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It should not be news that FDCPA claims apply to default and other foreclosure notices. But the judicial bias exists, based upon the premise that it doesn’t matter who is owed money or how much; or there is the background policy assumption that the brunt of bank misbehavior should fall on their victims.
Fortunately Judges are retreating from those assumptions as they see more and more things they just don’t like: musical chairs with services, trustees and beneficiaries/mortgagees and demand figures that cannot be reconciled with the alleged loan. It DOES matter who owns the loan and it DOES matter how much was demanded to “reinstate” the loan, and it DOES matter whether the “Servicer” is really the servicer or has any authority at all to be contacting, collecting or threatening borrowers.
The remedies under FDCPA are fairly limited, but they do have teeth. AND once a finding is made that there was a violation it will have an effect on the right or ability of the foreclosing party to continue with foreclosure, bid at the auction or convey title.
Keep in mind that in non-judicial states, the common bogus practice of the banks is to file a self-serving fabricated substitution of trustee (which ought to be challenged). Then the unauthorized trustee sends a notice of default and notice of sale. But that is all done based upon the self-serving fabricated substitution of trustee — which is where they claim that the issue of who owns the loan (who is the beneficiary) is “resolved.” Nothing could be further from the truth. The main thing to immediately challenge, in my opinion, is the substitution of trustee. In almost all cases, my analysis indicates they are bogus and make non sense from the point of view of reasonable business practices.
If the beneficiary was real, they would simply contact the existing trustee on the deed of trust and advise them to give notice of default and notice of sale. Instead they add the extra step EVERY TIME of filing a substitution of trustee in order to accomplish two things: (1) to establish themselves as beneficiaries under the DOT and (2) to give the powers of the trustee to a controlled entity — which means that the party claiming the position of beneficiary is essentially appointing themselves to serve as trustee — a direct violation of statute.
The real reason for this behavior goes even deeper. If they were to use the original trustee (whom they used to distance themselves from the transaction with the borrower) they would have no access to non-judicial foreclosure.
- A REAL Trustee on the Deed of Trust would receive the instructions from the “new” beneficiary and ask questions about what they have as proof of their being the new Trustee.
- A REAL trustee might reject the paperwork submitted by the self-appointed new beneficiary as being insufficient (remember that people involved with title are VERY conservative as to what passes for real title or real claims).
- A REAL trustee would receive the challenge from the borrower and simply file an action in state court called an “interpleader” in which the trustee would say that it has no stake in the outcome (not true for the new “substituted” trustees) and that there are competing claims from the bank and the borrower. The REAL trustee would tender the Deed of Trust to the Court and simply say (a) give me my fees for filing this action in court and (b) let me know when these guys have finished litigation.
IN short, a REAL Trustee would not, in nearly all cases, ever send a notice of default or a notice of sale when there are so many questions about the status of the alleged “new” beneficiary and the status of the alleged loan. A REAL Trustee would want to know whether there is anyone who qualifies as beneficiary or mortgagee in the chain of the party claiming to be a proper foreclosing party.
And the reason for this is that property records have, for hundreds of years, perhaps nearly a thousand years, been considered sacred and the public records showing title must be absolutely trustworthy. Why? Because that is how territorial wars start. What MERS and other sham nominee entities have done here is to disembowel the trustworthiness of public records on title to real property.
Filed under: foreclosure