Appellate Court Wrestling with Inconsistent Facts in Foreclosure Cases

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IT ISN’T BOTCHED PAPERWORK. IT’S FAKE PAPERWORK

It should come as no surprise that Judges have been confused since the dawning of the mortgage crisis launched by Wall Street. Wall Street was counting on it. And the problem they are having is that most courts, including appellate courts, are presuming the loans existed in the first place. You can’t blame for that because nearly everyone still makes that presumption. How could it not be true? What do you mean the loan came from someone else? Then why didn’t that third person  make sure they were made the payee on the note and the mortgagee on the mortgage? The real lenders didn’t know about the loan and would never have approved it? Preposterous!

Yes, I concede it all sounds like nonsense. But here is something that does NOT sound like nonsense. If the loan actually existed (between the named payee on the note and the named mortgagee or beneficiary on the mortgage) there is no circumstances under which a lawyer for the “lender” or “investor” would withhold proof of that transaction to the borrower, the Court or anyone else that was entitled to that information. If they had proof of payment on the loan they would rush to show it. If they had proof of payment on the alleged purchase of the loan, they would rush to show it — because that would make them a holder in due course (where the borrower has virtually no defenses).

The problem is that with the shell game of plaintiffs, servicers and trustees, Judges are getting distracted as they start picking at the foreclosure actions and entering some judgments in favor of the homeowners but failing to even consider the possibility that the entire scheme is fraudulent. Instead we see articles like the one below where the paperwork is considered “botched.” It isn’t botched. It is part of a fraudulent scheme. Look for any case where the underlying monetary transaction has been shown or proven. It isn’t there. 6-7 million foreclosures and still no money changing hands. What lender would endorse a note and assign a mortgage without receiving payment for it? (Unless of course they didn’t pay anything either at the loan closing table).

And why would anyone endorse a note or assign a mortgage without a sale of the loan and without receiving payment for it? The answer is very clear. They wouldn’t.

But the Courts are starting with the premise that the loan, and the transfer of the loan is presumptively legal and valid. And part of that presumption starts with the wrong question in the minds of judges — why would anyone file a foreclosure action if they were not the injured party whose legitimate interests were abridged when the borrower stopped paying? That slippery slope leads them to ratify unsigned, robo-signed, fabricated, forged paperwork in the belief that it really doesn’t matter how much is wrong with the paperwork.

Judges still assume that the underlying transactions must be real; hence judgment for the homeowner is necessary to avoid a windfall. It is circular reasoning to assume that the claim must be true if it was filed — that is what our constitution is all about preventing.

see The Fate of Foreclosure Cases

Will botched paperwork affect the outcome of foreclosure appeals? It depends on the judges.

The decisions in three cases came down to paperwork and procedure Wednesday before the Fourth District Court of Appeal.

For BAC Home Loans Servicing LP, botched documentation at the height of the robo-signing scandal cost it a foreclosure judgment when the court ruled the lender failed to prove standing to sue homeowner Rosanie Joseph.

The appeals court reversed a foreclosure judgment issued by Palm Beach Circuit Judge Diana Lewis since there was no evidence to show Taylor Bean & Whitaker Mortgage Corp. owned the mortgage when filing to foreclose on Joseph in July 2009.

The 2008 mortgage issued by Key Mortgage Associates was attached to the lawsuit, but no note or assignments accompanied the filing by Ocala-based Taylor Bean, a leading wholesale mortgage lender. The company reported the note was lost or stolen.

Taylor Bean, one of the spectacular bankruptcies of the housing crash, later assigned the note to BAC, which picked up the foreclosure ball.

In trial, BAC produced the original note and mortgage. The note offered two endorsements by the same person, Erica Carter-Shaw as a Key Mortgage attorney and Taylor Bean “E.V.P.” Neither endorsement was dated.

“A party must establish its standing to bring a mortgage foreclosure complaint by establishing an assignment or equitable transfer of the note and mortgage prior to instituting the complaint,” Judge Martha Warner wrote for the unanimous panel. Judges Carole Taylor and Mark Klingensmith concurred.

No File Review

A different panel split in similar litigation: Gafoor Jaffer and Nina Jaffer v. Chase Home Finance.

The homeowners claimed Chase attached a mortgage note payable to a third party without any proof of transfer and used an amended foreclosure complaint that failed to state a cause of action. However, the Jaffers waived the question of Chase’s standing by failing to respond to the lawsuit before default was entered.

Chase conceded some of its employees signed affidavits about the loan documents without first reviewing the loan file.

But the Fourth DCA upheld summary judgment issued by Broward Circuit Judge Sandra Perlman.

In the 2-1 unsigned decision, Judges Spencer Levine and Klingensmith concurred. Judge Burton Conner dissented, citing Chase’s failure to file an accurate copy of the mortgage note.

Deutsche Bank National Trust Co. wasn’t as lucky when it moved to overturn Broward Circuit Judge Kathleen Ireland’s ruling in favor of homeowner Theresa Boglioli.

Attorneys say the decisions may further complicate already-lengthy and expensive foreclosure litigation.

“Normally you see discrepancies of this nature within different circuits. But what we’re seeing in the Fourth is discrepancies among themselves,” said foreclosure defense attorney Roy Oppenheim of Weston. “It just makes this more complex. When there is cloudiness, it just creates more ambiguity and delays the conclusion of the foreclosure mess. In the end it doesn’t help anybody when you have inconsistent rules.”

“The judges themselves are coming up with different rationale based on the same facts, which makes for wildly different outcomes.”

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