FREE Information, Resources and Help with Your Mortgage Loans – Over 13,000,000 Visitors

WELCOME TO LIVINGLIES

ABOUT LIVINGLIES AND LENDINGLIES

CONTACT US: Free and private REGISTRATION FORM

VIDEO: How To Use the TERA Report by LendingLies.com

**************************

Thursdays LIVE! Click in to the The Neil Garfield Show

Or call in at (347) 850-1260, 6pm Eastern Thursdays

*******************************

About Neil F Garfield

Schedule Private Consultation

Purchase Services and Products

Submit Case Interview Form – Receive Customized Recommended Services

Q & A – What can you do for me?

Contact Information:

GTC Honors, Inc.

Phone: 954-451-1230

Email: info@lendinglies.com

Services include: Expert Consultation Services, Strategy, Qualified Written Requests, Case Review and Reports, Forensic Analysis Referrals, Discovery , Motions, Pleadings, Complaints to AF and CFPB, Title and Encumbrance Analysis, and Case Analysis. We coach lawyers and pro se litigants. ALL 50 STATES.

MISSION STATEMENT: I believe that the mortgage crisis has produced manifest evil and injustice in our society. Pretenders with more money and more lawyers than any consumer or borrower are stealing homes from homeowners while they undermine the investments by  Pensions Funds.

LivingLies is the vehicle for a collaborative movement to provide homeowners with sufficient forensic and legal resources to combat banks who are using fictitious names and entities to cover up their malfeasance.

We provide thousands of pages of free forms, articles and discussion of statutes, case precedent and policy on this site. On www.lendinglies.com I provide paid crucial analytic and presentation services, books and products that enable lawyers and homeowners to confront the lies in attempted foreclosures.

Ask about our CONSULTATION SERVICES and LITIGATION SUPPORT.

Educate Yourself and Your Lawyer: Read this Blog and Purchase Books & Services from www.lendinglies.com

TILA RESCISSION: The war is NOT over contrary to bank disinformation

The banks have not asked for an order vacating a TILA RESCISSION because they know that following standard procedure would block  them from challenging TILA RESCISSION.

This is PROCEDURE vs SUBSTANCE. That is what this has always been about. As more courts continue to “rule” on TILA RESCISSION, getting it wrong every time, the effort to discredit TILA RESCISSION is picking up steam.

Here is the bottom line: I never said that the borrower would always prevail if challenged. I only said that the borrower must be challenged if a creditor wants to avoid the consequences of rescission. And failing to do that means that the rescission stands, by operation of law. I have also said that only a party with standing can bring that challenge and that on its face such a party does not seem to be the same as the party seeking to enforce the paper.

Let us help you plan your TILA RESCISSION strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

Purchase now Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations. Presenters: Attorney and Expert Neil Garfield, Forensic Auditor Dan Edstrom, Attorney Charles Marshall and and Private Investigator Bill Paatalo. The webinar and materials are all downloadable.

Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

===========================

In the past couple of weeks I have received hate mail from those who are pretending  to be on the side of homeowners whilst adamantly opposing TILA Rescission. The banks are more scared of TILA RESCISSION than anything else. So their effort is directed at discrediting the express wording of the statute, the Supreme Court decision directly on point and of course anyone (e.g., me) who persists in pushing the use of TILA RESCISSION. I will say openly that the courts have managed to tie up rescission now just as they did before SCOTUS stopped them. And once again, SCOTUS will administer a stern warning about playing with the express wording a clearly worded statute.

Remember when the general rule was that rescission was a claim and not an event — i.e., that homeowners had to bring an action to enforce rescission in order for rescission to be effective? That’s gone now.

So now they are saying that the likelihood of the defeat of the homeowner in a hypothetical lawsuit directed at vacating the TILA RESCISSION means that the rescission should be ignored (but not subject to a final judgment in which the TILA Rescission is vacated. That will be gone soon too.

Judges are not empowered to render decisions based upon a hypothetical lawsuit. The lawsuit to vacate the rescission must be real and must be filed by a party with standing. And standing cannot be based upon the note and mortgage which are void by operation of law. Standing in such a suit can ONLY be established by a party to whom the underlying debt is owed.

These purveyors of “bad news” will continue to report each erroneous court decision (as I predicted) until once again, the US Supreme Court smacks down the bad decisions for (a) not following the statute, (b) not following the SCOTUS Jesinoski decision and (c) not following standard due process procedure. Such a decision is extremely likely considering the unanimous Jesinoski decision.

And I would ask them — “If you are so sure that TILA Rescission is a dead horse, why are YOU spending any time rebutting TILA RESCISSION?”

Once again these paid shills for the banks are intentionally confusing procedure with substance. I never said that the borrower would always prevail if TILA RESCISSION was properly challenged. I only said that the borrower’s rescission must be challenged if a creditor wants to avoid the consequences of rescission. And failing to do that means that the rescission stands, by operation of law. I have also said that only a party with standing can seek relief from a court including bringing that challenge. I have also said that on its face such a “creditor” party does not seem to be the party seeking to enforce the paper and oddly enough, might not exist at all.

The error that occurred in the remanded Jesinoski case was the assumption or presumption that the party claiming to be beneficiary under the deed of trust was an actual creditor instead of a possessor or holder of the note. As per the express wording of the TILA RESCISSION statute, such a party relying upon paper documents are relying upon a note and mortgage that are void by operation of law and thus could never be the basis of legal standing to challenge TILA RESCISSION.

The court and the parties continued with a basic erroneous assumption:  that somehow a party who claims only to be holder of a note or mortgage can somehow challenge the notice of TILA RESCISSION. By failing to challenge their opposition on the question of standing (because the note and mortgage were void) the Jesinoskis sealed their own doom. This in turn enables the sometimes nonexistent claimant for a nonexistent claim to twist legal procedure and simply attack the notice of rescission with a motion and/or affidavit instead of a complaint in which it alleges standing to sue based upon the underlying debt.

The remand of the Jesinoski case to the trial court should have resulted in a stay of the proceedings for a defined period allowing the “creditor” to affirmatively allege that it has standing because it is the party who would suffer financial injury and that all disclosures were made, —thus requesting from the court that the rescission be vacated — something that has yet to be done anywhere — despite direct advice and counsel from lawyers for the banks. The problem they face is that the banks were given 20 days to challenge rescission— just as the homeowners being given up to 3 years to invoke rescission.

Despite the FACT that a TILA RESCISSION is effective upon mailing or delivery by operation of law, the courts simply refuse to treat it that way. As a result, no order has been entered nor has it been requested by the banks — a court order in which the rescission was vacated. The banks have not asked because they know that following procedure would block  them from challenging TILA RESCISSION.

You can’t blame them. Steamrolling seems to work for the banks. It’s better than law!

But a decision from the US Supreme Court along the lines expressed in this article is likely to materially effect many of not most foreclosures where the notice of rescission was delivered prior to the foreclosure sale or the foreclosure judgment.

PRACTICE HINT: If you are dealing with a party claiming rights to foreclose on the basis of being “holder”, that is probably an admission that they are not a creditor. Hence they would not have legal standing to demand relief from a court when seeking to vacate the rescission. If they had purchased the underlying debt, in all probability, they would assert themselves as having the status of a “holder in due course” (and of course prove it). This needs to be fleshed out in discovery — and by demanding discovery on the issue of standing you are highlighting the fact that the rescission is effective and that a challenge to rescission must be a pleading of a case of action — in other words, where they are forced to allege their basis for asserting legal standing.

What and Who is a Creditor?

Practically everyone thinks they know what is a creditor even if they cannot identify who is the creditor. The reason that this is important is that the lawyers for the banks have created a divergence of the money trial and the paper trail. One is worth every cent claimed and the other is worth nothing, but for the repeated acceptance of a claim as proof in and of itself that a real transaction is referenced in the paper trail. In most cases, it isn’t.

Let us help you plan your narrative and strategy: 202-838-6345. Ask for a Consult.
Register now for Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar.
Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

The problem is very real when you look at it through a semantic lens.

*

What is a creditor? In court it has come to mean anyone with a claim. What it does not automatically mean is that the so-called creditor owns the debt. In normal situations before claims of securitization, ownership of the debt was presumed to be underlying the claim for money and thus the term creditor and owner of the debt were used interchangeably. That is what the TBTF banks were counting on and that is what they got.

*

The “creditor” in foreclosures is just a party holding paper. If the paper is fabricated or otherwise does not represent an actual transaction in real life it should be struck since the paper doesn’t prove anything. A note is evidence of the debt. It is not the debt. That is why we have the merger doctrine to prevent double liability. But the merger doctrine only operates if the Payee on the note and the owner of the debt are the same.

*

If the party seeking the foreclosure cannot produce the proof that the Payee and debt owner are the same, then the note lacks foundation and would be disallowed as evidence. The mortgage being incident to the note would therefore secure nothing and would be equally invalid and subject to being removed from the country records. More than a decade of experience shows that you won’t get anywhere at trial with his knowledge UNLESS you have conducted proper discovery and pursued it through motions to compel.

*

But what we are left with is entirely counter-intuitive. You end up with a debt owner with no paperwork and the homeowner having two liabilities — one in the form of a debt that arises by operation of law when the debt owner advanced money and the homeowner received it — and one in the form of a potential liability in the form of a note that has no reference point in the real world, but if acquired by value in good faith and with no knowledge of the borrower’s defenses, can nonetheless be enforced leaving the maker (homeowner) to seek remedies from other parties who tricked him. {See Holder in Due Course}

*

This type of analysis is not well received by courts who come to each situation with a bias toward what they perceive to be “the bank” who wouldn’t be in court if they were not the owner of the debt. But as we have seen in most instances “the bank” is not appearing on its own behalf but merely as a representative of what is most often a nonexistent common law trust. If there is any bank involved at all it must be the underwriter of “securities” that were issued under the name of an alleged REMIC Trust.

Nonetheless we see the courts referring to the case at U.S. Bank adv the homeowner instead of saying XYZ Trust adv the homeowner for the simple reason that in practice styling the case refers to the first name that appears on the pleadings. So invariably the case is referred to as “U.S. Bank. adv John Smith.”

*

This continually reinforces the erroneous presumption that this is a case of a financial institution versus the homeowner; in fact, however, it is a case of an unlicensed unregistered private entity (the alleged REMIC Trust) outside the world of banking or finance whose existence as a trust entity is problematic at best, especially if the subject loan was never purchased by the Trust (acting  through the Trustee).

*

Without the debt being entrusted to the Trustee on behalf of the Trust there is no trust. The existence of an assignment, absent evidence of purchase, merely means that the alleged Trust has “ownership” of the paper, not the debt. But in practice owning the paper raises a presumption of ownership of the debt — which is why so much effort must be made toward preventing the application of the presumption through objections to foundation that are themselves founded on prior discovery showing the failure or refusal to provide proof of ownership and in fact, proof the paper chain being congruent with the money trial.

*

Hence the claim of creditor status may be true as to the paper but untrue as to the debt or any other monetary transaction in the real world.

When and What is Consummation of Contract?

Like many other “Black letter law” situations, when it comes to foreclosures the courts are ignoring all precedent, statutes, rules and regulations when they consider a loan contract consummated when one party signs documents — without the other side showing it signed documents and performed its obligations. Without consideration passing both ways, there is no contract to enforce.

The argument that there is nothing for the lender to sign is without merit. The further argument that therefore the only signature that counts in a written contract is the signature of one side is equally ridiculous. It is true that lenders don’t sign the notes and mortgages. But for lenders, their part of the contract only comes alive when they comply with TILA and perform — i.e., they give the loan of money.

To view it any other way would be saying that performance by the “lender” is optional. And that would by all accounts be an executory contract that would be unenforceable until the optional performance was completed. Hence consummation can only be (a) when the money appears (b) from the “lender” identified on the disclosure documents.

The banks craftily spotted the loophole that lenders don’t sign the actual instruments that provide evidence of a written loan contract. But those instruments may not be used to sidestep mutuality and reciprocity that MUST be present in every situation where a party is relying upon paper instruments instead of proving the loan from scratch. If a third party performs the duties promised by the originator there is no enforceable contract even if there is a separate remedy for recovery of money.

Consummation and consideration should be treated as fair game in discovery instead of annoying protests from the homeowner. The Courts have the power to make legal decisions — not political ones.

Let us help you plan your discovery requests: 202-838-6345. Ask for a Consult.
Register now for Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense webinar.
Get a Consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

Hat tip to Greg (cement boots)

Consummation vs Closing

Seems like various state laws redefine “consummation” as not the actual consummation (the initial fulfillment of promises made by both parties to a contract – think marriage) but instead, make it apply to the moment that a written obligation of a debtor (the wife) is signed at a “closing” in a loan transaction… These definitions do not take into account the duty of the originator or alleged lender (the husband) to timely perform their duties, especially to provide a record of the funding in the purported debtor’s name toward the discharge of the contracted obligation. This occurs most often in “refinance” deals where there is no seller or buyer, simply a rearranging of computer entries between financial institutions. This leaves the alleged debtor (the wife) wanting for proof of fidelity, consideration and performance while operating under the presumed legal disability created by the state’s definition. As you can imagine, and we have seen, this can have a deleterious effect on a judge’s or debtor’s ability to accurately calculate the deadline to timely file a TILA rescission notice within the three year statute of repose.

I think this comment is correct. By defining consummation as the moment when one party signs documents without regard to when or even whether the other party signs and performs contractual duties, the courts are letting originators off the hook for fraud, TILA violations and more. Like the debt itself the obligation is not open ended to anyone who claims it. It is owed to the party that owns the debt or obligation.

In normal contract law there is some fuzziness about consummation and sometimes rules of estoppel apply. But the normal rule is simply that the transaction is consummated and the documents are effective when the documentation is completed and executed by both sides, and consideration has passed both ways.

By considering consummation to be when only one party signs the courts are ignoring a basic legal doctrine that has been solid for centuries — consideration must pass before the documents can be used for enforcement.

This is particularly important in the modern era where “lenders” have been replaced by “originators.” In many cases the originator is not the lender. Hence no enforceable contract can be said to exist unless there is proof that the originator was acting for a third party Lender.

If the third party was not disclosed they would be admitting to a TILA violation. If the third party is not a lender either but rather a conduit, then we have (a) no consideration and (b) nondisclosure at “closing” as to the identity of the lender.

By “no consideration” I don’t mean that the homeowner did not receive money or the benefits of a disbursement.  I mean that nobody in the chain starting with the originator has paid that consideration and thus nobody in that chain of command is party to an enforceable contract. Like the fabricated assignments, allonges and endorsements, the existence of a paper instrument even if signed does not mean that the provisions contained therein are enforceable. Under contract law it is the transaction that must have consummated between the parties to the written contract. THAT is something that does not occur, even in the c leanest of cases, until after the closing and sometimes months or even years after.

By revealing the absence of a payment by the originator, one accomplishes two things. (1) the written loan contract (note and mortgage or Deed of Trust) was never enforceable and thus cannot be enforced by successors. (2) clear violations of TILA disclosure requirements have been violated.

BUT none of this means that there is no debt — assuming that money appeared after closing. The debt exists. The homeowner does owe money. And while the homeowner does not owe just anyone, he/she owes money to the person or parties who are out of pocket for the loan. Their remedy is probably an action in equity seeking to claim the paperwork AFTER they have proven that they are the real parties in interest. Or, their remedy would be simply the equitable action for unjust enrichment. In the first case they MIGHT preserve the mortgage encumbrance. In the second, they have no collateral.

Lateral Appeal in BKR to District Judge Often Overlooked

The PHH case underscores the statistics and the substance of actions brought in U.S> Bankruptcy Court. The fact is that BKR judges, once called magistrates, do not have the jurisdiction or power of ordinary District Court Judges.

In addition out of the three possible venues for appeal from BKR rulings and decisions, the one that gets the most traction the most often is directly to the sitting District Court judge in whose courthouse the BKR proceedings are pending. District judges are the most likely to find that the BKR “judge” lacked jurisdiction or power to even hear many matters.

Let us write the narrative for your appeal: 202-838-6345
Get a consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-

Hat tip to Dan Edstrom

see PHH v Sensenich US Dist Lexis 207801

There are three possible routes for appeal. The one that gets the best results is rarely used for unknown reasons. So here are some pointers on bringing an appeal from a ruling or decision entered by a BKR judge:

  1. Lateral appeal to District Court Judge: Success rate around 50%
  2. Bankruptcy Appellate Panel (BAP): Success rate around 15%
  3. Direct appeal to the Circuit Court of Appeals: Success rate less than 15%.

This anomaly was first pointed out by a Bankruptcy Court Judge in Arizona who as presenting at a CLE Bar Seminar for Bankruptcy lawyers. The seminar was in 2009 and still we are waiting for BKR practitioners to pick up the ball.

An apparently little known fact is that BKR courts are courts of limited jurisdiction as to what they can hear and how they can hear the issues. Many practitioners avoid an appeal from BKR to the Federal District Court Judge because they think that the District judge is on the same level as the BKR judge. And they think that two judges on the same bench are not going to rule against each other.

This view is simply wrong. They are not on the same bench. District Judges have authority over everything that happens in BKR court. BKR court is itself broken up into two categories. One category is simple rulings on motions in the administrative court proceeding (which is why the BKR “Judges” were called magistrates).

Most of what happens in the administrative phase of a bankruptcy is ministerial. Rulings that cross the line of ruling from ministerial to substantive judgments on the law regarding consumer rights, foreclosures etc. are subject to challenge and are as likely to get overturned by the District Judge as not. This is the part most people have some familiarity.

The other category is Adversary actions. This means someone has filed a lawsuit in Bankruptcy Court that is separately served and subject to the same rules of procedure as an action filed in U.S. District Court. But the similarity ends there. Many adversary actions go far beyond the jurisdiction of the BKR judge.

Lack of jurisdiction means the judgment or ruling is void. Those void judgments are generally reversed by the District Court judge and not necessarily by the BAP or Circuit Court probably because nobody brings up the issue of whether the BKR action was in the correct court.

Generally speaking there are two categories of appeal: procedural and substantive. Appeals citing errors in procedure (including jurisdiction) generally get the most traction. Appeals citing substantive law or worse, citing errors in apprehending the evidence, have the lowest success rate.

In the case cited above, Federal District Court Judge Geoffrey Crawford reversed a bankruptcy judge’s ruling that had imposed sanctions against a creditor “based on Rule 3002.1(i) of the Rules of Bankruptcy Procedure, the bankruptcy court’s inherent authority, and Bankruptcy Code section 105.”

The sanctions were awarded in three cases where debtors had to make mortgage payments pursuant to chapter 13 plans.  The mortgage servicer had billed the debtors for fees that the bankruptcy trustee asserted were improper. At a trustee’s request, the bankruptcy court imposed sanctions against the servicer of $375,000: $25,000 for each case under Rule 3002.(i) and $300,000 total for violations of court orders under its inherent powers and section 105.

Rule 3002.1 permits bankruptcy courts to provide relief to debtors when mortgage creditors fail to disclose certain fees and charges. Rule 3002.1(i) allows courts to remedy violations of certain provisions of Rule 3002.1 by (among other things) “award[ing] other appropriate relief, including reasonable expenses and attorney’s fees caused by the failure.” Whether Rule 3002.1 authorizes punitive sanctions was a matter of first impression. Neither the parties nor the court had found a case where a bankruptcy court had invoked the rule to support sanctions in this manner.

Judge Crawford reasoned that, because Rule 3002.1 is a procedural rule, it cannot enlarge the substantive authority of the bankruptcy courts. If bankruptcy courts do not have the substantive authority under statute and case law to issue punitive sanctions, then a mere procedural rule cannot alter the lack of substantive authority. The court thus concluded that the question under Rule 3002.1(i) was reducible to the question under a bankruptcy court’s inherent powers and section 105.

For homeowners this ruling helps. Citing it puts the banks in the position of opposing a ruling that went in their favor, i.e., this PHH case.  This also puts the homeowner on notice to check carefully before filing an adversary action instead of a collateral action that is directly before the District Judge or even State Court.

The problem is that most BKR attorneys who mostly do Chapter 7 and Chapter 13, have little or no litigation experience. Thus it may be necessary to NOT  charge your BKR lawyer with there responsibility of filing an adversary or collateral action and to bring in separate trial counsel even if the decision is made to file an adversary complaint.

 

 

 

Illusion of Confusion: Dealing with Unresponsive “Responses” in Discovery

The bank playbook is very simple: keep it as complicated as possible. That way the court and even the homeowner will come to rely on what the banks and so-called servicer say about names, places, documents and money. That’s how they sold the initial fraudulent MBS and around 10 million foreclosures.

If you had a high success rate and you succeeded in scaring most homeowners off from contesting fraudulent foreclosures, what would you do? You would keep going based upon a strategy of creating the illusion of complexity. The only really complex thing is the fact that the foreclosing parties make inconsistent assertions not only from case to case but from one pleading to another in one case.

What is simple? That the only two real parties in interest in this whole affair have been investors on one side and homeowners on the other side. Everyone else is an intermediary with little or no authority to do anything — a fact that has not stopped them from nearly destroying our financial system.

For reasons that have been discussed elsewhere on this blog, the acceptance of the illusion of confusion by the courts is NOT rooted in law, as it is required to be, but rather in politics. This isn’t the first time the courts made political decisions and it won’t be the last. But through persistence and good litigation techniques homeowners who went all the way to the end have often prevailed — probably because the judge was too uncomfortable once the real nature of the asserted transactions was revealed.

NEED HELP DRAFTING A COURT DOCUMENT? We can help you with Discovery and Compelling Responses to Discovery Requests with Our Paralegal Team that works directly with Neil Garfield! We provide services directly to attorneys and to pro se litigants.

Get a LendingLies Consult and a LendingLies Chain of Title Analysis! 202-838-6345 or info@lendinglies.com.

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave a message or make payments.

OR fill out our registration form FREE and we will contact you!

https://fs20.formsite.com/ngarfield/form271773666/index.html?1502204714426

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

—————-

I was writing an article on discovery when by coincidence Dan Edstrom who has been our senior most forensic analyst since 2008 forwarded some questions and comments about the discovery process. He understands full well that the discovery process does NOT consist of just asking a question or asking for a document and the other side then gives you all you need to win.

No, the response will be framed to confuse, which is generally enough to make the homeowner or the foreclosure defense walk away. The foreclosure goes though even though it is most likely completely fraudulent.

And the message that goes out to the world is the banks are winning a huge percentage of foreclosures when in fact they pretty much don’t win when the foreclosure is ably contested.  The issue is obvious — not enough people are ably contesting foreclosures.

In discovery it usually starts with interrogatories. And the first question is who is answering the interrogatories. So in one example, the answer was Sally Torres. The response was that Torres was “from” Ocwen Financial Corporation (OFC). She is described as a “representative” of OFC, which leaves open the question of the identity of her employer.

Back to basics — A corporation is a legal person. And THAT means it is not the same as another legal person, as for example Ocwen Loan Servicing (OLS).

So you need to read carefully and not skip the parts that nobody pays attention to — like the answer to the question and the verification where Torres signs the response. There she signs as a “representative” of OLS not OFC. That ,eaves open the same question but also adds another — is she a representative of both legal persons (OFC and OLS)? If so what is the nature of her “agency” for either legal person? If she is not an employee is there a contract?

The answers further state that she is a “Senior Loan Analyst” for OFC and a “Senior Loan Analyst” for OLS. Is it both? How does that work? And of course that gives rise to yet another question — What is a Senior Loan Analyst? Google it.

Job Summary. Responsible for analyzing financial and supporting documents on incoming applications consistent with internal and insurer policies. Evaluate property values based on appraised market prices and recommend or deny mortgages to clients after examining financial status.

Hmmmm. This sounds like a made-up title to impress a judge. The industry definition of a loan analyst describes a job that ends with the approval of a loan. What would a loan analyst know about foreclosure — years after the alleged origination of the alleged loan? More specifically, what did Torres actually know or do with regard to the subject loan? It doesn’t take a genius to speculate about a number of questions:

  • Did Torres actually sign the verification?
  • Why was a loan analyst necessary in the litigation of a foreclosure?
  • Is Ocwen a lender? Why need a loan analyst?
  • What as it that Torres analyzed?
  • Did she review the work of a “Junior” Analyst ?
  • Did someone else draft the answers?
  • Was there anyone who had personal knowledge of the loan history involved with answering the interrogatories?

The kicker in the case I reviewed, was that the notice letters were sent not by any Ocwen entity but by Wells Fargo. The problem here is that most lawyers do not wish to confess their ignorance and therefore don’t follow through with obvious questions. Everything they are seeing is incomprehensible and confusing.

Here is another example right out of a hearsay treatise: The “Plaintiff” in an unlawful detainer (eviction) action makes the assertion that the rental value of the subject property is $1,800 per month and that the only way they know that is from a website called “Rentometer.” How this number is calculated by the website is unknown. Nor do we know if any person was involved. But Judges regularly take this representation to be true, even though it comes from a declarant not present in court.

Here is the rub. If the attorney for the homeowner fails to raise an objection and motion to strike that assertion or representation the objection is waived. But on cross examination of the robo-witness it is fairly easy to show that there is no appraisal or opinion rendered by the witness, nor could there be. It is also fairly easy to establish that the witness has no idea who runs, operates, owns or is otherwise involved with Rentometer.

Like Zillow and other sites, Rentometer does not employ people. It employs computer algorithms that may or may not work in any given situation.

For all we know it is a site set up by the banks that looks professional but is used specifically to extract outsize rents from people defending their property. (thus cutting off income that could be used for an attorney).  It looks like it might be useful but no presumption should arise from the projection by Rentometer unless someone from Rentometer can lay the foundation for the estimate. But that would mean putting a person on the witness stand who is not a robo-witness so the foreclosing party is going to fight against that tooth and nail.

And of course any site that leis exclusively on algorithms could not possibly take into consideration whether the subject property is habitable, the school district, and other factors that apply to both marketability and price. In the case presented it appears that the rental value is zero or in fact negative. That is because the property’s condition is such that nobody would move into it without extensive major repairs and because taxes and maintenance of the exterior would still need to be paid.

And then there is this example: You ask for the documents that support the authority of the alleged new beneficiary to substitute the trustee on the deed of trust. You get back an assignment. But it turns out later, in court, that they are relying upon some additional unrecorded assignments. So you ask for the additional unrecorded assignments and the response is essentially “We already gave you the assignments.” In  this case with 1 recorded assignment and 2 unrecorded assignments their answer is exactly 1/3 true and 2/3 untrue. And THAT is why you need to be prepared to compel their response by a specific court order pointing to those documents and any others that pertain the request for production.

The most challenging thing after the foreclosure sale is to prove it should never have taken place. But it is possible and necessary to do that if you want the property or you want leverage for a settlement. You are challenging circular reasoning.

Their argument is that they followed the rules and appointed a substitute trustee who sold the property. Your answer is that the new ‘Beneficiary” was not a beneficiary, had no right to substitute the trustee and thus no right to file a notice of sale (nonjudicial states).

Here is where legal presumptions point the court in the wrong direction. Because the sale took place and it was “facially” valid, the presumption adopted by the court is usually that there was a sale even though you are contesting that narrative. You say that a sale didn’t take place, particularly where there was “credit bid” on behalf of an entity that had no interest in the debt and therefore could not possibly submit a credit bid.

Lastly the sleight of hand trick that is so successful for the banks is the assertion or inference that there is a trust. In this case US Bank is asserted, probably without tis knowledge, as the trustee of certificates which is no trusteeship at all. Even if you slip in “the holders of certificates” they still have not named a beneficiary.

So the common error being made out there is to ask for answers and documents and so forth and accepting the response from the servicer or alleged servicer. Back to basics: the  first question should be “please identify the person or entity that is the [Plaintiff (judicial state or any eviction action) / beneficiary on the deed of trust (nonjudicial states)].

Then the next question should be “Is the party executing the verification of these interrogatories an employee, officer of said Plaintiff/Beneficiary? They will respond with gibberish because the real party in interest is a remote “Master Servicer” of a trust that doesn’t exist.

And of course “Where are the records of the Plaintiff/Beneficiary that relate to the subject alleged loan?” Once again they will respond with gibberish because they want the court to accept the fabricated records of Ocwen as though they were the records of the Plaintiff/Beneficiary whose books and records do not exist. The closer you get the more likely they are to walk away or offer a settlement that includes a seal of confidentiality. And yes I have seen this scenario thousands of times.

 

 

 

 

 

 

 

 

 

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.

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.
—————-

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…
Technorati Links • Save to del.icio.us • Digg This! • Stumble It!

Posted by Isaac Gradman at 3:46 PM

%d bloggers like this: