Does Yvanova Provide a Back Door to Closed Cases?

That is the question I am hearing from multiple people. My provisional answer is that in my opinion there is a strong argument for using it if the property has not been liquidated after the foreclosure auction. There might be a grey area while the property is REO and there might be a grey area where the property has been sold but the issue of a void assignment is raised in an eviction procedure. It will strain the minds of judges even more, but these issues are certain to come up. As things continue to progress Judges will shift from looking askance at borrowers and thinking their defenses are all hairsplitting ways to get out of a debt and get a free house. Upon reflection, over the next couple of years, you will see an increasing number of judges taking the same cynical view and turning it toward the banks and servicers who in most cases function neither as banks or servicers.

The Yvanova court took great pains to say that this was a very narrow ruling. Starting with that one might argue it only applied to that specific case. But they went further than that and we all know it. SO it stands for the proposition that a void assignment can be the basis of a wrongful foreclosure. AND most BANK LAWYERS agree that is a huge problem for them, at least in California but they think it will adopted across the country and I agree with the Bank lawyers on that assessment.

The reason is simple logic. If the foreclosure is wrongful then it seems stupidly simple to say that it was wrong in the first place. If it was “wrong” the questions that emerge in legal scholarship arise from two main paths.

What does “wrong” mean. Or to put it in Yvanova language is wrong the same as void or is it voidable. This would have a huge impact on issues of jurisdiction, res judicata, collateral estoppel etc. Does it mean that it was wrong and you can get damages or does it mean that it was wrong and therefore the homeowner still owns the house. I lean towards the former not by preference but by what I think the court was saying between the lines. The whole point of nonjudicial foreclosure (amongst two other points that are obvious) is to provide stability and confidence in the title system. So if a wrong foreclosure occurs the title would most likely remain in whoever bought it at auction — although the purgatory in which many properties remain (REO) might create a grey area in which there is no prejudice in vacating the sale. Indeed if the party holding the “FINAL” title did so by fraud (using a void assignment) then equity would seem to demand return of title to the homeowner. AND THEN you still have the problem of evictions or writs of possession or whatever they are called in your state. Title is one thing but possession is another. If you raise the void assignment can you defeat possession even if you can’t defeat the title transfer? It would SEEM not but equity would demand that a thief not further the rewards of his ill-gotten gains.

Next path. Procedure, evidence and objections. Going back in time the homeowner might have objected or even alleged things that the Yvanova court now finds to have merit. So a lay person might think that is all they need is to show the void assignment and presto they have title or money or both in their hands. Not so fast. Due process is intended to allow a person to be heard and the justice system is designed and created to FINALIZE disputes, whether the decision is right or wrong. SO questions abound about what happened at the trial court level. But there was a remedy for that. It is called an appeal. And there are choices to even go to Federal Court if the state court is rubber stamping void instruments. But the time for doing that has expired on all but a few cases and the judicial doctrine of finality is the most difficult to overcome. Even a condemned man usually will be put to death even if there is actual evidence of innocence after a period of time has expired and a number of appeals have been exhausted.

SO that is my long winded way of saying I don’t know. If Yvanova opens the door to many new openings of closed cases, it certainly doesn’t say so. But a defense of a current case — even one amended to cite Yvanova, might fare much better.

The real answer: pick a path and try it.

California Supreme Court Rules in Yvanova, “The borrower owes money NOT TO THE WORLD at large but to a particular person or institution.”

Yvanova v New Century Mortgage 02182016 Supreme Court of California opinion

By William Hudson

Last week the California Supreme Court ruled in Yvanova v. New Century Mortgage Corporation (Case No. S218973, Cal. Sup. Ct. February 18, 2016) that homeowners have standing to challenge a note assignment in an action for wrongful foreclosure on the grounds that the assignment is void. Obviously if the court had ruled differently, the banks would have had absolute carte blanche to forge mortgage assignments with wild abandon. In fact, without a system of endorsements and assignments it would be almost impossible to determine what party has a legitimate interest in a property and chaos would have ensued (sound familiar?).

 
The Yvanova ruling puts to rest the prior assumption by most California courts that a homeowner lacks standing to challenge a void assignment. This decision has the potential to open the litigation floodgates by borrowers who were improperly foreclosed on due to fraudulent or improper assignments. In fact, you can bet that homeowners who lost their homes due to the court’s resistance to follow established law will be filing suit.

 
In Yvanova, she complained that the bank had resorted to the use of fraudulent documents in order to foreclose. First she identified that a bankrupt entity called New Century assigned a deed of trust years after the company ceased to exist. The mortgage assignments demonstrated that even though New Century was dissolved in 2008, New Century allegedly assigned Yvanova’s deed of trust to Deutsche bank in 2011. It was also discovered that Yvanova’s note could not have been delivered to the Morgan Stanley trust pool because the trust had a cutoff date of January 2007. Deutsche Bank, the servicer, claims to have transferred the deed of trust to that pool in December 2011. Thus, 3 years and 11 months after the trust had closed.

 
By law, and to ensure tax-free pass-through status by the REMIC (Real Estate Mortgage Investment Conduit) notes placed in trusts must be placed into the pool by a certain date. The Morgan Stanley trust had a cutoff date of January 2007 but Deutsche Bank claims the note they received by a zombie assignment was placed in the pool in 2011. Thus, a nonexistent company called New Century transferred a note to a closed trust.

 
Up until Yvanova was settled, the California courts rejected hundreds of similar claims over the years stating that borrowers were not a party to or holder of the debt (see Jenkins f. JP Morgan Chase). The California courts essentially ruled that homeowners may now challenge wrongful foreclosures on the grounds that the assignment of the note was invalid or the chain of assignment was faulty. In securitized trusts, it is fairly common for the endorsements and assignments to be either inaccurate or downright fraudulent (photoshopped, robosigned, etc.). The big securitizing banks like Ocwen, Deutsche, Morgan Stanley and Wells Fargo better prepare for a tsunami of wrongful foreclosure suits in California.

 
The California Supreme Court, by ruling in favor of Yvanova, effectively confirmed the 2013 California Appellate ruling Glaski v. Bank of America, which held that a homeowner facing a non-judicial foreclosure has standing to challenge violations of the pooling and servicing agreement. One of the most insightful quotes in Yvanova states, “The borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.”

 

The California Supreme Court got it right when they elaborated that, “A homeowner who has been foreclosed on by one with no right to do so has suffered an injurious invasion of his or her legal rights at the foreclosing entity’s hands. No more is required for standing to sue.” Could it be that the California courts are tired of the 9 years of fraudulent banking games that have clogged the court system with no end in sight?

 
It wasn’t the homeowner who got sloppy, greedy and decided to start forging and photoshopping legal documents. It was the banks that engineered this complete fiasco from the top to bottom. Maybe now the banks will clean up their act, or they will be forced to find a more efficient and convincing way to forge and falsify endorsements and assignments. To date, the left hand doesn’t know what the right hand is doing- and the banks only hope that the homeowner doesn’t discover their deception.

 
I will reiterate again, if a bank claims to own a debt then why not simply show the documentation and prove it? This entire mess could be cleaned up very quickly if the banks would simply show the court evidence of ownership- but the courts know the banks don’t have it. By now we know that this entire debacle was engineered under the premise of plausible deniability and the screws are coming loose.
It is evident that the courts have had enough. The Supreme Court in Yvanova stated that:

 

“… California borrowers whose loans are secured by a deed of trust with a power of sale may suffer foreclosure without judicial process and thus ―would be deprived of a means to assert [their] legal protections if not permitted to challenge the foreclosing entity‘s authority through an action for wrongful foreclosure. (Culhane, supra, 708 F.3d at p. 290.)

A borrower therefore ―has standing to challenge the assignment of a mortgage on her home to the extent that such a challenge is necessary to contest a foreclosing entity‘s status qua mortgagee‖ (id. at p. 291)— that is, as the current holder of the beneficial interest under the deed of trust.”
The decision goes on to state that:

 

“In seeking a finding that an assignment agreement was void, therefore, a plaintiff in Yvanova‘s position is not asserting the interests of parties to the assignment; she is asserting her own interest in limiting foreclosure on her property to those with legal authority to order a foreclosure sale. This, then, is not a situation in which standing to sue is lacking because its ―sole object . . . is to settle rights of third persons who are not parties. (Golden Gate Bridge etc. Dist. v. Felt (1931) 214 Cal. 308, 316.)”

Apparently the California Supreme Court just grew a pair and the remaining 49 states might want to listen up. With all of the fraud settlements that have occurred over the past seven years, it is evident that what is occurring isn’t simply sloppy paperwork or unintentional oversight but blatant fraud, theft and criminal conspiracy if you want to be honest. It is a sad day in America when a homeowner must go all the way to the Supreme Court in order to obtain a fair and just ruling. If the courts had ruled in favor of the banks (and I am sure the judges in Yvanova knew what was on the line), there is no doubt in my mind that banks would have had a foreclosure feeding frenzy.

The court states the obvious, that there is an investor or entity who may suffer an unauthorized loss of its interest in the note if the foreclosure proceeds, “when an invalid transfer of a note and deed of trust leads to foreclosure by an unauthorized party, the ―victim‖ is not the borrower, whose obligations under the note are unaffected by the transfer, but ―an individual or entity that believes it has a present beneficial interest in the promissory note and may suffer the unauthorized loss of its interest in the note.”

And finally, the court gets to the meat of the matter- the issue of standing. “As it relates to standing, we disagree with defendants’ analysis of prejudice from an illegal foreclosure. A foreclosed-upon borrower clearly meets the general standard for standing to sue by showing an invasion of his or her legally protected interests (Angelucci v. Century Supper Club (2007) 41 Cal.4th 160, 175)—the borrower has lost ownership to the home in an allegedly illegal trustee‘s sale. (See Culhane, supra, 708 F.3d at p. 289 [foreclosed-upon borrower has sufficient personal stake in action against foreclosing entity to meet federal standing requirement].)  Moreover, the bank or other entity that ordered the foreclosure would not have done so absent the allegedly void assignment. Thus- [t]he identified harm—the foreclosure—can be traced directly to [the foreclosing entity‘s] exercise of the authority purportedly delegated by the assignment.”

In conclusion, the court clarifies who is allowed to enforce the note without showing overt favoritism to the bank. Please note the eloquence of the last line in this paragraph in the Yvanova decision:

“Nor is it correct that the borrower has no cognizable interest in the identity of the party enforcing his or her debt. Though the borrower is not entitled to object to an assignment of the promissory note, he or she is obligated to pay the debt, or suffer loss of the security, only to a person or entity that has actually been assigned the debt. (See Cockerell v. Title Ins. & Trust Co., supra, 42 Cal.2d at p. 292 [party claiming under an assignment must prove fact of assignment].) The borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.

Again, “The borrower owes money NOT TO THE WORLD at large but to a particular person or institution, and ONLY the person or institution entitled to payment may enforce the debt by foreclosing on the security.” The court isn’t magically creating case law- this is exactly what the promissory note entitles the bearer to do- collect on a debt. The note does not say, “If you have a forged document you randomly printed a copy off the internet or photoshopped- you have standing.”

Only the individual or entity with actual STANDING can foreclose on a home. The fact that the homeowner defaulted on an alleged contract (that probably didn’t happen the way the contract reflects the transaction) doesn’t mean any party claiming to be a note holder can foreclose on the home. Like Jerry McGuire said, “SHOW ME THE MONEY.” Until the mortgagee shows up with actual evidence of ownership- no servicer, “lender” or unknown party should be able to randomly foreclose on a home simply by saying they own the note.

Again, this is the beauty of rescission. By precluding the servicer from walking into court with a forged note, mortgage and alleged contract- and forcing this party to demonstrate contractual standing- many fraudulent foreclosures would be prevented. It is tragic that so many people have lost their homes because the courts permitted a pretend lender with no standing to waltz in and take a home simply by showing fraudulent documents and making false claims.

Finally, the Yvanova ruling leaves us with the crowning glory of this decision, “A homeowner who has been foreclosed on by one with no right to do so has suffered an injurious invasion of his or her legal rights at the foreclosing entity‘s hands. No more is required for standing to sue.” Thank you California Supreme Court justices for ruling according to law instead of the banking lobby.

CA Appelate Decision: Damage Claims Against OneWest Goes to Jury, Summary Judgment reversed

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

Sue Rose is my new administrative assistant. Danielle and Geordan do not work for livinglies or the Garfield firm. If you have placed an order which is unfulfilled please call the above numbers.

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

see CA Appeals OrderReversesMSJ

This case allows the jury to hear claims against OneWest for fraud, negligent misrepresentation, concealment, promissory estoppel, negligence, wrongful foreclosure, and violation of CA Business and Professional Code.

Here is an example of the obvious: a Judge takes no risk in denying a motion for summary judgment. It is only when the Judge grants summary judgment that there is a risk of reversal. With the current judicial climate changing in favor of borrowers, [including findings that the mortgage was absolutely void (invalid, non-perfected) where a sham nominee like MERS was used], Judges should take note that they are better off getting in front of the new trend and allow borrowers’ claims to be heard in a fair manner, observing the requirements of due process.

If the Banks collapse because they created 100 million invalid mortgages, that is not a problem for the Judge. And, as I have said many times here, there are 7,000 banks and credit unions that can take up whatever falls out of the mega banks as a result of investors and regulators realizing that the mortgages are void, the assets on bank balance sheets don’t exist or are far overvalued, and the liability section of the bank balance sheet is far understated as a result of damage claims like the one featured in this article.

As noted earlier on these pages, the threshold legal question has been reversed. The question now is what difference does it make if the borrower is in default if the foreclosing party had no right to foreclose?  The previous question that I heard hundreds of times from the Judges themselves was incorrect from the beginning. Their question was what difference does it make if the loan was securitized, as long as the borrower is in default? And that is where the dissenting justice in this case also got it wrong. He is still assuming that these loan transactions were in fact consummated as reflected in the alleged loan documents. The underlying assumption of the dissenting judge is obvious: that the loan contracts were fundamentally valid and whatever defects existed could be corrected before or even during foreclosure. NOT TRUE!

Here in this case is an example of how judges are now perceiving the entire loan transaction instead of just the claim of a default. And the result is that this California appellate court decided to let the case go to trial and allow a jury to hear the claims against OneWest, whose behavior was predatory from the start of when they acquired IndyMac business in 2008-2009.

The appellate court reversed the trial judge who had granted Summary Judgment for OneWest — a little plaything organized over a weekend by some of the richest people in the country. On a net basis they paid nothing and made a ton of money off of loss sharing and guarantee payments from the FDIC and and the GSE’s respectively. They also foreclosed on thousands of homes in cases where they had no interest in the loan and no right to foreclose, collect or do anything else with respect to the loan.

The hidden issue here is whether the Judge, having been reversed, will now allow the homeowner’s attorney to probe deep into the dealings of OneWest during discovery. I suspect that the trial judge will allow more liberal discovery after being reversed. And if that happens you might not never hear about this case again — as it joins the tens of thousands of cases that have been settled under seal of confidentiality. Essentially the strategy of the banks is that if they lose, they can always pay off the homeowner to keep the case from being publicized.

ARE BONDHOLDERS LOOKING TO FIRE OCWEN?

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

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

see Fund Manager’s Letter to Bondholders Detailing Sins of Ocwen

Chickens are coming home to roost. Just read the letter. Anyone who is litigating a case where Ocwen is involved in any way in the chain of title or ownership of the loan paperwork should read this in detail. This could be used as support for arguments that the books and records of the servicer or foreclosing party should not be given the luxury of certain legal presumptions. The presumption that there is in fact a servicing de fault called by the bondholders may enough to force the parties actually prove the nonexistent transactions about which their assignments and endorsements are written.

Why? That is the  question everyone should be asking. If Ocwen was not servicing for the benefit of the REMIC Trust (and the bondholders) then who are they really working for? Themselves? Or are they taking instructions from the underwriter who is also the Master Servicer that committed fraud in the first place on the investors and then on the borrowers, hiding behind the mask and layers of “originators,” “aggregators” and other conduits and sham entities? My opinion is that this is all part of the same scheme to distance themselves both from the transaction in which the bondholder gave money to the underwriter in exchange for the mortgage bonds and the “loans” that were funded not by the trust but directly from investor money that should have been given to the trust. And Ocwen’s selfish interest is to make the most out of “servicer advances” which is their cut of the pie — money that was actually advanced from investor money to pay them with their own money.

Here are some excerpts from the fund manager’s letter —

The facts establishing these Events of Default are irrefutable.  For example, Ocwen recently “stipulate[d]” and “agree[d]” in a consent order with the New York Department of Financial Services to violations of law and to engaging in imprudent servicing practices.  In addition, the California Department of Business Oversight has commenced proceedings to suspend Ocwen’s servicer license in California, a significant source of loans in the RMBS trusts that generate the advances that collateralize the payments to Noteholders.  These (and other) agencies’ findings and enforcement actions demonstrate Ocwen’s systemic, long-standing and continuing servicing failures and disregard of applicable and analogous laws.

I. Ocwen’s Violations of Law and Imprudent Servicing Practices

A. New York Investigations

Facts admitted by Ocwen establish multiple breaches of various covenants in the Transaction Documents and Designated Servicing Agreements and multiple defaults or Events of Default under the Indenture.  On December 19, 2014, Ocwen and Ocwen Financial Corporation admitted to facts that give rise to material breaches and defaults of the covenants and agreements in the above-referenced provisions.  Ocwen’s stipulations are memorialized in the Consent Order Pursuant to New York Banking Law § 44 (the “2014 Consent Order”) that Ocwen entered into with the New York State Department of Financial Services (“NYSDFS”).[3]  Specifically, the 2014 Consent Order sets forth numerous facts to which Ocwen has admitted

B. California Investigations

Two different California regulators have found that Ocwen violated California law.  On a webpage answering “frequently asked questions” related to Ocwen’s settlement with the Consumer Finance Protection Bureau and attorneys general from 49 states and the District of Columbia (discussed below), the California Attorney General states, “[w]e believe that Ocwen violated federal and state laws against unfair and deceptive practices.  Ocwen’s unlawful conduct hurt consumers who have had home loans serviced by Ocwen, Litton, and Homeward.  For example, Ocwen made consumers pay improper fees and charges, caused unreasonable delays and expenses when consumers asked for help to avoid foreclosure, and wrongly refused to give consumers loan modifications that could have helped those consumers stay in their homes.”[6]

C. Consumer Finance Protection Bureau and State Attorneys General Investigation

Additionally, in December 2013, the federal Consumer Finance Protection Bureau (“CFPB”) and the attorneys general for 49 states and the District of Columbia filed a Complaint against Ocwen and Ocwen Financial Corporation in the U.S. District Court for the District of Columbia.[15]  The CFPB and state attorneys general alleged “violations” of (i) “state law prohibiting unfair and deceptive consumer practices with respect to loan servicing,” (ii) “state law prohibiting unfair and deceptive consumer practices with respect to foreclosure processing,” (iii) the Consumer Protection Act of 2010, 12 U.S.C. § 5481 et seq., “with respect to loan servicing,” and (iv) the Consumer Financial Protection Act of 2010, 12 U.S.C. § 5481 et seq., “with respect foreclosure processing.”[16]  Specifically, the CFPB and the attorneys general alleged that Ocwen engaged in the following acts and practices:

D. Federal Monitor Investigation

On December 16, 2014, a monitor appointed in United States, et al. v. Bank of America Corp., et al., No. 12-CV-361 (D.D.C. 2012) (the “Federal Monitor”) issued the “Monitor’s Interim Report Regarding Compliance by Ocwen Loan Servicing, LLC as Successor by Assignment from Defendants Residential Capital LLC, GMAC Mortgage LLC, and Ally Financial Inc. for the Measurement Periods Ended March 31, 2014 and June 30, 2014” (the “Monitor Report”).  The Monitor Report addressed, among other things, the “independence, competency and capacity” of Ocwen’s internal quality control review group (“IRG”).  (Monitor Report at 7.)  According to the Federal Monitor, IRG’s processes and procedures “lacked the critical keys to integrity mandated in the Enforcement Terms [as defined in the Monitor Report],” namely “an internal quality control group that is independent from the line of business whose performance is being measured and an internal quality control group with the appropriate authority, privileges and knowledge to effectively implement and conduct the reviews and metric assessments contemplated in the Enforcement Terms.”  (Id. at 13 (quotations omitted).)  The Federal Monitor identified a “dysfunctional and chaotic working environment” during the first half of 2014, noting “serious problems and flaws in the processes and procedures” employed by the IRG.  (Id. at 13.)  Based on these findings, the Federal Monitor notified Ocwen that the IRG had not correctly implemented the Enforcement Terms in a number of “material respects.”  (Id. at 14.)

II. The Market Reaction

The rating agencies have cited the NYSDFS’s investigation of Ocwen as a reason for their downgrading of Ocwen’s servicer rating.  The rating downgrades have increased the risk that Ocwen will be terminated as a servicer and/or subservicer.[21]  For example, in October 2014—months before Ocwen signed the 2014 Consent Order—Standard & Poor’s downgraded Ocwen’s servicer rating to “average” following a letter by the NYSDFS to Ocwen “stating that during its review of Ocwen’s mortgage servicing practices it had uncovered serious issues with Ocwen’s systems and processes, including Ocwen’s backdating of potentially hundreds of thousands of foreclosure-related letters to borrowers.”[22]  Standard & Poor’s concluded that, based on the facts uncovered in the NYSDFS investigation, Ocwen’s “internal practices and policies may not meet industry or regulatory standards.”[23]  On October 22, 2014, Moody’s also downgraded its assessments of Ocwen “as a primary servicer of subprime residential mortgage loans to SQ3 from SQ3+ and as a special servicer of residential mortgage loans to SQ3 from SQ3+.”[24]  According to Moody’s, “[t]he assessment actions follow [the NYSDFS’] allegations,” which “also raise the risk of actions that restrict Ocwen’s activities, the levying of monetary fines against Ocwen, or additional actions that negatively affect Ocwen’s servicing stability.”[25]

Discovery and Due Process in California

I produced a memorandum as an expert witness and consultant in litigation support for a lawyer in California that after re-reading it, I think would be helpful in all foreclosure litigation. I have excerpted paragraphs from the memo and I present here for your use.

Plaintiff/Appellant has pre-empted the opposing parties with a lawsuit that seeks to determine with finality the status and ownership of her loan. She has received, in and out of court, conflicting answers to her questions. The Defendant/Appellees continue to stonewall her attempt to get simple answers to simple questions — to whom does she owe money and how much money does she owe after all appropriate credits from payments received by the creditor on her mortgage loan.

 

She does not take the position that money is not owed to anyone. She asserts that the opposing parties to this litigation are unable and unwilling to provide any actual transaction information in which the subject loan was originated, transferred or acquired. If she is right none of them can issue a satisfaction and release of mortgage without further complicating a tortuous chain of title — and none of them had any right to collect any money from her. A natural question arising out of this that Plaintiff/Appellant seeks to answer is who is the creditor and have they been paid? If they have been paid or their agents have been paid, how much were they paid and on what terms if the payments were from third parties who were strangers to the original loan contract between the Plaintiff/Appellant and the apparent originator.

 

She asserts that based upon the limited information available to her that the original debt that arose (by operation of law) when she received the benefits of a loan was mischaracterized from the beginning, and has changed steadily over time. She asserts that the “originator” was a sham nominee and the closing documents were both misrepresented as to the identity of the lender, and incomplete because of the failure to disclose the real terms of a loan that at best would be described as partially represented on a promissory note and partially represented on a certificated or uncertificated “mortgage bond.”

 

Neither the actual lender/investors nor the homeowner/borrower were parties to the contract for lending in which the Plaintiff/Appellant was a real party in interest.  And the homeowner/borrower in this case was not party to the promise to repay issued to the actual lenders (investors) who advanced the money. The investor/lenders were party to a bond indenture, prospectus and pooling and servicing agreement, while the borrower was party to a promissory note and deed of trust. It is only by combining the two —- the bond and the note — that the full terms of the transaction emerge — something that the major banks seek to avoid at all costs.

 

When it suits them they characterize it as one cloud of related transactions in which there is a mysterious logic, and when it suits them otherwise they assert that the transactions and documents are not a cloud at all but rather a succession of unrelated individual transactions. Hence they can foreclose under the cloud theory, but under the theory of individual (step) transactions, they don’t have to account for the receipt of exorbitant compensation through tier 2 yield spread premiums, the receipt of insurance, servicer advances, credit default swaps, over-collateralization, cross collateralization, guarantees and other hedge contracts; under this theory they were not acting as agents for the investors (whom they had already defrauded) when they received payments from third parties who thought that the losses on the bonds and loans were losses of the banks — because those banks selling mortgage bonds, while serving as intermediaries, created the illusion that the trillions of dollars invested in mortgage bonds was actually owned equitably and legally by the banks.

 

Plaintiff/Appellant seeks to resolve this conflict with finality so she can move on with her life and property.

 

 If she is right, several debts arose out of the subject transaction and probably none of them were secured by a valid deed of trust or mortgage. If she is right the issues with her mortgage debt have been mitigated and she can settle that with finality and it is possible that she owes other parties on unsecured debts who made payments on account of this loan, by reason of contracts to which the Plaintiff/Appellant was not a party but which should have been disclosed in the initial loan contract. In simply lay language she wants an accounting from the real creditor who would lose money if they did not receive payment or credit toward the balance due on the loan for principal and interest.

 

If she is wrong, then the loan is merely one debt, secured by a valid deed of trust. But one wonders why the banks have steadfastly stonewalled any attempts to establish this as a simple fact by producing the actual record of transactions and passage of money exchanging hands in real transactions that support any appearance or presumption of validity of the documents that are being used by her opposition to claim the right to collect on the loan that she freely admits occurred. Why did the bank oppose her attempts at discovery before litigation and after litigation began?

 

If she is wrong and no third party payments were made, then the bookkeeping and accounting entries of the opposition would show that the loan was posted as loan receivable, with an appropriate reserve for default on the balance sheet, and there would be an absence of any documentation showing transfer or attempted transfer of the loan to a party who actually was the source of funds for the origination or acquisition of the loan. The same books and records would show an absence of any entries that reduce the balance due on the loan. And the loan file correspondence of the opposition would not have any reference to fees earned for servicing the loan on behalf of a third party and the income statement would have no underlying bookkeeping entries for receiving fees for acting as the lender, acting as the servicer or acting as a trustee.

 

In some ways this is an ordinary case regarding a deprivation of due process in connection with the potential forfeiture of property and present denial of access to the courts. She is left with both an inability to determine the status of her title, whether it is superior to any claim of encumbrance from the recorded deed of trust, the status of the ownership of her loan where she could obtain a satisfaction of mortgage from a party who either was the creditor or properly represented the creditor, or whether her existing claims evolve into other claims under tort or contract — i.e., a consequent forfeiture of potential claims against the Appellant’s opposing party. For example, by denying the Plaintiff/Appellant’s motions to compel discovery, Plaintiff/Appellant was denied access to information that would have either settled the matter or provided Plaintiff/Appellant with the information with which to prove her existing claims and would most likely have revealed further causes of action. The information concerning the ownership status of her loan, and the true balance of her loan is essentially the gravamen of her claim.

 

But if, as she suspects and has alleged, the parties purporting to be the lender or successor to the lender have engaged in no actual transactions in which the loan was originated or acquired, then the claims and documents upon which her opposition relies, are obviously a sham. This in turn prevents her from being able to contact her real lender for satisfaction, refinance, or modification of her loan under any factual scenario — because the parties with whom she is dealing are intentionally withholding information that would enable her to do so. Hence their claims and documents would constitute the basis for slander of title if she is right about the actual status and balance of her loan.

 

Her point is not that this Court should award her a judgment — but only the opportunity to complete discovery that would act as the foundation fro introduction of appropriate testimony and evidence proving her case. The trial court below essentially acted in conflict with itself. While upholding her claims as being sufficient to state causes of action, it denied her the ability to conduct full discovery to prove her claim.

 

Hagar v. Reclamation Dist., 111 U.S. 701, 708 (1884). “Due process of law is [process which], following the forms of law, is appropriate to the case and just to the parties affected. It must be pursued in the ordinary mode prescribed by law; it must be adapted to the end to be attained; and whenever necessary to the protection of the parties, it must give them an opportunity to be heard respecting the justice of the judgment sought. Any legal proceeding enforced by public authority, whether sanctioned by age or custom or newly devised in the discretion of the legislative power, which regards and preserves these principles of liberty and justice, must be held to be due process of law.” Id. at 708; Accord, Hurtado v. California, 110 U.S. 516, 537 (1884).

685 Twining v. New Jersey, 211 U.S. 78, 101 (1908); Brown v. New Jersey, 175 U.S. 172, 175 (1899). “A process of law, which is not otherwise forbidden, must be taken to be due process of law, if it can show the sanction of settled usage both in England and this country.” Hurtado v. California, 110 U.S. at 529.

686 Twining, 211 U.S. at 101.

687 Hurtado v. California, 110 U.S. 516, 529 (1884); Brown v. New Jersey, 175 U.S. 172, 175 (1899); Anderson Nat’l Bank v. Luckett, 321 U.S. 233, 244 (1944).

Non-Judicial Proceedings.—A court proceeding is not a requisite of due process.688 Administrative and executive proceedings are not judicial, yet they may satisfy the due process clause.689 Moreover, the due process clause does not require de novo judicial review of the factual conclusions of state regulatory agencies,690 and may not require judicial review at all.691 Nor does the Fourteenth Amendment prohibit a State from conferring judicial functions upon non-judicial bodies, or from delegating powers to a court that are legislative in nature.692 Further, it is up to a State to determine to what extent its legislative, executive, and judicial powers should be kept distinct and separate.693

The Requirements of Due Process.—Although due process tolerates variances in procedure “appropriate to the nature of the case,”694 it is nonetheless possible to identify its core goals and requirements. First, “[p]rocedural due process rules are meant to protect persons not from the deprivation, but from the mistaken or unjustified deprivation of life, liberty, or property.”695 Thus, the required elements of due process are those that “minimize substantively unfair or mistaken deprivations” by enabling persons to contest the basis upon which a State proposes to deprive them of protected interests.696 The core of these requirements is notice and a hearing before an impartial tribunal. Due process may also require an opportunity for confrontation and cross-examination, and for discovery; that a decision be made based on the record, and that a party be allowed to be represented by counsel.

688 Ballard v. Hunter, 204 U.S. 241, 255 (1907); Palmer v. McMahon, 133 U.S. 660, 668 (1890).

 

George W. Mantor Runs for Public Office on “No More Dirty Deeds”

Mantor for Assessor/Recorder/Clerk of San Diego County

Editor’s note: I don’t actually know Mantor so I cannot endorse him personally — but I DO endorse the idea of people running for office on actual issues instead of buzz words and media bullets.

Mantor is aiming straight for his issue by running for the Recorder’s Position. I think his aim is right and he seems to get the nub of some very important issues in the piece I received from him. I’d be interested in feedback on this campaign and if it is favorable, I might give a little juice to his campaign on the blog and my radio show.

His concern is my concern: that within a few years, we will all discover that most of us have defective title, even if we didn’t know there was a loan subject to claims of securitization in our title chain. This is not a phenomenon that affects one transaction at a time. It affects every transaction that took place after the last valid loan closing on every property. It doesn’t matter if it was subject to judicial or non-judicial sale because real property is not to be settled by damages but rather by actual title.

Many investors are buying up property believing they have eliminated the risk of loss by purchasing property either at or after the auction sale of the property. They might not be correct in that assumption. It depends upon the depth and breadth of the fraud. Right now, it seems very deep and very wide.

Here is one quote from Mantor that got my attention:

Despite the fact that everyone knows, despite the fact that they signed consent decrees promising not to steal homes, they go right on doing it.

Where is law enforcement, the Attorneys General, the regulators? They all know but they only prosecute the least significant offenders.

Foreclosures spiked 57% in California last month. How many of those were illegal? Most, if not all.

An audit of San Francisco County revealed one or more irregularities in 99% of the subject loans. In 84% of the loans, there appear to be one or more clear violations of law.

Fortune examined the foreclosures filed in two New York counties (Westchester and the Bronx) between 2006 and 2010.  There were130 cases where the Bank of New York was foreclosing on behalf of a Countrywide mortgage-backed security.  In 104 of those cases, the loan was originally made by Countrywide; the other 26 were made by other banks and sold to Countrywide for securitization.

None of the 104 Countrywide loans were endorsed by Countrywide – they included only the original borrower’s signature.  Two-thirds of the loans made by other banks also lacked bank endorsements.  The other third were endorsed either directly on the note or on an allonge, or a rider, accompanying the note.

No_More_Dirty_Deeds

US Bank Antics versus Their Own Website

Editor’s Note: In answer to the many inquiries we get, I am ONLY licensed in the State of Florida. The reason you see my name pop up in other states is that I am frequently an expert witness and trial consultant on cases, working for the lawyer who is licensed in that state. My law firm, Garfield, Kelley and White provides direct representation in most parts of Florida and litigation support to lawyers in Florida and other states.

Many lawyers are now well versed enough to proceed with only a little help from us. But some need our templates, drafting and scripts for oral argument of motions and other court appearances. I have not appeared pro hac vice in any case thus far and I doubt that I will be able to to do so. So if you want litigation support for your cases, the lawyer should contact my office at 850-765-1236. If you are unrepresented it will be much more challenging to provide such support as it might be construed as the unauthroized practice of law.

 

US Bank is popping up all over the place as the Plaintiff in judicial actions and the initiator of foreclosures in non- judicial states. It is one of the leading parties in the shell game that is mistaken for securitization of loans. But on its own website it admits against the interests that it has advanced in courts across the country, that it has NO POWER TO FORECLOSE or to pursue any other remedies.

US Bank pops up as the foreclosing party as trustee for some supposedly securitized asset pool masquerading as a REMIC trust ( which we all know now was breached in virtually every way, which is why the IRS granted a one year amnesty for the trusts to get their acts together — an action of dubious legality).

Both US Bank and the the Pooling and Servicing Agreement will usually state flat out that the servicer makes all decisions and takes all actions relating to the borrower and the borrower’s payments. There are several reasons for this one of which is the obvious conflict that could occur if the the servicer and the trustee were both bringing foreclosure actions.

But the other reason, the hidden one, is that the banks want to keep the court’s attention on the borrower’s contract and keep it away from the lender’s contract which is quite different than the borrower’s contract. And THAT will invite inquiry as to how or even if the two contracts are related or connected such that the mortgage encumbrance gives rights to the trust beneficiaries such that the collection and foreclosure efforts will inure to the benefit of the trust beneficiaries in the REMIC trust.

So why is US Bank violating both the content and intent of the PSA and its own website? In my own law firm I have two entirely different foreclosure cases — one in which US Bank is the foreclosing party and the other where the servicer started the foreclosure action. Both loans are claimed to be in the same trust although one is in California and the other is in Florida. Why would Chase bank as servicer started an action? Even worse, why did Chase bank start the action as though it was the creditor and claim that there was no securitization? [In the Florida case I am lead counsel whereas in the California case I am only an expert witness and consultant].

I am not sure about the answers to these questions but I have some conjectures.

In the Florida case, US Bank is bringing the case because the servicer can’t — it knows and its records show non-stop servicer advances to the trust beneficiaries of the REMIC trust that supposedly was funded and who purchased or originated the loans in the trust. In the California case, even though the servicer advances are still present it is non-judicial so it is easier for Chase to slip by without even pausing because unless the homeowner brings a legal action to stop the foreclosure sale it just happens. And then it is over.

But Chase is treading on thin ice here which is why it is now transferring the servicing rights —- and therefore the rights to litigate — to SPS who did not make the servicer advances. Of course the servicer advances are probably actually paid by the broker dealer who is holding the money of the trust beneficiaries without THEM knowing that the broker dealer has not used their money entirely for mortgage loans — and instead took a large chunk out as a “trading profit” when it was a tier 2 yield spread premium that should have been disclosed at closing.

One of the more interesting questions is whether the modification or refi of the loan renews the effect of TILA violations thus enabling the borrower to claim the undisclosed compensation, treble damages, interest and attorney fees. A suggestion here about that — most lawyers are ignoring the damage aspect of these cases and seeing the TILA has a defined statute of limitations that appears to have run. I would take issue as to whether it has in fact run, but even more importantly there is still an action for common law fraud unless blocked by a separate statute of limitations. The extra profits collected by those entities in the cloud of parties who served in various roles in the securitization process are all fair game for recovery or set-off against the amount claimed as due as principal of the loan. It can also be used to cause severe collateral damage — literally — because it would probably reveal that the mortgage encumbrance was never perfected by completion of the loan contract.

Both Chase and US Bank are going into bankruptcy courts in Chapter 11 proceedings and demanding adequate protection payments while the bankruptcy is proceeding, knowing and withholding the fact that the creditor is being paid every month and there is no default from the creditor’s point of view. This would be important information for the debtor in possession and the his attorney and the Judge to know. But it is withheld in the hope that the borrower/debtor will never discover the truth — and in most cases they don’t, unless they get a loan level account report based upon a solid securitization report which is based upon a good title report. see http://www.livingliesstore.com.

Both US Bank and Chase are wiling to endure awards of sanctions for misleading the court as a cost of doing business because the volume of complaints about their illegal and fraudulent activities is nearly zero when compared with the total of all state court, federal court and bankruptcy actions. But now they are treading on even thinner ice — they are seeking to get turnover of rents with people who own multiple properties. Their arrogance apparently overcame their judgment. The owners of multiple properties frequently have substantial resources to litigate against the US Bank and Chase and now SPS. The truth is coming out in those cases.

Other Banks who say they are trustees simply direct the borrower or other inquirers to the servicer. But where US Bank is involved it is seeking profit at the expense of the trust beneficiaries and the owners of the real property involved. It seems to me that US Bank has gotten too cute by half and is now exposed to multiple actions for fraud. And I question whether the current revelations about US Bank BUYING the position of trustee has any legal support. I don’t think it does — not in the PSA, not in the statutes nor under common law.

SEE US Bank Role-of-Trustee-Sept2013

Follow

Get every new post delivered to your Inbox.

Join 4,571 other followers

%d bloggers like this: