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THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
While I wouldn’t have a victory party yet, it does seem that law enforcement is looking at the mortgage madness and concluding that continuing criminal fraud exists AND that they are going to prosecute where they find it.
This one case is not a game changer but it paves the way for a continuing drum roll for perp walks. The point of this indictment of both a company and its officers is that they were lying to the world about their portfolio. As the digging goes deeper, I am sure the prosecutor will discover that the actual fraud is much larger than his PR statement.
The reason this is important is that the lies at the top of the food chain in these fictitious securitizations completely negate the claim that a Trust or other entity is actually sitting on a portfolio of loans. That is important because the ONLY authority of the Trustee, Servicer, Depositor etc stems from a claim that they are named in the Pooling and Servicing Agreement. But the evidence points to the conclusion that none of the Trusts ever came to own the loan, which is why they have never alleged holder in due course — because the trust would then be required to prove payment.
Since the Trust or other entity never came to own the loan, it doesn’t matter what the Trust instrument (PSA) says about the authority of the Trustee, servicer et al. They simply have no such authority.
And what this new indictment shows is that yes that does matter because of the lies amounting to fraud upon a variety of people — Judges, Investors, Borrowers, etc. The charge of misrepresenting the true nature of the portfolio can easily be made against any REMIC Trust whose name is being used in connection with any foreclosure. It is a fraud upon the Court, against the borrower, and misleads attorneys on both sides — unless the REMIC Trust actually owns the loan. But if they did, then the banks would assert status of a holder in due course. THAT never happens.
Once you start with the supposition that the Trust does NOT own the loan and is NOT a holder in due course, the rest of the defense falls into place.
And this is precisely why the required lawsuits to vacate a notice of rescission is never filed. The Banks don’t have a creditor who could or would file such a lawsuit. And that is why they never filed such lawsuits as required by the TILA Rescission statute. The error currently being made in many venues is that people are thinking that the substance of the claim seeking to vacate the rescission controls the situation. It does not. It is the procedure. Once the rescission is sent the loan contract, the note and the mortgage are void.
If the Banks had any real interest they would file the lawsuit to vacate the rescission instantly upon receiving the notice and they would seek sanctions and attorney fees for the sending of a wrongful rescission. It would be irresistible for the banks to take that road since it would eliminate virtually all defenses to foreclosures and serve as an example of what the Banks will do to you for sending a rescission improperly. But they have never filed such a lawsuit. Instead they try to dance a little 2 step in court and hope that the Judge’s antipathy to TILA will sway the ruling.
Filed under: foreclosure