Adverse Possession vs Cancellation of Instrument and Quiet Title

In the final analysis, the only way to smoke out the banks on their fraudulent claims as “creditors” or “agents of creditors” is to create a situation where the creditor must be disclosed. In those cases where judges have ruled in discovery or ruled on the right to prepay, subject to identification of the creditor, the cases have all settled under seal of confidentiality. There are thousands of such cases buried under side agreements requiring “Confidentiality.”

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I have been seeing a number of people adding Adverse Possession to their theories about Quieting title. So let me say first that an order granting quiet title to a homeowner whose title is encumbered by a recorded mortgage or deed of trust is practically impossible not only because judges don’t want to grant it, but for the more important reason that quiet title is not legally sound strategy for homeowners seeking defend their homes from foreclosure.

In order to quiet title, one would need to allege and prove by clear and convincing evidence that the mortgage or deed of trust should never have been executed or recorded in the first place. Anything less than that does not deserve quiet title declaration from any court. The fact that a certain party purports to have authority to enforce the mortgage or deed of trust when in fact they don’t have such authority is damn good reason not  to let them enforce the mortgage or deed of trust. But that does not mean that the instrument is void.

Here is the response I gave to a question about adverse possession:

Adverse possession does not seem to apply to this situation. But it is possible that you could get traction by filing a lawsuit to cancel the DOT (Cancellation of Instrument) and maybe even get a order quieting title to your name. This is not simple and the requirements and elements of such claims are difficult to fulfill.

Adverse possession is usually utilized in boundary disputes.
A mortgage or a deed of trust is an interest in real property. And where we are dealing with the deed of trust,The trustee is receiving title to the property. So technically you are probably correct. But when you look deeper, You will see that adverse possession does not apply.
The transfer of title to a trustee under the deed of trust divests the homeowner of title. Under the terms of the DOT you are entitled to live there and act, for all  purposes, as though you are the title owner including in a foreclosure proceeding. Hence several elements of adverse possession are not met especially “adverse,” since you have express permission under a contract to be there and to act as the title owner.
ELEMENTS OF ADVERSE POSSESSION: (NOTE — the “title owner is the DOT trustee)
  • Continuous
  • Open
  • Notorious
  • Peaceful, Peaceable
  • Hostile (claiming title against the interest of the party who actually has title)
  • Adverse (no permission or contractual right to assert title against the party who is seized with title).
  • Exclusive (barring claims or use by the actual title owner
  • Visible (putting a fence on your neighbor’s yard, ignoring the property line)
  • Actual (not implied)
But the fact that the DOT conveyed title to a real trustee on behalf of a false beneficiary is probably the basis for a lawsuit to cancel the instrument (if you can prove your allegations) and then get an order declaring the title is quieted, free from the encumbrance of record that is declared by the judge to be void.
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You need to be careful though about your conclusion that the DOT was void. This involves several factual questions that are not obvious. Even a void instrument could conceivably be valid if it contains a defect that is corrected or could be corrected by affidavit pursuant to local law.
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Your argument would be that no such affidavit was ever offered. Thus even after you filed your lawsuit, they failed or refused to make any corrections.
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Their argument will circle around third party beneficiary, “standing,” and the fact that SOME party could enforce it if they could show that they were the intended beneficiary despite the recitation on the face of the DOT.
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This is not the basis for a simple legal argument. Each side must allege and prove their factual (what happened, when, where, who was involved and why) allegations by at least a preponderance of the evidence and most probably, legal or not, the homeowner would be held to a higher standard of clear and convincing evidence informally or formally because the recorded documents carry a “presumption” of authenticity and validity that the homeowner must overcome.
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Academically speaking such claims are well-founded. But in practice judges look at such claims as gimmicks to get around a legitimate debt. In order to combat that we must figure out a way to bring in a party who has a legitimate claim to represent the unknown and undisclosed creditors.
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The banks have successfully cast the money trail in obscurity. The banks are committing fraud with each foreclosure in my opinion and in the opinion of everyone else I know that has analyzed the securitization of mortgage debt. But they have made it appear that there is nobody other than the bank’s pet entities (the so-called trusts) to play the role of creditor.

Deutsch Bank National Trust Company Was Crushed in Texas in 2015. Why isn’t anyone listening?

When a judge looks carefully at the record, the bank loses. The use of Deutsch’s name in the style of the case still shows that Judges are considering the Plaintiff to be the named “Trustee” instead of the named (or named, which is frequently the case) Trust. In fact the Trustee has nothing to do with foreclosures. In this case the Judge wrote the following:

“Judgment (for the homeowner for declaratory relief) was based on findings and conclusions that Deutsche Bank had failed to prove chain of title back to the original lender, now defunct. The sole proof on which the bank relied — a purported assignment from “MERS as nominee for the lender, its successors and assigns” — was held void, because the assignor did not exist when the document was signed.

“Deutsche Bank’s first argument is based on a misrepresentation of the trial record. [i.e. the lawyers were lying to the court about what was in the trial record].

“The Burkes argued that the stamp block containing the Cathy Powers signature was not a part of the Note as originally executed, and instead offered a copy of the unindorsed Note as one of their own exhibits,

“This absence of documentary proof mirrors the lack of any testimonial evidence of holder status. Given its utter failure of proof, Deutsche Bank’s continuing assertion of a right to foreclose as holder of the Note is not just groundless, it is frivolous. On this trial record the current holder of the Burke Note remains a mystery.

“Deutsche Bank introduced no proof whatever of a prior transaction by which it acquired any rights in the Note. Absent such proof, L’Amoreaux is not controlling. Here MERS was acting on behalf of a defunct entity (IndyMac Bank), and its purported assignment was therefore void and invalid under the Texas common law of assignments, as explained below.

“There is simply no proof of an existing assignor with an existing right in the property capable of being assigned in 2011. It is undisputed that Indy-Mac Bank had been “dead” since 2008, several years prior to the 2011 assignment. (P. Ex. 6, at p. 1). Thus, any post-mortem transaction by that entity would be a nullity under Pool v. Sneed.

“In sum, L’Amoreaux does not undermine this court’s judgment in favor of the Burkes because (1) there is no record evidence of a prior assignment of the lender’s interest in the Note or Deed of Trust, (2) there is no record evidence that any purported assignor existed at the time of the 2011 assignment; and (3) there is no record evidence of a principal/agency relationship between MERS and any “successor or assign” of the lender when the assignment was executed.

“Deutsche Bank’s third argument is a red herring

“a homeowner is allowed “to challenge the chain of assignments by which a party claims a right to foreclose….” Id. at 224. It is true that in Texas an obligor cannot defend against an assignee’s efforts to enforce the obligation on a ground that merely renders the assignment “voidable at the election of the assignor,” such as a fraudulent signature by an unauthorized corporate agent. Id. at 225. The problem here is not a voidable defect that a defrauded assignor might choose to disregard — it is the absence of a valid assignor (i.e. a real entity owning the right to be assigned) in the first place. Cf. L’Amoreaux v. Wells Fargo Bank, N.A., 755 F.3d 748, 750 (5th Cir.2014) (considering homeowner’s challenge to validity of MERS assignment on its merits, implicitly rejecting bank’s “voidable” argument).

“A court’s primary duty in construing a written contract is to ascertain the true intention of the parties as expressed in the language of the document itself. Coker v. Coker, 650 S.W.2d 391, 393 (Tex.1983). In this document, the name of the assignor, “Mortgage Electronic Registration Systems, Inc.” appears three (3) times — in the body of the assignment, above the signature line, and in the corporate acknowledgement. Each time, MERS’s name is immediately followed by the phrase “as nominee for” the lender, IndyMac Bank, its successor and assigns. P. Ex. 2. Nowhere does this document hint that MERS intended to convey its own rights,[8] or that it was acting as principal rather than as agent for other entities.

Words matter, especially in real estate transactions. See Univ. Sav. Ass’n v. Springwoods Shopping Ctr., 644 S.W.2d 705, 706 (Tex.1982) (“the terms set out in a deed of trust must be strictly followed”); see also Mathis v. DCR Mortg. III Sub I, L.L.C., 389 S.W.3d 494, 507 (Tex.App. — El Paso, 2012) (“The rules of interpretation that apply to contracts also apply to notes and deeds of trust.”). Based on the words of the 2011 assignment, MERS was no more acting on its own behalf than was the bank’s own law firm.

“Deutsche Bank asks to reopen the trial record to provide “the wet ink original of the Note or testimony affirming Deutsche Bank’s status as holder of the Note.” (Dkt. 90, at 7). No authority or excuse is offered for this breathtakingly late request. Even assuming such evidence exists, Deutsche Bank does not pretend that it is “newly discovered”, nor that the bank was excusably ignorant about it until after trial despite using due diligence to discover it. See 11 WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND PROCEDURE § 2808 (2012). After four years of litigation, including court-ordered mediation and trial on the merits, the time for such a deus ex machina maneuver has long since passed. The Burkes are entitled to the finality of judgment that our judicial process is intended to provide. The bank’s request for a do-over is denied.

Let us help you prepare for trial: 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.
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Hat tip Bill Paatalo

see Deutsche Bank Nat’l Trust Co. v. Burke, 117 F. Supp. 3d 953 – Dist

 

Short Explanation of TILA RESCISSION vs Common Law Rescission

Quiet title is a lawsuit not a motion. It must be worded correctly to fulfill the elements required for the court to consider the demand for quiet title. Otherwise it will be dismissed.

For quiet title to apply the mortgage must be void not just unenforceable. TILA Rescission is a statutory remedy that is different from common law rescission. Sending of TILA rescission notice by U.S. Mail means that delivery is presumed. If delivery occurred or is presumed the TILA Rescission is effective. Just the opposite in common law rescission based upon fraud. At common law, sending a notice of rescission based upon fraud is only the first step in a long litigation process.

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One must be careful NOT to file a lawsuit or motion seeking to have the court declare it is effective. Either the notice was delivered or it wasn’t delivered. If U.S. Mail is used d delivery is presumed. If it was delivered it is effective. That is what the statute says and that it was SCOTUS said about the statute. The matter should be closed, but judges are resisting following the directive of the highest court in the land from which there is no appeal. (See Jesinoski v Countrywide).

If the notice of rescission is sent within three years of apparent consummation then there is no doubt that it is effective. If it is sent more than 3 years after the note and mortgage were executed then there is a split of opinion. I believe it is still effective until the rescission is vacated by a court order. In either case — before and after the three years — courts are reluctant to apply it.

The appropriate lawsuit could be framed in allegations that the defendants should be stopped from attempting to enforce the void loan documents or stopped from harassing the borrower using the void note and void mortgage. Both are rendered void by virtue of the notice of rescission.

If the lawsuit is filed within 1 year of the date of the notice of rescission it could also include allegations that the defendants (if they are lenders) failed to comply with the three statutory duties in the TILA rescission statute. Or, if they are not lenders nor representatives of the lender that they committed multiple violations of TILA, RESPA and FDCPA as well as fraud and negligence and of course uttering false instruments and recording instruments that are false or fraudulent.

TILA RESCISSION is an statutory event not a claim. No lawsuit is proper to declare an already legally effective instrument to be effective. It happened on the day of mailing. Best to use U.S. Postal Service for the notice.

Common law rescission is a claim not an event. In that sense they are procedural the opposite of one another. A lawsuit is required and the pleader must prove the allegations which ordinarily means that they must prove fraud by clear and convincing evidence.

We can help evaluate your options!
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