MINNESOTA SUPREME COURT: “NOTHING PLUS NOTHING EQUALS NOTHING”

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SEE 2015-08-10-0001

NOTHING PLUS NOTHING EQUALS NOTHING

On February 25, 2015 the Minnesota Supreme Court considered several of the conventional theories advanced by the banks in favor of their right to foreclose. And the Court also considered the procedural and substantive issues surrounding rescission in Minnesota whose statutes closely resemble rescission under the Federal Truth in Lending Act.

The court rejected the bank’s arguments and points out that even the dissent on the court made the same mistakes as the lower courts, which were obviously in a state of utter confusion. It should be noted that this decision was rendered approximately 1 month after the Jesinoski v. Countrywide decision. It is apparent that the Supreme Court of Minnesota was heavily influenced by the unanimous Supreme Court decision governing rescission under the Truth in Lending Act.

In the nearly 8 million foreclosures that have been allowed by the judicial system using deeply flawed reasoning, the banks have convinced the courts that piling up paperwork essentially creates rights even if none existed before. The Minnesota Supreme Court simply stated that nothing plus nothing equals nothing. If you start with nothing then any successor to any paperwork that was executed also gets nothing. This is well settled law.

The court also considered the issue of cancellation or rescission of a transaction in the light of a statute that is clear on its face. Since there are few appellate decisions since the Jesinoski was rendered in January, we must refer to the Supreme Court of Minnesota in this case as at least a starting point.

Starting with the fact that the statute was clear, the court concludes that no court had the authority or jurisdiction to “interpret” the statute. For at least 8 years before Jesinoski the banks convinced thousands of judges in hundreds of thousands of decisions to ignore a rescission or cancellation of the loan documents that was, according to the statute, effective upon mailing.

The banks convinced the courts to read into that statute the rules governing common law rescission, which clearly conflict with the statute. If the statute is clear then it is by definition not ambiguous. And if there is no finding of ambiguity in the statute, the court has established, whether it likes it or not, that it has no power or jurisdiction to change the outcome based upon the opinion of the judge as to which party should win. If the judge proceeds to interpret the statute anyway, it is a nullity. Here again we have the application of the simple formula proposed by the Supreme Court of Minnesota, to wit: nothing plus nothing equals nothing. In the case of TILA Rescission the issue is closed, to wit: the unanimous decision of the US Supreme Court in Jesinoski was that the statute is not ambiguous and thus not subject to interpretation by ANY judge.

 

The third line of defense by the banks slight of hand — they make the transaction so complex and convoluted that it is impossible for the judge or even the homeowner or his attorney to follow it. The judge then relies upon the more sophisticated party (the bank) to clear up the complexity. But as we have recently seen in several Florida cases, and now as we see in the Minnesota Supreme Court, the judicial system has made an about-face and is now questioning whether there is any substance behind the paperwork and the complexity raised by claims of securitization which have been revealed in most cases to be false. Like the unanimous US Supreme, there is unanimity of findings and conclusions by regulators, legal scholars, economists, financial experts, and litigators, with tens of billions of dollars in settlements that were made public and hundreds of billions of dollars in private settlements. The conclusion is that the securitization failed — i.e., that it never really happened.

The Minnesota Supreme Court plunged into the midst of the complexity offered up by the various transactions involved in this particular case. The court succeeded in simplifying the matter by applying well settled law with no need to interpret anything or redefine anything.

While the facts of this case vary from the usual rescission issues under the Federal Truth in Lending Act, the principles applied remain the same.

However, the court places heavy emphasis on the time limits imposed by the statute for the exercise of the cancellation or rescission of a transaction. It may be expected that most courts will do the same. But it is also true that both the majority and the dissent seem to be in agreement that if the rescission was recorded the issue would have been less in doubt than it appeared in the court record.

Because it wasn’t in issue. this court has not addressed procedural issues, to wit: who has the burden of proof on the issue of timeliness? Under TILA Rescission it is the real creditor (the only one with standing). How do we know that? We know it because the borrower is not required to prove or allege timeliness. The rescission is effective when mailed. Practice Hint: In an action to enforce the rescission, the grounds for rescission need not and should not be in the allegations — the issue is limited to the sending of the rescission letter and the fact that the party being sued is attempting to use the void note and mortgage.

Perhaps counter-intuitively, the party being sued (servicer, Trustee etc) for permanent injunction from using the void note and void mortgage may NOT raise issues of timeliness of the rescission because they have no standing to do so. The actual creditor, if there is one, would be the only party able to do that. That would be an action for wrongful rescission. Note that in Jesinoski, Justice Scalia makes the point that the statute makes no distinction between disputed and undisputed rescissions. Hence “effective when mailed” means exactly that and the loan contract, note and mortgage are all canceled and void. If the issue of timeliness was still “out there”, then the rescission would not be effective upon mailing — which is exactly the point Justice Scalia was making. He didn’t say that the creditor could not file a lawsuit to vacate the rescission based upon timeliness. But that lawsuit would need to allege, first and foremost that the pleader had standing as a party who is being financially injured by the rescission. As I see it, no other party could raise those issues because they lack standing.

The most interesting point about this is that the lawsuit for enforcement of the rescission will not likely be against the creditor because the creditor is unknown. We only have access to the information given to us by self-appointed intermediaries who are claiming a right to enforce the note and mortgage. But since the rescission is effective upon mailing by operation of law, the effect is to make the note and mortgage void (as well as canceling the loan contract — if there is one). So the only defense from intermediary parties sued (to prevent them from using the note and mortgage) to the lawsuit for injunction or enforcement of the rescission is that the rescission was already vacated by a court of competent jurisdiction, which is essentially never the case. This is why rescission is such an effective discovery tool as well, to wit: in order to challenge the “wrongful” rescission the challenge must be made by the party who has something to lose — like the current liability to disgorge all the money paid by the borrower, deduct all finance charges, and pay to the borrower all the money paid to third parties as compensation for origination of the loan.

Hence the lesson drawn from this case is that the rescission should probably be recorded in the county property records as quickly as possible. In Florida it would appear that this would be done by attaching a copy of the rescission letter to the notice of interest in real property and then recording the entire instrument with the exhibit. Combining the two issues of timing and recording, it would appear that if anything in the notice of rescission or cancellation of the transaction refers to the date of consummation of the transaction, that the rescission could be void on its face for not complying with the statutory time periods for action by the borrower. A reference to the date of consummation in the letter giving notice of the rescission or cancellation of the transaction would also appear to be an admission that the transaction was in fact consummated.

The lesson to take away from that analysis is that the date on which the documents were signed is not necessarily the date of consummation. The date of consummation would be when the loan was funded and the liability of the borrower first arose as a result of the funding. IN our first year of law school we are taught that the liability of the borrower does not commence when he signs paperwork; the liability arises when the borrower gets the money. If the funding didn’t come from the party claiming to have rights to enforce the loan by virtue of what was written on the note or the mortgage or deed of trust, then we go back to nothing plus nothing equals nothing. No loan plus assignment of loan equals no successor, no servicer and no owner of the loan.

That would mean that the borrower would prevail under either one of two theories, which you see developed in this case in Minnesota. It is either No Consummation or Rescission. Either the borrower is entitled to nullification of the entire transaction and nullification of the instruments that should never have been released from the closing table and were procured by at best a failure to disclose and at worst an intentional misrepresentation, or the borrower would prevail for having cancelled or rescinded the transaction.

The forth line of defense from the banks has always been that the borrower is seeking a “free house.” No such thing occurs in the event of either nullification of the original instruments or cancellation of rescission of the original instruments. The party to whom the money is actually owed still has claims and might even have claims for an equitable interest in the mortgage that was recorded. But it does not have claims to simply exercise the rights of the creditor as expressed in the note and mortgage because the actual creditor has no legal interest in the note or in the mortgage. AND THAT would require a court order AFTER a party enters the picture and alleges that it is the actual creditor and can prove it.

No money plus note plus mortgage equals no valid lien and no foreclosure. It is positively astounding that after 8 million foreclosures we are still arguing about a well settled principle of law, fairness, equity and justice — in order for the paper to be used there had to be an actual transaction with the parties IN THAT CHAIN.

 

The banks have bootstrapped their misuse of investor money together with false claims of securitization to create the illusion that some or all of them had some actual rights; but nowhere have they ever come forward and done what any creditor would do when challenged about the transactions: “here they are, with canceled checks and wire transfer receipts. Next question?”

A fifth issue emerges which the court could have avoided but instead met the issue head on. “It is of course elementary that delivery of a deed is essential to a transfer of title…Delivery of a deed is complete only when the grantor has put it beyond his power to revoke or reclaim it…An undelivered deed cannot transfer legal title even to a bona fide purchaser, because lack of delivery renders the deed void…In this case, although Graves physically transferred a quick claim deed to Wayman, delivery did not occur because Graves never put the deed beyond his power to revoke or reclaim it.”

The court concluded that since “Graves retained the power to revoke or reclaim the deed during the statutory cancellation period…which made deliver impossible during the cancellation period,” that delivery was never completed. The court concluded “without delivery of the deed to Wayman, the common law treats the quick claim deed as void.”

 

The reason this is important is that it is a hidden issue in all of the closings that have occurred, especially over the last 10 years, where loans were ostensibly approved and funded. The note is released for anyone to do anything they want to do with it usually within a few days or a few weeks from the date that the borrower executed the mortgage instruments. The mortgage itself is not only released but it is recorded. The problem with that is that it is incontestable that the borrower retains a right to rescind for the first 3 days on any grounds at all, and that the 3 days starts to run from the date of consummation.

If the party on the note as payee and on the mortgage as mortgagee did not consummate the transaction with the borrower and instead was a sham nominee or party to a table funded loan, then it would follow that the 3‑day period under the Truth in Lending Act had not commenced running. It would also follow that the 3‑year limitations in the Truth in Lending Act had also not commenced running. And the reason is the Minnesota court’s statement that “nothing plus nothing equals nothing.” It is obvious to the Minnesota Supreme Court, and should be obvious to the rest of us, that it would be completely inappropriate for a third party to the transaction to act as though the endorsements and assignments of improperly executed and improperly drafted instruments would somehow create rights that did not exist before.

If the banks would want to assert rights in connection with the meeting at which the borrower executed the usual pile of documents it would first need to acknowledge the fact that it was the real party in interest and to prove that fact. This would amount to an admission of a pattern of conduct that is described by Regulation Z as predatory per se. Anything that is predatory per se, is obviously against public policy. Anything that is against public policy is obviously evidence of unclean hands. A party with unclean hands may not obtain equitable relief. Since foreclosure is the most extreme remedy under civil law, and is a remedy generally considered to be equitable in nature, then it follows that no party with unclean hands should be allowed to foreclose.

The idea that any of this produces a free house for the borrower is wrong. In the first place, the borrower has invested a great deal of money usually in connection with the property on which there is a claim of an encumbrance. In many cases the property has been in the family for generations and would not be subject to mortgage but for the knock on the door from one of the tens of thousands of loan agents that were selling loan products from door to door. But assuming that the current system of foreclosures becomes subject to the conclusions of the courts in the judicial system that foreclosure is impossible, that does not mean that the source of funding may not make a claim upon the homeowner for repayment of the money that was used to fund the origination or acquisition of the loan.

In fact it is quite obvious now that we know that at least half of all the people who went into foreclosure were asking for modifications, that the losses attendant to the actual loans could have been minimized at the same time as keeping homeowners in the homes and enabling them to recapture over time their equity. In fact the evidence is clear that most homeowners would be happy to execute entirely new and valid paperwork with a party who was in fact the real creditor.

The Minnesota court decides that even if you are a bona fide purchaser because you paid valuable consideration for the mortgage in reliance on what appeared to be the facts, you still get nothing if you paid for something where the grantor did not possess an interest that could be conveyed. This is bad news for the banks. They introduce undated endorsements and undated assignments and powers of attorney and various other instruments in court laying paper upon paper upon paper making it appear, that the greater weight of the evidence shows that they are in fact possessed of the claim to enforce the note and mortgage.

Nothing could be further from the truth. If their chain upon which they are relying in their foreclosure is based on a non‑existent transaction or an incomplete transaction, then they have no power to do anything anymore than the original party did. The only exception to this might be in the event that a party was introduced as a holder in due course. But that would mean that the party described as a holder in due course paid real value for the rights expressed in the note, under circumstances where it was acting in good faith and without knowledge of the borrower’s defenses. Such an allegation might be made, but appears impossible for the banks to prove.

BOA Slammed For Pursuing Nonexistent Debt and Filing False Foreclosure: Judgment for Borrower $204,000

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As Judges catch up to the reality and disabuse themselves of the assumption that the Banks wouldn’t file foreclosure without a good reason to do so and a legally enforceable right to do so, we get more and more decisions like this one.

BOA like the other banks is in pursuit of foreclosures for many reasons. They have no right to foreclosure and the real creditor is being blocked out of the equation. The so-called investor doesn’t even know the foreclosure was filed. And they are contractually stopped from even inquiring, just as the Trustees of the REMIC Trusts don’t know anything, don’t have anything and are not allowed to do anything or ask anything.

Some time back I had a case in which unknown to the heirs, a deceased homeowner had purchased a life insurance policy that paid BOA directly. BOA took the money, filed a satisfaction of mortgage and then went after the heirs to sign a “modification agreement” on a debt that no longer existed. This was not negligence. A few years later the heirs ran into some financial trouble and BOA filed foreclosure against them and then sought to withdraw their recorded satisfaction of mortgage. The list is endless of cases where banks have foreclosed on nonexistent mortgages — i.e., they NEVER existed. Judges entered judgments, even default judgments without seeing any evidence that the mortgage was real.

So I find it encouraging that more and more judges are taking seriously the strict procedural requirements and substantive requirements for a foreclosure to go forward and awarding damaged borrowers some money to recover from the malfeasance of the bank.

The plain truth is that BOA and other banks are pursuing foreclosures not because they are the lender or a successor to a lender or even an authorized representative of the real creditor. They are actually using the illusion of a default and foreclosure to cover up the fact that they are really suing for themselves — even if they are not the lender, the successor or authorized representatives. They are getting title to homes in which they have no investment. SO THE FREE HOUSE IS GOING TO BOA AND OTHER BANKS, NOT THE BORROWER.

But they do have investment in the “servicer advances” which are neither advances nor paid by the servicer out of its funds. Their problem is that they have no direct claim against the borrower for those advances, and if they reveal it, it will show that the “creditor” has not experienced a default because they have received the payment they expected.  The creditor’s books balance and are fully reconciled. The servicer’s books balance and are fully reconciled, even if reported inaccurately.

THEY ARE NOW PACKAGING UP THESE SERVICER ADVANCES THAT THEY CLAIM DO NOT EXIST AND SELLING THEM INTO THE SECONDARY MARKET FOR SALE AS SECURITIZATION PRODUCTS. Here is the rub: The money for “servicer advances” comes from  a “reserve” (slush) fund that is actually disclosed in the prospectus. The investors were paid with their own money regardless of whether the borrower paid or not.

SO the Banks are (1) foreclosing without any right, justification or excuse (2) hijacking the process so that they can “recover” servicer advances in which the investor money was used to pay the investors and (3) forcing homeowners into foreclosure so that they can make their endless scheme of fraud work for the banks — not the investors and certainly not for the borrowers.

The old “investor rejected the modification” line doesn’t cut it. They never asked the investor. Look at the PSA and the prospectus. The servicer doesn’t need to ask the investor (according to THEIR contract, which is against public policy) and THAT is because the Banks, although they were intermediaries, posed as the principals in every transaction and every foreclosure. None of it was true — where the loan (96% of all loans) was subject to false claims of securitization.

Appellate Courts Drilling Down Through the Paper to the REAL TRANSACTION

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see DOC080715 Balch v LaSalle Bank Fla. 4th DCA 8-5-15

A court that gets it! Reversed and remand with orders to enter involuntary dismissal! Finally the smoke and mirrors are clearing out. This court has pierced through the paperwork and is asking “how do we know there is any reality to what is stated on the paperwork relied upon by the foreclosing party?” In other words, show me the real transaction, prove the payments. Let’s see if any real transaction ever took place. By raising the issue of INTENT the Court is saying to the banks “we don’t trust you.”

  1. “No evidence indicating when the special indorsement in favor of Washington Mutual bank was placed on the note”
  2. “Where the Plaintiff contends that its standing to foreclose derives [note the wording “derives” as in derivative] from an endorsement of the note, the plaintiff must show that the endorsement occurred prior to the inception of the lawsuit.”
  3. “Assignment is insufficient to establish standing, as the assignment was executed after the complaint was filed”
  4. “Evidence that the note was transferred into the Trust prior to the foreclosure action is insufficient by itself to confer standing because there was no evidence that the indorsee had the intent to transfer any interest to the Trustee.”

Guest Attorney Patricia Rodriguez on the Neil Garfield Show Tonight!

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LA Lawyer Patricia Rodriguez (TILA Rescission is boiling over the top. And there are differences between non-judicial states and judicial states. The main problem though is that desperate homeowners are hearing something different than the real message: rescission is as close to a magic bullet as we have seen but it is still susceptible to multiple issues in litigation. Rescission is certainly effective upon mailing and that appears to be true even if the notice is wrongfully sent. The burden of vacating the rescission is on the so-called lender. But there are still circumstances where the notice of rescission itself may well render it void even if mailed. Admitting that the transaction was consummated on a specific date where the rescission letter itself has both the consummation date and the date of mailing might encourage judges to strike down the rescission or vacate it because it is void on its face if the notice was sent after the three year period. It is true that the statute of limitations is an affirmative defense and that the ability to raise an affirmative defense depends upon your standing to raise the issue. Patricia Rodriguez agrees that the argument could still be made that the rescission is effective but the more information on the rescission, the more likely the Judge will find the rescission void on its face even if mailed.

NJ Foreclosure Mill Goes Bankrupt

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see 30,000 Cases to be Transferred from Bankruupt NJ Lawfirm

It’s a growing trend. More law firms are backing out the foreclosure mill business. The reasons are pure economics. The number of contested foreclosures is rising exponentially. The foreclosure firms get a small flat fee for each foreclosure case. The numbers don’t add up.

In addition, these firms are finding themselves in the cross hairs of bar associations who are starting to look at the use of fabricated documents and fabricated testimony from robo-witnesses and robo-signers.

These firms made tens of millions of dollars in profits simply because nearly all homeowners were allowing the foreclosure by default. As the news reveals that homeowners are being foreclosed by entities that have no right to collect, enforce or foreclose on the original mortgage loan, attorneys are all coming to the same conclusions: (1) these cases are winnable and (2) the actual claim is being filed on behalf of the servicer to recover servicer advances which are themselves being “securitized.”

First they said there were no trusts, the  they said there were trusts but the servicer had the right to represent the trusts, then came the time that trustees issued statements prohibiting (pursuant to PSA) the “servicer” from using the name of the Trustee,  then US Bank and others began replacing the Trustees of the empty, penniless trusts and allowing the foreclosures to be filed in its name.

AND now they are returning to the first strategy where they deny the existence of a trust when it is obvious that the only reason why Citi and others would call themselves “servicers” is to avoid liability for the origination of the loan and to make it more difficult for the borrower to show that there is a REMIC Trust out there that claims ownership or that did claim ownership of the loans.

That makes it difficult to show that there is no known creditor on the original MORTGAGE LOAN. There are claims, but not by any creditor or successor on the MORTGAGE LOAN. But without foreclosures, if the loans are modified, the real claims of servicers and investment banks serving as Master Servicers completely vanish. THAT IS WHY THEY FORECLOSE INSTEAD OF MODIFY OR SETTLE.

But the overall strategy is the same: make it as confusing as possible and play into the prejudice of the judges to pull the wool over their eyes. These claims are mostly unsecured because the real claim is to recover the money paid by the Master servicer and then ignored by the sub-servicer when they send out notice of default (no default if the creditor was paid), and ignored when the final accounting of what is due from borrower to the owner of the MORTGAGE LOAN is used as the basis for foreclosure.

The law firms are now on notice that they are representing parties with conflicts of interest. Foreclosure means the servicer gets money paid by the Master servicer from the reserve fund created when the original MBS were sold. Modification would mean revealing that the actual creditors on the MORTGAGE LOAN are (a) not showing a default on their books and (b) not being allowed to mitigate d damages because they don’t learn of the misguided “processing” (i.e., loss of documents and putting up numerous hurdles and obstacles and false reports that the investor rejected the modification or settlement).

So where the economics are turning sour, the liability for civil, criminal and regulatory liability is driving the big foreclosures mills out of the marketplace. They are doing it through bankruptcy so that claims from borrowers for wrongful foreclosure won’t be effective to recover from partners in the law firms.

The 4 Dog Defense: Bank PR at its most pernicious

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see http://dsnews.com/news/08-03-2015/goldman-sachs-agrees-to-270-million-rmbs-settlement-with-pension-funds

While watching a show on TV called “the Human Experiment” I was reminded about the four dog defense that was created in the 1950’s as growing awareness about the significant damage to health and early deaths were being tied to Tobacco. Shortly afterwards the four dog defense was adopted by the Chemical Industry and by others dealing with “crisis management.” But it has been in use for the last 10 years as the primary playbook of Wall Street. The only thing I would add is that there might be a fifth dog — “OK we did it, but we are not paying anything and we reject any punishment or rescission of the illegal transactions.”

As many health and consumer advocates have found out by personal experience, the most pernicious part of this strategy is that it works — for decades, which is is what we are dealing with on the latest round of Wall Street malfeasance. You hear someone on TV saying that “the loan products were within industry guidelines and posed no significant threat to the consumers or the economy when they were approved.” And because we who live in the United States want to believe that if it’s on the shelf at the store or the bank, then it’s safe and has been tested for efficacy.

Thus the Tobacco industry, the chemical industry, and the financial industry have taken advantage of the misapprehension that their next purchase, their next financial transaction is safe and they used that wrong presumption as part of their marketing. They made it appear as thought they were in competition with each other to give you a 3% loan. If true, they were flat out pedal to the metal trying to lose money.

Nobody asked why they would spend hundreds of millions of dollars and create entities like DiTech and Quicken Loans that seemingly had more money than the Banks. Somebody somewhere, close to the levers of power, should have noticed. Either they didn’t or they ignored it — until the crash came. At that point it was most important that people cover their behinds and least important to actually fix the problem without dumping a $20 Trillion dollar invoice on people who had the misfortune of buying contaminated loan products.

THE FOUR DOG DEFENSE

Someone complains about a product (tobacco, chemicals, or loans). In the PR context, this is compared to someone complaining that the seller or manufacturer has a dog that bit them and hurt them.

1. My dog doesn’t bite. So Tobacco industries and chemical industries and banks all tell us that what they are selling is harmless and attack the contrary claims as based upon “junk science” or conspiracy theorists. They completely deny that any harm exists much less that it caused harm to anyone by their tobacco, chemical or loan. Proprietary “independent groups” looking very official release reports that say there is no real harm in tobacco or chemicals and that the proliferation of more than 400 loan products from a starting point of just 5 different loan products was actually good for the consumer, good for the marketplace and good for the country. The corollary to this in the mortgage market is the denial that they even had a dog. Remember back in 2001-2009? There were no trusts. It was just a “Standard loan” with a “Standard foreclosure.”

2. My dog didn’t bite you. So after some years of information and data coming to light, perhaps with the help of the press, the next step is to admit what was no longer deniable (remember the famous phrase “previous statements on this subject are inoperable”?). In this context the company says that its tobacco, chemical or loan can cause damage but it didn’t cause damage to you. And as usual the regulators are actually members of the industries they are supposed to regulate. In the arena of the financial markets look back at comments from Treasury Secretaries Paulson and Geithner under Presidents Bush and Obama and Fed Chairmen Greenspan and Bernanke, we see that they sought to reassure the public that the toxic waste masquerading as triple AAA investments and “standard loans” were well contained within the subprime crisis — leaving those of us who knew otherwise wondering if they were all stupid or just lying. In foreclosures, this translated, as “OK we lied, there are trusts but that doesn’t concern you or hurt you.” We also had various pronouncements that there was nothing illegal.

3. My dog bit you but didn’t hurt you. More years have passed and now it is obvious that the toxic tobacco, chemicals and loans (and MBS) may have had some impact on you, but it isn’t serious and nothing significant is expected to happen (see above). The recurring refrain is that the release of these toxic substances and toxic financial products could cause harm, but the use of them was within restricted environments in which you would not be effected and you were not effected. No harm, no foul. And we have added bonus that the invisible hand of the marketplace will make any necessary corrections inevitable. So maybe the loans were mostly predatory (predatory per se if they were part of a pattern of conduct of table funded loans); but you were not harmed — the investors got their investments and are getting paid (see link above) and the borrowers received their loans — so what is the harm? Why should a little thing like violation of public policy announced by Congress and the Federal Reserve make a difference — you got the loan, you didn’t make the payments, so ANYONE could step in and collect, enforce or foreclose. What difference does it make if nobody in the chain ever had an economic interest? You failed or refused to make the payments and the fact that the “servicers”, “banks” or “trustees” couldn’t answer basic questions about the loan is irrelevant. 90 seconds per case was plenty on the rocket docket.

4. My dog bit you and hurt you but it’s not our fault. 

This is the classic ultimate defense of shifting responsibility to the victims. The investors should have known better than to believe the investment banks. The borrowers should have known better than to take toxic loans. If they were injured it was their choice to smoke, their choice to ingest skin products, water, food and other substances that caused cancer, killed you or killed your life savings and took away your home, your lifestyle and your job. It was your choice to smoke, to drink toxic water and buy into a toxic loan. So any injury is YOUR fault. In the foreclosure context this translates as “OK, the Trust never acquired the loan, the servicer therefore has nothing to service, nobody has any right to collect except the investors whose money was used in ways they never imagined. It doesn’t matter that we can’t show you proof of funding or proof of purchase because you didn’t make your payments. This is eroding now as more judges are asking the question “what difference does it make if the borrower is alleged to have stopped making payments, when the party alleging it had no right to collect, enforce or foreclose?”

Which brings us to the fifth dog which is that even if the behavior of Wall Street executives and employees was illegal we must allow them to keep their ill-gotten wealth and we must maintain the big banks because if they are required to report the truth on their financial statements they will all fail, leaving 7,000 community banks and credit unions to pick up the pieces. So various PR settlements, fines and even “damages” have been the subject of agreements. None of them address the essential fact that the homes were not free to anyone, that the homeowners invested heavily in maintaining the home, and that the homeowner and the investors — the only two real parties in interest — have been excluded from both the litigation and the settlement process.

The parallel strategy is intimidation. If the Banks convince you that worse things will happen if they are made accountable for all the damage they created, then government, courts and people will back off. It’s the one strategy that works nearly all the time: “scare the s**t out of them!”

Modification is An Illusion: 80%+ turned down

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This is not legal advice on your case. Consult a lawyer who is licensed in the jurisdiction in which the transaction and /or property is located.

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One of the reasons that I never started up a division to process loan modifications is that although I could easily have made a ton of money, most of them would fail and I knew it. Every once in a while I accept an engagement to help negotiate the modification but the essential problem that everyone is ignoring is that we are not dealing with the creditors AND we are not dealing with an authorized representative of an ACTUAL creditor. So I think that the entire modification scene is a PR stunt and I won’t play.
One of the interesting statistics shows that over half of all homeowners in trouble were not seeking to get out of a legitimate debt. Quite the contrary. They were seeking to make what they knew was invalid, into a valid binding contract with reasonable terms. — Four million of them! So much for deadbeat borrowers.
And if the experience had not been so frustrating with “incomplete applications” and “lost applications” and then turned down because “investor rejected” probably all of the foreclosures would have been worked out except for a few and the economy would not have tanked eliminating jobs for workers whose pension funds had been invested and lost in the mortgage backed securities scheme. In a sense many, if not most working people were foreclosing on themselves!
Practice Suggestion: I wonder whether the worker with pension rights and benefits could demand information on which REMIC Trusts issued what securities to their Pension Fund or the mutual funds in which their 401k was invested.
But instead of good faith efforts to modify, they got lies, deceit, fabrication and fraudulent schemes to tilt the borrower into a foreclosure that didn’t need to happen. And in so doing they killed both the borrower’s equity and the REAL creditor’s equity in the loan, driving down prices with their control of the market just as they had artificially increased the price of homes far above their values during the boom.
Why would the Banks force themselves to lose money by rejecting modifications and forcing foreclosure and depressing market prices? Simple — that is not what happened. They didn’t lose money. They made money. And they suffered no losses from the write down of mortgages that mostly could have been saved. That is what happens when Wall Street gets unfettered discretion to do anything they want without a regulator looking over their shoulder and without law enforcement carting them off to jail.
In the end it doesn’t matter in our bully culture if the investors (pension funds) lost money, it doesn’t matter if 18 million people have been displaced from their homes, their lives and their jobs. What matters to Wall Street is how much money they can make regardless of how they do it and who gets hurt. The Obama administration is still drinking the Cool-aid along with his predecessor in office, Bush. Neither of them had a clue about finance and they still take their advice and information from the same people who screwing everyone.
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