Deed Theft Scams: Why Not Prosecute the Banks Too?

It is supreme irony that individual scam artists are being prosecuted for false representations and deed theft — while the the institutional scam artists on Wall Street did the same thing raking in trillions of dollars, without a whiff of criminal prosecution.

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https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

see http://www.foxnews.com/us/2017/04/22/scams-push-foreclosure-fraud-to-limit-taking-victims-homes.html

What the fraudster did in this case was reprehensible and criminal. Any person who does this deserves jail. So beware of anyone who suggests that they have some nifty way to save you from foreclosure if you just deed the property to them. It’s an industry. And it is based on your payment of rent while they zig and zag with the banks.

Beware of any who promises you guaranteed results. The only thing that will stop a foreclosure judgment or sale is a court order from a court of competent jurisdiction. In the real world of the justice system there is no such thing as guaranteed results.

But when you look at the details, it is impossible to distinguish between the fraud visited upon the victim in the article linked above and the fraud visited upon the same victim that put him in the position of losing his home to another complete stranger.

Consider this:

  • The “loan” you received was merely one part of a fraudulent scheme in which the money of third parties was swindled from them and then applied to create the illusion of your loan.
  • The note you signed was to the sales agent for the fraudulent scheme and not to the party whose money was used to make the “loan.”
  • By receiving the money you are obligated to pay it back. That’s called the debt.
  • By signing the note you are obligated to make payments to the payee on the note. That’s your second liability and it WILL be enforced if someone pays real money for your signed note, at least before it goes into default. That person would be a holder in due course.
  • By signing the mortgage deed or deed of trust, you have put your home up as collateral to guarantee payments on the fraudulent note, not to guarantee payment of the debt.
  • The mortgage deed or deed of trust are deeds. How is the above transaction different from conventional deed theft?
Quote from article:
“The scammers are no longer content with stealing $5,000. Now they want the whole house,” said Dina Levy, who heads the Homeowner Protection Program in the New York attorney general’s office, which has spread word about deed theft and prosecuted culprits.
Isn’t that what happened on Wall Street? No longer content to overcharge you for unaffordable loans the banks want your whole house. And no longer satisfied to take your house they want ten times the value of your house by “trading” in securities that everyone treats as non-securities under the 1999 law. But they are securities and they are in violation of SEC regulations and laws defining theft as a crime on the grandest scale ever seen in human history.

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Banks Fighting Subpoenas From FHFA Over Access to Loan Files

Whilst researching something else I ran across the following article first published in 2010. Upon reading it, it bears repeating.

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https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

WHAT IF THE LOANS WERE NOT ACTUALLY SECURITIZED?

In a nutshell this is it. The Banks are fighting the subpoenas because if there is actually an audit of the “content” of the pools, they are screwed across the board.

My analysis of dozens of pools has led me to several counter-intuitive but unavoidable factual conclusions. I am certain the following is correct as to all residential securitized loans with very few (2-4%) exceptions:

  1. Most of the pools no longer exist.
  2. The MBS sold to investors and insured by AIG and the purchase and sale of credit default swaps were all premised on a general description of the content of the pool rather than a detailed description with the individual loans attached on a list.
  3. Each Prospectus if it carried any spreadsheet listing loans, contained a caveat that the attached list was by example only and not the real loans.
  4. Each distribution report contained a caveat that the parties who created it and the parties who delivered it did not guarantee either authenticity or reliability of the report. They even had specific admonitions regarding the content of the distribution report.
  5. NO LOAN ACTUALLY MADE IT INTO ANY POOL. The evidence is clear: nothing was done to assign, indorse or deliver the note to the investors directly or indirectly until a case went into litigation AND a hearing was scheduled. By that time the cutoff date had been breached and the loan was non-performing by their own allegation and therefore was not acceptable into the pool.
  6. AT ALL TIMES LEGAL TITLE TO THE PROPERTY WAS MAINTAINED BY THE HOMEOWNER EVEN AFTER FORECLOSURE AND SALE. The actual creditor who submitted a credit bid was not the creditor. The sale is either void or voidable.
  7. AT ALL TIMES LEGAL TITLE TO THE LOAN WAS MAINTAINED BY THE ORIGINATING “LENDER”. Since there was no assignment, indorsement or delivery that could be recognized at law or in fact, the originating lender still owns the loan legally BUT….
  8. AT ALL TIMES THE OBLIGATION WAS BOTH CREATED AND EXTINGUISHED AT, OR CONTEMPORANEOUSLY WITH THE CLOSING OF THE LOAN. Since the originating lender was in fact not the source of funds, and did not book the transaction as a loan on their balance sheet (in most cases), the naming of the originating lender as the Lender and payee on the note, both created a LEGAL obligation from the borrower to the Lender and at the same time, the LEGAL obligation was extinguished because the LEGAL Lender of record was paid in full plus exorbitant fees for pretending to be an actual lender.
  9. Since the Legal obligation was both created and extinguished contemporaneously with each other, any remaining obligation to any OTHER party became unsecured since the security instrument (mortgage or deed of trust) refers only to the promissory note executed by the borrower.
  10. At the time of closing, the investor-lenders were the real parties in interest as lenders, but they were not disclosed nor were the fees of the various intermediaries who brought the investor-lender money and the borrower’s loan together.
  11. ALL INVESTOR-LENDERS RECEIVED THE EQUIVALENT OF A BOND — A PROMISE TO PAY ISSUED BY A PARTY OTHER THAN THE BORROWER, PREMISED UPON THE PAYMENT OR RECEIVABLES GENERATED FROM BORROWER PAYMENTS, CREDIT DEFAULT SWAPS, CREDIT ENHANCEMENTS, AND THIRD PARTY INSURANCE.
  12. Nearly ALL investor-lenders have been paid sums of money to satisfy the promise to pay contained in the bond. These payments always exceeded the borrowers payments and in many cases paid the obligation in full WITHOUT SUBROGATION.
  13. NO LOAN IS IN ACTUAL DEFAULT OR DELINQUENCY. Since payments must first be applied to outstanding payments due, payments received by investor-lenders or their agents from third party sources are allocable to each individual loan and therefore cure the alleged default. A Borrower’s Non-payment is not a default since no payment is due.
  14. ALL NOTICES OF DEFAULT ARE DEFECTIVE: The amount stated, the creditor, and other material misstatements invalidate the effectiveness of such a notice.
  15. NO CREDIT BID AT AUCTION WAS MADE BY A CREDITOR. Hence the sale is void or voidable.
  16. ANY BALANCE DUE FROM THE BORROWER IS SUBJECT TO DEDUCTIONS FOR THIRD PARTY PAYMENTS.
  17. ANY BALANCE DUE FROM THE BORROWER IS SUBJECT TO AN EQUITABLE CLAIM FOR UNJUST ENRICHMENT THAT IS UNSECURED.
  18. ANY BALANCE DUE FROM THE BORROWER IS SUBJECT TO AN EQUITABLE CLAIM FOR A LIEN TO REFLECT THE INTENTION OF THE INVESTOR-LENDER AND THE INTENTION OF THE BORROWER.  Both the investor-lender and the borrower intended to complete a loan transaction wherein the home was used to collateralize the amount due. The legal satisfaction of the originating lender is not a deduction from the equitable satisfaction of the investor-lender. THUS THE PARTIES SEEKING TO FORECLOSE ARE SUBJECT TO THE LEGAL DEFENSE OF PAYMENT AT CLOSING BUT THE INVESTOR-LENDERS ARE NOT SUBJECT TO THAT DEFENSE.
  19. The investor-lenders ALSO have a claim for damages against the investment banks and the string of intermediaries that caused loans to be originated that did not meet the description contained in the prospectus.
  20. Any claim by investor-lenders may be subject to legal and equitable defenses, offsets and counterclaims from the borrower.
  21. The current modification context in which the securitization intermediaries are involved in settlement of outstanding mortgages is allowing those intermediaries to make even more money at the expense of the investor-lenders.
  22. The failure of courts to recognize that they must apply the rule of law results not only in the foreclosure of the property, but the foreclosure of the borrower’s ability to negotiate a settlement with an undisclosed equitable creditor, or with the legal owner of the loan in the property records.

Loan File Issue Brought to Forefront By FHFA Subpoena
Posted on July 14, 2010 by Foreclosureblues
Wednesday, July 14, 2010

foreclosureblues.wordpress.com

Editor’s Note….Even  U.S. Government Agencies have difficulty getting
discovery, lol…This is another excellent post from attorney Isaac
Gradman, who has the blog here…http://subprimeshakeout.blogspot.com.
He has a real perspective on the legal aspect of the big picture, and
is willing to post publicly about it.  Although one may wonder how
these matters may effect them individually, my point is that every day
that goes by is another day working in favor of those who stick it out
and fight for what is right.

Loan File Issue Brought to Forefront By FHFA Subpoena

The battle being waged by bondholders over access to the loan files
underlying their investments was brought into the national spotlight
earlier this week, when the Federal Housing Finance Agency (FHFA), the
regulator in charge of overseeing Fannie Mae and Freddie Mac, issued
64 subpoenas seeking documents related to the mortgage-backed
securities (MBS) in which Freddie and Fannie had invested.
The FHFA
has been in charge of overseeing Freddie and Fannie since they were
placed into conservatorship in 2008.

Freddie and Fannie are two of the largest investors in privately
issued bonds–those secured by subprime and Alt-A loans that were often
originated by the mortgage arms of Wall St. firms and then packaged
and sold by those same firms to investors–and held nearly $255 billion
of these securities as of the end of May. The FHFA said Monday that it
is seeking to determine whether issuers of these so-called “private
label” MBS misled Freddie and Fannie into making the investments,
which have performed abysmally so far, and are expected to result in
another $46 billion in unrealized losses to the Government Sponsored
Entities (GSE).

Though the FHFA has not disclosed the targets of its subpoenas, the
top issuers of private label MBS include familiar names such as
Countrywide and Merrill Lynch (now part of BofA), Bear Stearns and
Washington Mutual (now part of JP Morgan Chase), Deutsche Bank and
Morgan Stanley. David Reilly of the Wall Street Journal has written an
article urging banks to come forward and disclose whether they have
received subpoenas from the FHFA, but I’m not holding my breath.

The FHFA issued a press release on Monday regarding the subpoenas
(available here). The statement I found most interesting in the
release discusses that, before and after conservatorship, the GSEs had
been attempting to acquire loan files to assess their rights and
determine whether there were misrepresentations and/or breaches of
representations and warranties by the issuers of the private label
MBS, but that, “difficulty in obtaining the loan documents has
presented a challenge to the [GSEs’] efforts. FHFA has therefore
issued these subpoenas for various loan files and transaction
documents pertaining to loans securing the [private label MBS] to
trustees and servicers controlling or holding that documentation.”

The FHFA’s Acting Director, Edward DeMarco, is then quoted as saying
““FHFA is taking this action consistent with our responsibilities as
Conservator of each Enterprise. By obtaining these documents we can
assess whether contractual violations or other breaches have taken
place leading to losses for the Enterprises and thus taxpayers. If so,
we will then make decisions regarding appropriate actions.” Sounds
like these subpoenas are just the precursor to additional legal
action.

The fact that servicers and trustees have been stonewalling even these

powerful agencies on loan files should come as no surprise based on

the legal battles private investors have had to wage thus far to force

banks to produce these documents. And yet, I’m still amazed by the

bald intransigence displayed by these financial institutions. After

all, they generally have clear contractual obligations requiring them

to give investors access to the files (which describe the very assets

backing the securities), not to mention the implicit discovery rights

these private institutions would have should the dispute wind up in

court, as it has in MBIA v. Countrywide and scores of other investor

suits.

At this point, it should be clear to everyone–servicers and investors
alike–that the loan files will have to be produced eventually, so the
only purpose I can fathom for the banks’ obduracy is delay. The loan
files should, as I’ve said in the past, reveal the depths of mortgage
originator depravity, demonstrating convincingly that the loans never
should have been issued in the first place. This, in turn, will force
banks to immediately reserve for potential losses associated with
buying back these defective mortgages. Perhaps banks are hoping that
they can ward off this inevitability long enough to spread their
losses out over several years, thereby weathering the storm caused (in
part) by their irresponsible lending practices. But certainly the
FHFA’s announcement will make that more difficult, as the FHFA’s
inherent authority to subpoena these documents (stemming from the
Housing and Economic Recovery Act of 2008) should compel disclosure
without the need for litigation, and potentially provide sufficient
evidence of repurchase obligations to compel the banks to reserve
right away. For more on this issue, see the fascinating recent guest
post by Manal Mehta on The Subprime Shakeout regarding the SEC’s
investigation into banks’ processes for allocating loss reserves.

Meanwhile, the investor lawsuits continue to rain down on banks, with
suits by the Charles Schwab Corp. against Merrill Lynch and UBS, by
the Oregon Public Employee Retirement Fund against Countrywide, and by
Cambridge Place Investment Management against Goldman Sachs, Citigroup
and dozens of other banks and brokerages being announced this week. If
the congealing investor syndicate was looking for political cover
before staging a full frontal attack on banks, this should provide
ample protection. Much more to follow on these and other developments
in the coming days…
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Posted by Isaac Gradman at 3:46 PM

Ally $52 Million settlement for “Deficient Securitization”

All of these adjectives describing securitization add up to one thing: the claims were false. For the most part none of the securitizations ever happened.

And that means that the REMIC trusts never purchased the debt, note or mortgage.

And THAT means the “servicer” claiming the right to administer a loan on behalf of the trust is false.

And THAT arguably means the business records of the servicer are not business records of the creditor.

And THAT my friends means what I have been saying for 10 years: virtually none of the foreclosures were legal, moral or justified. The real transaction was never revealed and never documented. The “closing” documents were fake, void and fraudulent. And THAT is grounds for cancellation of the note and mortgage.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

see http://www.nationalmortgagenews.com/news/compliance-regulation/ally-to-pay-52m-to-settle-subprime-rmbs-investigation-1091364-1.html

It is hard to imagine any scenario under which Government cannot know what I have been saying for years — that the claims of securitization are false and the documents for the loans were fraudulent. Government has decided to ignore the facts thus transforming a nation of laws into a nation of men.

In plain English the decision was made to let the chips fall on borrowers, who were victims of the double blind fraud, despite clear and irrefutable evidence that the banks malevolent behavior caused the 2008 meltdown. The choice was made: based upon information from the birthplace of securitization fraud, Government decided that it was better to artificially prop up the securities markets and TBTF banks than to preserve the purchasing power and household wealth of the ordinary man and woman. The economy — driven by consumer spending (70% of GDP) — had the rug pulled out from under it. And THAT is why the effects of rescission are still with us 8 years after the great meltdown.

The fact that there are 7,000 community banks, credit unions and savings banks using the exact same electronic payments platform as the TBTF banks was washed aside by the enormous influence exerted by a dozen banks who controlled Washington, DC, the state legislatures, and the executive branch in most of the states.

The American voter came to understand that they had been screwed by their representatives in Government. They voted for Sanders, they voted for Trump and they voted for anyone who was for busting up government. But they still face daunting challenges as they continue to crash into a rigged system that favors a handful of merciless bankers who have bought their way into the Federal and State Capitals.

Chipping away at the monolithic Government Financial complex individual homeowners are winning case after case in court without notice by the media. It isn’t noticed because in most instances the cases are settled, even after judgment, with a seal of confidentiality. Most people don’t fight it at all. They sweep up and leave the keys on the counter believing they have committed some wrong and now they must pay the price. THAT is because they have not received the necessary information to realize that they can and should fight back.

Goldman Sachs Fined $5 Billion for Violations Dating Back to 2008

…should anyone who owns a home that is subject to claims of securitization of their mortgage be at risk of losing their property?

…the government should stop the arrogant policy of letting most of the burden fall onto middle class property owners.

For a description of our services  click here: https://wordpress.com/post/livinglies.wordpress.com/32498

So we have another “settlement” with one of the major players in the greatest economic crime in human history. But the cover-up of the actual transgressions  emanating from corruption on Wall Street continues. Government investigators should have had a press conference in which they clearly stated the nature of the violations — all of them. People deserve to hear the truth; and the government should stop the arrogant policy of letting most of the burden fall onto the middle class property owners.

The defects in government intervention give rise the illusion that these settlements only have effect on the investors and other financial institutions who were defrauded. Both the charges and the settlements seem far away from the ground level loans and foreclosures. But that is only because of deals in which the government’s continued complicity in “protecting the banking system — a policy that has rewarded trillion dollar banks and given them unfair advantage over the 7,000 other banks and credit unions.

Government now knows the truth about what Wall Street did. But they are restricting their comments in the fear that maybe notes and mortgages would be obviously void, making the MBS bonds worthless causing some world-wide panic and even aggression against the United States for allowing these enormous crimes to occur and continue.

For example, if the government investigators actually said that the REMIC Trusts were never funded, then the cases pending in which the REMIC Trust is named as the initiator of the foreclosure would dissolve into nothing. There would be no Plaintiff in judicial states and there would be no beneficiary in non-judicial states. Thus the filing of a substitution of trustee on a deed of trust would be void. It would raise jurisdictional issues in addition to the absence of any foundation for the assertion of the right to foreclose.

If government investigators identified patterns of conduct in the fabrication, forgery and utterance of false instruments, recording false instruments, then presumptions of validity might not apply to documents presented in court as evidence. Instead of the note being all the evidence needed from a “holder”, the actual underlying transactions would need to be proven by parties seeking foreclosure. If those transactions don’t actually exist, then it follows that the note, mortgage and claim are worthless.

And a borrower could point to the finding by administrative agencies and law enforcement agencies that these practices constitute customary and usual practices in the industry — a statement that would go a long way to convincing a judge that he or she should not assume or presume anything without proof of payment (consideration) in the origination of the loan with whoever ended up as Payee on the note. The same analysis would apply for the alleged acquisition of the “loan.”

If the party on the note or the party claiming they acquired the loan was NOT a party to an actual transaction in which they made the loan or paid to acquire it, then the note is evidence of a transaction that does not exist. Instead government is continuing to cover-up the fact that a policy decision has been made in which borrowers can fend for themselves against perpetrators of financial violence.

The view from the bench still presumes that they would not have a case to decide if there wasn’t a valid loan transaction and a valid acquisition of the loan. They see defects in documentation as splitting hairs. And to make matters worse I have personally seen judges strike virtually all discovery requests that address the issue of whether real transactions took place. And I have seen lawyers retreat over the one issue that would mean success or failure for their client. The task of defending illegal foreclosures would be far easier if the consensus view from the bench was that all the loans are suspect and need to be proven as to ownership, balance and authority.

These issues are almost impossible to prove at trial because the parties with the actual information and proof are not even at the trial. But they can be reached in discovery where on a motion to compel answers and a hearing on the objections from the “bank” or “servicer” the homeowner presses his demand for data and documents that show the actual existence or nonexistence of these transactions.

It would seem that the U.S. Department of Justice is coming out of the shadows on this. They are looking back to 10 years ago when the violations were at their most extreme. We may yet see criminal prosecutions. But putting people in jail does not address the essential issue, to wit: should anyone who owns a home that is subject to claims of securitization of their mortgage be at risk of losing their property?

 

Getting Your Goals Set on the Right Conclusions

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

This for general information only and NOT an opinion on your case.
================================

I was responding to a client about the goals in opposing the wrongful foreclosures. These are hard to write or say. It might seem to be a contradiction in terms to walk away with a waiver of deficiency or some other “Settlement” or “Modification” with a party whom you know (but may not be able to prove) is false party with fake papers.

You might believe there might be as much as $50,000 in equity if and when repairs are made. My concern is that we don’t get pulled into reverse logic here. If the house is barely break-even without the repairs, then it could be wise to pursue short-sale or modification.  The real question is how much will it really cost to make the required repairs and where would you get the money from?

This is where most lay people put the cart before the horse. Equity in the home is not a matter for speculation, nor should it be calculated from a starting point of “after repairs.”

If you are looking for the pretenders to pay you damages sufficient to pay for the repairs and for them to give up on the foreclosure, it would be a mistake to assume that is going to happen without full scale litigation for wrongful foreclosure seeking money damages. That would require a lot of money in fees, costs and other expenses. You should determine whether  you have any appetite for that.

If you did have the money for repairs, then it would seem that you would have made the repairs and then sold the house, taking your equity and paying off whoever is claiming to own the loan, even if they don’t. If you don’t have the repair money, that leaves the only source of money to fix the house as the parties who wish to foreclose on it.

I have never seen them  agree to anything like that for one simple reason: They are not interested in either the house or the money. They want a foreclosure judgment and sale — that is the only path that will give them some protection against accusations of stolen money and stolen homes.

 

Since the goal of your opposition is NOT to break-even or minimize damages on the loan itself, and since their real goal is more closely related to off-record transactions in which your loan was sold multiple times, they obviously are not going to make it easier for you to save the home, save the equity, and especially [not] save the loan. They want the loan to fail not succeed. They want the foreclosure sale.

 

Now the anger and frustration nationwide with all forms of institutions flows in large part from the simple fact that we all know that the banks committed serious fraud and other illegal acts in creating these loans. We all know that there was nothing but pretense and presumption in transferring these loans and steering loans to foreclosure — rather than a workout where the original loan investments were protected, and of course foreclosure with fabricated, forged, back-dated documentation that included notes and sometimes mortgages — even if they were rescinded.

“We all know” is insufficient to prove a case or a defense. The courts have added to the problem by restricting discovery, restricting evidence on the basis that the off-record transactions (even in discovery) are irrelevant, that the money trail for the subject loan is irrelevant, and then entering orders and judgments consistent with the conclusion that might be stated as follows: “Judgment is entered in favor of the one with the most paper even if the paper does not speak the truth.”

 

My tentative conclusion, if all of my presumptions are correct, is that in situations where this analysis is relevant, on an individual basis, as a life decision, the only real goal might be to walk away without a deficiency judgment and leave it at that. Any other course of action in litigation will lead to a judgment in the trial court that statistically speaking is going to be against the homeowner, leaving the issues to be decided on appeal. That is process that will likely take at least one year and probably 2 years to complete.
From my perch of course I want all notes and mortgages to be contested if there are any claims of securitization or sale. And the proof of concept is already established — those who truly litigate all the way down to trial, have a much better chance to see a much better result than those who simply walk away. But that costs money, time and energy. And that is why I often tell lawyers and homeowners that the only right decision is what the homeowner decides to do and is willing to pay for.

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

——————————–

ALERT FOR BANKRUPTCY LAWYERS — SECURED STATUS OF ALLEGED CREDITOR IS NOT TO BE ASSUMED

——————————–

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!!

AFFIRMED- NO SECURED PARTY STATUS FOR BK PROVEN 

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.

THEY REJECT GLASKI-

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.

BUT……… THEY DO SUCCEED ON SECURED STATUS

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
nullity.”).
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.

TILA CLAIM UPHELD!—–

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

creditor;

(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

creditor.

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.

LAST, THEY GOT REAR ENDED FOR NOT SEEKING LEAVE TO AMEND

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
complaint).

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