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Hat tip to our lead investigator Ken McLeod (Chandler, Az) who brought this case to my attention. It is from 2013.
Mysteriously seemingly knowledgeable legislators passed statutes permitting government agencies to finance mortgage loans in amounts for more than the property is worth, to people who could not afford to pay, without the need to document things such as income, and then to allow the chopping up the [*7]loans into little pieces to sell to new investors, so that if a borrower defaulted in repayment of the loan, the lender would not have the ability to prove it actually owned the debt, let alone plead its name correctly. The spell cast was so widespread that courts find almost everyone involved in mortgage foreclosure litigation raising the “Sgt. Schultz Defense” of “I know nothing.”
Rather than assert its rights and perhaps obligations under the terms of the mortgage to maintain the property and its investment, respondent has asserted the Herman Melville “Bartleby the Scrivener Defense” of “I prefer not to” and relying on the word “may” in the document, has elected to do nothing in this regard. Because this loan appears to have been sold to investors, it may be asked, does not the respondent have a legal obligation to those investors to take whatever steps are necessary to preserve the property such as collecting the rents and maintain the property as permitted in the mortgage documents?
It should be noted that in its cross-motion in this action Deutsche asserts that its correct name is “Deutsche Bank National Trust Company, as Trustee for Saxon Asset Securities Trust 2007-3, Mortgage Loan Asset Backed Certificates, Series 2007-3” and not the name petitioner placed in the caption. Which deserves the response “you’ve got to be kidding.” Deutsche is not mentioned in the chain of title; it is listed in these HP proceedings with the same name as on the caption of the foreclosure action in which it is the plaintiff and which its counsel drafted; and its name is not in the body of foreclosure action pleadings. In the foreclosure proceeding Deutsche pleads that it “was and still is duly organized and existing under the laws of the UNITED STATES OF AMERICA.” However, there is no reference to or pleading of the particular law of the USA under which it exists leaving the court to speculate whether it is some federal banking statute, or one that allows Volkswagens, BMW’s and Mercedes-Benz’s to be imported to the US or one that permitted German scientists to come to the US and develop our space program after World War II.
As more and more cases are revealed or published, the truth is emerging beyond a reasonable doubt about the origination of the loans, the actual debt (identifying creditor and debtor), the note, the mortgage and the inevitable attempt at foreclosure and forced sale (forfeiture) of property to entities who have nothing to do with any actual transaction involving the borrower. The New York court quoted above describes in colorful language the false nature of the entire scheme from beginning to end.
The TRUTH of the matter, as we now know it includes but is not limited to the following:
- DONALD DUCK LOANS: NONEXISTENT Pretender Lenders: Hundreds of thousands of loan closings involved the false disclosure of a lender that did not legally or physically exist. The money from the loan obviously came from somewhere else and the use of the non-existent entity name was a scam to deflect attention from the real nature of the transaction. These are by definition “table-funded” loans and when used in a pattern of conduct constitutes not only violation of TILA but is dubbed “predatory per se” under Reg Z. Since the mortgage and note and settlement documents all referred to a nonexistent entity, you might just as well have signed the note payable to Donald Duck, who at least is better known than American Broker’s Conduit. Such mortgages are void because the party in whose favor they are drafted and signed does not exist. Such a mortgage should never be recorded and is subject to a quiet title action. The debt still arises by operation of law between the debtor (borrower) and the the creditor (unidentified lender) but it is not secured and the note is NOT presumptive evidence of the debt. THINK I’M WRONG? “SHOW ME A CASE!” WELL HERE IS ONE FOR STARTERS: 18th Judicial Circuit BOA v Nash VOID mortgage Void Note Reverse Judgement for Payments made to non-existent entity
- DEAD ENTITY LOANS: Existing Entity Sham Pretender Lender: Here the lender was alive or might still be alive but it is and probably always was broke, incapable of loaning money to anyone. Hundreds of thousands of loan closings involved the false disclosure of a lender that did not legally or physically make a loan to the borrower (debtor). The money from the loan obviously came from somewhere else and the use of the sham entity name was a scam to deflect attention from the real nature of the transaction. These are by definition “table-funded” loans and when used in a pattern of conduct constitutes not only violation of TILA but is dubbed “predatory per se” under Reg Z. Since the mortgage and note and settlement documents all referred to an entity that did not actually loan money to the borrower, (like The Money Source) such mortgages are void because the party in whose favor they are drafted and signed did not fulfill a black letter element of an enforceable contract — consideration. Such a mortgage should never be recorded and is subject to a quiet title action. The debt still arises by operation of law between the debtor (borrower) and the the creditor (unidentified lender) but it is not secured and the note is NOT presumptive evidence of the debt.
- BRAND NAME LOANS FROM BIG BANKS OR BIG ORIGINATORS: Here the loans were disguised as loans from the entity that could have loaned the money to the borrower — but didn’t. Millions of loan closings involved the false disclosure of a lender that did not legally or physically make a loan to the borrower (debtor). The money from the loan came from somewhere else and the use of the brand name entity (like Wells Fargo or Quicken Loans) name was a scam to deflect attention from the real nature of the transaction. These are by definition “table-funded” loans and when used in a pattern of conduct constitutes not only violation of TILA but is dubbed “predatory per se” under Reg Z. Since the mortgage and note and settlement documents all referred to an entity that did not actually loan money to the borrower, such mortgages are void because the party in whose favor they are drafted and signed did not fulfill a black letter element of an enforceable contract — consideration. Such a mortgage should never be recorded and is subject to a quiet title action. The debt still arises by operation of law between the debtor (borrower) and the the creditor (unidentified lender) but it is not secured and the note is NOT presumptive evidence of the debt.
- TRANSFER WITHOUT SALE: You can’t sell what you don’t own. And you can’t own the loan without paying for its origination or acquisition. Millions of foreclosures are predicated upon acquisition of the loan through a nonexistent purchase — but facially valid paperwork leads to the assumption or even presumption that the sale of the loan took place — i.e., delivery of the loan documents in exchange for payment received. These loans can be traced down to one of the three types of loans described above by asking the question “Why was there no payment.” In turn this inquiry can start from the question “Why is the Trust not named as a holder in due course?” The answer is that an HDC must acquire the loan for value and receive delivery. What the banks are doing is showing evidence of delivery and an “assignment” or “power of attorney” that has no basis in real life — the endorsement of the note or assignment of the mortgage was fabricated, robo-signed and is subject to perjury in court testimony. Using the Pooling and Servicing Agreement only shows that more fabricated paperwork was used to fool the court into thinking that there is a pool of loans which in most cases does not exist — a t least not in the REMIC Trust.
- VIOLATION OF THE TRUST DOCUMENT: Most trusts are governed by New York law. Some of them are governed by Delaware law and some invoke both jurisdictions (see Christiana Bank). The laws that MUST be applied to the REMIC Trusts declare that any action taken without express authority from the Trust instrument is VOID. The investors still have not been told that their money never went into the trust, but that is what happened. They have also not been told that the Trust issued mortgage bonds but never received the proceeds of sale of those bonds. And they have not been told that the Trust, being unfunded, never acquired the loans. And that is why there is no assertion of holder in due course status. Some courts have held that the PSA is irrelevant — but they are failing to realize that such a ruling by definition eliminates the foreclosure as a viable action; that is true because the only basis of authority to pursue foreclosure, collection or any other enforcement of the sham loan documents is in the PSA which is the Trust document.
- THIRD PARTY PAYMENTS WITHOUT ACCOUNTING: “Servicer” advances that are actually made by the servicer but pulled from an account controlled by the broker dealer who sold the mortgage bonds. These payments continue regardless of whether the borrower is paying or not. Banks fight this issue because it would require that the actual creditors be identified and given notice of proceedings that are being pursued contrary to the interests of the investors. Those payments negate any default between the debtor and the actual creditor who has been paid. They also reduce the amount due. The same holds true for proceeds of insurance, guarantees, loss sharing with the FDIC and proceeds of hedge products like credit default swaps. Legally it is clear that these payments satisfies the payments due from the borrower but gives rise to an unsecured volunteer payment recapture through a claim for unjust enrichment. That could lead to a money judgment, the filing of the judgment and the foreclosure of the judgment lien. But the banks don’t want to do that because they would definitely be required to show the money trail — something they are avoiding at all costs because it would unravel the entire fraudulent scheme of “securitization fail.” (Adam Levitin’s term).
- ESTOPPEL: Inducing people to go into default so that there can be more foreclosures: Millions of people called the servicer asking for a modification or workout that the servicer obviously had no right to entertain. The servicer customer representative gave the impression that the borrower was talking to the right person. And this trusted person then started practicing law without a license by advising that modifications could not be requested until the borrower was at least 90 days in arrears. All of this was a lie. HAMP and other programs do NOT require 90 day arrearage. The purpose was to get homeowners in so deep that they could never get out because the servicers are charged with the job of getting as many loans into foreclosure as possible. By telling the borrower to stop paying they were (a) telling them the right thing because the servicer actually had no right to collect the payment anyway and (b) they put the servicer in an estoppel position — you can’t tell a borrower to stop paying and then say THEY breached the “agreement”. Stopping payment was a the request or demand of the servicer. Further complicating the process was the intentional loss of submissions by borrowers; the purpose of these “losses” (like “lost notes” was to elongate the process and get the borrower deeper and deeper into the false arrearage claimed by the servicer.
The conclusion is obvious — complete strangers to the actual transaction (between the actual debtor and actual creditor) are using the names of other complete strangers to the transaction and faking documents regularly to close out serious liabilities totaling trillions of dollars for “faulty”, fraudulent loans, transfers and foreclosures. As pointed out in many previous articles here, this is often accomplished through an Assignment and Assumption Agreement in which the program requires violating the Truth in Lending Act (TILA) and the Real Estate Settlement and Procedures Act (RESPA), the HAMP modification program etc. Logically it is easy to see why they allowed “foreclosures” to languish for 5-8 years — they are running the statute of limitations on TILA violations, rescission etc. But the common law right of rescission still exists as does a cause of action for nullification of the note and mortgage.
The essential truth in the bottom line is this: the paperwork generated at the loan closing is “faulty” and most often fabricated and the borrower is induced to execute documents that create a second liability to an entity who did nothing in exchange for the note and mortgage except get paid as a pretender lender — all in violation of disclosure requirements on Federal and state levels. This is and was a fraudulent scheme. Hence the “Clean hands” element of equitable relief in foreclosure as well as basic contract law prevent the right to enforce the mortgage, the note or the debt against the debtor/borrower by strangers to the transaction with the borrower.
Filed under: foreclosure | Tagged: American Brokers Conduit, Chrsitiana bank, Donald duck loans, HAMP, HDC, PETE, PSA, Quicken Loans, REMIC TRUST, RESPA, The Money Source, TILA, Transfer without sale, UCC |