Who Can Sign a Lost Note Affidavit? What Happens When It Is “Found?”

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Let’s start with the study that planted the seed of doubt as to the validity of the debt, note, mortgage and foreclosure and whether any of those “securitized debt” foreclosures should have been allowed to even get to first base. Katherine Ann Porter, when she was a professor in Iowa (2007) did a seminal study of “lost” documents and found that at least 40% of ALL notes were lost as a result of intentional destruction or negligence. You can find her study on this blog.

The issue with “lost notes” is actually simple. If the note is lost then the court and the borrower are entitled to an explanation of the the full story behind the loss of the note, why it was intentionally destroyed and whose negligence caused the loss of the note. And the reason is also simple. If the Court and the borrower are not fully satisfied that the whole story has been told, then neither one can determine whether the party claiming rights to collect or enforce the note actually has those rights.

This is the question posed to me by a knowledgeable person involved in the challenge to the validity of the debt, note, mortgage and foreclosure:

Who is finding the Note?  Can a servicer execute a Lost Note Affidavit as a holder?  Non holder in possession?

It took me a while to get to the obvious point of the above defense.  It is intended in the event that party A loses the Note and files a LNA [Lost Note Affidavit}, that the Issuer, does not have to pay party B even if he appears with a blank endorsed note, unless B can prove holder in due course (virtually impossible these days, esp in foreclosure cases).

This is critical.  The foreclosing party, through a series of mergers and successions, files a case as successor by merger to ABC.  Can’t locate note, so it files a LNA, stating ABC lost the Note.  Note is found, but the foreclosing party says, oops, was in a custodial file for which we were the servicer for XYZ.   While the foreclosing party has the note, it cannot unring the fact it got the Note from XYZ after ABC lost it.

Good questions. He understands that the requirements as expressly stated in the law (UCC, State law etc.) are quite stringent. You cannot re-establish a lost note with a copy of it unless you can prove that you had it and that you were the person entitled to enforce it (known as PETE). You also cannot re-establish the note unless you can prove that the note was lost or destroyed under circumstances where it is far more likely than not that the original won’t show up later in the hands of someone else claiming PETE status. So there should be a heavy burden placed on any party seeking to foreclose or even just to collect on a “lost note.” But courts have steamrolled over this obvious problem requiring something on the order of “probable cause” rather than actual proof. While there is some evidence the judiciary is turning the corner against the banks, the great majority of cases fly over these issues either because of presumptions by the bench or because the “borrower” fails to raise it — and fails to make appropriate motions in limine and raise objections in trial.

But the person who posed this question drills down deeper into the real factual issues. He wants to know details. We all know that it is easier to allege that you destroyed it accidentally or even intentionally than to allege the loss of the note. A witness from the party asserting PETE can say, truthfully or not, “I destroyed it.” Proving that he didn’t and that the copy is fabricated is very difficult for a homeowner with limited resources. If the allegation and the testimony is that the note was lost, we get into the question of what, when where, how and why. But in a lost note situation most states require some sort of indemnification from the party asserting PETE status or holder in due course status. That is also a problem. I remember rejecting the offer of indemnification from Taylor, Bean and Whitaker after I reviewed their financial statements. It was obvious they were going broke and they did. And the officers went to jail for criminal acts.

So the first question is exactly when was the “original” note last seen and by whom? In whose possession was it when it was allegedly lost? How was it lost? Who has direct personal information on the location of the original and the timing and method of loss? And what happens when the note is “found?” We know that original documents are being fabricated by advanced technology such that even the borrower doesn’t realize he is not being shown the original (that is why I suggest denying that they are the holder of the note, denying they are PETE, denying they are holder in due course etc.)

In the confusion of those issues, the homeowner usually fails to realize that this is just another lie. But in discovery, if you are awake to the issue, you can either learn the facts (or deal with the inevitable objections to discovery). And then the lawyer for the homeowner should graph out the allegations and testimony as best as possible. The questioner is dead right — if the party NOW claiming PETE status or HDC status received the “found” original note but received it from someone other than the party who “lost” it, there is no chain upon which the foreclosing party can rely. In simple language, what they are attempting to do is fly over the gap between when the note was lost and destroyed and the time that the current claimant took possession of the paper. And once again I say that the real proof is the real money trail. If the underlying transactions exist, then there will be some correspondence, agreements and a payment of money that will reveal the true transfer.

And again I say, that if you are attacking the paper you need to be extremely careful not to give the impression that the borrower is attempting to get out of a legitimate debt. The position is that there is no legitimate debt IN THIS CHAIN. The debt lies outside the chain. The true debt is owed to whoever supplied the money that was received at the loan closing, regardless of what paperwork was signed. Failure to prove the original loan transaction should be fatal to the action on the note or the mortgage (except if the foreclosing party can prove the status of a holder in due course). The fact that the paperwork was signed only creates a potential second liability that does not benefit the party whose money was used for the loan.

The foreclosure is a thinly disguised adventure in greed — where the perpetrators of the false foreclosure, use fabricated, robo-signed paper without ANY loan at the base of the paper trail and without any payments made by any of the parties for possession or enforcement of the paper. They are essentially stealing the house, the proceeds, and the money that was used to fund the “loan” all to the detriment of the real parties in interest, to wit: the investors who were tricked into directly lending the money to borrowers  and the homeowners who were tricked into signing paperwork that created a second liability for the same loan.

14 Responses

  1. Christine … Thank you .. you are truly an inspiration and I will try harder to curb my anger and re-direct that energy into doing those things you point out .. I would really appreciate if you could call me so we could have a brief phone conversation in which I can write down the things I need to get in order and the game-plan you suggest , I will be reaching out to the 2 attorneys you listed, and my trial in January will address the “standing” issue .. my answer to the complaint denied all of the allegations pertaining to the debt and I basically used April Charneys response language that “I don’t know these people (plaintiffs) .. the debt that they allege may pertain to some past business between myself and some other party, and that business deal was never completed and was not valid”. etc, etc …
    I really want to take advantage of my opportunity to go to trial and don’t want to screw this up , so I do get what you’re saying and I agree with you .. I just don’t have a lot of money for an attorney, unless they would allow me to make installment payments after a down payment?
    Call me at my cell so that I can understand your points about the NOD and the mortgage statements, breach of contract argument, etc , ok?
    Dwight (732)691-3655

  2. Christine,

    Please contact me at mikekeane@optonline.net. I am curious as to the names of the two attorneys you can suggest.

  3. DwightNJ,

    You can spend a lot of energy looking for compassion on this site and denouncing bloggers whose input you don’t care for. Or you can use the same energy to build your file and make it so attractive to a competent attorney that he/she will take your case? MCJ actually pulled that one and got what she wanted. She’s still in her house. It’s a win in my book. Count the wins within the bloggers). What you need to understand is this:

    1) Law is specialized; you, as an individual, can only sue on CIVIL matters (breach of contract, negligence and breach of statutes). Those are your only avenues, as an individual, party to a biilateral contract you signed;
    2) Anything having to do with fraud, SEC violations, REMIC violations, MERS issues, failed securitization, most breaches of UCC are not of your resort and not accessible to you: you are an individual in a civil suit. You are not: a prosecutor, a regulator or a legislator. Stick with the issues at your hand.
    3) You, as a homeowner, have few choices: be on the offensive as soon as it starts smelling bad and long before you default (in which case, having done your homework, you can prevail) or be on the defensive and find yourself scrambling to fight allegations made against you, in which case you are on the losing end of the stick. The fight gets a lot tougher but it is not lost if you play your cards well.

    Tnharry, Gene, Bob G., Rock and many others tried their darn best to teach that much. They got disgusted with being forever attacked. I would call it a serious loss for homeowners fighting pro se. All that’s left on this site is BS and chronic whining. Not the stuff of winners.

    Rock said: “Attack the contract.” He is right. If you signed with Peter, question ad nauseam on what grounds Paul is suing you. It’s called standing. There are thousands of cases nationwide where homeowners won on standing. Do your homework. Msfraud, Stopforclosurefraud and many other sites give cases to draw from.

    I said: “Go for the accounting. There is not ONE N.O.D. that reflects a mortgage monthly statement. Not ONE.” Do you have those documents? If you kept them, compare them and start asking the right questions. It worked for me in federal court and I got a judgment in my favor with money in hand, I’m in the house and the bank retaliatory FC case has nowhere to go: they couldn’t produce the accounting in federal court. They can’t produce it now. It doesn’t exist.

    Most people on this site lost their case, moved out by force and are trying to paddle upstream, after the fact, to get some kind of after-the-fact compensation, in an economy in such disarray and shambles that the likelihood of any retroactive compensation is… pretty close to nil.

    You are in the house. It is huge! Stay put. You got a heck of a reprieve once. I may be able to give you pointers (beside giving you two names of trusted attorneys) but you need to know your case so well on accounting that, when questions are shot at you like a machine gun, you can answer them without hesitation. Are you there yet? Do you know all your players, do you have a timeline and an accounting or, at the very least, discrepancies so blatant that they cannot be ignored?

    I’ve been helping people. It takes work on my side and it takes work on theirs. Wishful thinking is the death of any homeowner’s prayer.

  4. Are “We The People” Useful Idiots In The Digital Age?
    Tyler Durden’s pictureSubmitted by Tyler Durden on 11/18/2014 19:21 -0500

    Back in the heyday of the old Soviet Union, a phrase evolved to describe gullible western intellectuals who came to visit Russia and failed to notice the human and other costs of building a communist utopia. The phrase was “useful idiots” and it applied to a good many people who should have known better. I now propose a new, analogous term more appropriate for the age in which we live: useful hypocrites. That’s you and me, folks, and it’s how the masters of the digital universe see us. And they have pretty good reasons for seeing us that way. They hear us whining about privacy, security, surveillance, etc., but notice that despite our complaints and suspicions, we appear to do nothing about it. In other words, we say one thing and do another, which is as good a working definition of hypocrisy as one could hope for.

    —John Naughton, The Guardian

    http://www.zerohedge.com/news/2014-11-18/are-we-people-useful-idiots-digital-age

  5. MyCookieJar took exception with me the other day when I wrote a post pointing out how this all boils down to our failed justice system, the failed judicial branch, the failed judges who hide behind a black robe … she told me that I had a bad attitude and would lose my house. She and others like her want to ignore the brutal honest truth about the evil that has infiltrated everything … instead, she blames the victims of the crimes and tells them to hire an attorney and play the shell game in a court room . But don’t ever point out the criminal conduct or else you will look like a fool. Find other ways to win your case or a modification.

    Imagine if a group of rich serial rapists were on the loose, kidnapping their victims and raping them , with total disregard for the law and for the pain and suffering they administered upon their victims.

    Imagine that these wealthy rapists were caught in 2008 and their criminal enterprise was exposed and identified. The DOJ and other law enforcement agencies were lined up ready to send them all to prison. But then a deal was reached, a settlement, large sums of money were paid in order to escape prosecution. But the government told all the victims that they could still retain their due process and have their day in court in order to seek justice against those criminals.

    The foreclosure case is when those rapists file a complaint against the victim who they had already raped and harmed, the rapist is asking the Judge to rule in his favor so he can take the victims clothes and keep them as a trophy of his crime …

    when the victim goes to court , the victim is told by MyCookieJar and others “Don’t mention that he raped you, don’t argue that a crime took place when you were kidnapped and raped” … “what you need to do, is argue something else .. like the rapist parked and didn’t pay the meter, that he breached the parking laws outside your home before he raped you” .. “study the parking lot contract and see if he breached it” …

    The victims are told “don’t try and argue the real , honest, brutal truth about what happened .. like that the Ponzi scheme criminal act began at the origination , and that documents have been fabricated and forged in order to prop up their illegal house of cards foreclosure .. the Judge doesn’t want to hear about the crimes, are you crazy? Do you think we should give you a free house?”

    Likewise, it would be like telling the victim of the rape “are you crazy, do you really think a Judge wants to hear that your were sodomized and brutally assaulted? You should just try to ask for a modification and see if the rapist would agree to give you back some of your clothes, maybe you should offer the rapist some monthly payments but don’t ever bring up the brutal honest truth in court that a real crime had taken place .. because you’ll look like a fool, like you’re trying to get your clothes back for free .. why should you get free clothes?”

    Yes, this is how absurd the foreclosurre climate has become in our courts .. they refuse to allow justice to prevail. We are being asked to accept an altered-reality of the justice system .. we are being asked to continue playing the part of the victim and to ask how high when we are told to jump.

    The guy who helped with the ObamaCare exposes the thinking of how our government and justice system looks at us .. like we are stupid.

    We are not stupid .. we all need to keep fighting and standing up for the truth. Don’t ever allow others to convince you that the truth doesn’t matter .. the truth is the only thing that matters. The Judges are either going to deal with the truth , or we will have to have them removed from the bench. That’s what we need to do about it. If they can’t uphold the law .. then they need to be taken off the bench. We need to start a movement to address this part of the problem immediately.

    Why don’t we start a campaign to have millions of people write in demanding that the Judges in foreclosure cases be terminated from their positions due to the blatant bias uncovered and their open remarks showing proof of their ill intent towards homeowner victims.
    This is public knowledge and they are blatant about it. They all agree that no matter what crimes took place “those citizens are not to get a free house” .. and that’s right on the record in most cases.

    It shows proof that the Judges are not carrying out justice and are in violation of their code of ethics and canons by which they are under an oath to uphold. They need to be replaced, they cannot be re-trained.

    Honest and ethical Judges should replace the current filth that sits on the bench .. and let the cards fall where they may. Let the house of cards that the banks built and prospered off .. fall to heap .. and let true justice prevail for all.

  6. Like this paragraph my Keane
    You said
    “e judges will stand, or fall, no less than any other leader, among those of us who will endeavor to bring truth out of chaos”

  7. Who said anything about quitting, never.

  8. Well, DW and ET I guess We can quit.

    I don’t plan on it anytime soon. I also believe my solution emboldens those who will ultimately nod toward the rule of law.

    When I started down this road, I wrote to the NJDOBI I felt the real terrorist attack was directed at the middle class through the one thing they felt was inviolate: their homes.

    I haven’t altogether abandoned my original hypothesis.

    In the meantime, don’t underestimate “Patriotism” or the notion there are still some among us who will fight simply because that is what the truth will always require: selflessness.

    At the same time, it doesn’t hurt that the prognosis, under current manipulation, for the American Dollar, is bleak indeed.

    Lincoln saw it, I would argue Wilson saw it also, although only too late.

    Kennedy is yet another.

    The “Greenback” exists. It is the property of “We The People”. It is past time We repudiated the banking filth once-and-for-all and re-enlisted in the promise We have squandered through laziness and indifference to the truth.

    Jackson would have done by now.

    The judges are human. They also see, on a daily basis, the ramifications of recklessness and lawless indifference; the burdens inherent among those who will call the shots burdened by the notion someone must manifest a willingness to embrace righteousness no matter the cost.

    At present, they are simply responding to half-truth and criminal manipulation.

    There are those that played the bankers’ game. There are those who defaulted because they are also beyond redemption while perfected in greed. There are those who also participated in playing into the hands of our enemies.

    The judges will stand, or fall, no less than any other leader, among those of us who will endeavor to bring truth out of chaos.

  9. Michael Keene, very well said indeed. All tied up in a very neat nutshell.

    Now, what can be done about it? Judges? Seeing the light? Why exactly would that happen? Patriotism? The same judges who all seem OK with Citizens United and wincing at the thought of ruling against a bank? The ONLY time they rule against the bank is when they do so without prejudice, all the while winking that their door is always open for a re-do whenever there’s a need. How convenient. Newly crafted fraudulent documents equals more runway foam. So simple.

    The problem is that the same EVIL that forged the ring controlled by MERS, also forged one for the Federal Reserve, as well as one for Treasury. Then there’s the wraiths on the Hill who long for power and money and will do their bidding. It’s all about uncontrollable power wielded with reckless abandon. Which, as a result, causes them to decide that continuing things as they are at any and ALL cost is the only outcome worth pursuing for their world view to continue. We are simply fodder, expendable serfs in nearly inexhaustible numbers, the same notion on display with the inequality ratios we’re seeing.

    I see no reason, short of taking it to the streets, to believe that these people will see reason and suddenly resort to a return to justice as a business model. Ain’t happening. It’s way too easy to cheat and steal as a preferred business model. REV 2.0

  10. Mr Keane
    Well said
    I watched an episode of breaking bad ( such a good show) and one of the addicts said trying induce the addicts that were in a recovery program would be ” like shooting a baby in the face ” how true, as with judges I honestly believe they originally signed up with idea of serving the people and administering the law and justice as the goal – at the same time I understand judges unconscious ( and not so) bias
    But end of day they will not ” shoot the baby in the face”. This is my belief. And jMHO.

  11. I personally destroyed thousands of mortgage documents: the notes and the liens.

    My family rendered them to disc format, and, in so doing, greatly diminished the demands of the storage and maintenance of the paper.

    The ease with which documents could be retrieved thus, speaks volumes as to why this practice became an industry standard.

    My jaw hangs open in disbelief upon hearing anyone could suggest mortgage brokers, during the “Boom” years, didn’t avail themselves of this practice.

    This is especially true now we are learning of “MERS as Originator of Mortgage”, or, “MOM”.

    We have already learned the MERS was established, according to their own mission statement, to: “Process Loans, Not Paperwork”.

    We also know any number of robo-signers purchased, for $25.00, rubber stamps signifying them as “Senior Vice-presidents” within the MERS system.

    We also know “robo-signing” is just another word for “counterfeiting” and fraud.

    Frankly, none of the SVPs for the MERS were ever any such thing; instead, they were often operatives of phony “lending” outfits, for example… conflict of interest anyone?

    We also know the MERS CEO was deposed in court and he admitted he is the “sole” employee of his company.

    Yeah, Right … You are the “sole” employee and you also claim ownership or the right to transfer ownership to some 70 million mortgage loans.

    It is simply criminal behavior.

    The MERS never advanced ANY funds for ANY loans. The MERS NEVER ORIGINATED ANY LOANS.

    Mr. Garfield is correct. The true “Holders in Due Course”, those that paid the loans in full, up-front, using investor funds, desire that their identities remain forever obscured.

    The “MOM” was designed specifically for just that purpose.

    The HsiDC recognize that once they are exposed, they will have to explain to the IRS, at least, where the money came from.

    The consequences to this behavior, I’m sure we all can agree, are long overdue.

    We all know the original notion behind establishing Trusts was to render the loans that entered them “bankruptcy remote”. In other words, why should an innocent investor suffer should some distressed borrower default on their loan?

    What we haven’t come to fully realize yet is that NONE of the loans EVER entered lawful Trust.

    Some of us are also unprepared to admit borrowers paid installments, for years, on loans that had been paid, in full, beyond their knowledge, at origination.

    Because this is true, the HsiDCs have reason to fear any disclosure to the IRS as to where the money went.

    Again, the consequences are long overdue, with tax violations alone, likely fatal.

    The shortfall to the international markets based on speculation in derivatives is also misunderstood. Presently, 680 Trillion Dollars in “notional derivatives” is owed the system.

    The “notion” derives from second half of the bankers’ plan: The “Bust” cycle.

    For example, we have already experienced the “Boom” years when interest rates were low and regulatory oversight was non-existent.

    The result was Wall Street’s willingness to create and participate in any number of predatory endeavors and it is also true some borrowers are also at fault.

    At the same time, however, it is and was incumbent upon the legal profession and banking industry to adhere to the law.

    This they failed to do.

    What is legal, after all, when identities are stolen and frauds abound purely in service to greed and nothing else?

    For, in the end, this brings us to the “Bust” cycle. And, whether it was engineered from the outset, or is now ingrained as an unlawful response of the system to the unlawful behaviors that spawned it in the first place, it is past time we recognize it for what it is.

    Criminal behavior.

    Presently, the “notion” of the “Bust” cycle “derives” from the money owed from short sales placed upon the performance of the loans borrowers paid until default, even as they didn’t know the investors had satisfied the loan, in full at origination.

    Presently, there is some 680 Trillion Dollars riding on successful foreclosure of the underlying asset; the home of a human being; possibly a family; possibly a service member; undoubtedly a citizen of this country.

    Presently, the criminal filth that created the scheme in the first place are being rewarded… but, there is another way.

    The judges need to understand the American Dollar will cease to be threatened when they incarcerate the guilty and use the derivatives bets, placed as short sales, to pay the victims: the borrowers and investors alike.

    This solution has no down side and it will return the law and the country to its proper bearing.

  12. What happens when you want to pay the full amount of the loan? Who is the real lender?

  13. Join LinkedIn & access Faye’s full profile

    Faye Turner
    ChaseWorks Associate at JPMorgan Chase
    Monroe, LouisianaFinancial Services

    ChaseWorks Associate

    JPMorgan Chase

    May 2011 – Present (3 years 7 months)|Monroe, Louisiana Area

    Lost Note Project
    Research various systems to obtain needed information such as property Notes, Mortgages or Deeds of Trust necessary to prepare lost note affidavits.

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