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The biggest problem I have with Judges, Lawyers and even borrowers is that they have failed to do the required research and analysis of the mortgage market and securitization schemes that have dominated our landscape since 1996. As a result they apply presumptions to which the foreclosing party is not entitled and they arrive at preconceived notion of facts and law that are wrong.
Nothing could have been more stark than the thousands of orders, judgments and appellate opinions that were tersely overruled by a unanimous U.S. Supreme Court. And there is an admonishment from the Scalia opinion (and recently the Florida Supreme Court) if you read between the lines. It says that you can’t legislate from the bench or change the rules in your local courtroom that effectively overrules Federal Law or which make the foregone conclusion inevitable in violation of due process and the rule making authority of the actual entities who have that power.
In other words just because “everyone is doing it” neither makes it right nor institutionalizes it; but most courts are still treating case precedent that was overturned and in violation of Federal law as though the Court has discretion. It doesn’t. Attaching the note to a complaint doesn’t make the note enforceable even if it technically gives the pleader “standing” until proven otherwise.
And when a homeowner denies the loan, denies the ownership and denies the balance, and denies the note and denies the mortgage, the Judge should allow for the simple inescapable fact that the issue is in dispute and that presumptions don’t decide the case — facts decide the case. I think many lawyers have not been aggressive enough in pushing these points.
And I think the reason is that deep down inside they believe their client is liable for “the debt” (even thought the lawyer has made no inquiry into the actual nature of the debt) and then they take a giant leap of faith that looks for gimmicks and loopholes rather than showing plainly that the foreclosing party has no ownership, doesn’t know the balance, has no idea if there is a default from the perspective of the actual creditors, and lacks both the authorization and the knowledge to pursue foreclosure.
I have spoken with many lawyers and many judges. It all comes down to the fact that if there wasn’t a real default, we wouldn’t be in court. That assumption is wrong. We are in court because the Banks figured out a way to eat their cake and still have it. The Banks were intermediaries selling IPO shares in REMIC entities — so the banks neither owned the securities nor did they own the loans. And the real “lenders” got screwed. The banks intentionally did the loan paperwork such that it appeared as though the banks owned or controlled the loans and the mortgage backed securities. That is an illusion — one which is perpetuated by the insistence of Judges on relying on presumptions that lead to erroneous conclusions of law and fact.
So the end result is that the Banks claim losses on loans they never owned nor had any financial stake in. They are strangers to the transaction and they are not being required to prove the loan or acquisition of the loan by proof of purchase (which if it existed would end 90% of the litigation over these fake mortgages and fake mortgage foreclosures). If you look at the books of the investors whose money was used to fund the loans through improper means, you can see why all of them are suing — they loaned money to a REMIC Trust through a broker dealer on the premise that it would go through a REMIC trust, get the tax benefits, and the REMIC trust would originate or acquire the loans.
None of that actually happened and so the investors are stuck with a receivable that is neither enforceable by the note nor secured by the collateral; the simple reason for this is that the true disclosures were not made at the time of the closing, placing the banks in the position of controlling the information flow to both the investors who had signed off on their ability to get any information and to the borrowers who could only speculate what was wrong with the recorded encumbrance that was unenforceable but still slandering their title.
So they come into court with a witness who has never been employed in the processing of the loan at hand and who is “trained” to represent things he or she in actuality knows nothing about — providing a layer of deniability to the lawyers and the banks. The witness says he is “familiar” with the record keeping of the entity he is employed by but neglects to mention that entity has done no servicing of the loan at any time or has no controls in place to kick back those loans where there are obvious discrepancies. Add the fact that the servicing entity represented by the witness has a long list of failures, fraud and settlements with provisions for future conduct that they continue to ignore, and only a fool would give them credibility on presumptions of fact and law based upon suspect paperwork much of it backdated, robo-signed, forged etc.
So is it wrong to say that the banks are not entitled to the benefit of the presumptions in light of the obvious history of forgery, perjury and other flagrant violations? NO! And does it prejudice the bank in ANY way to require them to prove the facts that they want presumed? NO! If they have the proof then let them produce it. But in 8 years of following thousands of cases I have never seen a bank come forward and say ok, here is the proof of the loan and here is the proof we purchased it. And here is the proof of our authority to represent the party who purchased it.
Instead they want presumptions upon presumptions using untrustworthy hearsay documents to escape the most elements of proof. And the same banks who reject that argument, use that as policy when granting approval of loans — they presume nothing. They want backup and proof of everything including where you got the money from for the down payment. In a level playing field, what is good for the goose is good for the gander. That is all you should demand and you should do it aggressively. The question that should be asked of the Judge is “Do you really think it is better to come to the wrong conclusion based upon presumptions arising out of suspect paperwork proffered by known violators of disclosure, testimony and who have stone walled even the agreements they made in “settlements” with Attorneys general, government agencies and the Department of Justice.
Allowing the bank to continue to get away with this nonsense is causing massive damage to our economy and to the individual lives of the people affected. Not only is the Court coming to erroneous factual and legal conclusions, if is acting in continuing and furthering the fraudulent schemes of Wall Street banks. And that, my friends, is no gimmick. You should only owe money to the party who advanced it to you or on your behalf out of THEIR funds. And if the paperwork was screwed up so the banks could trade on should have been the property of the investors, that is not a problem for the borrower. There is no encumbrance and there is no note that is actually enforceable. Creating a new creditor based upon a second debt arising from one transaction out of thin air is not a solution to the mortgage crisis — it is part of the problem.
Filed under: foreclosure |