You can prove your point thus rebutting the legal presumptions that attach to facially valid paper by starting at the top of the paper trail, the bottom or anywhere in between. You won’t find a single transaction in which money exchanged hands. That means whoever transferred this “valuable” note received no payment. The transportation of a note that never should have been signed in the first place is almost irrelevant — except as to the issue of delivery which in turn goes to the issue of possession. Absent some purchase of the “loan”, such a PETE or holder may not enforce.
THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
Ever so slowly and carefully, with the dread of dismantling the entire financial system, the courts are looking more closely at what the banks and servicers are doing in foreclosures. In this case US Bank says in its foreclosure complaint that it is the holder of the note and then argued that it was either the holder or the possessor with rights to enforce. What’s the difference?
A possessor is someone who physically has possession of the original note. You might liken this to a courier who is entrusted with picking up the note from one place and carrying it to another place. The courier cannot, as some have claimed, enforce the note because it merely possesses the note. In order to be a possessor with rights to enforce (PETE) it must (1) have the actual original and not a mechanical reproduction of it, (2) plead that it is a PETE and (3) prove that it has the right to enforce.
Proving the right to enforce was simple before the current era. The creditor executes the necessary paperwork and comes into court if necessary to verify that it has given the possessor the right to enforce the note. What happens to the money after the possessor gets it and what happens to the Judgment (it could be assigned) afterwards is nobody’s business. But the banks have steadfastly insisted that they should not be required to produce or even identify the creditor. That falls under the legal theory of “NUTS.” But it has been allowed in millions of foreclosures so far. A party comes into court and says I am here to enforce this “original note” on behalf of someone, but I can’t tell you who that is because it’s private.
I’ve tried a few things in courtroom in my 40 years of doing this but if I had ever tried to do that I think most judges would have literally thrown a book at me.
We are expected to presume that since the possessor has the original note it MUST have the the authority to enforce it. And THAT is where the trial judges and many appellate court have it wrong. In fact those courts have complicated the matter further by treating the possessor as a holder in due course who paid value for the note in good faith and without knowledge of the borrower’s defenses. This in the old days would have been sufficient to cause enforcement to issue even if the borrower/maker had meritorious defenses against the payee.
The court in this case looked at the complaint for foreclosure and presumed nothing except what was in the pleading. The pleading said the Plaintiff was a holder. There was no mention of being a holder, much less a holder in due course. Since there was no argument about whether the Plaintiff was a holder nor any assertion that such proof existed, the trial judge dismissed it and the bank foolishly appealed revealing its soft underbelly.
A holder is distinguished from a PETE and distinguished from a holder in due course. The banks revel in the fact that they were able to misuse the status of “holder” thus accomplishing their goal of foreclosure where in yesteryear, they would have kicked out of court probably with sanctions.
A holder must not only have possession, but also have an endorsement from the prior owner of the debt and note where the endorsement actually identifies the party receiving physical possession of the note or endorsed in blank which means it payable to the “bearer” — i.e., possessor — of the note. Thus the facts to be proven are expanded: (1) possession of an actual original (prove delivery) and (2) endorsement by an authorized signatory on behalf of a new possessor either in blank or to the new possessor. The difference between PETE and holder is that the right to enforce is right on the note. But if the endorsement is robosigned, which is to say fabricated and forged by an unauthorized person sitting in the back of LPS or a law office, the endorsement is a nullity (it is void).
If there is no objection to the authenticity of the note (i.e., whether the note is the actual original) and no objection as to whether it was properly endorsed, then the only other question is whether the party for whom the endorsement was made was the actual owner of the debt and note. And there’s the rub again.
A party comes into court and says I have the original note right here and it has been endorsed in blank so I can enforce it. What the banks never say because they don’t like jail cells is that the person who executed the endorsement was authorized and did so on behalf of a party who did own the debt and note at the time of the endorsement. They don’t say that because it isn’t true. The endorser is either MERS or some other conduit or intermediary who never had any interest in the subject debt, note or mortgage. And when the borrower tries to drill down in discovery on the truth of whether the prior endorser/possessor actually had possession or actually had the right to enforce or actually owned the debt or note, the banks run to the presumptions as if they were at trial. The problem is that trial judges have been buying that strategy for 10 years. Thus the homeowner is hit with the idea that it doesn’t matter whether any of this is real, it is still happening.
This also is something banks assiduously avoid since they are essentially throwing layers of fictitious ownership at the Judge such that the Judge assumes that it is not credible to assume that all the signatures, endorsements and assignments are void when issued by so many upstanding members of the community. And THAT is why discovery is so important because unless you are extraordinarily gifted at cross examination, the “robo-witness” is not likely to blurt out that he has no idea what happened or who owns it. If you assume nothing and deny everything and you aggressively pursue discovery, you are much more likely to come out on top.
As long as you go down the rabbit hole that the banks have prepared for you, the focus will be on the paper trail which they have created, recreated, fabricated and forged. BUT if you pursue discovery along the money trail you will find that all of the paper was signed by parties who never had a penny in the deal and probably never received delivery of the “loan” documents. That means that whoever started off the paper trail was not party of the money trail — i.e., they were never involved in any actual transaction relating to the subject loan.
You can prove your point thus rebutting the legal presumptions that attach to facially valid paper by starting at the top of the paper trail, the bottom or anywhere in between. You won’t find a single transaction in which money exchanged hands. That means whoever transferred this “valuable” note received no payment. Hence there was no purchase of the debt or note or mortgage. The transportation of a note that never should have been signed in the first place is almost irrelevant — except as to the issue of delivery which in turn goes to the issue of possession. Absent some purchase of the “loan”, such a PETE or holder may not enforce. Who would do that unless they already knew that they were entitled to nothing except fees?