By William Hudson
To Listen: https://youtu.be/jOeAe9zT5D0
Attorney Neil Garfield and James “Randy” Ackley got into a discussion on the Neil Garfield Show about why the courts were allowing loan servicers to present evidence that was hearsay, often fraudulent and did not comply with the rules of evidence. Ackley stated that, “The court is allowing evidence to be introduced that would not be admitted in any other type of case.”
The discussion brought up the fact that courts are making erroneous presumptions in favor of the banks despite the fact that there is now a public record of banks fabricating evidence, robosigning documents, false notarizations and bank employees testifying under oath about facts they know nothing about. The argument dovetails back to the locus of destroying (or losing) a promissory Note- the central issue in almost every foreclosure to date.
Why would a lender deliberately lose a promissory note when the note has cash value? Why deliberately destroy or lose a promissory note? Last summer, after 13 years of Litigation- a client of Neil Garfield’s said their servicer wrote a letter saying, “oops we can’t seem to find your promissory note.” They did this about the same time the client discovered that they had fabricated the Note and the employee who they claimed signed the Note hadn’t endorsed Notes for 13 years. The “lost” Note appears to be the strategy du jour for 2016 (better to “lose” a Note than go to prison).
And yet, it is now clear that promissory notes underlying mortgage backed securities were deliberately lost or destroyed on a systematic basis, in what can only be deemed as outright fraud at this point. The Florida Bankers Association already admitted to the Florida Supreme Court that banks destroyed notes after e-recording the notes to “avoid confusion” and that this was a standard business practice. Professor Katherine Porter wrote way back in a 2008 Texas Law Review article that examined the loan documentation from 1700 bankruptcy cases and discovered 41.1 % of the files audited lacked a promissory note to support the proof of claim.
Nothing has changed, other than the banks now have the ability to hire firms that will forge the documents for them (although they typically do a poor job with their sloppy photoshop attempts). It is now FACT that the Notes were almost NEVER delivered to the MBS trusts but the courts continue to pretend that the prima facie evidence before them is legitimate. This isn’t shoddy paperwork- it is flat out criminal conduct. The banks are daily getting away with what would result in you or I going to jail for at least three years or more.
Destroying or losing a Note is insane. Promissory notes are negotiable instruments (like checks) and by law only the original (and not any copy) is enforceable against the borrower. Under the UCC (uniform commercial code), section 3-309, a lost note may not be detrimental to recovery by the owner of the note. But the requirements of proof under this section are stringent; the section requires that possession and ownership of the promissory note occur while vested in the plaintiff at the time of loss.
Most MBS notes disappeared before being transferred to the trust that allegedly holds the note, which would defeat recovery under U.C.C 3-309. In order to enforce a lost note under the UCC, the court must be stringent to ensure that “the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument.”
Yet, on a daily basis homes are foreclosed on with absolutely NO compliance with the Uniform Commercial Code requirements. Furthermore no indemnity bond is posted by the bank to protect the homeowner from another party who actually can prove they own the Note, leaving the homeowner exposed to double-jeopardy.
There is a gross DOUBLE STANDARD that applies to foreclosure cases in America. However, look on the bright side- if the courts are this corrupt it is better to fight a foreclosure than a murder charge. If the courts operated the criminal courts the way they do the trial courts, the incarceration rates would quadruple. Can you imagine the same rules of evidence applied to a murder charge that are applied in foreclosure defense? “Your honor, it appears to be blood but it could be ketchup.” Judge, “The prima facie evidence is sufficient. Let’s make sure we can fit him in on the lethal injection schedule for next year.”
The fact that the banks do not possess the Notes is not a technicality. Instead, the lost Note issue is a scheme designed to protect the commercial banks with no concern for protecting the borrower from fraudulent claims. The ultimate protection for the borrower is an original canceled note- but even if you pay off your home in full- you will never receive the cancelled Note. Everything has been flipped on its head- Notes are fabricated on a computer, presented as real, and if the paperwork “looks” legitimate- foreclosure can proceed. The consumer has more protection when they register an old vehicle for $500.00 than they do when they purchase a $500,000 home (and the DMV records are much more accurate).
The courts have an obligation to homeowners to demand proof that the bank has standing. The banks have gotten away with so much fraud that they are now brazen in their arrogance. On a routine basis banks show up with documentation that is deficient or even fraudulent and the judges are still ruling in favor of the banks. No Note? No problem! No Indorsement? Oh well- go create one and bring it to the next hearing! The courts and banks are concerned that foreclosures will slow and costs will increase but have no concern that the rule of law has imploded and fraud is now considered a standard business practice.
The ONLY solution to the current foreclosure crisis is for EVIDENCE to be introduced like it is in ANY other civil or criminal case. In light of the fact that banks have now admitted they have participated in fraudulent activities- the servicers must turn over their business records to ensure they mesh with both the paper trail and the alleged money trail. There is simply no other option for homeowners now that banks lie with impunity, law enforcement takes no action, and the courts look the other way.
Filed under: foreclosure