HSBC v Buset: Dirty Deeds Done Dirt Cheap

By William Hudson

Buset-Final-Order-Granting-Mtn-for-Involuntary-Dismissal

CASE NO.: 12-38811 CA 01
HSBC v BUSET
JUDGE: BEATRICE BUTCHKO

The Honorable Judge Beatrice Butchko of Florida’s 11th Judicial Circuit, Dade County, Florida granted an involuntary dismissal against Plaintiff HSBC for unclean hands, lack of competent evidence and an order to show why plaintiff shouldn’t be sanctioned for fraud upon the court under the court’s inherent contempt powers. Judge Butchko did her homework and nailed HSBC for what amounts to a securitization fail.

The Defendant’s Motion for Involuntary Dismissal was granted because the Court opined that HSBC could not prove standing because Ocwen’s Assignment of Mortgage was a “sham” and the transaction described in the AOM never legally occurred. The court noted that the Depositor was incorrect and that an undated, specific endorsement affixed to the back of the promissory note reflected the same defective transfer from the originator to the Plaintiff, without reference to the depositor. Furthermore, the judge recognized that placement in a trust requires that a Note has the proper endorsements, assignments and is timely, therefore this, “could never happen for a securitized trust.” The Buset decision has to be one of the finest decisions to come out of South Florida all year.

Judge Butchko demonstrated that she was able to grasp the nuances of securitization and wrote, “This endorsement is contrary to the unequivocal terms of the PSA, in evidence over Plaintiff’s objection, which required all intervening endorsements be affixed to the face of the note because there was ample room for endorsements on the face of the note. There is also no evidence the endorsement was affixed before the originator went out of business in 2008.” While most judges would have ruled that these issues were unimportant or mere technicalities, Butchko questions the authenticity of the endorsements and even the dates before deciding the evidence does not support HSBC’s claims.

Securitization has specific criteria that must be met as the Note is transferred for the protection of assets from future bankruptcy clawbacks. This is done to protect the investors of the trust (MBS investors typically receive lower returns for higher levels of safety). Therefore, there could be no direct sale from the originator to the trust directly. Securitization also requires a sale from the Depositor acting as a “middleman” between the originator and Trust to provide bankruptcy remoteness in the event the originator goes bankrupt or sells the Note.

Neil Garfield has always been adamant that foreclosure settlements do not occur until a bank is forced to provide evidence through Discovery. HSBC’s failure to comply with the Court’s Discovery Order of April 27, 2015 resulted in claims of Unclean Hands after the plaintiff refused to provide the requested Discovery items. The Court ordered the Plaintiff to provide:

(1) the final executed documents evidencing the chain of title for the subject loan;

(2) all records of any custodian related to the chain of custody of the note; and

(3) all records showing how and when the specific endorsement on the promissory note was created.

If the court is angry now, wait until they discover there is no chain of title for the subject loan and that there are no records showing how the endorsement on the note was created. It would be paramount if the business records further reflected that monthly mortgage payments were not being forwarded to any trust.

Judge Butchko writes that she, “fails to comprehend why Plaintiff would not fully comply with the Court’s Order compelling discovery when the evidence sought by the Defendant would actually assist Plaintiff in establishing the missing link in the chain of ownership in the endorsement and assignment of mortgage.” Good judges, like sharks, are beginning to smell blood in the water. Since business records are available at the click of a mouse- why doesn’t HSBC just put the issue to rest and produce the documents? Because, as all Living Lies readers know- any business records would likely reveal the bank’s fraudulent activities. Did Judge Butchko miss the memo that she isn’t supposed to ask these questions?

The Court entered an Order to Show Cause why Plaintiff should not be Sanctioned for violating the Court’s order on April 27, 2015, after representing that it fully complied on or before January 14, 2016. The court then demanded that HSBC conduct further discovery in support of these orders to show cause and set an evidentiary hearing on them. The defendants repeatedly attack HSBC’s use of records they claim they received from prior servicers as hearsay and quote Professor Charles Ehrhardt, who warned against allowing the poor evidentiary practices in foreclosure courts to “erode the requirement of reliability upon which section 90.803 (6) and the other hearsay exceptions are premised.” 1 Fla. Prac., Evidence § 803.6 (2015 ed.).

Professor Ehrhardt argues:
While the decision seems to focus on records in the mortgage servicing industry,
which are plagued by inaccuracies, its rationale extends to all records offered
under 90.803(6) which are records of a prior business and are presently located in
the records of the current business…. The [Calloway] decision is a significant
change in Florida law and inconsistent with many other Florida decisions.” 1 Fla.
Prac., Evidence § 803.6 (2015 ed.).

The Judge ruled that the Court could not exercise its discretion to admit the prior servicer’s
records into evidence as HSBC’s own witness failed to satisfactorily establish a foundation to warrant finding those records are trustworthy. The defendant’s attorneys of Jacobs Keeley repeatedly attacked the credibility of the HSBC witness instead of allowing an employee without personal knowledge to testify on issues she had no knowledge about.

HSBC’s employee witness, when questioned, admitted there was absolutely no math done to check the accuracy of the prior servicer’s records or numbers. She could not verify the trustworthiness of the prior servicer’s records and therefore her testimony was a legal fiction. In this case, Ocwen simply accepted the prior servicer’s numbers as true without any effort to audit or confirm their accuracy. The only confirmation appears to have been to check the carryover of figures from one servicer’s columns to the columns of another. This testimony was complete hearsay and testimony like this should never be allowed to stand unchallenged.

Judge Butchko further impresses by commanding the Court to take Judicial Notice of the Consent Order entered in the matter of Ocwen Financial Corporation, Ocwen Loan Servicing, LLC by the New York State Department of Financial Services dated December 22, 2014. This Consent Order documents Ocwen’s practice of backdating business records that it failed to fully resolve “more than a year after its initial discovery.” All homeowner’s fighting foreclosure should move to have the court take notice of records in the public domain that demonstrate that a servicer has participated and been fined for fraudulent behavior.

Where Judge Butchko really shines is in her ability to comprehend how the securitization issue applies in this case. The Court ruled that HSBC failed to prove standing by virtue of an endorsement and an assignment of mortgage, “created for purposes of litigation” that both missed a key component in the Title of Ownership- namely the need for a Depositor.  HSBC Bank as trustee for Freemont Home Loan Trust 2005-B mortgage Backed Certificates, Series 2005-B, failed to prove it was the proper owner and holder of the Defendant’s loan by virtue of the endorsement on the note or the assignment of mortgage. Both the endorsement and the assignment omit the Depositor, Freemont Mortgage Securities Corporation, from the transaction which constitutes a fatal break in the chain of title.

The Defendant presented the testimony from their expert witness, who testified that the endorsement on the note is contrary to the instructions in §2.01 of the PSA that required a “complete chain of endorsements, which would include the Depositor, to be placed on the face of the note so long as space allowed.” The court noted that there was sufficient space on the face of the note for the endorsements. The court questioned that an undated specific endorsement from the originator directly to the trust found on the back of the note was, “inherently untrustworthy.” YES Judge Butchko! That wasn’t so difficult to understand- and perhaps other Florida courts will take notice.

The Court questioned the validity of the endorsement in that HSBC violated the Court’s order to produce the custodian’s records or documents showing when and how the endorsement was affixed to the original note. WHY is this NOT DONE in every foreclosure case in the United States? If the bank has the records- produce them!

The Court was in agreement that HSBC’s endorsement and assignments would be grounds for the Trust to reject this loan pursuant to the PSA since there was not a complete chain of endorsements on the face of the note. The Court ruled that HSBC had failed to prove its standing to foreclose on the note and mortgage in this action.

The court went on to rule that a Promissory Note Is Not a Negotiable Instrument. The defendant through their expert witness was able to provide testimony explaining that the negotiability of a promissory note is not a consideration in the securitization model. Securitization sells pools of thousands of mortgages with ever having an intention to sell each loan by individual negotiation.  Moreover, the court held that securitization routinely involves the sale of non-negotiable instruments like car loans, rent receivables, even, “David Bowie’s intellectual property rights.”

The Model Uniform Commercial Code as it relates to the note and mortgage for the subject loan fall under Article 3 of Florida’s Uniform Commercial Code. The Court noted that, “However, it is axiomatic that all promissory notes are not automatically negotiable instruments”. The Court stated that the Note is subject to and governed by the Mortgage, rendering the note a non-negotiable instrument. “This Court finds that the Note is non-negotiable as the amounts payable under the Complaint include amounts not described in the Note and as the Note does not contain an unconditional promise to pay.”

Moreover, the court held that the UCC definition of “holder” would necessarily include a thief that takes by forcible transfer. However, a thief would never be entitled to the equitable relief of foreclosure. The Defendant correctly cited the language of the promissory note expressly provides a different definition of “Note holder” from the definition of holder under Fla. Stat. §673.3011. The promissory note defined the term “Note Holder” as “anyone who takes this Note by [lawful] transfer and who is entitled to receive payments under this Note.”

The court concluded that the Note required that “any subsequent party attempting to enforce the note prove they came into possession of the note by lawful transfer and have the right to receive payments under the Note.” This provision establishes the parties’ intention to contract out of the UCC definition of holder, so as to limit the right to enforce only to those who proved ownership.

Judge Butchko’s decision eloquently and succinctly confirms the California Court in Yvanova, “The borrower owes money NOT TO THE WORLD at large but to a particular person or institution.”  Could it be that the judiciary is finally coming to terms with the illusion of ownership that the banks have spun for the past 9 years is a façade? This decision was epic.

The decision follows below:

The Defendant’s Motion for Involuntary Dismissal after the trial was granted was for the following reasons:
I. The Court Finds Unclean Hands In Plaintiff’s Prosecution of This Action
That Bars the Equitable Relief of Foreclosure

1. The Florida Supreme Court has long recognized the maxim that in equitable
actions such as this foreclosure, “he who comes into equity must come with clean hands.” Bush v. Baker, 83 So. 704 (Fla. 1920).

2. In Bush, the Florida Supreme Court instructed that the “principal or policy of the
law in withholding relief from a complaint because of ‘unclean hands’ is punitive in nature.”

3. The Court finds several examples of Plaintiff’s unclean hands that mandate
punitive action that affirmatively bars plaintiff’s entitlement to the equitable relief of foreclosure.

A. Unclean Hands Involving the Specific Endorsement and Assignment
of Mortgage That Both Reflect a Transaction that Never Happened

4. Plaintiff’s trial witness, Sherry Keeley, an Ocwen employee, gave extensive
testimony regarding the Assignment of Mortgage (AOM) that Ocwen prepared in June of 2012 and recorded in the Public Records of Miami-Dade County in July of 2012.

5. On its face, this AOM purports to document a sale of Defendant’s loan from
Mortgage Electronic Registration Systems, Inc (“MERS”) as nominee for the originator,
Freemont Investment and Loan, directly to the securitized trust identified as the plaintiff.

6. Ms. Keeley testified that Ocwen prepared this assignment in preparation for filing
the foreclosure complaint. The Ocwen employee identified the originator of the promissory note and prepared the AOM to reflect a transfer from MERS, as Nominee of that originator to the same party as Ocwen intended to name as Plaintiff in the foreclosure action.

7. The Court takes judicial notice that on July 25, 2008, Freemont Investment and
Loan (“Freemont”) entered into a voluntary liquidation and closing which did not result in a new institution. https://www5.fdic.gov/idasp/confirmation_outside.asp?inCert1=25653. As such, the
status of MERS as nominee for Freemont ended when Freemont closed on July 25, 2008, which renders the AOM created in 2012 void ab initio.

8. Ms. Keeley further testified the Pooling and Servicing Agreement for this
securitized trust backed up the veracity of the AOM. However, Ms. Keeley later conceded that, according to the PSA, the chain of title for any loan within this trust went as follows:

Originator- FREEMONT INVESTMENT AND LOAN
Depositor- FREEMONT MORTGAGE SECURITIES CORPORATION
Trust- HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE FR FREMONT HOME LOAN TRUST 2005-B, MORTGAGE-BACKED CERTIFICATES, SERIES 2005-B

9. This Court finds the AOM created in 2012 does not document a transaction that
occurred in 2005, as Plaintiff suggests. The transaction described in the AOM never legally occurred. There was never a transaction between MERS and/or Freemont Investment and Loan that sold Defendant’s loan directly to the Trust. Not in 2012, not in 2005, not ever.

10. The AOM is missing a key party in the chain of ownership, the Depositor,
Freemont Mortgage Securities Corporation.

11. Similarly, the undated, specific endorsement affixed to the back of the promissory note reflects the same defective transfer from the originator to the Plaintiff, without reference to the depositor.

12. This endorsement is contrary to the unequivocal terms of the PSA, in evidence
over Plaintiff’s objection, which required all intervening endorsements be affixed to the face of the note because there was ample room for endorsements on the face of the note. There is also no evidence the endorsement was affixed before the originator went out of business in 2008.

13. The Court finds unclean hands in the AOM and undated endorsement reflect a
transaction that never happened, and could never happen for a securitized trust.

14. The Court accepts the testimony of Defendant’s well qualified expert witness,
Kathleen Cully, who explained the securitization model which required the protection of assets from future bankruptcy clawbacks. There could be no direct sale from the originator to the trust directly.

15. The Court accepts Ms. Cully’s testimony that Securitization always required a
sale from the Depositor acting as a “middleman” between the originator and the Trust to provide bankruptcy remoteness in the event the originator went bankrupt.

B. Unclean Hands For Violating the Court’s Discovery Order Despite
Plaintiff’s Representations That It Fully Complied With That Order

16. The Court also finds unclean hands in Plaintiff’s failure to comply with the
Court’s Discovery Order of April 27, 2015.

17. In that order, the Court overruled plaintiff’s blanket objections and found no basis
for Plaintiff to object to providing any discovery under Fla. Stat. 655.059.

18. The Court then ordered Plaintiff to provide (1) the final executed documents
evidencing the chain of title for the subject loan; (2) all records of any custodian related to the chain of custody of the note; and (3) all records showing how and when the specific endorsement on the promissory note was created.

19. On January 14, 2016, the Court’s Order on Defendant’s Motion for Sanctions for
Deposition Abuses and Violations of the Court’s Order Compelling Discovery reflected:
“Plaintiff submits it has fully complied with the Court’s Order of April 27, 2015.”

20. At trial and deposition, Ms. Keeley admitted that Ocwen, Plaintiff’s servicer,
received the Order compelling discovery. However, Ms. Keeley could not testify to any action taken by Ocwen to obtain responsive documents admittedly under Plaintiff’s care, custody, and control. Defendant clearly established that Plaintiff did not comply with the discovery order.

21. The Court fails to comprehend why Plaintiff would not fully comply with the
Court’s Order compelling discovery when the evidence sought by the Defendant would actually assist Plaintiff in establishing the missing link in the chain of ownership in the endorsement and
assignment of mortgage.

22. The Court hereby enters an Order to Show Cause why Plaintiff should not
be Sanctioned for violating the Court’s order on April 27, 2015, after representing that it fully complied on or before January 14, 2016.

23. Moreover, the Court hereby enters an Order to Show Cause why Plaintiff
should not be sanctioned for the reasons set forth in Defendant’s Motion for Sanctions Under the Court’s Inherent Contempt Powers for Fraud Upon the Court filed on March 16, 2016.

24. Defendant is hereby ordered to conduct further discovery in support of these
orders to show cause and set an evidentiary hearing on them at the Court’s earliest
convenience.

II. Defendant’s Motion For Involuntary Dismissal Is Also Granted For
Plaintiff’s Failure to Prove Damages, Conditions Precedent, and Standing

25. At trial, Plaintiff produced Ms. Keeley as an “other qualified witness” to
introduce Ocwen’s business records in accordance with Fla. Stat. §90.803(6).

26. During her testimony, Ms. Keeley attempted to lay a predicate to introduce the
business records from Litton Loan Servicing, a prior servicer.

27. This Court fully understands and abides by analysis regarding prior servicer’s
records set forth in the Fourth DCA’s opinion in Bank of New York v. Calloway, 2015 WL 71816, 40 Fla. L. Weekly D173 (Fla. 4th DCA 2015)). In Calloway, the Fourth DCA held a trial court could exercise discretion to deem the prior servicer’s records trustworthy if there were evidence that during the loan boarding process, records were reviewed for accuracy. Id. at *8.

28. Notwithstanding the holding of the Fourth DCA, the Defendant challenges
Calloway citing to Professor Charles Ehrhardt, who warns against allowing the poor evidentiary practices in foreclosure courts to “erode the requirement of reliability upon which section 90.803 (6) and the other hearsay exceptions are premised.” 1 Fla. Prac., Evidence § 803.6 (2015 ed.). Professor Ehrhardt further argues:
While the decision seems to focus on records in the mortgage servicing industry,
which are plagued by inaccuracies, its rationale extends to all records offered
under 90.803(6) which are records of a prior business and are presently located in
the records of the current business…. The [Calloway] decision is a significant
change in Florida law and inconsistent with many other Florida decisions.” 1 Fla.
Prac., Evidence § 803.6 (2015 ed.)(emphasis added).

29. In addition, Defendant further suggested the Court should follow another Fourth
DCA opinion dealing with business records from a prior company which does not verify for accuracy. Landmark Am. Ins. Co. v. Pin-Pon Corp., 155 So. 3d 432, 435-43 (Fla. 4
where the Fourth DCA held:
[W]e find that Pin–Pon did not establish that the architect was either in charge of
the activity constituting the usual business practice or was well enough acquainted
with the activity to give the testimony. Although the documents in Exhibit 98
might have qualified as the general contractor’s business records, the mere fact
that these documents were incorporated into the architect’s file did not bring those
documents within the business records exception. In short, Pin–Pon failed to lay
the necessary foundation for the admission of Exhibit 98 as a business record. Id.

Hence, in this case, the Court cannot exercise its discretion to admit the prior servicer’s
records into evidence as Plaintiff’s witness failed to satisfactorily establish a foundation to
warrant finding those records are trustworthy.

A. The Legal Fiction That Ocwen’s Loan Boarding Process In This Case
Verifies The Accuracy, Reliability of Correctness of the Prior
Servicer’s Records

30. At trial, Ms. Keeley explained that she received training on Ocwen’s loan
boarding process which qualified her to give testimony to lay the foundation for the prior
servicer’s records under the business records exception.

31. Ms. Keeley testified the loan boarding process involved two steps. First, Ocwen
confirmed that the categories for each column of financial data from the prior servicer matched or corresponded to the same name Ocwen used for that same column of financial data. Ocwen confirmed the figures from the prior servicer transferred over such that the top figure from Litton became the bottom figure for Ocwen. The court notes that when testifying about Ocwen’s boarding process, Ms. Keeley appeared to be merely repeating a mantra or parroting what she learned the so called boarding process is without being able to give specific details regarding the procedure itself.1 Her demeanor at trial although professional, was hesitant and lacking in confidence in this court’s estimation as the trier of fact.

32. Ms. Keeley admitted there was absolutely no math done to check the accuracy of
the prior servicer’s records or numbers. The loan boarding process’ verification to ensure the trustworthiness of the prior servicer’s records is therefore a legal fiction. In this case, Ocwen simply accepted the prior servicer’s numbers as true without any effort to audit or confirm their accuracy. The only confirmation appears to have been the check a carryover of figures from one servicer’s columns to the columns of another.

33. Moreover, Ms. Keeley testified loans with “red flags” would never be allowed to
board onto Ocwen’s system until the prior servicer resolved them. However, Ms. Keeley also admitted she has witnessed loans that went through the boarding process that had misapplied payments and substantially incomplete loan payment histories from the prior servicer.

34. The existence of misapplied payments and incomplete payment histories in loans
that went through the loan boarding process contradicts any suggestion that the boarding process identifies red flags and/or clears them, such that Courts can trust the reliability of their records.

35. To support the court’s concern regarding the lack of foundation of the so called
boarded records in this case, the Court takes Judicial Notice of the Consent Order entered in the matter of Ocwen Financial Corporation, Ocwen Loan Servicing, LLC by the New York State Department of Financial Services dated December 22, 2014. This Consent Order documents Ocwen’s practice of backdating business records that it failed to fully resolve “more than a year after its initial discovery.”

36. Therefore, the Court finds Plaintiff failed to inquire into the accuracy, reliability
or trustworthiness of the prior servicer’s payment history. Ocwen’s own payment history merely accepts the prior servicer’s records as accurate without question unless the numbers were challenged at some point after the loan boarding process. That is simply not enough to for this court to accept the prior servicer’s records as trustworthy and admit them into evidence here. A mere reliance by a successor business on records created by others, although an important part of establishing trustworthiness, without more is insufficient. Bank of New York v. Calloway, 157 So.3d 1064, 1071 (Fla. 4th DCA 2015). As such, this Court exercised its discretion to sustain Defendant’s objections to both payment histories as inadmissible hearsay. Therefore Plaintiff lacked evidence of an essential element of proof, damages, warranting an involuntary dismissal.

B. Plaintiff’s Failure to Lay a Predicate for Prior Servicer Litton’s
Breach or Default Letter

37. Plaintiff made the unusual effort of seeking to introduce over an inch thick stack
of default letters generated by Litton prior to filing this action.

38. Plaintiff failed to lay a proper business record foundation for these default letters
and the Court exercised its discretion to sustain Defendant’s hearsay objection to their admission.

39. Ms. Keeley testified there was no attempt during Ocwen’s loan boarding process
to check the accuracy of the breach letters. The loan boarding process merely verified that all the prior servicer’s PDF documents for the subject loan were uploaded to Ocwen’s system.

40. At the onset, the Court noted that the first two default letters in the inch thick
stack which Plaintiff sought to admit into evidence were inexplicably dated a week apart and had a $1,900 difference in the amount required to cure the default. The Court rejects Plaintiff’s mere suggestion that the difference is explained by the fact that the loan has an adjustable rate mortgage. Plaintiff produced no reasonable explanation for the $1,900 difference.

41. Moreover, Ms. Keeley testified that in the training she received about Ocwen’s
loan boarding process, she learned that Litton, the prior servicer used an outside vendor to actually mail out the default letters. Therefore, without more, the admission of the default letters mailed by an outside entity not testifying in court creates a double hearsay problem as there is no evidence of a boarding process of that third party vendor’s mailing practices and procedures. Nor did the Ocwen representative testify that she had received training regarding the procedure used by the third party vendor in mailing the default letters.

42. Furthermore, to compound the double hearsay hurdle, Defendant’s counsel
impeached Ms. Keeley’s testimony at trial with her deposition taken in December of 2015, wherein she testified she did not know how the prior servicer mailed the default letters. The Court cannot reconcile Ms. Keeley’s deposition testimony and her trial testimony where she testified she learned about the third party vendor’s mailing procedure during her Ocwen boarding process training. This inconsistent testimony calls into question the veracity of her testimony and further undercut’s Plaintiff’s evidentiary foundation for the proposed documents.

C. Plaintiff Failed To Prove Standing By Virtue of an Endorsement and
an Assignment of Mortgage Created For Purposes of Litigation That
Both Miss a Key Line in the Title of Ownership, namely the Depositor

43. Plaintiff, HSBC Bank USAS, National Association, as trustee for Freemont Home
Loan Trust 2005-B mortgage Backed Certificates, Series 2005-B, failed to prove it is the proper owner and holder of the Defendant’s loan by virtue of the endorsement on the note or the assignment of mortgage.

44. Both the endorsement and the assignment omit the Depositor, Freemont Mortgage
Securities Corporation, from the transaction which constitutes a fatal break in the chain of title.

45. The Defendant presented the testimony of their expert witness, Ms. Cully, who
testified that the endorsement on the note is contrary to the instructions in §2.01 of the PSA that required a complete chain of endorsements, which would include the Depositor, to be placed on the face of the note so long as space allowed.

46. The Court notes there is ample space on the face of the note for endorsements.
Therefore, the Court finds that the undated specific endorsement from the originator directly to the trust found on the back of the note is inherently untrustworthy.

47. The Court further questions the validity of the endorsement in that Plaintiff
violated the Court’s order to produce the custodian’s records or documents showing when and how the endorsement was affixed to the original note.

48. In addition, the Court accepts Ms. Cully’s testimony that the form of the
endorsement and assignment would be grounds for the Trust to reject this loan pursuant to the PSA. There is not a complete chain of endorsements on the face of the note. The PSA required no assignment of mortgage, only that the Trust appear in the MERS system as the loan owner.

49. For these reasons, the Court finds Plaintiff failed to prove its standing to foreclose
the note and mortgage in this action.

III. The Promissory Note Is Not A Negotiable Instrument

50. The Court gives great weight as the trier of fact to the testimony of Defendant’s
expert witness, Kathleen Cully. Ms. Cully is a Yale Law School graduate that worked her entire career in structured finance transactions since 1985. She was extremely well versed in the Uniform Commercial Code. Among many other tasks and accomplishments, Ms. Cully testified that she led the Citigroup team that created the first pooling and servicing agreement ever. She led Citigroup’s Global Securitization strategy. The Court finds Ms. Cully eminently qualified as an expert witness in the area of securitized transactions and their interplay with the Model Uniform Commercial Code.

51. Ms. Cully gave extensive testimony explaining that the negotiability of a
promissory note is not a consideration in the securitization model. Securitization sells pools of thousands of mortgages with ever having an intention to sell each loan by individual negotiation.

52. Moreover, securitization routinely involves the sale of non-negotiable instruments
such as car loans, rent receivables, even David Bowie’s intellectual property rights.

53. The Court finds Ms. Cully’s testimony gives a highly credible analysis of the
Model Uniform Commercial Code as it related to the note and mortgage for the subject loan. Her testimony on the negotiability of the promissory note is attached as Exhibit A. The Buset Note is attached as Exhibit B and the Buset Mortgage is attached as Exhibit C.

54. The Court applies Ms. Cully’s reasoned analysis as it relates to the note and
mortgage for the subject loan and to Article 3 of Florida’s Uniform Commercial Code.
However, it is axiomatic that all promissory notes are not automatically negotiable instruments.

55. The Court recognizes that no Florida appellate court has yet to consider Ms.
Cully’s analysis. The Court has reviewed the recent Fourth DCA opinion in Onewest Bank FSB v. Nunez, (2016 WL 803542 (Fla. 4th DCA March 2, 2016)) which found the Uniform Secured Note provision contained in the promissory note does affect its negotiability because it merely references the mortgage and cites provisions governing rights in collateral and acceleration.

56. The Nunez opinion states the controlling UCC law on negotiability as:
“Florida has adopted the Uniform Commercial Code, including its provision on
negotiability and enforcement of negotiable instruments. Under section
673.1041(1), Florida Statutes (2013), the term “negotiable instrument” means:

[A]n unconditional promise or order to pay a fixed amount of money, with
or without interest or other charges described in the promise or order, if it:
…..
(c) Does not state any other undertaking or instruction by the person
promising or ordering payment to do any act in addition to the
payment of money . . .

Section 673.1061, Florida Statutes (2013), defines “unconditional” by stating
those conditions that prevent it from being unconditional:

(1) Except as provided in this section, for the purposes of s. 673.1041(1), a
promise or order is unconditional unless it states:
(a) An express condition to payment;
(b) That the promise or order is subject to or governed by
another writing; or

(c) That rights or obligations with respect to the promise or
order are stated in another writing.

A reference to another writing does not of itself make the promise or order conditional.
(2) A promise or order is not made conditional:
(a) By a reference to another writing for a statement of rights with respect to
collateral, prepayment, or acceleration. . . .” Id. at *1-2.

57. The Uniformed Note Provision in Nunez is identical to that found in the
Defendant’s Promissory Note herein which provides:
In addition to the protections given to the Note Holder under this Note, a
Mortgage, Deed of Trust, or Security Deed (the “Security Instrument”),
dated the same date as this Note, protects the Note Holder from possible
losses that might result if I do not keep the promises that I make in this Note.
That Security Instrument describes how and under what conditions I may be
required to make immediate payment in full of all amounts I owe under this Note.
Some of these conditions are described as follows: . . . Id. at *1 (emphasis added).

58. This Court does not address the provision described in the Nunez opinion, instead
grounding this decision on a myriad of other provisions of the Mortgage establishing the Note is subject to and governed by the Mortgage, rendering the note a non-negotiable instrument.

59. Among other things, the additional protections routinely change the “fixed
amount of money” due under the promissory note and require additional undertakings and instructions for the borrower beyond the mere repayment of money.

60. First, at page 2 of the mortgage, sub-section (G) expressly provides that “‘Loan’
means the debt evidenced by the Note, plus interest, any prepayment charges and late charges due under the note, and all sums due under this Security Instrument, plus interest.” (emphasis added).

61. Paragraph 3 of the Mortgage provides for the payment of taxes and interest on the
property. These payments are not described in the Note, which requires payment only of
principal, interest, late fees and costs and expenses of enforcement.

62. The Court finds the amounts due under the Mortgage are “other charges” that are
not “described in” the Note, as required by §673.1041(1), Florida Statutes. That alone destroys negotiability.

63. Furthermore, Plaintiff’s complaint seeks damages for all sums due under the Note
and “such other expenses as may be permitted by the mortgage.” Standard mortgage servicing industry practice treats all sums due under the note and mortgage as the “loan” payoff amount or the total amount needed to liquidate in full all monetary obligations arising under both the Note and the Mortgage—the Loan, as defined in the Mortgage—not just the Note.

64. Not only does that payoff amount include charges not described in the Note, it is
much more than a mere “reference” to the Mortgage “for a statement of rights with respect to collateral, prepayment or acceleration”—it means that the Note is effectively “subject to or governed by” the Mortgage, which in turn means that it is not unconditional. See Fla. Stat. §673.1061. That also destroys negotiability of the Note.

65. This Court finds that the Note is non-negotiable as the amounts payable under the
Complaint include amounts not described in the Note and as the Note does not contain an
unconditional promise to pay.

66. The promise is not unconditional because the Note is subject to and/or governed
by another writing, namely the Mortgage. Moreover, rights or obligations with respect to the Note itself—as opposed to the collateral, prepayment or acceleration—are stated in another writing, namely the Mortgage.

67. Moreover, the UCC definition of “holder” would necessarily include a thief that
takes by forcible transfer. However, a thief would never be entitled to the equitable relief of foreclosure. Defendant correctly cites to ¶1 of the promissory note that expressly provides a different definition of “Note holder” from the definition of holder under Fla. Stat. §673.3011.

68. The promissory note defines the term “Note Holder” at ¶1 as “anyone who takes
this Note by [lawful] transfer and who is entitled to receive payments under this Note.”

69. By its terms, ¶1 requires that any subsequent party attempting to enforce the note
prove they came into possession of the note by lawful transfer and have the right to receive payments under the Note. This provision establishes the parties’ intention to contract out of the UCC definition of holder, so as to limit the right to enforce only to those who proved ownership.

70. The Court finds the amounts due under the mortgage are “additional protections”
from possible losses that protect the Note Holder pursuant to the Uniform Secured Note
provision. The protections necessarily affect the fixed amount of money due under the note.

71. The Court further notes Plaintiff’s complaint seeks all sums due under the note
and mortgage. Standard mortgage servicing industry practice treats all sums due under the note and mortgage as the “loan” payoff amount or the total amount needed to liquidate in full all monetary obligations arising under both the Note and the Mortgage.

72. At page 4 of the mortgage, Uniform Covenant 2 entitled “Application of
Payments or Proceeds” provides that “payments be applied in the following order of priority: (a) interest due under the Note; (b) principal due under the Note; and (c) amounts due under Section 3 [of this Security Instrument]. Any remaining amounts shall be applied first to late charges, second to any other amounts due under this security Instrument, and then to reduce the principal balance of the Note.” (emphasis added).

73. As payments are applied to amounts due under both the note and mortgage, this
Court finds the Uniform Covenant 2 in the mortgage must be read as an integrated agreement with the promissory note that will necessarily change the fixed amount of money due thereunder.

74. At the first paragraph of page 7, the mortgage provides: “Any amounts disbursed
by lender under this Section 5 shall become additional debt of Borrower secured by this Security Instrument. These amounts shall bear interest at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.”

75. Therefore, pursuant to the Uniform Secured Note Provision of the note and
Section 5 of the mortgage, forced placed insurance premiums become additional debt secured by the mortgage bearing interest at the note rate which changes the “fixed amount of money” due.

76. At page 8 of the mortgage are two provisions which involve rights or obligations
with respect to the promise or order stated in another writing and constitute instructions and undertakings of the borrower to do acts in addition to the payment of money.

77. At ¶6 of the mortgage the borrower is obligated to occupy the property as a
principal residence within 60 days after signing the mortgage and must continue to occupy the property as Borrower’s principal residence for a least one year.

78. At ¶7, Borrower is obligated to maintain the property and permit lender to
conduct inspections, including interior inspections, upon notice stating cause for the inspection.

79. At ¶8 of the mortgage, “Borrower shall be in default if” borrower gave materially
false or misleading information during the loan application process or concerning Borrowers occupancy of the property as Borrower’s principal residence.

80. At ¶9 of the mortgage entitled, “Protection of Lender’s Interest in the Property
and Rights Under this Security Instrument” the mortgage states “any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument. These amounts shall bear interest at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.”

81. At ¶14 of the mortgage entitled “Loan Charges” provides for refunds of such
charges and states: “the Lender may choose to make this refund by reducing the principal owed under the Note or by making a direct payment to Borrower.” Again these additional protections for the Note Holder provided in the Uniform Secured Note provision in the note necessarily affect the “fixed amount of money” due under the note.

82. The Court grants Defendants’ Motion for Involuntary Dismissal and enters
judgment in favor of the Defendants who shall go forth without day.

83. The Court reserves jurisdiction to award prevailing party attorney’s fees and
to impose sanctions against Plaintiff under the inherent contempt powers of the court for fraud on the court, and such other orders necessary to fully adjudicate these issues.

84. Plaintiff is ordered to produce a corporate representative with most
knowledge regarding its efforts to comply with the discovery order dated April 27, 2015, for deposition at the offices of Defendant’s counsel within 15 days from the entry of this order.

DONE AND ORDERED in Chambers at Miami-Dade County, Florida, on 04/26/16.

No Further Judicial Action Required on THIS
MOTION
CLERK TO RECLOSE CASE IF POST
JUDGMENT
_____________________________
BEATRICE BUTCHKO
CIRCUIT COURT JUDGE

Copies furnished to:
Defendant’s counsel: Jacobs Keeley, PLLC., 169 E. Flagler Street, Ste. 1620, Miami, FL 33131,
efile@jakelegal.com

Plaintiff’s counsel: Brock and Scott, 1501 NW 49th Street, Ft. Lauderdale, FL 33309,
flcourtdocs@brockandscott.com
http://stopforeclosurefraud.com/2016/04/29/hsbc-v-joseph-t-buset-ocwen-guillotined-in-florida-bench-trial-and-then-rapped-for-oh-so-filthy-hands-order-granting-defendants-motion-for-involuntary-dismissal-for-u-n-c-l/

37 Responses

  1. As a Florida qualified-expert witness in the areas of residential mortgage securitization and it’s impact on foreclosure litigation, I believe I speak to all of us ‘legal professionals’ in saying: Thank the good, good Lord above!

    I have followed Neil’s blog since I was a naive ‘kid’ in law school with dreams of truth, justice and the American way! It has always been an invaluable tool and source of information for my business partners, clients and I. As a poor-schmuck who has participated (in one capacity or another) in hundreds of foreclosure cases and prepared thousands of ‘forensic securitization audits’ and ‘loan modification submissions,’ I can confirm that commonsense rulings are a rarity.

    Having testified in dozens of cases regarding securitization, pooling and servicing agreements, improper transfers, etc., it feels at times as if I have put many, many judges throughout the State of Florida to sleep or, more often, drawn their ire and loathing for making obvious, factual findings. Thankfully, however, I agree that the courts are starting to come around and, more and more often, are receptive to…. you know…those irksome….. you know…. arguments of law and equity that… well you know…. have been on the books SINCE BEFORE FLORIDA WAS PART OF THE UNION! Ha Ha!

    Well, I am going to sneak this judge or her assistant an email or note thanking the court for doing the one-thing most homeowner’s expect of their system of jurisprudence: an unbiased, fair arbiter of facts and law. All that said please accept my heartfelt gratitude and admiration, Neil, for the amazing work and your service to the community-at-large. May God himself repay you and yours in-kind for all the effort and timeliness with the blog and thanks again

    Respectfully,

    Jules C. Vallez, J.D.

  2. OK, one last thing.

    Issue of Standing may be brought at any time (even after judgment). The above case has shown a note not to be a negotiable instrument and that negotiation MUST be proven. Simply being a holder, then, is not sufficient to provide Standing. Again, this is my interpretation, not legal advice. I don’t know what to tell you, but I’d try everything.

  3. Oh, you said “Final” Judgment….never mind. Different thing I know nothing about.

  4. @AnonNE,

    Another oddity.
    “It says if you object to the amount due …you must object in writing within 10 days …it must be specific and only address the amount due.”

    I understand a MSJ can be contested on anything, not just amounts due. Any disagreement with alleged facts presented, iac. I’d suggest you make your case in opposition to any presumptions. A MSJ assumes no disagreement unless stated. Again, all IMO, which is way short of legal advice.

  5. @AnonNE,

    If the big Reed Smith firm pondered a year and then dismissed, it suggests they were troubled by something and did not wish to go on record. Is it the same firm who brought the current suit?

  6. @AnonNE,

    I’d also check your States’ ‘Contract’ Statute of Limitations. Suit filed in 2007, dismissed in 2011. That’s five years since dismissal, nine since filing (limitations, as I understand it, must be verified, begin at the time an acceleration is demanded). There’s some controversy as to when this begins. Your acceleration should have occurred prior to the original filing. So, there’s nine years since today. When was the current suit brought?

  7. @AnonNE,

    ….your rescission may be your biggest gun at this point.

  8. @AnonNE,

    btw, all your significant activity occurred prior to OTC seizing WAMU, so you have a different deal than all that.

    I’d question how it is that Fannie Mae came to be the owner/holder of your note. And, by what authority WF came to be acting as Servicer. I’ve noticed that virtually all Servicing is passed from one Servicer to the next. However, we cannot forget that Servicing rights extend from the actual owner of the debt. In securitization, the Master Servicer is acting under the PSA’s Power of Attorney when assigning servicing rights to another Servicer. You don’t seem to have a PSA involved in your deal, so there needs to be some contract giving WF Servicing rights by Fannie Mae. Have you ever seen anything like that?

  9. The judge in my case completely ignored several Motions I made as though they were never even read. Frustrating. Even on a Motion for a hearing. There were several occasions where the judge seemed to be coaching plaintiff attorney, and even maybe had off the record meetings. Once, he even offloaded the duty to inform me of a change in hearing date/time made the afternoon of the prior day to Plaintiff attorney, which notification never occurred. I did catch it though, by checking the online log, so they were very surprised to see me.

    It’s all very odd, for sure.
    Justice seems very hard to obtain when not a club member.

    Fortunately, appellate courts seem to be more straightforward.
    However, we’ve recently had some Civil Appeal Court rulings that seem to be drudged up from nowhere to suit the banks. In my state, all appeals go up to Supreme Court and are either heard there, or handed down to Civil Court of Appeals.

    Gotta keep fighting….

  10. I just received a certified mail copy today of their motion for Final Judgment …

    It says if you object to the amount due …you must object in writing within 10 days …it must be specific and only address the amount due.

    If so …they will send it back to the judge to decide your objection to the amount due.

    I have never seen a full accounting of all my payments made to WAMU

    I should try and object within the 10 days

    I will also try to motion again for either reconsideration of dismissal based on the fact that the judge failed to address the issues of my prior motion in his order denying that motion .. Doesn’t he have to address each issue raised in that motion when he denies it?

    Otherwise once this gets approved for Final Judgement … It will be heading to sheriffs sale ….of must be appealed within 40 days.

  11. @AnonNE,

    Your insurance interests me. I’ve had to repeatedly have the Servicers name removed as beneficiary to my policy. I just demanded it of my agent and they did it. I also asked my insurer what process they went through to validate a beneficiary named on the policy since I had no input into them being placed there. I’m on my third Servicer now and each one applied their name to my policy (they/the Servicer has no beneficial interest in my property, it should name the actual creditor, IMO.)

    If your policy is paid from escrow, that raises additional issues.

    Your policy names a completely different outfit. That’s odd. I’d get a mailing address and demand to know what they claim their interest is. I’d also inform them that I have had their name removed as it appears there’s a mistake.

    You know if you make a claim on your policy, the check will be made out to both you and that entity. Might as well get it cleared up before that.

  12. btw, all, I’d suggest everyone re-read the above article carefully, and until you understand everything going on there. It’s VERY significant.

  13. @AnonNE,

    As we all are discovering, judicial bias now seems to be the biggest obstacle to justice. The irony would be funny…..

    You seem to have done everything you can. Perhaps it can be resolved upon appeal. I can only suggest that you prep for that.

    I will say that one thing I did that was not required in a civil case was to file a “Notice of Intent to Appeal” with a “Designation of Record” attached as Exhibit “A”. That, turns out, is required only for criminal cases when one expects to appeal (in my state). But, I can say it seemed to have an effect/impact of some kind that I’ll not try to describe. It can’t hurt, even if you don’t actually appeal.

    @Johnb, there’s nothing I’d be willing to discuss in private that should not occur on this forum. That way, everyone potentially benefits. Besides, I’m fighting my own battles, I can’t help you in that way.

    If two different rubber stamp impressions for the same assignment have occurred, it would be highly suspect. Maybe a forensic evaluation of the actual notes is in order. Not legal advice, just thinking what I might do.

  14. Yes .. I raised all of the NG points in my answer and affirmative defenses. I denied that a default had occurred. I denied that a valid or legal loan contract was ever consummated. I alleged it was a table-funded loan and predatory per say under Reg Z.

    I also stated that I had rescinded the loan under the TILA 3 year rule prior to them fabricating their fraudulent Assignment of Mortgage. My rescission letter pre-dates their alleged default date.

    The new judge in their second case is a rocket rocket judge and was not interested in understanding any of my points. He was brand new on the bench for the Chancery Division after having spent his previous 10 years as a criminal court judge, sentencing convicted criminals to long term or Life time sentences. I was one of his first foreclosure cases when he was moved in to replace the other judge who was retiring. The other judge had already decided my case was going to trial. He was the same judge they had stone-walked in the first case, when they kept adjourned g for a year and refused to bring a witness , after he had requested they do so. He had us set for trial and then he retired before our trial date. The new judge took the bench and WF immediately filed a motion for SJ…this new judge granted it ..denying me the trial that the other judge had already decided was needed.

    This new judge ridiculed me .. Asking how I can, on one of hand, say there was no legal valid loan ….and on the other hand say I rescinded under TILA… He said it was a contradiction.

    The guy was headstrong determined that my case needed to go away.

    He had no patience for any of the issues in my case.

  15. Unlegal, they changed the rubber stamps from the complaint to the different ones they produced at SJ. In discovery now. Confused, can
    I send you a private message?

  16. @AnonNE,

    Listen, I can’t give real legal advice because I’m not a lawyer and am definitely NOT qualified to do so. Other’s here have mentioned attacking the contract. That transaction described in the note appears to have never occurred, especially if the note was previously arranged to be assigned or was assigned prior to closing. And, as Neil says, the note is not the debt, it’s evidence of a debt. To me, your loan was table funded and did not come from the named ‘Lender’. Neil says that’s predatory per Reg Z. I’d hit ’em with everything, because what you do not bring up now cannot be started with an appeal.

    If you’ve not considered some of Neil’s services, now might be a good time.

  17. @AnonNE,

    You do have a different one. I’m recalling a lot of commotion regarding WAMU that you’d do well to research. IIRC, WAMU didn’t go out of business, per se, they were seized by OTC and placed into the care of the FDIC, then eventually sold to JPMorgan Chase. Ah, here’s what Wikipedia has: https://en.wikipedia.org/wiki/Washington_Mutual.

    Just recalling stuff that I passed along the way, but seems to me there was a great deal of questions regarding the Assignments of Mortgages held by WAMU, and whether they were sold or not to JPM. I seem to recall something about them not being transferred. As I think, it seems there were no assignments, but JPM claimed they ‘came over’ with the sale. The selling price of $1.9B was considered very low for the scale of the bank. And, believe I read something about them not ‘coming over’ unless they were specifically assigned.

    ….seems like a case for a lawyer.

    But, researching the many cases of WAMU would probably bring something out.

  18. Sept. 2004 …. Refinanced with Commerce Bank

    Prior to closing or upon closing they endorsed note to WAMU

    Dec. 2004 … Fannie Mae “aquisition of the loan” they aquiered loan

    2004-2007 …mailed monthly mortgage payments to WAMU

    2007… Wells Fargo takes over as our new servicer

    Sept. 2007 … Wells Fargo files foreclosure complaint

    *(we notice on our homeowners insurance that a Trust Bank of Ohio is listed as the first mortgagee on the insurance policy …when we ask the insurance company who this Trust Bank is ..they say they don’t know, but it has always been on our policy as the first mortgages)

    Wells Fargo -Plaintiff in foreclosure complaint …tells us that they can’t do anything for us without first asking the investor/Fannie Mae.
    Wells Fargo tells us that Fannie Mae decides all issues on this loan.

    We have never been told that our loan was part of any trust.

    2010 … We file motion to vacate the Final Judgment and Dismiss the complaint due to fraud and lack of standing. Sheriffs sale stopped.

    Dec. 2010 … Wells Fargo files opposition to my motion, in it they include a certification by the attorney , swearing to the exhibits attached as a true and accurate copy of the note in their possession … But the note has no stamp endorsement from the last known HIDC , WAMU

    The problem is …WAMU is out of business since 2008.

    I submit a reply to their opposition papers , pointing out that they have an invalid note that is unenforcable because WAMU is out of business

    We show up to the hearing on my motion …the judge never asks them about the note in open court on the record ..they apparently had an ex parte communication and agreed to a plan in his chambers before my case was called …in court he told me that he was going to adjourn this until Feb. 2011 so they could bring the note in for me to see. It made no sense because he had never asked them about the note ..but he knew that they needed time to go fabricate one and put the stamped endorsement on the newly fabricated one.

    Feb 2011 … They have the new version of the note with the stamp.
    I object and call it a fraud …the judge orders a plenary hearing and wants Wells Fargo to bring in a witness to testify …the note and endorsement had no date …

    Big law firm REED SMITH substitutes in as new counsel for WF

    They ask for adjournment for almost a year …and finally ask for a dismissal without prejudice Nov. 2011

  19. OK, one more thing for AnonNE,

    You haven’t mention a Trust involved at all in your case. It’s all banks. But, I still suggest Fannie is unable to be considered the holder/owner. At best, after default and insurance/guarantees, they may have a way to be in possession of a failed note (like an insurance company taking possession of a wrecked auto they paid out a claim upon) once the prior holder made the claim (got paid for face value under the guarantee). So, most of the prior writings concerning a Depositor would not apply to you. However, and in any case, the intermediate endorsement would still have to be executed even if the final assignment is left blank. You cannot have two blank endorsements.

    Out

  20. Sorry, being wordy today……had the thought that in some/many cases, there’s actually a fourth entity involved. This entity has been called the ‘Accumulator’. The Accumulator lies between the Originator and the Depositor and ‘accumulates’ mortgage files from several/many smaller Originators, then bundles them to the Depositor, who, in turn, delivers them to the Trust. In each case, no matter how small amount of time is involved (one Depositor described this time as “…an infinitesimally small fraction of a second…” ), an assignment remains the only way to negotiate them forward to another entity. In any case, there is no legal way for a Trust to accept an Assignment directly from the Originator per their own definition of the required process in the PSA to both make it bankruptcy-remote and allowable as a REIT per IRS published rules. Or, after the Closing Date of the Trust, especially if it being declared in default. To accept a mortgage file after closing, the Trust Members (Certificate Holders) are supposed to vote AFTER a Trust Attorney provides them written opinion of the validity of the mortgage file being considered. I can’t image a case where Trust Members would vote to accept a mortgage file in default, or that threatened their REIT status with the IRS. I’ve never heard of one being added to a Trust in this manner. Because a note was assigned to them, by whatever means, doesn’t mean they have accepted it into the Trust.

    I’ll stop talking now…..

  21. If you have reason to believe the ‘original’ note being provided is not the original, you could Motion the court to allow professional forensic evaluation of the note to determine its validity. I went as far as to request the Court mark the original since the Plaintiff refused to surrender it to the Court for holding while an evaluation was done.

  22. AnonNEast (as opposed to NW, sorry),

    Of course, I cannot give legal advice. I was able to have my SJ vacated based upon the MSJ having no Affidavits to authenticate claims for SJ. When it comes time for SJ, Plaintiff cannot simply make claims, they have to provide the proof of prior claims. In our state (OK), the State SC ruled these Affidavits are required. When none exist, there can be no SJ. MOV was done well after SJ in my case.

    Your blank endorsement is similar to mine. Rubber stamped w/sig in rubber. Since _that_ ‘original’ note was simply shown the Judge, and did not match the note attached to the complaint, there’s disparity between them which raises the question of when the endorsement was applied and by what authority. One cannot simply rubber stamp it, they have to have authority from the endorser. In my case, the endorser business ceased operations in 2008, so a more recent application of an endorsement would be void because there is no officer who could authorize it after 2008. Since it’s sometime after the note attached to the complaint, they didn’t appear to have it at the time the complaint was filed. And, I’d find it impossible for them to obtain such at that time.

    How to depose that person who rubber stamped the note would be of interest. (Hint: Vault/Mail Clerk at Servicer)

    You could also request discovery for Vault Logs of the Trusts’ Custodian to determine the travel path of the original note. When was it originally delivered to the Trusts’ Custodian (defined in PSA), when it came out to be delivered to Servicer or Plaintiff Attorney. You should be able to trace it from original deposit w/Custodian to Court. But, I’d imagine those records really do not exist since it likely never went to the Trusts’ Custodian.

    It’s all crap, we just have be as creative as the banks to show how.

  23. Thank you Bruce Jacobs! Your work is impressive – thank you also for sharing the caution to protect this ruling. Well done!

  24. Unlegal … Thank you …just to clarify my particular note ..when I say it has a blank endorsement , what I mean is …someone added a stamp allegedly by Washington Mutual Bank, it is signed by an alleged VP. , but the stamp includes a blank where they are to name who it is being sold to … Example: Pay to the order of _____blank_____ signed by the VP of Washington Mutual Bank (signed but not dated)

    It is endorsed in blank ….like somebody endorsing a blank check.

    But it is a stamp …that anybody can fabricate or order from Staples.

    Supposedly the courts deem these notes endorsed in blank as valid and adequate in order to foreclose.

    Some courts have inquired about missing dates , they wanted to see more evidence of WHEN the note was endorsed in blank ,WHEN and HOW was it transferred? DOES the bank employee affidavit explain anything pertaining to the blank endorsement and its transfer? WHO was the custodian? WHERE was it held? The affidavits fall far short of explaining or proving anything, yet they courts grant summary judgment on these weak business records exception false affidavits. The records that the affiant is describing were not even attached to the affidavit.

    I objected and motioned ..but was denied. The courts are resistant to anything that questions the authenticity of the fabricated documents.

    In Wells Fargo replies to my QWR…they included a loan info sheet ..it is a document describing 1)Who owns your loan? – Fannie Mae … 2)Who is your servicer – Wells Fargo …etc., etc.

    Fannie Mae website also clims they own my loan

    MERS website also claims that Fannie Mae owns my loan

    But Wells Fargo the servicer … is in court foreclosing .

    Wells Fargo submitted the note as an exhibit in its certification and it was missing the endorsement from Washington Mutual, and this happened in 2010 …two years after WAMU was already gone.

    They said oops …and came back to courts with a note with the endorsement added made out to blank …pay to the order of (blank)

    When the judge questioned them …the asked to dismiss this complaint without prejudice …even though we were in court on my motion to dismiss due to fraud …

    They waited from 2011 until 2014 and have now re-filed a new FC

    Same note …same AOM

    But different judge now ….he doesn’t care …granted SJ

    I motioned to vacate the SJ and Dismiss the complaint based on the Fannie Mae – WAMU – WF – MERS – Note – Employee affidavit- etc etc inconsistencies …but he denied my motion , simply saying that we have already addressed these issues.

    Trying to decide how to articulate another motion … Before the Final Judgment is applied for and granted .

    Once Final Judgment is entered … I get 40 days to appeal.

    But this is why I want to make sure I exhaust all of my motions to reconsider now, before going to appeal … I want this lower court to paint themselves into a corner on issues that are viewed as errors by the appellate division ..this is why I feel I need to keep motioning, because this trial court judge is deliberately being vague and careful not to say too much …he knows what my plan is and he’s preventing me from creating a record for appeal …by not addressing my points raised in my motion.

  25. In case I failed to mention it, this article is a flat out amazing piece of legal work. Please try and respect the contributors’ requests for handling. I congratulate the team on this major success.

  26. While I’m at it, another issue. Since it’s required that the note transfer between Originator and Trust via Depositor something else arises. I’ve checked and in virtually all cases I’ve seen, the Depositor is NOT a Member of MERS. In a MoM (MERS on MERS) Mortgage, the original Mortgage is immediately assigned to MERS at closing. By MERS own rules, whenever a note is assigned to a non-member, MERS must assign the Mortgage over to the non-member, rather than just ‘switch’ agency to another Member. That non-member would then also record their Mortgage with the county (some counties have this as voluntary, but if not recorded, put them behind any recorded interest).

    This never seems to occur. Opinion requested.

  27. Ya’ll also need to realize that a completed foreclosure action NEEDS to include the actual executed endorsement from the forecloser. A blank endorsed note cannot be cashed. I’m suggesting a motion to require the Plaintiff to execute the [previously blank] endorsement prior to being awarded by the court.

    Could Neil or someone verify this for us?

    I’m also of the opinion that the original note also needs to be surrendered to the Court in exchange for the award. Once there’s an award, the note ceases to exist (has been cashed). The Court needs to protect Defendant against double jeopardy by removing the note from circulation (especially if it still considered a negotiable instrument).

    Again, professional opinion requested.

  28. The reason a blank endorsement would not cover the gap between Originator and Trust is because it lacks an actual endorsement. That is, an executed endorsement from the Depositor. A blank endorsement cannot do that. Just as when you deposit a check in the bank…you are required to endorse the back, execute the endorsement. To get from the Originator to the Trust via Depositor, that execution MUST exist.

  29. @AnonNW,

    Fannie Mae can never be the holder of a note, they are the insurance for the bank. Fannie Mae is actually prohibited from buying notes. (These are my understandings, though, should ask someone knowledgeable to verify these as true).

    As for the Depositor, they are the intermediary between the Originator (Pretender Lender) and the Trust to assure the Trust cannot be affected by bankruptcy of the Originator. This condition is explicitly defined in the Trust’s PSA as required procedure for a note to enter a Trust. The lack of an Assignment to the Depositor, who then would Assign to the Trust is the missing link in chain of Title.

  30. Wow … so many long, tedious and convoluted arguments … just to get to whether or not the plaintiff has standing …wow, wow!!

    Good job, really (hat-tip) … but, I’m just saying …

    “Notes” endorsed in-blank can NEVER be enforced by its holder, they can only be negotiated. A note must have a final-special-endorsement to receive its final-enforcement … against its maker. (period)

    And … [every] “AOM” following alleged securitization is a violation of federal law, and a class-3 felony under various states law, period.

  31. Can someone please explain the importance of the argument regarding the endorsement on the note failing to mention the depositor.

    In many of our cases ..the note has a blank endorsement

    Example:

    The borrower went to Bank “A” to get a refinance

    Bank “A” ..immediately endorsed the note over to Bank “B”(WAMU)

    Bank “B” acted as servicer and told the borrowers that Fannie Mae aquifer the subject loan shortly after origination

    Bank “B” (Washington Mutual-WAMU) in 2007 has Wells Fargo(Bank C) take over servicing of the subject loan

    Borrowers in 2007 default and ask Bank “C” (Wells Fargo) for a modification … Wells Fargo says they have to ask the investor (Fannie Mae) …

    Bank “C” (Wells Fargo) files a foreclosure complaint in their name, and allege “Holder” status …they submit a fraudulent, fabricated, forged Assignment of Mortgage …and a fabricated/downloaded copy of the note in order to prove standing …the court accepts it.

    The note shows the originator pretender lender Bank “A” endorsed the note in favor of Bank “B” prior to closing ….

    Bank “B” (Washington Mutual) was the last alleged last “HIDC”

    Bank “B” went out of business in 2008

    Bank “C” (Wells Fargo) shows a copy of the note with no endorsement from Washington Mutual ..who was then out of business…

    Borrowers object to the note …judge speaks ex parte to WF attorneys and then says they need time to locate the note with the blank endorsement from Washington Mutual

    3 months later Wells Fargo shows up in court with a new version of the note , a different version than what they had certified to in their certification and exhibits …now the note in ad a blank endorsement added to it from Washington Mutual …but it was now 2010 and that bank had gone out of business 2 years prior in 2008.

    So Bank “C” Wells Fargo fabricated a blank stamp on their note ..and the judge accepted it … Along with their self-fabricated AOM.

    So in this article above …the judge mentions that the endorsement on the note makes no mention of the depositor ..what does that mean?

    In my case, the blank endorsement added after the fact had no date.

    The Wells Fargo employee affidavit used for summary judgement makes no mention of where payments were forwarded, applied, disbursed, etc …makes no mention of chain of title, no dates of transfers, etc … No dates of endorsements … ????

    So what does the judge in the Florida case mean when she attacks the note?

    She says the note fails to identify the depositor ???

    Thank you

  32. InGa- ocwen isnt going to investigate anything for you. When their agents call you from Mumbai, they are probably thinking more about how to survive in such a disgusting place, rather than about helping you, or answering your questions. They are criminals, in violation of every regulatory action, settlement, or court order in the country.

  33. I didn’t realize the link was a law firm.
    Well good for you if you can help people.

    Trespass Unwanted, Creator, Corporeal, Life, Free, People, Independent, State, In Jure Proprio, Jure Divino

  34. Bruce Jacobs

    Congratulations.
    It’s a long journey.

    Thanks for being one of the front line defenses, and offenses.

    May the people that use your works, respect its power and only wield it after training thoroughly on it’s proper use.

    Trespass Unwanted, Creator, Corporeal, Life, Free, People, State, In Jure Proprio, Jure Divino

  35. This is my case. It took years of preparation. It took years of trial skills. It took dedication and hard work. Check me out at http://www.debtwarriors.com. This didn’t happen by accident.

    Please protect it. Call me before you use it. Come to the seminar we are putting on. Know there are judges and banks that will look for every way to kill this order. Don’t take it up on appeal without calling me.

    This is a war. Let the generals lead us into battle. That is the best way to victory.

    I just ask that everyone take the time to really understand the arguments before you start throwing them around in foreclosure court.

    There are so many judges that will want nothing better than to find a weak case and tear this gem apart.

    Judge Butchko and I were prosecutors together when I was just a young lawyer. I knew she wouldn’t go for any of it unless I teed it up perfectly for her. Now we need to build the coalition of good judges that will follow her lead.

    I’ve been fighting this battle alongside a lot of great lawyers and mentors. Max Gardner and Margery Golant deserve major credit for this victory. I would never have gotten here without their guidance. Kathleen Cully was an amazing expert witness. We spent many, many hours going through this argument. Fine tuning it. Making it perfect.

    My only hope is that you all use it wisely. This is just an opinion of a trial level judge in Miami. She happens to be a very senior judge who teaches judges college. She’s a hero to me. So proud of her. But she does not bind any judge and many will want to disagree.

    Please make sure we don’t go into the appellate courts on these arguments with weak cases. Please let me know if you are making these arguments in an appeal. One wrong brief can turn it back to the banks.

    Margery, Max, Kathleen and I are talking about putting on a seminar to really dig deep into these arguments. I truly hope this is the start of bringing back the rule of law to foreclosures. We need to treat it with respect and protect it from Judges that will want to do it harm.

  36. BEATRICE BUTCHKO I am impressed!

    I too have Ocwen,Litton Fremont and HSBC as trustee – my assignment was also recorded and dated in 2009 which is after Fremont’s BK in 2008. Ocwen is unable to provide (they say because it is not available) any loan information for my loan before 2008 which is when the servicing switched to Litton from Fremont. They could not provide me any loan payment history from 2005 – 2008. When I was switched to Ocwen I sent them a certified letter where I listed many accounting issues I had had with Litton – Ocwen did not investigate as I requested.

  37. Neil the courts know that all the paperwork is a sham already. Most courts just go along with it. They act like homeowners were born yesterday, just like the fabricated paperwork which really was born yesterday. Any mortgage transaction before the scam of 2008 at least (or most loans) had the proper assignment and the note and mortgage were not separated which imo has created the scam that is going on today.

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