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Pretender Lenders: How Tablefunding and Securitization Go Hand in Hand” By William Paatalo and Kimberly Cromwell. CLICK:

Illinois App. Ct.: Assignment Document Without Assignment of the Debt Conveys Nothing

So here, in black and white, is yet another appellate decision  confirming what I have said for 12 years: The assignment of the mortgage is merely the delivery of a piece of paper. It conveys nothing in terms of an interest in the real property or the right to foreclose the mortgage. BUT if the assignment of the document is accompanied by a sale or assignment of the allegedly underlying debt, then the assignment can be used as evidence of an encumbrance and the contractual right to seek foreclosure.

Just as a promissory note can be used as EVIDENCE of a debt and is not the debt, so too is the mortgage EVIDENCE of an encumbrance and the right to foreclose. Confusion on this issue has led to millions of defective foreclosures.

“ ‘[a]n assignment of the mortgage without an assignment of the debt creates no right in the assignee.’ ” Bristol v. Wells Fargo Bank, National Ass’n, 137 So. 3d 1130, 1133 (Fla. Dist. Ct. App. 2014) (quoting Vance v. Fields, 172 So. 2d 613, 614 (Fla. Dist. Ct. App. 1965); see also Elvin v. Wuchetich, 326 Ill. 285, 288-89 (1927) (assignment of mortgage on truck without transferring note transferred no interest in truck authorizing replevin).

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see Illinois Case Debt MUst Also be Assigned

This is why lawyers are necessary. Beneath each “self-evident” fact there are multiple layers of decisions that attempt to get it just right. Ignorance of those layers leads either to loss in court or a judge issuing an erroneous ruling.

In first year law school the contracts professor pounds into the heads of the students a simple phrase: “The note is not the debt. It is evidence of the debt.” That seemingly simple notion leads to other axioms. The note is indeed evidence of a debt but not necessarily proof of the debt — like a note signed in anticipation of receiving a loan or a car — and no loan or car appears.

The debt arises by operation of law under the legal presumption that when you get something it is not a gift — whether it is money or a car. You are presumed to owe the grantor something (usually money) at a fair rate of exchange or a price agreed by the parties. That debt exists regardless of whether anything is in writing anywhere.

So if I get $100 from you and there is no evidence of a gift, then I owe you $100 with or without anything in writing. That is the debt.

If I sign a note to you saying I owe the $100 to you and stating the terms for repayment, then the note is evidence of the debt and the debt is merged into the note so I don’t owe you $200 — $100 for the note and $100 for the debt. The note is is evidence of that debt and the terms of repayment. Not much can be said in defense other than that the debt was repaid and I have proof of that.

BUT if I sign a note payable to a party other than you then we have a problem. I received the money from you, but I executed a note to someone else at your request. OK, you still have a note that can be enforced. The merger doctrine still applies. (The debt is merged into the note).

NOW change the scenario  such that the third party is actually the party that “originated” or brokered the loan and you are not included in the paperwork even though you made the loan. Add the fact that I don’t know you made the loan. Unless there is a contract linking the third party and you the merger doctrine cannot work. Because the debt is the same in all instances —- when I received the money from you, I owe you $100. That is true even if I don’t know of your existence.

SO the gravamen of the fictitious claims by the banks is that a relationship is “presumed” between the originator and whoever ends up with the last assignment, endorsement (“indorsement”) or both. BUT as this case says, along with hundreds of others, is that if there is no actual exchange of value then there is no transaction, assignment or endorsement. And in that case the assignment is a nullity. It means nothing unless there is evidence of the sale of the underlying debt.

Just like the presumption is that your loan to me was not a gift, the transfer of a six figure debt is presumed to require valuable consideration (i.e., money), which is exactly what is stated in Article 9 of the UCC as adopted by all 50 states. There can be no enforcement of a mortgage without proof of value paid by the named enforcer.

AND there is the rub. Since the payee on the note and mortgage never gave me the $100 and nobody paid you the $100 that you gave me, the debt never moved. Therefore all documents purporting to transfer the note or mortgage are nothing in the eyes of the law (and common sense). Neither the note nor the mortgage can be successfully enforced by anyone, even though the fabricated enforcer can survive a motion to dismiss by alleging the basic elements of an enforcement action in its complaint in judicial states.

Fundamentally mortgage foreclosure is about money. That is why the ownership of the debt is vital to the efficacy of any document fabricated for purposes of foreclosure. The current “enforcers” are sham conduits for the major banks who serve as both underwriters of sham securities offerings and as Master Servicer of a non-existent trust. They are standing in the way of workouts and settlements of mortgages that were created in a chaotic, overheated market created by those same banks.

They have no place in the relationship between you and me. But you don’t even know that I exist because nobody has told you. And I know you are out there but I don’t know who you are. And if we could get together, we could probably work this thing out.


The Neil Garfield Show: Foreclosure Q & A. Have a Question? Neil Garfield wants to hear from you!

Q & A with Neil Garfield

Thursdays LIVE! Click in to the The Neil Garfield Show

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Co-hosted with attorney Charles Marshall.

Do you have a perplexing question about foreclosure, securitization or chain-of-title issues?

Neil Garfield will answer questions from callers.  Please keep your question brief and limit yourself to one question so other guests may have an opportunity to speak with Neil.  Information provided is for educational purposes only and is NOT intended as legal advice.  Neil recommends you meet with an experienced attorney in your jurisdiction for guidance.

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Ocwen is NOT Entitled to Invoke the Benefits of a Legal Presumption

The banks are winning  most cases because homeowners choose not to defend. The second most reason for this fraudulent winning streak is the application of legal presumptions that eliminate the need to actually prove their case. 99% of the time they are winning cases in which they should lose and be subject to sanctions for trying to defraud the court and the homeowner.

The bottom line is that if ever there was a source of information that was less than credible in civil litigation it is the case of Ocwen as a servicer. By definition that means that they are not entitled to any legal presumptions. And that means Ocwen must prove everything proffered to prove the truth of any matter asserted.

All statutes on evidence say the same thing: if the hearsay contained within testimony or a document comes from an unreliable source,  no legal presumptions should apply.  So a facially valid document is not presumptively correct as to its contents. And a payment history is not presumptively correct merely because it supposedly came from the records of the servicer.

In plain language, no document from Ocwen should be allowed in evidence without the testimony of a person who either prepared it or who witnessed its preparation and no entry of transactions should be allowed in evidence without the proper foundation by a witness with personal knowledge.

“Familiarity” with the books and records of Ocwen is NOT knowledge of the books and records of the foreclosing party in all events. THAT is where the 3d DCA in Florida and most other courts are getting it wrong. There is no foundation ever laid for showing that the books and records of the servicer are the complete books and records of the named foreclosing party (frequently a trust). What we are seeing is, in reality, fabrications of a slice of a slice of third party records.

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Practice Hint: Ask for the party to whom payments are made on the subject loan account. Ask whether those payments s stopped. In most cases the payments have not stopped even though the borrower has not paid anything. That is because of “servicer advances” where the debt is once again illegally shifted to the benefit of the underwriting bank that is also the Master Servicer. The named foreclosing party is used as a proxy for the Master Servicer to recover “servicer advances.” This is yet another reason why the named foreclosing party is not the real party in interest or, alternatively, the named foreclosing party is only one of many entities who have an exclusive interest in the proceeds of the foreclosure.

Note this paragraph in the Massachusetts consent order:

WHEREFORE, Ocwen, at all relevant times herein was a wholly-owned subsidiary of Ocwen Mortgage Servicing, Inc., which was a wholly-owned subsidiary of Ocwen Financial Corporation, has engaged in the business of servicing residential mortgage loans in Massachusetts. These activities generally include collecting or remitting for any lender, noteowner, noteholder, or itself, payments, interest, principal, and trust items on a residential mortgage loan in accordance with the terms of the residential mortgage loan, as well as the additional servicing activities further described below. Ocwen has also engaged in the business of residential mortgage lending.

The MMC Examination found that the effectiveness of Ocwen’s Management Control Systems (MCSs) failed to keep pace with growth leading to a material increase in operational deficiencies including the failure to timely date borrower correspondence, the failure to timely pay borrower escrow items, the failure to ensure the accuracy of escrow statements, the failure to timely reconcile consumer custodial accounts and the failure to ensure licensure of an affiliate that provides servicing related activities. The MMC Examination review of these operational deficiencies revealed that as Ocwen attempted to assimilate MSR purchases, deficient MCSs caused consumer harm, led to violations of federal and state regulations and resulted in non-compliance with servicing standards required by the 2012 National Mortgage Settlement (NMS). (e.s.)

… the number of Ocwen’s comment codes has ballooned to more than 8,400 such codes. Often, due to insufficient integration following acquisitions of other servicers, there are duplicate codes that perform the same function. The result is an unnecessarily complex system of comment codes, including, for example, 50 different codes for the single function of assigning a struggling borrower a designated customer care representative.” (e.s.)

The MMC Examination found that Ocwen has engaged in a pattern and practice of unsafe and unsound loan servicing by manipulating the lender-placed force-placed insurance market and artificially inflating the premiums and then passing the improperly inflated amounts onto consumers.

If they refuse to give information on remittances to an alleged creditor, how can they claim to be a servicer? What are they hiding?
Who are the “affiliates” that provide service related cities? What are those “service related activities?”


Hat tip to Dan Edstrom:

Massachusetts consent order against Ocwen from April 20, 2017:
The further you get into this Consent Order the better it gets (unless you have stock invested in Ocwen).
This pretty much sums up the Consent Order
“Based upon the aforementioned Statement of Facts, Ocwen has failed to demonstrate the financial responsibility, character, reputation, integrity, and general fitness that would warrant the belief that the business will be operated honestly, fairly, and soundly in the public interest in violation of General Laws chapter 93, sections 24G, 24I, General Laws chapter 255E, section 4, 209 CRM 42.03, and 209 CMR 18.03.”
From the editor: Note that these are independent administrative findings by a government agency.  Courts are required to defer to the agency’s determination. In the case of an out of state agency ruling, courts are required to extend comity — i.e., accept the ruling unless it is plainly not relevant to the case at bar. Even without such doctrines, the finding casts serious doubt on any evidence proffered through Ocwen, thus eliminating the ability of the foreclosing party to claim the benefit of legal presumptions. All such named foreclosing parties must establish foundation not through presumption but through actual proof of the facts asserted.
Mass. to sue Ocwen:

Discovery Where Freddie or Fannie Is Alleged to be Owner of Loan

Fannie and Freddie are the equivalent of black holes in physics. Representations abound that they own a loan, or note, or mortgage or debt. What this testimony shows is that there are specific discovery items to request and compel wherein the the truth of the matter and the truth about the parties will be revealed.

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see: Statement of Donald Bisenius US Senate FM_statement_SBC_foreclosure_hearing_12_1_10

see: Statement of Terry Edwards/Fannie Mae US Senate Banking testimony 12/2o10

If anyone made a representation that Fannie or Freddie is the “investor” or that one of them owns the loan, then there are specific documents that should be produced that will show the nature of the transaction.

Each one of them should be noticed for production or subpoenaed. First you may need to propound discovery to the foreclosing party to identify the custodian.

Or, you can directly subpoena the Government Sponsored Entity (now in conservatorship) to produce the documentation.

In addition to agreements, you probably should ask for any record of financial transactions in which the GSE was involved with respect to the subject loan.

Statement of Donald Bisenius, Freddie Mac Senate Banking Committee December 1, 2010


Document custody

Concerns have been raised about the custody of mortgage notes and other documents. When a mortgage is sold to Freddie Mac, the seller must deliver the original note for each mortgage loan, together with any power of attorney or modifying instrument (such as a modification agreement, conversion agreement, assumption of liability or release of liability agreement), to a document custodian, which holds the documents in trust for Freddie Mac. Currently, Freddie Mac uses approximately 125 document custodians, with much of the volume concentrated in a relatively small number of large companies.

Our Guide sets forth eligibility standards and various other requirements for document custodians. Each document custodian enters into a tri-party custodial agreement with Freddie Mac and the servicer that is servicing a mortgage for which the custodian holds note files. Each document custodian files an annual certification report to Freddie Mac, and is required to notify Freddie Mac between reports of any significant personnel, operational or financial changes. Freddie Mac also conducts periodic on-site reviews of document custodial operations.

Don’t Get Caught in a Stock Market Crash

The bottom line is that when the bottom falls out, stocks will fall around 40% and will not rebound. We are running on fumes with mass hysterical confidence and inflows from retirement savings accounts. The effects of the crash on consumer and business confidence might well be catastrophic, fueling a drop in economic activity that will drag down earnings and the price of stocks traded on the open market.


You can read the article or not. I will summarize. I admit that I was considerably off on the timing of the crash. This article is by one of the most respected economists, worldwide.  He accurately predicted prior crashes in the stock market and real estate market in 2008. His observation is that the reason for overpricing stocks is the psychology of investors who believe that others will continue buying stocks.

I think he and I both missed something.The missing component is the inflow of cash savings generated by 401k’s and other retirement programs. Nobody knows where else to put the money so they invest in stocks. This factor alone creates an excess demand that is blind to value. And it might soften the effects of a stock market crash but it won’t eliminate it

All the red flags are out. The baseline of all stock valuation is a ratio between the earnings of a company to the price of its stock. Normal for a stable market is 16. The current ratio is 30. No reasonable foundation exists to support a stock market that is based upon a price-earnings ratio of 30. This number came up in 1929 and 2000-2003.

In 1929 stocks lost 80% of their value. In the 2000’s stocks lost 50% of their value. I think the probable downside is less than 40% but when it happens it will be sudden — just like prior crashes. In both cases, confidence was high — until it wasn’t.

We are tap dancing on thin ice. The question is when, not if. I strongly recommend that you move your money into cash or short-term debt instruments (bonds) issued by either the Federal government or a Triple A rated company. You might “miss out” on further growth but you will preserve your capital and ride out the storm. While there will be a rebound after the crash, it will not return to current levels because current levels are unsustainable.

3rd DCA Florida Reverses Judgment for Homeowner

“This is an example of self-validating bias. While the court’s reasoning was correct, the application of that reasoning to the facts was incorrect. The Judgment should have been affirmed.”
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And while you are at it, look at this post on Deadly Clear —


Deutsch v Briito HEARSAY Exceptions

  1. The Appellate Court clearly went to extremes in order to find that a proper prima facie case for foreclosure was made by Deutsch Bank National Trust Company — an entity that most probably had no interest or rights with respect to the subject mortgage.
  2. The 3d District starts off with a misapprehension or misapplication of the facts. The last payment in 2008 was rejected by whoever received it. Yet the court assumes that the failure to make that payment was a default by the elderly homeowners.
  3. The court then glosses over the nonexistent boarding process based upon the testimony of a robo-witness from a servicer.  It is important to drill down on the robo-witness in cross examination. At the base of his/her testimony there is nothing at all. The whole purpose of using a robo-witness is to make absolutely certain that he/she doesn’t slip up and tell the truth. They don’t know the truth.
  4. The Trial Court correctly concluded that the testimony from the robo-witness was inadmissible hearsay, based upon her assessment of all the facts. But the appellate court said this was in conflict with the Court’s admission into evidence of the proffered testimony and documents into evidence. The Appellate Court sailed overhead on the their own assessment of the testimony as credible and twisted the case into a judgment for Deutsch.
  5. The trial judge’s decision was based upon its rejection of the case presented by the named Plaintiff.
  6. But the Appellate Court’s reasoning that the witness need not be a person who actually performed the “boarding process” is correct. But to assume that the boarding process actually occurred in connection with the subject loan was a giant leap that the 3d DCA was more than willing to make.
  7. In virtually every case the witness for the foreclosing party is NOT a person with personal knowledge of anything. Such a witness is essentially reading the content of documents that were produced for the exclusive purpose of presentation at trial. That is hearsay on hearsay.
  8. This quote says it all: “the trial court decided that Mr. Blanchard was not familiar enough with the practices and procedures of Moss Codilis, one of the prior third party vendors, and excluded the demand letter for that reason.” On the surface this looks like a potential error by the trial court. But it wasn’t. For the trial judge, there was no proper foundation for admitting the hearsay documents and hearsay testimony into evidence probably because she didn’t believe it. The Appellate court, instead of determining whether the Judge’s belief was based upon any evidence that would support her, decided that she could not make the choice. If that were true we would need computers not trials.
  9. The Appellate court once again ignored the obvious bad faith and iniquity of the servicer and absolved Deutsch of any possible wrongdoing, preemptively including the fact that this Deutsch entity was neither the trustee for a trust that owned the subject loan nor a party with an interest or right over the subject mortgage.
  10. The fact remains that neither Deutsch in this case, nor any other purported “lender” could or would prevail in a judicial proceeding that was conducted without the application of presumptions which is a ruling that the party preferring documents and testimony is credible. They are not credible and the public domain has dozens of examples of a long-standing pattern of conduct including fabrication of documents, false representations or misleading information about the ownership of the loan and outright fraud, in addition to unclean hands in the handling of the loan account even if we assume that they had any right to administer the loans account.
  11. The essential question remains: Under what legal theory can a party reap the rewards of a contract in which it was (a) not a party and (b) not a third party beneficiary?

The Tricky World of Unlawful Detainer and Eviction

It may be fairly said that in nonjudicial states, the banks take the greatest risk when they file, as Plaintiff, in an unlawful detainer action. It is the first time they are required to actually state their case, establish legal standing and ask for “relief.” They must plead and prove legal standing. The trap door is that they usually have no legal standing, the foreclosure sale was “private”, and the first time time their actions generally come under judicial review is in the judicial procedure leading to eviction.

It is in these cases that the banks will fight any semblance of real discovery because if they complied they would revealing the fraudulent nature of their actions. Below is one homeowner’s response to objections to discovery filed by “U.S. Bank, as trustee” etc.

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The lawyer’s who file unlawful detainer actions do so on behalf of a party that probably doesn’t exist. They have already held a private sale of the property on behalf of the same party as successor beneficiary. That party still doesn’t exist, and the sale is both void and fraudulent. They have already filed a Substitution of Trustee on behalf of the false successor beneficiary which is also false and fraudulent. And they have sent a Notice of Default and Notice of Sale all for the same nonexistent entity — or at the very least an entity that has no interest in the alleged loan contract, the note or the mortgage or deed of trust.

Somehow the lawyers get a court of law to treat the private sale as a judicial act, and thus apply doctrines of claims preclusion (res judicata, collateral estoppel, Rooker Feldman). This puts the homeowner in the position of having his claims of fraud either precluded or ignored. Nonjudicial sale is by very definition a private act that does not involve the judiciary.

It is in that context that you will see the battle formed. Here is a well written response to the “objections” to discovery filed by the “bank.” A careful reading will reveal the inherent weaknesses in all such nonjudicial foreclosures — especially those performed in the name of an “unidentified trust.” The usual practice is to either exclude the word “trust” from the name of the “successor” beneficiary or to insert the word “trust” in a place that does not necessarily mean that an existing trust has been identified.

see DF Reply to PL Opp to Motion to Compel

The names have been changed to protect privacy of the homeowner.

Note that in judicial states, these are the same issues except that a homeowner MUST raise the issues in defense of the foreclosure complaint filed by the lawyers who are asserting they represent a Plaintiff that either does not exist or that has no interest in the alleged loan contract, note or mortgage.

Practice Note: Some lawyers argue, and I think I agree, that a homeowners is theoretically better off NOT contesting the private nonjudicial sale and saving his ammunition for the unlawful detainer action. That strategy is based upon the fact that in the context of the private foreclosure sale, the homeowner has the burden of pleading and proving a case against foreclosure in a court predisposed to presuming the validity of the void notices etc.

In the unlawful detainer the burden pleading and proof shifts from the homeowner to the lawyers who are pursuing removal of the homeowner.

Therefore, there is a good strategical argument for waiting until the “party” seeking foreclosure must allege the facts supporting its case. The people who argue for this strategy point out that the right to seek a TRO prohibiting the sale is illusory. It puts the homeowner in the position of defending against allegations that have not been written filed or even asserted. It is the legal equivalent of shadow boxing.

Public Policy: My opinion is that when a foreclosure becomes contested, the parties should be realigned. That means the Defendant becomes the Plaintiff and must file a claim which can be admitted or denied or defended by the homeowner. The current nonjudicial foreclosure process is in my option, a denial of due process —requiring the homeowner to prove what would have been alleged by the foreclosing party, and then defending those allegations. I have long held that nonjudicial foreclosure is currently unconstitutional in its application.


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