Latest Moratorium Extensions Are Two-Edged Sword

The new president is facing incoming fire from all directions. If he does not extend the moratorium on foreclosures and evictions, hundreds of thousands of people are going to be homeless. But the extension does not come without costs.
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As you have seen on these pages, I am quite confident that none of the scheduled payments from homeowners are legally due. On the other hand, I am loathe to tell homeowners or tenants that they should withhold payments if they can make them.
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The reason is basically extortion or duress. By withholding a scheduled payment without a court order telling you can don’t need to make the payment, you put yourself and your home in jeopardy. the Wall Street foreclosure team will use that as their excuse for pursuing collection and enforcement ending in foreclosure and eviction if you don’t properly defend.
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The situation with tenants is even more dire. Many if not most rental units are owned by small landlords who do not possess the resources to get through this pandemic period. When the time comes that their units are exempted from moratoriums by time or edict, they will be required to pay the “arrearage” just like everyone else. Those homeowners who are using the moratorium as an excuse to withhold payment without having a plan of attack are headed for trouble — possibly the kind they can’t fix.
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The obvious answer to this problem is for homeowners to launch preemptive lawsuits against the securitization team. But my observations and experience show that most judges will not allow such lawsuits to go forward. this is because it is seen as an attack on the financial system generally and because judges are afraid that allowing such lawsuits will invite many more that will clog all the court systems. I have had many judges agree that the lawsuit did state a claim but dismissed it anyway sometimes after as much as 14 months of sitting on the motion to dismiss.
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Some people believe that the judges don’t get it. But most of them do “get it” — at least in part. Since those judges believe the loan exists, the loan account exists and that the homeowners almost certainly owe the payments, they see little harm in waiting until enforcement action is brought against the offending homeowner. Then they will occasionally rule in favor of a homeowner who reveals fatal deficiencies in the proof of the claim.
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It is during the moratorium periods that homeowners have an unprecedented opportunity to start actions against the securitization team — but not entirely the way most might think. By sending a proper Qualified Written Request and Debt Validation Letter you open up a more palatable action for the Judges in advance of enforcement. This is the opening step in the homeowner’s challenge.
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They must answer and they risk some rather harsh sanctions if they lie — so they withhold information. But the information they give in response to the statutory inquiries will most likely contain inconsistencies with their correspondence.
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Your questions need to be very specific. And they should start with existence, ownership, and authority over a loan account receivable on the ledger of some company; that entry can only be legal and valid if value was paid in exchange for a conveyance of ownership of the loan account receivable (aka underlying debt or underlying obligation). This is the most basic requirement established by law and custom over centuries in English common law and statutes, American common law; it is also established as the law in every jurisdiction in their adoption of Article 9 §203 of the Uniform Commercial Code.
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Next, the homeowner can file a complaint with the Consumer Financial Protection Board and the Consumer Division of the Attorney General of their State. Once again a response is mandated by statute and the securitization/foreclosure team does no dare withhold a response. but once again their response is going to be filled with legalese evasion of admitting the simple fact that they don’t own the loan account receivable and they have not been given any authority from anyone who does own it.
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Homeowners should not allege nor try to prove that all securitization of residential “debt” is a fraudulent scheme or a lie, even though that is true. It scares judges and it sounds like a conspiracy theory to them. So keep it simple and to the point.
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Foreclosure is about restitution for an unpaid debt. If the claiming party has no actual ownership of the debt arising from a real-world transaction in which they paid value in exchange for owning the loan account receivable they fail the test of the condition precedent set forth in 9-203 of the UCC. And that opens the door to “limited” actions for violations of the FDCPA (title X, 124 Stat. 2092 (2010) and other statutes. Those statutes have a bite to them and the foreclosure mills are afraid of them.
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The advantage of the preemptive action by the homeowner is that very often the securitization/collection/foreclosure team is not ready with fabricated documents containing false information about transactions that never occurred.
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The rule of thumb is to create a vehicle that can be gradually expanded as more information is obtained and the judge is gradually educated as to the true facts of the case. And remember that attorney fees are often recoverable in such actions along with statutory or compensatory damages.
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Once filed and discovery is underway, the best practice is to take information gleaned from discovery and then request a leave of court to amend the pleadings to include a broader action for declaratory, injunctive, and supplemental relief.
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The homeowner would be seeking damages for illegally trying to enforce a debt, and disgorgement of amounts paid to parties who had no nexus to ownership, or authority over the claimed “debt.” While this premise is true in virtually all cases in which securitization claims were in play, it can only be established by revealing the inability or unwillingness of the opposition to answer the most basic questions about existence, ownership, and authority over the debt.
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They can’t but you must do much more than accusing them. You must out litigate them which is why you most likely should have a lawyer who knows how to file motions to dismiss, discovery requests and motions to enforce discovery requests, along with motions for sanctions, motions for the court to adopt a negative inference against the opposition and motions in limine.
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If small landlords take heed, they can force the situation to tilt in their own favor, pass some of the savings to tenants and come out the other end of this crisis somewhat intact. If they don’t then it is unlikely that many of them will survive after the moratorium ceases unless their tenants have been paying rent in a timely fashion.
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Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford. 

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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
Please visit www.lendinglies.com for more information.

LSF9: U.S. Bank>Foreclosure Mill Lawyers trying to get Hawaii Supreme Court to Change the Rules Before I Get to Them

Stop complaining about banks and courts. Start writing to everyone. The game is on!

Attorney Gary Dubin has already won the case twice. Now the foreclosure attorneys are trying to resurrect the case involving the LSF9 Master Participation Trust, which has been the subject of numerous articles and radio shows. Bill Paatalo,  Charles Marshall, and I, among many others,l have already completely neutered this sham entity.

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But what they are actually trying to do, is to loosen the rules instead of tightening the rules for the oncoming flood of foreclosure lawsuits in the state of Hawaii and to have that serve as an example to the rest of the country.

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I’m trying to stop them. See https://livinglies.me/2020/12/18/help-me-change-the-rules-if-you-want-a-different-outcome/

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They are staying on message. That means they are directing the court’s attention to possession of the promissory note. From that premise, they are making all of their presumptions and arguments.

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First of all possession of the note does not necessarily mean that the delivery of the note was accompanied by a grant of entitlement to enforce the note. That grant could only come from the owner of the underlying obligation or someone who legally represented the owner of the alleged underlying obligation.
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This is a point that is often missed. However, if physical delivery has occurred between a holder of the note (someone with physical possession who also has been legally granted the right to enforce) then the delivery of the note implies a grant of the right to enforce, which right is then legally presumed to exist — even if there was no such grant. The delivery of the note implies a grant of the right to enforce, which is then presumed. That is the system.
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But you will never find an allegation, assertion or exhibit that the named claimant has paid value in exchange for a conveyance of the underlying obligation. Not ever. If they said that, they would need to prove that. They can’t because it isn’t true. But right now the rules don’t require them to say that and I have announced on these pages that I intend to petition the Supreme Courts of every state to require it.
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So they are mounting a pre-emptive attack to undercut my efforts to reduce the flood of foreclosure cases that will come once the moratoriums are lifted. They should never be lifted. At this point, the regulators have all the information they need to say that the transactions with homeowners do not represent an enforceable obligation because they are merely an attempt to get back consideration paid to the homeowners for their involuntary participation in a concealed business scheme resulting in the sale of securities that had nothing to do with sale or ownership or rights to administer, collect or enforce any alleged obligation from any homeowner.
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All of this can be headed off at least two points in the process: (1) at the pleading stage where they should swear to have paid value for the underlying obligation and (2) in discovery where they should be required, as a condition precedent (H. S. §490:9-203), to present evidence of payment of value for the underlying obligation.

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So the real question is whether anyone in the current foreclosure scheme has ever paid value for the underlying obligation, if it exists, in accordance with H. S. §490:9-203. I raise the question of the existence of the obligation because my investigation, together with interviews of insiders, combined with my own experience on Wall Street has led me to the inescapable conclusion that the obligation was extinguished during the process labeled as securitization.
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As popularly understood, securitization of residential obligations is and always has been a fiction.

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There is no person or company that maintains any entry on any accounting ledger of any legal entity on which the obligation is established as a loan account receivable. Such an entry could only be made if value was paid. No value is paid for ownership of the underlying obligation under the current securities scheme; hence nobody can claim legal ownership of the obligation or any right to enforce it.
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That is the nub of their problem. And that is why they rely on false, fabricated, backdated forged, Robo signed documents. If they had paid value for the underlying obligation, they would say so, since that would eliminate virtually any arguments about the transfer or ownership of the debt, note, and/or mortgage. There would be no viable defense left to homeowners. The fact that foreclosure mills never do so is in itself corroboration of my factual and legal conclusion, to wit: that they don’t own the underlying obligation and that they are faking it.
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And that means that the collection of scheduled payments from homeowners are not being used to reduce any loan account. That is impossible because no such account exists. It also means that the proceeds from the forced sale of homestead after a court or state system allows the sale, also are not being used to reduce any loan account.
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That is why they keep talking about the note rather than the obligation. The rules governing the enforcement of a note or different than the rules governing the enforcement of a mortgage. Foreclosure mills have been informally convincing judges to ignore the current rules. Now they’re seeking to formally change it, step by step.
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First, they think they can get the Hawaii Supreme Court to do it indirectly, and then they are going to ask for a formal rule change. Ownership of the debt, note, or mortgage will be thrown out the window nullifying around 1000 years of legal doctrine and development.
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The enforcement of a note is governed by Article 3 UCC whereas enforcement of a mortgage is governed by Article 9, where there are added protections and restrictions.
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The note is only relevant if it is evidence of the underlying obligation. It is also treated as being something in the nature of a transfer of title to the underlying obligation, so when the note is transferred there is a legal presumption that the underlying obligation has also been transferred. But article 9 says that isn’t enough. It says the claimant must be the one who paid value in exchange for receiving a conveyance of ownership of the underlying obligation.
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The problem for the Foreclosure Mill and the reason that they are trying to get the Hawaii Supreme Court to change the rules, is that no such transaction ever occurred in which value was paid in exchange for receiving a conveyance of ownership of the underlying obligation. without the legal presumption of such a transaction, they are dead in the water because they cannot proffer any evidence that it ever happened. 
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I would also add that LSF9 trust is no trust. it is a fictitious entity. You might analogize it to a hologram of a hologram of an empty paper bag. There are no trustee duties and hence no trustee, regardless of labels used to confound the courts, lawyers, and clients. There is no res or thing (or “loan”) owned by USB or any trust — least of all the sham monstrosity called LSF9 Master Participation Trust.
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Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.

Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.

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Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FREE REVIEW: Don’t wait, Act NOW!

CLICK HERE FOR REGISTRATION FORM. It is free, with no obligation and we keep all information private. The information you provide is not used for any purpose except for providing services you order or request from us. In  the meanwhile you can order any of the following:
*
CLICK HERE ORDER ADMINISTRATIVE STRATEGY, ANALYSIS AND NARRATIVE. This could be all you need to preserve your objections and defenses to administration, collection or enforcement of your obligation. Suggestions for discovery demands are included.
*
CLICK HERE TO ORDER TERA – not necessary if you order PDR PREMIUM.
*
CLICK HERE TO ORDER CONSULT (not necessary if you order PDR)
*
*
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR) (PDR PLUS or BASIC includes 30 minute recorded CONSULT)
*
FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
  • But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
  • Yes you DO need a lawyer.
  • If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
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Please visit www.lendinglies.com for more information.
DID YOU LIKE THIS ARTICLE?
Nobody paid me to write it. I am self funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you fee you can afford.

Please Donate to Support Neil Garfield’s Efforts to stop Foreclosure Fraud.

Click

 

Dancing with ghosts. The banks have no shame in contradicting themselves

The bottom line is that foreclosures are all about collecting on unpaid debt. The only party who can initiate foreclosure proceedings that will force the sale of title to the home and then forcibly dispossess the homeowner is a party who owns the debt, is injured by nonpayment and who receives the proceeds of foreclosure as restitution for an unpaid debt.

In a pending case the attorneys for the “bank” argue that ownership of the debt is irrelevant.

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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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Article 9, §203 of the Uniform Commercial Code as adopted by the statutes of the State of Hawaii simply says that a condition precedent to enforcement of as security instrument is payment for the debt. Opposing counsel has proposed a daring, inventive argument to avoid producing evidence of something that he should be anxious to demonstrate: this his client is an injured party seeking restitution. Instead opposing counsel has advanced argument intended to divert the court’s attention into Dickensian (see Bleak House, Charles Dickens, serially published March 1852-September 1853 ) meandering in which the point of the proceeding is totally lost on lawyers who no longer remember the reason the matter is in court.
The statute merely states as matter of law what is already axiomatic: in order to bring a case to court the claimant must be an injured party and present an actual controversy wherein some act of the accused has produced such injury. Opposing counsel doesn’t like that apparently because he does not represent an injured party and yet still seeks the remedy which thus will result in the generation of unaccountable revenue to a party simple because they asked for it.
In the case at bar the defendant has been sued in foreclosure, presumably for restitution of an unpaid debt. She asks in discovery whether the Plaintiff is actually the party who has suffered an injury by way of asking for evidence of who paid for the debt and when that occurred. In another decade counsel for the foreclosing party would have happily obliged, thus removing any likelihood of failure of the action. But here, counsel resists, saying that such a request is not warranted since the action is not dependent upon on ownership of the debt. It seems to be the argument that the mere possible existence of the debt is sufficient for anyone to enforce it.
Opposing counsel is essentially objecting as a substitute for filing a motion to dismiss or summary judgment. Despite the convoluted and erroneous arguments proposed by opposing counsel, the fact remains that discovery is allowed on any subject that could lead to the discovery (hence the name “discovery”) of admissible evidence. Since foreclosure is by definition a remedy for the recovery of debt, it is impossible to fathom an argument against requiring the suing party to answer questions about that debt. Yet that is exactly what opposing counsel seeks to do with smoke and mirrors. Defendant is entitled to an order requiring a good faith factual answer because there is no basis to deny her request or sustain any bojection of opposing counsel.
While it therefore is not necessary entertain the “merits” of the supercilious argument advanced by opposing counsel, the following is submitted in an abundance of caution.
Thus the first erroneous element of the argument of opposing counsel is that it ignores a simple fact, to wit: the note is one contract and the mortgage is another separate contract. Opposing counsel is seeking to mislead the court into ignoring the mortgage contract and laws concerning conditions precedent and standing to enforce the mortgage contract which is a security instrument, despite arguments to the contrary offered up by opposing counsel. If a mortgage is not a security instrument then it will come as unwelcome news to the holders of tens of millions of mortgages on real property.
In practice there are some presumptions that arise from possession and rights to enforce the promissory note in residential mortgage transactions; but those presumptions can be rebutted when, for example, the presumption of ownership of the loan is rebutted by evidence or inference or legal presumption — i.e., a showing that the claimant is neither the owner of the debt nor representing any owner of the debt who paid for it — or by undermining the use of the legal presumptions arising from their claims of possession, ownership or rights to enforce the promissory note. Those legal presumptions are those that allow a court tor reasonably conclude that the claimant is the owner of the debt and therefore would be receiving restitution for an unpaid debt to satisfy an unpaid debt due to the claimant.
Opposing counsel seeks to remove the very purpose of such legal presumptions, arguing instead that ownership of the debt is irrelevant and that anyone can initiate proceedings to forcibly divest title and peaceful possession from a homeowner merely by showing possession of the promissory note — thus wholly ignoring the conditions precedent to enforcement of the mortgage. The question of whether the proceeds of a foreclosure sale would go to pay anyone who had suffered actual economic loss from nonpayment is thus rendered irrelevant. Opposing counsel wishes this court to divert from current laws of enforcement of mortgages to new “interpretations” that only require certain conditions that allow for enforcement of the promissory note in residential mortgage transactions while ignoring any laws regarding the actual mortgage.
The fundamental flaw in their argument is that if they were right, then a few other things would also be true. The motive is clear — to provide a legal theory in which ownership of the debt is completely divorced from enforcement of the mortgage. This opens the door to moral hazard and outrage. Foreclosure, which is enforcement of a security instrument, is widely considered to be the most severe penalty under civil law — the equivalent of capital punishment in criminal law. It results in the loss of homestead property. Opposing counsel would have this court believe that no statutory law controls the conditions precedent to initiating a foreclosure proceeding. Such an offering is both absurd and dangerous.

First, the result of their intentionally misleading argument would be that there is no provision in the entire Uniform Commercial Code governing the conditions in which a mortgage could be enforced. This argument, wholly specious, produces the anomalous result of having no statutory authority setting forth standards for foreclosure and leaving it entirely to interpretation of contract law. If this were true, then foreclosure law would be entirely common law doctrine and would lead to wildly inconsistent results.
This is not the case. Foreclosure law is consistent in all U.S. jurisdictions precisely because the standards are the same, to wit: only the owner of the debt can authorize initiation of foreclosure proceedings because only the owner of the debt is an injured party arising from nonpayment. Opposing counsel is attempting to alter this paradigm and  enable virtually anyone with the right information to bring a foreclosure action, pocket the proceeds, and divest the homeowner of ownership and peaceful enjoyment of their home. Foreclosure is not and should not be an opportunity for entrepreneurs to generate revenue. Foreclosure is intended, by statute, to be strictly limited to a remedy (restitution) for an unpaid debt. Opposing counsel seeks to expand the remedy of foreclosure from restitution for an unpaid debt to the owner for the debt to a whole new concept — generation of revenue without regard to the owner of the debt.
Second, their argument is disingenuous. They are trying to get the court the court to assume that there is no UCC provision under Article 9 for enforcement of a security instrument against the owner of real property while at the same time they seek to use the UCC provisions under Article 3 to support legal presumptions that they are in fact owners of the debt and authorized to enforce not only the promissory note, which is governed by Article 3 but the mortgage which they say is not governed by anything. Thus they invoke the UCC for their purpose of invoking foreclosure procedure while at the same time they deny the application of the UCC to the actual enforcement of the mortgage.
Hence they seek to shift the focus from enforcement of the mortgage to enforcement of the note. In other words they want it both ways, to wit: they want the legal presumptions under Article 3 which removes any obligation to prove payment for the debt payment with evidence but they want to remove any possibility of rebutting those presumptions as being irrelevant, because now under their theory they don’t need to be or represent anyone who owns the debt by virtue of having paid for it.
Thus anyone who claims to possess the note and have the status of someone who could enforce it would also automatically be conclusively presumed to be able to enforce the mortgage. According to the argument proposed by opposing counsel, the note should be converted from being considered evidence of the debt to actually being the debt and the facts be damned. If someone else paid for the debt, they are automatically excluded from the foreclosure process — which means that the one party who actually might have suffered from nonpayment by the borrower gets none of the proceeds.
Hence the basic premise behind the argument of opposing counsel is to undermine existing law and replace it with a haphazard set of possible interpretations.
Next look at their convoluted attempt to state that Article 9 does not cover real estate transactions.
First, looking at the simple wording of Article 9, §203 UCC, if there was meant to be an exclusion or exemption, it would be there. No such exclusion or exemption exists. The argument of opposing counsel consists entirely of twisting other provisions of UCC, as adopted by the laws of the State of Hawaii, to mean that the law does not mean what it says when it relates to a residential mortgage. Without ambiguity, the court has no power to “interpret” the statute to mean something other than what is says. Yet opposing counsel seeks to have this court interpret the statute as being irrelevant thus rendering moot the entire concept of a present controversy, legal standing, and public policy.
The rest of opposing counsel’s arguments are rebuffed, rebutted and rejected by his own quotation from Article 9 §308 UCC which states as follows:
“(e) [Lien securing right to payment.]

Perfection of a security interest in a right to payment or performance also perfects a security interest in a security interest, mortgage, or other lien on personal or real property securing the right.”

In plain language, the statute defining perfection of as security instrument includes the word “mortgage,” which is defined in Article 9 § 102 as “(55) “Mortgage” means a consensual interest in real property, including fixtures, which secures payment or performance of an obligation. “Security Instrument” is defined in Article 9 § 102 as “(74) “Security agreement” means an agreement that creates or provides for a security interest” and “secured Party is defined in Article 9 §102 as

“(73) “Secured party” means:

(A) a person in whose favor a security interest is created or provided for under a security agreement, whether or not any obligation to be secured is outstanding;

(B) a person that holds an agricultural lien;

(C) a consignor;

(D) a person to which accountschattel paperpayment intangibles, or promissory notes have been sold;

(E) a trustee, indenture trustee, agent, collateral agent, or other representative in whose favor a security interest or agricultural lien is created or provided for; or

(F) a person that holds a security interest arising under Section 2-4012-5052-711(3)2A-508(5), 4-210, or 5-118.”

Opposing counsel attempt to thread the needle by pointing to only one of six possible situations in which the rights arise of a “Secured Party.” A mortgage clearly qualifies as a security interest, as banks and attorneys for banks have argued for centuries. Their position on this issue has been constant and it has been codified into state law that is consistent throughout all U.S. jurisdictions. They have always been right, until they said they were not right.

For all of the above reasons the objections of plaintiff should be overruled, the Plaintiff should be directly ordered to answer the queries of the Defendant and failing that, the Defendant is entitled sanctions and the legal presumption that the Plaintiff is not an owner the debt, not a secured party, has not paid value for the debt, and this does not qualify as an injured party.

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