Who is the Creditor? NY Appellate Decision Might Provide the Knife to Cut Through the Bogus Claim of Privilege

The crux of this fight is that if the foreclosing parties are forced to identify the creditors they will only have two options, in my opinion: (a) commit perjury or (b) admit that they have no knowledge or access to the identity of the creditor

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https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.

see http://4closurefraud.org/2016/06/10/opinion-here-ny-court-says-bank-of-america-must-disclose-communications-with-countrywide-in-ambac-suit/

We have all seen it a million times — the “Trustees”, the “servicers” and their agents and attorneys all beg the question of identifying the names and contact information of the creditors in foreclosure actions. The reason is simple — in order to answer that question truthfully they would be required to admit that there is no party that could properly be defined as a creditor in relation to the homeowner.

They have successfully pushed the point beyond the point of return — they are alleging that the homeowner is a debtor but they refuse to identify a creditor; this means they are being allowed to treat the homeowner as a debtor while at the same time leaving the identity of the creditor unknown. The reason for this ambiguity is that the banks, from the beginning, were running a scheme that converted the money paid by investors for alleged “mortgage backed securities”; the conversion was simple — “let’s make their money our money.”

When inquiry is made to determine the identity of the creditor the only thing anyone gets is some gibberish about the documents PLUS the assertion that the information is private, proprietary and privileged.  The case in the above link is from an court of appeals in New York. But it could have profound persuasive effect on all foreclosure litigation.

Reciting the tension between liberal discovery and privilege, the court tackles the confusion in the lower courts. The court concludes that privilege is a very narrow shield in specific situations. It concludes that even the attorney-client privilege is a shield only between the client and the attorney and that adding a third party generally waives that privilege. The third party privilege is only extended in narrow circumstances where the parties are seeking a common goal. So in order to prevent the homeowner from getting the information on his alleged creditor, the foreclosing parties would need to show that there is a common goal between the creditor(s) and the debtor.

Their problem is that they can’t do that without showing, at least in camera, that the identity of the creditor is known and that somehow the beneficiaries of an empty trust have a common goal (hard to prove since the trust is empty contrary to the terms of the “investment”). Or, they might try to identify a creditor who is neither the trust nor the investors, which brings us back to perjury.

New York Times: Prosecution of Financial Crisis Fraud Ends With a Whimper


In 2011, Robert Khuzami of the Securities and Exchange Commission announced charges against top executives from Fannie Mae and Freddie Mac. Credit Win Mcnamee/Getty Images

One source of great frustration from the financial crisis has been the dearth of cases against individuals over subprime lending practices and the related securitization of bad loans that caused so much financial havoc. To heighten the frustration, I offer Aug. 22, 2016, as the day on which efforts to pursue cases related to subprime mortgages were put to rest with no individuals — save perhaps the unfortunate former Goldman Sachs trader Fabrice Tourre — held accountable.

On that date, the Securities and Exchange Commission settled its last remaining case against a former Fannie Mae chief executive for securities fraud related to the disclosure of the company’s subprime mortgage exposure. The agency accepted a mere token payment that will not even come out of the individual’s own pocket.

On the same day, a federal appeals court refused to reconsider its May ruling that Bank of America’s Countrywide mortgage unit and one of its former executives did not commit fraud by failing to disclose to Fannie Mae and Freddie Mac that the subprime loans it was selling to them did not come close to the contractual requirements for such transactions.

In December 2011, the S.E.C. publicized its civil securities fraud charges against top executives from Fannie Mae and Freddie Mac for understating their exposure to subprime mortgages, which resulted in the government taking them over. Robert Khuzami, then the head of the S.E.C.’s enforcement division, said that “all individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country’s investors.”

That is not how it turned out, however. Five of the executives settled in 2015 by arranging for modest payments to be made on their behalf by the companies and their insurers, amounts that were never even described as penalties in the settlements.

Each also agreed not to hold a position in a public company that would require signing a filing on its behalf for up to two years. That is far short of the director and officer bar the S.E.C. usually seeks in such cases, but at least it had the sound of something punitive regardless of whether there was any real impact.

The settlement with the sixth defendant, Daniel H. Mudd, the former chief executive of Fannie Mae, disclosed in a judicial filing on Aug. 22, did not even reach that modest level of accountability. Fannie will make a $100,000 donation on his behalf to the Treasury Department — which is like shifting money from one pocket to another because the government already controls the company. Nor is there any ban on Mr. Mudd holding an executive position at another public company, something that at least resulted from the cases against the other executives.

What the S.E.C. accomplished in settling the cases against Mr. Mudd and the other executives hardly sends a message to other executives to be careful about how they act in the future. No money came out of the pockets of any of the defendants, and the prohibitions on future activity were token requirements. It was, after all, unlikely that any of the defendants would have been put in a leadership position at a public company within the applicable time. It is difficult not to come away with the impression that the settlements were little more than a slap on the wrist, and perhaps less than that for Mr. Mudd.

The case involving Countrywide may be more disheartening because it calls into question the scope of a federal statute from the savings and loan crisis, the Financial Institutions Reform, Recovery, and Enforcement Act, or Firrea, that the Justice Department used to extract large settlements from banks. That law authorizes the Justice Department to seek civil penalties for conduct that violates the mail and wire fraud statutes if it affects a bank.

The government won the jury trial in 2013. Preet Bharara, the United States attorney in Manhattan, said that “in a rush to feed at the trough of easy mortgage money on the eve of the financial crisis, Bank of America purchased Countrywide, thinking it had gobbled up a cash cow. That profit, however, was built on fraud.” The trial court hit Bank of America with a $1.267 billion penalty and ordered a former Countrywide executive, the only individual named as a defendant in the case, to pay a separate $1 million fine.

But the United States Court of Appeals for the Second Circuit in Manhattan overturned the verdict last year by ruling that the government had not shown fraud because there was no false statement made when Countrywide sold loans that did not meet certain contractual obligations it had with Fannie and Freddie. The opinion found that “willful but silent noncompliance” with a contract was not fraudulent without some later misstatement.

The government’s aggressive approach to the case may explain why the Justice Department asked the full appeals court to review the decision even though such a request is rarely granted.

The appeals court judges issued a terse order on Aug. 22 denying the government’s request without further comment, which means the only option for challenging the ruling will be to try to take the case to the Supreme Court. The last time the Justice Department asked the Supreme Court to review a case from Mr. Bharara’s office was in United States v. Newman, an insider trading decision. The justices rejected that request before granting review in a similar case from California.

The likelihood that the Supreme Court will take up the appeals court’s decision appears to be low. The issue about what constitutes fraud in a contractual relationship is narrow, raising arcane questions about how a court should construe an agreement between sophisticated parties and when full disclosure is required. This is the type of claim that is usually pursued in a private lawsuit rather than through a federal enforcement action, so the justices may not want to be dragged into a dispute that will have little precedential impact on the application of federal law.

The lack of cases identifying individuals for any misconduct related to the financial crisis has become an all-too common complaint. What will be additionally disheartening to many is that even those few cases that were brought have now ended up largely as defeats for the government.

Mozilo Goes free

Someone needs to go back to the Declaration of Independence. Government exists only by consent of the governed. People are withdrawing their consent on a daily basis now. Where do you think that will lead?

see http://www.housingwire.com/articles/37308-countrywides-mozilo-reportedly-off-the-hook-for-all-those-subprime-mortgages?eid=311685972&bid=1437193#.V2RJhpGUqsU.email

Revenge is not the point. But justice is important. Mozilo was, in my opinion, just a bag man for the mega banks, making Countrywide into a giant holographic image of an empty paper bag.

DOJ is continuing to follow the rules set informally by the Bush administration and later ratified by the Obama administration in which it was assumed that the foxes would help “find” the chickens and put them back in the hen house. It was absurd to all of us who were even reasonably well versed in the language and culture of finance and economics.

Here is what we missed: a DOJ prosecution would have enabled the free flow of information back to the White House where decisions could be made about (1) what went wrong (2) who did it and (3) how to claw back trillions of dollars in ill-gotten gains. Instead both Bush and Obama went to the foxes to ask where the chickens were. The foxes still had chicken blood dripping from their mouths when they said “I don’t know but we’ll help you find out.” Both the Republican President and the Democratic President were clueless about finance. They had to rely on people who at least said they understood what was going on. They went to people from Wall Street who were fat, happy and getting more jovial with each passing month.

Here is what COULD have happened: the absence of a clear definition of a real creditor could have been exposed, making all the mortgages essentially unenforceable. The notes would have been unenforceable because they named parties who did NOT give the loan nor did those parties represent anyone who did give a loan. An announcement of this sort would have toppled the derivative market which is all based upon smoke and mirrors and would  have stopped the progression of the current derivative markets being used as a free zone for theft from investors.

The DEBT would still have been enforceable in favor of the investors, instead of the unused Trusts and other conduits and “originators.” But the real debt owed by homeowners would have been the value of the home, not the imaginary price of the home. All those crazy mortgage products were a cover-up for what the Wall Street banks were stealing from investors. The investors were not just some financial institution; they were managed funds for people’s retirement and savings. In a cruel irony, Wall Street cheated the same people against whom they were foreclosing. They stole the retirement money, covered it up in impossible loans, and then foreclosed saying they were doing so on behalf of the investors — i.e., the same people who were losing their homes, their pensions, retirement and their savings. In short Wall Street banks’ schemes resulted in the middle class suing itself for foreclosure, thus losing both their retirement, pension and savings and then their home.

Wall Street Banks could have been pushed aside as investors and homeowners figured out creative ways to remove the bad mortgages from the title chain and replace them with real mortgages that were based upon principal balances that were economically realistic. Neither the investors nor the borrowers knew that the banks had created a culture of false appraisals creating the illusion of a spike in land VALUE by manipulating the PRICE of  real property. Foreclosures could have been reduced to nearly zero. And the stimulus of maintaining household wealth would have made the recession a much milder affair. Instead there was an epic transfer of wealth from the vast population of people who were sucked into investing in the scheme to provide the food, and vast population of people who were duped into accepting the illusion of mortgage loans whose value was zero.

Somehow the media has concentrated on transfer of wealth as though it means the rich must give to the poor. But anyone with a high school degree can do this arithmetic — the transfer clearly went from the populous to the fraction of the 1% who had concocted this epic fraud. Our population went from middle class to below the poverty line while Mozilo and his counterparts made hundreds of millions of dollars at a minimum. Some made tens of billions of dollars that has not yet been revealed. All of that money came from the middle class and then the theft was rewarded with more trillions of dollars from the Federal government. Until we claw that money back our economy will remain forever fragile.

Mozilo earned nothing. He merely followed the instructions of people who had his complete attention. A civil or criminal prosecution would have led to the specific people whose orders he was following and an unraveling of a scheme that even Alan Greenspan admitted he didn’t understand. In short we would have known the truth and we would have had much greater trust in our Government institutions and our judiciary, who blindly accepted the nutty premise that the party suing for foreclosure wouldn’t be in court if there was no liability owed to them. Between the outlandishly cruel and biased criminal justice system and the tidal wave of foreclosures that never needed to happen, people have an historically low opinion of government and the Courts; and it seems that ordinary people have a greater understanding of what happened to the country at the hands of Wall Street banks than the officials who serve in the positions where such banks and such behavior is supposed to be regulated and stopped.

Bottom Line: As long as the Federal government fails to reign in illegal derivative activity (masking PONZI schemes and other illicit behavior) Judges will not reject the erroneous premise that homeowners got greedy and are deadbeats for failing to pay their debts. And as long as THAT continues, our economy cannot recover and our society will continue splitting apart. Someone needs to go back to the Declaration of Independence. Government exists only by consent of the governed. People are withdrawing their consent on a daily basis now. Where do you think that will lead?

Federal and State Judges Think they Can Overrule the US Supreme Court

Jeff Barnes has put into words what I have been thinking about for several weeks. Barnes is a lawyer who has concentrated on foreclosure defense and has won many cases across the country. He is a good lawyer, which means that he understands how to get traction. So when he complains about Judges, people ought to sit up and take notice.

I think he has hit the nail on the head:

Posted on October 22, 2015

October 22, 2015

In recent months, we have been advised by homeowners in different states that certain Judges in those states have taken the position that decisions by either the Supreme Court of that state or decisions of the United States Supreme Court are not binding on them. Taking such a position violates the Judge’s duties as an officer of the Court, erodes confidence in the judiciary, and renders the public more suspicious of the court system than it already is.

A Judge is duty-bound to follow the “law of the land” whether they agree with it or not. A Judge cannot impose his or her own personal views as to whether the state or US Supreme Court made the correct decision on an issue: when a state Supreme Court or the US Supreme Court decides a specific legal issue, the law is established and Judges must follow it. State supreme courts (other than as so denominated in New York, as the “Supreme Court” is a lower level court in NY) and the US Supreme Court are the highest appellate courts, and their decisions establish “the law of the land”: a state Supreme Court decision establishes the law for that State, while the US Supreme Court establishes the law for the country.

In our experience, the overwhelming majority of Judges are fair, honest, considerate of the position of both sides, and take the law into account when rendering their decisions. The examples below are isolated, but the fact that two such examples have been recently brought to our attention is disturbing.

One of the cases which we were advised of concerned the use of Mr. Barnes’ successful appeal of the MERS issues in the Supreme Court of Montana, which by its decision established that MERS was not the “beneficiary” of a Deed of Trust despite claiming to be so. Although this decision was issued two years ago, the homeowner advised that when that decision was presented to a local Montana county Judge, the Judge took the position that he was not bound by the Supreme Court of Montana’s decision.

Another homeowner advised us that in a prior foreclosure-related hearing before a state court Judge that the Judge told the homeowner that he was not bound by decisions of the United States Supreme Court.

This contempt and disrespect for state Supreme Courts and the US Supreme Court is beyond disconcerting.  There is no reason why homeowners facing foreclosure should be treated adversely when a decision of a state or the US Supreme Court is in favor of them and presented to the Judge. “And Justice for All” means just that: it does not mean “except no justice for homeowners in foreclosure.”

Jeff Barnes, Esq.

see http://foreclosuredefensenationwide.com/?p=612

We see it in many cases involving rescission. It is isn’t that the Judge doesn’t understand. As pointed out by Justice Scalia in the Jesinoski decision the wording of the Federal statute on TILA Rescission could not be more clear and could not be less susceptible to judicial construction. In that unanimous decision of the US Supreme Court in January, 2015, the Court said that like it or not, notice of rescission is effective by operation of law when mailed and nothing else is required to make it effective. The court specifically said that common law rescission is different than the statutory rescission in the Truth in Lending Act.

In fact, the court was perplexed as to how or why any judge would have found otherwise. Thousands of Judges in hundreds of thousands of cases had refused to apply the plain wording of the TILA statute 15 USC 1635. Then came Jesinoski in which the Supreme court said there is no distinction between disputed and undisputed rescissions — they are both effective upon mailing by operation of law. That became the law of the land.

And yet, trial judges and even appellate court are again leaning toward NOT upholding the law and NOT forcing the banks to comply with statute. Many more are “reserving ruling” denying the homeowner remedies that are readily available through TILA Rescission. These courts don’t like TILA rescission. They don’t want to punish the banks for bad behavior. But that is what Congress wanted when they passed TILA 50 years ago.

As many Judges have said in their own written findings and opinions — if you don’t like the law then change it; don’t come to a court of law and expect a judge to change the law. Whether this will lead to some sort of discipline for Judges or simply make them vulnerable to being removed from the bench is unknown. What I do know is that when ordinary people come to realize that the foreclosure crisis could end now, thus stimulating our limping economy, they will likely vote accordingly.

Any Judge who refuses to follow the law as it is written and passed by a legislative body and signed into law by the executive branch (the {President or the Governor) has no right to be on the bench and should resign if his “moral compass” makes following the law so onerous that he or she cannot uphold the laws. In the absence of resignation, then momentum will likely rise and push the agenda of those people who want such judges removed involuntarily. Those Judges are acting against the most basic thrust of our society — that we are a nation of laws and not of men. We have a very well defined process of passing laws and that does not include any one person (on or off the bench) deciding on their own the way the law should read.

Donald Duck Loans: Void Note, Void Mortgage and Recovery of all payments made by borrower in REVERSE FORECLOSURE

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see 18th Judicial Circuit BOA v Nash VOID mortgage Void Note Reverse Judgement for Payments made to non-existent entity

When I said that lawyers should be counterclaiming for unlawful collection of payments by the servicer and related parties back in 2008, most people simply thought I was nuts and others were more generously skeptical. Everyone said “show me a case” which of course I could not because this scheme had never been played before and it has taken 7 years for courts to piece it together.

In the case we will discuss tonight briefly as I take more time to answer questions from the audience, we will see how the senior Judge in Seminole County carefully detailed the events and documents and concluded that the foreclosure was a farce — but more than that, the mortgage and note were a farce and declared them void. In addition, the Judge not only entered judgment for the homeowner on the issue of foreclosure but also granted a money judgment FOR THE BORROWER AGAINST BANK OF AMERICA for all payments made to Bank of America as successor or formerly known as Countrywide formerly known, but not registered or incorporated as America’s Wholesale Lender — which did not exist.

The conclusion of the Judge is that if the entity named on the note or mortgage does not exist, then neither does the note or mortgage. And any payments squeezed out of unwary borrowers are due back to the borrower because he might need them some day if someone actually makes a claim that is true. Thus at common law we have the very same remedy that was intended by the Truth in Lending Act under the right of rescission.

Hence the upcoming US Supreme Court decision probably doesn’t matter all that much although they should affirm the express wording of the statute even if they think the homeowner is getting a windfall. That is an erroneous assumption against the borrower — just as erroneous as assuming the loan documents were ever valid.

Sorry to be so immature, but I TOLD YOU SO!!!

Now when bankruptcy lawyers and foreclosure defense lawyers are preparing their pleadings and schedules they best look at whether there is an actual loan from an actual entity at the base of the chain relied upon by the foreclosing party.

Powers of Attorney — New Documents Magically Appear

For more information on foreclosure offense, expert witness consultations and foreclosure defense please call 954-495-9867 or 520-405-1688. We offer litigation support in all 50 states to attorneys. We refer new clients without a referral fee or co-counsel fee unless we are retained for litigation support. Bankruptcy lawyers take note: Don’t be too quick admit the loan exists nor that a default occurred and especially don’t admit the loan is secured. FREE INFORMATION, ARTICLES AND FORMS CAN BE FOUND ON LEFT SIDE OF THE BLOG. Consultations available by appointment in person, by Skype and by phone.


BONY/Mellon is among those who are attempting to use a Power of Attorney (POA) that they say proves their ownership of the note and mortgage. In No way does it prove ownership. But it almost forces the reader to assume ownership. But it is not entitled to a presumption of any kind. This is a document prepared for use in litigation and in no way is part of normal business records. They should be required to prove every word and every exhibit. The ONLY thing that would prove ownership is proof of payment. If they owned it they would be claiming HDC status. Not only doesn’t it PROVE ownership, it doesn’t even recite or warrant ownership, indemnification etc. It is a crazy document in substance but facially appealing even though it doesn’t really say anything.

The entire POA is hearsay, lacks foundation, and is irrelevant without the proper foundation be laid by the proponent of the document. I do not think it can be introduced as a business records exception since such documents are not normally created in the ordinary course of business especially with such wide sweeping powers that make no sense — unless you recognize that they are dealing with worthless paper that they are trying desperately to make valuable.

They should have given you a copy of the settlement agreement referred to in the POA and they should have identified the original PSA that is referred to in the settlement agreement. Those are the foundation documents because the POA says that the terms used are defined in the PSA, Settlement agreement or both. I want all documents that are incorporated by reference in the POA.

If you have asked whether the Trust ever paid for your loan, I would like to see their answer.

If CWALT, Inc. or CWABS, Inc., or CWMBS, Inc is anywhere in your chain of title or anywhere else mentioned in any alleged origination or transfer of your loan, I assume you asked for those and I would like to see them too.

The PSA requires that the Trust pay for and receive the loan documents by way of the depositor and custodian. The Trustee never takes possession of the loan documents. But more than that it is important to distinguish between the loan documents and the debt. If there is no debt between you and the originator (which means that the originator named on the note and mortgage never advanced you any money for the loan) then note, which is only evidence of the debt and allegedly containing the terms of repayment is only evidence of the debt — which we know does not exist if they never answered your requests for proof of payment, wire transfer or canceled check.

If you have been reading my posts the last couple of weeks you will see what I am talking about.

The POA does not warrant or even recite that YOUR loan or anything resembling control or ownership of YOUR LOAN is or was ever owned by BONY/Mellon or the alleged trust. It is a classic case of misdirection. By executing a long and very important-looking document they want the judge to presume that the recitations are true and that the unrecited assumptions are also true. None of that is correct. The reference to the PSA only shows intent to acquire loans but has no reference or exhibit identifying your loan. And even if there was such a reference or exhibit it would be fabricated and false — there being obvious evidence that they did not pay for it or any other loan.

The evidence that they did not pay consists of a lot of things but once piece of logic is irrefutable — if they were a holder in due course you would be left with no defenses. If they are not a holder in due course then they had no right to collect money from you and you might sue to get your payments back with interest, attorney fees and possibly punitive damages unless they turned over all your money to the real creditors — but that would require them to identify your real creditors (the investors who thought they were buying mortgage bonds but whose money was never given to the Trust but was instead used privately by the securities broker that did the underwriting on the bond offering).

And the main logical point for an assumption is that if they were a holder in due course they would have said so and you would be fighting with an empty gun except for predatory and improper lending practices at the loan closing which cannot be brought against the Trust and must be directed at the mortgage broker and “originator.” They have not alleged they are a holder in course.

The elements of holder in dude course are purchase for value, delivery of the loan documents, in good faith without knowledge of the borrower’s defenses. If they had paid for the loan documents they would have been more than happy to show that they did and then claim holder in due course status. The fact that the documents were not delivered in the manner set forth in the PSA — tot he depositor and custodian — is important but not likely to swing the Judge your way. If they paid they are a holder in due course.

The trust could not possibly be attacked successfully as lacking good faith or knowing the borrower’s defenses, so two out of four elements of HDC they already have. Their claim of delivery might be dubious but is not likely to convince a judge to nullify the mortgage or prevent its enforcement. Delivery will be presumed if they show up with what appears to be the original note and mortgage. So that means 3 out of the four elements of HDC status are satisfied by the Trust. The only remaining question is whether they ever entered into a transaction in which they originated or acquired any loans and whether yours was one of them.

Since they have not alleged HDC status, they are admitting they never paid for it. That means the Trust is admitting there was no payment, which means they were not entitled to delivery or ownership of the note, mortgage, or debt.


So if they did not allege they are an HDC then they are admitting they don’t own the loan papers and admitting they don’t own the loan. Since the business of the trust was to pay for origination of loans and acquisition of loans there is only one reason they wouldn’t have paid for the loan — to wit: the trust didn’t have the money. There is only one reason the trust would not have the money — they didn’t get the proceeds of the sale of the bonds. If the trust did not get the proceeds of sale of the bonds, then the trust was completely ignored in actual conduct regardless of what the documents say. Which means that the documents are not relevant to the power or authority of the servicer, master servicer, trust, or even the investors as TRUST BENEFICIARIES.

It means that the investors’ money was used directly for fees of multiple people who were not disclosed in your loan closing, and some portion of which was used to fund your loan. THAT MEANS the investors have no claim as trust beneficiaries. Their only claim is as owner of the debt, not the loan documents which were made out in favor of people other than the investors. And that means that there is no basis to claim any power, authority or rights claimed through “Securitization” (dubbed “securitization fail” by Adam Levitin).

This in turn means that the investors are owners of the debt but lack any documentation with which to enforce the debt. That doesn’t mean they can’t enforce the debt, but it does mean they can’t use the loan documents. Once they prove or you admit that you did get the loan and that the money came from them, they are entitled to a money judgment on the debt — but there is no right to foreclose because the deed of trust, like a mortgage, is made out to another party and the investors were never included in the chain of title because the intermediaries were  making money keeping it from the investors. More importantly the “other party” had no risk, made no money advance and was otherwise simply providing an illegal service to disguise a table funded loan that is “predatory per se” as per REG Z.

And THAT is why the originator received no money from successors in most cases — they didn’t ask for any money because the loan had cost them nothing and they received a fee for their services.

Bank of America Ordered to Pay $1.2 BILLION for Fraudulent Mortgages

“Given the current environment where robo-signing became institutionalized as a practice even though it is the equivalent of forgery and where fabrication of documents by law offices and “document processors” were prepared according to a published menu of prices, why would anyone, least of all a court of law, apply general principles surrounding presumptions when established fact makes it more likely than not that the presumptions lead to the wrong conclusions? Where is the prejudice to anyone in abandoning these presumptions in light of all the information in the public domain?” — Neil Garfield, livinglies.me


U.S. District Judge Jed Rakoff in Manhattan ruled nine months after jurors found Bank of America and former Countrywide executive Rebecca Mairone liable for defrauding government-controlled mortgage companies Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB) through the sale of shoddy loans by the former Countrywide Financial Inc in 2007 and 2008.

The case centered on a mortgage lending process known as “High Speed Swim Lane,” “HSSL” or “Hustle,” and which ended before Bank of America bought Countrywide in July 2008.

Investigators said the program emphasized quantity over quality, rewarding employees for producing more loans and eliminating checkpoints designed to ensure the loans’ quality. (see link below)

Now that an actual employee of the Bank has also been ordered to pay $1 Million, maybe others will start coming out of the woodwork seeking immunity for their testimony. There certainly has been a large exodus of employees and officers of Bank of America to other Banks and even other industries. They are all trying to distance themselves from the inevitable down fall of the Bank. Meanwhile the corrupt system is heavily engaged with financial news reporting. For every article pointing out that Bank of America might have hundreds of Billions of dollars in legal liabilities for their fraudulent practices in originating, acquiring, servicing and foreclosing mortgages, there are five articles spread over the internet telling investors that BOA is a good investment and it is advisable to buy the stock. I know how that system works. For favors or money some people will write anything.


The question I continue to raise is that if there was an administrative finding of fraud by an agency of the government, which there was, and if there was a jury finding of fraud involved in the Countrywide mortgages (and other mortgages) why are we presuming in court that that the mortgage is valid?

I understand the statutory and common law presumptions arising out of certain instruments that appear to be facially valid. But I propose that lawyers challenge those presumptions based upon the widespread knowledge and information across the public domain that many if not most of the mortgages were procured by fraud, processed fraudulently, serviced fraudulently, and foreclosed fraudulently. In my opinion it is time for lawyers to challenge that presumption in light of the numerous studies, agency investigations and findings that the mortgages, from beginning to end, were fraudulently originated, acquired and processed.

Why should the filings of a pretender lender receive the benefit of the presumptions of validity just because it exists when we already know it is more likely than not that there are no underlying facts to support the presumptions — and knowing that there was probably fraud involved? Why should the burden remain on the borrowers who have the least access to the information about that fraud and who get nothing from the banks during discovery?

Forfeiture of the private residence of a person is the worst outcome of any civil litigation. It is like the death penalty in criminal litigation. Shouldn’t it require intense scrutiny instead of a rocket docket that presumes the validity of the mortgage and note, and presumes that a possessor of a note (that more likely than not was fabricated and forged by a machine) has the right to enforce?

In a REAL transaction in the REAL world, the originator of a loan would demand that all underwriting restrictions be applied, and confirmation of the submissions by the borrower. If anyone was buying the loan in the secondary market, they would demand the same thing and proof that the assignor, endorser or transferor of the loan had title to it in every conceivable way.

The buyer would demand copies of the actual documentation so that they could enforce the loan. These documents would exist and be kept in a vault because the fate of the investment normally depends upon the ability of the “lender” or “purchaser” of the loan to prove that the loan was properly originated and transferred for value in good faith without knowledge of any defenses of the borrower.

In short, they would demand that they receive proof of all aspects in the chain of title such that they would be considered a Holder in Due Course.

Today, nobody seems to allege they are a holder in due course and nobody seems to want to identify any party as a Holder in Due Course or even a creditor. They use the term “holder” with its presumptions as a sword against the hapless borrower who doesn’t have the information to know that his or her loan is likely NOT owned by anyone in the chain claimed by the foreclosing party.

If it were otherwise, all foreclosure cases would end with a thud — the loan would be produced in all its glory with everything in its place and fully disclosed. The only defense left would be payment. Instead the banks are waiting years to run the statute on TILA rescission and TILA violations before they start actively prosecuting a foreclosure.

What bank with a legitimate claim for foreclosure would want to wait before it got its hands on the collateral for a loan in default? Incredibly, these delays which often amount to five years or more, are ascribed to borrowers who are “buying time” without looking at the docket to see that the delay is caused by the Plaintiff foreclosing party, not the borrower who has been actively seeking discovery.

What harm would there be to anyone who is a legitimate stakeholder in this process if we required the banks to plead and prove in all cases — judicial and nonjudicial — the following:

  1. All closing documents with the borrower conformed with Federal and State law as to disclosures, Good Faith Estimate and appraisals.
  2. Underwriting and due diligence for approval of the loan application was performed by [insert name of party].
  3. The payee on the note loaned money to the borrower.
  4. The mortgagee on the mortgage (or beneficiary on the deed of trust) was the source of funds for the loan.
  5. The “originator” of the loan was the lender.
  6. No investor or third party was the creditor, investor or lender at the closing of the loan.
  7. Attached to the pleading are wire transfer receipts or canceled checks showing that the borrower received the funds from the party named on the settlement documents as the lender.
  8. Each assignment in the chain of title to the loan was the result of a transaction in which the loan was sold by the owner of the loan for value in good faith without knowledge of borrower’s defenses.
  9. Each assignment in the chain of title to the loan was the result of a transaction in which the loan was purchased by a bona fide purchaser for value in good faith without knowledge of borrower’s defenses.
  10. Attached to the pleading are wire transfer receipts or canceled checks showing that the seller of the loan received the funds from the party named on the assignment or endorsement as the purchaser.
  11. The creditor for this debt is [name the creditor]. The creditor has notice of this proceeding and has authorized the filing of this foreclosure [see attached authorization document].
  12. The date of the purchase by the creditor Trust is [put in the date]. Attached to the pleading are wire transfer receipts or canceled checks showing that the seller of the subject loan received the funds from the REMIC Trust named in the pleadings as the purchaser.
  13. The purchase by the Trust conformed to the terms and conditions of the Trust instrument which is the Pooling and Servicing Agreement [attached, or URL given where it can be accessed]
  14. The Creditor’s accounts show a deficiency in payments caused by the failure of the borrower to pay under the terms of the note.
  15. All payments received by the creditor (owner of the loan) have been posted whether received directly or received indirectly by agents of the creditor.
  16. The creditor has suffered financial injury and has declared a default on its own account. [See attached Notice of Default].
  17. The last payment received by the creditor from anyone paying on this subject loan account was [insert date].

When I represented Banks and Homeowner Associations in foreclosures against homeowners and commercial property owners, I had all of this information at my fingertips and could produce them instantly.

Given the current environment where robo-signing became institutionalized as a practice even though it is the equivalent of forgery and where fabrication of documents by law offices and “document processors” were prepared according to a published menu of prices, why would anyone, least of all a court of law, apply general principles surrounding presumptions when established fact makes it more likely than not that the presumptions lead to the wrong conclusions? Where is the prejudice to anyone in abandoning these presumptions in light of all the information in the public domain?

see http://thebostonjournal.com/2014/07/30/bank-of-america-ordered-to-pay-1-27-billion-for-countrywide-fraud/

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