TONIGHT! Aggregation and Assignments on the Neil Garfield Show

Are Assignments Based Upon Aggregated Pools Real?

Thursdays LIVE! Click in to the The Neil Garfield Show

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

East-West: Charles Marshall California Attorney co-hosts the discussion

 

The bottom line is that the courts are not accepting denials of assertions or allegations by the foreclosing party. The courts are requiring the homeowner to file an affirmative defense rather than simply denying everything in the complaint. This forces the burden of proof and burden of persuasion onto the homeowner to come up with facts supporting their denial. These facts are within the sole care, custody and control of the party initiating foreclosure.

Through the magic of writing things down on paper anyone can make anything seem like it might be real. Of course in the legal system it goes further than that. If it is written there are many assumptions and presumptions that arise simply because a piece of paper was produced with some writing on it. But nobody ever intended such writing to be used in lieu of facts that are contrary to the truth.

The first place you see this scheme in operation is in the supposed aggregation of loans. The truth is that the DATA for the loans was aggregated, which only means that information ABOUT the supposed loans was taken from several spreadsheets and combined into one.

This is done all the time when a PROPOSED deal is in the works. The aggregation of the data is known as a pro forma presentation — with all parties knowing that it isn’t real, but here is what it might look like if we really did it.

The banks have elevated pro forma spreadsheets into the illusion of actual deals. The reason nobody has ever come up with a money trail showing that the aggregation took place and was sold to a trust is that no such money trail exists.

The truth is that no actual aggregation took place and there was no sale to the trust. In fact probing the trusts, there is never a time that the trust is actually created by entrusting money or property to the named Trustee. Without that there is no Trust because nothing is held “in trust.”

The money from investors is never held by the Trustee. The loan debt is never owned by the Trustee or the Trust. There is no sale. And that is because the Broker Dealers funded the loans in the first place using the money of investors.

So there was nobody to pay for purchase of the underlying debt except the investors and the banks certainly were not going to pay for the underlying debt by handing the investors a check or wire transfer.

How did they do it? Through the illusion of Assignments and endorsements by entities and people who have no ownership interests or other rights to the underlying debt. Even servicing relies upon authority from a trust that does not exist and which neither owns the paper nor the underlying debt.

Let’s go back to the beginning. For ANY deal to be legally binding you need the following elements:

  1. An offer of terms by A to B.
  2. Acceptance of those exact terms by B.
  3. Now you have an agreement but not a contract (yet).
  4. Memorialization of the contract in writing.
  5. The contract is not enforceable until the parties sign
  6. The Closing: Reciprocal consideration is exchanged.
  7. Now you have an enforceable contract.

The only thing we get with assignments and endorsements on supposed “allonges” is #4 — Memorialization in Writing. There is no evidence or even assertion that any of the other things happened. Hence the foreclosing party is using an unenforceable false memorialization of a transaction (transfer of loan paper and no transfer of the underlying debt) that never occurred in order to create the illusion of a foreclosure by a real party in interest.

This is all basic Black Letter law. Yet the courts have routinely ignored several very specific laws governing loans, notes, mortgages and assignments and endorsements. Judges have routinely assumed and even presumed that the paper memorialization was all they needed. The door to moral decay and hazard was opened wide. And we all experienced the shock of seeing our economy nearly turn on its belly.

Now Congress is in the process of rolling back the safeguards so that the investment banks can return to business as usual — transforming the role of banks from being financial intermediaries into some multi-headed hybrid creature that can steal money and homes. The banks can do this by using ordinary deposits by its customers, or by soliciting new deposits with the false promise that the money is actually going into a Trust where a big name bank like US Bank will watch over it.

How do you stop it? By litigating on the strategy and narrative that there is no meat in the sandwich, no deal that ever occurred in real life and no authorized intermediary whose claim is solely based upon the existence of a nonexistent trust and nonexistent transactions in which the underlying debt was bought and sold.

 

New York Judge Orders Release of Hidden Documents

This is just the beginning of what I have been predicting for 10 years. When the public finds out that the government itself is addicted to the false scheme of securitization — and that this has led to abandonment of policies and rules of law that have continued to depress the U.S. economy — the “movements” of Sanders and Trump will look like garden parties.

The mortgage loan schedules, assignments, and endorsements are all pure fabrication, illusion smoke and mirrors. This is why 10 years ago the banks were denying the existence of the trusts. They created a void between the investors and their money on the one hand and the homeowners and their homes on the other. They stepped into the void acting as principals when they were in fact rogue intermediaries.

“In the discovery battle in these suits, the government’s pleas for secrecy were so extreme that it asked for, and received, “attorneys’ eyes only” status for the documents in question. This meant that not even the plaintiffs were entitled to see the raw papers. This designation is usually reserved for cases involving national security or proprietary business secrets.”

THE FOLLOWING ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

—————-
*
Matt Taibbi is one of the few journalists in existence who has actually taken the time to gain some real understanding of the financial crisis that was revealed in 2008-2009. I would only add that this is like the tobacco litigation where the states became addicted to revenue from the tobacco companies in order to pay their “fines.”
 *
There are many reasons why the Bush and Obama administrations moved to “save” the TBTF banks at the expense of the rule of law and on the back of homeowners who were lured into unworkable debt masquerading as mortgage debt.
 *
And the outcome of this leadership by example is that the mortgages are treated as valid encumbrances, the mortgage bonds are treated as viable assets on the balance sheets of banks, and the one source that could save the economy — consumers — is being cutoff from any form of relief.
 *
This is like the Fortune 500 companies who have decided that their stock is their product, and the higher their stock price the better they are doing — even if it means that they artificially inflating their stock price by purchasing the stock at high levels with company funds. It’s like oil companies who continue to value the oil in the ground as though they were going to suck it all out and make a profit when we all know that oil is largely going to be left intact and not subject to sale or use. The bubble is here and this decision by a federal judge forces the hand of the Obama administration to lift the veil of secrecy on the pact between the TBTF banks and the U.S. government.
 *
THE SIMPLE TRUTH: The “Trusts” were nothing but names on paper. And the paper allegedly issued by the “Trusts” was as worthless as the Trusts themselves. The investors advanced money under the belief that it would mean their money was going through a “pass-through” entity to be managed by the Trust; but the money never went to the trusts and the trusts never acquired any assets from any source, leaving the trusts at best “inchoate” and at worst nonexistent depending upon the state.
 *
The mortgage loan schedules, assignments, and endorsements are all pure fabrication, illusion smoke and mirrors. This is why 10 years ago the banks were denying the existence of the trusts.
 *
They created a void between the investors and their money on the one hand and the homeowners and their homes on the other. They stepped into the void acting as principals when they were in fact rogue intermediaries.
 *
And to cover their tracks they funded loans with money they stole from investors, thus stealing the money and the debt, while at the same time defrauding the borrower and the courts with false claims of ownership leading to the pinnacle of their scheme — a forced sale of property that in fact they had no interest in, based upon a loan that they never funded or acquired. Getting to that auction is the first legal document in the whole fabricated illegal chain of documentation — and it gives them the right to use that foreclosure sale as proof that everything that went before the sale was true and valid. It wasn’t.
 *
GET A CONSULT
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.

New Mexico Supreme Court Wipes Out Bank of New York

bony-v-romero_nm-sup.ct.-reverses-with-instruction_2-14

There are a lot of things that could be analyzed in this case that was very recently decided (February 13, 2014). The main take away is that the New Mexico Supreme Court is demonstrating that the judicial system is turning a corner in approaching the credibility of the intermediaries who are pretending to be real parties in interest. I suggest that this case be studied carefully because their reasoning is extremely good and their wording is clear. Here are some of the salient quotes that I think it be used in motions and pleadings:

We hold that the Bank of New York did not establish its lawful standing in this case to file a home mortgage foreclosure action. We also hold that a borrower’s ability to repay a home mortgage loan is one of the “borrower’s circumstances” that lenders and courts must consider in determining compliance with the New Mexico Home Loan Protection Act, NMSA 1978, §§ 58-21A-1 to -14 (2003, as amended through 2009) (the HLPA), which prohibits home mortgage refinancing that does not provide a reasonable, tangible net benefit to the borrower. Finally, we hold that the HLPA is not preempted by federal law. We reverse the Court of Appeals and district court and remand to the district court with instructions to vacate its foreclosure judgment and to dismiss the Bank of New York’s foreclosure action for lack of standing.

The Romeros soon became delinquent on their increased loan payments. On April 1, 2008, a third party—the Bank of New York, identifying itself as a trustee for Popular Financial Services Mortgage—filed a complaint in the First Judicial District Court seeking foreclosure on the Romeros’ home and claiming to be the holder of the Romeros’ note and mortgage with the right of enforcement.

The Romeros also raised several counterclaims, only one of which is relevant to this appeal: that the loan violated the antiflipping provisions of the New Mexico HLPA, Section 58-21A-4(B) (2003).[They were lured into refinancing into a loan with worse provisions than the one they had].

Litton Loan Servicing did not begin servicing the Romeros’ loan until November 1, 2008, seven months after the foreclosure complaint was filed in district court.

At a bench trial, Kevin Flannigan, a senior litigation processor for Litton Loan Servicing, testified on behalf of the Bank of New York. Flannigan asserted that the copies of the note and mortgage admitted as trial evidence by the Bank of New York were copies of the originals and also testified that the Bank of New York had physical possession of both the note and mortgage at the time it filed the foreclosure complaint.

{9} The Romeros objected to Flannigan’s testimony, arguing that he lacked personal knowledge to make these claims given that Litton Loan Servicing was not a servicer for the Bank of New York until after the foreclosure complaint was filed and the MERS assignment occurred. The district court allowed the testimony based on the business records exception because Flannigan was the present custodian of records.

{10} The Romeros also pointed out that the copy of the “original” note Flannigan purportedly authenticated was different from the “original” note attached to the Bank of New York’s foreclosure complaint. While the note attached to the complaint as a true copy was not indorsed, the “original” admitted at trial was indorsed twice: first, with a blank indorsement by Equity One and second, with a special indorsement made payable to JPMorgan Chase.

the Court of Appeals affirmed the district court’s rulings that the Bank of New York had standing to foreclose and that the HLPA had not been violated but determined as a result of the latter ruling that it was not necessary to address whether federal law preempted the HLPA. See Bank of N.Y. v. Romero, 2011-NMCA-110, ¶ 6, 150 N.M. 769, 266 P.3d 638 (“Because we conclude that substantial evidence exists for each of the district court’s findings and conclusions, and we affirm on those grounds, we do not addressthe Romeros’ preemption argument.”).

We have recognized that “the lack of [standing] is a potential jurisdictional defect which ‘may not be waived and may be raised at any stage of the proceedings, even sua sponte by the appellate court.’” Gunaji v. Macias, 2001-NMSC-028, ¶ 20, 130 N.M. 734, 31 P.3d 1008 (citation omitted). While we disagree that the Romeros waived their standing claim, because their challenge has been and remains largely based on the note’s indorsement to JPMorgan Chase, whether the Romeros failed to fully develop their standing argument before the Court of Appeals is immaterial. This Court may reach the issue of standing based on prudential concerns. See New Energy Economy, Inc. v. Shoobridge, 2010-NMSC-049, ¶ 16, 149 N.M. 42, 243 P.3d 746 (“Indeed, ‘prudential rules’ of judicial self-governance, like standing, ripeness, and mootness, are ‘founded in concern about the proper—and properly limited—role of courts in a democratic society’ and are always relevant concerns.” (citation omitted)). Accordingly, we address the merits of the standing challenge.[e.s.]

the Romeros argue that none of the Bank’s evidence demonstrates standing because (1) possession alone is insufficient, (2) the “original” note introduced by the Bank of New York at trial with the two undated indorsements includes a special indorsement to JPMorgan Chase, which cannot be ignored in favor of the blank indorsement, (3) the June 25, 2008, assignment letter from MERS occurred after the Bank of New York filed its complaint, and as a mere assignment

of the mortgage does not act as a lawful transfer of the note, and (4) the statements by Ann Kelley and Kevin Flannigan are inadmissible because both lack personal knowledge given that Litton Loan Servicing did not begin servicing loans for the Bank of New York until seven months after the foreclosure complaint was filed and after the purported transfer of the loan occurred. 
[NOTE BURDEN OF PROOF]

(“[S]tanding is to be determined as of the commencement of suit.”); accord 55 Am. Jur. 2d Mortgages § 584 (2009) (“A plaintiff has no foundation in law or fact to foreclose upon a mortgage in which the plaintiff has no legal or equitable interest.”). One reason for such a requirement is simple: “One who is not a party to a contract cannot maintain a suit upon it. If [the entity] was a successor in interest to a party on the [contract], it was incumbent upon it to prove this to the court.” L.R. Prop. Mgmt., Inc. v. Grebe, 1981-NMSC-035, ¶ 7, 96 N.M. 22, 627 P.2d 864 (citation omitted). The Bank of New York had the burden of establishing timely ownership of the note and the mortgage to support its entitlement to pursue a foreclosure action. See Gonzales v. Tama, 1988-NMSC- 016, ¶ 7, 106 N.M. 737, 749 P.2d 1116

[THE DIFFERENCE BETWEEN REMEDIES ON THE NOTE AND REMEDIES ON THE MORTGAGE]

(“One who holds a note secured by a mortgage has two separate and independent remedies, which he may pursue successively or concurrently; one is on the note against the person and property of the debtor, and the other is by foreclosure to enforce the mortgage lien upon his real estate.” (internal quotation marks and citation omitted)).

3. None of the Bank’s Evidence Demonstrates Standing to Foreclose

{19} The Bank of New York argues that in order to demonstrate standing, it was required to prove that before it filed suit, it either (1) had physical possession of the Romeros’ note indorsed to it or indorsed in blank or (2) received the note with the right to enforcement, as required by the UCC. See § 55-3-301 (defining “[p]erson entitled to enforce” a negotiable instrument). While we agree with the Bank that our state’s UCC governs how a party becomes legally entitled to enforce a negotiable instrument such as the note for a home loan, we disagree that the Bank put forth such evidence.

a. Possession of a Note Specially Indorsed to JPMorgan Chase Does Not Establish the Bank of New York as a Holder

{20} Section 55-3-301 of the UCC provides three ways in which a third party can enforce a negotiable instrument such as a note. Id. (“‘Person entitled to enforce’ an instrument means (i) the holder of the instrument, (ii) a nonholder in possession of the instrument who has the rights of a holder, or (iii) a person not in possession of the instrument who is entitled to enforce the [lost, destroyed, stolen, or mistakenly transferred] instrument pursuant to [certain UCC enforcement provisions].”); see also § 55-3-104(a)(1), (b), (e) (defining “negotiable instrument” as including a “note” made “payable to bearer or to order”). Because the Bank’s arguments rest on the fact that it was in physical possession of the Romeros’ note, we need to consider only the first two categories of eligibility to enforce under Section 55-3-301.

{21} The UCC defines the first type of “person entitled to enforce” a note—the “holder” of the instrument—as “the person in possession of a negotiable instrument that is payable either to bearer or to an identified person that is the person in possession.” NMSA 1978, § 55-1-201(b)(21)(A) (2005); see also Frederick M. Hart & William F. Willier, Negotiable Instruments Under the Uniform Commercial Code, § 12.02(1) at 12-13 to 12-15 (2012) (“The first requirement of being a holder is possession of the instrument. However, possession is not necessarily sufficient to make one a holder. . . . The payee is always a holder if the payee has possession. Whether other persons qualify as a holder depends upon whether the instrument initially is payable to order or payable to bearer, and whether the instrument has been indorsed.” (footnotes omitted)). Accordingly, a third party must prove both physical possession and the right to enforcement through either a proper indorsement or a transfer by negotiation. See NMSA 1978, § 55-3-201(a) (1992) (“‘Negotiation’ means a transfer of possession . . . of an instrument by a person other than the issuer to a person who thereby becomes its holder.”). [E.S.] Because in this case the Romeros’ note was clearly made payable to the order of Equity One, we must determine whether the Bank provided sufficient evidence of how it became a “holder” by either an indorsement or transfer.

Without explanation, the note introduced at trial differed significantly from the original note attached to the foreclosure complaint, despite testimony at trial that the Bank of New York had physical possession of the Romeros’ note from the time the foreclosure complaint was filed on April 1, 2008. Neither the unindorsed note nor the twice-indorsed

7

note establishes the Bank as a holder.

{23} Possession of an unindorsed note made payable to a third party does not establish the right of enforcement, just as finding a lost check made payable to a particular party does not allow the finder to cash it. [E.S.]See NMSA 1978, § 55-3-109 cmt. 1 (1992) (“An instrument that is payable to an identified person cannot be negotiated without the indorsement of the identified person.”). The Bank’s possession of the Romeros’ unindorsed note made payable to Equity One does not establish the Bank’s entitlement to enforcement.

We are not persuaded. The Bank provides no authority and we know of none that exists to support its argument that the payment restrictions created by a special indorsement can be ignored contrary to our long-held rules on indorsements and the rights they create. See, e.g., id. (rejecting each of two entities as a holder because a note lacked the requisite indorsement following a special indorsement); accord NMSA 1978, § 55-3-204(c) (1992) (“For the purpose of determining whether the transferee of an instrument is a holder, an indorsement that transfers a security interest in the instrument is effective as an unqualified indorsement of the instrument.”).

[COMPETENCY OF WITNESS]

the Bank of New York relies on the testimony of Kevin Flannigan, an employee of Litton Loan Servicing who maintained that his review of loan servicing records indicated that the Bank of New York was the transferee of the note. The Romeros objected to Flannigan’s testimony at trial, an objection that the district court overruled under the business records exception. We agree with the Romeros that Flannigan’s testimony was inadmissible and does not establish a proper transfer.

Litton Loan Servicing, did not begin working for the Bank of New York as its servicing agent until November 1, 2008—seven months after the April 1, 2008, foreclosure complaint was filed. Prior to this date, Popular Mortgage Servicing, Inc. serviced the Bank of New York’s loans. Flannigan had no personal knowledge to support his testimony that transfer of the Romeros’ note to the Bank of New York prior to the filing of the foreclosure complaint was proper because Flannigan did not yet work for the Bank of New York. See Rule 11-602 NMRA (“A witness may testify to a matter only if evidence is introduced sufficient to support a finding that the

9

witness has personal knowledge of the matter. [E.S.] Evidence to prove personal knowledge may consist of the witness’s own testimony.”). We make a similar conclusion about the affidavit of Ann Kelley, who also testified about the status of the Romeros’ loan based on her work for Litton Loan Servicing. As with Flannigan’s testimony, such statements by Kelley were inadmissible because they lacked personal knowledge.

[OBJECTION TO HEARSAY BUSINESS RECORDS REVERSED AND SUSTAINED]

When pressed about Flannigan’s basis of knowledge on cross-examination, Flannigan merely stated that “our records do indicate” the Bank of New York as the holder of the note based on “a pooling and servicing agreement.” No such business record itself was offered or admitted as a business records hearsay exception. See Rule 11-803(F) NMRA (2007) (naming this category of hearsay exceptions as “records of regularly conducted activity”).

The district court erred in admitting the testimony of Flannigan as a custodian of records under the exception to the inadmissibility of hearsay for “business records” that are made in the regular course of business and are generally admissible at trial under certain conditions. See Rule 11-803(F) (2007) (citing the version of the rule in effect at the time of trial). The business records exception allows the records themselves to be admissible but not simply statements about the purported contents of the records. [E.S.] See State v. Cofer, 2011-NMCA-085, ¶ 17, 150 N.M. 483, 261 P.3d 1115 (holding that, based on the plain language of Rule 11-803(F) (2007), “it is clear that the business records exception requires some form of document that satisfies the rule’s foundational elements to be offered and admitted into evidence and that testimony alone does not qualify under this exception to the hearsay rule” and concluding that “‘testimony regarding the contents of business records, unsupported by the records themselves, by one without personal knowledge of the facts constitutes inadmissible hearsay.’” (citation omitted)). Neither Flannigan’s testimony nor Kelley’s affidavit can substantiate the existence of documents evidencing a transfer if those documents are not entered into evidence. Accordingly, Flannigan’s trial testimony cannot establish that the Romeros’ note was transferred to the Bank of New York.[E.S.]

[REJECTION OF MERS ASSIGNMENT]

We also reject the Bank’s argument that it can enforce the Romeros’ note because it was assigned the mortgage by MERS. An assignment of a mortgage vests only those rights to the mortgage that were vested in the assigning entity and nothing more. See § 55-3-203(b) (“Transfer of an instrument, whether or not the transfer is a negotiation, vests in the transferee any right of the transferor to enforce the instrument, including any right as a holder in due course.”); accord Hart & Willier, supra, § 12.03(2) at 12-27 (“Th[is] shelter rule puts the transferee in the shoes of the transferor.”).

[MERS CAN NEVER ASSIGN THE NOTE]

As a nominee for Equity One on the mortgage contract, MERS could assign the mortgage but lacked any authority to assign the Romeros’ note. Although this Court has never explicitly ruled on the issue of whether the assignment of a mortgage could carry with it the transfer of a note, we have long recognized the separate functions that note and mortgage contracts perform in foreclosure actions. See First Nat’l Bank of Belen v. Luce, 1974-NMSC-098, ¶ 8, 87 N.M. 94, 529 P.2d 760 (holding that because the assignment of a mortgage to a bank did not convey an interest in the loan contract, the bank was not entitled to foreclose on the mortgage); Simson v. Bilderbeck, Inc., 1966-NMSC-170, ¶¶ 13-14, 76 N.M. 667, 417 P.2d 803 (explaining that “[t]he right of the assignee to enforce the mortgage is dependent upon his right to enforce the note” and noting that “[b]oth the note and mortgage were assigned to plaintiff.

[SPLITTING THE NOTE AND MORTGAGE]

(“A mortgage securing the repayment of a promissory note follows the note, and thus, only the rightful owner of the note has the right to enforce the mortgage.”); Dunaway, supra, § 24:18 (“The mortgage only secures the payment of the debt, has no life independent of the debt, and cannot be separately transferred. If the intent of the lender is to transfer only the security interest (the mortgage), this cannot legally be done and the transfer of the mortgage without the debt would be a nullity.”). These separate contractual functions—where the note is the loan and the mortgage is a pledged security for that loan—cannot be ignored simply by the advent of modern technology and the MERS electronic mortgage registry system.

[THE NOBODY ELSE IS CLAIMING ARGUMENT IS EXPLICITLY REJECTED]

Failure of Another Entity to Claim Ownership of the Romeros’ Note Does Not Make the Bank of New York a Holder

{37} Finally, the Bank of New York urges this Court to adopt the district court’s inference that if the Bank was not the proper holder of the Romeros’ note, then third-party-defendant Equity One would have claimed to be the rightful holder, and Equity One made no such claim.

11

{38} The simple fact that Equity One does not claim ownership of the Romeros’ note does not establish that the note was properly transferred to the Bank of New York. In fact, the evidence in the record indicates that JPMorgan Chase may be the lawful holder of the Romeros’ note, as reflected in the note’s special indorsement.

[HOLDER MUST PROVE ENTITLEMENT TO ENFORCE — NO PRESUMPTION ALLOWED]

Because the transferee is not a holder, there is no presumption under Section [55-]3-308 [(1992) (entitling a holder in due course to payment by production and upon signature)] that the transferee, by producing the instrument, is entitled to payment. The instrument, by its terms, is not payable to the transferee and the transferee must account for possession of the unindorsed instrument by proving the transaction through which the transferee acquired it.

[LENDER’S OBLIGATION TO ASSURE THAT THE LOAN IS VIABLE]

B. A Lender Must Consider a Borrower’s Ability to Repay a Home Mortgage Loan in Determining Whether the Loan Provides a Reasonable, Tangible Net Benefit, as Required by the New Mexico HLPA

{39} For reasons that are not clear in the record, the Romeros did not appeal the district court’s judgment in favor of the original lender, Equity One, on the Romeros’ claims that Equity One violated the HLPA. The Court of Appeals addressed the HLPA violation issue in the context of the Romeros’ contentions that the alleged violation constituted a defense to the foreclosure complaint of the Bank of New York by affirming the district court’s favorable ruling on the Bank of New York’s complaint. As a result of our holding that the Bank of New York has not established standing to bring a foreclosure action, the issue of HLPA violation is now moot in this case. But because it is an issue that is likely to be addressed again in future attempts by whichever institution may be able to establish standing to foreclose on the Romero home and because it involves a statutory interpretation issue of substantial public importance in many other cases, we address the conclusion of both the

12

Court of Appeals and the district court that a homeowner’s inability to repay is not among “all of the circumstances” that the 2003 HLPA, applicable to the Romeros’ loan, requires a lender to consider under its “flipping” provisions:

No creditor shall knowingly and intentionally engage in the unfair act or practice of flipping a home loan. As used in this subsection, “flipping a home loan” means the making of a home loan to a borrower that refinances an existing home loan when the new loan does not have reasonable, tangible net benefit to the borrower considering all of the circumstances, including the terms of both the new and refinanced loans, the cost of the new loan and the borrower’s circumstances.

Section 58-21A-4(B) (2003); see also Bank of N.Y., 2011-NMCA-110, ¶ 17 (holding that “while the ability to repay a loan is an important consideration when otherwise assessing a borrower’s financial situation, we will not read such meaning into the statute’s ‘reasonable, tangible net benefit’ language”).

[DOOMED LOANS — WHO HAS THE RISK?]

We have been presented with no conceivable reason why the Legislature in 2003 would consciously exclude consideration of a borrower’s ability to repay the loan as a factor of the borrower’s circumstances, and we can think of none. Without an express legislative direction to that effect, we will not conclude that the Legislature meant to approve mortgage loans that were doomed to end in failure and foreclosure. Apart from the plain language of the statute and its express statutory purpose, it is difficult to comprehend how an unrepayable home mortgage loan that will result in a foreclosure on one’s home and a deficiency judgment to pay after the borrower is rendered homeless could provide “a reasonable, tangible net benefit to the borrower.”

[LENDER’S OBLIGATION TO MAKE SURE IT IS A VIABLE TRANSACTION] a lender cannot avoid its own obligation to consider real facts and circumstances [E.S.] that might clarify the inaccuracy of a borrower’s income claim. Id. (“Lenders cannot, however, disregard known facts and circumstances that may place in question the accuracy of information contained in the application.”) A lender’s willful blindness to its responsibility to consider the true circumstances of its borrowers is unacceptable. A full and fair consideration of those circumstances might well show that a new mortgage loan would put a borrower into a materially worse situation with respect to the ability to make home loan payments and avoid foreclosure, consequences of a borrower’s circumstances that cannot be disregarded.

if the inclusion of such boilerplate language in the mass of documents a borrower must sign at closing would substitute for a lender’s conscientious compliance with the obligations imposed by the HLPA, its protections would be no more than empty words on paper that could be summarily swept aside by the addition of yet one more document for the borrower to sign at the closing.

[THE BLAME GAME]

Borrowers are certainly not blameless if they try to refinance their homes through loans they cannot afford. But they do not have a mortgage lender’s expertise, and the combination of the relative unsophistication of many borrowers and the potential motives of unscrupulous lenders seeking profits from making loans without regard for the consequences to homeowners led to the need for statutory reform. See § 58-21A-2 (discussing (A) “abusive mortgage lending” practices, including (B) “making . . . loans that are equity-based, rather than income based,” (C) “repeatedly refinanc[ing] home loans,” rewarding lenders with “immediate income” from “points and fees” and (D) victimizing homeowners with the unnecessary “costs and terms” of “overreaching creditors”).

[FEDERAL PREEMPTION CLAIM FROM OCC STATEMENT DOES NOT PROVIDE BANK OF NEW YORK ANY PROTECTION]

 

While the Bank is correct in asserting that the OCC issued a blanket rule in January 2004, see 12 C.F.R. § 34.4(a) (2004) (preempting state laws that impact “a national bank’s ability to fully exercise its Federally authorized real estate lending powers”), and that the New Mexico Administrative Code recognizes this OCC rule, neither the Bank nor our administrative code addresses several actions taken by Congress and the courts since 2004 to disavow the OCC’s broad preemption statement.

 

Applying the Dodd-Frank standard to the HLPA, we conclude that federal law does not preempt the HLPA. First, our review of the NBA reveals no express preemption of state consumer protection laws such as the HLPA. Second, the Bank provides no evidence that conforming to the dictates of the HLPA prevents or significantly interferes with a national bank’s operations. Third, the HLPA does not create a discriminatory effect; rather, the HLPA applies to any “creditor,” which the 2003 statute defines as “a person who regularly [offers or] makes a home loan.” Section 58-21A-3(G) (2003). Any entity that makes home loans in New Mexico must follow the HLPA, regardless of whether the lender is a state or nationally chartered bank. See § 58-21A-2 (providing legislative findings on abusive mortgage lending practices that the HLPA is meant to discourage).

Deliberate Destruction Of Documents: Securitization Evolved into a Myth

SERVICES YOU NEED

“Then guy then laughed nervously and said, “Well, if you’re right, we’re ****ed. We never transferred the paper. No one in the industry transferred the paper.”

Editor’s Note: It is very rewarding to see the work of Karl Denninger and others who are taking  my work and not only moving it along, but advancing on it. LUMINAQ is now offering not only the title and securitization searches but actual accounting records showing that the loans were reported to the creditor as performing at the same time they were being declared in default, along with payment to the creditor. Is it a default if the creditor received payment? Obviously not. And THAT is why I keep saying that the non-payment by the borrower is NOT the same thing as a default. It is the non-receipt by the creditor of an expected payment that is a default.

I guess the lesson here is whatever you think is true isn’t. Whatever you think is impossible, is the rule. In EVERY CASE that I have reviewed, seen reviewed or reported to me the basic facts are the same: Except for a few loans from the 2001-2003 era, NONE of them were actually securitized, and from what I can see and what title experts are reporting under promise of anonymity, none of these loans are actually secured by the property. The lien wasn’t just subject to the old “failure to perfect the lien” doctrines, they were never secured to begin with.

The liability of the borrower inured directly to the benefit of an unnamed principal that was in turn the undisclosed agent of another unnamed principal, which was the account representative of undisclosed lenders who received a bond, not the note signed by the borrower. The parties named on the mortgage or deed of trust had nothing to do with the finances, payments or accounting for the amount advanced by the lender nor the proceeds of payments receivable by the lender. The lenders received promises to pay from people OTHER than the homeowner.

The note was payable to a party who did not loan the money and never touched the money and who is not due any money now. The same is true for the parties named as mortgagees, beneficiaries or lenders in the mortgage or deed of trust. And they were all different parties. So the obligation was payable to the lender, the note was payable to a disinterested intermediary, and the mortgage or deed of trust was in favor of still another disinterested party. There is no law I know of that would allow a disinterested party named in an encumbrance to foreclose or enforce a debt that is not due to THAT party. The encumbrance is a myth.

As the article below corroborates many statements  made on this blog — the FACTS are that that notwithstanding the contents of the securitization documentation, nothing ever happened. Nothing was transferred legally, equitably or any other way — the obligation was left undisturbed and exists only by operation of law to the party who advanced the funds. The note is NOT evidence of the obligation because it is a misrepresentation of the party to whom the obligation is owed. The mortgage or deed of trust, which is neither an obligation nor a note that could be used as evidence of the obligation, is incident to an obligation that does not exist — the one described on the note.

If I signed a warranty deed and mortgage conveying and encumbering your home, properly witnessed, notarized and recorded, it would look right but it wouldn’t be true. If I signed a letter stating that I had the original document in my hands, as it was duly recorded in the county records, the letter would be true statement of a false fact. The documentation that shows on ABS.net, Bloomberg and other services showing loan specific data in alleged “pools” and “tranches” of loans is exactly like the letter — a self-serving statement that is documenting a fact that is untrue, to wit: that the loan was assigned into the pool and securitized into tranches and then sold off as mortgage bonds.

THE ASSIGNMENT NEVER TOOK PLACE. THERE WAS NO ENDORSEMENT, TRANSFER OR EVEN TRANSMITTAL OF THOSE DOCUMENTS AND OBVIOUSLY NO RECORDING OF THESE NONEXISTENT DOCUMENTS, WITHOUT WHICH THE POOL’S CLAIM TO THE LOAN IS SIMPLY FALSE. IT ISN’T JUST VOID OR VOIDABLE, IT IS A LIE.

The unavoidable conclusion is that the loans are unsecured, a QUIET TITLE action would remove the appearance of the false encumbrance, and the homes that have already been “sold” pursuant to “foreclosure” in both non-judicial and judicial states are subject to wrongful foreclosure actions, as are the homes that are currently in some stage of the foreclosure process.

As for the unsecured obligations, they are owed — subject to offset and counterclaims — under TILA, RESPA, Consumer Fraud laws and common law fraud. If there is anything left after deduction for compensatory damages and punitive damages or treble damages, then the borrower still owes it to whoever is really the party who lost money on the transactions, assuming they have not already mitigated their damages by receipt of insurance, federal bailout, or counter-party contract payments.

See, I Told You So (Deliberate Destruction Of Documents)
The Market Ticker ® – Commentary on The Capital Markets
Posted 2010-09-27 08:35
by Karl Denninger
in Housing
See, I Told You So (Deliberate Destruction Of Documents)

Yves over at Naked Capitalism has dug up confirmation of what I’ve been saying now for more than two years and have had on “background” and could not “out” the sources of – the practice of not complying with both MBS securitization offering circulars and black-letter state law was both pervasive and intentional.

One of my colleagues had a long conversation with the CEO of a major subprime lender that was later acquired by a larger bank that was a major residential mortgage player. This buddy went through his explanation of why he thought mortgage trusts were in trouble if more people wised up to how they had messed up with making sure they got the note. The former CEO was initially resistant, arguing that they had gotten opinions from top law firms. My contact was very familiar with those opinions, and told him how qualified they were, and did not cover the little problem of not complying with the terms of the pooling and servicing agreement. He also rebutted other objections of the CEO. Then guy then laughed nervously and said, “Well, if you’re right, we’re ****ed. We never transferred the paper. No one in the industry transferred the paper.”

WE NEVER TRANSFERRED THE PAPER. NO ONE IN THE INDUSTRY TRANSFERRED THE PAPER.

Got it folks?

This was not an accident and the dog didn’t eat anyone’s homework.

THE MAJOR BANKS AND LENDERS ALL INTENTIONALLY FAILED TO COMPLY WITH BOTH THEIR OWN OFFERING DOCUMENTS AND BLACK-LETTER STATE LAW.

Even better – in 2009 The Florida Banker’s Association ADMITTED that they have been intentionally destroying the original “wet ink” signatures and documents:

The reason “many firms file lost note counts as a standard alternative pleading in the complaint” is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file. See State Street Bank and Trust Company v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003). Electronic storage is almost universally acknowledged as safer, more efficient and less expensive than maintaining the originals in hard copy, which bears the concomitant costs of physical indexing, archiving and maintaining security. It is a standard in the industry and becoming the benchmark of modern efficiency across the spectrum of commerce—including the court system.

I don’t care what’s a “standard” if it does not comport with the law!

This is like saying that “dealing crack is a standard in the gang industry, therefore, we can sell it even though Federal Law says that we should go to prison for doing so.”

Incidentally, for those who will chime in that “electronic copies are just as good”, no they’re not. They’re not secured, they’re not cryptographically signed and verified by the originator, and they are trivially easy to tamper with.

I’d accept that an electronic copy is ok provided that the original is scanned, encoded, and digitally signed by the consumer at the point of origination, and that consumer then takes the original and a copy of the electronic document with him, with all of this being disclosed and approved by the consumer. If I PGP-sign a document or file it is extremely difficult to tamper with it in a way that cannot be detected. But without that sort of signature and encoding in the presence of the consumer, along with the consumer being the one that gets the paper copy, it is essentially impossible to prove that the document was not tampered with. “Wet signatures” and originals are required for exactly this reason – it makes tampering dangerous as it can usually be detected quite easily.

This is massive, pernicious and OUTRAGEOUS fraud folks.

*
It is fraud upon the county governments who were deprived of their recording and transfer fees (e.g. “doc stamps.”)

*
It is fraud upon all of the MBS buyers, who purchased these securities with a representation and warranty that these notes WERE transferred and properly endorsed.

*
And it is fraud upon the courts when the “lost note” affidavits are filed asserting that the documents were LOST, when in fact THEY WERE INTENTIONALLY DESTROYED.

If you hold private-label MBS wake the hell up and get your lawsuits going, because these big banks that put this stuff together will not survive this and the only way you get anything back is to be first in line.

Folks, this is not small potatoes or something we can overlook.

We are talking about intentional, pernicious, industry-wide fraud perpetrated upon the public, upon the government, upon homeowners and upon investors to the tune of trillions of dollars.

We MUST NOT tolerate this.

Each and every institution involved must be held to criminal account for their willful and intentional acts in this regard.

Bail these people out? Hell no. They deserve a speedy and public trial, to be immediately followed by the proper sanction imposed for intentional acts taken to destroy this nation and it’s financial stability. This is terrorism, exactly as Bin Laden intended (destruction of our economy) and should be met with an identical punishment.

MERS Bashed Again as Not Owning Anything

Therefore they cannot convey any interest in a note, mortgage, debt or obligation since they expressly do not own it and in fact openly disclaim it.

And stating the obvious the decision says that that note is payable to a specific payee. It must therefore be endorsed by that payee for it to be transferred.

SEE MERSdecision 5-20-10

HILLARY STEPPED DOWN

You could see the grueling 15 months of endless campaign stops on the faces of the candidate, her husband and her daughter. It wasn’t working and they knew it. She had piled on the drive for momentum as late as an hour before the polls closed and the deal swung the other way. History slipping away. Her assumption of power thwarted. Her dream smashed by a democratic process that turned out to be every bit as unpredictable as it was intended to be.

She tried her best. She was inevitable, vetted, competent, well financed, and started out with hundreds of delegates and endorsements. She was brilliant, home-town, foreign policy astute, an historic candidate as the former first lady and the first lady to become president. She was tough. She was rough. She used every trick in the book and showed her mettle as she applied all her long years of political knowledge to the project at hand, confident of victory.

While her own quest is ended, she has nonetheless made history, paving the way for the next first lady president; and she played an important part of enduring American history by providing training and sparring with the first Afro-American man in the U.S. history to occupy the oval office.

It is on this day that America takes another leap forward in healing the greatest tragedy in our history with an “imperfect messenger” whose African father ironically and paradoxically arrived in this Country by his own free will, leaving a child behind who would become the most powerful person on Earth.

It’s a step down from lofty ambition but I doubt if we seen the last of Hillary. Her role model being Eleanor Roosevelt, her mentor being a successful former President himself, her current position as United States Senator, and her upcoming appearances on the campaign trail, without the stress of having her own trajectory on the line, all tell a tale of future accomplishments. When President Obama starts his first term, he’ll know he got there not just in spite of her, but because of her. 

 

%d bloggers like this: