“it was the cash that was sliced and diced and not the note and mortgage, and therefore that the mortgage and note, besides being fatally defective, besides being unsecured, were intentionally split TWICE. First the obligation was split from the note and therefore the mortgage as well. And second the note and mortgage were split from each other as well. The law appears well settled that an intentional split renders the mortgage or encumbrance void.”
EDITOR’S NOTE: The reporter for Bloomberg is making a valid point, about the number of hands that touch your loan in some manner shape or form. But it misinforms the public on the basis of passing the loan around “like a whiskey bottle at a frat party.” (Mike Stuckey, MSNBC News). The assumption continues that the actual mortgage was transferred when in fact it never moved. You get the notion that the promissory note signed by the homeowner was a REAL instrument and that it too went on a journey, when in fact, it never took the first step. And so you get the idea that the note and mortgage (or deed of trust), just because there are paper documents calling themselves the note and mortgage, are related to the borrower’s obligation when in fact they are at best incomplete descriptions of the obligation, and most probably invalid or void.
The misleading theme behind all this lying and spinning is the old “you took the money, so you must be liable” line. But the fact that you received the benefit of funding or “took the money” doesn’t mean that you are liable, and it certainly doesn’t mean that you are liable to ANYONE who claims it. If that were the case, our entire system of commerce would come to a standstill because nobody would know where the transaction ended.
If you write a promissory note and mortgage ( or deed of trust) it is just paper. It doesn’t mean anything unless it describes an actual transaction. The fact that it is recorded is probably a crime in many states. So take a close look at your mortgage and note. The note, according to law, is intended to be “evidence” of the obligation. If you took money as a result of making a deal with someone, then the deal you made is the one that can be enforced — not some other deal that is described on a promissory note you were told to sign because you were told that the note contained in words the terms of the deal you agreed to take. In fact, getting you to sign that note is fraud in the execution because they got you to sign it under false pretenses.
THIS IS WHERE A CLOSE LOOK AT THE LOAN SPECIFIC TITLE AND SECURITIZATION REVIEW MAY REVEAL FATAL DEFECTS IN THE NOTE. If the note is invalid then it can’t be enforced. The note does NOT entitle ANYONE to create a substitute agreement without your consent. If it names a lender, interest rate or terms to which you never agreed, then you still owe the obligation, but the note is NOT evidence of your obligation. If the note is partially true, then outside (parole) evidence must be allowed for the court to hear the whole deal as it really was offered and accepted.
Then you get to the mortgage or deed of trust, which I have referred to as a WILD DEED. A WILD DEED is one which is executed and recorded after having been signed by or on behalf of a party who has no interest in the property or any transaction relating to the property, and whose name does not otherwise appear in the chain of title. The mortgage or deed of trust is, under the laws of most states (actually al of them as far as I know) only an incident to the NOTE because it says in black and white that it is intended to create security for the “Lender” as stated on the note. But since the “lender” was never disclosed to the borrower at all, much less on the note or mortgage, and in fact was misrepresented in the closing documents, the execution of the mortgage or deed of trust was also procured by fraud in the execution and probably qualifies as a WILD DEED or, at the very least, to be treated as a WILD DEED.
OK, since we know the note and mortgage don’t describe the obligation WE STILL NEED TO BE ABLE TO DESCRIBE THE TRANSACTION WITH FACTS CONSTITUTING ADMISSIBLE EVIDENCE IN A COURT OF COMPETENT JURISDICTION. We are left with THE NECESSITY OF PROVING the details of the ACTUAL transaction, not the one shown on paper in the note and mortgage. Since the mortgage does not secure the real transaction, the mortgage secures nothing, which means there is no legal encumbrance upon the property, which means there can be no foreclosure because the mortgage or deed of trust were fatally defective and procured by fraud at inception.
And by the way, according to Reg Z from our friends at the Federal Reserve, a “table-funded” loan is presumptively predatory if that is the pattern of conduct of the parties because it deprives the borrower of the knowledge of who is on the other side of the transaction and the opportunity to negotiate directly with that party for the terms. A Table-Funded loan is one on which the real lender is behind the curtain and the party from whom you think you are taking the loan and with whom you thought you were negotiating, and in whom you reposed your trust as “lender” is neither a lender nor an underwriter, all representations to the contrary being false, deceptive and misleading.
As discussed repeatedly elsewhere in my blog, books, and videos, the burden of proving the transaction SHOULD be on the party seeking affirmative relief, which is the right to enforce the obligation and the right to foreclose on the invalid mortgage. Unfortunately most judges up to this point, although their number is diminishing daily, still force the borrower to prove the transaction, even though the borrower is simply entering a denial of the would-be enforcer/forecloser (pretender lender). The actual party seeking affirmative relief whether it is a judicial state or non-judicial state is the one seeking to change title to the property from you to the claimant. What could be more obvious?
But the judicial system is slow to catch up with the truth of securitization. And so you need to waive around independent title and securitization reports showing that the note and mortgage never moved, showing that it was the cash that was sliced and diced and not the note and mortgage, and therefore that the mortgage and note, besides being fatally defective, besides being unsecured, were intentionally split TWICE. First the obligation was split from the note and therefore the mortgage as well. And second the note and mortgage were split from each other as well. The law appears well settled that an intentional split renders the mortgage or encumbrance void.
In Foreclosure Limbo
A Florida couple is caught in a tangle of paperwork as their mortgage makes the rounds of lenders, databases, and debt-service agencies
Ernie and Teri Hassell are currently in a place millions of Americans call home: mortgage hell.
In 1997 the couple used their solid credit rating to buy a house in St. Petersburg, Fla., for approximately $200,000. After Teri became sick with a gland disorder, the couple refinanced twice—once in 2003 and again in 2007—taking on additional debt to pay for her treatment. In 2008, Ernie Hassell, 62, lost his full-time job as a risk-management consultant, and the couple fell behind on mortgage payments. As a result, they tried to sell their home, on which they then owed $537,000. The best offer they got was for $259,000. The deal fell apart, and their lender tried to foreclose.
By that time the Hassells’ mortgage was already making the rounds. Their most recent lender, American Brokers Conduit, transferred custody of the loan [Editor’s note: Not true. MERS never touches one document or one penny in the transaction. Easy to prove now because of the representations on their web site and the transcripts that have gone viral on the internet]. to Mortgage Electronic Registration Systems, a digital database owned by huge lenders such as Bank of America (BAC). When the Hassells defaulted in 2008, MERS kicked the debt to American Home Mortgage Servicing, a company that specializes in handling subprime mortgages. AHMS filed a foreclosure suit against the Hassells—admitting in court papers that the couple’s promissory note had been “lost, stolen, or destroyed.” [Editor’s note: AHMS had no idea where the documents were located, if they existed or even if they were accurate renditions of the transactions with borrower].
AHMS now says it has rediscovered the document. [Editor’s Note: Maybe they have it and maybe they don’t. The use of modern technology can make any document look like an original. But even if they literally are holding the original, that doesn’t explain how they they got it, from whom they received it and what claims are being made by what parties as to any alleged liability that is expressed on the note, nor does it provide an accounting for third party loss mitigation payments that are made WITHOUT subrogation, thus providing set-off against the obligation]. A company spokeswoman blames the mishap on AHMS’s own financial woes: The firm’s parent filed for bankruptcy in 2007. Yet Matthew Weidner, the Hassells’ lawyer, is still fighting the claim. “This is a microcosm of the financial crisis,” he says. Meanwhile, the Hassells’ debt is again on the move. In November, AHMS passed the debt to Residential Credit Solutions, a Texas operation that buys busted home loans. For now, the Hassells aren’t budging. “We own this home,” Ernie says. “Even if they say we don’t.”
Leonard is a reporter for Bloomberg Businessweek in New York.