Illinois Takes A Step in the Right Direction

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Editor’s Comment: Illinois has taken a step forward but they are still plagued by the wrong assumption — that the courts are dealing with a legitimate debt. There is no debt if it is paid and in many cases the original debt has been paid down or paid off by  third party mitigation payments from insurance and credit default swaps.

Remember the note raises the presumption of the existence of the debt which is rebuttable. It does not prove the loss. Without proof of loss there is no foreclosure or any other lawsuit for that matter. The party seeking relief must show they have been or will be injured in some way to get money damages, equitable relief (like foreclosure) or anything else. Without injury they don’t belong in court, which is why we have a jurisdictional rule regarding standing. No injury=no standing.

So the bad point about the new rules is that the forecloser must prove the debt, but it doesn’t specifically say they must plead or prove the loss. The problem with that is production of the note (whether the the real note or something that looks like the real note) raises the presumption of the debt. It also causes Judges to assume that the loss is self-evident — i.e., if someone has the note it is presumed that they paid for it and will suffer a loss of their expectancy of payment under the terms of the note.

If you don’t demand to see the canceled check or the wire transfer receipt and wire transfer instructions or other forms of actual payment of money (where it can be seen that money actually exchanged hands) then there is no consideration, the paper is not negotiable, the UCC doesn’t apply and the party seeking to foreclose has no standing because they have not been injured by the borrower, even if the borrower didn’t make any payments. At the root of this mess is a scheme of illusions created by the banks. Demand reality and you will get traction.

But there are also some good points about the new rules. The one requiring counseling for the homeowners would be good if the counselors knew what they were talking about and understood the perfectly valid defenses available to homeowners who got swindled into signing papers in favor of a company that never made a loan to them. From what I have seen, the counselors don’t have any idea about such things and it is merely a debt counseling session about getting your life in order, which is a good thing, but not what you can do about having your life turned upside down by an illegal foreclosure.

The part I like is the burden placed on foreclosers that would show that a modification is not possible. This is simple: if the results of foreclosure are that the net proceeds are substantially less than what the homeowner is offering, then the loan  can be modified. Demand should be made for the methodology and the person who calculated the modification for the forecloser and their authority to do so. And demand should be made for what contact they had with the “creditor.” Then you contact the creditor and find out (a) if they are the creditor (b) whether they were contacted and (c) how they feel about getting $150,000 from the homeowner rather than $50,000 from foreclosure.

As for the modification part, the banks are going to fake it just like they fake everything else. Be ready with an expert declaration that shows that the modification offered is far better than foreclosure, and that this is evidence of the fact that the servicer never even “Considered” the modification, which is violation of HAMP and HARP.

Notice of Violation Under California Bill of Rights

“If we accept the Bank’s argument, then we are creating new law. Under the new law a borrower would owe money to a non-creditor simply because the non-creditor procured the borrower’s signature by false pretenses. The actual lender would be unable to retrieve money paid to the fake lender and the borrower would receive credit for neither his own payments nor any payment by a third party on the borrower’s behalf.” Neil F Garfield, livinglies.me

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Barry Fagan submitted the Notice below.

Editor’s Notes: Fagan’s Notice gives a good summary of the applicable provisions of the Bill of Rights recently passed by California. The only thing I would add to the demands is a copy of all wire transfer receipts, wire transfer instructions or other indicia of funding or buying the loans. everything I am getting indicates that in most cases they can’t come up with it.

If you went into Chase and applied for a loan and they approved your application but didn’t fund it, you wouldn’t expect Chase to be able to sue you or start foreclosure proceedings for a loan they never funded. It’s called lack of consideration.

If you actually got the loan from BofA but they forgot to have you sign papers, you would still owe the money to them but it wouldn’t be secured because there was no mortgage lien recorded in their name. And BofA would have a thing or two to say to Chase about who is the real creditor — either the one or advanced the money or the one who got documents fraudulently or wrongfully obtained.

So then comes the question of whether Chase could assign their note and lien rights to BofA. If TILA disclosures had been made showing the relationship between the two banks, it might be possible to do so. But in these closings, the actual identity of the creditor (source of funds) was actively hidden from the borrower.

Thus we have a simple proposition to be decided in the appellate and trial courts: can a party who obtains signed loan documentation including a note and mortgage perfect the lien they recorded in the absence of any consideration. The floodgates for fraud would open wide if the answer were yes.

If the answer is NO, then the origination documents and all assignments, indorsements, transfers and allonges emanating from the original transaction without consideration are void. AND if each assignment or transfer recites that it is for value received, and they too had no money exchange hands thus producing lack of consideration, then they cannot even begin to assert themselves as a BFP (Bona Fide Purchaser for value without notice). The part about “without notice” is going to be difficult to sustain in proof since this was a pattern of table funded loans deemed “predatory per se” by Reg Z.

The reason they diverted the document ownership away from the creditor who actually advanced the money was to create the appearance of third party ownership (and transfers, which was why MERS was created) in the documentary chain arising out of the original of the non-existent loan (i.e., no money exchanged hands pursuant to the recitals on the note and mortgage as between the payor and payee). They needed the appearance of ownership was to create the appearance of an ownership and insurable interest.

Thus even though the money did not come from the originator, the aggregator or even the Master Servicer or Trustee of the pool, affiliates of the investment bank who underwrote and sold bogus mortgage bonds, were able (as “owners”) to purchase insurance, credit default swaps, and receive bailouts because they could “document” that they had lost money even though the reality was that the the third party source of funding, and the real creditors were actual parties suffering the loss.

Had those windfall distributions been applied to balances due to the owners of the mortgage bonds, the balance due from the bond would have been correspondingly reduced. AND if the balance due to the creditor had been reduced or paid in full, then the homeowner/borrower’s obligation to that creditor would have been extinguished entitling the homeowner to receipt of a note paid in full and a release of the mortgage lien (or at least cooperation in nullification of the imperfect mortgage lien).

PRACTICE TIP: Don’t just go after the documents that talk about the transaction by which they claim a liability exists from the borrower to one or more pretender lenders. Push for proof of payment in discovery and don’t be afraid to deny the debt, the note or the mortgage.

In oral argument before the Judge, when he or she asks whether you are contesting the note and mortgage, the answer is yes. When asked whether you are contesting the liability, the answer is yes – and resist the temptation to say why. The less said the better. This is why it is better preempt the pretender lenders with your own suit — because all allegations in the complaint must be taken as true for purposes of a motion to dismiss.

Don’t get trapped into disclosing your evidence in a motion to dismiss. If it is set for a motion to dismiss the sole question before the court is whether your lawsuit contains a short plain statement of ultimate facts upon which relief could be granted and all allegations you make must be assumed to be true. When opposing counsel starts to offer facts, you should object reminding the Judge that this is a motion to dismiss, it is not a motion for summary judgment and there are no facts in the record to corroborate the proffer by opposing counsel.

From Barry Fagan:

Re:  Notice of “Material Violations” under California’s Newly Enacted Homeowners Bill of Rights pursuant to California Civil Code sections, 2923.55, 2924.12, and 2924.17.
See attached and below

Reference is made to Wells Fargo’s (“Defendant”) December 13, 2012 response to Barry Fagan’s (“Plaintiff”) October 25, 2012 request for copies of the following:

(i)           A copy of the borrower’s promissory note or other evidence of indebtedness.

(ii)         A copy of the borrower’s deed of trust or mortgage.

(iii)       A copy of any assignment, if applicable, of the borrower’s mortgage or deed of trust required to demonstrate the right of the mortgage servicer to foreclose.

(iv)        A copy of the borrower’s payment history since the borrower was last less than 60 days past due.

Please be advised that I find Defendant’s response to be woefully defective. This letter is being sent pursuant to my statutory obligation to “meet and confer” with you concerning the defects before bringing an action to enjoin any future foreclosure pursuant to Civil Code § 2924.12.

Defendant’s are in violation of both the notice and standing requirements of California law, and the California newly enacted Homeowner Bill of Rights (“HBR”). In July 2012, California enacted the Homeowner Bill of Rights (“HBR”). Among other things, the HBR authorizes private civil suits to enjoin foreclosure by entities that record or file notices of default or other documentsfalsely claiming the right to foreclose. Civil Code § 2923.55 requires a servicer to provide borrowers with their note and certain other documents, if the borrowers request them.

Civil Code § 2924.17 requires any notice of default, notice of sale, assignment of deed of trust, or substitution of trustee recorded on behalf of a servicer in connection with a foreclosure, or any declaration or affidavit filed in any court regarding a foreclosure, to be “accurate and complete and supported by competent and reliable evidence.” It further requires the servicer to ensure it has reviewed competent and reliable evidence to substantiate the borrower’s default and the right to foreclose.

Civil Code § 2924.12 authorizes actions to enjoin foreclosures, or for damages after foreclosure, for breaches of §§ 2923.55 or 2924.17. This right of private action is “in addition to and independent of any other rights, remedies, or procedures under any other law.  Nothing in this section shall be construed to alter, limit, or negate any other rights, remedies, or procedures provided by law.” Civil Code § 2924.12(h). Any Notice of Default, or Substitution of Trustee recorded on Plaintiffs’ real property based upon a fraudulent and forged Deed of Trust shall be considered a “Material Violation”, thus triggering the injunctive relief provisions of Civil Code § 2924.12 & § 2924.17(a) (b).

I therefore demand that Wells Fargo Bank, N.A. provide Barry Fagan with the UNALTERED original Deed of Trust along with the ORIGINAL Note, as the ones provided by Kutak Rock LLP on October 13, 2011 to Ronsin Copy Service were both photo-shopped and fraudulent fabrications of the original documents, thus not the originals as ordered to be produced by Judge Tarle under LASC case number SC112044. Attached hereto and made a part hereof is the October 13, 2011 Ronsin Copy Service Declaration with copies of the altered and photo-shopped Note and Deed of Trust concerning real property located at Roca Chica Dr. Malibu, CA 90265.

Judge Karlan under LASC case number SC117023 “DENIED” Wells Fargo’s Request for Judicial Notice of the very same Deed of Trust, Notice of Default, Substitution of Trustee and the Notice of Rescission concerning real property located at Roca Chica Dr. Malibu, CA 90265.
Attached hereto and made a part hereof is the relevant excerpt of Judge Karlan’s October 23, 2012 Court Order along with a copy of Wells Fargo’s Request for Judicial Notice of those very same documents. Court Order: REQUEST FOR JUDICIAL NOTICE “DEFENDANT’S REQUEST FOR JUDICIAL NOTICE IS DENIED AS TO EXHIBITS A, B, C, D, K, L, & M.” 

As a result of the above stated facts, please be advised that the fraudulently altered deed of trust and photo-shopped Note that you claim to have been previously provided to Barry Fagan shall not be considered in compliance with section 2923.55 and therefore Wells Fargo Bank, N.A. has committed a “Material Violation” under California’s Newly Enacted Homeowners Bill of Rights pursuant to Civil Code sections, 2923.55, 2924.12, and 2924.17 (a) (b).

Please govern yourselves accordingly.

Regards,

/s/Barry Fagan

Barry S. Fagan Esq.

Thank you.

Barry S. Fagan Esq.
PO Box 1213, Malibu, CA 90265-1213
[T] +1.310.717.1790 – [F] +1.310.456.6447

Nocera: It’s Time to Give Eminent Domain a Try

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Editor’s Note: At least academically the notion of solving the housing crisis through eminent domain is gaining a great deal of traction. Many people say they want less government and eminent domain has always been a point of contention. It is the process of taking private property away from private owners, paying them a fair market value, and then converting it to a better use for the community than what was there previously. There are not many constraints on eminent domain and there certainly are no constraints on using it to take mortgages away from their “owners.”

Ah! There is the rub — who do you pay when the other side won’t tell you whether the loan still exists or has been transformed into some other vehicle that has long since paid the original debt? If eminent domain is used, the largest risk is going to be for the banks and servicers who claim to own these “assets” which in truth do not exist and over which they never had any right of ownership. The 12 fold leverage of the loans will collapse when it is discovered the loans do not exist anymore or are already discounted by third party payments.

Thus the opposition from the banks will be to stop any thought of eminent domain and therefore stop any inquiry into the status or balance due on the loan, which in many cases is zero without the borrower being aware of it. The borrower MIGHT have a liability for contribution to third party payors but only if they did not expressly waive the right to press claims against the borrowers. The fact is that virtually all insurance contracts and all counterparty contracts on credit default swaps contain just such a provision. Hence the cost of eminent domain will be a zero sum game as soon as it begins.
As a stop gap the current plan, which in my opinion makes perfect sense, is to give the homeowner most but not all of the benefit of the write-down of principal, the rest to private investors who can be more confident that if the value of the collateral declines, it won’t be by much.

Under normal circumstances, eminent domain  would either be supported by the banks or unnecessary since “workouts” are or at least were the norm whenever a loan got into trouble but there was still value in maintaining the business or property as a going concern.

Here the banks are insisting on getting as little as possible just like insisted on funding loans that could not possibly succeed (where the “reset” was in excess of all  household income).

Here the banks and servicers are dealing with uncovering a huge lie that few people have grasped: the banks had no losses attributable to loan de faults because they were using the money of investors, who were the ones suffering the loss.

See my next blog on how pension funds bought these bogus mortgage bonds only to have the losses pitched over the fence at them after Wall Street collected for themselves the bailouts, insurance and proceeds of credit default swaps. As a result pension funds are going to get slashed because the funds are simply not there anymore. They are sitting in the pockets of Wall Street bankers.

Housing’s Last Chance?

By JOE NOCERA

There are few counties in America in as rough shape as San Bernardino County in California. During the housing bubble, the good times were very good. But then came the bust.

Today, San Bernardino County has one of the highest unemployment rates in the nation: 11.9 percent. Home prices have collapsed. Astonishingly, every second home is underwater, meaning the homeowner owes more on the mortgage than the house is worth. It is well documented that underwater mortgages have a high likelihood of defaulting — and, eventually, being foreclosed on. It has also been clear for some time that the best way to keep troubled homeowners in their homes is by reducing the principal on their mortgages, thus lowering their debt burden and more closely aligning their mortgage with the actual value of the home.

Which is why Greg Devereaux, the county’s chief executive officer, found himself listening intently when the folks from Mortgage Resolution Partners came knocking on his door. They had spent the previous year kicking around an intriguing idea: have localities buy underwater mortgages using their power of eminent domain — and then write the homeowner a new, reduced mortgage. It’s principal reduction using a stick instead of a carrot.

I know. When you first hear this idea, it sounds a little crazy. Eminent domain to take a mortgage? But the more closely you look at it, the more sense it starts to make. It would be a way to break the logjam that keeps mortgages in mortgage-backed bonds — securitizations — from being modified. It could prevent foreclosures. And it could finally stabilize housing prices.

The core issue that Mortgage Resolution Partners is trying to solve is what might be called the securitization problem. Bundling mortgages into securities and selling them to investors was, initially, a wonderful idea because it greatly expanded the amount of capital available for homeownership. But the people who wound up owning the mortgages — investors — were diffuse, often with conflicting interests, while the mortgages were managed by servicers or trustees who didn’t actually own them. And the securitization contracts never anticipated that people might need to modify. So it has been nearly impossible to modify mortgages stuck in securitizations.

It turns out, however, that there is nothing to prevent a government entity from using eminent domain to acquire a mortgage. “Eminent domain has existed for centuries,” said Robert Hockett, a law professor at Cornell who has served as an adviser to Mortgage Resolution Partners. “And it is applicable to any kind of property, including a mortgage.” What matters, Hockett continued, is two things: is the entity paying fair value for the property, and is it for a legitimate public purpose?

Can there be any doubt that keeping people in their homes constitutes a legitimate public purpose? “This is a yoke around the American economy,” said Steven Gluckstern, an entrepreneur with a varied career in insurance and finance who is the chairman of Mortgage Resolution Partners. “When people are underwater, their behavior changes. They stop spending. There are 12 million homes that are underwater,” he added. “Is the answer to really just let them get foreclosed on? Or wait for housing prices to rise?” According to Gluckstern, the fact that the foreclosure crisis is continuing is precisely why housing prices aren’t rising — despite some of the lowest interest rates in history.

As for fair value, since the home has dropped dramatically in value, the mortgage is worth a lot less than its face value. On Wall Street, in fact, traders are buying securitized mortgage bonds at a steep discount — reflecting the true value of the mortgages they’re buying. Yet the homeowner remains saddled with a mortgage that is unrealistically high. The plan calls for the county to buy mortgages at a steep, but fair, discount to its face value, and then to offer the homeowner a new mortgage that reflects much, though not all, of that discount. (Fees and costs would be paid for by the spread.) The money to buy the mortgages would come from investors; indeed, Mortgage Resolution Partners is in the process of raising money.

The securitization industry is up in arms about this proposal. In late June, after the plan was leaked to Reuters, some 18 organizations, including the Association of Mortgage Investors, wrote a threatening letter to the San Bernardino board of supervisors claiming that the plan would inflict “significant harm” to homeowners in the county. For his part, Devereaux insists that no final decision has been made. But, he says, “this is the first idea that anyone has approached us with that has the potential to have a real impact on our economy.” Other cities are watching closely to see what happens in San Bernardino.

We’re four years into a housing crisis. Nothing has yet worked to stem the terrible tide of foreclosures. It’s time to give eminent domain a try.

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Editor’s Note: A declaration of an expert is only as good as it is credible. In my opinion it should be used sparingly as a device to survive motions to dismiss, motions to lift stay and Motions for summary judgment. And then it should be used as the basis for submitting requests for discovery —- interrogatories, requests for admission and requests for production. The more it is used to “prove” the homeowners’ case, the more likely it is that the homeowner will be assuming the burden of proof of the entire case when it is the other side that has all the actual facts, documents, wire transfers and other indicia of actual financial transactions in which money exchanged hands.

Under the rules of evidence the rules are lax as to admission of a witness as a supposed “expert” but it is common for the court to ignore the declaration for any one of several reasons:

  1. The “expert” lacks credentials to carry the weight of the testimony and opinion evidence. This involves academic degrees and actual experience in a complex field in which the expert can and does describe clearly what is not apparent from the face of the documents.
  2. The expert advocates rather than reports. Bias and a lack of objectivity is often presumed.
  3. The expert fails to show the court the methods by which he or she reached conclusions and opinions in a way that is understandable to the Court.
  4. The expert is unprepared for cross examination.
  5. Th expert is unprepared to assist in cross examination of an opposing expert.

FINDINGS:

EXCERPT FROM RECENT EXPERT DECLARATION REGARDING AFFIDAVIT OF JAMES WOODALL DATED MAY 12, 2011

Affidavit of counsel: At most an affidavit of counsel is only a representation to the Court that counsel has performed some due diligence and that this served as a colorable basis for advocating a position on behalf of his client. It is not evidence in either the auditing or legal sense.
There is no supporting documentation showing that Woodall in fact represents Wells Fargo. Several cases across the country including Wells Fargo and U.S. Bank in particular have demonstrated that at the end of the case, the attorney admits he was not retained by the purported “client” and in fact never even spoke with anyone at the Bank.
Wells Fargo asserts itself as servicing agent but fails to provide any supporting documentation supporting that assertion. Here again, Wells Fargo has been sanctioned, fined and punished for misrepresenting itself as authorized owner or servicer of a particular loan.

The supporting documentation should be a copy of the documentation showing that Wells Fargo was hired by the creditor to serve as servicer. In claims, such as this one, that the loan was securitized, that authority would ordinarily come from a pooling and servicing agreement (PSA). Such authority in the PSA would only be valid if there was a valid financial transaction in which the investor-lender agreed that Wells Fargo would be the subservicer, a fact that can only be established by Foundation documents and testimony from the Master Servicer
A valid purchase of the loan by the investor through the conduit named in the affidavit. In most cases, the presence of a valid financial transaction in which actual money exchanged hands is fabricated and the use of it in court is fraudulent.
In my opinion, this document is fraudulent, fabricated and potentially forged as well.
The attorney asserts that he has the “wet ink” original documents in his possession but fails to state how he came into possession of those documents. In many, if not most cases, the “wet ink” documents are in fact fabrication using technology to duplicate what appears to be original documents. With respect to Wells Fargo I was an actual witness testifying under oath when the Wells Fargo attorney attempted to get the “original” documents into evidence. A cursory examination of the document (I am not a forensic document examiner) revealed obvious defects in a heavy signature that did not create any raised markings on the reverse side. I testified that the document as shown would most likely be a fabrication printed that same morning considering the condition of the paper handed to me. The lawyer ceased that line of questioning and never entered the original documents into evidence. Therefore it is my opinion that the assertion in the affidavit is at least suspect in that it lacks foundation from a competent witness who could substantiate the manner in which the document was produced, maintained and “delivered” to the affidavit.

Without first discovery to trace the chain of custody it is impossible in my opinion, to accept the proffer of these documents as “original” as carrying any presumption.

My presumption is that the documents were fabricated and that the affiant has no personal knowledge as to the origination of the documents or the chain of custody nor whether the documents were or could have been fabricated.
Reference to Note dated August 15, 2005 by and between Union Federal bank as Lender and Borrower.  See above as to whether the attachment is true and correct as a copy of the the note.
I see no foundation for establishing the authenticity of the “original note.” Therefore without proper foundation from a competent witness and other corroboration, it cannot be said that the note is genuine.
The reference to the note raises issues as well. It recites that Union Federal bank was the lender, but the other references in the same affidavit indicate that the funding source were the investors who at least believed they were advancing funds for mortgage originations using one of two conduits:

  • Either the current information and data reports brought to my attention by the Press and analysts are correct — that the finding source was a Bear Stearns escrow account in which the money from investors was undifferentiated and co-mingled without regard to any conduit vehicle that was referred to in the MAster Service Agreement or Pooling and servicing agreement, OR
  • The terms of the prospectus and PSA given to the investor-lenders conformed to the actual financial transaction. Based upon review of this and other transactions like it, it is my opinion that the source of funds was an undifferentiated group of investors whose money was pooled in an escrow account unknown and undisclosed to the investors who thought their money was being pooled into a special purpose vehicle qualifying under the REMIC provisions of the Internal Revenue Code.

In my opinion Union Federal was a nominee for an undisclosed principal controlled by Bear Stearns or an affiliate of Bear Stearns and the terms of repayment to the investor lender promised to the investor lender were different in the prospectus and representations and PSA than those set forth in the purported “note” that established co-obligors who expressly waived subrogation in insurance contracts and as counter-parties to credit default swaps in which Bear Stearns as apparent agent for the investor lender had made payable to Bear Stearns because the REMIC entity was ignored.

The reference to U.S Bank, as trustee has been the subject of litigation all over the country. In most cases, their claim to being a trustee or a trust has been unsupported by appropriate trust language in any document establishing a trustor, trustee, beneficiaries and terms and authority of the trustee. In fact, each case shows that U.S. Bank, which maintains a trust department, did NOT administrate any such entity or funds as trustee but rather as an asset manager outside the of its own trust department. While some trust language appears in the PSA, it is clear that the powers of the trustee or cut back more and more and one reads the securitization documents.

At the end end one is left with a nominee who acts as manager but is subject to the direction of the Master Servicer (Bear Stearns or its affiliate) or under certain restricted circumstances the holders of Mortgage Bonds.

But those “holders” of mortgage bonds were the recipients of a security that was “sold forward” — i.e., in which Bear Stearns as underwriter admitted it did not have the loans yet, but indicated that when they did have the loans, they would be allocated to the REMIC. This allocation was was never done, because Bear Stearns was claiming ownership of the loans when it obtained insurance and the benefits of credit default swaps.

In my opinion U.S. Bank is neither the manager nor trustee of the interests of the investor lenders in the case at bar, and there lacks any corroborative evidence to suggest otherwise. U.S. Bank has been fined and sanctioned numerous times for misrepresentations of this kind in several parts of the country, most notably in Florida.

Reference to Bear Stearns Asset Securities, 2005-AC7. This shows that the loan with the homeowner in this case was already pledged at the time of the loan origination and that it was funded through sources other than the named lender, who was a naked nominee, having neither funded nor purchased the loan — a status that is, in my opinion beyond any reasonable doubt true for each of the parties attempting to support the foreclosure of the subject property.

While the funding came from the investor lenders based upon the representations, prospectus and PSA, the requirements or conditions precedent to said funding did not conform to the actual actions undertaken by the Investment Bank. The REMIC did not fund or purchase the subject loan. The actual lenders would be properly described as an amalgam of investors whose money was commingled in a large commingled escrow account without any documentation supporting such a financial transaction. Hence the investors were duped into funding loans without documentation and in the expectation of repayment terms that differed from the terms expressed in the note allegedly signed by the borrower. Since the alleged note recited a transaction that never occurred and named a party other than those who actually provided the note, it is void. Since the note is void, the ancillary mortgage to guarantee performance under the terms of the note was also void. And since the third party payments were received and unallocated in part to the account of the creditor (the group of investor-lenders whose money was used to fund the loan), the corresponding balance of the borrower was not adjusted.

Thus it is my opinion that the mortgage did not secure the actual loan transaction between the investor-lenders and that an action at law for contribution may exist by the third parties who made payments to the creditor, but these claims have not been pursued because they made such payments with the express agreement with the investment bank that they would not pursue remedies against the homeowner (in order to prevent the obvious double foreclosure that would ensue since the banks and servicers were claiming the right to foreclose as the owners of the loan). Such is the case in the subject transaction.

In my opinion, the REMIC referred to in the affidavit entered into no financial transaction in which money exchanged hands, received no assignment that conformed to the requirements of the PSA.
If a foreclosure is ordered, it would be an adjudication of the real parties in interest who have no notice of these proceedings. They would be required to accept a loan that has already been declared in default and which should have been assigned into the Pool (REMIC) within 90 days after the creation of the REMIC, which by the naming convention used for the REMIC was established in 2005 and which as governed by the assignment and assumption agreement that actually inured to the benefit of Bear Stearns instead of either the REMIC or the investor Lenders.
Insurance payments, proceeds of credit default swaps from co-obligors should have been allocated to the investor lenders and reduced the balance due them accordingly by payment received from the co-obligors, whose entitlement to contribution is barred by their express waiver of contribution.
Without a full accounting from Both the Master Servicer and the subservicer (allegedly Wells Fargo) it is not possible to determine either the status of the loan nor its balance. Thus the homeowner is barred from submitting any meaningful modification proposal with HAMP and is being subjected to incorrect demands that affect the homeowner’s right to reinstatement if the note were to be found valid (which in my opinion it is not). The mortgage, in my opinion also invovles naked nominess for undisclsoed principals and asserts that the property is pledged tos ecure the faithful performance under the terms of the note.
However, the note does not recite the actual elements of any financial transaction between the payee and the alleged borrower. The financial transaction was between the investor lenders through an undifferentiated escrow account and the homeowner, a transaction that is largely undocumented but traceable i the wire and ACH instructions given to the closing agent and which was withheld from the homeowner.
Each and every finding herein is based upon overwhelming statistical evidence of fact and an examination of the actual documents involved in this closing.
The substitution of trustee referred to in the affidavit (indirectly by reference) was false, fabricated and fraudulent. None of the parties had the right, power or financial interest to announce themselves as the new beneficiary nor to appoint a new “trustee” that was owned and/or controlled by the new beneficiary. In my opinion, beyond any reasonable doubt, the actions undertaken by the “substitute trustee” were without any right, justification and excuse and in the absence of dude diligence.
Knowing the conflict between the parties, the old trustee and the new trustee were under a duty to file an interpleader action as an innocent party against the purported stakeholders and a request for fees and costs. The failure to do that is a breach of fiduciary duty to the homeowner and to the beneficiary.
MERS was also a naked beneficiary a fact well established by their own website and findings in trial courts across the country. At not time did MERS ever claim or actually perform any tasks in funding, purchasing, processing, or servicing the loan nor were they in a position to do so inasmuch as they agreed to never pursue that course of action in their agreements with members. MERS is an unsecured data base that was used as as substitute for the recording  requirements in the state of Utah.

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BUYING PROPERTIES: Pitfalls and Remedies

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We had an expression when I was on Wall Street that in an up market everyone thinks they are a genius. The apparently oversold properties being sold in short-sales and REO sales by the banks are subject to serious pitfalls that won’t surface until the buyer seeks to sell or refinance the property.

  1. All evidence, despite the spinning of Wall Street, realtors and others whose vested interest in seeing sales, is that property sales will both slow down and property prices are still 15% over the real value of those properties when measured against the benchmark that every economist uses: median income and overhanging inventory.
  2. The corruption of title that is becoming increasingly evident, especially with the Oregon decision two days ago, is completely evident. Practically every property sold has the potential of a lawsuit brought by either the “former” (still legally the owner) homeowner, prior lien holders etc.
  3. No deed from a stranger to the chain of title, even if there is an intervening deed on foreclosure, is safe from attack. We have numerous reports of junior landholders re-establishing their rights and homeowners regaining the title, possession and use of the property.
  4. Virtually no title policy being issued today covers claims arising out of claims of securitization or assignments off record.
  5. The answer is to take steps as part of your purchase to as sure that title is not now and won’t be considered clouded later and to obtain through negotiation a policy of title insurance that does not exclude such claims and names MERS and other third parties that are excluded by current title policies.

Getting Lost in the Weeds: Following the Money Trail

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“What they did was take money from their left pocket and put it into their right pocket taking out $10 each time and putting that $10 into their back pocket.  Then they reported that $10 to the SEC and the shareholders calling it trading profits or a fee.  They’re calling this movement from left pocket to right pocket ‘expansion of the money supply’.  And of course, if I start with $100 in my left pocket and take out $10 and don’t record it in the transfer then instead of the amount of money in my left pocket going down to $90 it remains at $100 and next time I move money from my left pocket to my right pocket if still don’t report the $10 I take out rather than going down to $80 the total in my left pocket still remains at $100”  Neil F Garfield

“If you look back over the past 200 years at any of the bank failures the world has had, we always say, ‘We never believed they would do something like this!’  but they do and they do it for one simple answer, greed.”  Neil F Garfield

Editor’s Comment:  

Dear Reader,
I’ve called them pretender lenders because that’s what they are.  The actual financial transaction did not take place the way you think it did.  The documents would have us believe otherwise, but the money shows where the real deal was.  I understand your concern but I am concerned that you might be missing the whole point and conveying incorrect information to others.
Your research is fabulous in following the relationships between the pretender lenders.  Your research does not pretend to cover the entire transaction, just the documentation and the apparent relationships.  All of that is invaluable.
The essential point that I am hoping you will consider is that the origination of the loan was a false origination.  The note, the mortgage, the HUD statement and all documents after the loan received referred to a financial transaction that never occurred.  They are void.
The financial transaction occurred with a different party under different terms than those expressed in the note and mortgage and disclosure docs given to the borrower at the time of closing.  Your point of confusion is easy to understand since the banks have gone to great lengths, including fabricating, forging, and robosigning fraudulent documents each reciting facts relating to a financial transaction (where MONEY exchanges hands).  “For value received” is a fraudulent statement.  No payment was ever made and the closing instructions to the escrow agent came from a complete stranger to the transaction with instructions to refund any excess to that stranger.  Without any language that would connect the stranger to the pretender lender at the origination of the loan.  If there was an actual connection between the financial transaction which was undocumented and the documents that refer to a financial transaction that never happened both the paperwork and the wire instructions would each refer to the other and be disclosed to the borrower.
For example, on the wire instructions, if the funding of the loan was intended to fulfill the so called “commitment” of the loan originator posing as the lender and therefore as the payee on the note, then it is standard practice to include in the wire transfer the words “for benefit of ‘xyz’ company”.  If the documents were meant to incorporate the financial transaction where money exchanged hands they would have referred to the parties who were the source of funds and the terms under which those funds were to be repaid as set forth in the prospectus and pooling and servicing agreement.
In neither the money chain (wire transfer instructions) nor the document chain (note, mortgage, HUD 1 settlement and disclosure documents) were any representations or disclosures made that even hinted at the presence or possibility of the other chain.
You might be tempted to presume that the wire transfer related to the borrower’s execution of loan documents in favor of the source of funding in the wire transfer.  But taken on its face, no such connection is made nor was one intended.  It was this split between the money trail and the document trail that enabled the banks to create a long term gap during which they could trade “ownership” of the loan before making any attempt to deliver the loan to the investors who had advanced the funds.  By that time, the loan was in default and past the cutoff date.  All of these trades were false trades based on false premises and the promise of false documents as we found out when one of the “trades” turned out to be foreclosure.
While the borrower believed that his “lender” was moving around from the originator to a servicer and then a new servicer and then a new trustee etc. the actual ownership of the obligation came from an undifferentiated commingled escrow account that was created in spite of provisions to the contrary in the prospectus and PSA delivered to the investor.  Hence the banks were able to report that they had successfully obtained insurance and had further covered the investment with credit default swaps and other hedge products, but they failed to reveal that the beneficiaries of the payout were the banks themselves and not the investors.  This is also what enabled the banks to claim losses from mortgage defaults requiring a bailout from the federal government even though the banks had neither funded nor purchased any mortgage.
In order to get away with this, the investment banks needed to have a provision inserted in all of the resale agreements in which the loan was sold multiple times, that upon payment of the insurance or credit default swap the payor waived their right to pursue the borrower on any of the loans (waiver of subrogation).  Had that provision not been inserted, AIG, the federal government and counter parties in credit default swaps would have swarmed over the transactions and determined for themselves that the original note and mortgage were faked.
Regards,
Neil

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Oregon Supreme Court: Only the Real Creditor Can Foreclose Non-Judicially

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Niday vs GMAC et al

“Plaintiff now  appeals, again arguing that the “Oregon legislature intended the ‘beneficiary’ to be the one for whose benefit the [deed of trust] is given, which is the party who lent the money,” rather than MERS. We agree and hold that the “beneficiary” of a trust deed under the Oregon Trust Deed Act is the person designated in that trust deed as the person to whom the underlying loan repayment obligation is owed. The trust deed in this case designates the lender, GreenPoint Mortgage Funding, Inc., as the party to whom the secured obligation is owed. And, because there is evidence that GreenPoint assigned its beneficial interest in the trust deed but did not record that assignment, the trial court erred
in granting summary judgment in favor of defendants.

Editor’s Note: This decision is even larger than it appears. First, for Oregon it knocks out all MERS foreclosures. How that will be handled retroactively is unknown. But if the foreclosure was wrongful and corrupted title it seems that the only option is to reverse ALL foreclosures that ahd MERS as the beneficiary and where they were the pretender lender acting as though they were creditor.

Second, is the issue of the credit bid which the court obviously was keenly aware of. At the auction everyone must bid cash except the party to whom the money is actually owed AND to whom the house was pledged. MERS fulfills neither of those definitions or descriptions.

Third, it directs the attention of everyone to the enormous title corruption throughout the country in which deeds on foreclosure were issued to entities who merely submitted an oral credit bid and to whom the deed was issued as though that party was in fact the true creditor. In those cases, the foreclosure sale is invalid.

The problem remains that the burden of proof is frequently laid at the doorstep of the borrower who has the least knowledge and the least access to knowledge. But the court takes care of that by saying, that if MERS is involved, then the party must foreclose using judicial process.

And now people who are getting wise to the system are asking a different question in their challenge to the pretender lender: “how did you get that loan.” That means they must show the transaction in which they received the loan in exchange for consideration — something that appears to be impossible unless the banks go so far as to fabricate electronic data transfers for payment processing.

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