www.LivingLies.wordpress.com as you may find much of the research and many of the articles to be relevant and of interest.

Mr. Garfield wishes the following comments and observations to be added, in order to clarify the question being asked.

It should probably be noted that in my own research and from the research from at least two dozen other lawyers whose practice concentrates in real property and foreclosures have all reached the same conclusion. The submission of a credit bid by a stranger to the transaction is a fraudulent act. A credit bid is only permissible in the event that the party seeking to offer the bid meets the following criteria:

1. The homeowner borrower owes money to the alleged creditor

2. The money that is owed to the alleged creditor arises out of a transaction in which the homeowner borrower agreed to the power of sale regarding that debt

3. Any other creditor would be as much a stranger to the transaction as a non-creditor

Our group is also in agreement that:

4. Acceptance of the credit bid is an ultra vires act.

5. The deed issued in foreclosure under such circumstances is a wild deed requiring the title registrar to attach a statement from the office of the title registrar (for example Helen Purcell) stating that the deed does not meet the requirements of statute and therefore does not meet the requirements for recording.

6. In the event that nobody else is permitted to bid, the auction violates Arizona statutes.

And we arrived at the following conclusions:

7. In the event that there is no cash bid and the only “bid” was accepted as a cash bid from either a non-creditor or a creditor whose debt is not secured by the power of sale, no sale has legally occurred.

8. The applicable statutes preventing the corruption of the title chain by such illegal means include the filing of false documents, grand theft, and evasion of the payment of required fees.

9. This phenomenon is extremely wide spread and based upon surveys conducted by our office and dozens of other offices (including an independent audit of the title registry of San Francisco county) strongly suggest that the vast majority of foreclosures in Arizona resulted in illegal auctions, illegal acceptance of a bid, and illegal issuance of a deed on foreclosure-which resulted in many cases in illegal evictions.

10. Federal and State-equivalent RICO may also apply, as well as Federal mail fraud which should be referred to the US Attorney.

CONSTITUTIONAL CHALLENGE TO THE NON-JUDICIAL SALE STATUTE AS APPLIED.

It should also be noted that all the same attorneys agreed that the use of an instrument called “Substitution of Trustee” was improper in most cases in that it removed a trustee owing a duty to both the debtor and the creditor and replaced the old trustee with an entity owned or controlled by the creditor.

This is the equivalent of allowing the creditor to appoint itself as Trustee.

In virtually all cases in which a securitization claim was involved in the attempted foreclosure the Substitution of Trustee was used exactly in the manner described in this paragraph. This method of applying the powers set forth in the Deed of Trust is obviously unconstitutional as applied.

Constitutional scholars agree that the legislature has wide discretion in substituting one form of due process for another. In this case, non-judicial sale was permitted on the premise that an independent trustee would exercise the ministerial duties of what had previously been a burden on the judiciary.

However, the ability of any creditor or non-creditor to claim the status of being the successor payee on a promissory note, being the secured party on the Deed of Trust, and having the right to substitute trustees does not confer on such a party the right to appoint itself as the trustee, auctioneer, and signatory on the Deed upon foreclosure nor to have submitted a credit bid.

We are very interested in your reply. If your office has any cogent reasons for disagreement with the above analysis, we would like to “hear back from you” as you promised at Mr. Blomberg’s meeting 22 days ago. We would encourage you to stay in touch with Mr. Blomberg or myself with regard to your progress in this matter in as much as we are considering a constitutional challenge not to the statute, but to the application of the statute on the above stated grounds.

Thank you for your time and consideration,

Sincerely

Neil F Garfield esq

licensed in Florida #229318

www.LivingLies.wordpress.com

Filed under: foreclosure | Tagged: ARIZONA ATTORNEY GENERAL, AZ AG, cash bid, Constitutional challenge, constitutional scholars, credit bid, creditor, Darrell Blomberg, DEBTOR, DEED OF TRUST, Federal mail fraud, fraudulent act, Helen Purcell, homeowner, illegal eviction, Neil F Garfield, non-judicial statute, power of sale, RICO, San Francisco county, stranger to the transaction, Substitution of Trustee, title registrar, Tom Horne, trustee, ulta vires act, US Attorney, wild deed | 17 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: administrative procedures, administrative process, administrative review process, auctioneer, Bank of America, Citibank, County Attorney, credit bid, creditor, debt, foreclosure process, foreclosure reviews, fraudulent paperwork, Helen Purcell, homeowners, judicial, Maricopa County Recorder, memorandum of understanding, MERS, Mortgage, non-consensual lien, non-creditors, NONJUDICIAL, possession, pretender lender, procedural technicality, Robo-Signing, secured debt, securitization chain, substituted trustee, Substitution of Trustee, tile companies, title, unsecured debt, Wells Fargo, wrongful auction, wrongful foreclosure | 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: administrative procedures, administrative review process, auctioneer, Bank of America, Bryan Hubbard, Citibank, credit bid, creditor, debt, default, foreclosure process, foreclosure reviews, fraudulent paperwork, homeowners, independent foreclosure review, JP Morgan Chase, judicial, Julie Schmit, Money on the table, Mortgage, non-creditors, NONJUDICIAL, OCC, Office of the Comptroller of the Currency, possession, pretender lender, procedural technicality, restitution, Robo-Signing, secured debt, securitization chain, substituted trustee, Substitution of Trustee, title, unsecured debt, Wells Fargo, wrongful auction, wrongful foreclosure | 40 Comments »

Bringing in the Clowns Through Breach of Fiduciary Duties

Posted on April 23, 2012 by Neil Garfield

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Editor’s Comment: In my many conversations with both attorneys and pro se litigants they frequently express intense frustration about those invisible relationships and entities that permeate the entire mortgage model starting in the 1990’s and continuing to the present day, every day court is in session.

I think they are right. This article takes it as given, whether the courts wish to recognize it or not, that the parties at the closing table with the homeowner were all fiduciaries and included all those who were getting fees paid out of the closing proceeds — in other words paid out either the homeowner’s hapless down payment (worthless the moment it was tendered) or the proceeds of a loan (undocumented as to the source of the loan and documented falsely as to the creditor and the terms of repayment.

This article also takes it as a given, whether the courts are ready to recognize it or not, that the parties at the closing table with the investors who were the source of funds pooled or not were all fiduciaries and included all those who were getting fees paid out of the closing proceeds — in other words paid out either the hopeless plunge into an abyss with no loans purchased or funded until long after the money was in “escrow” with the investment banker in exchange for a completely worthless mortgage backed security without any mortgages backing the security.

But the interesting fact is that while some of the parties were known to the investor, and some of the parties were known to the homeowners, the investor did not know the parties at the closing table with the homeowner; and the borrower did not know the parties at the closing table with the investor.

In point of fact, the borrower did not even know there was a table or an investor or a table funded loan until long after closing, if ever. Remember that for years MERS, the servicers and others brought foreclosures that are still final (but subject to challenge) while they vigorously denied the very existence of a pool or any investors.

While this is interesting from the perspective of Reg Z that states that a pattern of table-funded loans is to be regarded as “predatory” per se, which the courts have refused to enforce or even recognize, I have a larger target — all the participants in the securitization chain, each of whom actually claims to have been some sort of escrow agent giving rise to a fiduciary relationship per se — meaning that the cause of action is simple and cannot be barred by the economic loss rule because they had no contract with the homeowners and probably had no contracts with the investors.

Again, I warn about the magic bullet. there isn’t one. But this one comes close because by including these fiduciaries by name from your combo title and securitization report and by description where the fake securitization was dubbed “private label” they are all brought into the courtroom and they are all subject to a simple action for accounting which can be amended later to allege damages, or if you think you have enough information already, state your damages.

Based upon my research of the fiduciary relationship there are no limits anywhere if the action is not based upon a direct contract, and some states and culled that down to a “no limit’ doctrine (see Florida cases) except in product liability or similar cases.

The allegation is simply that the homeowner bought a loan product that was known to be defective, poorly documented, if at all, and subject to a shell game (MERS) in which the homeowner would never know the identity of the chosen creditor until the homeowner was maneuvered into foreclosure. There are several potential channels of damages that can be alleged.

Lawyers are encouraged to do about 30 minutes of research into fiduciary liability in your state and match up the elements of the cause of action for breach of fiduciary duty with the securitization documents that either has already been admitted or that has been discovered.

Go through the PSA and look at it from the point of view of assumed agency and escrowing or holding documents, receivables, notes, money and mortgages. Each one of those is low hanging fruit for a breach of fiduciary duty lawsuit.

And of course any party specifically named as a “trustee” whether a trust exists or not raises the issue of trust duties which are fiduciary as well, whether it is the trustee of a “pool” or the trustee on the deed of trust (or more likely the alleged substitution trustee on the DOT).

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: appraisal fraud, attorney general, auction fraud, closing table, DocX Indictment, fiduciary duty, fiduciary relationship, foreclosure fraud, FORECLOSURE SETTLEMENT, foreclosures, forgery, housing market, housing prices, investors, MERS, mortgage fruad, mortgages, PSA, Reg Z, Robo-Signing, settlement, strategic default, Substitution of Trustee, trustee | 85 Comments »

ANTI-DEFICIENCY STATUTE UPHELD IN ARIZONA

Posted on December 27, 2011 by Neil Garfield

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M&I Marshall v Mueller Anti-Deficiency Statute upheld CV100804

One of the scare tactics that the Banks are using to confuse homeowners is that they will come after the homeowner after foreclosure claiming that they are entitled to a Judgment for the deficiency — the difference between the amount recovered from the foreclosed property and the amount they alleged was due. This case from Arizona squarely comes up in favor of the borrower. The mere intention to use the property as their principal dwelling is sufficient to invoke the statutory protection. Check the statutes of your state and consult an attorney before you assume you are protected.

But the protection is broader than that as a practical matter. The last thing the usual pretender lender wants to do is start a lawsuit where they are subject to the requirements of pleading a cause of action upon which relief could be granted. That is because they need to prove each and every allegation. And it is because they would be subject to discovery requests tracing the money on ALL transactions, direct or indirect affecting the balance due from the borrower. In virtually all cases it would be found that the amount claimed by the forecloser is different than what they reported to investors. THAT means the entire foreclosure is wrongful.

In addition, the great likelihood is that the money trail will lead to an inescapable conclusion — the documents in the securitization chain refer to transactions that never occurred. Each “endorsement” or transfer or sale is a document that refers to a transaction. The transaction is the sale of the note and mortgage. The transaction did not occur if nobody actually paid for it. And they didn’t pay for it because the consideration was supplied long ago by the investors whose money was used to fund the mortgage. Thus each document in the claimed securitization chain refers to a transaction that did not ever happen and can’t happen.

(And the reason they didn’t do it right is because they needed to have some colorable right to claim rights to the loan even though they were only intermediaries. Their purpose was selling the loan multiple times, a process that would have been impossible if the investors were given the documents called for by the PSA. They needed a gap in time between the time of the closing with the borrower and the time that the actual transfer documents were created in favor of the investors or the investor pool).

And THAT in turn means that the substitution of trustee in non-judicial states is bogus. If the transaction transferring the loan never occurred then the documents of transfer are worth less than the paper they are written on, and the forgery, robo-signing and fabrication of documents is almost besides the point. If the substitution of trustee is bogus then all actions conducted by that “trustee” are equally bogus. That includes foreclosure, eviction etc.

NOTE: The same logic applies to the origination of the loan. In most cases the documents refer to a transaction that never occurred —- the loan of money to the borrower BY THE PARTY NAMED ON THE NOTE. At the very least, this fact alone should be sufficient to remove the foreclosure from non-judicial procedure and require the “creditor” to foreclose judicially. In court, parole evidence would allow the borrower to show that the “creditor” is relying upon a faulty transaction. At most, this fact might be sufficient to invalidate the mortgage lien and perhaps the note itself, leaving a naked obligation for which there is no documentation and for which there is obviously no collateral.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: anti-deficiency states, bankruptcy, borrower, countrywide, creditor, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, Substitution of Trustee, TILA audit, trustee, WEISBAND | 18 Comments »

DO YOU DARE ISSUE A WARRANTY DEED OR ANY DEED WITHOUT LIABILITY?

Posted on September 19, 2011 by Neil Garfield

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The inescapable conclusion at this point, is that title on more than 100 million real estate transactions is at the very least in doubt and quite probably corrupted. In legalese that would be expressed as clouded, unmarketable (i.e., you can’t sell it or finance it, because nobody will take it), defective or fatally defective. The only exceptions I can think of are those deals where raw land has been purchased from a long-standing owner with no debt attached to the land or where a home is purchased or refinanced where the last transaction is twenty years ago. Most people are unaware that they are sitting on shifting sands instead of a solid foundation — where title is properly recorded in the recording office of the county in which the property is located.

Yet people and institutions are issuing instruments fraught with liability and the high probability that the transaction — and the representations contained in the instrument they signed —- will be the subject of litigation later when someone tries to clear title or collect damages. Here are some examples:

A Warranty Deed, required in most transactions, requires the person signing to (a) attest and prove they are who they say they are (b) that they or the party whom they represent has title (usually fee simple absolute) and (c) that if they are signing as an agent, they have provided proof (usually recorded with the deed in properly recordable form) of their authority. The signor is promising, in exchange for the consideration paid, that if this Warranty Deed turns out to be challenged by anyone, they will defend the challenge and pay damages if they lose. Reliance on the title company, mortgage banker, mortgage lender or anyone else is not a defense although the signor could cross claim against those people and bring them into the lawsuit. The point is that the cost of litigating these cases could rise into tens of thousands of dollars. The cost of losing could rise into hundreds of thousands of dollars, or even millions of dollars.
A “Special Warranty Deed” might have some language of limitations that SHOULD put the buyer on notice but most people rely upon the title or closing agent, or their lawyer (if they have one) to make sure that the deed gives them the title they thought they were getting. This too could give rise to litigation because of representations at closing, representations in the title commitment or policy etc.
A Satisfaction of Mortgage requires the person signing to (a) attest and prove they are who they say they are (b) that they or the party whom they represent is the creditor and is the owner of the rights under the mortgage or deed of trust and (c) that if they are signing as an agent, they have provided proof (usually recorded with the Satisfaction in properly recordable form) of their authority. The signor is promising (unless someone played withe the wording), in exchange for the consideration paid, that if this Satisfaction turns out to be challenged by anyone, they will defend the challenge and pay damages if they lose. Reliance on the title company, mortgage banker, mortgage lender or anyone else is not a defense although the signor could cross claim against those people and bring them into the lawsuit. The point is that the cost of litigating these cases could rise into tens of thousands of dollars. The cost of losing could rise into hundreds of thousands of dollars, or even millions of dollars.
A Release and Reconveyance is the same as a Satisfaction of Mortgage. So whether you received a satisfaction of mortgage or a release and reconveyance, your assumption that the prior lien was paid off and is now officially satisfied and removed from the records as encumbrance on the land may be, and I think, probably is wrong. We have seen several cases here at livinglies where the wrong party (Ocwen in one case) took the oney issued the Satisfaction and then refused to either give back the money or provide any additional information even though it is now apparent that they were not the creditor, not he owner of the mortgage and had no authority to issue the satisfaction.
A Trustees Deed on Foreclosure is much the same as a Warranty Deed. Potential Trustee liability here is huge. It requires the person signing to (a) attest and prove they are who they say they are (b) that they or the party whom they represent is the Trustee or “substitute Trustee” (see below) and is the owner of the rights under the mortgage or deed of trust, (c) that if they are signing as an agent, they have provided proof (usually recorded with the Satisfaction in properly recordable form) of their authority and (d) that they are in fact the Trustee and that they have performed the statutory duties of due diligence that is required of a Trustee under a Deed of Trust. The signor is promising (unless someone played withe the wording), in exchange for the consideration paid, that if this Deed turns out to be challenged by anyone, they will defend the challenge and pay damages if they lose. Reliance on the “beneficiary” who usually comes out of nowhere, “lender” who also usually comes out of nowhere, title company, mortgage banker, mortgage lender or anyone else is not a defense although the signor could cross claim against those people and bring them into the lawsuit. The point is that the cost of litigating these cases could rise into tens of thousands of dollars. The cost of losing could rise into hundreds of thousands of dollars, or even millions of dollars. The banks don’t actually worry about this because most “Trustees” are “substitute Trustees” in which a substitution was filed given apparent authority to a new “Trustee” who is not an independent title agent or some similar entity but rather an agent that is in the foreclosure business with the bank that has inserted itself into the transaction as a “pretender lender.” Due diligence by the Trustee would have revealed most robosigning and other fraudulent practices, but due diligence, contrary to the requirements of statute, was never performed because they were no longer taking the orders from the legislature. They were skipping over their statutory duties and taking orders from a party who is merely alleged to be the lender even though it is not the same party as stated on the original note and mortgage ( deed of trust).
Substitution of Trustee: Until securitization came into play it was a rare occurrence that the trustee would be substituted. The Trustee on teh Deed of Trfust would simply be given instructions by the payee on the note and the named secured party in the mortgage) deed of trust) to commence default and dforeclosure proceedigns. But now in virtually every foreclosure there is first a “substitution of trustee’probably because the original trustee would perform the due diligence required under statute and revealed potential problems which would have held up or cancelled the foreclosure. requires the person signing to (a) attest and prove they are who they say they are (b) that they or the party whom they represent is the creditor and is the owner of the rights under the mortgage or deed of trust and (c) that if they are signing as an agent, they have provided proof (usually recorded with the Satisfaction in properly recordable form) of their authority. The signor is promising (unless someone played withe the wording) that if this Substitution of Trustee turns out to be challenged by anyone, they will defend the challenge and pay damages if they lose. Reliance on the “beneficiary” who usually comes out of nowhere, “lender” who also usually comes out of nowhere, title company, mortgage banker, mortgage lender or anyone else is not a defense although the signor could cross claim against those people and bring them into the lawsuit. In many cases the substance of the substitution is that the “new” beneficiary is in effect appointing itself or its agents who promise to do their bidding instead of using the original Trustee or someone else who take their duties seriously. The point is that the cost of litigating these cases could rise into tens of thousands of dollars. The cost of losing could rise into hundreds of thousands of dollars, or even millions of dollars. The banks don’t actually worry about this because most “Trustees” are “substitute Trustees” in which a substitution was filed given apparent authority to a new “Trustee” who is not an independent title agent or some similar entity but rather an agent that is in the foreclosure business with the bank that has inserted itself into the transaction as a “pretender lender.” Due diligence by the Trustee would have revealed most robosigning and other fraudulent practices, but due diligence, contrary to the requirements of statute, was never performed because they were no longer taking the orders from the legislature. They were skipping over their statutory duties and taking orders from a party who is merely alleged to be the lender even though it is not the same party as stated on the original note and mortgage ( deed of trust).

There are many other documents that fall within the same level of analysis like the Notice of Default (which comes from the alleged authority of the Substitute Trustee, based upon information from what is probably an undisclosed source, the Notice of Sale (which appears right on its face, but is subject to the same analysis as to the signor, and other documents.

The Bottom Line is that homeowners and institutions alike are facing potential litigation and liability as the years roll on, with few if any witnesses to back them up and in the case of homeowners precious little in the way of resources to fight off the litigation.

Check with a real property and litigation attorney before you take any action based upon what you see here. They should be licensed in the county in which the property is located.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: bankruptcy, beneficiary, borrower, countrywide, creditor, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, quitclaim deed, release and reconveyance, rescission, RESPA, satisfaction of mortgage, securitization, special warranty deed, Substitution of Trustee, TILA audit, title insurance, trustee, warranty deed, WEISBAND | 13 Comments »

EXAMPLE OF PLEADING TRAPPING PRETENDERS IN THEIR OWN LIES

Posted on September 14, 2011 by Neil Garfield

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Using the exhibits filed by the respondents the confusion created by the respondents, the on-record conduct of the Respondents in arrogant defiance and contempt of the this Court’s discharge injunction, and the breaks in chain of title that are self-evident (and clearly shown below), leads to the inescapable conclusion that the application for relief from stay was faked, the foreclosure sale was faked, the deed issued was improper, and the eviction was wrongful even without the issues of forgery and fabrication.

The entire series of events caused by the respondents is based upon the substitution of an illegal notary clause for an actual affidavit with sworn testimony from an actual person with actual knowledge verifying the authority of the signatories and the authenticity of the documents. California notaries are expressly forbidden to attest to the authority of an individual for use in another state. Respondents nevertheless regularly use this device to create the appearance of authority when none exists. They did so when they used the name of Chevy Chase Bank, a defunct bank to apply for relief from stay, and they did so in connection with several key documents without which they would have no color of title to property or loans for which it is clear that had no actual authority or title.

But for this sleight of hand trick by the Respondents, none of the actions to seek relief from stay in Petitioner’s bankruptcy and to collect on a debt that was not due to them, none of the actions for foreclosures, sale or possession would have or could have occurred. The following chain of title report is taken from the Respondents’ own exhibits with reference thereto.

4. Careful scrutiny of the chain disclosed below reveals the unlawful intermediation of parties that were at best conduits but who masqueraded as real parties in interest for the express purpose and intent of stealing from the Petitioner and the undisclosed creditor-investor, who probably still does not know what transpired in these actions. The result was a substantial loss to both the Petitioner and the other creditors of the Petitioner who could have otherwise been paid.

When Chevy Chase applied for relief from stay, it was at best a bookkeeper. It provided no proof of its own authority as to the decision to foreclose or even to establish the status of the debt. It was presumably receiving instructions from the “creditor.” The “creditor” from whom it was receiving such instructions may be presumed from the actions of the respondents to have been the Respondents themselves, who inserted themselves into the process without any right, justification, excuse or authority. Hence the application for relief from stay was fraudulently filed and procured.

DEED OF TRUST: (EXHIBIT B)

6.1. GRANTOR/TRUSTOR: XXXXXXXXXXXXXXXXXXX

6.2. GRANTEE: NORTH AMERICAN TITLE COMPANY

6.3. BENEFICIARY: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., “NOMINEE” FOR FIRST MAGNUS FINANCIAL CORPORATION

6.4. LENDER: FIRST MAGNUS FINANCIAL CORPORATION

TRANSFER OF SERVICING RIGHTS 8/29/06 (EXHIBIT C)

7.1. ASSIGNOR: FIRST MAGNUS FINANCIAL CORPORATION

7.2. CHEVY CHASE BANK, F.S.B.

NOTICE OF SUBSTITUTION OF TRUSTEE: (EXHIBIT C -10)

8.1. ASSIGNOR: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., “NOMINEE” FOR FIRST MAGNUS FINANCIAL CORPORATION.

8.1.1. Signed (allegedly) by Pamela Campbell as “Assistant Secretary” of MERS while she was employed by Cal-Western Reconveyance who is not and was not a member of MERS.

8.1.2. Campbell’s name has been widely cited as a known robo-signed signature affixed by numerous different people, as can be seen by the different signatures on sets of documents discovered in Maricopa County, corroborated similar reports from California and other states.

8.1.3. Petitioner has learned that whoever signed Pamela Campbell’s name must have used the user ID and password of someone other than Pamela Campbell — Probably someone from US Bank, who was by pretense asserting itself as the creditor.

8.1.4. Based upon Published information in cases, media and the MERS website, these facts would strongly indicate that the substitution of trustee document was neither prepared nor executed by anyone employed by Cal-Western and was probably prepared and executed by one of the many servicer providers that were in the business of fabrication and execution of false documents.

8.2. FIRST MAGNUS WAS LIQUIDATED PREVIOUS TO THE ALLEGED SUBSTITUTION OF TRUSTEE IN A TUCSON BANKRUPTCY CASE

8.3. FIRST MAGNUS DID NOT CLAIM OWNERSHIP OF PETITIONER’S LOAN IN ITS PREVIOUSLY FILED BANKRUPTCY

8.3.1. THUS EITHER FIRST MAGNUS WAS MERELY A NOMINEE FOR AN UNDISCLOSED LENDER AT ORIGINATION OF THE LOAN OR FIRST MAGNUS ASSIGNED THE LOAN TO A THIRD PARTY BEFORE THE FIRST MAGNUS BANKRUPTCY

8.3.1.1. If First Magnus was a nominee, then it follows that there were two nominees on the Deed of Trust — First Magnus and MERS. Since no other institution was named, that leaves two nominees acting for an undisclosed principal. UNDER ARIZONA LAW NO LIEN COULD BE PERFECTED AGAINST THE LAND WITHOUT DISCLOSURE OF THE CREDITOR.

8.3.1.2. If First Magnus assigned the loan to a third party before the First Magnus Bankruptcy, the documents submitted by Chevy Chase and the other “successors” are fabrications and forgeries by definition.

8.3.1.3. EITHER WAY, APPLICATION FOR RELIEF FROM STAY, THE SUBSTITUTION OF TRUSTEE, THE NOTICE OF SALE, THE SALE, THE JUDGMENTS, AND THE EVICTION WERE ALL WITHOUT ANY COLOR OF AUTHORITY.

8.3.1.4. EITHER WAY, THE ACTS UNDERTAKEN TO OBTAIN THOSE JUDGMENTS WERE CONTRARY TO THE DISCHARGE INJUNCTION ISSUED IN PETITIONER’S CASE.

8.3.1.5. EITHER WAY THE DEMAND FOR RELIEF FROM STAY BY CHEVY CHASE IN PETITIONER’S BANKRUPTCY WAS WITHOUT COLOR OF AUTHORITY TO ACT ON BEHALF OF A CREDITOR THAT WAS NOT DISCLOSED DESPITE PETITIONER’S REPEATED ATTEMPTS TO REVEAL THE CREDITOR (ALSO CONTAINED IN THE PUTATIVE “SUCCESSORS” EXHIBITS)

8.3.1.5.1. Petitioner has determined that the pooling and servicing agreement for the referenced pool contains language that requires the servicer to continue payments to the undisclosed creditor even if the homeowner fails to make payments. Said document also contains numerous references to insurance and credit enhancements that require payments and credits to the undisclosed creditor that were never revealed despite Petitioner’s numerous attempts to obtain said information. See Respondents Exhibits.

8.3.1.5.2. Even if Chevy Chase was the authorized servicer at the time it applied for relief from stay, it failed to identify, contrary to OCC requirements, the status of the debt (and of course the identity of the creditor), taking into account all payments made. If the servicer complied with the pooling and servicing agreement then the creditor was receiving payments and reports that the loan was fully performing while at the same time other parties entered the picture out of the chain of title claiming a default. Hence the representation that Petitioner was in default was made either without knowledge or with reckless disregard for the truth.

8.3.1.5.3. NO CREDITOR ON RECORD: The record is devoid of any representation from the true creditor that it is the creditor and the current status of the obligation, the amount due and what payments have been received from the servicer or other parties.

8.4. ASSIGNEE OF SUBSTITUTION OF TRUSTEE: CAL-WESTERN RECONVEYANCE CORPORATION (alleged by Petitioner robo-signed, forged and fabricated by Cal-Western using signature of Pamela E Campbell as “campbell,” reciting she is Assistant secretary of MERS, using notary clause in violation of California law attesting to Campbell’s authority). In short, Cal-Western appointed itself using an outsource provider to claim deniability as to the source of the document.

8.5. ABSENT FROM SUBSTITUTION OF TRUSTEE: AUTHORITY OF PAMELA CAMPBELL, WHO WAS EMPLOYEE OF CAL-WESTERN, NOT MERS. No document has ever been produced showing a corporate resolution from First Magnus, MERS, or even Cal-Western to indicate that Campbell had any authority whatsoever. Instead the “successors” used a faked notary clause that violated California law to attest to Campbell’s authority. These “successors” thought it important to create some attestation of Campbell’s authority so they cannot now take the position that it was unnecessary. In order to satisfy the requirements of title examination, the authority of Campbell would need to be established as these same “successors” have done in other cases where they filed a false Power of Attorney or Limited Power of Attorney.

NOTICE OF TRUSTEE SALE: (EXHIBIT E)

9.1. TRUSTOR: XXXXXXXXXXXXXX

9.2. CURRENT TRUSTEE (WITHOUT AUTHORITY): CAL-WESTERN

9.3. CURRENT BENEFICIARY: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC. (NOT AS NOMINEE), C/O CHEVY CHASE BANK . This is another indication that if MERS contact information for this loan was in care of Chevy Chase Bank FSB, then the document allegedly signed on behalf of MERS would not have been executed at the offices of Cal-Western, where Pamela Campbell worked as Assistant Vice President.

9.4. CLEAR BREAK IN TITLE: NO MENTION OF FIRST MAGNUS FINANCIAL CORPORATION, “LENDER” IDENTIFIED IN DOT AS SECURED PARTY. Hence, the Notice of Sale was not on behalf of First Magnus, AMBAC, who shows on its website that it administers the pool identified by Respondent US Bank as supposedly owning the loan, nor even US Bank as successor to Assignee of First Magnus. Thus the Notice of Sale clearly states it is for MERS as the creditor, which is universally accepted as factually untrue, and contrary to the application to this Court for relief from stay obtained by Chevy Chase. Note that US BANK remains out of the picture — it is not mentioned on any document, recorded or otherwise.

9.5. EXECUTED BY CAL-WESTERN, “A LICENSED ESCROW AGENT”

TRUSTEE’S DEED UPON SALE: (EXHIBIT I)

10.1. CURRENT TRUSTEE: CAL-WESTERN (WITHOUT AUTHORITY

10.2. GRANTEE: US BANK NATIONAL ASSOCIATION, AS TRUSTEE RELATING TO CHEVY CHASE FUNDING LLC MORTGAGE BACKED SECURITIES SERIES 2006-4

10.2.1. FIRST TIME US BANK APPEARS — OUT OF CHAIN OF TITLE

10.2.2. US BANK, TRUSTEE WITHOUT ANY REFERENCE TO ANY TRUST

10.2.2.1. PETITIONER HAS DETERMINED THAT NO TRUST EXISTS

10.2.2.2. PETITIONER HAS DETERMINED THAT US BANK IS NOT A TRUSTEE FOR ANY TRUST POSSESSING A CLAIM OR INTEREST IN PETITIONER’S LOAN

10.2.2.3. PETITIONER HAS DETERMINED THAT AMBAC ADMINISTERS THE POOL ALLEGED TO HAVE RECEIVED THE OWNERSHIP OF THE LOAN, BUT THE DOCUMENTS DO NOT MENTION THE POOL NOR AMBAC.

10.2.3. FIRST TIME CHEVY CHASE FUNDING LLC APPEARS, OUTSIDE CHAIN OF TITLE

10.2.4. FIRST TIME MORTGAGE BACKED SECURITIES SERIES 2006-4 APPEARS OUT OF CHAIN

10.2.5. AMBAC, ADMINISTERS MORTGAGE BACKED SECURITIES SERIES 2006-4 NEVER MADE A PARTY. AMBAC’s role is not yet known to Petitioner except that it claims ownership or rights to the same pool claimed by US Bank, “as Trustee, relating to” that pool. The presence of AMBAC and its known role in insurance and credit enhancement products for mortgage backed bonds indicates that it may have paid off the balance due to the investor-creditors who were the source of funds on Petitioner’s loan.

10.2.6. NO CONSIDERATION FOR ISSUANCE OF TRUSTEE DEED: NO TENDER OF CASH OR DEBT OBLIGATION BY NOTE, AFFIDAVIT OR ANY OTHER DOCUMENTATION. NO CONSIDERATION FOR SALE. Thus the deed was issued in derogation of the rights of the true creditor, who remains undisclosed, as well as the rights of any other party who might have rights to the property or could have bid on the property. The result is that US BANK received title to property on which it had never made a loan, never purchased the obligation, and never had any authority to represent the true creditor, whether disclosed or not.

10.2.7. SIGNED (PURPORTEDLY) BY RHONDA RORIE, WHO WAS UNAUTHORIZED EMPLOYEE NOTARIZING ROBO-SGINED DOCUMENTS FOR CAL-WESTERN, AGAIN alleged by Petitioner robo-signed, forged and fabricated by Cal-Western using signature of RHONDA RORIE as reciting she is A.V.P. of CALWESTERN, using notary clause in violation of California law attesting to RORIE’S authority).

VERIFIED COMPLAINT: (EXHIBIT J) FOR EVICTION

11.1. PLAINTIFF: US BANK NATIONAL ASSOCIATION, AS TRUSTEE RELATING TO CHEVY CHASE FUNDING LLC MORTGAGE BACKED SECURITIES SERIES 2006-4

11.1.1. COMPOUNDING BREAK IN CHAIN OF TITLE (SEE ABOVE)

11.2. DEFENDANT: XXXXXXXXXXXXXXXXXXX

11.3. RECITES US BANK BECAME OWNER PURSUANT TO TRUSTEE SALE

11.4. VERIFIED BY SPECIALIZED LOAN SERVICING BY DARREN BRONAUGH “ON BEHALF OF US BANK NATIONAL ASSOCIATION, AS TRUSTEE RELATING TO CHEVY CHASE FUNDING LLC MORTGAGE BACKED SECURITIES SERIES 2006-4.”

11.4.1. FIRST TIME SPECIALIZED LOAN SERVICING APPEARS

11.4.2. NO AUTHORITY REFERENCED OR ATTACHED

11.4.3. DARREN BRONAUGH SIGNATURE HAS BEEN REVEALED AS ROBO-SIGNED ON NUMEROUS OTHER DOCUMENTS AND IS ALLEGED FORGED ON THIS VERIFIED COMPLAINT.

12. LETTER FROM QUARLES AND BRADY 2/11/2011: (EXHIBIT (B)

12.1. Asserts representation of US BANK NATIONAL ASSOCIATION, AS TRUSTEE RELATING TO CHEVY CHASE FUNDING LLC MORTGAGE BACKED SECURITIES SERIES 2006-4

12.2. Does not assert representation of Specialized Loan Services, Chevy Chase Funding LLC, First Magnus Financial Corporation, Mortgage Electronic registration Systems, or Cal-Western.

12.3. Demands possession for US BANK NATIONAL ASSOCIATION, AS TRUSTEE RELATING TO CHEVY CHASE FUNDING LLC MORTGAGE BACKED SECURITIES SERIES 2006-4

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: AMbac, bankruptcy, borrower, CAL-WESTERN RECONVEYANCE, CHEVY CHASE, countrywide, disclosure, First Magnus, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, MERS, modification, Pamela Campbell, quiet title, RELATING TO, rescission, RESPA, sale, securitization, servicing rights, Specialized Loan Services, Substitution of Trustee, TILA audit, trustee, UACTION, US BANK, WEISBAND | 14 Comments »

Aztec Foreclosure Corp Antics Analyzed

Posted on August 17, 2011 by Neil Garfield

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GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

BY ‘NANCY DREW”

In California, OR, WA, CO (non judicial states) place an Automatic Stay one must file Bankruptcy “BK” which stops notice of defaults?
sadly allowing substitute trustee to act as robo-mill and includes bank attorneys who don’t have to reveal ‘security’ the mortgage note as collateral attached.

‘substitute’ trustees file falsified documents as does the documented LPS/DOCX employees, just the employee may be a contractor such as Aztec Foreclosure Corp.

The falsified documents as required by the BK courts excludes the same transactions in judicial states just the ‘Trustee’ and Substitute Trustee don’t have to disclose the ‘name of the loan trust, trust fund, certificates, the ‘mortgage note’ as collateral attached inside and sliced and diced when sold to FREDDIE MAC and others Institutional Investors.

You are forced to fight harder under COTA and Accounting GAAP to reveal what is not recorded with county recorder. You are forced to fight pro pe and when 90 days in default of any amount, the SERVICER of the asset as a receivable – advances funds and tracks the debt they will claim when they liquidate your mortgage.
You are fighting with the ‘Servicer’ who has to advance funding to the ‘Master Servicer’ get it! The party before BK does not have legal standing and the CA Courts ignore? WHY?

Aztec Foreclosure Corp

Aztec Foreclosure Corporation is a full service foreclosure trustee concentrating its practice in the representation of mortgage lenders and other financial institutions in foreclosure of residential real estate collateral in the States of California and Nevada.

Aztec Foreclosure Corporation of Washington is a full service foreclosure trustee serving the State of Washington.

Who is Robbie Weaver Office Manager in CA and Elaine Malone Foreclosure Supervisor? Who is the ‘attorney’ providign due dilligence? Kelly D. Sutherland ‘Managing Attorney’ in state of Washington? Is she licensed to practice in CA?

Look at the 21 Pages of Completed RESALES of Properties!
Please take NOTICE that
THe ‘LIST’ 21 pages of sales REPORT generated by data extracted from databases in which somebody programmed the appearance of the data in a report form all CREATED BY A COMPUTER

A LIST OF ‘COMPUTER GENERATED SALES’ ALL PURCHASED AT THE ‘OPENING BID’ WERE THE HIGHEST BID’
WHO WAS AT THE SALE? WHAT ‘TRUSTEE’ SIGNED C/O …. generated 8/12/2011 @ 3:00:50 PM

Report Date 8/12/2011 (Note the report is generated bya computer from database) organized by Case#, Sale Date, Property Address, Bids in which then the ‘security’ identified. Get that information while you are in BK!

http :// www . aztectrustee . com / Reports / CAZ_WebCompSalesRpt . pdf

Aztec Foreclosure Corporation | Professional Foreclosure Trustee Serving California and Nevada

Aztec Foreclosure Corporation of Washington (Washington State only)

Aztec Foreclosure Corporation has the necessary experience working with lenders to protect their delinquent mortgage assets. Our tenured staff has assisted lenders in their default management department, providing unique insight and an ability to better communicate with our clients. Our knowledge and experience extends beyond the routine foreclosure process into the daily operations of the default management industry. Aztec Foreclosure Corporation of Washington provides the same services in the State of Washington.

STATE OF CALIFORNIA:
Notice of Default – State of California
Upon receipt of the foreclosure referral package, the Notice of Default (“NOD”) is prepared and forwarded to the title company for recording along with the executed Declaration from the lender. Recoding of the NOD constitutes ‘first legal’ when recorded. Once recorded, a copy of the NOD and Declaration will be mailed to all parties to the Deed of Trust and parties having recorded a request for notice.

A Trustee Sale Guarantee (“TSG”) will be ordered from the title company and reviewed upon receipt that will disclose all parties entitled to notice, as well as any other encumbrances recorded against the Deed of Trust and reviewed for any possible defects which may exist that would prevent continuation of foreclosure. The one-month mailing notices are sent to any parties requiring notice.

Notice of Sale
A Notice of Sale (NOTS) will be recorded in the appropriate county and all parties requiring notice will be sent certified and regular mailings of the upcoming foreclosure sale date. The NOTS will be published for three successive weeks in a newspaper of general circulation for the city and county the property is located. A copy of the NOTS will be posted on the property itself and recorded in the county recorder’s office. The sale will be conducted at the time and place set forth on the NOTS.

Bidding instructions will be requested from the client and should be submitted to our office no later than 5 days before the scheduled sale date. Aztec will bid according to the client’s instructions. If there are no competitive bidders, the interest of the property will revert to the beneficiary. Third party bidders must outbid the beneficiary to obtain the property, and the sale proceeds are distributed in the order of priority, with the beneficiary being satisfied first.

The sale may be postponed pursuant to the client’s instructions without an additional publication. The sale may be postponed up to a maximum of 365 days after the original sale date. After that a new publication will have to be set with a new sale date, mailings, etc.

Redemption
There is a 3 month redemption period that must run from when the NOD is recorded before a foreclosure sale can be set. Effective June, 2009, CA implemented the CA Foreclosure Prevention Act which required an additional 90 days of redemption:

On February 20, 2009, Governor Schwarzenegger signed ABX2 7 and SBX2 7, which establish the California Foreclosure Prevention Act. The California Foreclosure Prevention Act modifies the foreclosure process to provide additional time for borrowers to work out loan modifications while providing an exemption for mortgage loan servicers that have implemented a comprehensive loan modification program. Civil Code Section 2923.52 requires an additional 90 day period beyond the period already provided before a Notice of Sale can be given in order to allow all parties to pursue a loan modification to prevent foreclosure of loans meeting certain criteria identified in that section.

A mortgage loan servicer who has implemented a comprehensive loan modification program may file an application for exemption from the provisions of Civil Code Section 2923.52. Approval of this application provides the mortgage loan servicer an exemption from the additional 90-day period before filing the Notice of Sale when foreclosing on real property as designated by this Section.

Upon expiration of redemption, sale, publication and posting dates will be set. The sale cannot be held until the expiration of 21 days from redemption.

Sale
The sale will be conducted at the time and place set forth on the NOTS. Aztec will bid according to the client’s instructions. If there are no competitive bidders, the interest of the property will revert to the beneficiary. Third party bidders must outbid the beneficiary to obtain the property, and the sale proceeds are distributed in the order of priority, with the beneficiary being satisfied first.

The sale may be postponed pursuant to the client’s instructions without an additional publication. The sale may be postponed up to three times at the request of the beneficiary, after which it will be necessary to republish a new sale date.

Conveyance & Final Title
After the foreclosure sale is conducted, a Trustee’s Deed Upon Sale is issued by Aztec conveying title to the successful bidder. If the property reverts to the beneficiary, it is sent for recording within a few days of the sale. If a third-party purchases the property, the unrecorded Trustee’s Deed will be sent to the address specified by that party.

If the property is to be conveyed to the Secretary of Housing & Urban Development (“HUD”) or Secretary of Veterans Affairs (“VA”), a Grant Deed from the beneficiary to the agency is sent to the client for execution prior to the sale.

After receipt of the Grant Deed, if it is a VA loan, the deed is sent for recording immediately. Aztec will order a title policy and forward it to VA within their required time line. If it is a HUD loan, Aztec will await instructions to record the deed to HUD. Prior to the deed recording, Aztec will obtain tax and lien information to verify if title is clear before recording the HUD deed. When all taxes and liens are cleared, with the client’s instructions, the deed is recorded. Once recorded, the title policy is obtained and forwarded to HUD within their required time line. The clients are given copies of the title polices and recorded deeds.

The only post-sale right of redemption occurs when an IRS tax lien is recorded against the property. Once the sale is held, the lien is extinguished, but the IRS retains a 120-day right of redemption. During this time frame, the IRS has the right to purchase the property.

Reinstatement and Payoff
The trustors, owners and junior lienholders have a statutory right to reinstate the loan up to five business days prior to the sale. The beneficiary may waive the five-day limit and accept reinstatement at any time prior to the sale. Reinstatement must be tendered in the amount of all sums due the lender plus all foreclosure fees, costs and any attorney’s fees and costs incurred.

Deficiency Judgment – State of California
The right to a deficiency judgment following the foreclosure sale is limited by anti-deficiency legislation. Under California Code of Civil Procedure Section 508b, there can be no deficiency judgment on foreclosure of a purchase-money mortgage or trust deed. Also, under Section 580d, one cannot seek a deficiency after a non-judicial foreclosure sale.

The anti-deficiency rule does make a distinction between vendors and third-party lenders. The vendor is precluded from seeking a deficiency judgment where his loan secures payment of the balance of the purchase price of real property. In respect to a third-party lender, the anti-deficiency rule applies only to a dwelling of not more than four families given to secure repayment of a loan that was used to pay all or part of the purchase price of such dwelling occupied entirely or in part by the purchaser.

Deficiency judgments may be obtained if the obligation is not subject to California Code of Civil Procedure, Section 580. These cases are outside the scope of this synopsis.

Eviction – State of California
The eviction process is initiated by serving the owners/trustors with a three-day Notice to Quit. All other occupants must be given a sixty-day Notice to Quit.
After the 3/60 day period has expired and if the property is still occupied, a Complaint for Unlawful Detainer is filed. The summons and complaint are sent for service upon all defendants. The requisite personal or substitute service of process may take up to two weeks. In cases where service cannot be effectuated, application is made to the court for permission to serve by posting and mailing the summons and complaint to the property.

Defendants have five days to answer the complaint after service, plus ten extra days if service was made by substitute service or posting and mailing. If the defendants do not respond timely, a default judgment is entered. If defendants file an answer and contest the action, a motion for summary judgment is filed and usually granted within two weeks. In those infrequent cases in which summary judgment is not granted, a trial date is requested. A judgment and writ for possession are submitted to the court within 48 hours of a trial, granting a motion for summary judgment or a default judgment is entered. The court is requested to forward the writ to the marshals for posting on the property. Processing of the writ and posting take approximately two weeks.

The defendants have five days to vacate after posting of the writ. The marshal then returns to the property to physically remove the occupants. The servicer must arrange to have a representative present to take possession and secure the property. The majority of eviction cases that are former owner occupied are completed within 60 to 75 days.

SEE AZTEC FORECLOSURE ‘TRUSTEE’

SAME DETAILS ABOVE FOR NEVADA,
AND SAME DETAILs ABOVE FOR ‘WASHINGTON STATE ONLY’

Washington Staff:

Kelly D. Sutherland
Managing Attorney
360.260.2253 ext 281
ksutherland@logs.com

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: Aztec Foreclosure Corp, bankruptcy, borrower, COTA, countrywide, disclosure, Docx, Elaine Malone, Fannie, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, Freddie, gaap, Kelly D. Sutherland, LOAN MODIFICATION, LPS, modification, Notice of Default, quiet title, rescission, RESPA, Robbie Weaver, securitization, servicer, Substitution of Trustee, TILA audit, trustee, WEISBAND | 12 Comments »

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So the direct elements are laid out here and other objections to title are preserved (see above):

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