Fl 4th DCA Finds HSBC Has No Standing to Foreclose and Attacks the Credibility of Robo-witnesss

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 SO here we have the 4th DCA getting close the 2d DCA opinion posted yesterday. You have the non-existent American Broker’s Conduit as “originator”, Wells Fargo playing the part of servicer, and HSBC playing the part of Trustee for a Trust that never received the loan. Hence there was no owner and no servicer, whose rights derive from the terms of the trust (but since the trust didn’t own the loan, the servicer had no rights to service that loan).
Once again in another DCA in Florida the courts are asking “where’s the beef?” If the transactions are not real or disclosed then how is the court to treat documents that “talk about” the transactions as if there were real purchases and sales of the loans and loan documents.
The reason why there are no such proffers of real evidence is that there is no real evidence. The banks are faking it. And they have been quite successful in nearly 8 million foreclosures. Finally the courts are refusing to be used as tools in the largest economic crime in human history. We have turned the corner. Anyone who loses these cases at the trial level should take it up on appeal — if they have the resources and they have an adequate record on appeal. Remember that Standing is a jurisdictional issue and you can raise jurisdiction at any time, including on appeal, for the first time.
And there is no doubt that standing is the burden of the party who is asserting standing. It is not on the borrower to show that the foreclosing party lacks standing. It is up to the foreclosing party to prove a prima facie case with real evidence and without presumptions that shows that possession of the note was the result of a real transaction or that they have received authorization from someone who had possession of the note with rights to enforce, which means that they in turn received the note or the rights to enforce from the party who is the actual creditor. Under normal circumstances, there would be no doubt that the bank would need to show and even want to show that the transactions were real. The fact they they are fighting iit could only mean one thing — the entire chain is fabricated, forged and a total sham.
The problem is that Judges, lawyers and even borrowers are still having trouble with the notion that the banks would come to court without any reason for being there except greed. The banks come to court because they have successfully barred the real creditor from knowing about and participating in any efforts to collect on the money advanced by investors, who are the real creditors. So there is nothing to stop the banks from lying to borrowers, lawyers, judges and even appellate courts because they are the only ones who know the real story.

Fl 2d DCA: Courts Cannot Fill In the Blanks — US Bank Lacks Standing — False Presumptions Are Falling Apart

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 see DOC072215
Can’t help saying I told you so. The banks, servicers, trustees et al can’t come into court claiming a right to collect or foreclose when they can’t prove the transactions by which they say they came into possession of the loan documents. It has long been the successful strategy of banks to hoodwink judges into treating them as Holders in Due Course — even when HDC status is expressly denied by the foreclosing party. For them it is simple: they have the note in their possession and that is all anyone needs to know. WRONG.
Practice Note: Lawyers should use this a case to bolster their claims for discovery. The express wording of this decision clearly makes the case for information that might lead tot he discovery of admissible evidence concerning the accounting for the possession of the note — which means, as this court states, proving the actual transaction, not, “beating around the bush” with instruments that talk about the transaction as though it had occurred.
The Court is getting serious about the right to foreclose based upon false premises and doesn’t like the arguments advanced by US Bank one bit. This also applies importantly to CitiMortgage which heavily relies on the arguments stated in this decision.
“This Court cannot fill in the blanks of an incomplete chain in order to determine that US Bank actually acquired the instrument …. the transferee must account for possession of the unindorsed instrument by proving the transaction through which the [alleged] transferee acquired it…
Ultimately the problem with US Bank’s attempt to establish standing to foreclose is that it relies on a “paper trail” that beats around the bush but never axes the tree necessary to establish the legal requirement of standing. We cannot, as advocated by U.S. Bank, presume standing simply because it serviced the loan; Long standing case law prevents us from doing so.”
Lawyers who do not fight on this point are literally snatching defeat from the jaws of victory. The whole point of my work over the past 8 years has been to alert everyone that none of the transactions presumed actually occurred. The false presumption has been that the burden of proof was on the borrower to prove that even though it was the other side who had the only proof. But the burden is not on the borrower. It is on the foreclosing party to at least make a prima facie case for standing and they can’t do that through mere presumptions concerning fabricated instruments that appear to be facially valid.
In the real world of banking there are plenty of tracks that would show such a transaction if it really had occurred. The fact that the banks, servicers, trustees et al are fighting so hard against revealing those tracks is the strongest indication that no such tracks, and therefore no such transactions ever occurred.  Any bank who was seriously thinking about buying into such a transaction would insist on seeing the footprints of the transaction and proof of payment. The courts should do nothing less than the banks require of each other and themselves when the transactions are real.

MERS is Not a Beneficiary

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I am busier than a one-armed paper hanger this week. No offense to the personally challenged.
Fortunately a brief popped up in my email which goes all the way back to what I was saying in 2007-2008 regarding MERS.
First MERS is NOT a beneficiary under any statutory definition of any state, as far as I can tell. In an action in Arizona the judge asked the MERS lawyer point blank whether that was a true statement and the lawyer confirmed that MERS did not fit the legal definition of a beneficiary. Which brings us to the “Donald Duck” effect. If MERS is named as beneficiary or mortgagee in a deed of trust or mortgage, and MERS is not really the beneficiary under any legal foundation, then the designated beneficiary has essentially been left blank. They have in essence used a fictitious character that has no legal existence. Hence the Donald Duck analogy.
The Banks are painting themselves into a corner. They have been using assignments from MERS as the basis for showing the sale of the loan when in fact (a) no sale occurred and (b) MERS never owned the loan (c) MERS was never a creditor or payee on the note and (d) MERS was never a mortgagee or beneficiary. It was a cover for an illegal scheme the complexity of which has been revealed on this blog, piece by piece. Suffice it to say that the intermediary banks screwed both the borrowers and the investors whose money was used for the origination or acquisition of loans. It’s like a very old joke about lawyers. Here it was the the investment bankers who stole from the investors, lied to the borrowers and violated every law, rule and regulation concerning disclosure to both the investors and the borrowers — and then the banks kept most of the money.
Regardless of how the Judge in this particular case rules, the brief filed by counsel for the borrowers or debtors correctly states the facts and the law. MERS is already in trouble in multiple states. It should be completely disregarded as a legal entity in the chain of title. And the credibility and truthfulness of any document produced as a “business record” by MERS is at best of minimal value. It should not be allowed into evidence. The information on such documents are false and the authority to report it is absent, as is the personal knowledge of anyone who signed such a document.

Guidance for Judges When Considering Admissibility of Hearsay Business Records

We have all seen it. Practically every foreclosure trial is the same. The lawyers claim they represent the servicer but do not claim to be representing the Plaintiff “Trust.” Their sole witness is a robo-witness whose sole job is to testify in court and who in most cases never had any other relationship with the servicer or any bank or trust involved in the subject foreclosure.

The lawyer seeks to get into evidence the “business records” of the “servicer.” In most cases the “servicer” is not the servicer. It has processed no payments and has done none of the duties of a servicer as it is understood in the industry and as specified in the Pooling and Servicing Agreement. That servicer is in actuality an enforcer masquerading as a servicer.

So the lawyer shows the witness the “business record” and asks him what it is and the witness replies that it is the business records of his employer, the alleged servicer who is not a servicer. And then come the rehearsed questions about whether the witness is “familiar” with the record keeping procedures of his employer but is never asked about the record-keeping procedures of the the predecessors who actually collected money from the borrowers and who did and in most cases still are making payments to the investors who are the real “creditors.”

The witness usually knows nothing about who, what, when , where and why any records were kept, why they reflect certain changes in posting or anything else because his employer entered the picture AFTER the borrower stopped paying but during the time that the previous “servicer” was making payments tot he investors. In most cases the investors are getting paid currently through servicer advances. That in truth is what the real case is about — getting to a foreclosure judgment and sale so the previous servicer can collect back the volunteer payments made to investors.

My tirades about hearsay and exceptions to hearsay to allow certain documents can be summed up thusly: By definition any document purporting to have relevant information or data on it is hearsay simply because a document cannot be cross examined nor can it attest to its own authenticity, accuracy, reliability and truthfulness. On that everyone agrees. So a witness is necessary to provide a foundation for one of the exceptions to the hearsay rule which simply says that a hearsay statement may not be admitted in evidence. The witness can’t say that he heard from someone not in the courtroom that the light was red. If the lawyer wants to get the red light into evidence he needs the person who said it, not the person who heard it.

But more than that is the credibility of a witness, and the company he or she represents, in connection with current foreclosures. They are retained as a stand-in for their predecessors so they don’t have to answer questions about how and why certain records were kept and how and why the court and the borrower is not entitled to the rest of the records which would show payments to the real creditors. They are there at the behest of the former servicer for the sole purpose of getting a foreclosure judgment and sale not for the protection of the creditor, who has been paid, but for the advantage of the predecessor who wants to collect the volunteer advance payments made to the investors. That predecessor has no direct claim against the borrower. So they are disguising their claim as a foreclosure leaning on the fact that the borrower stopped paying. But if the creditors are receiving payment anyway there is no default.

Since it is the servicer that has an interest, the credibility of the witness or “records.” is at least in some doubt. My feeling is that the credibility of the witness is more than a little in doubt. Both the witness and the company for whom he or she is the corporate representative have no interest in serving the “lender” or “creditors” and have only the interest of themselves and their predecessor “servicers” to protect or advance. So by my reckoning lawyers should argue more forcefully (notwithstanding some appellate decisions to the contrary) to bar such evidence in court. They could, if they really wanted to be open about it, bring in a witness who was involved in the creation of the records that were “boarded.”

I came across a recently decided case and I liked their description of what constitutes trustworthiness and credibility. I offer it below:

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In Kagen aka Gaurino v Kagen,Unpub Per Curiam Opinion, (#318459, 7/14/2015) the Court of Appeals reversed a trial court order denying the father’s motion to update the children’s vaccinations; and ordered that the children be vaccinated, but in strict compliance with the recommendations of the children’s pediatrician.

<>

A critical issue before the court was the admissibility of hearsay evidence under the catch-all exception of MRE 803(24). <>

Hearsay evidence may be admissible under the catch-all exception of MRE 803(24). “To be admissible under MRE 803(24), a hearsay statement must: (1) demonstrate circumstantial guarantees of trustworthiness equivalent to the categorical exceptions, (2) be relevant to a material fact, (3) be the most probative evidence of that fact reasonably available, and (4) serve the interests of justice by its admission.” People v Katt, 468 Mich 272, 290 (2003).  In Katt, 468 Mich at 291 n 11, the Michigan Supreme Court quoted with approval various factors that federal courts have adopted in analyzing a statement’s trustworthiness. Of particular relevance are the following factors: (3) The personal truthfulness of the declarant. If the declarant is an untruthful person, this cuts against admissibility, while an unimpeachable character for veracity cuts in favor of admitting the statement. The government cannot seriously argue that the trust due an isolated statement should not be colored by compelling evidence of the lack of credibility of its source: although a checkout aisle tabloid might contain unvarnished truth, even a devotee would do well to view its claims with a measure of skepticism. (4) Whether the declarant appeared to carefully consider his statement. * * * (8) Whether the declarant had personal knowledge of the event or condition described. * * * (11) Whether the statement was made under formal circumstances or pursuant to formal duties, such that the declarant would have been likely to consider the accuracy of the statement when making it.<>

In Kagen, proffered reports from the Center for Disease Control (CDC), National Institute of Health (NIH), Food and Drug Administration (FDA), and Michigan Department of Community Health (MDCH) were admissible. Although hearsay, “[a]ll four reports are official (formal) statements by government agencies.” Kagen I, unpub op at 5. That the reports were prepared in the declarants’ official capacities and were presented in a public forum assured that the declarants had verified the accuracy of the information before its dissemination.  Such reports “were prepared by experts in the field of child immunizations and were based on scientific study,” we reasoned, and “it would impose an unreasonable burden to expect [the party] to present the testimony of the government agents who compiled or prepared the reports.” Kagen I, unpub op at 5. Accordingly, such reports produced by government agents are “the most probative evidence of [a material] fact [that is] reasonably available.” See Katt, 468 Mich at 290. As noted, such formal reports are also reliable as required under the first Katt factor as they are created by individuals in their official capacities and for public dissemination, invoking a special duty to ensure accuracy. Kagen I, unpub op at 5-6.<>

However, documents from Wikipedia are not inherently trustworthy.  See, e.g., Badasa v Mukasey, 540 F3d 909, 910 (CA 8, 2008); Bing Shun Li v Holder, 400 Fed Appx 854, 857 (CA 5, 2010) (“We agree with those courts that have found Wikipedia to be an unreliable source of information.”); United States v Lawson, 677 F3d 629, 650 (CA 4, 2012) (“Given the open-access nature of Wikipedia, the danger in relying on a Wikipedia entry is obvious and real. As the “About Wikipedia” material aptly observes, “[a]llowing any-one to edit Wikipedia means that it is more easily vandalized or susceptible to unchecked information.” Further, Wikipedia aptly recognizes that it “is written largely by amateurs.”); Johnson v Colvin, unpublished opinion of the United States District Court for District of Maine, decided September 25, 2014 (Docket No. 1:13-cv-406-DBH) (“Counsel are reminded that this court has not accepted Wikipedia as a reliable medical reference.”); Smartphone Techs LLC v Research in Motion Corp, unpublished opinion of the United States District Court for the Eastern District of Texas, filed February 13, 2012 (Docket No. 6:10-CV-74-LED-JDL) (citations omitted)<>

A blog by its very nature is not akin to a formal and official statement presented by a government agency. A blog is a “[w]eb site that contains online personal reflections, comments, and often hyperlinks provided by the writer.” Merriam-Webster’s Collegiate Dictionary (11th ed), p 133. As described by this Court in Ghanam v Does, 303 Mich App 522, 547; 845 NW2d 128 (2014) (quotation marks and citation omitted): Ranked in terms of reliability, there is a spectrum of sources on the internet. For example, chat rooms and blogs are generally not as reliable as the Wall Street Journal Online. Blogs and chat rooms tend to be vehicles for the expression of opinions; by their very nature, they are not a source of facts or data upon which a reasonable person would rely.<>

Snopes.com as a website that “has come to be regarded as an online touchstone of rumor research” also lacks the characteristics of trustworthiness.  See (accessed July 1, 2015). The site touts: “Welcome to snopes.com, the definitive Internet reference source for urban legends, folklore, myths, rumors, and misinformation.” (accessed July 1, 2015).<>

Finally, the catch-all exception to the hearsay rule does not open the door to the introduction of anything a physician or ‘purported’ expert has to say. The other evidentiary rules governing the introduction of expert testimony (MRE 702, MRE 703 and MRE 707) make it plain that in the absence of an adequate foundation, an expert opinion lacks reliability.<>

Rescission Update: The Notice and the Response

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 The challenge is getting people to accept the simplicity of the specific statutory procedures contained in the statutes governing TILA Rescission. The most common mistake I see is that the borrower justifies the rescission with all sorts of factual allegations in their notice of rescission. In so doing they may have set the stage for their undoing.

Where the notice of rescission contains too much information it raises issues on its face that might cause a problem. There is  confusion raised between whether they are invoking common law rescission — where they must file a suit, allege and prove fraud — and TILA rescission, which does not require a lawsuit and where the borrower has no obligation to give reasons. The rescission letter as framed often raises certain issues regarding the statute of limitations and implies that the rescission is to be effective when a judge agrees with the reasoning in the letter. TILA rescission does not require anyone to agree or any Judge to enter an order. Such letters as I read them seem to invoke TILA rescission but then raise issues about common law rescission.

The reason why the Jesinoski decision was so short and the decision was unanimous is that Congress set forth an unambiguous specific statutory scheme just like state legislatures set forth a specific statutory scheme in non-judicial foreclosures. First the notice on day 1. Then the duty to comply with rescission on the date of receipt and continuing for 20 days. After the 20 days from receipt has expired the recipient is in violation of the statute and having failed to challenge the rescission by operation of law (i.e., a lawsuit) they have waived their defenses — same as the borrower in non judicial foreclosure when they fail to file suit within the prescribed window of time. And finally when they fail to comply with statutes for over one year, they lose any right to collect on the debt.

So the TILA rescission is effective upon mailing. That works by operation of law and can only be undone by some other operation of law. And the window for challenging the rescission is limited to the 20 day period in which the “lender” must comply with the the three duties provided by statute — return of the cancelled note, filing a release and satisfaction of the mortgage or deed of trust, and payment of all money received or paid as set forth in the TILA statute.

Keep in mind that the statute has a provision for the borrower to invoke a legally binding effect in a non-judicial procedure (mailing a letter) but that the TILA statutes does NOT provide for any lender, creditor or servicer to contest the rescission by non-judicial means (i.e., a letter stating that the rescission is rejected or denying the reasons for the rescission or stating that the the statute of limitations has run).

NOTE: Some may argue that I am interpreting the statute, which is equally impermissible. The argument is that the 20 days relates only to compliance with the three duties under TILA rescission. Those arguing this point would say that the statute provides the ONLY remedy available during the rescission process, to wit: compliance with the three duties and then getting repaid for the principal amount that was loaned. Under this theory no action could stop the rescission, judicial or otherwise. The “lender” could probably be allowed to file an action for damages for “wrongful rescission.” But they would faced with the problem of standing — i.e., disclosing and proving the money trail to show they were injured by the rescission. So the argument is that since the statute provides no process for challenging the rescission, which is the intent of Congress in the statute, that there can be no judicial or non-judicial procedure to stop it. They may be right. As I read the statute, not even the borrower could make the rescission non-effective without a separate and new agreement creating a new loan contract.

People ask me where does it say that they only have 20 days? (The more relevant question is whether the “lender” has ANY opportunity to challenge the rescission, which is NOT provided by TILA statutes but I think is implied in order to satisfy due process). The answer is that the statute, the Supreme Court and the Regulation Z all say that the loan contract is cancelled, the note is void and the mortgage is void as of the date that the notice of TILA rescission is mailed. So the answer to the question is that the 20 day period is the only period of time in which the duty to comply is ticking away. Justice Scalia said in no uncertain terms that the statute is not ambiguous and therefore may not be “interpreted.”

Since the rescission is effective by operation of law then that can only mean that there are no contingencies about the rescission which could interfere with its effectiveness. And that is exactly what Justice Scalia said.  Any attempt to raise “defenses” to rescission after 20 days would, if allowed, render the rescission NOT effective by operation of law until a judge reviewed it. Any Judge so ruling would be over-ruling the US Supreme Court.

PRACTICE NOTE: Lawyers for the banks and servicers are picking up steam on their attempt to use fear and intimidation about rescission. They are calling borrowers and opposing counsel and essentially saying “Great! When do we get paid?” This is intended to undermine confidence of the borrower and the lawyer for the borrower. The fact is that the statute is very clear and it is unambiguous as stated by a unanimous US Supreme Court — the “lender” must be in compliance with all three duties BEFORE they can demand payment and they cannot demand payment of finance charges.

In order to make demand for payment they must fulfill four requirements: (1) less than one year as elapsed since the notice of rescission (2) they have already returned the cancelled original note (3) they have already filed a release adn satisfaction of the mortgage or deed of trust int eh county records and (4) they have already paid the borrower all money ever paid on the loan, including interest, principal, fees, and compensation paid to anyone in the origination of the loan. Note that the last issue is subject to a Qualified Written Request (RESPA 6) or lawsuit in which enforcement of the rescission is sought. In that sense rescission is the ultimate discovery tool — allowing the borrower to prove behind the snowstorm of paperwork that is used by the banks and service to process illegal foreclosures.

THE LAWSUIT FOR ENFORCEMENT MUST NOT BE A LAWSUIT THAT SEEKS TO MAKE THE RESCISSION EFFECTIVE. THE RESCISSION IS ALREADY EFFECTIVE BY OPERATION OF LAW. DON’T RAISE THE ISSUE THAT ONLY THE BANKS AND SERVICERS SHOULD BE RAISING. THE LAWSUIT SHOULD SIMPLY STATE THAT THE RESCISSION WAS SENT AND RECEIVED  AND THAT THE BORROWER IS SEEKING AN ORDER COMMANDING THE “LENDER(S)” TO COMPLY WITH THE THREE MAIN DUTIES DESCRIBED IN THE TILA STATUTES.

BUT STRATEGY PLAYS A PART HERE: REMEMBER THAT WHEN THE RESCISSION IS MAILED THERE IS NO LOAN CONTRACT, THERE IS NO NOTE AND THERE IS NO MORTGAGE — BUT AFTER ONE YEAR THERE IS NO DEBT EITHER. FILING AN ENFORCEMENT ACTION INVITES THE OPPOSITION TO SET FORTH THE CHALLENGES AND DEMAND THAT THE RESCISSION SHOULD BE VACATED. THAT FIGHT WILL CENTER AROUND WHETHER (A) THE 20 WINDOW IS TO BE STRICTLY CONSTRUED AND (B) PROBABLY PREVENTS THE BORROWER FROM ESCAPING THE DEBT UNLESS THE “LENDER(S)” ARE STILL IN NON COMPLIANCE AFTER ONE YEAR FROM DATE OF THE RESCISSION.MANY RESCISSION NOTICES WERE SENT YEARS AGO. BY OPERATION OF LAW THERE WAS NO MORTGAGE OR DEED OF TRUST. BY OPERATION OF LAW, AS I READ IT, THERE IS NO LOAN CONTRACT, THERE IS NO NOTE, THERE IS NO MORTGAGE AND THERE IS NO DEBT; BUT IT MIGHT ALSO BE TRUE THAT THE FORECLOSURE SALE WAS VOID AND THAT THE HOMEOWNER LEGALLY STILL OWNS THE PROPERTY. ANY ACTION TAKEN UPON THE USE OF A VOID INSTRUMENT IS ALSO VOID. 

In litigation, the main battle is going to be on the issue of standing. The Banks and servicers will a tempt to use the (now void) note and mortgage for standing just as they do in foreclosures. But here is the rub: with the loan contract cancelled by operation of law, and the note and mortgage being void by operation of law, they can’t prove standing the same way they do in foreclosure actions (which I would argue they shouldn’t be allowed to do anyway). They can’t use the VOID note and mortgage or loan contract as the basis for allegations and proof of standing. They can ONLY prove standing by showing the money trail. They must come out from behind the curtain and show the court that they have an economic interest in the transaction in order to complain about three rescission of the loan contract, the note and mortgage. In order to plead they must state that the rescission was sent and received. The Supreme Court and the statues and Regulation Z take care of the rest rendering the loan contract, note and mortgage void.

Note also that the arguments about why they should not have to show the actual money trail underscores the reasons for the rescission and potentially raise the specter of equitable tolling because they are still trying to hide the facts from the borrower.. They are essentially arguing a position that states that they can use void instruments as the basis for a claim for relief and that they should not be forced to show the money trail — something they cannot do because is there no money trail in their chain.

Compelling Discovery and Explaining Why You want Answers

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I have always said that these cases will be won in discovery. Discovery must of course be preceded by proper pleading. Typically borrowers ask all the right questions and get no answers. They are met with objections that are, to say the least, disingenuous. The motion to compel better answers or to overrule the objections of the party seeking foreclosure is the real battle ground, not the trial. And speaking from experience, just noticing the objections for hearing or using a brief template and then  relying on oral argument will not, in most cases, cut to the quick.  The motions and hearings aimed at forcing the opposition to answer fairly simple questions (yes or no responses are best) should be accompanied with a brief that states just why the question was relevant, and why you need the answers from the opposition and why you can’t get it any other way. This involves educating the judge as to the fundamentals of your position, your defenses and your claims as the backdrop for why the discovery requests you filed should be compelled.

Practically every case in which there was a major settlement under seal of confidentiality involves an order from a judge wherein the servicer or bank was required to answer the real questions about the actual money trail and the accounting and management of the money from soup to nuts. So if a judge says that the borrower gets all the information about the loan starting with the source of funding at the alleged time of origination and the judge says that the borrower is entitled to know where the borrower’s money was sent after being received by a servicer, and the judge says the borrower can know what other payments were made on account of the subject loan, the case is ordinarily settled in a matter of hours.

The only money trail is the one starting with investors who thought they were buying mortgage backed securities, the proceeds of which sale would go to a REMIC trust, but were instead diverted to the coffers of the investment bank who created and sold those mortgage backed securities. And it ends with a “remote” vehicle sending money to a clueless closing agent who assumes that the money came from the originator. BECAUSE THE MONEY DIDN’T COME FROM THE ORIGINATOR, THERE IS NO MONEY TRAIL AFTER THE ALLEGED “CLOSING.” Who would pay an originator for a loan they know the originator never funded? Who would pay an assignor when they know the assignor never paid any money to acquire the loan, debt, note or mortgage? Answer nobody. And that is why the servicers and banks cannot open their books up — the entire scheme is an illusion.

What follows is an abstract from my notes on one such case: (The trial was bifurcated in time)

What we are seeing here is a master at obfuscation. In one case I have in litigation, Wells Fargo wants to assert that it can foreclose on the mortgage in its own name. It has alleged in the complaint that it is the owner of the loan and then testified that it is not the owner but rather the servicer. It has testified that Freddie Mac was the investor from the start but it has produced an assignment from a nonexistent entity in which Wells Fargo was the assignee.

Nobody testified that they were in court on behalf of any investor and the only thing we have is the bare assertion from the witness stand that Freddie Mac is the investor from the start. And yet during this whole affair, Wells posed as the lender, owner and then servicer of the loan without any authority to do so. And they posed as a party who could foreclose on the borrower without any evidence and probably without any knowledge as to what was showing on the books and records of whoever actually did the funding of this loan (or if the funding was in the amount claimed at closing) or whoever is claimed to be the owner of the loan.

A Motion to Compel should be filed citing their response to Yes or No questions — objection vague and ambiguous etc.

The point should be made that the defendants are the sole source of records, data and witnesses by which the Plaintiff’s case can be proven as to liability, damages and punitive damages. We have limited discovery to asking about their procedures as they relate to this particular alleged loan.

The issue at hand is that our position is that they knew that the alleged originator could not have been the lender because they did not exist, did not have bank account etc. And they have admitted that the named successor was not the lender either and  admit that the foreclosing party did not buy the loan, the debt, the note or the mortgage.. Not until the first part of trial did the representative from Wells state that contrary to the pleading they were acting as servicer not the creditor or owner of the loan. And they stated that the real lender was Freddie mac “from the start.”

So we are asking how it happened that Wells entered the picture at all as servicer or representative for any actual creditor — the only indication we have that some creditor exists is the surprise testimony from the designated representative of Wells in which he admitted that the named originator was not the lender, could not explain how such an “originator” was put on the note and mortgage and that Wells Fargo was not the lender or owner of the loan either. But we have no documentary evidence or data or witness from them explaining why they proceeded to assert any right to collect any money much less enforce a loan of money that came from somewhere but we don’t know from where.

The corporate representative of Wells says Freddie Mac was the “investor from the start.” But we have the direct refusal of Wells Fargo to produce a servicing, agency or representative agreement that applies to this loan.

We know that Freddie Mac was never a lender in the sense that they never originated any loans. So now we are asking for how they did get involved. The charter of Freddie Mac allows them to be two things: (1) guarantor and (2) Master trustee for REMIC Trusts. Freddie can buy loans with either cash or mortgage backed bonds issued by the REMIC Trust if such bonds were issued by one or more Trusts to Freddie Mac.

But all of that still leaves the question of where did the money come from — the money that was used to give to the borrower? It appears that the money came from investors who bought mortgage backed securities from REMIC Trust if Freddie Mac was really involved (A fact that is unknown at this time) or that the money came from investors who bought mortgage backed securities from a private label REMIC trust that is not registered with the SEC. But the money came from somewhere and we want to know the identity of the source because it will tell us who was really involved. And it is only in the context of knowing who was really involved that we assess the behavior of Wells Fargo and why they did what they did.

We ask them about their risk of loss and they respond by saying that they deny that they would not incur damages if the borrower defaults on the loan. Since they have said they didn’t provide funding and that they were not the investor (they say Freddie Mac was the investor (from the start), and they have no servicing agreement or at least not one they are willing to produce, then exactly how would they suffer damages on “default” on the loan?

They should be compelled to answer our discovery requests in a more forthright manner. If they are answering truthfully, which we must assume they are, for the moment, then that could only mean that there is a deal somewhere in which they have some potential exposure and which has never been disclosed. That exposure has nothing to do with the debt, note or mortgage that was originated in the name of the alleged originator. And THAT goes to the essence of their motivation to lie to the borrower and to interfere with her ability to sell the property and pay off the loan.

The exposure relates to the fact that without a foreclosure judgment and subsequent sale of the property, they lose their ability to recover servicer advances. Servicer advances are the exact opposite of the basis for a foreclosure action. In a foreclosure action it is based upon the fact that the creditor experienced a default — i.e., the creditor did not receive payments. With servicer advances, the investor gets the money regardless of whether or not the borrower pays. They are volunteer payments because the borrower is not in privity with the advancer of payments to the creditor and in fact is completely unaware of the fact that such payments are being made.

It also hints at another proposition: that some third party would hold them responsible unless they got a foreclosure judgment. We are left with equivocating answers that continue the pattern of obscurity as to the nature of the origination of the loan and the ownership or authority to represent anything. So it might just be that they they could not give a payoff figure and that their motivation was obtain the foreclosure judgment at all costs, even if they had to lie and dodge to get it. It would also explain why they lured her into the default. Certainly their turnover of SOME of the audio files which did not include the call in which she was told she needed to be 90 days behind (contrary to HAMP) in order to get some sort of relief.

And there is another issue that comes up when you consider borrower’s testimony that she did receive a forbearance 2 years earlier. Did they have authority to do that? What changed, if anything? Did some other party intervene? Was there a change in internal Wells Fargo policy?

All these things could be answered if they would be more forthright in their answers and if they reconciled the obvious discrepancy between not being the owner of the loan, but alleging that they were, not being the servicer or unwilling to state the source of their authority to represent another party, and testifying that they were the servicer, and testifying about Freddie Mac involvement without any records showing that involvement (indicating that the witness did NOT have access to the entire file). This also goes to the issue of whether there was any default at all if there is a PSA for a trust that claims ownership and if that PSA shows that through servicer advances or other payments means the real creditors — the investors — were NOT showing any default at all.

The point of this diatribe is that this case highlights the fact that in virtually all Wells Fargo cases (and with other banks), the real party seeking a foreclosure judgment is the servicer (since they are the only ones showing up at trial anyway), but that whatever the servicer’s interest is or whatever their risk of loss is, it relates to a claim either not against the borrower or not based upon the mortgage which is either void or owned by someone else.

If the self-proclaimed servicer is saying they will suffer damages upon default and they admit they have no ownership of the loan nor did they fund the original loan transaction, then any recovery would be based upon a cause of action other than a foreclosure of a mortgage where they are neither the mortgagee, successor or creditor. Their claim if caused by volunteer payments (servicer advances) to the creditors, it is based upon unjust enrichment not breach of the contractual duty to pay the loan.

Remember that the witness testified to being the corporate representative of Wells Fargo as servicer and not to being a corporate representative of the “investor.” And the witness testified that the records of the investor were never available to him, so how can he testify that the creditor has experienced a default? Since the borrower never had any privity with Wells Fargo as servicer or lender how else could they be exposed to a loss? And more importantly, why are they suing the borrower for collection on the note and enforcement of the mortgage when the actual creditor has not experienced any default?

THAT is the draft of the memo or brief that should accompany the Motion to Compel answers to simple questions. It is almost comical that their answer to a yes or no question was an objection that it was too broad, ambiguous etc. What IT platform are you using? Answer: None of your business. But it is written as an objection to the form or content to the question. That is how the servicers stonewall borrowers and that is how borrowers are prevented from ever knowing the truth about the origination or management of their loan.

Sneak Preview of Seminar on July 18 Tonight on the Neil Garfield Show

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Tonight we have some teasers from our Senior Forensic Analyst, Dan Edstrom and Jim Macklin who are the presenters of a seminar along with Charles Marshall, Esq. who has been very active in foreclosure defense in Northern California. I know them for years, trust them with all outsource work and analysis and I have prior experience with them as presenters. It is worth the trip and 6 hours of your time and the price is in keeping with the livinglies philosophy — just enough to pay for itself.

I strongly endorse the presenters and this seminar. Click on the link below

https://www.eventbrite.com/e/7182015-anaheim-ca-6-hour-cle-seminar-relief-for-distressed-homeowners-tickets-8647834907?ref=estw

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