Losing Strategy: “Getting it on the Record”

I know I am going to take some heat for what I am about to say. In my opinion “getting it on the record” is an excuse for losing and implies that the judge’s decision was wrong and can be appealed when in fact the judge’s decision was correct and will be easily affirmed on appeal.

Clients and lawyers and others frequently ask me to “review” something they have written. Below you will find my usual responses. The main trap door that losing homeowners fall through is that they bury their own argument in an attempt to litigate the entire case (i.e., to get it on the record, AGAIN) on each and every filing they submit to the court.

Let us help you plan your foreclosure defense 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.

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

Here is my reply to most people whether they professionals or lay people.

The only caveat to this is that I personally know of many excellent legal writers “out there” for whom this article does not apply. They understand that the goal is to win in litigation and that means victory in as many points in the timeline of motions and discovery as is possible. You don’t win without that.

The second caveat is that persuasion and credibility are two sides of the same coin. You gain nothing by tossing out allegations that you can never prove and that are not backed up with foundation and corroboration. Practices like that lead to stuffing pleadings with irrelevant gibberish which might be true, but will dilute the good arguments and will never be considered, much less allowed into evidence.

Here are some of my common replies, shortly before they ask what it will cost for me to rewrite the pleading or memorandum.

In my opinion this needs to be rewritten, it needs to be much shorter and it must focus in on a small number of bullet points. The first points must catch the attention of the judge since it is unlikely that the judge will read beyond page 2.A “Reply” should be exactly that, to wit: something that answers the objection filed by or on behalf of ABC. While components of a reply are present they are buried under what is largely re-litigating the entire case.
Your point about all defendants being represented by the same attorney is well-taken. Do something with that, don’t just say it. Perhaps you could float an argument like “Opposing counsel seeks to invoke alter ego status on the one hand in order to invoke res judicata and on the other hand wants us to believe that ABC is a separate and independent entity with no connections to the alleged violations of law asserted by Plaintiff.
Under either scenario the baseline narrative is completely dependent upon a chain of ownership of the debt that is neither asserted nor substantiated by any foundation or documentary exhibits or evidence. In a sleight of hand maneuver, Defendants instead want us to focus on the note or mortgage (deed of trust), which at best are only paper instruments supposedly memorializing a transaction that is neither asserted nor in existence.
Thus they argue a false equivalency between the debt and the note despite no allegation nor proof that the note accurately memorialized a financial transaction in the real world between maker and payee on the note. They neither allege nor argue the merger doctrine in which the debt is absorbed into the note. This would force them to prove the money trail which nobody in the shoddy history of false claims of securitization is ever willing to allege or even provide a response.
“Getting it into the record” is not a trial strategy. It is a losing strategy both at the trial level and appellate level. That is because the goal is wrong. The goal is really to win, which can be and has been done in tens of thousands of cases. Getting something into the record is a euphemism for negligence, because it means that it is a data dump rather than a compelling narrative designed to persuade the trier of fact. Data dumps are virtually ignored by judges, just as you would if you were sitting on the bench.
“Defendant Counsel’s “Representation” of all defendants, each with supposedly different interests is at odds with his grouping of all the defendants together — ignoring the fact that if the case is decided against one of them it might be applied to them all. Do all the Defendants consent to this representation? Or, as alleged by Plaintiff, are they all sham conduits working for a fee in a common enterprise to create the illusion of an interest in ownership, servicing and transfers of the recorded encumbrance? Does one of them own the debt or are any of the defendants in privity with the owner of the debt?

NY Monroe Case: Default entered against homeowner — CASE DISMISSED on Standing — US Bank Never refiled.

multiple choice robo-pleading

NO PLEADING: HOMEOWNER WON ANYWAY

I have held off on discussing this case until some time passed. As far as I now know US Bank, like several cases I won, has not refiled for foreclosure. There is a good reason for that. US Bank is not the Plaintiff. The Plaintiff is named as a REMIC Trust, for which the attorneys claim that US Bank is the Trustee.

As such the Plaintiff does not own nor have any interest in the loan either as owner or servicer. Hence the named trustee (U.S. Bank) is named but it has nothing to do since the trust is nonexistent and in all events no attempt has ever been made to entrust the subject mortgage into the fiduciary hands of U.S Bank.

And THAT is because the only party with an equitable interest in the debt is a group of investors whose money was used to fund the origination or acquisition of the loan. The investors meanwhile think that their money was placed in trust and then used to purchase, not originate, loans.

Every once in a while a wily judge catches on from the face of the documentation. This judge ruled against US Bank as Trustee for a named REMIC Trust because he didn’t believe US Bank or the Trust was actually related to the subject loan. He gave them a chance to correct their pleading, but apparently out of fear of perjury, the lawyers for the nonexistent trust backed off, apparently permanently.

Let us help you plan your foreclosure defense 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.

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

see Memorandum and Order – USBank Trust NA as Trustee for LSF9 MPT v Monroe

Quoting from the complaint field by lawyers for their supposed client, a nonexistent trust with a completely denuded trustee, the court includes their own allegation in its ruling:

2 (“Plaintiff is the owner and holder of the subject Note and Mortgage or has been delegated authority to institute this Mortgage foreclosure action by the owner and holder of the subject Note and Mortgage.”);

What does that even mean? This is a perfect example of multiple choice robo-pleading. Either the Plaintiff is the owner and holder of the subject note or mortgage or they are not. If they own the debt,  they don’t say as much and certainly didn’t offer any proof at their uncontested hearing on damages. It’s pretty hard to lose an uncontested hearing but US Bank has done it multiple times, as reported in this case.

If they have been delegated authority by the owner and holder of the subject note and mortgage, they fail to say who delegated that authority and how the delegation occurred. Since the express purpose of the trust was to own the debt, note and mortgage and make payments to investors based upon the trust’s ownership of the debt, note and mortgage, Demoting the trust to the status of a conduit or agent would be completely adverse to the express wording and authority granted in the trust.

Actually that kind of wording is exactly what enables the players to claim interest in notes and mortgages adverse to the interests of the parties whose money was directly used to fund the origination and acquisition of loans.

 

Here are some revealing quotes from the District Judge:

The Complaint does not contain any details concerning U.S. Bank’s role as trustee or the powers it has over the trust property (including the mortgage here). (e.s.)

The party asserting subject matter jurisdiction carries the burden of proving its existence by a preponderance of the evidence. E.g., Makarova, 201 F.3d at 113; Augienello v. FDIC, 310 F. Supp. 2d 582, 587–88 (S.D.N.Y. 2004). This is true even on a motion for default judgment, since the principle that a default deems the well-pleaded allegations of the complaint to be admitted is inapplicable when a court doubts the existence of subject matter jurisdiction. Transatlantic Marine, 109 F.3d at 108.

2 While some of these issues were discussed elsewhere by U.S. Bank’s counsel, e.g., Dkt. No. 7, they were not included in the affidavit filed in support of default judgment.

“When a default is entered, the defendant is deemed to have admitted all of the well- pleaded factual allegations in the complaint pertaining to liability.” Bravado Int’l Grp. Merch. Servs., Inc. v. Ninna, Inc., 655 F. Supp. 2d 177, 188 (E.D.N.Y. 2009) (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). “While a default judgment constitutes an admission of liability, the quantum of damages remains to be established by proof unless the amount is liquidated or susceptible of mathematical computation.” Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974); accord, e.g., Bravado Int’l, 655 F. Supp. 2d at 190. “[E]ven upon default, a court may not rubber-stamp the non-defaulting party’s damages calculation, but rather must ensure that there is a basis for the damages that are sought.” United States v. Hill, No. 12-CV-1413, 2013 WL 474535, at *1 (N.D.N.Y. Feb. 7, 2013)

In the past year, U.S. Bank’s attorneys—Gross Polowy—have repeatedly failed to secure default judgments in similar foreclosure cases before this Court. E.g., U.S. Bank Tr., N.A. v. Dupre, No. 15-CV-558, 2016 WL 5107123 (N.D.N.Y. Sept. 20, 2016) (Kahn, J.); Nationstar Mortg. LLC v. Moody, No. 16-CV-279, 2016 WL 4203514 (N.D.N.Y. Aug. 9, 2016) (Kahn, J.); Nationstar Mortg. LLC v. Pignataro, No. 15-CV-1041, 2016 WL 3647876 (N.D.N.Y. July 1, 2016) (Kahn, J.); cf. Ditech Fin. LLC v. Sterly, No. 15-CV-1455, 2016 WL 7429439, at *4 (N.D.N.Y. Dec. 23, 2016) (denying a motion for default judgment due to a defective notice of pendency); OneWest Bank, N.A. v. Conklin, No. 14-CV-1249, 2015 WL 3646231, at *4 (N.D.N.Y. June 10, 2015) (same). In each case, Gross Polowy’s motion was denied for one of two reasons: either the complaint failed to sufficiently allege subject matter jurisdiction, e.g., Dupre, 2016 WL 5107123, at *2–5, or the motion for default judgment failed to meet the requirements of the Court’s Local Rules, e.g., Moody, 2016 WL 4203514, at *2. Here, both of these failures are present.

The Complaint also includes no allegations concerning U.S. Bank’s ability to proceed under its own citizenship, despite bringing this case on behalf of the “LSF9 Master Participation Trust.” Compl.

While U.S. Bank is the nominal plaintiff in this case, it is longstanding federal law that “court[s] must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy.” Navarro Sav. Ass’n v. Lee, 446 U.S. 458, 461 (1980). “Where an agent acts on behalf of a principal, the principal, rather than the agent, has been held to be the real and substantial party to the controversy. As a result, it is the citizenship of the principal—not that of the agent—that controls for diversity purposes.” Hilton Hotels Corp. v. Damornay Antiques, Inc., No. 99-CV-4883, 1999 WL 959371, at *2 (S.D.N.Y. Oct. 20, 1999) (citing Airlines Reporting Corp. v. S&N Travel, Inc., 58 F.3d 857, 862 (2d Cir. 1995)). At issue here is the application of this rule in lawsuits brought by a trustee on behalf of a trust. —3 Gross Polowy should be aware of this rule because they were “foreclosure counsel” for the plaintiff-appellee in Melina, 827 F.3d at 216–17, though in fairness it seems they were replaced by Hogan Lovells for both the subject matter jurisdiction issue and the subsequent appeal, id. at 216; OneWest Bank, N.A. v. Melina, No. 14-CV-5290, 2015 WL 5098635 (E.D.N.Y. Aug. 31, 2015), aff’d, 827 F.3d 214.

In Navarro, the Court held that trustees can be the real parties in controversy—regardless of the type of trust—provided that they “are active trustees whose control over the assets held in their names is real and substantial.” 446 U.S. at 465; see also Carden v. Arkoma Assocs., 494 U.S. 185, 191 (1990) (noting that, if the trustees are “active trustees whose control over the assets held in their names is real and substantial,” they are brought “under the rule, ‘more than 150 years’ old, which permits such trustees ‘to sue in their own right, without regard to the citizenship of the trust beneficiaries’” (quoting Navarro, 446 U.S. at 465–66)). The continued validity of this rule was endorsed by the Court in Americold. 136 S. Ct. at 1016.

If U.S. Bank wishes to proceed in federal court, it must, within thirty (30) days, move to amend its Complaint to address the deficiencies identified in this order. This motion to amend must be prepared in accordance with Local Rule 7.1(a)(4), which establishes the form for such a motion and lists the required papers. With that motion, to resolve the Court’s doubts concerning subject matter jurisdiction, U.S. Bank must also provide its articles of association (along with any other documentation required to establish the location of its main office), the trust instrument for the LSF9 Master Participation Trust,4 and any other documentation required to show that U.S. Bank’s control over the trust assets is real and substantial. Failure to comply with this Memorandum-Decision and Order when moving to amend the Complaint may result in the denial of the motion or sanctions. L.R. 1.1(d).

 

4 In the Dupre case discussed above, U.S. Bank also was instructed to file the trust instrument for the LSF8 Master Participation Trust (presumably another securitization vehicle for mortgage debt) in order to establish subject matter jurisdiction. 2016 WL 5107123, at *2. When it did file the trust instrument, “the text . . . was almost entirely redacted,” and the only visible portion seemed to oppose the notion that U.S. Bank was an active trustee with real and substantial control over the trust assets. Id. at *2, *4. This failure should not be repeated here, and filing documents under seal or with redactions requires advance permission of the Court. L.R. 83.13; see also Lugosh v. Pyramid Co. of Onondaga, 435 F.3d 110, 119–20 (2d Cir. 2006) (describing the standard for restricting public access to judicial documents).

 

GARFIELD PREMISES

Most people really don’t completely understand our premise when we investigate, research, examine and analyze a case or case documents. We have several premises with which we start and check to to see if they apply. While the answer is short the work behind it is long and complicated.

Let us help you plan your foreclosure defense 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.

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

15 Assumptions we make that show up in all our reports and drafting.

  1. Rescission is an event that occurs upon mailing of the notice. It is not a claim for which the borrower must justify before it becomes effective. It is effective on mailing.
  2. The trusts are empty. They never took part in any transaction in which any loan was purchased. Therefore referring to the loan as being in a trust is erroneous.
  3. The Trusts don’t exist. The use of the Trustee’s name is an accommodation for a fee, and the use of the alleged trust name is the use of a fictitious name of the underwriter for certificates issued in the name of the trust. Hence the certificate owners own nothing (especially since they usually have disclaimed all interest in the debt, note or mortgage.)
  4. Since there is no trust in which the subject loan was entrusted to the named trustee, all claims to servicing rights arising from the written trust instrument (PSA) are also fictitious.
  5. None of the parties in the named trust have any right, title or interest in ownership or servicing the subject loan.
  6. In most cases the named payee on the note was neither a source nor a conduit for funds. All documents, especially mortgage documents, are construed against the drafter of those documents.
  7. The naming of a Payee who is not the source of funding prevents merger of the debt with the note, which can only occur when the payee and creditor are the same.
  8. In most cases the named Payee is different from the the creditor who funded the loan, intentionally or otherwise.
  9. In most cases the recorded mortgage names as creditor (“Lender”) a party (the named payee on the note) who is different from the creditor who funded the loan, intentionally or otherwise.
  10. In most cases (nearly all) the originator of the loan named as Payee on the note and “lender” on the mortgage was never in privity with the actual funding source.
  11. In nearly all cases referring to a lender or servicer as a lender or servicer is erroneous and admits a fact that is not true.
  12. In nearly all cases referring to a trustee as a REMIC Trustee is erroneous and admits a fact that is not true.
  13. In nearly all cases referring to a trustee as a DOT Trustee is erroneous and admits a fact that is not true.
  14. In virtually no case does equitable or legal ownership of the debt get transferred with documents of transfer.
  15. In virtually no case is there a real world transaction in which a loan is purchased and sold. It is the paper that is transferred, not the debt; hence there is no consideration.

Is a Neg-AM Note a Negotiable Instrument?

The UCC is not ambivalent about protecting both the maker of a negotiable instrument and the party seeking to enforce it. The maker does not assume the risk of double liability except for instances where the note is purchased for value in good faith and without knowledge of the borrower’s defenses. In all other circumstances the object is to prevent the maker from being exposed to double liability.

The fact that a note is not a negotiable instrument does not mean that it cannot be enforced, or that it is void or whatever else people are saying on the internet. If the note does not meet the definition of a negotiable instrument then it is simply not entitled to the legal presumptions that are given to a negotiable instrument to ease its trading and enforcement. Any other approach would be equivalent to propelling parties who seek to enforce a note being vaulted into the elevated class of holder in due course.

In other words, if the note is not a negotiable instrument then enforcement can only be achieved by pleading and proving the facts needed to enforce without the benefit of legal presumptions that each State adopted as a a statute when the Uniform Commercial Code was made law.

In cases where a negative amortization is involved, the courts have blurred the issues. Such a loan has many extrinsic factors that should disqualify the note from being treated as a negotiable instrument.

Let us help you plan your foreclosure defense 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.

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

We must always remember that the purpose of the UCC is not to provide a vehicle for tricking anyone. The purpose is to allow for free flow of commerce and enabling the passing of paper instruments is essential to that function. Like many statutes creating legal presumptions, perhaps all of them, the point is simply to take what is almost always true in fact and simply create a legal presumption that the matter asserted is in fact true, until proven otherwise. Lest the use of such presumptions tip the due process scales, the definitions and rules regarding the use of legal presumptions must be strictly construed.

The issue of negative amortization is highly relevant on many levels including the one frequently mentioned — negotiability. The courts are probably confusing the ability to negotiate an instrument with BEING a negotiable instrument. The words of art are important. A marketable instrument is not the same as a negotiable one. The fact that someone is willing to buy a note does not make the note negotiable. A note featuring negative amortization should not be considered a negotiable instrument even though it might be marketable.

One of the problems with consumer loans is that they are subject to TILA Rescission. That means that they are potentially enforceable if no notice of rescission has been mailed. Certainty is gone from that scenario. You cannot determine whether the note is an asset or a liability. It is practically the opposite of a negotiable instrument since it might well be worthless, and the even the purchaser of the note might suffer a total loss unless the purchaser had paid value for the debt in a transaction in which the seller owned the debt.

Most Neg-AM loans allow the borrower (or can’t stop the borrower) from switching from one payment plan to another, e.g. paying full amortization none of which changes are reflected on the face of the note. This creates relevant events that occur off the face of the note, making the actual amount of principal due (and interest on the changing principal) at any time subject to calculation, not just from the face of the note but from the face of extrinsic or parole records.

An interesting characteristic of most Neg-AM notes is that they contain provisions that require conversion or reset when the accrued interest is added to principal in such amount as to require the reset — i.e., usually at 115% of the original loan amount. But none of these features necessarily extrinsically change the terms on the face of the note. Modifications do that, but not Neg-AM loans. It is in the calculation of the principal and interest thereon that one must go to “business records.”

If Neg-AM notes can be negotiable instruments then buyers of the notes are expected to rely upon the legal presumptions that the note is what it appears to be. Such buyers, much like the borrowers, are in for a surprise when the loan resets, based upon an extrinsic calculation of when 115% of principal has been exceeded, and if exceeded, by how much. Certainty is gone. If certainty is gone then facts are necessary. No legal presumptions should apply.

There are very simple elements required in order to gain the legal presumptions that would apply to a negotiable instrument.

The main one is that the instrument must be payable in an amount that can be computed based upon the information on the face of the note. On the face of a Neg-AM note, there are terms and conditions that can easily be used to compute the total indebtedness, assuming that extrinsic factors have not come into play. All notes change every day in terms of the amount of interest due and, in the case of Neg-AM notes, the amount of principal, which goes up automatically by underpayment of interest.

It is generally agreed that a note on which there is a known or declared default is NOT a negotiable instrument for purposes of Article 3. You can’t know with certainty the amount due because you don’t know when the borrower defaulted. A DOT or Mortgage is not a negotiable instrument, and to enforce a DOT/Mortgage you must have paid value for the mortgage (Article 9), regardless of whether the note that is secured is a negotiable instrument or not. These are protections to be sure, but they are also insurance that the legal presumptions lead correctly to the truth of the matter.

A second element is that the payment must be due as of a date certain. A mortgage/DOT can’t be a negotiable instrument and cannot invoke the presumptions that a “holder” of a note can invoke, based upon possession and endorsement.

With Neg-AM notes the problem comes into high relief — when the “lender” knows that the reset will be in excess of the entire household income thus creating a virtual guarantee that the alleged loan contract will terminate in 3 years rather than 30 years. Hence the supposed indorsee of such a note is buying into a foreclosure situation, if he/she/it has done due diligence. If not, then here is a second situation where the note might be worthless and the buyer loses, unless the buyer bought the debt from a seller who owned the debt.

A third element is that the original note must either be made out to bearer or to a defined party. But it is possible for a note made payable to a non-lender or a fictitious party might be construed as bearer paper — if there was an actual transaction in which someone gave the borrower money, even if the identity of the funding source was concealed. The obviously violations of disclosure requirements are separate matters.

In all the elements the point is that in order for an instrument to be called “Negotiable” under Article 3 you must not need to inquire into parol or extrinsic evidence. All presumptions arise when the note is facially valid and there are no circumstances that the indorsee knows about that would undermine enforcement. With a DOT/mortgage, by definition on the face of the instrument, you must go to extrinsic evidence as to the presumed default on another instrument (the note) and you can only enforce upon proof of value paid for the mortgage/DOT.

A note might be facially valid and enforceable, which means that a party who pleads and proves they are entitled to enforce is entitled to a money judgment but not foreclosure unless they plead and prove they are a holder in due course, which by definition means that value was paid and hence the mortgage or DOT is also enforceable by them.

Other than an HDC, all the other categories of potential enforcement by a party should enable them only to enforce the note. Of course if the owner of the debt shows up, there would be no problems with enforcement of either the note or the mortgage because the owner of the debt is entitled to enforce the obligation to pay the debt.

Under securitization schemes in practice it is possible to own the mortgage but not be able to enforce it without having paid value. Courts that decide cases based upon the “mortgage follows the note” are missing the point of LAW that resides in their State’s adoption of the UCC, to wit: under no circumstances may a party force the sale of homestead property without being the owner of the debt. That is not a proposal. It is the law in all 50 states.

While the encumbrance may not be enforced, this does not invalidate the mortgage or deed of trust. When it comes time to sell or refi the property you will learn that you still must deal with the holder of the mortgage. An action in equity might be decided in your favor or you might have to pay a sum of money to the owner of the mortgage encumbrance even though they paid nothing for it.

People forget that there are three items here, not two. In addition to the note and mortgage, which serve only as evidence as the debt, there is the actual debt. Back before claims of securitization, all three were used interchangeably. Now it is different. If the funding source is not the payee on the note, then the doctrine of merger does not apply, to wit: the note becomes separate from the debt that arises to the person or party who advanced the money. If the Payee is in privity with the funding source then merger does apply. But most Payees were not in privity with the source of funds. The banks boast of how they created remote vehicles and relationships.

The very fact that there are terms allowing the payment to be less than PI for the month suggests that the borrower might very well have made some payments more than the minimum due. In other words, inquiry must be made to determine the debt balance with certainty. There is certainly an argument here that reference is to the payment history rather than just the note. If that is true then the face of the note is inadequate to determine the “certain sum” currently due. This can become an issue in any installment note.

A finding that all these questions are irrelevant would have dire consequences in the marketplace where certain types of predefined paper can be received in the free flow of commerce without uncertainty as to whether the paper can be enforced. This is a two edged sword. Opening the door beyond the strict definitions of the UCC is opening the door for more mischief involving fabrication of documents, forgery and robosigning.

The UCC is not ambivalent about protecting both the maker of a negotiable instrument and the party seeking to enforce it. The maker does not assume the risk of double liability except for instances where the note is purchased for value in good faith and without knowledge of the borrower’s defenses. And the purchaser should not bear the risk of a total loss immediately upon paying for the note — unless the purchaser knew there were problems and was willing to take his chances.

The final point I would make is that the question should be asked: Given the fact that so-called REMIC Trusts are supposedly buying the loan pools aggregated by the likes of Countrywide and its progeny, why do lawyers firmly announce that their clients are “holders” and not “holders in due course”.

The latter designation (HDC) would allow the possessor of the note to enforce both note and mortgage despite lending violations when the alleged loan was “originated.” Being an HDC might also avoid defenses that current abound — that there are breaks in the chain of title. If the would-be enforcers simply included the allegation (and proof) that they were the owners of the debt or a holder in due course it would be game over for borrowers. That they don’t assert that position is a tacit admission that the reason why they don’t is that they can’t.

Thus we continue to be mired in litigation with phantoms, ghosts,  smoke and mirrors.

Why Everyone (except SCOTUS) is Wrong About TILA Rescission

All contrary arguments are erroneous since they would insert a contingency where the statute contains no room for any contingency. The language of the statute bars any such contingency when it says that the TILA Rescission is effective upon delivery, by operation of law. If anyone wants the statute to say or mean anything different they must get their remedy from the legislature, not the courts, who have no authority whatsoever to interpret the statute otherwise. The status of any case involving foreclosure is that it does not exist. Hence the court is left ONLY with the power to perform the ministerial act of dismissing the case for lack of jurisdiction.

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.

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

So in answer to questions about putative “modifications”, eviction or unlawful detainer, bankruptcy, and TILA Rescission this is what I have written in response to some inquiries.

Should the rescission be recorded? Not necessarily but

YES. I would like to see it recorded. You need to check with the clerk in the recording office or an attorney who understands recording procedure. Generally recording a document with an old date must be attached to an affidavit that is recorded with the notice of rescission attached. The affidavit explains that the attachment was inadvertently not recorded at the time it was created.

*

Should a copy of the notice of rescission be filed in the court record also?

YES. If there is any way to get the recorded document into the court record, it should be pursued.

This presents title issues because if you are recording this long after events have transpired, some of which are also recorded as memorializing transactions, fake or real. Any recorded instruments that purports to be a memorialization of a transaction before the rescission was recorded would generally be given priority.
*
The lawyer sent me an answer to my notice of rescission. Now what?
Either file to enforce the duties to be performed (if you are within one year of the date of delivery of the notice of rescission), or file a quiet title action if the one year has expired. There are several different scenarios actually, but this is the one I would focus upon.
*
I am getting kicked out of bankruptcy court. Now what?
Getting “kicked out” of BKR court probably means that you are back in the state court system which might open some opportunities for you to get more into the court record. (Like an old rescission).
*
My property is being sold. Does that mean that I have to get out?
*
They can’t get you out without filing an unlawful detainer (eviction in some jurisdictions) based upon an asserted change of title. There might be a period of time between the sale and the attempt to get you out of the home (eviction or unlawful detainer). If the property is sold to a “third party” they want want rent from you, which could allow you to stay.
The unlawful detainer action presents another opportunity to raise the issue of rescission, since the entire action is based upon a valid change of title. It also sets off potentially another round for appeal, especially on the issue of rescission. Res Judicata and Collateral Estoppel do not apply to jurisdictional issues. If the rescission was mailed then by operation of the law the note and mortgage are void.
The defense is ordinarily that the “sale” was a fabrication based upon fictional claims and was contrary to the notice of rescission, which voided the note and mortgage upon which they were relying. The time for challenging the rescission has long passed. Hence all enforcement actions after the date of the 2009 rescission are void since they were based upon various claims attendant to paper instruments that were void, effective the day of delivery of the rescission.
Note that delivery of TILA Rescission notice is complete when dropped in a USPS mailbox and your testimony that it was sent via US Postal Service is all that is necessary as foundation.
I sent 2 notices of rescissions. Is that better or worse for me?
If I was defending against your claim of rescission I would argue that sending the 2016 rescission was either an admission that the earlier one had not been sent or that it was a concession that, for whatever reason, the 2009 rescission notice had been abandoned.
Hence I suggest you put very little emphasis on the new rescission and maximum emphasis on the old rescission.
*
I sent the rescission less than 3 years after the modification but more than 3 years since the alleged consummation. Hoes my rescission affect my loan in that instance?
In most cases “modifications” are not treated as new loans. But the fact that something is called a modification and it really changes everything including the “lender” it may be possible to characterize it as a new loan subject to TILA Rescission. TILA Rescission hinges on whether the “modification” was a new loan — a fact, we would argue — that must be determined by trial. Since intent is part of the analysis of a contract, this could present another opportunity to force them to admit they don’t know the identity or intent of the creditor and whether said creditor had given them authority to make a new contract.
And the underlying narrative for this approach is that as a new contract, the “lender” was required to comply with disclosure requirements at the time of the new contract, thus triggering the three day right of rescission and the the three year limitation. Under my theory, based on Jesinoski, it doesn’t matter whether the three years has expired or not.
We know for certain that the notice of rescission is effective upon mailing; it is not based upon some contingent event or claim or court order. The date of consummation is itself a factual issue that can be in the pleading of the creditor (who is the only one with standing, the note and mortgage having been rendered void) claiming that the notice of rescission should be vacated based upon the three years, the date of consummation etc. 
Any alternative theory that puts the burden on the property owner would be contrary to the express wording of the statute and the SCOTUS ruling in Jesinoski. The statute 15 USC §1635 and SCOTUS are in complete agreement: there is no law suit required to make rescission effective. It would make the statutorily defined TILA Rescission event indefinite, requiring a court ruling before any rescission would be treated seriously. In other words, the opposite of what the statute says and the opposite of what SCOTUS said in Jesinoski. 
All contrary arguments are erroneous since they would insert a contingency where the statute contains no room for any contingency. The language of the statute bars any such contingency when it says that the TILA Rescission is effective upon delivery, by operation of law. If anyone wants the statute to say or mean anything different they must get their remedy from the legislature, not the courts, who have no authority whatsoever to interpret the statute otherwise. The status of any case involving foreclosure is that it does not exist. Hence the court is left ONLY with the power to perform the ministerial act of dismissing the case for lack of jurisdiction.
All this is important because we ought to be heading toward any defensive strategy that reveals the absence of a creditor. We are betting that the fight to conceal the name of the creditor is a cover for not knowing the the identity of the creditor, hence fatally undermining the authority as holder, servicer, trustee or anything else.
*
What if consummation never occurred?
It may turn out that consummation between the parties to the note and mortgage never occurred. It’s important to remember that would mean the rescission is irrelevant since the loan contract does not exist. But such a finding by a court of competent jurisdiction would negate the legal effect of the note and mortgage; this is true as long as the note was not purchased for value in good faith by a buyer without knowledge of the borrower’s defenses.
In that case, the burden does shift to the homeowner and it is entirely possible that under that scenario there could be no consummation but nevertheless homeowner liability would continue on the falsely procured note and potentially the mortgage as well. The reason is simple: that is what the State statute says under Article 3 and Article 9 of the UCC, as adopted by all 50 states. The homeowner’s remedy in such a scenario would be limited to actions for damages against the intermediaries who perpetrated the the fraudulent and fictitious “transaction” in which the named lender failed to loan anything.

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

WELCOME TO LIVINGLIES

Please fill out free and private REGISTRATION FORM

NEW PILOT VIDEO:

How To Use the TERA Report by LendingLies.com

GO TO LENDINGLIES to order forms and services

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

Purchase Seminars

Submit Case Interview Form – Receive Customized Recommended Services

Q & A – What can you do for me?

Contact Information:

The Garfield Firm

GTC Honors, Inc.

Phone: 954-451-1230

Email: info@lendinglies.com

Services include: Expert Consultative Services, Strategy, Qualified Written Requests, Case Review and Reports, Forensic Analysis Referrals, and our Title and Encumbrance Analysis.

MISSION STATEMENT: I believe that the mortgage crisis has produced manifest evil and injustice in our society. I believe our recovery will never reach the majority of struggling Americans until we restore equal protection for all citizens and especially borrowers in our debt-ridden society. LivingLies is the vehicle for a collaborative movement to provide homeowners with sufficient resources to combat bloated banks who are flooding the political market with money. We provide thousands of pages of free forms, articles and discussion of statutes, case precedent and policy on this site. I provide paid services, books and products that enable us to maintain an infrastructure to provide a voice to the victims of Wall Street corruption.

Ask about our CONSULTATION SERVICES and LITIGATION SUPPORT.

Case reviews by Neil Garfield available. Litigation and Expert Consulting in all fifty states.

Educate Yourself and Your Lawyer: Read this Blog and Purchase Books & Services from our Online Store

  • GET A CONSULT WITH NEIL GARFIELD
  • PARALEGAL SERVICES
  • GET A REVIEW AND REPORT ON STATUS AND STRATEGIES
  • GET our Rescission Package
  • GET Litigation support
  • Get our COMBO Title and Securitization Report
  • FREE! Select recent articles from the right side of this page!

RECOMMENDED READING:

WHOSE LIEN IS IT ANYWAY? by Neil F Garfield. E-Book available on our online store.

Pretender Lenders: How Table Funding and Securitization Go Hand in Hand” By William Paatalo and Kimberly Cromwell. CLICK: http://infotofightforeclosure.com/tools-store/ebooks-and-services/?ap_id_102

Homeowners Sue SPS in Class Action Over Failure to Mitigate

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

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

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

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

GET A CONSULT

FREE RESEARCH: Go to our home page and enter subject in search bar.

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

Let us help you plan and draft your answers, affirmative defenses, discovery requests and defense narrative:

954-451-1230 or 202-838-6345. Ask for a Consult.

REGISTRATION FORM: You will make things a lot easier on us and yourself if you fill out the registration form. It’s free without any obligation. No advertisements, no restrictions. The consult is important to determine how we may be of assistance in the drafting and filing of documents in court or complaints directed to law enforcement.

Purchase audio seminar now — Neil Garfield’s Mastering Discovery and Evidence in Foreclosure Defense including 3.5 hours of lecture, questions and answers, plus course materials that include PowerPoint Presentations.

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

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

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

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

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

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

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

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

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

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

%d bloggers like this: