Fatal Flaws in the Origination of Loans and Assignments

The secured party, the identified creditor, the payee on the note, the mortgagee on the mortgage, the beneficiary under the deed of trust should have been the investor(s) — not the originator, not the aggregator, not the servicer, not any REMIC Trust, not any Trustee of a REMIC Trust, and not any Trustee substituted by a false beneficiary on a deed of Trust, not the master servicer and not even the broker dealer. And certainly not whoever is pretending to be a legal party in interest who, without injury to themselves or anyone they represent, could or should force the forfeiture of property in which they have no interest — all to the detriment of the investor-lenders and the borrowers.
There are two fatal flaws in the origination of the loan and in the origination of the assignment of the loan.

As I see it …

The REAL Transaction is between the investors, as an unnamed group, and the borrower(s). This is taken from the single transaction rule and step transaction doctrine that is used extensively in Tax Law. Since the REMIC trust is a tax creature, it seems all the more appropriate to use existing federal tax law decisions to decide the substance of these transactions.

If the money from the investors was actually channeled through the REMIC trust, through a bank account over which the Trustee for the REMIC trust had control, and if the Trustee had issued payment for the loan, and if that happened within the cutoff period, then if the loan was assigned during the cutoff period, and if the delivery of the documents called for in the PSA occurred within the cutoff period, then the transaction would be real and the paperwork would be real EXCEPT THAT

Where the originator of the loan was neither legally the lender nor legally a representative of the source of funds for the transaction, then by simple rules of contract, the originator was incapable of executing any transfer documents for the note or mortgage (deed of trust in nonjudicial states).

If the originator of the loan was not the lender, not the creditor, not a party who could legally execute a satisfaction of the mortgage and a cancellation of the note then who was?

Our answer is nobody, which I know is “counter-intuitive” — a euphemism for crazy conspiracy theorist. But here is why I know that the REMIC trust was never involved in the transaction and that the originator was never the source of funds except in those cases where securitization was never involved (less than 2% of all loans made, whether still existing or “satisfied” or “foreclosed”).

The broker dealer never intended for the REMIC trust to actually own the mortgage loans and caused the REMIC trust to issue mortgage bonds containing an indenture for repayment and ownership of the underlying loans. But there were never any underlying loans (except for some trusts created in the 1990′s). The prospectus said plainly that the excel spreadsheet attached to the prospectus contained loan information that would be replaced by the real loans once they were acquired. This is a practice on Wall Street called selling forward. In all other marketplaces, it is called fraud. But like short-selling, it is permissible on Wall Street.

The broker dealer never intended the investors to actually own the bonds either. Those were issued in street name nominee, non objecting status/ The broker dealer could report to the investor that the investor was the actual or equitable owner of the bonds in an end of month statement when in fact the promises in the Pooling and Servicing Agreement as to insurance, credit default swaps, overcollateralization (a violation of the terms of the promissory note executed by residential borrowers), cross collateralization (also a violation of the borrower’s note), guarantees, servicer advances and trust or trustee advances would all be payable, at the discretion of the broker dealer, to the broker dealer and perhaps never reported or paid to the “trust beneficiaries” who were in fact merely defrauded investors. The only reason the servicer advances were paid to the investors was to lull them into a false sense of security and to encourage them to buy still more of these empty (less than junk) bonds.

By re-creating the notes signed by residential borrowers as various different instruments, and there being no limit on the number of times it could be insured or subject to receiving the proceeds of credit default swaps, (and with the broker dealer being the Master Servicer with SOLE discretion as to whether to declare a credit event that was binding on the insurer, counter-party etc), the broker dealers were able to sell the loans multiple times and sell the bonds multiple times. The leverage at Bear Stearns stacked up to 42 times the actual transaction — for which the return was infinite because the Bear used investor money to do the deal.

Hence we know from direct evidence in the public domain that this was the plan for the “claim” of securitization — which is to say that there never was any securitization of any of the loans. The REMIC Trust was ignored, thus the PSA, servicer rights, etc. were all nonbinding, making all of them volunteers earning considerable money, undisclosed to the investors who would have been furious to see how their money was being used and the borrowers who didn’t see the train wreck coming even from 24 inches from the closing documents.

Before the first loan application was received (and obviously before the first “closing” occurred) the money had been taken from investors for the expressed purpose of funding loans through the REMIC Trust. The originator in all cases was subject to an assignment and assumption agreement which made the loan the property and liability of the counter-party to the A&A BEFORE the money was given to the borrower or paid out on behalf of the borrower. Without the investor, there would have been no loan. without the borrower, there would have been no investment (but there would still be an investor left holding the bag having advanced money for mortgage bonds issued by a REMIC trust that had no assets, and no income to pay the bonds off).

The closing agent never “noticed” that the funds did not come from the actual originator. Since the amount was right, the money went into the closing agent’s escrow account and was then applied by the escrow agent to fund the loan to the borrower. But the rules were that the originator was not allowed to touch or handle or process the money or any overpayment.

Wire transfer instructions specified that any overage was to be returned to the sender who was neither the originator nor any party in privity with the originator. This was intended to prevent moral hazard (theft, of the same type the banks themselves were committing) and to create a layer of bankruptcy remote, liability remote originators whose sins could only be visited upon the aggregators, and CDO conduits constructed by CDO managers in the broker dealers IF the proponent of a claim could pierce a dozen fire walls of corporate veils.

NOW to answer your question, if the REMIC trust was ignored, and was a sham used to steal money from pension funds, but the money of the pension fund landed on the “closing table,” then who should have been named on the note and mortgage (deed of trust beneficiary in non-judicial states)? Obviously the investor(s) should have been protected with a note and mortgage made out in their name or in the name of their entity. It wasn’t.

And the originator was intentionally isolated from privity with the source of funds. That means to me, and I assume you agree, that the investor(s) should have been on the note as payee, the investor(s) should have been on the mortgage as mortgagees (or beneficiaries under the deed of trust) but INSTEAD a stranger to the transaction with no money in the deal allowed their name to be rented as though they were the actual lender.

In turn it was this third party stranger nominee straw-man who supposedly executed assignments, endorsements, and other instruments of power or transfer (sometimes long after they went out of business) on a note and mortgage over which they had no right to control and in which they had no interest and for which they could suffer no loss.

Thus the paperwork that should have been used was never created, executed or delivered. The paperwork that that was created referred to a transaction between the named parties that never occurred. No state allows equitable mortgages, nor should they. But even if that theory was somehow employed here, it would be in favor of the individual investors who actually suffered the loss rather than the foreclosing entity who bears no risk of loss on the loan given to the borrower at closing. They might have other claims against numerous parties including the borrower, but those claims are unliquidated and unsecured.

The secured party, the identified creditor, the payee on the note, the mortgagee on the mortgage, the beneficiary under the deed of trust should have been the investor(s) — not the originator, not the aggregator, not the servicer, not any REMIC Trust, not any Trustee of a REMIC Trust, and not any Trustee substituted by a false beneficiary on a deed of Trust, not the master servicer and not even the broker dealer. And certainly not whoever is pretending to be a legal party in interest who, without injury to themselves or anyone they represent, could or should force the forfeiture of property in which they have no interest — all to the detriment of the investor-lenders and the borrowers.

Why any court would allow the conduits and bookkeepers to take over the show to the obvious detriment and damage to the real parties in interest is a question that only legal historians will be able to answer.

Foreclosures on Nonexistent Mortgages

I have frequently commented that one of the first things I learned on Wall Street was the maxim that the more complicated the “product” the more the buyer is forced to rely on the seller for information. Michael Lewis, in his new book, focuses on high frequency trading — a term that is not understood by most people, even if they work on Wall Street. The way it works is that the computers are able to sort out buy or sell orders, aggregate them and very accurately predict an uptick or down-tick in a stock or bond.

Then the same investment bank that is taking your order to buy or sell submits its own order ahead of yours. They are virtually guaranteed a profit, at your expense, although the impact on individual investors is small. Aggregating those profits amounts to a private tax on large and small investors amounting to billions of dollars, according to Lewis and I agree.

As Lewis points out, the trader knows nothing about what happens after they place an order. And it is the complexity of technology and practices that makes Wall Street behavior so opaque — clouded in a veil of secrecy that is virtually impenetrable to even the regulators. That opacity first showed up decades ago as Wall Street started promoting increasing complex investments. Eventually they evolved to collateralized debt obligations (CDO’s) and those evolved into what became known as the mortgage crisis.

in the case of mortgage CDO’s, once again the investors knew nothing about what happened after they placed their order and paid for it. Once again, the Wall Street firms were one step ahead of them, claiming ownership of (1) the money that investors paid, (2) the mortgage bonds the investors thought they were buying and (3) the loans the investors thought were being financed through REMIC trusts that issued the mortgage bonds.

Like high frequency trading, the investor receives a report that is devoid of any of the details of what the investment bank actually did with their money, when they bought or originated a mortgage, through what entity,  for how much and what terms. The blending of millions of mortgages enabled the investment banks to create reports that looked good but completely hid the vulnerability of the investors, who were continuing to buy mortgage bonds based upon those reports.

The truth is that in most cases the investment banks took the investors money and didn’t follow any of the rules set forth in the CDO documents — but used those documents when it suited them to make even more money, creating the illusion that loans had been securitized when in fact the securitization vehicle (REMIC Trust) had been completely ignored.

There were several scenarios under which property and homeowners were made vulnerable to foreclosure even if they had no mortgage on their property. A recent story about an elderly couple coming “home” to find their door padlocked, possessions removed and then the devastating news that their home had been sold at foreclosure auction is an example of the extreme risk of this system to ALL homeowners, whether they have or had a mortgage or not. This particular couple had paid off their mortgage 15 years ago. The bank who foreclosed on the nonexistent mortgage and the recovery company that invaded their home said it was a mistake. Their will be a confidential settlement where once again the veil of secrecy will be raised.

That type of “mistake” was a once in a million possibility before Wall Street directly entered the mortgage loan business. So why have we read so many stories about foreclosures where there was no mortgage, or was no default, or where the mortgage loan was with someone other than the party who foreclosed?

The answer lies in how these properties enter the system. When a bank sells its portfolio of loans into the system of aggregation of loans, they might accidentally or intentionally include loans for which they had already received full payment. Maybe they issued a satisfaction maybe they didn’t. It might also include loans where life insurance or PMI paid off the loan.

Or, as is frequently the case, the “loan” was sold after the homeowner was merely investigating the possibility of a mortgage or reverse mortgage. As soon as they made application, since approval was certain, the “originator” entered the data into a platform maintained by the aggregator, like Countrywide, where it was included in some “securitization package.

If the loan closed then it was frequently sold again with the new dates and data, so it would like like a different loan. Then the investment banks, posing as the lenders, obtained insurance, TARP, guarantee proceeds and other payments from “co-obligors” on each version of the loan that was sold, thus essentially creating the equivalent of new sales on loans that were guaranteed to be foreclosed either because there was no mortgage or because the terms were impossible for the borrower to satisfy.

The LPS roulette wheel in Jacksonville is the hub where it is decided WHO will be the foreclosing party and for HOW MUCH they will claim is owed, without any allowance for the multiple sales, proceeds of insurance, FDIC loss sharing, actual ownership of the loans or anything else. Despite numerous studies by those in charge of property records and academic studies, the beat goes on, foreclosing by entities who are “strangers to the transaction” (San Francisco study), on documents that were intentionally destroyed (Catherine Ann Porter study at University of Iowa), against homeowners who had no idea what was going on, using the money of investors who had no idea what was going on, and all based upon a triple tiered documentary system where the contractual meeting of the minds could never occur.

The first tier was the Prospectus and Pooling and Servicing Agreement that was used to obtain money from investors under false pretenses.

The second tier consisted of a whole subset of agreements, contracts, insurance, guarantees all payable to the investment banks instead of the investors.

And the third tier was the “closing documents” in which the borrower, contrary to Federal (TILA), state and common law was as clueless as the investors as to what was really happening, the compensation to intermediaries and the claims of ownership that would later be revealed despite the borrower’s receipt of “disclosure” of the identity of his lender and the terms of compensation by all people associated with the origination of the loan.

The beauty of this plan for Wall Street is that nobody from any of the tiers could make direct claims to the benefits of any of the contracts. It has also enabled then to foreclose more than once on the same home in the name of different creditors, making double claims for guarantee from Fannie Mae, Freddie Mac, FDIC loss sharing, insurance and credit default swaps.

The ugly side of the plan is still veiled, for the most part in secrecy. even when the homeowner gets close in court, there is a confidential settlement, sometimes for millions of dollars to keep the lawyer and the homeowner from disclosing the terms or the reasons why millions of dollars was paid to a homeowner to keep his mouth shut on a loan that was only $200,000 at origination.

This is exactly why I tell people that most of the time their case will be settled either in discovery where a Judge agrees you are entitled to peak behind the curtain, or at trial where it becomes apparent that the witness who is “familiar” with the corporate records really knows nothing and ahs nothing about the the real history of the loan transaction.

BONY Objections to Discovery Rejected

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It has been my contention all along that these cases ought to end in the discovery process with some sort of settlement — money damages, modification, short-sale, hardest hit fund programs etc. But the only way the homeowner can get honest terms is if they present a credible threat to the party seeking foreclosure. That threat is obvious when the Judge issues an order compelling discovery to proceed and rejecting arguments for protective orders, (over-burdensome, relevance etc.). It is a rare bird that a relevance objection to discovery will be sustained.

Once the order is entered and the homeowner is free to inquire about all the mechanics of transfer of her loan, the opposition is faced with revelations like those which have recently been discovered with the Wells Fargo manual that apparently is an instruction manual on how to commit document fraud — or the Urban Lending Solutions and Bank of America revelations about how banks have scripted and coerced their employees to guide homeowners into foreclosure so that questions of the real owner of the debt and the real balance of the debt never get to be scrutinized. Or, as we have seen repeatedly, what is revealed is that the party seeking a foreclosure sale as “creditor” or pretender lender is actually a complete stranger to the transaction — meaning they have no ties i to any transaction record, and no privity through any chain of documentation.

Attorneys and homeowners should take note that there are thousands upon thousands of cases being settled under seal of confidentiality. You don’t hear about those because of the confidentiality agreement. Thus what you DO hear about is the tangle of litigation as things heat up and probably the number of times the homeowner is mowed down on the rocket docket. This causes most people to conclude that what we hear about is the rule and that the settlements are the exception. I obviously do not have precise figures. But I do have comparisons from surveys I have taken periodically. I can say with certainty that the number of settlements, short-sales and modifications that are meaningful to the homeowner is rising fast.

In my opinion, the more aggressive the homeowner is in pursuing discovery, the higher the likelihood of winning the case or settling on terms that are truly satisfactory to the homeowner. Sitting back and waiting to see if the other side does something has been somewhat successful in the past but it results in a waiver of defenses that if vigorously pursued would or could result in showing the absence of a default, the presence of third party payments lowering the current payments due, the principal balance and the dollar amount of interest owed. If you don’t do that then your entire case rests upon the skill of the attorney in cross examining a witness and then disqualifying or challenging the testimony or documents submitted. Waiting to the last minute substantially diminishes the likelihood of a favorable outcome.

What is interesting in the case below is that the bank is opposing the notices of deposition based upon lack of personal knowledge. I would have pressed them to define what they mean by personal knowledge to use it against them later. But in any event, the Judge correctly stated that none of the objections raised by BONY were valid and that their claims regarding the proper procedure to set the depositions were also bogus.

tentative ruling 3-17-14

BeforeYou Open Your Mouth Or Write Anything Down, Know What You Are Talking About

EDITOR’S NOTE: By popular demand I am writing a new workbook that is up to date on the theories and practices of real estate loans, documentation, securitizations and effective enforcement and foreclosure of the collateral (real property — i.e., the house). The book will be finished around the end of January. If you want to purchase an advance subscription to an advance copy we can give you a discount off the price of $599. You will receive the final edit drafts of each section as completed. And your comments might be included in the final text with attribution. This is an excerpt from what I have done so far ( the references to “boxes” is a reference to artwork that has not yet been completed but the meaning is clear enough from the words):

[Note: I did borrow some phrases and cites from Judge Jennifer Bailey's Bench Book for Judges in Dade County. But things have changed substantially since she wrote that guide and my book is intended to update the various treatises, books and articles on the subject of mortgage related litigation in the era of securitization]

 

INTRODUCTION

 

The massive volume of foreclosures and real estate closings have resulted in a failure of the judicial system — both Judges and Attorneys to scrutinize the transactions and foreclosures and other enforcement actions for compliance with basic contract law. This starts with whether there is an actual loan at the base of the tree of assignments, endorsements, powers of attorney etc. If the party at the base of the tree did not in fact make any loan and was not possessed of any actual or apparent authority to represent the party who DID make the loan, then the instruments executed in favor of the originator are void, not voidable. This is simply because the loan contract like any contract requires offer, acceptance and consideration. Lacking any meeting of the minds and/or consideration, there was no contract regardless of what one of the parties signed.

 

The interesting issue at the start of our investigation is how to define the loan contract. Is it a contract that arises by operation of statutory or common law? Is it a contract that arises by execution of instruments? What if the borrower executes an instruments that acknowledges receipt of money he never received from the party he thought was giving him the money? Is it possible for the written instruments to create a conflict between the presumptions at law arising from written, properly executed instruments and the real facts that gave rise to a contract that was created by operation of law?

 

These questions come up because there is no actual written loan contract. The borrower and lender do not come together and sign a contract for loan. The contract is implied from the documents and actions contemporaneously occurring at or around the time of the loan “closing.” It appears to be a case of first impression that the borrower is induced to sign documents in favor of someone who, at the end of the day, does NOT give him the loan. This never was a defect before the era of claims of securitization. Now it is central to the issue of establishing the identity and rights of a creditor and debtor and whether the debt is secured or unsecured.

 

Even where the loan contract is solid, the same legal and factual problems arise at the time of the alleged acquisition of the loan where assignments lack consideration because, like the above origination, an undisclosed third party was the actual source of funds.

 

 

 

Definitions:

 

 

 

1)   Debt: in the context of loans, the amount of money due from the borrower to the lender. This may include successors to the lender. In a simple mortgage loan the amount of money due, the identity of the borrower and the identity of the lender are clear. In cases where the mortgage loan is subject to claims of assignments, transfers, sales or securitization by either the borrower or the party claiming to be the lender or the successor to the lender, there are questions of fact and law that must be determined by the court based on the method by which the money advanced to or on behalf of the borrower that leads to a finding by the court of the identity of the party who advanced the money for the origination of the debt or for the acquisition of the debt.

 

a)    In all cases the debt arises by operation of law at the moment that the borrower receives the advance of money from a lender regardless of the method utilized and regardless of the validity of any instruments that were executed by either the borrower or the lender.

 

i)     The acceptance of the money by the borrower raises a strong presumption that the advance of money in the context of the situation was not a gift.

 

ii)    In simple loans the legal instruments that were executed by the borrower at the loan closing are presumptively supported by consideration as expressed in the note or mortgage and a valid contract presumptively exists such that the court can enforce the note and the mortgage.

 

b)   The factual circumstances and any written instruments that were executed by the parties as part of a loan contract govern terms of repayment of the debt.

 

c)    Enforcement of the repayment obligation of the borrower requires either a lawsuit on the loan of money or a lawsuit on a promissory note.

 

i)     If the lawsuit is on the loan of money plaintiff must state the ultimate facts upon which relief could be granted including the factual circumstances of the loan and the fact that the loan was made. In Florida — F.R.C.P. 1.110 (b), Form 1.936

 

ii)    The lawsuit is on a note plaintiff must state the ultimate facts upon which relief could be granted including that the plaintiff owns and holds the note, that Defendant owes the Plaintiff money, and state the amount of money that is owed. In Florida — F.R.C.P. 1.110 (b), Form 1.934

 

(1)Where the Plaintiff alleges it is a party by virtue of a sale, assignment, transfer or endorsement of the note, Plaintiffs frequently fail to allege the required elements in which case the Court should dismiss the complaint — unless the Defendant has already admitted the debt, the note, the mortgage, and the default.

 

(2)The burden of pleading and proving the required elements is on the Plaintiff and cannot be shifted to the defendant without violating the constitutional requirements of due process.

 

(3)Requiring the Defendant to raise a required but missing element of a defective complaint filed by a Plaintiff would require the Defendant to raise the missing element and then deny it as an attempt at stating an affirmative defense that raises no issue other than an element that was required to be in the complaint of the Plaintiff. This is reversible error in that it improperly shifts the burden of pleading onto the Defendant and requires the Defendant to prove facts mostly in the sole control of the Defendant and which would establish standing to bring the action.

 

d)   In those cases where the loan is subject to claims of assignments, transfers, sales or securitization by either party the court must decide on a case-by-case basis whether the legal consideration for the loan (i.e., the advance of money from lender to borrower or for the benefit of the borrower) supports the debt described in the legal instruments that were executed by the borrower at the loan closing.

 

i)     If the Court finds that the legal instruments that were executed by the borrower at the loan closing are not supported by consideration, then the debt simply exists by operation of law and is not secured.

 

(1)Such a finding could only be based on the court determining that the lender described in the legal instruments is a different party than the party who actually loaned the money.

 

(2)Warehouse lending arrangements may be sufficient for the court to determine that the named payee on the note or the identified lender supplied consideration. The court must determine whether the warehouse lender was an actual lender or a strawman, nominee or conduit.

 

ii)    If the court finds that the legal instruments that were executed by the borrower at the loan closing are supported by consideration, then a valid contract may be found to exist that the court can enforce.

 

2)   Mortgage: a contract in which a borrower agrees that the lender may sell the real property (as described in the mortgage) for the purposes of satisfying a debt described in a promissory note that is described in the mortgage contract. It must be a written instrument securing the payment of money or advances made to or on behalf of the borrower. A lien to secure payment of assessments for condominiums, cooperatives and homeowner association is treated as a mortgage contract, pursuant to the enabling documents. See state statutes. For example, F.S. 702.09, Fla. Stat. (2010)

 

a)    a mortgage, if properly perfected, creates a specific lien against the property and is not a conveyance of legal title or of the right of possession to the real property described in the mortgage contract. See state statutes. For example section 697.02, Fla. Stat. (2010), Fla. Nat’l Bank v brown, 47 So 2d 748 (1949).

 

b)   Mortgagee: the party to home the real property is pledged as collateral against the debt described in the note. Mortgagee is presumptively the party named in the mortgage contract. With the advent of MERS and other situations where there is an assignment of the mortgage (expressly or by operation of law) the named mortgagee might be a strawman or nominee for a party described as the lender. In such cases there is an issue of fact as to perfection of the mortgage contract and therefore the mortgage encumbrance resulting from the recording of the mortgage contract. See state statutes. For example F.S. 721.82(6), Fla. Stat. (2010).

 

i)     In Florida the term mortgagee refers to the lender, the secured party or the holder of the mortgage lien. There are several questions of fact and law that the court must determine in order to define and apply these terms.

 

c)    Mortgagor

 

d)   Lender: the party who loaned money to the borrower. If the lender was identified in the mortgage contract by name then the mortgage contract is most likely enforceable.

 

i)     If the lender described in the mortgage contract is a strawman, nominee or conduit then there is an issue of fact as to whether any party could claim to be a secured party under the mortgage contract. Under such circumstances the mortgage contract must be treated as naming no identified secured party. Whether this results in a finding that the mortgage contract is not complete, not perfected or not enforceable is a question of fact that is decided on a case-by-case basis.

 

e)    No right to jury trial exists for enforcement of provisions of the mortgage. However, a right to jury trial exists if timely demanded provided that the foreclosing party seeks judgment on the note or the loan, to wit: financial damages for financial injury suffered by the Plaintiff.

 

i)     Bifurcation of the trial for damages and trial for enforcement of the mortgage contract may be necessary if the basis for the enforcement of the mortgage is non-payment of the note. Any properly raised affirmative defenses relating to setoff or enforceability of the note would be raised in the case for damages.

 

ii)    In that case the trial on the breach of the note would first be needed to render a verdict on the default and then a trial on enforcement of the mortgage would be held before the court without a jury.  Any properly raised defense relating to fees and other costs assessed in enforcement of the mortgage contract.

 

iii)  A question of fact and law must be decided by the court in actions in which the plaintiff merely seeks to enforce the mortgage by virtue of an alleged default by the plaintiff but does not seek monetary damages. Florida Form 1.944 (Foreclosure Complaint) is not specific as to whether it is allowing for a single trial without jury.

 

(1)Since foreclosures are actions in equity, no jury trial is required, but it can be allowed. Since actions for damages require jury trial if properly demanded, it would appear that this issue was not considered when the Florida Form was created.

 

iv)  The requirement that the Plaintiff must own the loan is a requirement that the Plaintiff is not acting in a representative capacity unless it brings the action on behalf of a principal that is disclosed and alleges and attaches to the complaint an instrument that confers upon Plaintiff its authority to do so.

 

v)    Owning the loan means, as set forth in Article 9 of the UCC that the Plaintiff paid for it in money or other consideration that was equivalent to money. The same thing holds true under Article 3 of the UCC for enforcement of the note if the Plaintiff seeks the exalted status of Holder in Due Course which requires payment PLUS no knowledge of defenses all of which must be alleged and proven by the Plaintiff. [1]

 

3)   Note: a written instrument describing the terms of repayment or terms of payment to the payee or a legal successor in interest. In mortgage loans the payor is often described as the borrower. This instrument is usually described in the mortgage contract as the basis for the forced sale of the property. The note is part of a contract for loan of money. It is often considered the total contract. The loan contract is not complete without the loan of money from the payee on the note. If the lender was identified in the note by name then the note is most likely enforceable.

 


[1] In non-judicial states where the power of sale is recognized as a contractual right, the issue is less clear as to the alignment of parties, claims and defenses. In actions to contest substitution of trustees, notices of sale, notices of default etc. it is the borrower who must bring the lawsuit and in some states they must do so within a very short time frame. Check applicable state statutes. The confusion stems from the fact that the Borrower is actually denying the allegations that would have been made if the alleged beneficiary under the deed of trust had filed a judicial complaint. The trustee on the deed of trust probably should file an action in interpleader if a proper objection is raised but this does not appear to be occurring in practice. This leaves the borrower as the Plaintiff and requiring allegations that would, in judicial states, be either denials or affirmative defenses. Temporary restraining orders are granted but usually only on a showing that the Plaintiff has a likelihood of  prevailing — a requirement not imposed on Plaintiffs in judicial states where the lender or “owner” must file the complaint.

 

Courts Continue to Ratify Theft of Money and Documents by Banks

An ordinary individual finds a sack of promissory notes, and you might expect him to try to locate the owners of those notes. After all they are the equivalent of cash. But the banker sells the stolen notes with false assignments, insures them, gets them guaranteed with payment proceeds to himself and then settles with the lender for pennies on the dollar. Then the banker sues to collect on the stolen notes and wins. Except in this case the banker created the sack, created the notes, falsified the payee and inflated the amount due. The Banker has successfully stolen the money from the lender and stolen the notes from the lender. Despite 7 years of active litigation the judiciary has still failed to pick up on this scenario. Neil Garfield, http://www.livinglies.me

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I was responding to an email  from a lawyer who was wondering if a grievance could be filed against judges who failed to maintain judicial stability and demeanor. I ended up on a rant, and made it into an article. My conclusion is that a grievance is probably not he right venue, but judges should be a little more curious about what really went on in the mortgage meltdown.

I have been thinking about this sort of thing for a while now. The cases are prejudged not only individually by each judge but also because the judges speak with each other, and feed off of the decisions of other trial judges. Adding to this is the bias shown in Appellate courts.
This amounts to several presumptions against the homeowner, who is a best a pawn and at worst a victim of fraud just like the torrent of lawsuits and settlements have been stated by MBS investors, insurers, CDS counterparties, GSE guarantors, law enforcements and regulatory agencies — all saying the same thing: FRAUD (not breach of contract etc.).
Frustration is rising amongst homeowners and attorneys who represent their clients in a kangaroo court will the rules of pleading and the rules of evidence are turned upside down to give the thief the products of his fraudulent scheme.
First is the assumption behind the question “did you get the loan?” This is a fundamental question but the same judge who asks the borrower that question fails to require the foreclosing party that there WAS a loan from anyone in their paper trail. And the same issue applies to acquisition of loans after some bank with a charter makes the loan and then sells it to a “successor in interest.” The reason for this gross failure of the judiciary though is simply because they have never known a scheme like the one perpetrated by the banks this time.
Starting with that premise, the judiciary considers defenses by homeowners as perhaps technically right but leading to an unjust result— the loss of money by a bank who loaned money and who will now lose money if the homeowners’ defenses are applied. The logic is inexorable — it leads to the inevitable conclusion that the judiciary must put on a show about due process, but we all know that the foreclosure is inevitable. The corollary is that the reason the court dockets are clogged are because even though the loan was received by the borrower the homeowners are perpetrators a vast abuse of there judicial system.
In turn, the courts view foreclosure defense lawyers as something less than “real lawyers” and many judges have lost patience with both pro se litigants and lawyers defending the rights of homeowners. In your case, you were genuinely engrossed in a medical problem bunt the judge went ahead anyway because the judge saw the whole thing as “harmless error.” The foreclosure would, in the end, proceed, no matter what you said or what your clients or experts would proffer as facts in testimony.
The result is inexplicable rulings by trial courts and appellate courts. Underlying their opinions, rulings and orders is the basic premise that the homeowner received a loan. And so your judge called you a liar and refused to continue the case despite your inability to appear due to disability. Is this a case where a letter should be sent to the Judicial Qualification Committee or the Florida bar stating a grievance? Yes, as long as you realize that whoever reviews this is going to be suffering from the same delusion that permeates the rest of hedge judiciary. But it is of course relevant that the judge called you a liar, which goes far beyond the subject case at hand, and amounts to slander as well as prejudgment and bias. Perhaps a letter to the judge describing your reputation in the courts and the damage of having a judge call you a liar would cause the judge to reverse the judge’s opinion of you and apologizing for taking her remarks so far.
But the essential point remains the same. The issue is the unfortunate absence of support for basic pleading practice. Just look at the form pleadings published by the Florida Supreme Court, or look at the complaints filed by banks and credit unions for foreclosure. There is a requirement when you plead to collect on a loan to plead that you made the loan. In actions on a note, the requirement that the plaintiff allege financial injury is right there in the the Florida forms.
The real reason why the court dockets are clogged is because judges insist in ignoring basic pleading practice: the allegation of the existence of a debt owed by the Defendant to the Plaintiff and/or the allegation that financial injury has been suffered by the Plaintiff as a result of the failure of the Defendant/homeowner to make the payments set forth in the note.
The second question is whether the homeowners signed the note. The answer in most cases is yes. So what defenses will ultimately have merit in defending the foreclosure?
Even most foreclosure defense attorneys are far too timid in attacking these delusions maintained by the judiciary. They fear looking foolish and the embarrassment of losing repeatedly. They miss the first attack completely — that no, the homeowner did NOT receive a loan from the foreclosing party or anyone in the he chain in most cases. The problem is that their motion to dismiss does not force this issue. the result is that the existence of a debt wherein the homeowner became a debtor TO THE FORECLOSING PARTY is successfully avoided by the banks, as is the requirement of alleging financial injury.
The effect of this is to prevent the homeowner to enter an answer that denies the loan, denies the acquisition of the loan in any sale, and denies financial injury.
Instead by failing to require the banks to make the allegations that are required by the Supreme Court in its published forms, the homeowner is unfairly is unfairly required to raise the issues in affirmative defenses. The pernicious result of that is that the homeowner is required to prove a negative.
Discovery requests are met with fierce resistance by the banks, who usually run out the clock by the time the motion for summary judgment is heard or the the time that the trial occurs. The homeowner is therefore forced to prove a negative, when the rules require the banks to prove a positive fact that is based upon information that is ONLY accessible by the plaintiff.
The reason why the complaints do not allege the existence of a debt arising from receiving a loan from the foreclosing party or any predecessor in the chain of paper is that there is no such debt. The reason why the foreclosing party does not allege financial injury is (a) that there is no such financial injury and (b) the opening of this issue for discovery would require that all accounts be settled and resolved to determine the balance, if any, owed by the homeowner to anyone. 
The reason why lawsuits and regulatory actions allege that the broker- dealer investment banks committed fraud is that they intentionally lied and used the investor money to their own benefit. And the reason as why the investors, agencies, insurers, credit default swap counter parties and government sponsored guarantors are alleging fraud — and stating that the closing papers with the borrowers and the mortgage bonds are “unenforceable obligations” and “defective instruments” is because that is an accurate description. And the reason the banks are settling those cases and facing criminal prosecution is because they know that the paperwork is legally indefensible and unenforceable against borrowers.
By some twisted logic, thousands of judges, tens of thousands of lawyers, and millions of owners who lack the information and understanding of this massive fraud, the fraud at one end of the stick (sale of fraudulent mortgage bonds) is ignored on the the other end of the same stick (foreclosure of fraudulent Foreclosures on fatally defective STOLEN notes and mortgages). There was no debt in most of the cases and closings where documents were signed. There is no loss or financial injury to a party who has never funded the origination or acquisition of a loan.
The only debt ever created in most instances was from the homeowner directly to the pension funds and other investors who were left with no enforceable claim to enforce valid notes and mortgages. The only debt due in all cases is the amount due to the investors. Allowing the banks to enforce the debts on paperwork that is evidence of theft is a failure of the judicial system.
The dockets would be cleared with the questions “why have you not alleged a debt owed to you and financial injury?” This would establish jurisdiction or the lack of it at the outset. Unable to prove the debt, and being required to prove it because they alleged it, the banks would shrink from foreclosure and attempt to resolve the issues through non-judicial means.

 

Livinglies Recalibrates Forensic and Litigation Support Services

Responding to specific requests from lawyers and homeowners, the livinglies store has changed its offering. Www.livingliesstore.com

You can still get the old Combo of just a title and securitization report, but we have added some levels and services to meet the demand for our services. Of course pricing has been adjusted to reflect the increased workload. Actual litigation support is provided throughout the country to any attorney by Garfield, Gwaltney, Kelley and White (GGKW) with offices now in Broward County and Leon County. We will soon have offices in the Florida Panhandle and Dade County. I’ll be posting separately on each office and the attorneys we have selected to litigate in accordance with our requirements.

GGKW represents homeowners throughout the state of Florida. Do not ask us to provide the full range of litigation support if you are a pro se litigant, even if your case is in Florida. You would be asking us to provide services that might be the unauthorized or unethical practice of law in states where we are not licensed. It would also be a bad idea because you cannot expect an attorney from another state to know the laws of your state, how they are applied in your courts, and the differences between individual judges. Sometimes local rules are dispositive of cases. Florida homeowners can get some additional assistance from GGKW or the livinglies store, but there is no good substitute for an attorney who knows and can argue rules of procedure and laws of evidence as they relate to your case.

The first additional the Combo offering is the Qualified Written Request and Debt Validation Letters. These are rising in importance and an increasing number of lawyers are asking us to prepare these. We can’t send them out but we can prepare them for the signature of the homeowner. We ask more pointed questions about whether the originator actually loaned money to the homeowner — that is, whether there was any transaction between the homeowner and the party stated on the note and mortgage (or deed of trust). This has grown in importance because of the absence of a fundamental allegation by the pretender lenders — that someone in their chain of paper actually entered into an actual transaction (offer, acceptance, consideration and execution) with the alleged borrower. It appears in many cases that the actual funding of the loan was a stranger to the paperwork and that the parties on the paperwork are strangers to the actual transaction.

We also are offering affidavits and declarations from the auditors or experts, including myself, together with a consultation to answer questions on the methods used and the conclusions to be drawn. Where an attorney for the homeowner is available during the consult, the homeowner will hear suggestions on specific strategies and tactics for the battle in court.

We are also just now adding to the package, Freedom of Information requests to the FDIC, OTS, OCC and the Federal Reserve, where applicable. In all likelihood the request you make about the results of their investigations against the banks that led to the Consent Orders and any filings after those orders were entered will be met with some sort of stonewalling. After all, the investigator grilled by Senator Warren admitted to finding thousands of wrongful Foreclosures but refused to tell her or anyone else in Congress which mortgages were effected or the names of homeowners who were illegally thrown out of their homes. It is important to note that these investigations, like the San Francisco study, found serious defects in which the foreclosure should never have happened.

The the response to FOIA requests will undoubtedly require you to push the agency in court to make the disclosures. And interrogatories directed at compliance with the Consent Orders may reveal the actual findings and the names of homeowners who are living outside the homes they still should ow and possess.

We recommend that the other companies providing these services follow our lead. We believe it will lead to better results and a more comprehensible presentation in Court.

Of course I need to remind you that nothing in this article nor the services and products on the store are a substitute for a licensed attorney. You should take no action at all without consulting with a licensed attorney, hopefully one that is familiar with the issues of securitized loans. Most of these cases are being resolved on the basis of the the rules of civil procedure and the laws of evidence. This is above the head of most pro se litigants. Failure to at least consult with an attorney licensed interest state in which your property is located could well result in losing a case you could have otherwise won.

Fannie and Freddie Demand $6 Billion for Sale of “Faulty Mortgage Bonds”

You read the news on one settlement after another, it sounds like the pound of flesh is being exacted from the culprits again and again. This time the FHFA, as owner of Fannie and Freddie, is going for a settlement with Bank of America for sale of “faulty mortgage bonds.” And most people sit back and think that justice is being done. It isn’t. $6 Billion is window dressing on a liability that is at least 100 times that amount. And stock analysts take comfort that the legal problems for the banks has basically been discounted already. It hasn’t.

For practitioners who defend mortgage foreclosures, you must dig a little deeper. The term “faulty mortgage bonds” is a euphemism. Look at the complaints there filed. When they are filed by agencies it means that after investigation they have arrived at the conclusion that something was. very wrong with the sale of mortgage bonds. That is an administrative finding that concluded there was at least probable cause for finding that the mortgage bonds were defective and potentially were criminal.

So what does “defective” or “faulty” mean? Neither the media nor the press releases from the agencies or the banks tell us what was wrong with the bonds. But if you look at the complaints of the agencies, they tell you what they mean. If you look at the investor lawsuits you see that they are alleging that the notes and mortgages were “unenforceable.” Both the agencies and the investors filed complaints alleging that the mortgage bonds were a farce, sham or in other words, a PONZI Scheme.

Why is that important to foreclosure defense? Digging deeper you will find what I have been reporting on this blog. The investors money was not used to fund the REMIC trusts. The unfunded trusts never had the money to buy or fund the origination of bonds. The notes and mortgages were never sold to the Trusts even though “assignments” were executed and shown in court. The assignments themselves were either backdated or violated the 90 day cutoff that under applicable law (the laws of the State of New York) are VOID and not voidable.

What to do? File Freedom of Information Act requests for the findings, allegations and names of investigators for the agency that were involved in the agency action. Take their deposition. Get documents. Find put what mortgages were looked at and which bond series were involved. Get a list of the mortgages and the bonds that were examined. Get the findings on each mortgage and each mortgage bond. Use the the investor allegations as lender admissions admissions in court — that the notes and mortgages are unenforceable.

There is a disconnect between what is going on at the top of the sham securitization chain and what went on in sham mortgage originations and sham sales of loans. They never happened in the real world, no matter how much paper you throw at it.

And that just doesn’t apply to mortgages in default — it applies to all mortgages, which is why all the mortgages that currently exist, and most of the deeds that show ownership of the property have clouded and probably “defective” and “faulty” titles. It’s clear logic that the government and the banks are seeking to avoid, to wit: that if the way in which the money was raised to fund the loans or purchase the loans were defective, then it follows that there are defects in the chain of title and the money trail that were obviously not disclosed, as per the requirements of TILA and Reg Z.

And when you keep digging in discovery you will find out that your client has some clear remedies to collect the profits and compensation paid to undisclosed recipients arising out of the closing of the “loan.” These are offsets to the amount claimed as due. If the loan was not funded by the Trust, then the false paper trail used by the banks in foreclosure is subject to successful attack. If the loans were in fact funded directly by the trust complying with the REMIC provisions of the Internal Revenue Code, then the payee on the note and the mortgagee on the mortgage would be the trust — or if the loan was actually purchased, the Trust would have issued money to the seller (something that never happened).

And lastly, for now, let us look at the capital structure of these banks. A substantial portion of their capital derives from assets in the form of mortgage bonds. This is the most blatant lie of all of them. No underwriter buys the securities issued by the company seeking financing through an offering to investors. It is an oxymoron. The whole purpose of the underwriter was to create securities that would be appealing to investors. The securities are only issued when you have a buyer for them, and then the investor is the owner of the security — in this case mortgage bonds.

The bonds are not issued to the investment bank as an asset of the investment bank. But they ARE issued to the investment bank in “street name.” That is merely to facilitate trading and delivery of certificates which in most cases in the mortgage bond market don’t exist. The issuance in street name does not mean the banks own the mortgage bonds any more than when you a stock and the title is issued in street name mean that you have loaned or gifted the investment to the investment bank.

If you follow the logic of the investment bank then the deposits of money by depository customers could be claimed as assets — without the required entry in the liabilities section of the balance sheet because every dollar on deposit is a liability to pay those monies on demand, which is why checking accounts are referred to as demand deposits.

Hence the “asset” has been entered on the investment bank balance sheet without the corresponding liability on the other side of their balance sheet. And THAT remains that under cover of Federal Reserve purchase of these bonds from the banks, who don’t own the bonds, the value of the bonds is 100 cents on the dollar and the owner is the bank — a living lies fundamental. When the illusion collapses, the banks are coming down with it. You can only go so far lying to the public and the investment community. Eventually the reality is these banks are underfunded, under capitalized and still being propped up by quantitative easing disguised as the purchase of mortgage bonds at the rate of $85 Billion per month.

We need to be preparing for the collapse of the illusion and get the other financial institutions — 7,000 community and regional banks and credit unions — ready to take on the changes caused by the absence of the so-called major banks who are really fictitious entities without a foundation related to economic reality. The backbone is already available — electronic funds transfer is as available to the smallest bank as it is to the largest. It is an outright lie that we need the TBTF banks. They have failed and cannot recover because of the enormity of the lies they told the world. It’s over.

Rescission Returns in 3rd Circuit Opinion

Forbes has taken notice. There is a shift toward borrowers in mortgage litigation. The decision points back to the origination of the loan. This decision follows a similar decision in the 4th circuit. It all comes down to what actually happened at closing? And we don’t actually know if the decision to allow rescission indefinitely on second mortgages will extend to the first mortgage if it is all part of the same transaction. The result of rescission is that all payments of every kind must be returned to the borrower plus interest and attorney fees and potentially treble damages. All payments mean closing costs, fees, costs, expenses, principal interest, escrow and anything else. If the “lender” doesn’t do that the mortgage lien is expressly invalidated by operation of law, which is the same as being subject to a recorded satisfaction of mortgage. TILA is back!! — at least until the Supreme Court gets to weigh in on this ongoing dispute.

TILA requires only a clear statement and communication that the borrower wishes to rescind the transaction. The statute is clear that the burden shifts to the “lender” to either agree to rescission or sue to disqualify the rescission that must be supported by allegations and proof that the lender violated disclosure requirements at the time of origination of the loan. To be sure, there is a loophole created by the courts — that the rescinding borrower have the money to give back to the lender. But that is exactly what is going to cause the problem for Foreclosers. If the borrower can show some credible source of funds, the “lender” is screwed — because the lender is not the party who was named on the note and mortgage.

So the offer of the money will immediately cause an inquiry and discovery into the question who actually was the lender? We certainly don’t want to give the rescission money to the named party on the note and mortgage when the source of funds was a party with no legal relationship to the named “lender.” The facts will show that the mortgage lien was never perfected —and that therefore rescission under TILA is potentially unnecessary.

Either way, the debt turns up unsecured and can be discharged in bankruptcy. The problem for Wall Street is how they will explain to investors why the investors were not identified as the lenders in each closing. The answer is that Wall Street Banks wanted to use those loans as “assets” they could trade, insure, hedge and even sell contrary to the prospectus and PSA shown to pension Funds and other investors who advanced funds to investment banks as “payment” for mortgage bonds underwritten by those banks.

When the limelight is focused on the original closing, Pandora’s box will open for the bankers. It will show that they never used the money from investors to buy bonds issued by a REMIC trust. It will show the trusts to be unfunded. It will show the unfunded trusts never bought or funded the loans. It will show that the disclosure requirements and the reason for TILA (borrowers’ choices in the marketplace) were regularly violated.

That in turn will lead to the inquiry as to the balance of the loan that is now due. Rescission means giving back what you received. But what if, by operation of law, you have already given back some or all of the money? The investment banker will be hard pressed to describe itself as anything but the agent of the lender investors. As agent, it received payments from insurance, hedges and sales to the Federal Reserve. How will the Wall Street Banks explain why those payments should not be applied to reduce the account receivable of the investor lenders? How many times should the lender be paid on the same debt?

Remember that there is no issue of subrogation, contribution or other claims against the borrower here. They were expressly waived in the contracts for insurance and credit default swaps. Hence the payments should equitably be applied to the benefit of the investors whose money was used to start the false securitization scheme under false pretenses. Once the investors are paid or considered paid because their agents received the money from third party co-obligors, what is left for the borrowers to pay? Will the court order the borrower to pay “back” a lender who never made the loan?

Dreamli Zs 6:22pm Sep 28

http://www.forbes.com/sites/danielfisher/2013/02/07/court-decision-gives-borrowers-an-ace-in-the-hole-lenders-a-headache/

Court Decision Gives Lenders A Headache, Borrowers An Ace In The Hole
http://www.forbes.com
A court ruling gives borrowers an unlimited deadline for rescinding second mortgages

Matt Weidner Shows Lawyers How to Do Good Lawyering

The difference between Weidner and many other attorneys is that he goes into a case believing he can win it — and he’s right. Other attorneys believe their position is hopeless and seek only delays or modification — and they are wrong. Weidner has resisted the knee jerk reaction to these cases to believe that if the borrower ceases payment that all elements of a foreclosure are presumed met. He understands that the Banks are playing a shell game to conceal the fact that neither the named plaintiff nor the alleged creditor are in fact the real servicer and real creditor.

Matt Weidner has published his summary of essential issues raised in a hearing in which he was the attorney of record for the homeowner. He shows that knowledge of securitization, good preparation and articulate objections that are logically consistent with the proffer of evidence results in a good record and a good result. This transcript — shown on the link below — should be studied, not merely read. Then read it again. Weidner skills are formidable but they can be learned.

Editor’s Note: The background issue here is the conflict between the law permitting the servicer to commence the action and reality. The Servicer might be able to start a foreclosure but they cannot finish it. They can claim they have authority or power of attorney but the fact is they are not a creditor. And only a creditor can submit a credit bid.

So why is this case being brought this way? Is the creditor aware that their right to the title of the house and their right to sue for collection is being stripped from them. Does the creditor have notice? How do we know? Even if the pleading is not required, the proof demands the evidence that the Trustee of the REMIC testify that they have notice, they own the mortgage, they have not resold it, they have received no augments, directly or indirectly to reduce the balance of the account receivable, and that the investor approves of the Servicer/bookkeeper taking title with a credit bid and getting a judgment in its own name despite the obvious fact that the creditor is entitled to judgment. What authority does the Trustee have to let anyone take away property and assets? What reasonable purpose would be served? Doesn’t this show or at least suggest that the Trust does not own the loan? Maybe it never did, but the investors in the “Trust” know it was their money that funded mortgages — they just don’t actually know which loans they funded.

And as this case suggests, the intervention of the investment banks caused a fatal defect in the chain of title. If they wanted to stay out of trouble all they had to do was name the Trust on the note and mortgage or the assignment and record it as such. But they didn’t because they were playing with OPM (Other people’s money) and they still are playing the same game.

Residential funding gets into trouble. This is a very worthwhile read.

Foreclosure Defense Trial SECRETS EXPOSED! A WEIDNER Transcript of a Foreclosure Trial That Shows How A Homeowner Wins Foreclosure!
http://mattweidnerlaw.com/foreclosure-defense-trial-secrets-exposed-a-transcript-of-a-foreclosure-trial-that-shows-how-a-homeowner-wins-foreclosure/

“Materially Less”: The Foreclosure Deficiency Standard in Tennessee
http://www.jdsupra.com/legalnews/materially-less-the-foreclosure-defic-21465/

How the Bank Lobby Loosened U.S. Reins on Derivatives
http://www.bloomberg.com/news/2013-09-04/how-the-bank-lobby-loosened-u-s-reins-on-derivatives.html

Lending Giant Offers Short Sale Webinar
http://realtormag.realtor.org/daily-news/2013/09/03/lending-giant-offers-short-sale-webinar

Listen to Danielle Kelley Again on Blog Radio

Here it is. http://www.blogtalkradio.com/senkalive/2013/07/13/hope-for-justice-is-our-only-weapon-1

Danielle Kelley, Esq., a partner in the litigation firm of Garfield, Gwaltney, Kelley and White, returns to blog talk radio revealing the latest bank scamming on mediation, modification and settlement of illegal collections and Foreclosures by the Wall Street Banks.

It IS Not the Home the Banks Want It is the Foreclosure Judgment or Sale

THE MYTH OF FORECLOSURE SINCE 2001: “why would the banks foreclose unless they had to? The banks don’t want the homes and they don’t want to foreclose. The banks just want to get repaid for a legitimate loan.”

There is a natural tendency to believe that the bank would not be in the courtroom seeking a foreclosure in the absence of an actual loan that was unpaid. The presumption of the judge naturally moves towards the statistical certainty that banks would not incur the expense of foreclosing on property in which they had no interest. Thus for all of the flagrant criminal and civil violations committed by the banks in the enforcement of loans, the thoughts of any reasonable judge naturally drift to the idea that our marketplace will be completely corrupted and un-trusted if we let borrowers off the hook on legitimate debts. I think that  this is the reasoning that dominates the thinking of judges and justices on the trial bench and the appellate courts. And it is not unreasonable for them to have that knee-jerk reaction after centuries of statistical evidence showing that the above presumption has been correct millions of times.

This is why lawyers are necessary and pro se litigants  probably will fare poorly most of the time. As a rule of thumb, I tell attorneys whom I am mentoring that they have approximately 30 seconds to get the judge’s attention before the judge’s mind wanders off into the knee-jerk land that is described above. I suggest that you will get the judge’s attention through the establishment of rapport. Real rapport is established when you introduce your argument using terms and doctrines and common sense that you already know live in the mind of the judge. So you may as well say that all things being equal, you would normally rule in favor of the bank and against the borrower regardless of the hardship and regardless of the empathy that one might feel towards the borrower. You might also say that all things being equal, your empathy toward the borrower would be mitigated by their lack of judgment in taking a loan that they could not afford.

But then it is time to make your point. The reason you are there in court is not because you were paid but because you think the borrower has a case in which the borrower can and should prevail. Your primary point should be that if this was merely about fabrication of documents for an otherwise legitimate debt that was unpaid, you wouldn’t be there. Your secondary point should be that there is a very good reason why the borrower can and will deny the debt, deny the note,  deny the mortgage, deny the default, and deny the existence of a creditor who would qualify under state statute to submit a credit bid at any foreclosure auction. And your third point should drive that point home, to wit: the reason is that nobody in this courtroom nor any of their predecessors or successors have any interest in this loan. Instead they are participants in a scheme to prevent the borrower and this court from knowing the identity of the creditor at the time of the loan and the identity of the creditor at this time.

You should express confidence that the facts will show that there is a complete absence of any money exchanging hands between them and the borrower and between them and any “assignee” of any any instrument. In fact, you are confident the facts will show there is a complete lack of privity between the borrower and these people and entities with whom the borrower never did business, except to make monthly payments under the mistaken belief that the servicer was the bookkeeper for the creditor. (That is why they use Limited powers of attorney and false designations of “Signing officer” — you can do it unilaterally and you don’t need to show an underlying transaction for those instruments, but you DO need consideration (canceled check or wire transfer receipt) for the origination of the loan and any assignments claiming there was a transactional sale of the loan).

The next thing I tell lawyers whom I mentor is that they have five minutes to convince the judge and  they should avoid any argument that is off-topic, to wit: don’t even think that you can win the entire case in any one  hearing.  So for example you might tell the judge that the banks are not foreclosing because they have to, they are foreclosing because they want to. This would be a good time to say that things have changed dramatically since traditional foreclosures virtually ended 20 years ago.  Then you go on to state that the reason why these parties are attempting to foreclose on this property is because they have already been paid large fees sometimes in excess of the principal amount of the loan demanded; and they will owe those profits and fees back to the investment bankers that paid them to pretend to be lenders and pretend to be creditors and pretend to be parties with the right to foreclose. Sounds crazy but it is true.

And the reason that the investment bankers have paid them to do that is that the investment bankers stole part of the investor money that fueled this scheme, put it in their own pockets and then instead of using the infrastructure of the documented promises made to investors, they claimed to own the loans themselves that were fueled with what money was left after the investment banker skimmed the top. BY claiming they owned the loans they received insurance, credit default swaps, federal money and proceeds of sale to the Federal Reserve and others to the extent of receiving as much as 42 times the principal supposedly due from the borrower, which at all times was due to the investors directly without any intervening entities.

So that leaves the borrower unable to exercise his rights under HAMP and the so-called servicers are prevented from compliance with HAMP because they don’t actually have a debt anymore much less a creditor or any authority to speak for a creditor. By smothering the court with fraudulent paperwork these banks are creating the illusion of a debt, the illusion of a note that can be used as evidence of the debt, the illusion of a mortgage lien that has been perfected and the illusion of a default on a loan that is not in default and which in all probability has been paid by people who have waived their right to contribution and subrogation.

The sole reason we are here, your Honor, is that the banks need this foreclosure to avoid liability to third parties from whom they collected millions of dollars — they are not here to be repaid for a loan that isn’t due to them and never was.

Someone must benefit from these criminal actions. Up till now, it has been the criminals. Now it is our turn.

Vacant foreclosures in South Florida second in nation
http://www.wptv.com/dpp/news/region_c_palm_beach_county/vacant-foreclosures-in-south-florida-second-in-nation

Citigroup agrees to $968M settlement with Fannie Mae
http://www.bizjournals.com/albany/morning_call/2013/07/citigroup-agrees-to-968m-settlement.html

Bank of America Foreclosure Scandal: Customer Power, Not Regulation, Will Solve Corporate Corruption
http://www.policymic.com/articles/49539/bank-of-america-foreclosure-scandal-customer-power-not-regulation-will-solve-corporate-corruption

BLAME THE VICTIM: Study: Shaky math skills a predictor of foreclosure
http://blog.al.com/wire/2013/06/study_shaky_math_skills_a_pred.html

Servicing Intel: Foreclosure issues cloud mortgage investor outlook
http://www.housingwire.com/content/servicing-intel-foreclosure-issues-cloud-mortgage-investor-outlook

New regulations add protections for homeowners facing foreclosure
http://bostonherald.com/business/real_estate/2013/06/new_regulations_add_protections_for_homeowners_facing_foreclosure

LA settles foreclosure case with Deutsche Bank
http://www.utsandiego.com/news/2013/jun/29/la-settles-foreclosure-case-with-deutsche-bank/

More Conflicts For The “Independent” Foreclosure Reviews
http://retheauditors.com/2013/06/30/more-conflicts-for-the-independent-foreclosure-reviews/

Hundreds of thousands could get loan modifications – no paperwork required
http://www.inman.com/wire/hundreds-of-thousands-could-get-loan-modifications-no-paperwork-required/

The EU logs antitrust charges against Markit, the ISDA and 13 banks for blocking exchanges in the credit derivatives business. “The banks acted collectively to shut out exchanges from the market because they feared that exchange trading would have reduced their revenues.” Banks charged: BAC, BCS, C, MS, CS, DB, GS, HBC, JPM, RBS, UBS, BNPQY.PK.

Full Story: http://seekingalpha.com/currents/post/1113922?source=ipadportfolioapp

Banking Shaping American Minds

“I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence.” — Paul Volcker, former Fed Chairman, 2009

“We have allowed the borrower to get raped and then we have gone to the rapist for a course on sex education. Thus the investors (pension funds who will announce reductions in vested pensions) and the homeowners have been screwed on such a grand scale that the entire economy of our country and indeed the world have been turned upside down.” — Neil F Garfield, livinglies.me 2012

CHECK OUT OUR DECEMBER SPECIAL!

What’s the Next Step? Consult with Neil Garfield

For assistance with presenting a case for wrongful foreclosure, please call 520-405-1688, customer service, who will put you in touch with an attorney in the states of Florida, California, Ohio, and Nevada. (NOTE: Chapter 11 may be easier than you think).

Editor’s Comment: The article below is very much like my own recent article on privatized prisons and the inversion of critical thinking in favor of allowing economic crimes to have a special revered status in our society. Kim highlights the rampage allowed to continue to this day in which Banks are ravaging our society and supporting anything that will confuse us or indoctrinate us to accept outright theft from our society, our purses, and our lives.

It is this lack of critical thinking that has made it so difficult for homeowners to get credit on loan balances that are already paid down by parties who expressly waived any right to collect from the borrower. It is the reason Judges are so reluctant to allow homeowner relief because they perceive the fight as one in which the homeowners are only expressing buyer’s remorse on an otherwise valid transaction.

It is the reason why lawyers are reluctant to deny the debt, deny the balance, deny that a payment was due, deny the default, deny the note as evidence of any debt, deny the validity of the mortgage and counter with actions to nullify the instruments signed by confused and befuddled borrowers assured by the banks that they were making a safe and viable investment.

In most civil cases Plaintiff sues Defendant and Defendant denies most of the allegations — forcing the Plaintiff to prove its case. Not so in foreclosure defense. Lawyers, afraid of looking foolish because they have not researched the matter, refuse to deny the falsity of the allegations in mortgage foreclosure complaint, notice of default and notice of sale. Lawyers are afraid to attack sales despite decisions by Supreme Courts of many states, on the grounds that the sale was rigged, the bidder was a non-creditor submitting a credit bid, and the fact that the forecloser never had any privity with the homeowner, never spent a dime funding any mortgage and never spent a dime funding the purchase of a mortgage.

The quote from the independent analysis of the records in San Francisco County concluded that a high percentage of foreclosures were initiated and completed by entities that were complete “strangers to the transaction.” Why this is ignored by members of the judiciary, the media and government agencies is a question of power and politics. Why it MUST be utilized to save millions more from the sting of foreclosure is the reason I keep writing, the reason I consult with dozens of lawyers across the country and why I have moved back to Florida where I am taking on cases.

As a result of the perception of the inevitability of the foreclosure most court actions are decided in favor of the forecloser because of the presumption that the transaction was valid, the default is real, and that no forgery or fabrication of documents changes those facts. The forgeries and fabrications and robo-signed documents are bad things but the “fact” remains in everyone’s mind that the ultimate foreclosure will proceed. That “fact” has been reinforced by inappropriate admissions from the alleged borrower, who never received a nickle from the loan originator or any assignee.

The lawyers are admitting all the elements necessary for a foreclosure and then moving on to attack the paperwork. Theoretically they are right in attacking assignments and endorsements that are falsified, but if they have already admitted all the basic elements for a foreclosure to proceed, then the foreclosure WILL proceed and if they have any real damages they can sue for monetary relief.

But under the current perception carefully orchestrated by the banks, there are no damages because the debt was real, the borrower admitted it, the payments were due, the borrower failed to make the payments, and the mortgage is a valid lien on the property securing a note which is false on its face but which is accepted as true.

Even the borrowers are not seeing the truth because the people with the real information on the ones that are foreclosing on them. So borrowers, knowing they received a loan, do not question where the loan came from and whether the protections required by the truth in lending statute, RESPA and other federal and state lending laws were violated. We have allowed the borrower to get raped and then we have gone to the rapist for a course on sex education. Thus the investors (pension funds who will announce reductions in vested pensions) and the homeowners have been screwed on such a grand scale that the entire economy of our country and indeed the world have been turned upside down.

Deny and Discover is getting traction across the country, with a focus on the actual money trail — which is the trail of real transactions in which there was an offer, acceptance and consideration between the relevant parties. More and more lawyers are trying it out and surprising themselves with the results. Slowly they are starting to realize that neither the origination of the, loan as set forth in the settlement documents at closing nor the assignments and endorsements were real.

The debt described in the note does not exist and never did. Neither was it the same deal that the lender/investors meant to offer through their investment bankers.

The note and the bond have decidedly different terms of repayment. The payment of insurance and credit de fault swaps to the banks was a crime unto itself — a diversion of money that was intended to protect the investors. The balances owed to those investors would have been correspondingly reduced. The balances owed from the borrowers should be correspondingly reduced by payment received by the only real creditor.

Thus millions of homeowners have walked away from homes they owned on the false representation that the balance owed on their homes was more than they could pay. And the messengers of doom were the banks, depriving investors of money due to them and depriving the borrower of the real facts about their loan balances. Lawyers with only a passing familiarity have either told borrowers that they have no real case against the banks or they take a retainer on a case they know they are going to lose because they will admit things that they don’t realize are false. And Judges hearing the admissions, have no choice but to let the foreclosure proceed.

But that doesn’t mean you can’t come back and overturn it, get damages for wrongful foreclosure, and this is where lawyers have turned bad lawyering into bad business. There is a fortune to be made out there pursuing justice for homeowners. And the case far from the complexity brought to the table by the banks is actually quite simple. Like any other civil case or even criminal case, stop admitting facts that you don’t know are are true and which are in actuality false.

In every case I know of, where the lawyer has followed Deny and Discover and presented it in a reasonable way to the Judge, the orders requiring discovery and proof have resulted in nearly instant “confidential” settlements. Some lawyers and waking up and making millions of dollars helping thousands of homeowners —- why not join the crowd?

Banks Stealing Wealth and the Minds of Our Children

by JS Kim

In the past several years, people worldwide are slowly beginning to shed the web of deceit woven by the banking elite and learning that many topics that were mocked by the mainstream media as conspiracy theories of the tin-foil hat community have now been proven to be true beyond a shadow of a doubt. First there was the myth that bankers were upstanding members of the community that contributed positively to society. Then in 2009, one of their own, Paul Volcker, in a rare momentary lapse of sanity, stated “I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence.” He then followed up this declaration by stating that the most positive contribution bankers had produced for society in the past 20 years was the ATM machine. Of course since that time, we have learned that Wachovia Bank laundered $378,400,000,000 of drug cartel money, HSBC Bank failed to monitor £38,000,000,000,000 of money with potentially dirty criminal ties, United Bank of Switzerland illegally manipulated LIBOR interest rates on a regular basis for purposes of profiteering, and though they have yet to be prosecuted, JP Morgan bank, Goldman Sachs bank, & ScotiaMocatta bank are all regularly accused of manipulating gold and silver prices on nearly a daily basis by many veteran gold and silver traders.

http://www.zerohedge.com/contributed/2013-01-03/banking-elite-are-not-only-stealing-our-wealth-they-are-also-stealing-our-min

LivingLies Announces Columbus Ohio Law Office

If you are looking for legal representation in Ohio, please call our customer service line at 520-405-1688. You will either be interviewed or directed to a form on line to fill out as to the status of your case and various other matters. Or you can call the Columbus office direct. Client intake has already begun under this arrangement.

Editor’s Comment: I am thrilled announce this association with lawyers in Columbus, Ohio who not only understand the intricacies of securitization and not only represent homeowners fighting the banks, but whose mission is to WIN not just buy time. NO guarantees of course, but these guys are the real deal.

They are scholars, writers, creative and innovative as well as knowledgeable in trial practice, bankruptcy and property law. I have associated with them directly as being of counsel, which is not something I ordinarily do, as most of you know.

MEET WITTENBERG LAW GROUP
Please allow us to introduce Wittenberg Law Group, a Columbus, Ohio-based law firm that helps to defend homeowners against foreclosures. The professionals of Wittenberg Law Group stand ready to help you.
Eric J. Wittenberg is the founder and manager of the firm. Mr. Wittenberg is in his 26th year in the practice of law. He is involved in a great deal of litigation with lenders trying to wrongfully foreclose upon homeowners. Mr. Wittenberg shares something important with Neil Garfield–like Mr. Garfield, Mr. Wittenberg is an alumnus of Dickinson College. He has a master’s degree in public and international affairs from the University of Pittsburgh Graduate School of Public and International Affairs, and his law degree from the University of Pittsburgh School of Law, where he was the Head Notes and Comments Editor for the Journal of Law and Commerce. For 25 years, he has worked to protect the rights of individuals and small businesses.
He is also an award-winning Civil War historian and author, with 17 books on the subject in print. Mr. Wittenberg regularly lectures and leads tours of Civil War battlefields and is in great demand. He is also an ardent baseball fan and the co-author of You Stink! Major League Baseball’s Terrible Teams and Pathetic Players.
Jennifer L. Routte is a Columbus native who comes from a background of a successful family business. She worked in the family business for going to law school and understands the challenges faced by small businesses. She is an graduate of The Ohio State University and the Capital University School of Law.
Treisa L. Fox is an associate attorney who works almost exclusively on defending foreclosures. Ms. Fox, a native of West Virginia, is a graduate of Marshall University and of the Capital University School of Law. She has a great deal of experience with challenging the validity of loan documents and of the claims of lenders, and she stands prepared to assist you.
The professionals of Wittenberg Law Group stand prepared to assist you with your efforts to defend your homes.
Eric J. Wittenberg
Attorney and Counselor at Law
WITTENBERG LAW GROUP
6895 East Main Street
Reynoldsburg, Ohio 43068
614.834.9650
Fax: 614.328.0576
eric@wittenberglawgroup.com
http://www.wittenberglawgroup.com

Is bankruptcy the Only Way Out of the Foreclosure Steamroller?

If you are looking for legal representation in South Florida, Neil has established an office there again after 30 years of practice in Broward County. Please call 520-405-1688 for more information.

Editor’s Comment and Analysis: In theory, the writer is correct in the article below. Chip Parker located in Jacksonville, sounds like someone I would associate with because he understands both bankruptcy and the finer litigation points of foreclosure defense (I think).

For the most part though I would strongly suggest that all lawyers whoa re very familiar with bankruptcy associate with a bankruptcy attorney AND that all lawyers who do bankruptcy but are not familiar with foreclosure defense, associate with those attorneys who do understand it. Let the litigation for the MLS and POC be done by the foreclosure defense attorney.

AND don’t put the property on the schedule as secured unless you are 100% certain that it really is secured. The presence of a mortgage on record does not mean the loan exists as presented nor that it is secured — if the instrument was materially defective and even misrepresents the true facts of the transaction.

But Chip is right. It is only in  BKR that you have Judges clerks, trustees etc. who deal with prioritization of creditors, proofs of claims all day long and it certainly has produced many good decisions for borrowers.

Bankruptcy is the Ultimate Protection from Florida’s Corrupt Foreclosure System

by Chip Parker, Jacksonville Bankruptcy Attorney

For Floridians, Federal Bankruptcy Court is proving to be a far superior avenue for actually saving homes than our state court judicial system.

The homeowner, with the help of a qualified bankruptcy attorney, can encapsulate and protect as much of his assets as possible while eliminating the uncertainty created by a failed foreclosure system.  Homeowners are often emerging from Bankruptcy Court with the meaningful mortgage modifications that elude them in Florida’s state courts.  Floridians shouldn’t have to seek refuge from our state courts, but be grateful there is an alternative, especially if you live in the Middle District of Florida.

Who runs Florida’s Foreclosure Courts?  Why the banks do, of course.  Just ask judges, prosecutors and the Florida Bar.

Retired senior judges regularly bend the rules for banks and their often inept lawyers prosecuting foreclosures, and they have been turning a blind eye to the bankster fraud in their courtrooms for years.  For years, these retired judges have been paid for results – reducing the number of open foreclosure cases specifically – and they have been too willing to ignore the rule of law to make sure they “hit their numbers.”

Most retired judges create their own special set of rules they apply in foreclosure cases to tilt the playing field in favor of mortgage companies.  They justify this unequal treatment because “homeowners aren’t making mortgage payments,” but they refuse to hear the hundreds and thousands of stories from homeowners describing their failed attempts to work directly with the mortgage industry to make their mortgage payments and avoid foreclosure.

Florida’s Attorney General Pam Bondi inherited from her predecessor an ongoing investigation of corrupt lawyers running foreclosure mills in South Florida.  Stories of lawyers forging signatures and faking affidavits abound nationwide, and Florida is no exception.  However, one of Bondi’s first official acts was the prompt termination of the lead investigators, and eventually she let all the investigations wither and die on the vine.  Bondi never met a bank she didn’t like.

And now, the Palm Beach Post is reporting that the Florida Bar is doing nothing to discipline any of these corrupt bank lawyers despite nearly two hundred complaints filed by citizens, judges and fellow lawyers.  Is there any wonder why lawyers are held in such low regard in our society?

Keep in mind that a national Attorney General investigation into foreclosure fraud by the country’s five largest mortgage servicers that resulted in a $25B settlement for consumers.  This is the activity our foreclosure judges, Attorney General and the Florida Bar can’t seem to find here in the Sunshine State.

It makes the average Floridian facing foreclosure wonder whether there is a chance to save their home in a rigged system.  Well, there is an alternative – bankruptcy

When a homeowner files a bankruptcy, the Bankruptcy Court enters an order, known as the automatic stay, which removes jurisdiction from the Foreclosure Court.  The effect is a “freezing” the foreclosure case.

Once in bankruptcy, the homeowner can buy time, fight the mortgage company on a couple of the substantive foreclosure issues like “standing,” or even compel the mortgage company to engage in good-faith mediation.  Here, in the Middle District of Florida, the mortgage modification mediation program has been widely successful, permanently modifying mortgages, including significant principal reduction for underwater homes.

So, if you are a homeowner at your wit’s end over your home in foreclosure, call a bankruptcy lawyer to discuss the bankruptcy alternative to what is all-too-often an unfair state court foreclosure process.

see bankruptcylawnetwork.com

 

Foreclosure Strategists: Phx. Meet tonight: Make the record in your case

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NEW! 2nd Edition Attorney Workbook,Treatise & Practice Manual – Pre-Order NOW for an up to $150 discount
LivingLies Membership – Get Discounts and Free Access to Experts
For Customer Service call 1-520-405-1688

Want to read more? Download entire introduction for the Attorney Workbook, Treatise & Practice Manual 2012 Ed – Sample

Pre-Order the new workbook today for up to a $150 savings, visit our store for more details. Act now, offer ends soon!

Editor’s Comment:

Contact: Darrell Blomberg  Darrell@ForeclosureStrategists.com  602-686-7355

Meeting: Tuesday, May 15th, 2012, 7pm to 9pm

Make the Record

It appears the most rulings against homeowners are predicated on some arcane and minute failure of the homeowner to make the record.  We’ll be discussing how to make sure you cover all of those points by Making the Record as your case moves along.  We’ll also look at how the process of Making the Record starts long before you even think of going to court

We meet every week!

Every Tuesday: 7:00pm to 9:00pm. Come early for dinner and socialization. (Food service is also available during meeting.)
Macayo’s Restaurant, 602-264-6141, 4001 N Central Ave, Phoenix, AZ 85012. (east side of Central Ave just south of Indian School Rd.)
COST: $10… and whatever you want to spend on yourself for dinner, helpings are generous so bring an appetite.
Please Bring a Guest!
(NOTE: There is a $2.49 charge for the Happy Hour Buffet unless you at least order a soft drink.)

FACEBOOK PAGE FOR “FORECLOSURE STRATEGIST”

I have set up a Facebook page. (I can’t believe it but it is necessary.) The page can be viewed at www.Facebook.com, look for and “friend” “Foreclosure Strategist.”

I’ll do my best to keep it updated with all of our events.

Please get the word out and send your friends and other homeowners the link.

MEETUP PAGE FOR FORECLOSURE STRATEGISTS:

I have set up a MeetUp page. The page can be viewed at www.MeetUp.com/ForeclosureStrategists. Please get the word out and send your friends and other homeowners the link.

May your opportunities be bountiful and your possibilities unlimited.

“Emissary of Observation”

Darrell Blomberg

602-686-7355

Darrell@ForeclosureStrategists.com

Objections and Preserving Your Rights on Appeal: From, Whose Lien Is It Anyway? by Neil F Garfield

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For Customer Service call 1-520-405-1688

Want to read more? Download entire introduction for the Attorney Workbook, Treatise & Practice Manual 2012 Ed – Sample

Pre-Order the new workbook today for up to a $150 savings, visit our store for more details. Act now, offer ends soon!

Editor’s Comment:

Foreclosure cases are won or lost on procedure more than on the merits of the case offered by either side. Lawyer and especially pro se litigants tend to use the right of appeal, as though it was a vehicle for entertaining evidence, objections or motions that should have been made. These make up a large percentage of the 85% of cases that are affirmed on appeal.[1]

The appellate court rarely has even the power to consider affidavits or other evidence that was not proffered and which does not show up on the record on appeal sent by the clerk of the court on the “trial” level. The appellate court is limited to what DID happen and not what SHOULD have happened. If the matter was properly raised in the lower court, then the matter may be considered by the appellate court. If not, then they must simply state that the grounds for appeal were not properly preserved for appeal and affirm the decision of the lower court Judge.

In foreclosure cases, most of the objections that should be made are known in advance and quite probably should be brought or offered as a motion in limine before the actual hearing, so that the complete focus of the court is on the issue that  would be presented by opposing counsel  and the objections raised by the borrower homeowner. In those cases, where the objections are known in advance, you should not only state that you have an objection, but the state the reasons for your objection and include a memorandum of law on the point, complete with copies of the most relevant cases.

Most of the errors that I see on the trial court level amounts to denial of due process in that the Court refuses to hear the merits or to allow the parties to conduct discovery. If that is the case in your case, you should mention it even though it is “fundamental error” that the appellate court could hear even without raising the objection contemporaneously with the subject of your objection.

This assures (along with the transcription from a court reporter) that everything about that objection was stated, presented and denied, if such is the case. It might also alert the Judge that you are ready to make such an appeal. If the objection is procedural relating to whether a proper foundation has been laid for the introduction of evidence, or whether the Court is accepting the proffer of counsel without any evidence in the record to support it, then you must make that point clearly and with support from citations in your own state. If the court refuses to hear the objections in limine then you still have the matters raised as part of the court record but you must raise the objection in the hearing or you might well have waived them unless your main point (ill advised) is that the court abused its discretion in denying the motion in limine without hearing it on the merits.

In every case I have seen reversed on appeal, there was something in the record that contradicted or nothing in the record that supported the position taken on appeal.

There are no magic words or bullets on objections. What is necessary is that you state it, without rambling on tangent subjects, with sufficient specificity so that the appellate court will understand in a flash what your objection related to, and what grounds and what law upon which you were relying. Do not combine objections. If you have more than one then state that you have 2 or more objections and proceed with the first.

The mistake I see in appeals and trial proceedings is that the attorney for the homeowner borrower remains silent while opposing counsel states facts that are not in the record (because there has not been an adversary proceeding and that you deny those facts, as they are in issue between the two sides). In many cases the Judge takes silence as a concession that the facts are true as stated and that your defense relates to something other than contesting the facts being proffered by opposing counsel.

The appellate court might agree, particularly if you are not clear in immediately identifying the fact that there was a real transaction in which money exchanged hands and then another event which involved the signing of papers but in which there was no actual transaction. The fact that the borrower believed the papers to be true while everyone else knew they were not, cannot now be used to further the fraud upon your client.

____________________

[1] It has been pointed out by some bankruptcy court judges that out of the three possibilities for appeal of a bankruptcy court ruling, petitioners and their counsel usually bypass the appeal laterally to the sitting District Court Judge charged with hearing civil cases with Federal jurisdiction and with hearing appeals from decisions made in the bankruptcy court. Sources tell us that the percentage of reversals and remand is possibly as high as 50% when brought to the District Judge rather than the BAP or Circuit Court of Appeals.

The Rain in Spain May Start Falling Here

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NEW! 2nd Edition Attorney Workbook,Treatise & Practice Manual – Pre-Order NOW for an up to $150 discount
LivingLies Membership – Get Discounts and Free Access to Experts
For Customer Service call 1-520-405-1688

Want to read more? Download entire introduction for the Attorney Workbook, Treatise & Practice Manual 2012 Ed – Sample

Pre-Order the new workbook today for up to a $150 savings, visit our store for more details. Act now, offer ends soon!

Editor’s Comment:

It is typical politics. You know the problem and the cause but you do nothing about the cause. You don’t fix it because you view your job in government as justifying the perks you get from private companies rather than reason the government even exists — to provide for the protection and welfare of the citizens of that society. It seems that the government of each country has become an entity itself with an allegiance but to itself leaving the people with no government at all.

And the average man in the streets of Boston or Barcelona cannot be fooled or confused any longer. Hollande in France was elected precisely because the people wanted a change that would align the government with the people, by the people and for the people. The point is not whether the people are right or wrong. The point is that we would rather make our own mistakes than let politicians make them for us in order to line their own pockets with gold.

Understating foreclosures and evictions, over stating recovery of the housing Market, lying about economic prospects is simply not covering it any more. The fact is that housing prices have dropped to all time lows and are continuing to drop. The fact is that we would rather kick people out of their homes on fraudulent pretenses and pay for homeless sheltering than keep people in their homes. We have a government that is more concerned with the profits of banks than the feeding and housing of its population. 

When will it end? Maybe never. But if it changes it will be the result of an outraged populace and like so many times before in history, the new aristocracy will have learned nothing from history. The cycle repeats.

Spain Underplaying Bank Losses Faces Ireland Fate

By Yalman Onaran

Spain is underestimating potential losses by its banks, ignoring the cost of souring residential mortgages, as it seeks to avoid an international rescue like the one Ireland needed to shore up its financial system.

The government has asked lenders to increase provisions for bad debt by 54 billion euros ($70 billion) to 166 billion euros. That’s enough to cover losses of about 50 percent on loans to property developers and construction firms, according to the Bank of Spain. There wouldn’t be anything left for defaults on more than 1.4 trillion euros of home loans and corporate debt. Taking those into account, banks would need to increase provisions by as much as five times what the government says, or 270 billion euros, according to estimates by the Centre for European Policy Studies, a Brussels-based research group. Plugging that hole would increase Spain’s public debt by almost 50 percent or force it to seek a bailout, following in the footsteps of Ireland, Greece and Portugal.

“How can you only talk about one type of real estate lending when more and more loans are going bad everywhere in the economy?” said Patrick Lee, a London-based analyst covering Spanish banks for Royal Bank of Canada. “Ireland managed to turn its situation around after recognizing losses much more aggressively and thus needed a bailout. I don’t see how Spain can do it without outside support.”

Double-Dip Recession

Spain, which yesterday took over Bankia SA, the nation’s third-largest lender, is mired in a double-dip recession that has driven unemployment above 24 percent and government borrowing costs to the highest level since the country adopted the euro. Investors are concerned that the Mediterranean nation, Europe’s fifth-largest economy with a banking system six times bigger than Ireland’s, may be too big to save.

In both countries, loans to real estate developers proved most toxic. Ireland funded a so-called bad bank to take much of that debt off lenders’ books, forcing writedowns of 58 percent. The government also required banks to raise capital to cover what was left behind, assuming expected losses of 7 percent for residential mortgages, 15 percent on the debt of small companies and 4 percent on that of larger corporations.

Spain’s banks face bigger risks than the government has acknowledged, even with lower default rates than Ireland experienced. If losses reach 5 percent of mortgages held by Spanish lenders, 8 percent of loans to small companies, 1.5 percent of those to larger firms and half the debt to developers, the cost will be about 250 billion euros. That’s three times the 86 billion euros Irish domestic banks bailed out by their government have lost as real estate prices tumbled.

Bankia Loans

Moody’s Investors Service, a credit-ratings firm, said it expects Spanish bank losses of as much as 306 billion euros. The Centre for European Policy Studies said the figure could be as high as 380 billion euros.

At the Bankia group, the lender formed in 2010 from a merger of seven savings banks, about half the 38 billion euros of real estate development loans held at the end of last year were classified as “doubtful” or at risk of becoming so, according to the company’s annual report. Bad loans across the Valencia-based group, which has the biggest Spanish asset base, reached 8.7 percent in December, and the firm renegotiated almost 10 billion euros of assets in 2011, about 5 percent of its loan book, to prevent them from defaulting.

The government, which came to power in December, announced yesterday that it will take control of Bankia with a 45 percent stake by converting 4.5 billion euros of preferred shares into ordinary stock. The central bank said the lender needs to present a stronger cleanup plan and “consider the contribution of public funds” to help with that.

Rajoy Measures

The Bank of Spain has lost its prestige for failing to supervise banks sufficiently, said Josep Duran i Lleida, leader of Catalan party Convergencia i Unio, which often backs Prime Minister Mariano Rajoy’s government. Governor Miguel Angel Fernandez Ordonez doesn’t need to resign at this point because his term expires in July, Duran said.

Rajoy has shied away from using public funds to shore up the banks, after his predecessor injected 15 billion euros into the financial system. He softened his position earlier this week following a report by the International Monetary Fund that said the country needs to clean up the balance sheets of “weak institutions quickly and adequately” and may need to use government funds to do so.

“The last thing I want to do is lend public money, as has been done in the past, but if it were necessary to get the credit to save the Spanish banking system, I wouldn’t renounce that,” Rajoy told radio station Onda Cero on May 7.

Santander, BBVA

Rajoy said he would announce new measures to bolster confidence in the banking system tomorrow, without giving details. He might ask banks to boost provisions by 30 billion euros, said a person with knowledge of the situation who asked not to be identified because the decision hadn’t been announced.

Spain’s two largest lenders, Banco Santander SA (SAN) and Banco Bilbao Vizcaya Argentaria SA (BBVA), earn most of their income outside the country and have assets in Latin America they can sell to raise cash if they need to bolster capital. In addition to Bankia, there are more than a dozen regional banks that are almost exclusively domestic and have few assets outside the country to sell to help plug losses.

In investor presentations, the Bank of Spain has said provisions for bad debt would cover losses of between 53 percent and 80 percent on loans for land, housing under construction and finished developments. An additional 30 billion euros would increase coverage to 56 percent of such loans, leaving nothing to absorb losses on 650 billion euros of home mortgages held by Spanish banks or 800 billion euros of company loans.

Housing Bubble

“Spain is constantly playing catch-up, so it’s always several steps behind,” said Nicholas Spiro, managing director of Spiro Sovereign Strategy, a consulting firm in London specializing in sovereign-credit risk. “They should have gone down the Irish route, bit the bullet and taken on the losses. Every time they announce a small new measure, the goal posts have already moved because of deterioration in the economy.”

Without aggressive writedowns, Spanish banks can’t access market funding and the government can’t convince investors its lenders can survive a contracting economy, said Benjamin Hesse, who manages five financial-stock funds at Fidelity Investments in Boston, which has $1.6 trillion under management.

Spanish banks have “a 1.7 trillion-euro loan book, one of the world’s largest, and they haven’t even started marking it,” Hesse said. “The housing bubble was twice the size of the U.S. in terms of peak prices versus 1990 prices. It’s huge. And there’s no way out for Spain.”

Irish Losses

House prices in Spain more than doubled in a decade and have dropped 30 percent since the first quarter of 2008. U.S. homes, which also doubled in value, have lost 35 percent. Ireland’s have fallen 49 percent after quadrupling.

Ireland injected 63 billion euros into its banks to recapitalize them after shifting property-development loans to the National Asset Management Agency, or NAMA, and requiring other writedowns. That forced the country to seek 68 billion euros in financial aid from the European Union and the IMF.

The losses of bailed-out domestic banks in Ireland have reached 21 percent of their total loans. Spanish banks have reserved for 6 percent of their lending books.

“The upfront loss recognition Ireland forced on the banks helped build confidence,” said Edward Parker, London-based head of European sovereign-credit analysis at Fitch Ratings. “In contrast, Spain has had a constant trickle of bad news about its banks, which doesn’t instill confidence.”

Mortgage Defaults

Spain’s home-loan defaults were 2.7 percent in December, according to the Spanish mortgage association. Home prices are propped up and default rates underreported because banks don’t want to recognize losses, according to Borja Mateo, author of “The Truth About the Spanish Real Estate Market.” Developers are still building new houses around the country, even with 2 million vacant homes.

Ireland’s mortgage-default rate was about 7 percent in 2010, before the government pushed for writedowns, with an additional 5 percent being restructured, according to the Central Bank of Ireland. A year later, overdue and restructured home loans reached 18 percent. At the typical 40 percent recovery rate, Irish banks stand to lose 11 percent of their mortgage portfolios, more than the 7 percent assumed by the central bank in its stress tests. That has led to concern the government may need to inject more capital into the lenders.

‘The New Ireland’

Spain, like Ireland, can’t simply let its financial firms fail. Ireland tried to stick banks’ creditors with losses and was overruled by the EU, which said defaulting on senior debt would raise the specter of contagion and spook investors away from all European banks. Ireland did force subordinated bondholders to take about 15 billion euros of losses.

The EU was protecting German and French banks, among the biggest creditors to Irish lenders, said Marshall Auerback, global portfolio strategist for Madison Street Partners LLC, a Denver-based hedge fund.

“Spain will be the new Ireland,” Auerback said. “Germany is forcing once again the socialization of its banks’ losses in a periphery country and creating sovereign risk, just like it did with Ireland.”

Spanish government officials and bank executives have downplayed potential losses on home loans by pointing to the difference between U.S. and Spanish housing markets. In the U.S., a lender’s only option when a borrower defaults is to seize the house and settle for whatever it can get from a sale. The borrower owes nothing more in this system, called non- recourse lending.

‘More Pressure’

In Spain, a bank can go after other assets of the borrower, who remains on the hook for the debt no matter what the price of the house when sold. Still, the same extended liability didn’t stop the Irish from defaulting on home loans as the economy contracted, incomes fell and unemployment rose to 14 percent.

“As the economy deteriorates, the quality of assets is going to get worse,” said Daragh Quinn, an analyst at Nomura International in Madrid. “Corporate loans are probably going to be a bigger worry than mortgages, but losses will keep rising. Some of the larger banks, in particular BBVA and Santander, will be able to generate enough profits to absorb this deterioration, but other purely domestic ones could come under more pressure.”

Spain’s government has said it wants to find private-sector solutions. Among those being considered are plans to let lenders set up bad banks and to sell toxic assets to outside investors.

Correlation Risk

Those proposals won’t work because third-party investors would require bigger discounts on real estate assets than banks will be willing to offer, RBC’s Lee said.

Spanish banks face another risk, beyond souring loans: They have been buying government bonds in recent months. Holdings of Spanish sovereign debt by lenders based in the country jumped 32 percent to 231 billion euros in the four months ended in February, data from Spain’s treasury show.

That increases the correlation of risk between banks and the government. If Spain rescues its lenders, the public debt increases, threatening the sovereign’s solvency. When Greece restructured its debt, swapping bonds at a 50 percent discount, Greek banks lost billions of euros and had to be recapitalized by the state, which had to borrow more from the EU to do so.

In a scenario where Spain is forced to restructure its debt, even a 20 percent discount could spell almost 50 billion euros of additional losses for the country’s banks.

“Spain will have to turn to the EU for funds to solve its banking problem,” said Madison Street’s Auerback. “But there’s little money left after the other bailouts, so what will Spain get? That’s what worries everybody.”

The Banks, Rushing To Foreclose So They Can Sit On Vacant Homes

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Editor’s Comment:

Author: 

These damn judges here in Florida, they really need to wake up, start working harder and grant more foreclosures more quickly.  Hurry up already, and stop whining about budget cuts and staff positions cut, and who cares that the entire state court system is funded by less than one percent of the state budget, and shut up about case loads that have tripled to 3,000 or more cases per judge and frazzled judicial assistant.  Just grant those damn foreclosure judgments….after all, everyone knows the economy cannot recover until these damn slacking judges push through this foreclosure backlog….right?

Oh wait a minute, there’s apparently a bit of a fly in this ointment.  You see, apparently the banks are cancelling foreclosure sales just as quickly as our good judges are able to sign those damn Final Judgments of Foreclosure…yup…apparently, now wait just a dadgummed minute.

You mean to tell me our elected circuit court judges are busy throwing families out into the streets just so the banks can amass ever larger portfolios of vacant and abandoned properties that they are apparently not responsible for taking care of?

Well shut my mouth!  You don’t say?  Really!  No way?  Do you mean to tell me we can’t blame all this on our under-funded judges and this ain’t the fault of those damn ethically-challenged foreclosure defense attorneys what with all their delay tactics and pesky rules and those absurd arguments about THE LAW…blah, blah, blah.

When exactly will this nation wake up and start directing appropriate anger and rage at the real evil that’s hard at work, everyday all across this sleeping nation?

From the Tampa Times:

It’s an oft-repeated pattern.

In the last 12 months, lenders have canceled auctions on 4,204 properties in Pinellas and Hillsborough counties. Sales have been canceled two, three, even nine times on some homes.

In many cases, banks delay seizures to avoid having to pay maintenance bills or homeowner association fees. Meanwhile, neighbors fend off vandals and thieves and worry about property values falling because of the deteriorating houses.

The repeated cancellations burden the court system.

“These never seem to go away,” said Thomas McGrady, chief judge of the Pinellas-Pasco County Circuit. “It’s a nuisance.”

White Paper: Many Causes of Foreclosure Crisis

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Editor’s Comment:

I attended Darrell Blomberg’s Foreclosure Strategists’ meeting last night where Arizona Attorney General Tom Horne defended the relatively small size of the foreclosure settlement compared with the tobacco settlement. To be fair, it should be noted that the multi-state settlement relates only to issues brought by the attorneys general. True they did very little investigation but the settlement sets the guidelines for settling with individual homeowners without waiving anything except that the AG won’t bring the lawsuits to court. Anyone else can and will. It wasn’t a real settlement. But the effect was what the Banks wanted. They want you to think the game is over and move on. The game is far from over, it isn’t a game and I won’t stop until I get those homes back that were ripped from the arms of homeowners who never knew what hit them.

So this is the first full business day after AG Horne promised me he would get back to me on the question of whether the AG would bring criminal actions for racketeering and corruption against the banks and servicers for conducting sham auctions in which “credit bids” were used instead of cash to allow the banks to acquire title. These credit bids came from non-creditors and were used as the basis for issuing deeds on foreclosure, each of which carry a presumption of authenticity.  But the deeds based on credit bids from non-creditors represent outright theft and a ratification of a corrupt title system that was doing just fine before the banks started claiming the loans were securitized.

Those credit bids and the deeds issued upon foreclosure were sham transactions — just as the transactions originated with borrowers were based upon the lies and false pretenses of the acting lenders who were paid for their acting services. By pretending that the loan came from these thinly capitalised sham companies (all closed with no forwarding address), the banks and servicers started the lie that the loan was sold up the tree of securitization. Each transaction we are told was a sale of the loan, but none of them actually involved any money exchanging hands. So much for, “value received.”

The purpose of these loans was to create a process that would cover up the theft of the investor money that the investment bank received in exchange for “mortgage bonds” based upon non-existent transactions and the title equivalent of wild deeds.

So the answer to the question is that borrowers did not make bad decisions. They were tricked into these loans. Had there been full disclosure as required by TILA, the borrowers would never have closed on the papers presented to them. Had there been full disclosure to the investors, they never would have parted with a nickel. No money, no lender, no borrower no transactions. And practically barring lawyers from being hired by borrowers was the first clue that these deals were upside down and bogus. No, they didn’t make bad decisions. There was an asymmetry of information that the banks used to leverage against the borrowers who knew nothing and who understood nothing.  

“Just sign everywhere we marked for your signature” was the closing agent’s way of saying, “You are now totally screwed.” If you ask the wrong question you get the wrong answer. “Moral hazard” in this context is not a term anyone knowledgeable uses in connection with the borrowers. It is a term used to express the context in which unscrupulous Bankers acted without conscience and with reckless disregard to the public, violating every applicable law, rule and regulation in the process.

Why Did So Many People Make So Many Ex Post Bad Decisions? The Causes of the Foreclosure Crisis

Public Policy Discussion Paper No. 12-2


by Christopher L. Foote, Kristopher S. Gerardi, and Paul S. Willen

This paper presents 12 facts about the mortgage market. The authors argue that the facts refute the popular story that the crisis resulted from financial industry insiders deceiving uninformed mortgage borrowers and investors. Instead, they argue that borrowers and investors made decisions that were rational and logical given their ex post overly optimistic beliefs about house prices. The authors then show that neither institutional features of the mortgage market nor financial innovations are any more likely to explain those distorted beliefs than they are to explain the Dutch tulip bubble 400 years ago. Economists should acknowledge the limits of our understanding of asset price bubbles and design policies accordingly.

To ready the entire paper please go to this link: www.bostonfed.org/economic/ppdp/2012/ppdp1202.htm

CFPB Issues Bulletin Removing the Corporate Veils

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Editor’s Comment:

In a recent bulletin, the Consumer Financial Protection Board issued a bulletin that obliterated the “layering” of corporate veils to pierce through and allow homeowner borrowers to press their claims for wrongful foreclosure, slander of title, fraud and other claims against EVERYONE that is a “service provider” within the broad definition contained in the  Dodd-Frank Act. It makes everyone liable. Hat Tip to Darrell Blomberg. Instead of projecting dozens of hours as to discovery, depositions, and other forms of investigation, the CFPB has essentially created a presumption by an administrative finding. This finding, being merely a codification of existing law and doctrine is in my opinion completely retroactive.

The mere fact that a supervised bank or nonbank enters into a business relationship with a service provider does not absolve the supervised bank or nonbank of responsibility for complying with Federal consumer financial law to avoid consumer harm. A service provider that is unfamiliar with the legal requirements applicable to the products or services being offered, or that does not make efforts to implement those requirements carefully and effectively, or that exhibits weak internal controls, can harm consumers and create potential liabilities for both the service provider and the entity with which it has a business relationship. Depending on the circumstances, legal responsibility may lie with the supervised bank or nonbank as well as with the supervised service provider.

B.    The CFPB’s Supervisory Authority Over Service Providers

Title X authorizes the CFPB to examine and obtain reports from supervised banks and nonbanks for compliance with Federal consumer financial law and for other related purposes and also to exercise its enforcement authority when violations of the law are identified. Title X also grants the CFPB supervisory and enforcement authority over supervised service providers, which includes the authority to examine the operations of service providers on site.1 The CFPB will exercise the full extent of its supervision authority over supervised service providers, including its authority to examine for compliance with Title X’s prohibition on unfair, deceptive, or abusive acts or practices. The CFPB will also exercise its enforcement authority against supervised service providers as appropriate.2

C.    The CFPB’s Expectations

The CFPB expects supervised banks and nonbanks to have an effective process for managing the risks of service provider relationships. The CFPB will apply these expectations consistently, regardless of whether it is a supervised bank or nonbank that has the relationship with a service provider.

To limit the potential for statutory or regulatory violations and related consumer harm, supervised banks and nonbanks should take steps to ensure that their business arrangements with service providers do not present unwarranted risks to consumers. These steps should include, but are not limited to:

    Conducting thorough due diligence to verify that the service provider understands and is capable of complying with Federal consumer financial law;

See full article 2012-03 at http://www.consumerfinance.gov/guidance/

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