Questions to Ask About the Trust and the Trustee

In the final analysis you are looking for evidence of absence of any real events currently presumed as facts in any foreclosure case.

The trustee issue is a jurisdictional issue. If the Plaintiff Trust does not exist, then it has no standing to make or pursue any claims. If the named Trustee is not engaged in the active management of active trust affairs on behalf of the beneficiaries of a trust, then it is not a trustee imbued with the powers to administer assets that have not been conveyed and entrusted to the Trustee.
If the named beneficiaries have received a promise from the named “Trust” and the beneficiaries have expressly disclaimed any interest in the “underlying” loans, notes, mortgages or debts, then they are not beneficiaries and the entity is not a trust. (That fact pattern describes individual contracts with each investor who purchased a promise to pay executed by someone allegedly on behalf of an entity self proclaimed as a trust. If the named entity does not exist then the party who executed the isntruments may have liability for the promise).
Since the Trust has not been identified as having been organized and existing under the laws of any jurisdiction, it is entirely appropriate to ask questions about the existence of the trust and its right to do business in the state or the courts. The second jurisdictional issue is subject matter jurisdiction in which the question is whether the trust owns the indebtedness. I frequently deal with these issues in drafting the substance of documents to be filed with the court, subject to opinion of local counsel.
If prior demands for discovery are clear the appropriate strategy is to force the issue through a motion to compel. Filing an “amended” request fro discovery probably starts the clock all over again. By the time you get to a demand for sanctions for contempt the case could be over. If it is denied she should consider an interlocutory appeal on the issue of whether the record contains assertions or evidence of the existence of the trust. The only prejudice that could exist would be that the trust doesn’t exist and that “they” (actually the lawyers) would be “prejudiced” because they couldn’t foreclose using the trust name.
There is no doubt in my mind that one or both narratives are true: (1) the trust doesn’t exist and never did and (2) the loan (i.e., the indebtedness) was never purchased by the trust, acting through tis alleged trustee.
One of the problems here is that it would be wise, although not essential, to notice the named Trustee for deposition duces tecum. That’s often a problem because most homeowners not appear to have anyone competent to conduct the deposition. In a normal deposition, one MUST ask the witness identifying questions like
  1. What’s your name?
  2. Who do you work for?
  3. What is the relationship between your bank and this trust?
  4. Besides the alleged Prospectus and the alleged PSA, what agreements exist wherein the Trustee bank is obligated to do or receive anything from the trust, directly or indirectly. [This one should be broken up into parts].
  5. Under what jurisdiction was the trust organized?
  6. Under what jurisdiction is the trust now existing?
  7. Who is the trust officer for the trust?
  8. In which department(s) are trust matters generally handled in the Trustee Bank?
  9. In which department(s) are trust matters usually handled in the Trustee Bank for this trust?
  10. Has the Trustee bank published any memos or guidelines concerning the administration of securitization trusts?
  11. Assuming that the word “loan” means the indebtedness of the homeowners here in this case, on what date did US Bank as trustee purchase this loan to hold in trust?
  12. Who was the seller of the debt in that transaction?
  13. Was payment for the loan performed through a financial account held in the name of the Trustee for the alleged trust?
  14. How did US Bank as Trustee for the alleged trust perform due diligence to confirm the existence and ownership of the debt?
  15. Who are the beneficiaries of the alleged trust?
  16. Who is the trustor or settlor of the alleged trust?
  17. What is the date and name of the instrument that purports to create the trust?
  18. Describe the current functions of US Bank as trustee of the alleged trust.
  19. Describe the current assets of the alleged trust.
  20. Describe date and content of the last financial report received by US Bank as trustee for the alleged trust.
Most likely opposing counsel will object to the question’s relevancy at the time deposition is taken. But relevancy is not even a question at deposition which is by nature a fishing expedition. Even if opposing counsel was right that the question does not directly relate to proof of a fact asserted at trial, you are still entitled to inquire because it might lead to the discovery of admissible evidence.

Homeowners Sue SPS in Class Action Over Failure to Mitigate

Thousands of cases like this one have pointed out that SPS and other servicers like Ocwen do not consult with any investor, do not evaluate the case for settlement, modification or mitigation. The answer to questions arising from the unwillingness of those companies to comply with law stems from the fact that the  vast majority of their income comes from undisclosed third parties (the TBTF Banks).

TBTF Banks (BofA, Chase, Wells Fargo, Citi, etc.) do not want settlements or modifications or anything that will make the loan start performing. Subservicers like SPS and Ocwen are used as conduits to other conduits that provides window dressing for claims of compliance or efforts to comply.

Contrary to common sense nobody wants a settlement or modification. The players would rather have the value of the alleged loan reduced to zero or less in the case of foreclosures requiring the bank to maintain the property without any hope of selling it. Common sense says that faced with a value of ZERO versus a value of $200,000, for example, any normal business would select the obvious —- $200,000.

The most extreme cases are where the modification is deemed approved and a new servicer comes in to dishonor it and forecloses, even though the homeowner made the trial payments. Yet Petitions to Enforce the modification agreement are rare; but when they are filed they are usually successful. And in many of those cases the modification is modified for a greater principal reduction than was originally offered.


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Whether or not the class gets certified or settled the suit brings up certain salient points which again give rise to the most common question of all, to wit: “Why is that?”

The answer is hiding in plain sight: None of these parties represent a creditor or owner of the debt . All of them represent undisclosed third parties who are making money hand over fist in the shadow banking market. A completed foreclosure represents the first and only valid legal document in their long train of lies promulgated by piles of fabricated, forged, robo-signed paper. The justice system isn’t always right but it is always final. That is the game the banks are playing.

If SPS or Ocwen actually was set up to help homeowners avoid foreclosure and preserve the value of the loan receivable they would lose virtually all their business. A performing loan would change the makeup of the pools that the players claim to have created. All the re-sales of the same loan would be based upon a loan, even if it existed at one time, that doesn’t exist presently.

So the players NEED that foreclosure not for investors or a trust that doesn’t exist, but for themselves because most of the proceeds of the re-sales of the same loan went the TBTF Banks. They want to preserve their ill-gotten gains rather than do anything that could possibly benefit investors. And the best way they can do that is with an Order or Judgment signed by a duly authorized judge in a court of competent jurisdiction — not with a modification.

Practice Hint: If you see a case that has been ongoing for 8-10 years that is a strong indicator that the investors have received a settlement and no loner have any claim for payment and/or that the “Master Servicer” is continuing to allow payments to investors out of a pool of investor money — i.e., a Ponzi scheme. Those continuing payments have been inappropriately named “servicer advances.” They are not “advances” because it is merely return of investor capital. And since the payments come from an investor pool of cash the payments are not from the servicer since the money came from the same or other investors.

They are called servicer advances because using that name fictitiously allows the “Master Servicer’ (actually the underwriter of the certificates) to claim a “recovery” of “servicer advances.” The recovery is ONLY allowed after sale of the property after a foreclosure where the buyer is a BFP.

So for example if payments to investors attributed to the subject loan are $2,000 per month, 10 years worth of “servicer advances” results in a “recovery claim” of $240,000. Generally that is enough to wipe out any equity. The investors get nothing. The foreclosure was actually for the sole interest and benefit of the banks, not the investors. And the homeowner again finds himself used as a pawn for others to make money over the rotting carcass of what was once his home.

Hence the trial strategy suggested would be drilling down on whether the trust is receiving payment from a “third party,” whether that party has rights of subrogation or is satisfied by some other fee or revenue. If you get anywhere near this issue the bank will fold up like a used tent. They will pay for confidentiality.

The Role of Dynamic Dark Pools in Ponzi Schemes Masquerading as Securitized Loan Pools

The bottom line is that there are no financial transactions in today’s securitization schemes. There is only fabricated paper. If you don’t understand the DDP, you don’t understand “securitization fail,” a term coined by Adam Levitin.


GO TO LENDINGLIES to order forms and services. Our forensic report is called “TERA“— “Title and Encumbrance Report and Analysis.” I personally review each of them for edits and comments before they are released.

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954-451-1230 or 202-838-6345. Ask for a Consult. You will make things a lot easier on us and yourself if you fill out the registration form. It’s free without any obligation. No advertisements, no restrictions.

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I received a short question today to which I gave a long answer. The question is “What happens when an investor decides that he or she wants to cash it in does someone redeem their certificate ?”

Here is my answer:

YES they get paid, most of the time. It is masked as a “trade” on the proprietary trading desk of the CMO Dept. which is completely unregulated and reports nothing. As long as the Ponzi scheme is going strong, the underwriter issues money from the investor pool of money (dynamic dark pool -DDP). It looks like a third party bought the “investment.” If the scheme collapses then the underwriter reports to investors that the market is frozen and there are no buyers.

There is no redemption because there are no certificates. They are all digital entries on a server. Since the 1998 law deregulated the certificates, reporting is limited or nonexistent. The entries can be changed, erased, altered, amended or modified at will without any regulator or third party knowing. There is no paper trail. Thus the underwriter will say, if they were ever asked, whatever suits them and there is no way for anyone to confirm or rebut that. BUT in discovery, the investors have standing to ask to see the records of such transactions. That is when the underwriter settles for several hundred million or more.
They discount the settlement based upon “market” values and by settling for pennies on the dollar with small community banks who do not have resources to fight. Thus if they received $2 billion for a particular “securitized pool” that is allocated to a named trust they will instantly make about 10-20 times the normal underwriting fee by merely taking money before or after the money hits the DDP. Money is paid to the investors as long as sales of certificates are robust. Hence the DDP is constantly receiving and disbursing money from many more sources than a fixed group of homeowners or investors.
It is all about gaps and absences. If a debt was properly securitized, the investor would pay money to the underwriter in exchange for ownership of a certificate. The money would then be subject to fees paid to the underwriter and sellers of the certificates. The balance would be paid into a trust account on which the signatory would be a trust officer of the Trustee bank.
If a scheme is played, then the money does not go into the trust. It goes to the DDP. From there the money is funneled through conduits to the closing table with the homeowner. By depositing the exact and expected amount of money into the trust account of the closing agent, neither the closing agent nor the homeowner understands that they are being played. They don’t even have enough information to arouse suspicion so that they can ask questions.
Hence if you combine the proper securitization scheme with the improper one you see that the money is diverted from the so-called plan. This in turn causes the participants to fabricate documents if there is litigation. They MUST fabricate documents because if they produced real documents they would have civil and criminal liability for theft, embezzlement in investor litigation and fraud and perjury in foreclosure litigation.
It is only by forcing a peek around the multiple layers of curtains fabricated by the players that you can reveal the absence of ownership, authority or even an economic interest — other than the loss of continued revenue from servicing and resales of the same loan through multiple investment vehicles whose value is completely derived from the presumed existence of a party who is the obligee of the debt (owner of the debt, or creditor).
That party is the DDP — fund that is partially authorized for “reserve” and which the prospectus and trust instrument (PSA) state (1) that the mortgage loan schedule is not the real one and is presented as an example and (2) that the investors acknowledge that they might be paid from their own money from the “reserve.”
The gap is that the DDP and the reserve are two different accounts. The “reserve” is a pool of money held in trust by, for example, U.S. Bank as trustee for the trust. There is no such account. The DDP is controlled by the underwriter but ownership is intentionally obscured to avoid or evade detection and the liability that would attach if the truth were revealed.
We win cases not by proving theft from investors but by hammering on the fact that the documents are fabricated, which is true in virtually all cases involving a named trust. We will win a large award if we can show that the intended beneficiaries of the foreclosure were parties other than the obligee on the debt.
Thus the attorneys, servicers and trustee are protecting their ill-gotten gains and seeking to grab more money and property at the expense of the unnamed investors and homeowners. They are then transforming an expected revenue stream into the illusion of a secured debt owed not to the funding sources but to the intermediaries.
Go to LENDINGLIES for more help.

Message to Homeowners Who Have Won Their Cases — Your Demands are Too Low

SETTLEMENT NEGOTIATIONS: WHEN THE HOMEOWNER WINS IN LITIGATION, in every case the banks pay amazing amounts of money to the homeowner (and their lawyer) in order to get agreement on sweeping the case under the rug. Homeowners and their lawyers must realize that the settlement value of their case may be worth 1000 times the judgment value of the case.

This asymmetry in settlement negotiations escapes most but not all winning homeowners. It gets especially urgent when the banks made the wrong decision and appealed an unfavorable decision only to find that they not only lost one case, but many thousands as a result of that one case.

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The banks will do anything to sweep bad results under the rug. And that includes eliminating adverse appellate opinions and trial court opinions.
This is a common practice by them — to wipe out any trace that the entire mortgage scheme (and therefore the entire foreclosure scheme) was a scam. Their strategy makes sense for them. By offering you incentives they get the opinion wiped from the face of the earth. Hence hundreds of thousands of other homeowners who might have contested foreclosure walk away in defeat.

As Charles Marshall has repeatedly said, the settlement should reflect a compromise between the value perceived by the Plaintiff and the value perceived by the Defendant. In this case, the value to the banks is perceived as global — i.e., the impact it will have on currently contested foreclosures and the impact it will have on people who might not otherwise contest the foreclosure. That is the multiplier.

The leverage for the homeowner is commonly perceived — even by the lawyers — as the value of the case at bar. But the true leverage is based upon the cost to the banks generally if the decision stands and God forbid other decisions cite to it with approval. The entire “securitization” scheme would unravel. Wrapping your mind around the discrepancy is key to maximizing the settlement value.

Your case might only involve a $300k mortgage, but that one mortgage has effectively been sold many times, perhaps dozens of times when you include claims of securitization of derivative products (securitization on securitization). Hence your one mortgage loan, based upon fraudulent practices that violated various deceptive lending statutes, sits at the bottom of a house of cars larger than you can imagine. So, for example, you see $300k in value whereas the opposition sees it as potentially $6 million in direct cost that must somehow be hidden in yet another fraudulent cover-up (“resecuritization”).

But it doesn’t stop there. When you win your case it serves as a beacon for many thousands of homeowners — thus presenting a threat of unraveling the epic scope of fraudulent claims of securitization. This “value” is difficult to estimate, much less compute. But if you use an arbitrary number like 10,000 other homeowners will take the case to heart and litigate on those principles and assume that half of them successfully present the case in court citing your case as authority, the cost would easily be in range of $1 Billion.

The banks will do anything to distract you from the essential truth of what I have said here. And part of their strategy is always to propose a settlement that is so low it undermines the confidence of both the homeowners and their lawyer. Or they will offer a “modification” that makes no real difference in the bogus economics of the loan. It makes the $1 Billion seem like a fantasy but it isn’t.  Of course settlement value is not going to equal the bank’s risk factor ($1 Billion) but it is based on their perception of the likelihood of that risk crashing in on them.

Thus the give and take of negotiations depend upon how hard the homeowner is willing to push. And it must be kept in mind that at some point (far below $1 Billion) the banks would rather take the hurt of whatever your case brings than let it be known that a homeowner with a $300k mortgage became obscenely rich by exposing the fraudulent nature of the entire consumer mortgage and debt market.

Statutory Requirements for Enforcement of Note or Mortgage

For further information please call 954-495-9867 or 520-405-1688


So many people sent me this short white paper that I don’t know who to thank or even who wrote it. Any help would be appreciated so I can edit this article and give attribution to the writer.

The only thing that I would caution is that eventually, perhaps sometime soon, the importance of the Assignment and Assumption Agreement will rise in importance as to these enforcement actions based upon a fictitious closing, debt, note and mortgage. The A&A is an agreement between the “originator” and some other “aggregator conduit”.

The A&A essentially calls for violation of TILA by not disclosing the existence of a third party lender. It also allows for compensation and profits arising from the signature of the borrower on the settlement documents without disclosure of who received that compensation or made those profits and how much they were “earning.”

Whether this is ultimately determined to be a table funded loan or simply not a loan contract at all with the borrower remains to be seen. If it is determined to be a table funded loan with an undisclosed third party lender who is not even the aggregator in the A&A then according to regulations Z it is “predatory per se.” If it is predatory per se then how can anyone seek enforcement in equity (i.e. foreclosure)?

And while I am at it, to answer the question of many judges — “what difference does it make where the money came from? — ASK THE BANKS. They nearly always demand to see the bank account from which the down payment is being made and even going beyond that to require the borrower to prove that the money is the money of the borrower. If normal underwriting requires the borrower to produce proof of funding then why isn’t the bank required to prove that they funded the loan — either by origination or acquisition or both?

If a borrower gets the down payment from his Uncle Joe because he is in fact broke, then the Bank under normal underwriting circumstances won’t approve the loan. If a Bank has no financial stake in the alleged “loan” then why should THEY be allowed to enforce it? Isn’t that highly prejudicial to the real creditors? Isn’t the foreclosure judge making it harder for the real creditors to collect by entering judgment for a party who has no risk, no financial stake and no contractual right (or obligations) to represent the real creditor.

And lastly is the wrong assumption about the chronology of these transactions. The mortgage backed securities were “sold forward,” which is to say there was nothing in the Trust when they were sold — and as it turns out in most cases the Trust never got any loans. Further the notes and mortgages were also sold forward in a cloudy arrangement in which the ownership and balance due was at least in doubt if not unknown. You must remember that the banks were not in the business of loaning money — they were in the business of selling mortgage backed securities for empty trusts and then using the money any way they chose.

All that said the following was received by me from several people and I agree with virtually all of it.


Statutory Requirements For Establishing The Right To Enforce An Instrument

1. Prove status of holder of the instrument. (UCC § 3-301(i)); or

2. Prove status of non-holder in possession of the instrument who has the rights of a holder. (UCC § 3-301(ii)); or

3. Prove status of being entitled to enforce the instrument as a person not in possession of the instrument pursuant to UCC § 3-309 or UCC § 3-418(d). (NOTE is lost, stolen, destroyed).

UCC § 3-309, requirements.

a. Prove possession of the instrument and entitled to enforce it when loss of possession occurred. (UCC § 3-309(a)(1)).

i. If illegality or fraud were involved in the original transaction, it cannot be proved that the person is entitled to enforce the instrument.(See UCC § 3-305. DEFENSES)

b. Prove non-possession of the NOTE is NOT the result of a transfer. (UCC § 3-309(a)(2)).

NOTE: If discovery shows that the instrument was sold by the person claiming the right to enforcement, a transfer occurred, and such person is NOT entitled to enforce the instrument. (See UCC § 3-309(a)(ii)).

c. Prove that the person seeking enforcement cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process. (UCC § 3-309(a)(3)).

NOTE: If discovery shows that the instrument was sold by the person claiming the right to enforcement, a transfer occurred, and such person is NOT entitled to enforce the instrument. (See UCC § 3-309(a)(ii)).

d. A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person’s right to enforce the instrument. (UCC § 3-309(b)).


UCC § 3-309 Enforcement Of Lost, Destroyed, Or Stolen Instrument.
(a) A person not in possession of an instrument is entitled to enforce the instrument if

(1) the person seeking to enforce the instrument​
(A) was entitled to enforce the instrument when loss of possession occurred, or
(B) has directly or indirectly acquired ownership of the instrument from a person who was entitled to enforce the instrument when loss of possession occurred; ​
(2) the loss of possession was NOT the result of a transfer by the person or a lawful seizure; and​
(3) the person cannot reasonably obtain possession of the instrument because the instrument was destroyed, its whereabouts cannot be determined, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not amenable to service of process.​

(b) A person seeking enforcement of an instrument under subsection (a) must prove the terms of the instrument and the person’s right to enforce the instrument. If that proof is made, Section 3-308 applies to the case as if the person seeking enforcement had produced the instrument. The court may not enter judgment in favor of the person seeking enforcement unless it finds 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. Adequate protection may be provided by any reasonable means.


An instrument is transferred when it is delivered by a person other than its issuer for the purpose of giving to the person receiving delivery the right to enforce the instrument. (UCC § 3-203(a)).

If a transferor purports to transfer less than the entire instrument, negotiation of the instrument does not occur. The transferee obtains no rights under this Article and has only the rights of a partial assignee. (UCC 3-203(d)).


If the bank, mortgage company, etc., sold the NOTE, they have no right to enforce the NOTE, through foreclosure or court proceeding pursuant to the fact that the UCC bars such claimant from invoking the court’s subject matter jurisdiction of the case.


Even if the claimant produces the original wet-ink NOTE, there is a defense to the action pursuant to UCC 3-305.

Illegality and false representation (fraud) perpetrated in the transaction.

Did the bankdisclose the SOURCE of the money for the transaction?Did the bank inform the NOTE issuer that the money for the transaction was provided at no cost to the bank?

Did the bank disclose that the NOTE would be sold at the earliest possible convenience, and that such sale and receipt of money from a third party would actually pay off the NOTE? (Satisfaction of Mortgage).​

Many discovery questions to be asked when a claimant initiates foreclosure proceedings.


Many assume that the bank/broker/lender that begins the process is actually providing the money for making a “loan,” when in fact, the bank/broker/lender is only making an “exchange,“ of notes, at no cost, and then, coercing the issuer of the promissory note into the comprehension that he is receiving a “loan.” The following was stated in A PRIMER ON MONEY, SUBCOMMITTEE ON DOMESTIC FINANCE, COMMITTEE ON BANKING AND CURRENCY, HOUSE OF REPRESENTATIVES, 88th Congress, 2d Session, AUGUST 5, 1964, CHAPTER VIII, HOW THE FEDERAL RESERVE GIVES AWAY PUBLIC FUNDS TO THE PRIVATE BANKS [44-985 O-65-7, p89]

“In the first place, one of the major functions of the private commercial banks is to create money. A large portion of bank profits come from the fact that the banks do create money. And, as we have pointed out, banks create money without cost to themselves, in the process of lending or investing in securities such as Government bonds.”​

In this instance, the transaction was funded by using the prospective property (collateral) and the signer’s promissory note as if the property and the Note already belonged to the bank/broker/lender. [Editor’s note: Those loans NEVER belonged to the Bank who was selling them before they even existed.]

So, if the bank used the promissory NOTE, as money, to create the cash reserve which was then used to validate the bank check issued on the face amount of the promissory NOTE, at no cost to the bank, without NOTICE to the signer of the promissory NOTE, and without fully disclosing these facts and aspects of the transaction, the bank committed a DECEPTIVE PRACTICE, FRAUD.

BAP Panel Raises the Stakes Against Deutsch et al — Secured Status May be Challenged

Fur Further Information please call 954-495-9867 or 520-405-1688




I have long held and advocated three points:

  1. The filing of false claims in the nonjudicial process of a majority of states should not result in success where the same false claims could never be proven in judicial process. Nonjudicial process was meant as an administrative remedy to foreclosures that were NOT in dispute. Any application of nonjudicial schemes that allows false claims to succeed where they would fail in a judicial action is unconstitutional.
  2. The filing of a bankruptcy petition that shows property to be encumbered by virtue of a deed of trust is admitting a false representation made by a stranger to the transaction. The petition for bankruptcy relief should be filed showing that the property is not encumbered and the adversary or collateral proceeding to nullify the mortgage and the note should accompany each filing where the note and mortgage are subject to claims of securitization or a “new” beneficiary.
  3. The vast majority of decisions against borrowers result from voluntary or involuntary waiver, ignorance and failure to plead or object on the basis of false claims based on false documentation. The issue is not the signature (although that probably is false too); rather it is (a) the actual transaction which is missing and the (b) false documentation of a (i) fictitious transaction and (ii) fictitious transfers of fictitious (and non-fictitious) transactions. The result is often that the homeowner has admitted to the false assertion of being a borrower in relation to the party making the claim, admitting the secured status of the “creditor”, admitting that they are a creditor, admitting that they received a loan from within the chain claimed by the “creditor”, admitting the default, admitting the validity of the note and admitting the validity of the mortgage or deed of trust — thus leaving both the trial and appellate courts with no choice but to rule against the homeowner. Thus procedurally a false claim becomes “true” for purposes of that case.

see 11/24/14 Decision: MEMORANDUM-_-ANTON-ANDREW-RIVERA-DENISE-ANN-RIVERA-Appellants-v.-DEUTSCHE-BANK-NATIONAL-TRUST-COMPANY-Trustee-of-Certificate-Holders-of-the-WAMU-Mortgage-Pass-Through-Certificate-Series-2005-AR6

This decision is breath-taking. What the Panel has done here is fire a warning shot over the bow of the California Supreme Court with respect to the APPLICATION of the non-judicial process. AND it takes dead aim at those who make false claims on false debts in both nonjudicial and judicial process. Amongst the insiders it is well known that your chances on appeal to the BAP are less than 15% whereas an appeal to the District Judge, often ignored as an option, has at least a 50% prospect for success.

So the fact that this decision comes from the BAP Panel which normally rubber stamps decisions of bankruptcy judges is all the more compelling. One word of caution that is not discussed here is the the matter of jurisdiction. I am not so sure the bankruptcy judge had jurisdiction to consider the matters raised in the adversary proceeding. I think there is a possibility that jurisdiction would be present before the District Court Judge, but not the Bankruptcy Judge.

From one of my anonymous sources within a significant government agency I received the following:

This case is going to be a cornucopia of decision material for BK courts nationwide (and others), it directly tackles all the issues regarding standing and assignment (But based on Non-J foreclosure, and this is California of course……) it tackles Glaski and Glaski loses, BUT notes dichotomy on secured creditor status….this case could have been even more , but leave to amend was forfeited by borrower inaction—– it is part huge win, part huge loss as it relates to Glaski, BUT IT IS DIRECTLY APPLICABLE TO CHASE/WAMU CASES……….Note in full case how court refers to transfer of “some of WAMU’s assets”, tacitly inferring that the court WILL NOT second guess what was and was not transferred………… i.e, foreclosing party needs to prove this!!


Even though Siliga, Jenkins and Debrunner may preclude the

Riveras from attacking DBNTC’s foreclosure proceedings by arguing

that Chase’s assignment of the deed of trust was a nullity in

light of the absence of a valid transfer of the underlying debt,

we know of no law precluding the Riveras from challenging DBNTC’s assertion of secured status for purposes of the Riveras’ bankruptcy case. Nor did the bankruptcy court cite to any such law.

We acknowledge that our analysis promotes the existence of two different sets of legal standards – one applicable in nonjudicial foreclosure proceedings and a markedly different one for use in ascertaining creditors’ rights in bankruptcy cases.

But we did not create these divergent standards. The California legislature and the California courts did. We are not the first to point out the divergence of these standards. See CAL. REAL EST., at § 10:41 (noting that the requirements under California law for an effective assignment of a real-estate-secured obligation may differ depending on whether or not the dispute over the assignment arises in a challenge to nonjudicial foreclosure proceedings).
We must accept the truth of the Riveras’ well-pled
allegations indicating that the Hutchinson endorsement on the
note was a sham and, more generally, that neither DBNTC nor Chase
ever obtained any valid interest in the Riveras’ note or the loan
repayment rights evidenced by that note. We also must
acknowledge that at least part of the Riveras’ adversary
proceeding was devoted to challenging DBNTC’s standing to file
its proof of claim and to challenging DBNTC’s assertion of
secured status for purposes of the Riveras’ bankruptcy case. As
a result of these allegations and acknowledgments, we cannot
reconcile our legal analysis, set forth above, with the
bankruptcy court’s rulings on the Riveras’ second amended
complaint. The bankruptcy court did not distinguish between the
Riveras’ claims for relief that at least in part implicated the
parties’ respective rights in the Riveras’ bankruptcy case from
those claims for relief that only implicated the parties’
respective rights in DBNTC’s nonjudicial foreclosure proceedings.


Here, we note that the California Supreme Court recently

granted review from an intermediate appellate court decision
following Jenkins and rejecting Glaski. Yvanova v. New Century
Mortg. Corp., 226 Cal.App.4th 495 (2014), review granted &
opinion de-published, 331 P.3d 1275 (Cal. Aug 27, 2014). Thus,
we eventually will learn how the California Supreme Court views
this issue. Even so, we are tasked with deciding the case before
us, and Ninth Circuit precedent suggests that we should decide
the case now, based on our prediction, rather than wait for the
California Supreme Court to rule. See Hemmings, 285 F.3d at
1203; Lewis v. Telephone Employees Credit Union, 87 F.3d 1537,
1545 (9th Cir. 1996). Because we have no convincing reason to
doubt that the California Supreme Court will follow the weight of
authority among California’s intermediate appellate courts, we
will follow them as well and hold that the Riveras lack standing
to challenge the assignment of their deed of trust based on an
alleged violation of a pooling and servicing agreement to which
they were not a party.


Even though the Riveras’ first claim for relief principally

relies on their allegations regarding the assignment’s violation
of the pooling and servicing agreement, their first claim for
relief also explicitly incorporates their allegations challenging
DBNTC’s proof of claim and disputing the validity of the
Hutchinson endorsement. Those allegations, when combined with
what is set forth in the first claim for relief, are sufficient
on their face to state a claim that DBNTC does not hold a valid
lien against the Riveras’ property because the underlying debt
never was validly transferred to DBNTC. See In re Leisure Time
Sports, Inc., 194 B.R. at 861 (citing Kelly v. Upshaw, 39 Cal.2d
179 (1952) and stating that “a purported assignment of a mortgage
without an assignment of the debt which it secured was a legal
While the Riveras cannot pursue their first claim for relief
for purposes of directly challenging DBNTC’s pending nonjudicial
foreclosure proceedings, Debrunner, 204 Cal.App.4th at 440-42,
the first claim for relief states a cognizable legal theory to
the extent it is aimed at determining DBNTC’s rights, if any, as
a creditor who has filed a proof of secured claim in the Riveras’
bankruptcy case.


Fifth Claim for Relief – for violation of the Federal Truth In Lending Act, 15 U.S.C. § 1641(g)

The Riveras’ TILA Claim alleged, quite simply, that they did
not receive from DBNTC, at the time of Chase’s assignment of the
deed of trust to DBNTC, the notice of change of ownership
required by 15 U.S.C. § 1641(g)(1). That section provides:
In addition to other disclosures required by this
subchapter, not later than 30 days after the date on
which a mortgage loan is sold or otherwise transferred
or assigned to a third party, the creditor that is the
new owner or assignee of the debt shall notify the
borrower in writing of such transfer, including–

(A) the identity, address, telephone number of the new


(B) the date of transfer;


(C) how to reach an agent or party having authority to

act on behalf of the new creditor;

(D) the location of the place where transfer of

ownership of the debt is recorded; and

(E) any other relevant information regarding the new


The bankruptcy court did not explain why it considered this claim as lacking in merit. It refers to the fact that the
Riveras had actual knowledge of the change in ownership within
months of the recordation of the trust deed assignment. But the
bankruptcy court did not explain how or why this actual knowledge
would excuse noncompliance with the requirements of the statute.
Generally, the consumer protections contained in the statute
are liberally interpreted, and creditors must strictly comply
with TILA’s requirements. See McDonald v. Checks–N–Advance, Inc.
(In re Ferrell), 539 F.3d 1186, 1189 (9th Cir. 2008). On its
face, 15 U.S.C. § 1640(a)(2)(A)(iv) imposes upon the assignee of
a deed of trust who violates 15 U.S.C. § 1641(g)(1) statutory
damages of “not less than $400 or greater than $4,000.”
While the Riveras’ TILA claim did not state a plausible
claim for actual damages, it did state a plausible claim for
statutory damages. Consequently, the bankruptcy court erred when
it dismissed the Riveras’ TILA claim.


Here, however, the Riveras did not argue in either the bankruptcy court or in their opening appeal brief that the court should have granted them leave to amend. Having not raised the issue in either place, we may consider it forfeited. See Golden v. Chicago Title Ins. Co. (In re Choo), 273 B.R. 608, 613 (9th Cir. BAP 2002).

Even if we were to consider the issue, we note that the

bankruptcy court gave the Riveras two chances to amend their
complaint to state viable claims for relief, examined the claims
they presented on three occasions and found them legally
deficient each time. Moreover, the Riveras have not provided us
with all of the record materials that would have permitted us a
full view of the analyses and explanations the bankruptcy court
offered them when it reviewed the Riveras’ original complaint and
their first amended complaint. Under these circumstances, we
will not second-guess the bankruptcy court’s decision to deny
leave to amend. See generally In re Nordeen, 495 B.R. at 489-90
(examining multiple opportunities given to the plaintiffs to
amend their complaint and the bankruptcy court’s efforts to
explain to them the deficiencies in their claims, and ultimately
determining that the court did not abuse its discretion in
denying the plaintiffs leave to amend their second amended

SPS and the Chase Servicer Shell Game

For further information please call 954-495-9867 or 520 405-1688


Many Judges have expressed their concern about the constant movement of servicers and trustees. They are asking why the servicer keeps changing and why the trustees are changing. And now they are asking for legal argument why the substitution of the only named Plaintiff is not an amendment to the Complaint which must specifically allege facts in support of the claim of the “new Plaintiff.” This is a result of the multifaceted fraudulent scheme where claims of securitization are unfounded and claims of debt are fictitious — in derogation of the rights of both investors on Wall Street and borrowers on main Street.

Taking an example from one case being litigated now, we have a fact pattern where WAMU was the “lender” in the purchase money mortgage. Chase steps in and refinances the loan. Long after these events and long after the “default” was declared by Chase, SPS is said to be the servicer, not Chase. This successor entity is thus the party whose corporate representative is brought to trial to testify. The witness admits to having no direct personal knowledge and has no job other than testifying. The witness has no knowledge nor employment history with Chase, WAMU or the Trust or Trustee (usually US BANK where Chase is involved). The borrower, despite encouragement to take more money on refinancing, elected only to get enough money to make repairs due to storm damage. They received $45,000 in this example.

This is an issue which is slowly dawning on me that could shake things up considerably. Whether we use it or not is a different story.

It might mean that the real loan was only $45k — in total. That would affect the collections on the loan, which could have paid off the actual loan in its entirety, as well as the validity of the declaration of default and the truth of the matters asserted in the judicial complaint or the notice of non-judicial default and notice of sale. Specifically the “reinstatement” figure or “redemption” figure might actually be a negative figure — money due from the parties stating that they are the creditors, which claim they can hardly deny since they are pursuing foreclosure.

LOAN #1 was with WAMU. WAMU according to the FDIC receiver had sold the loans into the secondary market for securitization. This was the purchase money mortgage. So at some point before the refinancing in LOAN#2 the purchase money loan was sold into the secondary market. Thus WAMU only had servicing rights — if the “purchaser” entered into an agreement for WAMU to service the loan. In the case where the loan is subject to securitization, the “purchaser” is a REMIC Trust. But it appears as though few, if any, of the REMIC Trusts ever achieved the status of the owner of the debt, holder in due course, or owner of the mortgage or note. While it is possible to start a lawsuit to collect on the note, that lawsuit can never be resolved in favor of the Plaintiff unless the maker of the note defaults.

LOAN#2 was with Chase. This was supposedly a refinancing. The loan closing documents show that WAMU was paid and WAMU issued the satisfaction of mortgage and did not return the old note cancelled.

WAMU usually retained servicing rights so it would be claimed that WAMU had every right to collect the money and issue the satisfaction. But the servicing rights only existed if LOAN#1 actually made it into a Trust. If not, the loan was NOT subject to the Pooling and Servicing Agreement. If WAMU — or Chase as successor or SPS as successor are actually the servicers, it MUST therefore be by virtue of some other document. That is why we are seeing some rather strange Powers of Attorney and other “enabling” documents appear out of nowhere in which the issues are further confused.

The borrowers received $45k which was for roof repairs from storm damage. So the borrowers did receive  $45k presumably from Chase, but not necessarily as we have already seen, where the originator, even if it was a big bank was using money from an illegally formed pool outside of the REMIC Trust that the investors thought was getting the money from the proceeds of sale of mortgage backed securities.

So the witness probably has absolutely no access to information and therefore no testimony about whether LOAN#1 got paid off. And in fact it is most likely that WAMU was either paid or not depending upon internal agreements with Chase. And the witness can only testify using hearsay about the preceding records of Chase, US Bank and WAMU. Several trial judges have refused to accept such testimony saying directly that the witness and the company represented by the witness are too far removed from the actual transactions to have any credibility as to the authenticity or accuracy of the business records of other entities and that the SPS records are simply an attempt to get around the hearsay rules without exposing the predecessors to direct discovery and questioning where the answers would either be embarrassing or perjury.

If WAMU was paid in the refinancing (proceeds from LOAN#2) the wrong party was paid and the debt still exists unless Chase can show that the real creditor was paid off. It is unlikely they can show that because it probably is not true. Chase was hiding the default status of loans, as we have seen in Matt Taibbi’s story in Rolling Stone. The reason was simple — the more it  looked like these Mortgage backed Securities were performing as expected, the more the investors were inclined to buy more mortgage bonds — and that is where the bulk of the money is for Chase.

By selling loans at 100 cents on the dollar (Par Value) when the true value might only have been 1/10th that amount, the profit was enormous and it all went to Chase (not the investors whose money was used to start the string of transactions in the first place).

The witness will not be able to say that WAMU was definitely paid, and if it was paid, whether the money was paid to the real creditor. This is probably a primary reason why SPS was inserted between Chase and the foreclosure proceedings. It is also why they are attempting to rely on the business records of SPS instead of the business records of Chase.

SPS is usually inserted AFTER all events have occurred relating to the debt, note, mortgage, “default,” and foreclosure. Using a witness from SPS is, on its face, allowing a witness with zero personal knowledge about anything to verify records of other companies whose records the witness has never seen.

This is done to camouflage the actual events — wherein the money from investors was stolen or diverted from its intended target (REMIC Trust) and then used to fund loans in the name of a naked nominee whose interest in the loan was only that of a vendor whose name was being rented to withhold disclosure of the real creditor, the compensation received, and the identity of all the real parties who were getting paid as a result of the “loan origination.”

This is a direct conflict with TILA, requiring that disclosure and Reg Z which states that such a loan is “predatory per se.” If the loan is predatory per se it might be “unclean hands” per se which would mean that the mortgage could never enforced even if the consideration was present.

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