“FREE HOUSE” in NJ Bankruptcy Court

For further information and assistance please call 954-495-9867 and 520-405-1688. We will be covering this decision on the Neil Garfield show tonight.

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see http://stopforeclosurefraud.com/2014/11/18/in-re-washington-bankr-court-d-new-jersey-morris-county-homeowner-gets-a-free-house/

also see Senator Elizabeth Warren Ramping Up Attack: When Will “Principal reduction” become a reality?

This case is notable for several reasons:

  1. The Judge expresses outright that it is general judicial bias that homeowner should not prevail in foreclosure litigation.
  2. Nevertheless this Judge trashes the the claim of SPS (Specialized Loan Services) and BONY (Bank of New York) Mellon leaving the homeowner with what the Judge calls a free house.
  3. The Judge concludes that the mortgage was unenforceable and that the note was unenforceable after a careful examination of the statute of limitations under New Jersey law.
  4. The Judge concludes that the mortgage is void, not just unenforceable, thus clearing title.

While we can be pleased with the result, some of the reasoning might not withstand an appeal, if the foreclosers take the risk of filing one.

Here are some interesting excerpts:

“No one gets a free house.” This Court and others have uttered that admonition since the early days of the mortgage crisis, where homeowners have sought relief under a myriad of state and federal consumer protection statutes and the Bankruptcy Code. Yet, with a proper measure of disquiet and chagrin, the Court now must retreat from this position, as Gordon A. Washington (“the Debtor”) has presented a convincing argument for entitlement to such relief. So, with figurative hand holding the nose, the Court, for the reasons set forth below, will grant Debtor’s motion for summary judgment.
The Defendants accelerated the maturity date of the loan to the June 1, 2007 default date, as acknowledged in the Assignment (dkt. 7, Exhibit L).[10] Moreover, neither the Debtor nor the Defendants have taken any measures under the note or mortgage, or under the Fair Foreclosure Act, to de-accelerate the debt, and the Defendants have further failed to file a foreclosure complaint within 6 years of the accelerated maturity date as required by N.J.S.A. § 2A:50-56.1(a). Accordingly, the Defendants are now time-barred from filing a foreclosure complaint and from obtaining a final judgment of foreclosure.

11 U.S.C. § 502(b)(1) (emphasis added). 11 U.S.C. § 506 controls the allowance of secured claims and provides that, if the claim underlying the lien is disallowed, then the lien is void:

(a)(1) An allowed claim of a creditor secured by a lien on property in which the estate has an interest, or that is subject to setoff under section 553 of this title, is a secured claim to the extent of the value of such creditor’s interest in the estate’s interest in such property, or to the extent of the amount subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor’s interest or the amount so subject to setoff is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor’s interest.

(d) To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void, unless [conditions not relevant here exist].
As explained above, by application of N.J.S.A. § 2A:50-56.1(a) and (c), the Defendants are time-barred under New Jersey state law from enforcing either the note or the accelerated mortgage. As a result, Defendants’ proof of claim 7 must be disallowed under 11 U.S.C. § 502(b)(1) as unenforceable against the Debtor or against Debtor’s property under applicable state law. Having determined that Defendants do not have an allowed secured claim, the underlying lien is deemed void pursuant to 11 U.S.C. §§ 506(a)(1) and (d).[11]
In light of Defendants’ acceleration of the maturity date of the underlying debt as of June 1, 2007, and because neither Debtor nor Defendants took any action under either the mortgage instruments, or the Fair Foreclosure Act, to de-accelerate the maturity date, Defendants’ right to file a foreclosure complaint expired 6 years after the June 1, 2007 acceleration date under N.J.S.A. § 2A:50-56.1(a). Given that Defendants’ putative secured claim is unenforceable under 11 U.S.C. § 502(b)(1), by applicable New Jersey statute, their mortgage lien is void under 11 U.S.C. § 506(d), and the Debtor retains the property, free of any claim of the Defendants. Debtor is to submit a form of judgment. The Court will proceed to gargle in an effort to remove the lingering bad taste.
11] In as much as the Court finds that the Defendants are time-barred from enforcing the note or the mortgage, it is not necessary to address Debtor’s arguments that Defendants lack standing to enforce the note and mortgage based on alleged defects in the Assignment or the alleged impact of a Settlement Agreement.

25 Responses

  1. Re Michael Keanes take a song comes to mind from my fair lady, Hepburn singing ” oh wouldn’t it be lovely”

  2. RE: The release is the anniversary of the date the security was executed : You’re forcing a controlled sale against a consumer trustor who is entitled to a right for salvage and surety claims for subrogation. This is clearly a claim manufactured to commence the date of expiration of another contract.

    KC said: Think Coyle

  3. Your notice is created from a computer system tracking collateral used to form the depositor account. This deposit account was for a bond offering held to the Trustor’s contract for the date it was executed. Hence, the notices could not be filed until the expiration of the Bond roll over term.

    Are there Any Questions as to Why MyCookieJars didn’t get her payoff demand from the plender?

    Many Blessings to All

  4. Dear Counsel,

    This correspondence outlines a substantive protest to the Notice of Default, filed on August 31, 2012. The delinquency appears to reference the original promissory note executed on August 24th 2005 in favor of E-Loans Inc., as sole lender and beneficiary.
    The deed of trust was recorded on August 30th 2005 in favor of Mortgage Electronic Registration Systems, Inc., as Nominee for E- Loans Inc., as Beneficiary.

    Aztec Foreclosure Corporation is a substituted trustee or acting agent for the beneficiary under the purported same Deed of Trust Dated August 24th 2005. The foreclosure Notice of Default and Election to Sell under Deed of Trust is for an amount in question that does not exist or has become void. The balance that is due is for an obligation owed by Indy Mac Bank as obligor to MersCorp as nominee. The nominee is acting as intended – as sole beneficiary -for the Federal Reserve’s Bank of New York.

    Hence, the outstanding defaulted obligation of another is unfairly assessed against title as my own personal indebtedness. The originating mortgagee E Loans Inc. is a Third Party Originator or broker “TPO” under a table funding arrangement with Indy Mac Bank FSB. The Bank of New York delivered the “ABA” wire into settlement upon request by Indy Mac Bank FBO E Loans Inc. Member bank purchase and sale agreements program.
    Under the Mers Corp. “table funding” platform, E Loans Inc. executed a blank endorsement “allonge” and corporate assignment endorsed in blank given with the original note and certified copy of the original Deed of Trust.
    The note executed at signing for obligations securing the note holder and all cognizable successors and assigns.
    The claims brought by Aztec are by its own admission through a counter party, foreign national bank as a defaulted bond. The obligation is for the bond issuers amount due under the securities registration for mortgage and asset backed “pass –through” Investment Certificates, Series 2005-AR27 under the pooling and serving agreement dated October 1, 2005

    Accountants and forensics accounting auditors will point to MersCorp being used to preserve the integrity of the mortgage Deed of Trust, subsequent to having been liquidated into an investment Trust’s paid in capital account. The accountants will also demonstrate how a “triple set” of journal entries allows the present value of the mortgage “asset” to offset the ABA wires, “liability that eradicates or lifts the mortgage from title. Under generally accepted accounting principles FAS 140, codified SFAS 140-3 and recently amended ASC 320-10 the title emerged free and clear of all liens and held transferred unencumbered.
    In subsequent events, my title to real property was liquidated into equitable shares valued at four shares per $1000 in property value. My understanding is that title was transferred and sold, leaving me with an installment agreement, reverse purchase and sale or land sale contract. The notice of default is therefore false misleading and materially altered to reflect a variety of claims.

    These claims are not one in the same for obligations held under the neither original promissory note nor de-recognized mortgages deed of trust. The claims you bring are for the balance due by Indy Mac Bank successors One West Bank for FDIC member bank financing obtained in a registration of securities pledged into the Deutsche Bank National Trust Company under the Trustee for Indy Mac Bank INDX Mortgage Loan trust 2006-AR27 concerning certain asset backed securities. The amount due is for investment activities beyond the view of FDIC regulators and scope of the California deed of trust and states authority for a power of sale.

    The outstanding amount is for compensating balances related to certain collateralized bonds that are held in default by bond holders. Your own instructions clearly state I must contact the INDX Mortgage Loan trust 2006-AR27 investment fund was formed from FDIC Bank lines of credit owed by an Indy Mac Bank subsidiary concerning certain asset backed securities obligating its banks directors to the Federal Reserve.
    Recall, as of October 2008, the US Treasury has charged off and written down the amount used to record the present value of the mortgage. Please also note where the subject mortgage loan held in default conveniently purports a defaulted obligation and first lien against my title.

    By your own admission you have forgiven the second deed of trust.I intend to show where the second mortgage was used to finance the rating agencies overcollateralization demands for registering the INDX Mortgage Loan Trust Series 2006-AR27.

    In conclusion, note holder is substituted out for private placement bondholders for trust funds listed as INDX Mortgage Loan trust 2006-AR27. This is alleged solely for restoring lost shareholder value by an oppressive and materially impossible novation disguised as a foreclose claim. It is all to say there are significant deficiencies and weaknesses in your claims. A non judicial foreclosure is void upon demonstrating a Deed for Bond, UCC filing held as the real lien of record and lack of jurisdiction to bring a power of sale over a uniform instrument used for national uses with limited non uniform variations to guard the indenture dominion for asset held.

    At settlement or thereafter, title was made free of all liens and encumbrances’ subject to a UCC filing for Collateralized equities placed into trust FBO Indy Mac Bank INDX Mortgage Loan trust 2006-AR27 The foreclosure cannot restore an interest in title beyond a complicated and vast consortium of financial transactions, a N Y trustee’s assets, foreign and domestic inter bank bond offering and asset backed securities.

    As a Tax payer and now a mere party in possession, I ask that you first restore title and embrace the Congresses demand for these pledged “toxic” accounts to have been charged to a complete loss by the Secretary of the Treasury. Please refrain from further publication or pursuit for title. This efforts falls far beyond the states jurisdiction for a power of sale or non judicial jurisdiction.

  5. The lender is neither a mortgage lender nor servicing agent. The lender here is an indentures trustee operating solely in that capacity as securities and investment funds administrator.You may be forewarned prior to sale that the trustor shown on deed had never elected nor implied or was properly disclosed a willingness to abandon his fee simple rights to the estate.

    Your firm will be held accountable for dual tracking these bond and securities offerings to a foreclosures statutory time frame.

    Herein the situation will cause the Notices of Default and Notices of Sale to have been strategically backdated and calculated in advance of the bonds or assets release date. Something of this nature is not within the framework of the Emergency Economic Stabilization Act. The liabilities of the FDIC bank member appear transferred, as in sold and left to the holdings pledged on account with the Federal Reserve’s eastern branch who is the Bank of New York.

    The One West FSB claims or other successor’s claims are an award from the receiver for an interest in equity and not debt. Therefore, no matter how badly duped at signing and during the entire foreclosure process, a consumer household cannot be held obligated under a power of sale for liabilities that extend to an obligor and beyond the terms of his promise.

    Therefore how do you intend to deliver to the alleged beneficiary this so called credit bid whereby we anticipate the grantee to be the foreclosing beneficiary? And is this purported washing of assets and liabilities into a power of sale intended to explain why the notice of sale is dated before the first and not recorded? This is also the reason, I assume, the date of the sale coincides with the existing life of loan upon the deeds seven year anniversary?

    Your office is triggering a taxable event caused by manipulated a reverse engineered sale and purchase back from the lender under a failed tax shelter scheme.

  6. Take #2

    The mortgage your office originated or is holding as a successor is in fact a taxable event to the borrower at settlement where we allege you induced her to release and transfer her title. Now the question begs what are you foreclosing upon and who the party in default is.

  7. deny and discover tactics.

    Plaintiff received a mortgage loan for an obligation set forth in the terms of the agreement . The Note.

    Said note was secured by a deed given to the lender as beneficiary later assigned to beneficial interest

    The later assignment was never recorded.
    Said later assignment was then transferred to a successor
    Successor and assigned is taking its transfer for due consideration owed it as a third-party bargain to a counter party
    The assignor is the party who will emerge grantee at time of sale if the property is forced into a default.
    The assignor is listed at sale as the foreclosing beneficiary.

    The beneficial interest in the asset of the lender is assigned to the lender subsidiary and later assigned to a foreclosing party who is the bidder and who paid in consideration the winning bid.

    The beneficial interest at settlement is the same in the chain of assignments and will emerge the owner of the asset in a foreclosure sale. It is one in the same party who is named in the subject security instrument and borrowers deed of trust.

  8. The Trustor’s contribution of real property maintains it is lawfully siesed of the estate; while providing him an estate for years for tax purposes and to allow that he remain in possession
    Trustor is held solely to liens of record held as security interests UCC-1 filing, for the registration of stock. For this purposes of the statutory indenture and demand of the trustee, the security instrument, UCC 1, is proper jurisdiction over local recording as a uniform instrument used for national use. Finally, the Trustor’s assets are contribution and not a loan permitted or article for which the Trustee can substitute and delete at will and remain BK remote.
    If trusts claims to assets are interchangeable, from one loan and date to the next, a policy of substitute and delete as f or any trust assets cause two substantive issues to arise for the Trustor. First is a Taxable event upon which the IRC tax payer code will view the contribution, not as a sale, but solely classify it as a lease. This therefore conditions the mortgage to a sale and contribution by the trustor or interchangeable estate for years and securities registration for rental income.
    The second is for the barriers and prohibitions on making loans interchangeable. On any given date the mortgages are trust assets which are materially altered as a common law mortgage. Albeit it can never be restored without novation and having to recapitalize the subsequent events and not just the asset.
    There is no less the bare minimum of a lock out period for trust assets to have been barred from participation in this chaotic world of financing known as substituted and deleted loans under a nominee Mers Corp.

  9. The mortgage your office originated or is holding as a successor is in fact a taxable event to the borrower at settlement where we allege you induced her to release and transfer her title. Now the question begs what are you foreclosing upon and who the party in default is.

  10. Did the plaintiff attorney motion the court for judicial notice that counsel was on his own ?

    And representing an IRS “best efforts” claim for alleged abandoned asset?

  11. @Deborah wynn,

    “Bailout money” and “tax dollars” are routinely given to the same private bankers that have hijacked our currency and financial system for the last 101 years.

    The “Federal Reserve Act” was created in 1913 to enrich private bankers masquerading as federal employees.

    In 1913 those same bankers created the 16th Amendment.

    The 16th Amendment PROVIDES FOR INCOME TAX.

    The constitution is silent on taxing personal wealth because the FOUNDERS had just successfully fought the largest industrial military complex of their age to a standstill on the battlefield.

    Income tax is the creation of English Central Bankers. It always was. It always will be.

    The US today stands at another crossroads and We The People have been given another unique opportunity to show these criminal filth to the door.

    Income tax was created through the 16th amendment and the intentionally mislabeled “Federal Reserve” to pay the private banking parasites for defrauding the mindless heirs to the greatest country in the world.

    We The People have squandered our inheritance.

    These banking filth, by any measurable standard, are now completely undone according to their own rules.

    The stumbling block is an interdependent judiciary.

    The government and the courts are attempting to preserve the “Sovereignty” of the US Dollar by ignoring criminal behavior.

    Instead, I say, uncover the “short sale” bets presently existing as 680 Trillion Dollars in “Notional Derivatives”.

    I say, since borrowers are the victims of fraud, allow the proceeds of the criminal derivatives market to be returned to the borrowers and the investors alike.

    Then jail the bankers.

    Then return the central bank to the people to whom it rightfully belongs as a public utility to enrich public coffers, not, PRIVATE POCKETS OF CRIMINAL FRAUDSTERS.

  12. Liens and reconveyances

    To continue from where we left off. If the liens of record are moved off title instead of having been satisfied and having left the demand issuer whole, then the G/L reads much differently. The transaction would read twice the value of the income wire .

    This is what we do. Show through the HUD 1 and from discovery the liens of record were never satisfied or never paid as represented at closing!

    ABA Wire into Settlement 546,250
    Liens of Record 0.00
    Reconveyances 546,250

    Equity Held $1,092,500

  13. Next, realize the lenders liens are stripped from title rendering it free of all encumbrances. The estate and its unencumbered equity are used to fund the depositors account.

    I aver to the rules covered under RESTRAINTS ON ALIENATION. Most courts will invalidate some restrictions placed on the alienation of land in the grant as a matter of public policy.

    A. Three Types of Restrictions of which two of the three must be introduced into court

    1. Forfeiture A grant states that the grantee forfeits the land if he makes a transfer.

    A. Promissory A grant has a covenant forbidding alienation. Remedy is either injunction or damages for breach of contract.

    B. Effect of Rule The type of estate that was conveyed influences the effect of the rule.

    1. Fee Simple If a fee simple was conveyed, all restrictions are meaningless and unenforceable.

    2. Life Estate Disabling restraints will not be enforced, but others may be enforced.

    3. Leaseholds Forfeiture and promissory restraints are enforceable. Disabling restraints are also likely to be enforced by most courts.

  14. From a Friend,

    – In this analysis are certain factual based findings and verifiable discovery supported by empirical fact whereby estate is affirmed to set unencumbered and free of liens. Therefore, title rests disturbed from adverse claims made by FDCPA agencies seeking to recover abandoned assets in order to reconstitute lost or charged off value. Therefore a question as to the consumers default is answered whereas the consumers payments

    First, your promissory Note is destroyed for economic de-recognition (accrual) purposes and therefore is lost to the lenders claims of a breach by the borrower. Its recognition is by a controversial accounting revision under ASC 310, ASC 320 and ASC 380 using futures derivatives and short title methods, devises and instrumentality. Indeed the note is void whereby the Mortgage “deed” is discounted to create a notional value paid as a futures strike price and securities option Call Date. Next, realize the lenders liens are stripped from title rendering it free of all encumbrances. The estate and its unencumbered equity are used to fund the depositors account. A depositor’s account is held as mark to market consideration transferred into a Delaware LP, “paid in capital account.” The LP Paid in capital account is valued at $250 price per share. Therefore the number of shares is equal to the value of the property appraisal. This allows for the shares to represent title under a purchase and sale agreement for purposes of a 1031 exchange. Now consider where Trust Common Shares are pledged to a Foreign National Central Bank using a 80 -20 formula. Problematic issues arise whereby the 20 percent discount is equal to five years prepaid interest The prepaid interest is paid on demand at the strike price equal to the original notes face value.

  15. It’s only one year and it’s not here. It is, however, a bank CEO. Apparently, it can be done… Any chance it will spread?

    http://www.zerohedge.com/news/2014-11-20/wall-street-stunned-iceland-dares-jail-banker-involved-2008-crash

  16. So Michael Keane
    What do you make of all that bailout money all,Them there tax dollars now pitched on our lil tiny shoulders talk about atlas ( shrugged) ;!

  17. This is what the Judges allegedly are up against

    http://nypost.com/2014/11/19/man-found-dead-with-his-throat-slashed-in-apartment/

    NEVER AGAIN

  18. And darn right – it’s NOT about a free house.

  19. The mortgagee on Mr Washington’s Note is American Wholesale Lender. Remember Bank of America vs. Linda Nash America Wholesale Lender did not exist and the Judge ruled in favor of Linda Nash. http://stopforeclosurefraud.com/wp-content/uploads/2014/10/10-21-14-Nash-v-BANA_Final_Judgment.pdf

  20. @ Deborah wynn,

    In the “Big Short”, by Michael Lewis, you will read where the banks performed “monthly remittance reports”.

    These reports were researched by Mike Burry, the genius behind one mutual fund that had the foresight, despite incredible resistance from his pool of investors, to buy derivatives (short sales) bets against pools of loans (trusts).

    Burry realized, early-on, the remittance reports showed trends wherein large numbers of loans had begun to default and he placed his bets accordingly.

    I have followed Mr. Garfield for some time and he has explained the banks may foreclose and then abandon the property; there is no chain of ownership; “dual-tracking” etc.

    I personally destroyed mortgages: the lien and ultra-necessary NOTES.

    The banks went heavy into bogus loans. Then, in order to regain their losses they went heavy into betting against those pools of loans; not unlike Mike Burry, except they controlled the reports, which, in turn, described which loans were beginning to falter.

    Enter the central bankers.

    Criminal filth like Jim Cramer emptied bogus pools of loans into European Pension Plans while he and those of his sociopathic greed chased commissions and “jammed the paper”; he and his playmates described this activity as “ripping the faces off ‘muppets’.”.

    They showed a particular disdain for the Germans and it is true most looted European Pension Plans met their fate as apportioned by Cramer and his filth through clearinghouses in Lundesbank, Germany.

    A “Free House” in NJ is one thing.

    The day We The People recapture our own destiny is the day lawyers understand the true prize is the proceeds owed to defrauded borrowers that presently manifest as derivatives bets placed by criminal filth like Cramer and his ilk.

    The current debt owed to “Notional Derivatives” internationally is 680 Trillion Dollars.

    Defrauded homeowners were used as pawns to further defraud investors. The identities of the homeowners were used to place bets (likely using the borrowers’ own monthly mortgage payments) as “short sales” against performance on the loans.

    Since the borrowers were used thus, it is very simple, polish up your law license, re-embrace the rule of law and go after the TRILLIONS OF DOLLARS now awaiting the day you, as attorney, penetrate the bets placed in your clients’ names.

    The bounty is frankly beyond description and far surpasses a “Free House”.

    The added advantage is the judges can breathe easy; they can fulfill the requirements of the law and preserve the International Sovereignty of the American Dollar.

    China will be delighted. As holders of some 6 Trillion in American Dollars, once the American Public reclaims its currency, together we can recapture and control the countless Trillions presently loosed upon the world threatening financial Armageddon.

    Then we can send Cramer and his crowd to the Fukushima Re-Education and Nuclear clean-up camps in Japan.

  21. I encourage all to examine your credit reports from all three agencies and challenge the issues – look closely at who and dates and compare to your own records and supporting documents, the info you get may help your case and also may clean up your credit reputation and your NAME

  22. Michael Keane
    What you say makes sense. I have been studying my credit reports and the notices I had in past from debt collectors the dates speak for themselves regarding the ” Asset” they are attempting to collect upon. It’s all predatory business plan. They try to validate with counterfeit fraudulent documents. This is how they do business knowingly commiting fraud preying on the innocent ignorance of the populous of this country. Thing is there’s no need for it to be so corrupt it’s pure greed.

  23. @Jan van Eck,

    I believe I know “Why (they are) not before the BK Court, filing a proof of claim…”.

    I believe they are playing the odds.

    Only 5% of those in distress are fighting back. Even in cases where the appeal ultimately pans out, the foreclosure has already gone before.
    Those who are content to sit this one out in NJ out are not concerned with this particular fish that jumped the net; instead, they are busy splitting the catch among derivatives short-sales that have been swimming directly into their nets for years.

    The true end-game is not the foreclosed property. It is the foreclosure itself.

    In the absence of default on the underlying asset (the home), the international, “notional” value of the derivatives (short sales on performance of the loan) quickly plummets into the deep.

    It is a classic short sale scenario: borrow something you do not own (the rights to collect on the debt- after all the defrauded investors paid the loan already whether they know it or not) and then place multiple bets against the performance on the “loan” (these multiple bets were and are the province of multiple servicers and they are using mortgage payments until default to cast their own nets using borrower money).

    This is why servicers are accepting transfers into their portfolios of loans that are already in default: the servicers are playing the odds.
    After all feed a man a fish and he eats well for a day- teach a man to re-hypothecate (counterfeit) his ownership of schools of fish into infinity and he has become godlike.

    At the very least, he doesn’t need to eat in New Jersey any longer.

  24. This is an unusual case because, I suspect, the parties making the Proof of Claim in the BK Court are likely not even the proper successor Lenders to the debtor. The Court relied on an earlier lawsuit as foundation for the proposition that the Note was accelerated, and the mortgage became due, all that to trigger the six-year statute of limitations on the ability to enforce a Note. The problem arises if (big “if”) the entity that did that suit was not even the proper Lender in the first place (which is what I suspect is the case). If the Plaintiff was a pretender-lender, then its assertion of acceleration of the debt cannot pass over to the true Lender.

    The BK Court, in adopting the filing of the state-court suit as the foundation for its own Ruling, failed to recognize that, whatever the assertions being made by BONY and SPS, the true Lender is carefully defined in the Note (I have not yet examined the Note in this case and am going by the Uniform Fannie/Freddie Note Form in this analysis). Typically the Note provides that the Lender is the party that takes the Note by “transfer” and “is entitled to the payments” under the Note. Whoever that is, that is likely not BONY – who is not entitled to the payments stream.

    How do you define the “person entitled to the payments”? Well, here is an acid test: can that person go spend the money on a wind weekend in Vegas? if not, then the person is a mere intermediary, a collections agent of sorts, a pass-through to the real entity, the person or party entitled to spend the money as he chooses. All BONY can do is collect it “for someone else,” so that does not meet the definition contained inside the Note – the determining factor here.

    The people entitled to the payments stream are the “investors.” Why are they not before the BK Court, filing a Proof of Claim? Most likely, they have no idea of the BK Petition. And if they did, it is certainly more convenient (and a lot cheaper) to go sue BONY in NY then it is to chase around the country filing Proofs (and litigating) in a ton of different courts. Also, they may be being paid anyway by the Master Servicer to the Trust,acting under the PSA as a sort of surety or “guarantor,” so there is no real “default,” and they don’t care. Nobody knows the real reason or reasons.

    Judge Kaplan did not understand the case because nobody laid it out for him – neither the Debtor, who focused narrowly on the six-year statute of limitations, nor the filing creditor, who cannot reveal that their Proof was fraudulent, or face huge fines as sanctions (to see where that can go, check our “In Re Nosek,” where Judge Rosenthal up in Worcester, MA BK Court hammered Ameriquest, Wells Fargo, and a passel of lawyers for hundreds of thousands in sanctions). My guess is, BONY punted – and lost. No big deal for BONY; they never owned that Note in the first place. It was all a charade and an illusion. What did BONY really lose? Nothing; it was not their money at risk in the first place. They had paid nothing and invested nothing. They were custodians of a Note, probably already paid by some third-party insurer, but that Note never got stamped PAID and removed from commercial circulation. What was left over was an “orphan note,” a paid-off note (by the insurance) that was not endorsed as paid, just sitting there – and that was just too tempting for those BONY guys.

    Oh, and the premium for that insurance policy against borrower default? That premium was likely paid by the Borrower, the debtor homeowner now in bankruptcy, the premium taken out at closing but not revealed to the borrower on the HUD-1. Just lovely.

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