Livinglies's Weblog

The government’s role in this mess has been abdicated to people running agendas that are based on narrow self-interest. One could argue that if the Federal Reserve window was swung open for investment banks to borrow at Fed Funds rates using worthless securities based upon assets (residential real estate), that the same window should be open to the homeowners. But that is not necessary either.

Other than private loan situations and a few other rare exceptions, nearly 100% of all loans “secured” by residential real property were securitized, which means that these loans, false from in their inception, went on a journey to never never land where securities, also false from inception, were sold to investors to fund the transaction. Both sides were based upon fraud involving intentional representations of facts known to be false and upon which the victims at both ends relied most notably the false appraisal of the real estate value and the false appraisal of the ABS or CMO sold to an investor.

If authority is claimed but not real, then the nominal “lender” can execute a satisfaction of mortgage, an agreement to forgo deficiency, and allow the short payment — all to zero effect because the nominal “lender” lacked any right to execute any of those documents. Thus the lender, the “borrower” etc. could have their legal position virtually unchanged by the transaction, but the new buyer has a very substantial change of position, as does the new buyer’s lender both of whom might be taking title or recording a mortgage(s) subject to a mortgage that has not actually been been satisfied. This will produce trouble for title companies and closings.It might also produce claims of fraud against the nominal “lender” by new plaintiffs— the new buyer of the property and the new mortgage lender.

The same logic would also require the conclusion that a “lender” or other buyer who takes title to a residence at a foreclosure sale has received nothing in the way of marketable title and even if the argument is made that the mortgage and note were not extinguished, the “lender” takes title subject to claims of multiple third parties

Either the title company will state an exception in the title policy which basically will mean that the buyer is not insured if a third party enters the picture later, or that the new lender for the new buyer, doesn’t have a mortgage at all because the new mortgage lender did not get the signature of the new buyer.

IN THE BEGINNING (when the first buyer/”borrower” bought the property): We have a buyer, a seller (or developer), and a nominal mortgage lender. The “selling forward” (presale of the loan to a third party before closing) by the nominal “lender” negated the validity of the loan closing but not the real estate closing. So the buyer received good title to the property (all other things being equal) and the seller got paid. Since there was no valid mortgage transaction, rescission becomes unnecessary. However fact patterns may vary, as do state laws, so that rescission is probably a good idea as an alternative position to take.

The funding by an undisclosed third party means that the party posing as the lender at the loan closing was by definition part of a deceptive scheme. The statutes help us with that because of the disclosure requirements coming from Federal and state laws. Failure to disclose the real lender is in itself a fatal defect in teh transaction. Hence the New York Judge who ordered that the mortgage be removed from the county records, leaving the homeowner with title, free and clear of the mortgage encumbrance. Going further, he also invalidated all transfers of any interest in the mortgage because the mortgage and note had never really existed.

But even if the mortgage had come into existence, and even if the theory that this was in reality part of an elaborate scheme to trick people into creating negotiable instruments and to trick other people into buying them as “asset backed securities” the loan was paid in full and the mortgage satisfied or extinguished contemporaneously with the original loan transaction. Whether the third party paid the nominal “lender” before or after closing, the note had been paid in full. In order to “purchase” a negotiable instrument and security instrument (mortgage) involving real estate, the transaction would need to be recorded. This is arguably true even in the “notice” states (what’s left of them).

Thus the payment of money by the third party to the nominal lender can only be interpreted as payment (satisfaction) of the note. This is why the allegation that the payments are in default from the “borrower” should be denied. No payments are required, under the terms of the note itself, if the note has been prepaid — whether the prepayment was from the borrower, his mother, or a mortgage aggregator. The affirmative defense of payment obviously is supported by the same logic.

And the filing of a claim to quiet title by the homeowners serving the nominal lander as a defendant/respondent, and John Does 1-100 as people or entities who might claim an interest in the note, will most likely be successful. The “lender” must disclaim any interest in the note. The servicer of the mortgage must admit (and it should be alleged) that they have been receiving payments from the “borrower”, instructions from “lender” and making payments to some third party, none of which should have been demanded, accepted or processed.

The failure to deliver the note or the failure to be able to account for the note in a situation where the intention of a series of parties in a chain of transactions was to transfer the rights or interests in the original “loan” transaction ALWAYS indicates the potential for a third party claim against any one of the parties in the chain at a later time despite adjudication of rights between any two or three of them.

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Here is an article from one of our contributors

Welcome to Wall Street’s Masquerade Ball (every American was invited)

Securities Disguised as Residential Mortgages – and Why Short-Sales Don’t Work among Other Things

Let’s back into this so you can really understand why the reality of what has happened to nearly every American and every homeowner is so bad, the cause of most of our economic problems right now, and yes, most-likely fraudulent.

You lose your job, your job is outsourced to China, you are in a car accident, substantially injured, life happens,etc. All of a sudden, you can’t pay your monthly mortgage payment, along with other debts. You call the financial institution that you send your mortgage payments to. Oh, by the way, this institution is different than who actually lent you the money at closing – and this “servicer” of the loan has maybe changed twice or more since you closed on the loan.

So, you can’t make your payment. The “servicer” now starts calling you almost daily “harrassing” you to “pay up or else.” You indulge them in your perfectly legitimate and understandable situation and, yes, it falls on deaf ears. They tell you something like, “Miss, if you are having a hardship, we will mail you out a hardship package, please fill it out completely and include all the items requested and send back to us. We will see what we can do for you.

So you do just that, you spend about 3 hours of your precious time, diligently filling everything out and collecting all those “necessary” documents. You send it in. Hear nothing back for like 6 weeks. So you call, wait on hold for 40 minutes and finally get someone who barely speaks English… But it sure as hell is frustrating trying to communicate with someone who obviously doesn’t speak your language, not to mention that, in the back of your head, you wonder “how safe it is to be revealing your social security number and all sorts of sensitive, personal information to someone you’re sure is somewhere halfway around the globe and 10 hours ahead/behind us in time. Anyway, sorry for the rant again… back to the real story.

So, you finally get someone on the line and ask them if they received your fax of all the documents you most diligently put together and faxed to them at their request. You faxed everything in 6 weeks ago and haven’t heard a thing! The person politely tells you that for some reason, they have no record of receiving anything from you and “are you sure that you sent it to the right number?” – Now you’re head turns about 3 shades of red as your carotid artery starts to bulge and you consider popping a Nitro pill to stave off a sure-fire myocardial infarction. But that’s beside the point.

Anyway, back to the real story. So, you send it again, wait another 3 weeks, call again and, “MIRACLE!” They got it, thank God, now we can at least get a solution to our current challenges…right.  The foreigner on the other end politely tells you that it will be a few weeks before the “committee” can review it and come up with a decision on your “situation.” (You feel like telling them to go stick it but refrain since “good, polite Americans” don’t do that sort of thing). Son of a gun… I just went off on a quick rant again. Sorry.

Anyway, back to the real story. So, 4 weeks go by and you hear nothing. You think, “What the heck?” Does this company have their heads so far up their rear ends that they can’t even return a call and respond to my really dire “situation?” Then you remember that you were talking to some person who didn’t really care and by now, they might have taken your Social Security Number, borrowed another $100,000 (on your credit) to go shopping at their country’s version of Best Buy and they’re probably watching the CNN “Mortgage Meltdown” coverage on some 100 inch Big Screen Plasma on a brand new leather couch with a Universal Remote Control that even God would be jealous of. Shoot. Sorry for the rant right there.

Anyway, back to the real story… So, you call again, wait another 25 min. on hold and finally get someone on the line. You explain the whole nightmare and they tell you that “yes, we did receive your package and yes, it did come back from the committee, and “could you please wait for a supervisor?” – and yes, the wait on hold charade starts again… but I know, you can’t relate.

Anyway… supervisor comes on the phone like 10 minutes later and tells you that “unfortunately, there’s nothing we can do for you at this time. But if you’d like, you can go to our website and get the “I can’t make a friggin payment because I’m really out of a job” hardship form, fill it out and fax it in, we’ll see what we can do for you.”

Another rant and rave. Sorry. But really folks, this is the madness that everyday, hard-working AMERICANS are going through with their mortgage loans and the crazy lender/servicers can barely answer the phones much less speak intelligibly with a real solution or option!!!!

So, here’s the real story and WHY all those forms, short-sale efforts and all that work to modify your loan won’t do a bit of good. The company you’re calling is just the SERVICER! They don’t own your mortgage OR your note. They have no substantial right to do anything with the note/debt. The mortgage is still recorded in the name of the FIRST mortgage company that gave you the money at closing AND the note (the real evidence of the debt) was sold BEFORE you ever made a payment INTO a Securitization Trust which then SOLD that POOL of NOTES as a Security to 100’s or 1000’s of Investors ALL OVER THE COTTON-PICKIN’ WORLD.

So, the moral of the story is “THE SERVICER CAN’T MAKE A DECISION ON YOUR LOAN BECAUSE YOU REALLY GOT INTO A COMPLEX SECURITIZED INSTRUMENT SCHEME WHEN YOU SIGNED ALL THOSE CLOSING DOCUMENTS WHICH IS WHY THAT SAME DAMN SERVICER CAN’T APPROVE ANY REMEDY FOR ANY HARD-WORKING AMERICAN IN A REAL JAM!”

Want a little context to what I’m saying? Read below for some good ol’ fashioned 3rd party verification. Then, call me and we’ll try to help you a bit. I speak Indian, Chinese and Pig Latin by the way – just in case it’s needed to help you out on your loan.JK.

Filed under: CDO, Eviction, foreclosure, GTC | Honor, Mortgage | Tagged: deficiency judgment, foreclosure offense, mortgage lenders, short sales, title companies, title issues | 3 Comments »