How “Standing” Is Causing the Longest Economic Recovery Since the Great Depression

THE PERFECT CRIME: THE VICTIMS DON’T KNOW ANYTHING

WHY INVESTORS AND BORROWERS SHOULD GET RID OF THE SERVICERS AND REPLACE THEM WITH SERVICING COMPANIES THEY CAN TRUST TO MITIGATE THE LOSSES CAUSED BY INVESTMENT BANKS

HOW? It is simple: since the perpetrators ignored the REMIC trust, didn’t fund them and never intended to actually have the REMIC trusts own the loans, the investors can go directly to homeowners or through their own servicers to settle and modify mortgages. This would leave the investors with claims against the investment banks for the balance of the losses, plus punitive damages, interest and court costs. It is the same logic as piercing the corporate veil — if you pay your grocery bills using the account of your limited liability corporation, the corporate entity is ignored.

Vasquez v Saxon (Arizona supreme Court) revisited

Assume the following facts for purposes of analogy and analysis:

  1. John Jones is a Scammer, previously found to have operated outside the law several times. He conceives of yet another PONZI scheme, but with the help of lawyers he has obscured the true nature of his next scheme. He creates a convoluted scheme that ultimately was never understood by regulators.
  2. The first part of his scheme is to offer shares in a company where the money will be held in trust. The money will be disbursed based upon standards that are promised to incoming investors.
  3. The new company will issue the shares based upon the receipt of money from investors who are buying those shares.
  4. Jones approaches Jason Smartguy, who manages a pension fund for 3,000 employees of ABC Company, a Fortune 500 company.
  5. Jason Smartguy manages the pension funds under strict restrictions. A pension fund is a “stable managed fund” whose investments must be at the lowest risk possible and whose purpose is capital preservation.
  6. John Jones promises Jason Smartguy that the new company will invest in assets that are valuable and stable, and that these investments will pay a return on investment higher than what Jason Smartguy is getting for the pension fund under his management. Jason likes the idea because it gives him employment security and probably bonuses for increasing the rate of return on the funds managed for the pension fund.
  7. The lawyers for John Jones have concealed the PONZI nature of the scheme (paying back investors with their own money and with money from new investors) by disclosing the existing of a reserve fund — consisting entirely of money from Jason Smartguy.
  8. Jason advances $100 Million to John Jones who says he is acting as a broker between the new Company (the one issuing the shares) and the Pension fund managed by Jason Smartguy.
  9. The new Company never receives the money. Instead the money is placed in accounts controlled by people who have no relationship with the new Company.
  10. The new Company never receives title or any documentation showing they own shares of the money pool now controlled by John Jones when it should be controlled by the new Company.
  11. John Jones uses the money to bet against the new Company, insurance on the value of the shares of the new Company, and the proceeds of other convoluted transactions — mostly based on the assumption that John Jones owns the money in the pool and based entirely on the assumption that any assets of the pool therefore belong to John Jones — not the new Company as promised.
  12. John Jones also uses the money to buy assets, so everything looks right as long as you don’t get too close.
  13. The assets Jones buys are designed to look good on paper but are pure trash — which is why John Jones bet against the pool and shares in the pool.
  14. Everyone is fooled. The investors get monthly statements from John Jones along with a check showing that the investment is working just as was planned. They don’t know that the money they are receiving comes entirely from the reserve pool and the meager actual returns from the assets. The insurance company believes that Jones is the owner of the money and the assets purchased with money from the pool created by Jason Smartguy’s advance from the pension fund.
  15. John Jones goes further. He pretends to own the shares of the new Company that actually belong to the pension fund managed by Jason Smartguy. He insures those shares naming himself as the insurance beneficiary and naming himself as the receiver of proceeds from his bets that the shares in the new Company would crash, just as he planned.
  16. While the assets are proving as worthless as John Jones had planned, Jason Smartguy receives payments to the pension fund exactly as outlined in the Prospectus and the Operating Agreement for the New Company. Unknown to Jason, the assets are increasingly proving worthless, as a whole and the income is declining. So Jason buys more shares in the new Company, thus providing Jason with a larger “reserve” fund and more “assets” to bet against and more “shares’ to bet against.
  17. John Jones sets out to “acquire” assets that will fail, so his bets will pay off. He buys assets whose value is low (and getting worse) and he creates fictitious transactions in which it appears as though the new Company has bought the assets at a much higher price than their value. The “sales” to the Company are a sham. The Company has no money because Jason Smartguy’s pension money never was made to the new Company in exchange for the new Company issuing shares of the company to Jason’s pension fund.
  18. The difference between the real value of the assets and the price “sold” to the pool is huge. In some cases it is 2-3 times the actual value of the asset. John Jones treats these sales as “proprietary trading profits” for John Jones,when in fact it is an immediate loss to Jason’s pension fund. The shares of the new Company are worthless because it never received any money nor title to any assets. John Jones as “broker” took all the money and assets.
  19. Meanwhile John Jones continues to pay Jason’s pension fund along with distribution reports showing the assets are in great shape and the income is just fine. In reality the assets are virtually worthless and the income is declining just as John Jones planned. John Jones is taking money hand over fist and calling it his own. His bets on the whole thing crashing are paying off handsomely and he is not reporting to Jason how much he is making by taking Jason’s managed money and calling part of it proprietary profits.
  20. The beauty of John Jones PONZI scheme is in the BIG LIE told not only to Jason Smartguy but also to Henry Homebody, who owns a home in Tucson Arizona. Henry is easier to sell on a stupid scheme than Jason Smartguy because Jason requires proof of independent appraisals (ratings), proof of insurance and various other aspects of the investment. Henry Homebody trusts the “lenders” and considers them to be banks, some with reputations and brands that go back 150 years.
  21. Henry Homebody’s house has been in the family for 6 generations and is fully paid off. He pays only insurance and taxes. Unknown to him, he is a special target for scammers like Merendon Mining, whose operators are now in jail. Merendon got homeowners with unencumbered houses to “invest” in a mirage (gold shares) thus putting the fantastic equity in their homes to work. Henry is flown to Canada, wined and dined, and has a very good time, just before he agrees to take out a loan using his family home as collateral, which will provide an income to him of $16,000 over month (which is about ten times his current income).
  22. Henry is approved for a loan equal to twice the value of the property and in which the mortgage broker (now on the run from the law) used projected income from the speculative investment in Merendon mining. This act by the mortgage broker was illegal but worth the risk because the broker was part of the Merendon Mining scam. (look up Merendon Mining and First Magnus Funding).
  23. Henry makes Payments on the mortgage principal, interest, taxes and insurance (all higher because of the false appraisal that was used for the property). He is able to do this because some of the money from the “loan” was given to him and he was able to make payments until the magnificent returns started to come in from his Merendon Mining shares. But those shares were worded in such a way that they were not exactly the ownership of gold that Henry thought he was getting. In fact, it was another pool with options on gold. And of course the money never materialized and neither did the gold. (Note 1996-2014: more than 50% of all loans were “refi’s” in which the home was fully paid or nearly so).
  24. Henry’s lender turned out to be a party pretending to lend him money, using MERS as a nominee for trading purposes, and naming the originator as lender when in fact they were also just a nominee.
  25. Henry’s mortgage and note recite terms that are impossible to meet unless Merendon Mining pays off.
  26. Henry believes at closing that First Magnus was the lender and that some entity called MERS is hanging in the background. Nobody explains anything to him about the lender or MERS. And of course he was told not to get an attorney because nothing can be changed anyway.
  27. Henry did not know that John Jones had spread out Jason’s money into several entities and then used Jason’s money to fund the origination of Henry’s loan.
  28. Jason does not know that the note and mortgage were never executed in the name of the pension fund or the new Company that was supposed to own the loan as an asset.
  29. Eventually the truth starts coming out, the market crashes and prices of homes return to actual value. Merendon Mining is of course a bankrupt entity as is First Magnus, whose operator appears to be on the run.
  30. Henry can’t make the payments after the extra money they gave him runs out. He has $2 million in loans and the “guaranteed” investment in Merendon Mining has left him penniless.
  31. John Jones fabricates and forges dozens of documents to piece together a narrative wherein an “independent” company would claim ownership of Henry’s loan despite the complete absence of any real transactions between any of the companies because the loan was fully funded using Jason Smartguy’s pension money.
  32. Henry knows nothing about the scam John Jones pulled on Jason Smartguy and certainly doesn’t know that the new Company was involved in his loan (because it wasn’t). Henry doesn’t understand that First Magnus and MERS never loaned him any money and that he never owed them money. And Henry knows nothing about John Jones, whose name appears on nothing.
  33. John Jones, the PONZI operator goes about the business of finishing the deal and making sure that the multiple people who bought into Henry’s loan (without knowing of the other sales and bets placed by John Jones) don’t start asking for refunds.
  34. John Jones MUST get a foreclosure or there will be auditing and reporting requirements that most everyone will overlook as long as this looks like just another loan gone bad. His PONZI scheme will be revealed if the true facts become known so he makes sure that nobody sees the actual money trail except him. He might go to jail if the truth is discovered.
  35. The lawyers for John Jones have told him that even fabricated, forged, non-authentic, falsely signed, and falsely notarized documents carry a presumption of validity. Thus the lawyers and Jones concocted a PONZI scheme that would most likely succeed because even the borrower, Henry, still thinks he owes money to First Magnus or its “successors”, whose identity he doesn’t really care about because he knows he took the loan. He doesn’t know that First Magnus and several other entities were involved in collecting fees and making profits the moment he signed the papers, and possibly before.
  36. Meanwhile Jason Smartguy, manager of the pension fund is starting to get disturbing reports about the assets that were purchased. Jason still doesn’t know that the money he gave John Jones never went into the New Company, that the Company never engaged in any transactions, and that John Jones was claiming “losses” that were really Jason’s losses (the pension fund).
  37. John Jones was collecting money from multiple sources without any of them knowing about each other and that he had no losses, he had only profits, and even got the government to lend him more money so he wouldn’t go out of business which might ruin the economy.
  38. Most of all John Jones never made a loan to Henry Homeowner; but that didn’t stop him from saying he did make the loan, and that the paperwork between John Jones and Jason Smartguy’s pension fund was irrelevant — the borrower got a loan and stopped paying. Thus judicial or non judicial process was available to sell the home that had been in Henry’s family for 6 generations.
  39. But the weakness in John Smith’s PONZI scheme is that his entire strategy is based upon presumptions of validity of his false documentation. If courts start applying normal rules and require Jones to disclose the money trail, he is cooked. There can be no foreclosure if a non-creditor initiates it by simply declaring that they are the creditor and that they have rights to enforce the debt — when the only proof of that is that Jason Smartguy, manager of the pension fund, has not yet put the pieces together and demanded ownership of the loan, settled the cases with modifications and went after John Jones for the balance of the money that was skimmed off the deal.
  40. And since Henry’s house is in Tucson, Az, he is subject to non-judicial foreclosure and he is in big trouble. He has no reason to believe the “servicer” is unauthorized, that the debt that is subject to correspondence and monthly statements does not exist, nor that the mortgage or deed of trust was void for lack of consideration — none of the “lenders” at closing ever loaned him a dime. The money came from Jason but Henry didn’t, and possibly still doesn’t know it.
  41. John Jones files a document called “Substitution of Trustee.” In this false document Jones declares that one of his many entities is the “new beneficiary” (mortgagee). Jones holds his breath. If Henry objects to the substitution of trustee he might have to reveal that the new trustee is not independent, it is a company controlled by John Jones.
  42. John Jones has made himself the new trustee. If the substitution of trustee is nullified in a court proceeding, NOTHING can be done by John Jones or his controlled companies.
  43. If the old trustee realizes that they have received no information on the validity of the claim and might still be the trustee, they might file an “interpleader” action in which they say they have received competing claims, demand attorney fees and costs along with their true statement that as the trustee named on the deed of trust, they have no stake in the outcome.
  44. If that happens Jones is cooked, broiled and boiled. He would be required to allege and prove that the “new beneficiary” is in fact the creditor in the transaction by succession, purchase or otherwise. he can’t because it was Jason who gave the money, it was Jason who was supposed to get evidence of ownership of the loan, and it is Jason who should be deciding between foreclosure (which John Jones MUST have to escape enormous civil and criminal liability).
  45. Jones doesn’t file documents for recording unless and until the case goes into foreclosure. That is because he continuing to trade and make claims of losses on “bad loans.”
  46. In fact, just to be on the safe side, he doesn’t file the fabricated, forged perjurious assignment of the loan at all if nobody makes him. He only files the assignment when he absolutely must do so, because he knows each filing is false and potentially proof of identity theft from the pension fund and from the homeowner.
  47. So it often happens that despite laws in each state requiring the filing of any transfer of an interest in real property for recording, Jones files the assignment when there is the least probability and least likelihood that the PONZI scheme will be revealed. Jones knows the mortgage is void and should never have been recorded, as a matter of law.
  48. Henry brings suit against Jones seeking justice and relief. But he really doesn’t know enough to get traction in court. Jones filed the assignment after the notice of default, after the notice of sale, and after the notice of substitution of trustee.
  49. The Judge who knows nothing about the presence of Jason, who still does not know this is going on, rules for Jones saying that it is irrelevant when the assignment was recorded because it is still a valid assignment between the parties to the assignment.
  50. Jason knows nothing about how the money from his pension fund was handled.
  51. Jason knows nothing about how each foreclosure seals the doom and affirms the illegal windfall to intermediaries who were always playing with OPM (other people’s money).
  52. The Court doesn’t know that that the assignment was just on paper, that there was no business reason for it to be executed, that there was no purchase of the loan from Jason’s pension fund, to whom the actual loan was payable. Thus the Judge sees this as much ado about nothing.
  53. Starting from the premise that Henry owed the money anyway, that there were no real defenses, and that since nobody else was making a claim it was obvious that Jones was the creditor, the Arizona Supreme Court says that anyone can can foreclose on an undated, backdated fabricated assignment forged and robo-signed with no real transaction; and they can execute a substitution of trustee even if they are complete strangers to the loan transaction and once they file that, they can foreclose on property that was never used as collateral for the real loan.

Because there are hundreds of John Jones characters in this tragedy, the entire marketplace has been decimated. The middle class is permanently stalled because their only net worth has been stolen from them The borrowers would gladly execute a real mortgage for real value with real terms that make sense 95% of the time, but they need to do it with the owner of the debt — the pension fund. The pension fund the borrower need to be closely aligned on the premise that the loans can be modified for better terms that forced sales, the housing market could recover, and money would start flowing back to the middle class who drives 70% of our consumer based economy.

They are all wrong and are opening the door for more PONZI schemes and even better ways to steal money and get away with it. The Arizona Supreme Court in Vasquez as well as all other decisions from the trial bench, appellate courts, regulators and law enforcement are all wrong. The burden of proof in due process is on the party seeking affirmative relief. Anyone who wants the death penalty equivalent in civil litigation (forfeiture of homestead), should be required to prove beyond all reasonable doubt or by clear and convincing evidence that the mortgage was valid and should have been recorded.

If they didn’t make the loan they had no right to record the mortgage or do anything with the note or mortgage except give it back to the borrower for destruction. If they didn’t make disclosure of the real nature of the loan and all the profits that would arise from the borrower signing an application and the loan documents, those profits are due back to the borrower.

Each time the assumption is made that there are no valid defenses for the borrower, we are cheating investors and screwing the homeowners. And as for the windfall proposition we know who gets it — the John Jones PONZI operating banks that started all of this. Exactly how can this lead anyway other than a continued drag on our economy?

Vasquez v saxon Az S Ct CV110091CQ

For more information call 954-495-9867 or 520-405-1688

25 Responses

  1. That was Magna Carta. ( auto correct this time I’m typing good today)

  2. Neil is right about the ponzi. It’s only going to escalate and the lies will continue Unless our courts get busy about due process rule of law and all that it’s meant to be, from the manga carta and the United States constitution.

  3. And screw the REMICS what about the contract and clear title

  4. Agree Louise but he who fights and gets away – lives to fight another day. Ain’t over yet for Arizonians or Brits for that matter
    We would have to see all of the pleadings because then we might see why that decision came out pear shaped !

  5. The previous owners (deceased) had satisfaction of mortgage and held property in a revocabe trust til their death. Now what reason would their law firm have adding their name to the trustee deed with my husband instead of me? Why won’t they file the trustee agreement from seller estate? What is their intrests in the lender and capital asset co? Dag gone Questions! The answers lead to more questions

  6. Unrecorded lien. You can not fc an estate free n clear of liens held in irrevcocable life trust for a debt of only one of the settlors/ grantor/ trustee. . Unless of course … You get the “I don’t object”. From the other trustees/grantors. Am I thinking to much out loud again? Yes We Can … Say No.

  7. Neidermeir- you are right about that- I remember a spokesperson from IRS stating to the effect that ” we are not going to use the IRC to promote social policy”. This was in response to the Va AG I believe attempting sue REMIC’S for unpaid taxes due to prohibited transactions. As I recall.

  8. Just say No to Thugs and Enforce the Contract.

  9. So Illinois is a lien theory state and a Judicial state for mortgages. Owners retain title and lender gets a lien. (No Lien on title). WHY?

  10. That Arizona decision was a BS decision.

  11. Ok Deb, my husband and I granted as TIE with right of survivorship. A W.D. To capital asset co.at closing. Its unfiled. But legal here to. Irrevocable Living Trust. BUT only my husband is on the loan. Taking A Bite Out of Crime.🙂

  12. http://www.arizonalawreview.org/2011/syllabus/arizona-supreme-court-holds-narrowly-for-lenders-in as under:

    “Arizona Supreme Court Holds Narrowly for Lenders in Vasquez v. Saxon Mortgage, Inc.
    | Ariz. L. Rev. Syl. (2011)
    On November 18, the Arizona Supreme Court filed its decision in Vasquez v. Saxon Mortgage, Inc., et al.1 The case centered on whether the defendant Deutsche Bank could foreclose on Tucson homeowner Julia Vasquez, even though Deutsche Bank was not the beneficiary of record on the deed of trust. Saxon Mortgage, the originator of the loan and co-defendant, was still the beneficiary of record on the deed of trust because the assignment to Deutsche Bank had not been recorded. In a narrow holding based in Arizona statutory law, the court held that Deutsche Bank could foreclose on Julia Vasquez.
    The United States Bankruptcy Court for the District of Arizona certified two questions to the Arizona Supreme Court:
    Is the recording of an assignment of deed of trust required prior to the filing of a notice of trustee’s sale under A.R.S. § 33-808 when the assignee holds a promissory note payable to bearer?
    “Must the beneficiary of a deed of trust being foreclosed pursuant to A.R.S. § 33-807 have the right to enforce the secured obligation?”
    The court held that an assignment of a deed of trust does not need to be recorded prior to the filing of a notice of trustee’s sale to enforce the secured obligation against a mortgagor. The court only answered the first certified question because the second certified question was “not determinative” of the case.
    The court stressed that Arizona deed of trust law “is a creature of statutes,” and, as a result, viewed its role as “entirely one of statutory construction.” The court based its reasoning on A.R.S. §§ 33-808, 33-412(B), 33-817, and 33-411.01.
    A.R.S. § 33-808 regulates a notice of trustee’s sale. This section does not overtly require the recording of an assignment of a deed of trust before the trustee’s sale. It noted that the policy behind recording statutes is to “protect interests in property against claims of subsequent purchasers or creditors without notice.” The court also considered A.R.S. § 33-412(B)—providing that “[u]nrecorded instruments, as between the parties and their heirs … shall be valid and binding”—as further proof that recording statutes are meant to protect such interests. They do not, the court noticed, “affect a deed’s validity as to the obligor.”
    The heart of the opinion revolved around A.R.S. §§ 33-817 and 33-411.01. A.R.S. § 33-817, in the view of the court, stands for a “mortgage follows the note” theory. The section provides that “[t]he transfer of any contract or contracts secured by a trust deed shall operate as a transfer of the security for such contract or contracts.” The Court could find no logical reason to imply a recording requirement into §33-808 when “§33-817 does not require separate documentation of an assignment of the deed of trust when the secured note is transferred.” A.R.S. § 33-411.01 imposes a consequence on those who fail to record the transfer of a deed of trust:
    indemnification of legal fees in “any action in which the transferee’s interest in such property is at issue.” Although the section states that deeds “shall be recorded,” the court noted that the section did “not impose a recording requirement.” Similarly, the court found that the section did not “suggest that a notice of trustee’s sale on a previously assigned deed of trust is valid only if the assignment was recorded.”
    Finally, the court dismissed the argument that such a recording of an assignment is necessary to give effect to A.R.S. § 33-807.01, “which requires lenders to ‘explore options’ with borrowers at least thirty days before recording a notice of trustee’s sale.” While the Attorney General argued as amicus curiae that unless so interpreted “homeowners will not know with whom to ‘explore options,’” the Court noted that the statute “requires the lender to contact the homeowner, not the other way around.”
    The court declined to address the second certified question, finding it moot because Deutsche Bank held the promissory note and had the legal right to record the notice of trustee’s sale.
    Julia Vasquez’s case now returns to the U.S. Bankruptcy Court. Given the unusual issues that have arisen in this case so far, it could easily remain in the public eye.
    Vasquez v. Saxon Mortgage, Inc., 2011 WL 5599440, ___ P.3d ___ (Ariz. 2011). ↩”

  13. Re the tax burden
    WhAt say our children and their children. It’s called the poverty trap.

  14. @ Bob G.

    The investors have nothing to worry about with REMIC status , the IRS knows all about it and has given the “trusts” and therefore the investors a pass on the non-ownership. The private banks that make up the Federal Reserve own the government… they will not be made to pay for their crimes .. the best we can hope for is to end the ponzi and clean up their mess (at our expense).

  15. I know I’m not spot on but I’m closer n closer
    ( not an attorney obviously)

  16. Think about it ” this company is a debt collector” that ” company” issued a IRS doc against my name and they never loaned me a dime that company is servicing for a purported trust that Have a purported trustee who has no interest in real estate ( but later buys ( is posing as a BUYER) at ” auction” something they want to now ” sell” to another asking a sub trustee and their attorney to act as a shield ) now back to tax issue, the debt collector became debt collector by buying certain assets one being servicing rights from a failed bank via FDIC – term ” sweetheart deal “ring a bell? They were NOT the successor in interest – the debt owed is not proved up in any way under fdcpa and never satisfied the statute of frauds
    Because – it is.

  17. Lying that is . . .

  18. Yes they are Deb! Yes they are!

  19. It’s tax fraud – the parties claiming a tax break and declaring a certain amount ” owed” are lying.

  20. What part about the FCs costing the pensions to lose money do you not understand? Good Heavens! Stop That Crap with the Judges!

  21. My primary issue with this post is that I do not believe that the judges do not understand what is going on. I think they do, and they want to protect their pension plans which are invested in mortgage backed securities. In my state, the judges/clerks’ pension plan actually sued BONY Mellon for bad MBS investments. How can you not know that the MBS’s were corrupt and worthless? A new lawsuit has also been initiated re the County Recorder suing MERS. Counties contend the system hides who owns loans, often by listing only MERS as the owner, not a specific member bank or service. That constitutes fraud and undermines the county’s property-ownership records, which state law requires to list the exact owner of a property’s title,

  22. And because the banks had become a large part of US GDP used to pay National Debt they became TBTF. Other econmies around the world would crash In a chain reaction to the US defaulting on its debt. This lead to the taxpayer bailout. Three prong Stick. Invester, Homeowner and Taxpayer. One Buttwipe Broker/Dealer, adba asset co. Many Blessings to All.

  23. Neil still all these year into this Ponzi fails to understand that the investors did not and cannot purchase a single home mortgages. And you wonder why this crime still lives on!

  24. Here’s the problem with all this: the investors need to be careful about having their actions jeopardize their REMIC tax status. That’s why it makes no sense for them to claim late transfers or no transfers. They seem to be alleging proper transfers, but appraisal fraud and other common law frauds in the suits.

  25. This John Jones fellow sounds very busy. What the hell, where do they find the strength of soul for all that. Just reading it makes me want to go take a nap.

    Make it a Great Day.

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