You cannot ratify an event that never occurred. The paper assignment cannot be ratified if there was no actual event. The event is the purchase of a loan or many loans. The proof is not the assignment but the payment for the assignment. The Courts are wrong when they say the assignment could be theoretically ratified and then concluding that therefore the assignment is voidable not void. That is circular logic. They are looking at the assignment and they are concluding that there must have been a transaction if there was an assignment. The proper way to look at it is if there a transaction then the assignment could be valid could be ratified. If there is no transaction, there is nothing to ratify and therefore the assignment is void, not voidable.
THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
There is an erroneous presumption behind the recent cases in which judges determined that the assignment was voidable not void. Their assumption is that the trust bought the loan. This is not true. Both sides of the foreclosure cases have skated around this issue.
If the REMIC Trust did in fact issue payment for the acquisition of loans then these judges are probably right. But in nearly ten years of this work I can find no evidence nor even any assertion that the Trust ever issued payment for anything — ever. This is corroborated by the fact that the lawyers for the trust scrupulously avoid the one assertion that would end all of the cases if it was true: that the trusts are holders in due course.
A holder in due course is a party who purchased the loan in good faith and without knowledge of the borrower’s defenses. Since the Trust is far removed from the alleged “loan” closing it would be a futile effort to say that the trust was not operating in good faith or had knowledge of the borrower’s defenses. When they purchase the paper, even if it is fatally defective, they become holders in due course free from the defenses of the borrower. So why don’t they assert that position? Obviously this was not an oversight.
The only possible reason that does not strain credulity is that they didn’t pay for the loan. If they did not pay for the loan then it is inescapable that there was no transaction in the real world in which the Trust was a buyer of loans that included whatever loan your are litigating. The alleged assignment is not the transaction any more than a bill of sale is the transaction for the purchase of a car. There must be payment and delivery of cash for the car. If that didn’t occur, there is no amount of ratification in which a nonexistent transaction suddenly is born. Or to make the analogy even closer, imagine that scenario where the buyer steals the car instead of paying for it and then asserts a claim under the warranty in the Purchase Agreement.
Hence the argument used by judges to justify their bias for the banks is devoid of any factual or logical basis and devoid of legal support as well. If the transaction did occur then it could conceivably be ratified — although not without dire consequences for the trust and the investors who would lose their tax status for a pass through entity. But if the transaction did not occur then what effect could “ratification” have on something that still does not exist?
Thus the question is simply “was there ever a transaction between the REMIC Trust and the Seller of loans whereby the Trust paid for the loans the seller executed an assignment.” If yes, the judges are right. If no, the Judges are wrong.
BACKGROUND: Industry practice was to create a document that qualified under the laws of the State of New York as a common law Trust. This document is not registered with any secretary of state or any other agency keeping track of the creation of common law trusts. Like all trusts, this trust was a nullity unless and until assets were transferred into the Trust (the “res”). If there re no assets in the trust then there is nothing for a Trustee to do. Industry practice was to create the illusion of a trust on paper and then never use it. The only “exception” was the bank causing the “Trust” to issue more paper that also was unregistered and called “mortgage backed securities.” The Trust never sold those securities to anyone. The “sale” was performed by the investment bank underwriter. The Trust never received any money, never had any need for a bank account and the “trustee” and noting to do except sit there and look pretty and official. The Trust was never administered in any way. The Trustee merely got paid for acting as though the Trust was real.
Hence, without assets, the Trust could not possibly have purchased any loan. And THAT is why the assignment is void — i.e., it is the memorialization of a transaction that never occurred and never will occur. It can’t occur unless the Trust had or has money to pay for the loans.
And finally, we come to the obvious questions about transfers of paper regarding the “loan.” None of them were sales as there were no purchases. Nobody paid anyone. And that includes the so-called lender who may have endorsed a note or even executed an assignment, but never received any payment in exchange for their sale of the alleged loan through a robo-signed endorsement or assignment. Why? Because the lender was not real either. The funds used for the loan came out of a commingled dark pool of investor money that paid no attention to the individual trusts in which the investors thought they were investing. So the investors were duped into letting the investment bank fund all sorts of alleged loans without the investors getting any protection from an executed note in their favor or an executed mortgage naming them as mortgagee. Once you look at the money trail it is easy to see why the banks are loathe to let anyone even peek at the money trail — it just doesn’t add up.
Ratification becomes a non issue because there was no “act” to ratify. Bank attorneys have thus far succeeded in confusing the bench between ratification of a document as though it was an “act.” Somewhere along the line the Courts are going to be required to deal with the facts that are readily apparent in the public domain. BOTH the investors AND the alleged borrowers are complaining about the same thing and BOTH are alleging, in essence unconscionability. Hence the only two groups that are real parties in interest are in agreement — this is not the deal we thought it was. And as James “Randy” Ackley points out the starting point is the doctrines dealing with adhesion contracts. They were both screwed simply through bank control over appraisals that were not only artificially high; and as we have discussed multiple times on this blog, those appraisals were coerced — just as 8,000 appraisers said in a petition to congress in 2005.
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Filed under: foreclosure