UNFUNDED TRUSTS: WHY IT MATTERS

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On tonight’s show we will talk about the alleged trusts that allegedly own the loans. In most cases, they do not own the loan nor do they represent the interests of the owners. The owners of the DEBT are the investors who advanced money to the investment bank that sold mortgage bonds to the investor (pension fund). There are two main reasons why this is important:

  1. An unfunded trust has no money to buy or originate loans. Therefore it is an improper party to bring any action to collect or enforce the debt. This is especially true when the unfunded trust has no legal claim to enforce the loan on behalf of the owners. The REMIC Trust should not be allowed to cause a foreclosure, or interfere with the rights of borrowers and investors. Its “servicers” have no right to collect money and when they do collect money from the borrower, they owe the money back to the borrower who paid it to the servicer. This has been discussed in cases highlighted on this blog over the last week.
  2. The unfunded trust is evidence of a fraudulent scheme in which the investors (pension funds) were tricked into advancing money to an investment bank who then misused the money, didn’t deliver it to the trust that issued the mortgage bonds that were sold, and then acted as a conduit between the investors and the borrowers — without either one knowing what was really happening. In a foreclosure, this means that the alleged enforcement of the loan is really furtherance of the fraudulent scheme against investors. Raising this issue does NOT mean there is no debt. It means, in most cases, that foreclosure is not an option because the perpetrators of the fraud and the initiators of the collection and enforcement of the alleged “loan” are one and the same. Hence the Court SHOULD be interested in not being part of a fraudulent scheme. It is a classic case of unclean hands.

The issue is proof and mores specifically the willingness of the court to let you prove your case. This comes down to pleading, discovery, motions to compel that spell out your narrative for the case and investigation through forensic auditors and private investigators. Unfunded REMIC Trusts represent a potential attack against the party initiating foreclosure that can be fatal to their claim if properly presented.

As a general observation these attacks are met with claims of presumptions when dealing with negotiable paper, and the claim that the borrower has no standing to raise the issue. But the borrower clearly does have standing to raise the issue if the borrower is claiming return of all money paid and claiming that the foreclosure action is part of a fraudulent scheme to the detriment of the real creditor and the detriment of the borrower, both of whom under Federal Law are required to pursue options for modification or settlement.

And the legal presumptions only apply to paper that is truly negotiable and where there is no evidence of trustworthiness or lack of credibility. The recent transfers from Chase and other entities to SPS are not really transfers of servicing rights. The “loan” is clearly already declared to be in default — making the claim of negotiable paper (and the presumptions) moot. So the entrance of SPS or another “servicer” under these circumstances is just another layer to fool the court and the borrower.

They are merely hiring SPS to

(a) enforce, because SPS is not processing payments from the borrower nor making payments to the investors (that is done by Chase or whoever is the the named servicer in the PSA) and

(b) create the illusion of business records by having an SPS representative testify that the business records of SPS should be admitted because SPS examined the prior records of the prior servicers and found them to be correct in what they call a “boarding” process. This is a blatant attempt to circumvent the rules of evidence. Both the attempt at creating legal presumptions regarding the note and mortgage and the attempt to use the business records of an “enforcer” posing as a “servicer” should be rejected.

THIS ARTICLE IS MY OPINION AND SHOULD NOT BE USED AS A SUBSTITUTE FOR THE ADVICE FROM AN ATTORNEY LICENSED TO PRACTICE IN THE JURISDICTION IN WHICH YOUR PROPERTY IS LOCATED.

18 Responses

  1. Lets allow Garfield to address the question of securitization along with the reader that replied to the first comment provided regarding securitization. Isnt that the basis of all arguments ? Securitization implies stock and bonds , and in the event these bonds and stock were created and derived through fraud, this then means , VOID…. Securitization never really took place, thus the stock is merely no different than being counterfeit. In that case of proving , we are all aware these trusts were and always have been empty. No chain of tangible ownership. Instead these companies that participated in this all filed for bankruptcy ,knowing they would only collect once again through shell companies they created. Im thinking Madoff was correct here , He did nothing more than what the Government does and allows by some. Oh and I do have the original deed to my home and know ex employers along with current employer have networked to do this fraud . Its free money and your a slave

  2. The elephant in the room is clear here. The facts are the State , Municipal bond purchasers which are generally an attorney firm along and financial institution which is generally speaking as Prof. Black would say ” WELLSARGO” APPOINTED by the State. If you don’t see where the problem is here , then just sit back and give it a thought further. There were no Trust , your payments were being collected and placed in the pockets of the State Representatives and much of this money went towards funding campaigns as well. Foreclosure is the step in the fraud to merely cover up the fact all government pension funds were looted. The shame in all of this is Non Profit organizations along with Philantropist , and of course lets not leave out the XChildrens Homes , Childrens Funds along with the Universities are the beneficiaries of your home that you have paid for. It is modern slavery. Not one person is speaking upon the fraud that is at State level concerning these loans. We currently have under cover police officers , aviation and aerospace employees along with ex police officer and ex military committing the fraud against homeowners. Not one person is speaking on this at all. I tend to agree with the writer , we have not seen any of the cases won by the homeowners or by the attorney that writes this page. Could it be these are paralegals committing the fraud as well? Just wondering

  3. Rachel,

    True. Securitization was regularly faulty. What homeowners need to understand is that IT IS NOT an argument they, as a party to a bilateral contract, can make. It is something for the DoJ and SEC to investigate. Homeowners bringing it up in court… lose!!!

    Can you investigate? Sure! Can you transmit your misgivings and findings to the DoJ and SEC? Sure! Is it going to help you fight FC? Hell no!

  4. I have read through this securitization and realized one thing here, securitization almost never took place correctly or in reality not at all. This can only occur when the delivery of the note and deed is entered into the trust. We know these trusts were indeed empty, so…. in my mind of law and reality , it never happened. The Government ordered an audit of these trusts and found this to be the case , then turned around and had the very same auditors committing fraud upon the homeowner. JPMorgan was ordered to buy back these alleged loans. In reality these loans did not exist. Servicers were taking money and the payments never went against the alleged loans , the money went into someones pocket. Am I off base off base here ?

  5. What I do not understand in all of this is , when you have pension funds on the line with these fraudulent transactions , we are talking about the Government entities such as the Transportation , Government employees and so on. We are talking about the Judges Pensions as well, therefore it remains somewhat clear that the State in which these foreclosures are taking place in are indeed the perpetrators of initiating the fraud foreclosures. This would indeed be the State bringing forth the foreclosures only to use the original banks name to create the shell of the assignment for the State. Banks , government employees and teachers pensions( beneficiaries ) were trained in 2009 by AIG and other institutions to track , harass and create the fraudulent schemes against the homeowners of these fraudulent loans. It appears the attorneys are all on a network list of bond fraud therefore , obtaining representation is NULL. The State appointed servicer is Wellsfargo. One last thing here, the alleged investors are indeed the very fuel for the banks. What I am saying here is the alleged original investors which never paid a dime towards anything are indeed the very same faces and or hands behind the foreclosures as well. There is no way these banks and investors could be allowed to get away with such fraud otherwise. I do have one question here regarding Blacks Law. The physical note and deed , Must be attached and affixed ? Is this correct?

  6. Securitization
    To the extent that this action is based in part upon a challenge to the chain of title of the beneficial interest in the Deed of Trust, the Plaintiffs fail to allege any legal basis for his claim. [FAC pars 14-15, 30.] This Court follows the majority rule that absent a dispute amongst lenders as to ownership, a party showing an assignment or other ownership interest may foreclose. The ‘in default’ borrower has no right to avoid foreclosure. This Court concludes that appellate courts are split upon the rule stated by the Fifth District Court in Glaski v. Bank of America (2013) 218 Cal.App.4th 1079, that a debtor in default under the Deed of Trust upon his or her residence can bring an action for wrongful Notice of Default on the simple basis that there is a flaw in the ownership claim of the party calling for foreclosure. A contrary conclusion has been reached by numerous California appellate courts. (See, Jenkins v. JPMorgan Chase Bank (2013) 216 Cal.App.4th 497, 515; Gomes v. Countrywide Home Loans, Inc. (2001) 192 Cal.App.4th 1149.)

    The above tentative court ruling was presented this past week, and is straight out of the judges’ playbook on CA non-judicial foreclosure. Bear in mind that rulings of federal cases are not binding to CA courts (and references in this tentative ruling to fed cases were omitted).

    The gist of the Jenkins argument is this. “After our own examination of the nonjudicial foreclosure statutes, we agree with the Gomes court that the provisions do not contain express authority for such a preemptive action.   Also, even if the statutes are interpreted broadly, it cannot be said the provisions imply the authority for such a preemptive action exists, because doing so would result in the impermissible interjection of the courts into a nonjudicial scheme enacted by the California Legislature.  (See Lu v. Hawaiian Gardens Casino, Inc. (2010) 50 Cal.4th 592, 596 [legislative intent to create cause of action revealed through interpretation of statute and legislative history];  City of Cotati v. Cashman (2002) 29 Cal.4th 69, 80 (City of Cotati ) [plaintiff may not use claim for declaratory relief to “ ‘create a cause of action that otherwise does not exist’ ”].)  “The recognition of the right to bring a lawsuit to determine a nominee’s authorization to proceed with foreclosure on behalf of the note holder would fundamentally undermine the nonjudicial nature of the process and introduce the possibility of lawsuits filed solely for the purpose of delaying valid foreclosures.”  (Gomes, supra, 192 Cal.App.4th at p. 1155.)”

    The statutes referred to neither express nor deny authority of a preemptive action in order that the clauses in the contract (deed of trust) regarding the borrowers right and obligation to defend a clear title may not be impacted. The courts are fine with the homeowner taking the hit of the stress and loss of ability to defend themselves after a trustee sale / eviction, in which by case law the presumption is that there was no error in the trustee sale, including the authority of the beneficiary who supposedly elected to foreclose. The nasty little secret is that their contrivance of the case law is meant to prevent a question of jurisdiction of the court to consider equity of a party with no standing to be heard. Putting the horse before the cart, there can be no foreclosure if the party ‘electing’ to foreclose does not possess the authority to make that election. Yet in California, you (may) waive the standing argument if you wait until after the trustee sale.

    And note the rationalization by the courts that the damages done by delaying a foreclosure apparently are greater to the banksters than the loss of a home by the borrowers, even though more parties become affected after a trustee sale.

    This is what Glaski is really about.

    Smell the money yet?.

  7. Gene,

    Don’t know. To be honest with you, I never heard of HBOR until now (I’m not in CA) but from what I just read, it is very restrictive on who can claim protection under HBOR. And the conditions do not appear crystal clear. It feels more like a last-ditch/PR effort from CA’s government than a set-in-stone rule one can hang his hat on.

    http://www.nolo.com/legal-encyclopedia/what-is-the-difference-between-california-hbor-the-national-mortgage-settlement.html

  8. Christine,

    Good read on Glaski. No other CA Appeals Court has ruled in favor of the homeowner on Glaski issues, or when Glaski is cited in the complaint.

    The CA Supreme Court has taken Ivanova so as to address the Assignment issue and whether the homeowner has the right to challenge the assignment. Attorney who argued the Glaski Appeal will be arguing it. Few attorneys expect that the Supremes will rule that the homeowner has the right to challenge.

    What will be interesting is HBOR and its requirement that Assignments be accurate and correct. Will the Supreme’s take that into consideration, or will they ignore HBOR? If they ignore HBOR, does it mean another bite at the apple for homeowners?

  9. “I’ve been reading Neil’s blog since he first turned the lights on and don’t ever recall anyone, not one person, stating that they followed Neil Garfield’s advice to their detriment.”

    They don’t have to. They simply lose and disappear to never be heard from ever again. I don’t recall anyone on this site ever saying either: “I followed Garfield step by step and everything he advocated worked for me like a charm!” In fact, I’ve never even heard a competent attorney advise anyone to follow Garfield’s theories and “get on that site every chance you get! The guy holds the gold!” Nope. Quite the contrary.

    What I do recall reading, over and over from LL followers is this: “Where are the wins on those theories?”, “Why aren’t there any wins on LL?”

  10. The way to win is through discovery- hands up who got discovery, hands up who got their motions to compel answered, now
    hands up who were blocked from getting discovery one wAy or another

  11. At E……wins can be a subjective value. Winning a suspense account “should” be fairly easy if you paid your escrow. Lay opinion having succeeded in one with BOA last year…

    The beauty of freedom is one can fuck things up and take the fall if they so choose, they can be stupid and just plain nuts…this is how a democracy SHOULD work. Of course the courts are not working at the democratic-judicial system. The deck IS stacked. Most of the cases I have read (and they are in the hundreds) should be dismissed on the banks side, as a 12 (b)(6)…pretty easy flip.

    Just because the judge speaks…doesn’t make it so, legal or the feigning of jurisdictional authority.

    The bankers commit fraud on a daily basis, ask any “honest” attorney or judge, only kidding…scarce….get a few gin and tonics or Manhattans under their belts, maybe you could get the truth.

    Anyway…Neil is not giving advice on procedure, jurisdictional matter nor has he claimed any wins…but his information used for the right case, in the right forum and the proper pleadings…much of it is truthful.

    Just my tidbit and only a tidbit. No lawyer here, no expert, nothing, just a scrappy homeowner with several loans in question and the lies are present….doesn’t matter what anyone else thinks. They have so few wins too. No silver bullet!

  12. “SECURITIZATION AUDITS WORTHLESS IN SPITE OF GLASKI
    JULY 27, 2014 MAVEN

    I have compiled an array of articles dealing with the California 5th District Court of Appeals RED HERRING case known as “Glaski.” I refer to it as a red herring because foreclosure defense buffs love delaying foreclosure proceedings using securitization arguments that ALWAYS ULTIMATELY FAIL to save the house from foreclosure. Glaski lost the house to California’s non-judicial foreclosure process for failing to make timely mortgage payments. He sued and the trial court ruled against him. He appealed and the appellate panel ruled that the foreclosure lacked validity because the owner of the note never received ownership of it because the assignment to the trustee lacked validity for occurring after the closing date named in the Pooling and Servicing agreement, according to New York state law.

    Well, other California and Federal courts had more sense than the 5th District panel, and they gave the ruling short shrift as they opined that the borrower is not a party to the assignment of the note nor to the Pooling and Servicing Agreement, and has no standing to challenge or enforce either one in court.

    So now securitization auditors slide back into their funk, and continue on selling their scam audits to hopeful foreclosure victims who don’t know any better.

    Bottom line, NOBODY EVER SAVED A HOUSE FROM FORECLOSURE WITH A SECURITIZATION AUDIT.

    I go on to repeat tirelessly that only one thing beats the bank and its associates in mortgage issues: MORTGAGE ATTACK. You can read about it elsewhere on http://mortgageattack.com.”

  13. I’ve been reading Neil’s blog since he first turned the lights on and don’t ever recall anyone, not one person, stating that they followed Neil Garfield’s advice to their detriment. Nor do I ever remember Garfield suggesting that anyone should do so.

    Christine and Cookie are always attempting to paint this site as a “how to” instructional on foreclosure defense, and that’s about as far from reality as it goes. Neil exposes what he sees as the continued criminality raining down like so many tetrus blocks, with analysis as to how that all relates both to the investor class, and the borrowers. Nothing here, that I can recall, has ever been stated to be a road map to winning at foreclosure.

    And Gene says, “Notice the “Disclosure” at the end of his writing. His opinion only, but check with an attorney before using it. Such confidence…………..” Actually, that’d more than likely be a cover your ass statement, as I guarantee there’s no end to the number of bankster minions that would like to crucify Garfield just for the sake of being able to boast of taking his bothersome scalp. Would any savvy lawyer NOT recommend such a closing CYA?

    As to Christine, I too congratulate you on your win. At the same time, it needs to be stressed that what worked for you may not come even close to being an appropriate tactic for another. Your blanket dismissal of attacking fraudulent assignments, forgeries, hearsay, standing, etc., tells me that you truly believe that there’s no chance of gaining ground against the criminality. It’s your way or the highway. That’s bullshit. The criminality MUST be exposed, period. Lastly, I don’t need to remind you that you live in one of the more accommodating states judicially speaking. From what it sounds like in your case, you never ran into a judge who would rather the sun go out than rule for a borrower, which has been a persistent condition across the rest of the states. Lucky you.

    As to your recent comment accusing me of running everyone who is law savvy off of LL, you give me way too much power. All I do is call bullshit each time a “lawyer type” states boldly that Glaski is flawed or that the borrower has no standing whatsoever. It’s exactly that attitude that’s gotten us to where we are today; the belief that in this world of new “Finance Capitalism”, the folks that actually do the work have no say in the workings of the Very Serious People….just shut up and work your $7.35 job, pay off your school loans until you die trying, or we’ll find someone else who will. You took out a loan, didn’t you?

    Screw them all.

  14. Elex,

    Look around you and see how many on this site lost to the bank simply because they followed Garfield’s advice and spat out half-baked theories.

    If I recall, you, yourself, haven’t fared all that well. Any idea why? You can spew venom as much as you wish. It still doesn’t change the fact that people who stay away from those theories win and those who use them lose. Speaking from experience, mind you.

  15. Christine,

    Agree completely.

    NG writes:

    “The recent transfers from Chase and other entities to SPS are not really transfers of servicing rights. The “loan” is clearly already declared to be in default — making the claim of negotiable paper (and the presumptions) moot. So the entrance of SPS or another “servicer” under these circumstances is just another layer to fool the court and the borrower.

    They are merely hiring SPS to

    (a) enforce, because SPS is not processing payments from the borrower nor making payments to the investors (that is done by Chase or whoever is the the named servicer in the PSA) and

    (b) create the illusion of business records by having an SPS representative testify that the business records of SPS should be admitted because SPS examined the prior records of the prior servicers and found them to be correct in what they call a “boarding” process.

    This is a blatant attempt to circumvent the rules of evidence. Both the attempt at creating legal presumptions regarding the note and mortgage and the attempt to use the business records of an “enforcer” posing as a “servicer” should be rejected.”

    This is false and misleading by NG. Here is why:

    1. RESPA is very clear on this, as well and the PSA Master Servicing Rights Agreement, and the Master Servicng Rights Sales Agreement as well. Subservicers and Special Servicers are allowed and desired when loans default.

    2. The Servicing Rights Transfer only transfers the right to collect the money for the Investor. It has NO EFFECT on the Note, and being in default is not an issue.

    3. The Master Servicer still remains in position and retains full responsibility for the Subservicer or Special Servicer. So no real change has occurred.

    4. Just because the borrower is not making payments does not mean that SPS is attempting to collect. They are required under RESPA to engage in modification efforts to allow loan reinstatement. This is a part of loan servicing and collection attempts.

    5. Business records argument, pure garbage to what is relevant.

    Notice the “Disclosure” at the end of his writing. His opinion only, but check with an attorney before using it. Such confidence…………..

    And on another, notice that NG will also “support” RESPA with his pretender lender/table funded arguments, yet ignores the fact that both RESPA and Fed commentary are in direct contradiction of what he claims.

    NG must be taking classes from Obama…….

  16. FWIW, when I pressed my discovery requests (denied by trial judge) for common business records depicting sale or purchase of loan, and for transfer of note by transmission records or bailment to the appellate court in CA, the appellate judges came up with an issue not presented in the trial court in order to deflect the core question of denial of due process on the part of the trial judge. In the end, the appellate court ruled against me using evidence presumed to exist and never presented as material fact. And the state supreme court denied review.

  17. @christine – Neil offers to pay the cost of this website and allow open comment regardless of the irrelevance of the remarks. You offer to take a dump on his website.
    ‘Nuff said.

  18. And there we go again, with issues completely irrelevant to a homeowner fighting FC and incumbent to REGULATORS to investigate and prosecute, if need be/if warranted. Garfield has been saying the same thing over and over for 7 years. Where are his wins on his theories?

    There are none!

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