Quiet Title and Statute of Limitations

In the search for a magic bullet, many pro se litigants and even attorneys have ended up perplexed by laws and rules regarding an action to Quiet Title (frequently misspelled by pro se litigants as “Quite Title”). The purpose of this article is to add some context to the discussion and some reasons for my conclusion — that as more decisions emerge the action for Quiet Title will fade unless the mortgage of record is first nullified or canceled.

For context, let’s remember that the purpose of recording documents in the Public Records is to give certainty and notice to the world of transactions that can be recorded. If courts were to issue decisions to quiet title on recorded documents that are facially valid, the result would be chaos — nobody would know if they were really getting permanent title and title insurance companies would, for obvious business reasons, refuse to issue a title commitment or policy unless EVERYONE brought a quiet title action after every transaction and received a court order, suitable for recording that stated the rights of the stakeholders. This is precisely what the recording statutes are meant to avoid.

Now to the issue of the statute of limitations. Some states hold that even if there is an act of acceleration, the statute of limitations only applies to the monthly payments that were due during the statutory period that are now time-barred. Florida does not appear to be one of those states, and despite some decisions to the contrary, it doesn’t look to me like Florida will become one of them. In Florida it is generally accepted that the statute of limitations time bars any action after 5 years to collect a debt. You should check your state statutes because each state is different and don’t make any decisions without consulting a qualified attorney licensed in the jurisdiction in which your property is located.

So the thinking has gone in the direction of merely stating that the claim is time-barred if there was an acceleration of the debt, and five years as passed. But the Romero v SunTrust decision (see below) from last year, raises the real issues. While the Bank had no right to bring a claim on the note, and presumably had no right to bring an action on the mortgage, the mortgage remains on record. Alleging that the statute of limitations bars any action on the note or mortgage does not invalidate the mortgage. If it is facially valid and properly recorded, it is there in the County records for all to see.

So the question arises “What happens at a subsequent closing on the sale of the property or refinance, and the Mortgagee (or party claiming to be the successor of the mortgagee) refuses to execute a satisfaction of mortgage without receiving payment?” Is THAT a claim that is time-barred? The answer is I don’t know, but I suspect that the refusal to execute a satisfaction of mortgage is an act that is separate from bringing an action to collect on a time-barred debt.

I suspect that an action for equitable relief demanding a Court order to force the Bank into executing a satisfaction of mortgage would fail. That is essentially the same as asking the Court to issue a quiet title order stating that the mortgage is invalid — a precedent that raises numerous hazards in the marketplace. Essentially you are saying that you did have the debt, the bank is time barred from enforcing it, so you want the mortgage nullified or canceled. Several Courts have issued ruling consistent with this ruling so I don’t want to give the impression that what I am saying is the general rule — what I am saying is that I think my theory of the action will become the general rule.

My theory, supported by case law in other states, is that you must have grounds to attack the validity of the instrument and win your case before you can then ask for a decision on Quiet Title. Fortunately, in the context of loans and title subject to claims of securitization, such an attack is eminently possible and likely to succeed on an increasing basis. But in order to do so, one must be very conversant in the claims of securitization generally and especially knowledgeable as to claims of succession or securitization in your specific case. Alleging that this particular defendant has been repeatedly found in court to lack the indicia of ownership or authority to enforce a note and mortgage may not do you any good. You are still left with the question of what to do with a facially valid mortgage encumbrance recorded against the property. If the person you sued doesn’t own it, who does?

After years of avoiding the right strategies, lawyers are coming around to the idea that in order to be truly successful in an action to remove the mortgage encumbrance, you need to have an allege facts to support the claim that the mortgage deed (or Deed of Trust) was invalid in the first instance or that it could not be enforced even if the statute of limitations was not applicable. THEN alleging the statute of limitations is a good idea as corroboration for your logic that the mortgage is invalid because it is unenforceable and without merit in all instances.

There are two such attacks that are promising:

1. Attack the initial closing as lacking consideration or giving rise to common law or statutory rescission. If statutory rescission applies, the law states that the encumbrance is terminated by operation of law. (TILA). The allegation that the opposing bank is a “holder” (according to them) is insufficient to bar your attack on the initial closing. The problem of course is that the banks regularly confuse judges into applying the rules of a holder in due course when the Bank itself makes no such assertion. Hence, being able to remind or educate the judge on the differences between holders, holders with rights to enforce and holder in due course is essential and must be presented with clarity. If you don’t understand the differences you are not prepared for the hearing.

2. Attack the subsequent acquisition of the “loan”, debt, note and/or mortgage also as being a sham lacking in consideration AND of course in violation of the PSA. The point to remember here is that the “assignment” or “endorsement” (almost always fabricated, forged or unauthorized) is only an OFFER in which case the Trustee of the REMIC trust must accept the offer and then pay for it. In fact most PSA’s require a letter of opinion from counsel for the Trust indicating that no negative tax impact will result on the Trust’s REMIC status. Three things we know to be true in most cases: (a) the Trustee never accepted the transfer and (b) The trust never paid for the loan and (c) a loan already declared in default is not susceptible to acceptance by the trust. Keep in mind that most trusts are governed by New York Law which says that such transactions are void, not voidable.

So let us assume that you have a receptive Judge who agrees that the transfer to the trust never occurred or even that the original loan documents lack consideration from the named Payee on the note (and of course the named Mortgagee/beneficiary under the Mortgage). In my opinion you are still only half way to home base. No home run yet, although I think the law will evolve where that IS sufficient to remove the mortgage encumbrance.

So now what? You have still sued parties whom you have proven have no interest in the mortgage. The question is whether you have eliminated the possibility of ANY party (who has no notice of the action) having an interest in the debt, note or mortgage. And many judges will reply that you have put on a pretty good case but you still have not identified the creditor — an odd twist on the defensive actions in foreclosure cases.

My opinion is that you need to allege a fact pattern, where appropriate, that states that Wall Street investors advanced the money to the borrower without knowing that their money was not going through the trust. Hence a direct relationship arose by operation of law between the borrower, as debtor and the investors as creditors. Those investors are creditors not as Trust beneficiaries but rather personally, because the money never went through the trust. The allegation is that they were cheated by intervening fraudulent behavior or negligent behavior on the part of the broker dealer who sold them the securities of an empty REMIC Trust that never received the proceeds of sale of the REMIC RMBS.

At this point you can properly argue that  the investors were entitled to a note and mortgage by virtue of the securitization documents that were used to fraudulently induce them to part with their money. The allegation should be that they didn’t get it and that putting the name of sham “nominees” did not accrue to the benefit of the investors but rather inured to the benefit of intermediaries who were not lending money in your transaction.

Either way, you say that as to the debt between the mortgagor homeowner and whoever else might be making a claim, the initial mortgage encumbrance is now and/or has always been invalid and unenforceable because they recite facts based upon a non-existent transaction, that the mortgage has been split from the note, that the note has been split from the debt, and through no fault of the homeowner, there is no note or mortgage inuring to the benefit of the actual creditors. The cherry on top is that there is no such thing as an equitable mortgage — for the same reasons that courts are reluctant to grant quiet title actions — it would cause chaos in the market place and raise uncertainty that the recording statutes are intended to avoid.

See Romero v SunTrust Statute of Limitations 9-3-2013

See also “a new and different breach” Singleton v Greymar Fla S Ct 882 So2d 1004 9-15-2004

And on collateral estoppel Kaan v Wells fargo Bank NA Case 13-80828-CIV 11-5-13

For further information, call 954-495-9867 or 520-405-1688.

Are you a candidate for Florida’s Hardest Hit Fund relief for Foreclosure Victims? See Florida Hardest Hit Fund

 

 

5 Responses

  1. I am interested in your opinion in my previously foreclosed property. It was dismissed without 7 years ago.

  2. This article and the law suit it mentions explains a lot about how and why the federal government is running interference for and complicit with the stealing of property from homeowners, and the stealing of money from investors, as accomplices to the crimes with Fannie Mae, who happens to be the puppet master behind the scenes of my foreclosure .. it’s no surprise that I have never been granted a mortgage modification with a reduction of principle, or been offered anything close to a reasonable modification , Fannie Mae has no intention or desire because of their need to keep the smoke and mirrors playing out for the investors on the other side of the scheme.
    See the story here … http://mattweidnerlaw.com/foreclosure-federal-government-stealing-private-individuals-just-homeowners/

  3. I like what Neil writes here though, it gives us the argument as to why the mortgage should be deemed unenforceable, at the very least. Articulating this argument is one way, but if the Judge asks for proof to back up what we’re arguing, that’s where it gets tricky. It would then have to turn back to the plaintiff and the fact that they have not and cannot provide the real money trail and other evidence needed for them to be deemed as the real party in interest.

  4. I think the Judges are trying to hide behind the notion that IF they granted quiet titles, it would somehow create a hazard to the entire system and jeopardize the well being of the overall good of the public, which is a bunch of bs. The overall health and welfare of the title to property has already been undermined and harmed by the actions of the banks and lending institutions. As Neil points out, it all starts with the Ponzi scheme initial start point of the origination, which the courts don’t want to hear about, but which holds the key to revealing the truth about the scheme. For over 200 years this country depended on the proper public recordings of property sales, transfers, assignments, etc. and now the courts want to justify the lack thereof due to the banks having had the whole Ponzi scheme house of cards collapse in its face.
    The Judges are no longer interested in chain of title and recorded assignments, they have now focused their attention on who possesses the actual Note. But they disregard the fact that Notes and other documents are being fraudulently fabricated. When the public started demanding “show me the Note” , the banks hired more workers to start fabricating the Notes, and adding phony rubber stamp endorsements that were missing from the last computer file copy that was found. When have you ever heard of any courts ordering forensic document experts to examine a questionable Note? They don’t want to know the truth. Neil keeps coming back to attacking the origination as a way to attack the mortgage and deem it as being invalid and void.

    In my case I don’t even have a named Trust that my Note was supposedly placed into. My foreclosure is in the name of the last servicer Wells Fargo. My Note was probably one of those that fell thru the cracks and was never even assigned to a particular Trust, but was just part of the frenzy when it was passed around after the origination of the refinance in 2004, when it was immediately sent to Washington Mutual Bank as “servicer” but was owned by un-named “investors” according to Fannie Mae. So without having access to complete discovery and disclosure, I’m fighting a battle where I can’t even show proof that my Note was securitized, I can only speculate because the servicer refuses to provide all of the necessary info needed. Even if it was never securitized, the banks still need to show proofs of each and every transfer of the Note, not just the alleged Note with an alleged rubber stamp endorsement by WaMu .. that should not be enough.

    In my answer I did deny that any legal or valid financial transaction ever took place according to law. Now we’ll see if the Judge expects me the defendant to prove this negative , or will he make the plaintiff carry the burden of proving a legal valid financial transaction took place? I know their short answer will be “well here’s the note and mortgage that the defendants signed”.

    And if the Judge turns to me ? What is my response?

  5. I was of the opinion that a quiet title suit would force the lender to prove they were the lender. Why would an unknowledgeable mortgagor need to prove anything except that they have a warranty deed? After they quit recording the transfer of the note at the county court house, it is almost impossible to track the deed of trust. In the state of MO, the law states that transfer of ownership of the note/deed of trust have to be recorded; I’m not sure how they are getting away with that.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: