Modification Minefields as Foreclosures Resume Upward Volume

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

Listen to Neil Garfield Show on Thursday February 26, 2015 at 6pm EDT., and each Thursday



New Jersey now has an upsurge of Foreclosure activity. It is on track to become first in the nation in the number of foreclosures. What is clear is that the level of foreclosure activity is being carefully managed to avoid attention in the media. Right now, foreclosure articles and the infamous acts of the banks in pursuing foreclosures is staying off Page 1 and usually not  anywhere in newspapers and other media outlets online and and in distributed media. The pattern is obvious. After one area becomes saturated with foreclosures, the banks switch off the flow and then move to another geographical area. This effectively manages the news. And it keeps foreclosures from becoming a hot political issue despite the fact that millions of Americans are being displaced by illegal foreclosures based upon invalid mortgage documents and the complete absence of any real creditor in the mix.

As foreclosures rise, the number of attempts at modification also rise. This is a game used by “servicers” to assure what appears to be an inescapable default because their marching orders are to get the foreclosure sales, not to resolve the issue. The investment banks need foreclosures; they don’t need the money and they don’t need the house —- as the hundreds of thousands of zombie foreclosures attest where the bank forecloses and abandons property where the borrower could and would have continued paying.

The problem with modifications is the same as the problem with foreclosures. It constitutes another layer of mortgage fraud perpetrated by the Wall Street banks, who are now facing increasingly successful challenges to their attempts to complete the cycle of fraud with a foreclosure.

The “servicer” whom nearly everyone takes for granted as having some authority to move forward is in actuality just as much a stranger to the transaction as the alleged Trust or “Holder”. The so-called servicer alleged authority depends upon powers conferred on it by the Pooling and Servicing Agreement of an unfunded Trust that never completed its mission to originate or acquire loans. If the REMIC trust doesn’t own the loans, the servicer claiming authority from the PSA is claiming vapor. If the Trust doesn’t own the loan then the PSA is irrelevant and the powers conferred in the PSA are pure vapor.

This brings us full circle to where we were in 2007-2008 when it was the banks themselves that claimed that there were no trusts and that there was no securitization. They were, as it turns out, telling the truth. The Trusts were drafted but never funded, never used as conduits and never engaged in ANY transaction in which the Trust had funded the origination or acquisition of loans. So anyone claiming authority from the trust was claiming authority from a fictional character — like Donald Duck.

Complicating matters further is the issue of who owns the loan when there is a claim by Freddie or Fannie. Both of them say they “have” the mortgage online when they neither “have it” nor “own it.” Fannie and Freddie were one of two things in this mess: (1) guarantors, which means they have no interest until after a creditor liquidates the property and claims an actual money loss and Fannie and Freddie actually pays off the loss or (2) Master trustee (and probably guarantor as well) for a REMIC Trust that probably has no greater value than the unfunded REMIC Trusts that are unused conduits.

Further complicating the issue with the former Government Sponsored Entities (Fannie and Freddie) is the fact that many banks have been forced to buy back or pay damages for violating underwriting standards and other types of fraud.

So how do you get or sign a modification with a servicer that has no authority and represents a Trust that has no interest in the loan? The answer is that there is no legal way to do it — BUT there is a way that would allow a legal fiction to be created if a Court issued an order approving the modification and declaring the rights of the parties. The order would say that XYZ is the servicer and ABC is the creditor or owner of the loan and that the homeowner is the borrower and that the modification agreement is approved. If proper notice (including publication) is given it would have the same effect as a foreclosure and would eliminate all questions of title. Without that, you will have continuing title problems. You should also request that the “Servicer” or “Trustee” arrange for a “Guarantee of Title” from a title company.

For the tricks and craziness of what is happening in modifications and the issues presented in New Jersey and other states click the link above.

Details on Rescission Found in CFPB Regulations

12 CFR 226.15
 (d) Effects of rescission. (1) When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void, and the consumer shall not be liable for any amount, including any finance charge.
(2) Within 20 calendar days after receipt of a notice of rescission, the creditor shall return any money or property that has been given to anyone in connection with the transaction and shall take any action necessary to reflect the termination of the security interest.
(3) If the creditor has delivered any money or property, the consumer may retain possession until the creditor has met its obligation under paragraph (d)(2) of this section. When the creditor has complied with that paragraph, the consumer shall tender the money or property to the creditor or, where the latter would be impracticable or inequitable, tender its reasonable value. At the consumer’s option, tender of property may be made at the location of the property or at the consumer’s residence. Tender of money must be made at the creditor’s designated place of business. If the creditor does not take possession of the money or property within 20 calendar days after the consumer’s tender, the consumer may keep it without further obligation.
James L. Macklin, Managing Director
Secure Document Research(Paralegal Services/Legal Project Management)
Agent for Charles T. Marshall, Esq. (SBN 176091)
917 Tahoe Blvd #201 A
Incline Village NV 89451

Rescission Under the Truth in Lending: Questions and Answers on Neil Garfield Show Tonight 6pm EST

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



I am inundated with questions about TILA rescission. So continuing with the the last few shows I am going to allow more questions than usual tonight. The simple explanation is that TILA rescission is a creature of statute and it comes close to what we learned in law school about rescission but it isn’t the same. In fact, if you really look up the definition of rescission it doesn’t quite fit. But they called it that in the statute and frankly it comes close enough to what we know as rescission.

The biggest confusion was “do I have to give back the house to the bank?” And the answer was always NO — even under common law rescission that would never be the case because the transaction you are rescinding is a loan transaction and what must be returned in common law rescission of a loan is the money you received as a loan. You never received title to the house from the bank. You are not rescinding the purchase of the house. You are rescinding the loan transaction. Among the questions asked of me are the following:

  1. If I sent a notice of rescission ten years ago, and the bank foreclosed anyway, do I still own the property?
  2. If the “servicer” or “bank” ignored my notice of rescission, is that grounds to sue them for wrongful foreclosure?
  3. Can I get my house back after foreclosure if I rescinded before foreclosure?
  4. Can I rescind now after the sale of the property at auction?
  5. Is there a statute of limitations on enforcing the effective date of rescission?
  6. What is the effect on title if I gave notice of rescission before foreclosure?
  7. How is TILA rescission different from other statutory or common law rights of rescission.
  8. Does rescission stop the sale of the property?

Judges Resist Proactive Homeowners Challenging Servicers and Pretender Lenders

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

This is for general information only. It should never be used as a substitute for the advice of an attorney licensed in the jurisdiction in which your property is located.


see also 201306_cfpb_laws-and-regulations_tila-combined-june-2013

I’ve been busy dealing with Judges who are resisting meritorious defenses and proactive lawsuits challenging the validity of the mortgage, note, debt or assignments. I had one Judge order me to remove America’s Wholesale Lender — an entity that doesn’t exist — as a party Defendant.

But an increasing number of homeowners are seeking to challenge, rescind, or otherwise put the pretender lenders on defense, along with the “servicers” who have no authority and question the enforceability of a modification agreement in which the countersigning party is a “servicer” with dubious or nonexistent rights to enforce a modification agreement.

This is reminiscent of when I wrote in 2008 that the Courts are getting it wrong about rescission. I said then that rescission is a specific statutory remedy which is clear on its face and not subject to interpretation that the “borrower” is getting a free house. I said that applying common law rules on rescission was wrong. There was no requirement for the homeowner to file suit and no requirement for the homeowner to tender money to the “lender” (who can’t be known because of the lack of disclosure). Hundreds of state and Federal Courts all the way up to the appellate level disagreed with me. But I stuck to my guns and continued to advance the legal theory that the statute was explicit and that Courts did not have the right to legislate from the bench.

The US Supreme Court eventually agreed with me recently overturning hundreds of final judgments, orders on dismissal and discovery. The effective on past cases is not yet known. If they have already been concluded right through sale it might be that local law might make the wrong decision final anyway. But my opinion is that if we go by what the statute says, once the notice of rescission was sent, the mortgage and note were nullified “by operation of law.” And the effect is simple: there can be no foreclosure on a mortgage and note that don’t legally exist, even if the mortgage is still recorded in the chain of title. Closings — even short sales — are cast into doubt as to whether the title or the money was handled properly.

As a result, the general consensus about the borrower was turned on its head. The “enforcement” of the rescission was not required by the borrower, it was required to be challenged within 20 days of the notice of rescission. The tender of money by the borrower is similarly turned on its head — it is the lender who owes money (a lot of it) to the borrower. And the threat of foreclosure is totally removed. The statute of limitations doesn’t just apply to borrowers. it also applies to “lenders.”  Once the borrower gives notice of rescission, the “lender” must file a declaratory action contesting the rescission within 20 days. If they don’t file that action, they waive any potential defense to the rescission.

Many individuals are sending notices of rescission even on old loans based upon the premise that they only recently discovered the defects in the loan and defects in the loan closing procedures. If the lender fails to file a lawsuit saying that they are a “lender” and where they prove their status as a lender, they lose. If they can’t prove that the disclosures at closing were true and correct within the tolerances specified in the statute (TILA), they lose. If they fail to file within 20 days, they lose.

The requirement that the “lender” record a satisfaction of mortgage and return the canceled note is just to make it easier for the homeowner to get alternative financing. And the requirement that the “lender” disgorge or pay all money paid in the origination of the loan including brokers’ fees, together with all payments of interest and principal was also teeth in the law to level the playing field, reducing the amount that the homeowner might need to pay to the lender LATER.

The idea behind the law was to address predatory or wrongful lending or enforcement tactics by banks whose dubious business plans were far too sophisticated for any normal borrower to understand what was really happening. TILA and Regulation Z were written to level the playing field. Once the borrower discovered material defects in the loan or loan procedure, they are allowed to get rid of that loan and go get another loan. The primary impact, from a legal point of view, is that the mortgage is gone “by operation of law” and the note is nullified, leaving a bare debt for the “lender” to allege and prove. But whatever the debt might be, it is UNSECURED, and thus subject to discharge in bankruptcy.

Rescission is a drastic remedy that puts the “bank” at a  spectacular disadvantage. But it is the law. and the same holds true when you have fatal defects in the origination of the loan. If the named lender doesn’t exist or didn’t make the loan, the note and mortgage should not have been released to anyone, much less recorded. That means that the mortgage was essentially a wild deed. The mortgage is not voidable, it is void. And THAT means, just like in the case of rescission that the mortgage must be removed from the chain of title on the property. Like rescission, the note and mortgage are void or nullified by operation of law, if the Judges would only apply it.

My group has several of these cases on appeal and we are confident that the appellate courts will turn the corner on proactive cases where the homeowner is current on the so-called payments due (and which are extracted under threat of enforcement and foreclosure). The current thinking of the courts in many cases is neither based in fact nor logic. If the borrower is declared in default they are regarded as deadbeats. If they are current, they are regarded as greedy deadbeats. We think that like several cases have already shown, the “servicer” or “lender” will be forced to defend cases that were dismissed by trial judges.

In the end, we think that homeowners will not only get rid of the note and mortgage, but potentially also the debt because only someone who actually did the funding could come forward with a legal or equitable claim for unjust enrichment. Such creditors will have a difficult time making the claim because (a) they don’t know anything about the case and (b) in order to do so they would be required to track and prove the money trail to show that they are in fact the creditors. Modifications by volunteer intermeddlers — like servicers who lack actual authority to service the loan because they are relying on the Trust that is falsely claiming ownership of the loan — will in our opinion also be deemed a nullity.

Robotic Signatures: Before You Admit THAT is YOUR Signature on the “Wet Ink” “Original”

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


see Robot Can Write Your Letter and Signature

In a typical day in Court, the “borrower” is asked by the lawyer for the “lender” whether THAT is his or her signature on the note and the mortgage. The initial response is yes. By admitting that signature you have validated the note and mortgage and that you signed it and that the foreclosing party has it. That is a lot of admitting based upon a single “yes” answer.

My question to you is whether you have answered truthfully. Do you really remember what you signed, what was written on the documents and exactly how you signed each document? In most cases it is years before. The homeowner answers “yes’ because he or she knows they went to a closing and signed a bunch of papers.

It frequently does not occur to either foreclosure defense counsel nor his client that someone would have the brass to come into court with an entirely fabricated document that is signed by a robot in a fabrication of the closing documents that occurs long after the alleged loan closing but before trial of the case in which a complete stranger is foreclosing on the property as though it was the creditor.

The stranger gets away with it because the stranger is lying to the only party that has any claim —equitable or legal — to get payment from the loan “closing” in which the wrong creditor was put on the note and mortgage just so the Wall Street banks could play with the mortgage documents and bet on them as though they had an insurable interest.

Public figures have long used mechanical writing to replace their own hand in writing letters and signing documents and even checks. For some reason, few people have actually brought up the issue in court and most simply go along with the farce without realizing they are contributing to the fraudulent scheme of the banks.

At trial the banks have a problem. They can’t bring in a real witness to verify the closing documents on the loan because they destroyed the original documents in most cases. So they use the homeowner to authenticate fabricated documents created through automation.

In my opinion, for most people, the true answer is “I don’t know.” Or possibly “I don’t remember.” Unless you are positive that the document is the same note or mortgage you were shown at closing — not a copy of it made to look an original — then you should not telling lies in court. If you have no recall about what was signed at the alleged “closing”my opinion is you should not pretend otherwise. Unless you have had an expert forensic document examiner authenticate the “original” documentation relied upon by the bank, then you don’t actually know if you put that signature on the page instead of a robot. The fact that you know you signed something like it doesn’t mean THAT document is real. The fact that the robot did a good job doesn’t mean it is your signature.

Once the borrower has resisted the temptation to validate a fabricated document, the lawyer for the bank will probably try to get the documents in by “Self-Authentication.” Those are legal arguments we can talk about later. The last thing they are going to do is bring a witness who really knows — because that means either perjury or Pandora’s box unleashed.


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


For lawyers only: Many homeowners are going back and digging up their notices of rescission. There are cases in state court, federal court and bankruptcy court that could be and probably are effected by the US Supreme Court decision that made it clear that TILA rescission was a unique statutory remedy and that the common law right of rescission should not be used to interpret the explicit statutory remedy that is TILA Rescission.
Borrowers/debtors are filing motions to set aside previous rulings by courts who assumed that the rescission was only effective when a court says so (the common law rule rejected unanimously by the Supreme Court) and that tender of the money was required for the rescission to be effective (also rejected by the U.S. Supreme Court).  The Banks have reacted predictably — trying to enforce the previously incorrect rulings of the court by virtue of res judicata, collateral estoppel or even “law of the case.” Remember that state laws and rules of procedures will affect the ability of borrowers to go back into litigation that has been concluded even if it is on false premises.

I would file a short reply saying something like “Defendants continue to argue a point not in issue in an blatant attempt to appeal to the Court’s personal views or inclinations. Plaintiff does not seek a free house and never did. Plaintiff’s goal is very simple: If the defendants were not the owner or representative of the owner of the debt, note and mortgage and lacked any authority to pursue collection or enforcement, then they should not be permitted to pursue a strategy in which the defendants get a “free house.”

The US Supreme Court made clear that the requirements of TILA are clear and must be strictly construed — apart from any common law notions of fraud or rescission. The Federal statute is clear in stating that the Plaintiff’s issuance of a notice of rescission produced two results: (a) the note and mortgage are nullified by operation of law (although the debt remains) and (b) if the “lender” seeks to contest the rescission, they must do so within 20 days by the Lender filing a lawsuit, which it is uncontested that the Defendants no such action was filed. If the note and mortgage were nullified by “operation of law” (quoted from statute) there is no logic or legal argument that can make it otherwise.

There is no authority that makes the notice of rescission void. “Lenders” may challenge it within 20 days and if they don’t they have waived their “defenses” or “Claims.” The point of the nullification of the note and mortgage by operation of law is to provide the borrower with the capacity to seek out alternative financing (to pay the existing debt to the “lender”) which could only be achieved if the Defendant’s mortgage and note were removed from the title chain. The 20 days in which the “lender” just sue to set aside the rescission has long expired. And the Defendants still have not filed such a suit. They have waived their defenses or claims regarding the rescission by operation of Federal law. These are not theories. They are explicit statements by the US Government aimed at leveling the playing field between borrowers and lenders, reinforced by the short opinion rendered by Justice Scalia for a unanimous Supreme Court. ”

It is not the borrower that must tender payments. It is the lender that must tender payment, disgorgement and reimbursement for every penny paid by the the borrower in connection with the loan including at closing and all monthly or other payments thereafter. Nothing could be more clear in the statute. And now the US Supreme Court has said exactly that — courts that apply common law rules to rescission are wrong when it comes to TILA rescission. The various “defenses” and “claims” of the “lenders” are waived unless they bring suit within 20 days from the notice of rescission. There are no exceptions in the Federal Statute.

The subject mortgage and note did not exist after the notice of rescission. That is the express terms of the law. Hence any action to enforce or collect under the terms of the note or mortgage or deed of trust were void, ab initio. No court would even have subject matter or personal jurisdiction to consider a controversy regarding a nonexistent note and a nonexistent mortgage or deed of trust. Further, the defendants were obligated to send a satisfaction of mortgage and canceled note to the borrower after rescission. Defendants are seeking to have the court ratify Defendant’s violation of the express provisions of the Federal Act. In essence they are arguing that even though the US Supreme Court says otherwise, that the notice of rescission should be ignored. There is no higher authority than the US Supreme Court. One is left to ask, upon what source of authority the Defendants rely that is higher than the US Supreme Court speaking unanimously.


Neil Garfield Show Next Week

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


see UBS, SUNTRUST Fail to Escape Liability to Investors.

We are starting rising activity by investors who are drilling down on their “investment” that was not just handled negligently but was the largest fraud of its kind in human history. Investors are starting to realize that they were screwed the moment they deposited money with the investment banks. Those Banks took the money as an involuntary gift, and the proceeds were partially used to pay for mortgages to cover-up the fraud. And the worse the loan the better for the banks; because when you are telling the investor that the return is 5% and you are giving 10% loans that will likely default, you only have to lend out half the money that the investors gave you (provided of course that the loan fails).

The only theoretical risk for the Banks, they thought, was if the bad loans didn’t default. Well that was no problem. Anyone paying more than 7-8% is probably going to have a problem keeping the mortgage current once they start paying the full amount die for PITI (principal, interest, taxes and insurance). And since they knew they had flooded the market with money and the effect of the flood was housing prices floating at twice their value, they could bet on the market crashing. So it all worked out fine for them — or so they thought.

Fund managers who were buying the mortgage backed securities initially refused to believe they had been so stupid or refused to disclose it to keep their jobs. The evidence is piling in and all analyses point to the same thing — the fund managers who did the research and the due diligence all concluded that the pricing of the mortgage bonds was delusional and the infrastructure was a disaster. The fund managers who relied upon the reputation of the sellers (Wells Fargo, BOA, Citi, Chase etc.) had their clocks cleaned by Wall Street sharks.

It has taken years for the truth to come out but the investment community is kind of like Facebook — once information is out, everyone knows it. And investors of all sorts are suing the banks who were sliding pure crap into the loan pools that the investors thought were so safe. Just take a look at SunTrust cases. They insist that they originated the loan but somehow immediately after the closing they were only the servicer — something you don’t fund out until you press them against the wall in litigation.

So now ResCap is mad they got duped into buying worthless paper. And like hundreds of other investors is bringing claims for malfeasance and misfeasance in the management of the money given to the banks and the representations about what kind of loans the investors were getting. What they still have not quite realized is that the investors made the loans but didn’t have a single document to assert a claim for collection or a claim of being secured by a mortgage. All that went to the banks. Why? Because that was part of the fraud. Approximately $13 trillion of American wealth disappeared by virtue of this game. But now the banks are starting to feel the heat. It won’t be long before they are fully cooked — and all the efforts by the government to prop up these banks will have failed the moment when the ratings companies state that the value of those holdings in derivatives are zero or nearly zero. That’s when the balance sheet becomes clear.


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