HSBC v Buset: Dirty Deeds Done Dirt Cheap

By William Hudson

Buset-Final-Order-Granting-Mtn-for-Involuntary-Dismissal

CASE NO.: 12-38811 CA 01
HSBC v BUSET
JUDGE: BEATRICE BUTCHKO

The Honorable Judge Beatrice Butchko of Florida’s 11th Judicial Circuit, Dade County, Florida granted an involuntary dismissal against Plaintiff HSBC for unclean hands, lack of competent evidence and an order to show why plaintiff shouldn’t be sanctioned for fraud upon the court under the court’s inherent contempt powers. Judge Butchko did her homework and nailed HSBC for what amounts to a securitization fail.

The Defendant’s Motion for Involuntary Dismissal was granted because the Court opined that HSBC could not prove standing because Ocwen’s Assignment of Mortgage was a “sham” and the transaction described in the AOM never legally occurred. The court noted that the Depositor was incorrect and that an undated, specific endorsement affixed to the back of the promissory note reflected the same defective transfer from the originator to the Plaintiff, without reference to the depositor. Furthermore, the judge recognized that placement in a trust requires that a Note has the proper endorsements, assignments and is timely, therefore this, “could never happen for a securitized trust.” The Buset decision has to be one of the finest decisions to come out of South Florida all year.

Judge Butchko demonstrated that she was able to grasp the nuances of securitization and wrote, “This endorsement is contrary to the unequivocal terms of the PSA, in evidence over Plaintiff’s objection, which required all intervening endorsements be affixed to the face of the note because there was ample room for endorsements on the face of the note. There is also no evidence the endorsement was affixed before the originator went out of business in 2008.” While most judges would have ruled that these issues were unimportant or mere technicalities, Butchko questions the authenticity of the endorsements and even the dates before deciding the evidence does not support HSBC’s claims.

Securitization has specific criteria that must be met as the Note is transferred for the protection of assets from future bankruptcy clawbacks. This is done to protect the investors of the trust (MBS investors typically receive lower returns for higher levels of safety). Therefore, there could be no direct sale from the originator to the trust directly. Securitization also requires a sale from the Depositor acting as a “middleman” between the originator and Trust to provide bankruptcy remoteness in the event the originator goes bankrupt or sells the Note.

Neil Garfield has always been adamant that foreclosure settlements do not occur until a bank is forced to provide evidence through Discovery. HSBC’s failure to comply with the Court’s Discovery Order of April 27, 2015 resulted in claims of Unclean Hands after the plaintiff refused to provide the requested Discovery items. The Court ordered the Plaintiff to provide:

(1) the final executed documents evidencing the chain of title for the subject loan;

(2) all records of any custodian related to the chain of custody of the note; and

(3) all records showing how and when the specific endorsement on the promissory note was created.

If the court is angry now, wait until they discover there is no chain of title for the subject loan and that there are no records showing how the endorsement on the note was created. It would be paramount if the business records further reflected that monthly mortgage payments were not being forwarded to any trust.

Judge Butchko writes that she, “fails to comprehend why Plaintiff would not fully comply with the Court’s Order compelling discovery when the evidence sought by the Defendant would actually assist Plaintiff in establishing the missing link in the chain of ownership in the endorsement and assignment of mortgage.” Good judges, like sharks, are beginning to smell blood in the water. Since business records are available at the click of a mouse- why doesn’t HSBC just put the issue to rest and produce the documents? Because, as all Living Lies readers know- any business records would likely reveal the bank’s fraudulent activities. Did Judge Butchko miss the memo that she isn’t supposed to ask these questions?

The Court entered an Order to Show Cause why Plaintiff should not be Sanctioned for violating the Court’s order on April 27, 2015, after representing that it fully complied on or before January 14, 2016. The court then demanded that HSBC conduct further discovery in support of these orders to show cause and set an evidentiary hearing on them. The defendants repeatedly attack HSBC’s use of records they claim they received from prior servicers as hearsay and quote Professor Charles Ehrhardt, who warned against allowing the poor evidentiary practices in foreclosure courts to “erode the requirement of reliability upon which section 90.803 (6) and the other hearsay exceptions are premised.” 1 Fla. Prac., Evidence § 803.6 (2015 ed.).

Professor Ehrhardt argues:
While the decision seems to focus on records in the mortgage servicing industry,
which are plagued by inaccuracies, its rationale extends to all records offered
under 90.803(6) which are records of a prior business and are presently located in
the records of the current business…. The [Calloway] decision is a significant
change in Florida law and inconsistent with many other Florida decisions.” 1 Fla.
Prac., Evidence § 803.6 (2015 ed.).

The Judge ruled that the Court could not exercise its discretion to admit the prior servicer’s
records into evidence as HSBC’s own witness failed to satisfactorily establish a foundation to warrant finding those records are trustworthy. The defendant’s attorneys of Jacobs Keeley repeatedly attacked the credibility of the HSBC witness instead of allowing an employee without personal knowledge to testify on issues she had no knowledge about.

HSBC’s employee witness, when questioned, admitted there was absolutely no math done to check the accuracy of the prior servicer’s records or numbers. She could not verify the trustworthiness of the prior servicer’s records and therefore her testimony was a legal fiction. In this case, Ocwen simply accepted the prior servicer’s numbers as true without any effort to audit or confirm their accuracy. The only confirmation appears to have been to check the carryover of figures from one servicer’s columns to the columns of another. This testimony was complete hearsay and testimony like this should never be allowed to stand unchallenged.

Judge Butchko further impresses by commanding the Court to take Judicial Notice of the Consent Order entered in the matter of Ocwen Financial Corporation, Ocwen Loan Servicing, LLC by the New York State Department of Financial Services dated December 22, 2014. This Consent Order documents Ocwen’s practice of backdating business records that it failed to fully resolve “more than a year after its initial discovery.” All homeowner’s fighting foreclosure should move to have the court take notice of records in the public domain that demonstrate that a servicer has participated and been fined for fraudulent behavior.

Where Judge Butchko really shines is in her ability to comprehend how the securitization issue applies in this case. The Court ruled that HSBC failed to prove standing by virtue of an endorsement and an assignment of mortgage, “created for purposes of litigation” that both missed a key component in the Title of Ownership- namely the need for a Depositor.  HSBC Bank as trustee for Freemont Home Loan Trust 2005-B mortgage Backed Certificates, Series 2005-B, failed to prove it was the proper owner and holder of the Defendant’s loan by virtue of the endorsement on the note or the assignment of mortgage. Both the endorsement and the assignment omit the Depositor, Freemont Mortgage Securities Corporation, from the transaction which constitutes a fatal break in the chain of title.

The Defendant presented the testimony from their expert witness, who testified that the endorsement on the note is contrary to the instructions in §2.01 of the PSA that required a “complete chain of endorsements, which would include the Depositor, to be placed on the face of the note so long as space allowed.” The court noted that there was sufficient space on the face of the note for the endorsements. The court questioned that an undated specific endorsement from the originator directly to the trust found on the back of the note was, “inherently untrustworthy.” YES Judge Butchko! That wasn’t so difficult to understand- and perhaps other Florida courts will take notice.

The Court questioned the validity of the endorsement in that HSBC violated the Court’s order to produce the custodian’s records or documents showing when and how the endorsement was affixed to the original note. WHY is this NOT DONE in every foreclosure case in the United States? If the bank has the records- produce them!

The Court was in agreement that HSBC’s endorsement and assignments would be grounds for the Trust to reject this loan pursuant to the PSA since there was not a complete chain of endorsements on the face of the note. The Court ruled that HSBC had failed to prove its standing to foreclose on the note and mortgage in this action.

The court went on to rule that a Promissory Note Is Not a Negotiable Instrument. The defendant through their expert witness was able to provide testimony explaining that the negotiability of a promissory note is not a consideration in the securitization model. Securitization sells pools of thousands of mortgages with ever having an intention to sell each loan by individual negotiation.  Moreover, the court held that securitization routinely involves the sale of non-negotiable instruments like car loans, rent receivables, even, “David Bowie’s intellectual property rights.”

The Model Uniform Commercial Code as it relates to the note and mortgage for the subject loan fall under Article 3 of Florida’s Uniform Commercial Code. The Court noted that, “However, it is axiomatic that all promissory notes are not automatically negotiable instruments”. The Court stated that the Note is subject to and governed by the Mortgage, rendering the note a non-negotiable instrument. “This Court finds that the Note is non-negotiable as the amounts payable under the Complaint include amounts not described in the Note and as the Note does not contain an unconditional promise to pay.”

Moreover, the court held that the UCC definition of “holder” would necessarily include a thief that takes by forcible transfer. However, a thief would never be entitled to the equitable relief of foreclosure. The Defendant correctly cited the language of the promissory note expressly provides a different definition of “Note holder” from the definition of holder under Fla. Stat. §673.3011. The promissory note defined the term “Note Holder” as “anyone who takes this Note by [lawful] transfer and who is entitled to receive payments under this Note.”

The court concluded that the Note required that “any subsequent party attempting to enforce the note prove they came into possession of the note by lawful transfer and have the right to receive payments under the Note.” This provision establishes the parties’ intention to contract out of the UCC definition of holder, so as to limit the right to enforce only to those who proved ownership.

Judge Butchko’s decision eloquently and succinctly confirms the California Court in Yvanova, “The borrower owes money NOT TO THE WORLD at large but to a particular person or institution.”  Could it be that the judiciary is finally coming to terms with the illusion of ownership that the banks have spun for the past 9 years is a façade? This decision was epic.

The decision follows below:

The Defendant’s Motion for Involuntary Dismissal after the trial was granted was for the following reasons:
I. The Court Finds Unclean Hands In Plaintiff’s Prosecution of This Action
That Bars the Equitable Relief of Foreclosure

1. The Florida Supreme Court has long recognized the maxim that in equitable
actions such as this foreclosure, “he who comes into equity must come with clean hands.” Bush v. Baker, 83 So. 704 (Fla. 1920).

2. In Bush, the Florida Supreme Court instructed that the “principal or policy of the
law in withholding relief from a complaint because of ‘unclean hands’ is punitive in nature.”

3. The Court finds several examples of Plaintiff’s unclean hands that mandate
punitive action that affirmatively bars plaintiff’s entitlement to the equitable relief of foreclosure.

A. Unclean Hands Involving the Specific Endorsement and Assignment
of Mortgage That Both Reflect a Transaction that Never Happened

4. Plaintiff’s trial witness, Sherry Keeley, an Ocwen employee, gave extensive
testimony regarding the Assignment of Mortgage (AOM) that Ocwen prepared in June of 2012 and recorded in the Public Records of Miami-Dade County in July of 2012.

5. On its face, this AOM purports to document a sale of Defendant’s loan from
Mortgage Electronic Registration Systems, Inc (“MERS”) as nominee for the originator,
Freemont Investment and Loan, directly to the securitized trust identified as the plaintiff.

6. Ms. Keeley testified that Ocwen prepared this assignment in preparation for filing
the foreclosure complaint. The Ocwen employee identified the originator of the promissory note and prepared the AOM to reflect a transfer from MERS, as Nominee of that originator to the same party as Ocwen intended to name as Plaintiff in the foreclosure action.

7. The Court takes judicial notice that on July 25, 2008, Freemont Investment and
Loan (“Freemont”) entered into a voluntary liquidation and closing which did not result in a new institution. https://www5.fdic.gov/idasp/confirmation_outside.asp?inCert1=25653. As such, the
status of MERS as nominee for Freemont ended when Freemont closed on July 25, 2008, which renders the AOM created in 2012 void ab initio.

8. Ms. Keeley further testified the Pooling and Servicing Agreement for this
securitized trust backed up the veracity of the AOM. However, Ms. Keeley later conceded that, according to the PSA, the chain of title for any loan within this trust went as follows:

Originator- FREEMONT INVESTMENT AND LOAN
Depositor- FREEMONT MORTGAGE SECURITIES CORPORATION
Trust- HSBC BANK USA, NATIONAL ASSOCIATION, AS TRUSTEE FR FREMONT HOME LOAN TRUST 2005-B, MORTGAGE-BACKED CERTIFICATES, SERIES 2005-B

9. This Court finds the AOM created in 2012 does not document a transaction that
occurred in 2005, as Plaintiff suggests. The transaction described in the AOM never legally occurred. There was never a transaction between MERS and/or Freemont Investment and Loan that sold Defendant’s loan directly to the Trust. Not in 2012, not in 2005, not ever.

10. The AOM is missing a key party in the chain of ownership, the Depositor,
Freemont Mortgage Securities Corporation.

11. Similarly, the undated, specific endorsement affixed to the back of the promissory note reflects the same defective transfer from the originator to the Plaintiff, without reference to the depositor.

12. This endorsement is contrary to the unequivocal terms of the PSA, in evidence
over Plaintiff’s objection, which required all intervening endorsements be affixed to the face of the note because there was ample room for endorsements on the face of the note. There is also no evidence the endorsement was affixed before the originator went out of business in 2008.

13. The Court finds unclean hands in the AOM and undated endorsement reflect a
transaction that never happened, and could never happen for a securitized trust.

14. The Court accepts the testimony of Defendant’s well qualified expert witness,
Kathleen Cully, who explained the securitization model which required the protection of assets from future bankruptcy clawbacks. There could be no direct sale from the originator to the trust directly.

15. The Court accepts Ms. Cully’s testimony that Securitization always required a
sale from the Depositor acting as a “middleman” between the originator and the Trust to provide bankruptcy remoteness in the event the originator went bankrupt.

B. Unclean Hands For Violating the Court’s Discovery Order Despite
Plaintiff’s Representations That It Fully Complied With That Order

16. The Court also finds unclean hands in Plaintiff’s failure to comply with the
Court’s Discovery Order of April 27, 2015.

17. In that order, the Court overruled plaintiff’s blanket objections and found no basis
for Plaintiff to object to providing any discovery under Fla. Stat. 655.059.

18. The Court then ordered Plaintiff to provide (1) the final executed documents
evidencing the chain of title for the subject loan; (2) all records of any custodian related to the chain of custody of the note; and (3) all records showing how and when the specific endorsement on the promissory note was created.

19. On January 14, 2016, the Court’s Order on Defendant’s Motion for Sanctions for
Deposition Abuses and Violations of the Court’s Order Compelling Discovery reflected:
“Plaintiff submits it has fully complied with the Court’s Order of April 27, 2015.”

20. At trial and deposition, Ms. Keeley admitted that Ocwen, Plaintiff’s servicer,
received the Order compelling discovery. However, Ms. Keeley could not testify to any action taken by Ocwen to obtain responsive documents admittedly under Plaintiff’s care, custody, and control. Defendant clearly established that Plaintiff did not comply with the discovery order.

21. The Court fails to comprehend why Plaintiff would not fully comply with the
Court’s Order compelling discovery when the evidence sought by the Defendant would actually assist Plaintiff in establishing the missing link in the chain of ownership in the endorsement and
assignment of mortgage.

22. The Court hereby enters an Order to Show Cause why Plaintiff should not
be Sanctioned for violating the Court’s order on April 27, 2015, after representing that it fully complied on or before January 14, 2016.

23. Moreover, the Court hereby enters an Order to Show Cause why Plaintiff
should not be sanctioned for the reasons set forth in Defendant’s Motion for Sanctions Under the Court’s Inherent Contempt Powers for Fraud Upon the Court filed on March 16, 2016.

24. Defendant is hereby ordered to conduct further discovery in support of these
orders to show cause and set an evidentiary hearing on them at the Court’s earliest
convenience.

II. Defendant’s Motion For Involuntary Dismissal Is Also Granted For
Plaintiff’s Failure to Prove Damages, Conditions Precedent, and Standing

25. At trial, Plaintiff produced Ms. Keeley as an “other qualified witness” to
introduce Ocwen’s business records in accordance with Fla. Stat. §90.803(6).

26. During her testimony, Ms. Keeley attempted to lay a predicate to introduce the
business records from Litton Loan Servicing, a prior servicer.

27. This Court fully understands and abides by analysis regarding prior servicer’s
records set forth in the Fourth DCA’s opinion in Bank of New York v. Calloway, 2015 WL 71816, 40 Fla. L. Weekly D173 (Fla. 4th DCA 2015)). In Calloway, the Fourth DCA held a trial court could exercise discretion to deem the prior servicer’s records trustworthy if there were evidence that during the loan boarding process, records were reviewed for accuracy. Id. at *8.

28. Notwithstanding the holding of the Fourth DCA, the Defendant challenges
Calloway citing to Professor Charles Ehrhardt, who warns against allowing the poor evidentiary practices in foreclosure courts to “erode the requirement of reliability upon which section 90.803 (6) and the other hearsay exceptions are premised.” 1 Fla. Prac., Evidence § 803.6 (2015 ed.). Professor Ehrhardt further argues:
While the decision seems to focus on records in the mortgage servicing industry,
which are plagued by inaccuracies, its rationale extends to all records offered
under 90.803(6) which are records of a prior business and are presently located in
the records of the current business…. The [Calloway] decision is a significant
change in Florida law and inconsistent with many other Florida decisions.” 1 Fla.
Prac., Evidence § 803.6 (2015 ed.)(emphasis added).

29. In addition, Defendant further suggested the Court should follow another Fourth
DCA opinion dealing with business records from a prior company which does not verify for accuracy. Landmark Am. Ins. Co. v. Pin-Pon Corp., 155 So. 3d 432, 435-43 (Fla. 4
where the Fourth DCA held:
[W]e find that Pin–Pon did not establish that the architect was either in charge of
the activity constituting the usual business practice or was well enough acquainted
with the activity to give the testimony. Although the documents in Exhibit 98
might have qualified as the general contractor’s business records, the mere fact
that these documents were incorporated into the architect’s file did not bring those
documents within the business records exception. In short, Pin–Pon failed to lay
the necessary foundation for the admission of Exhibit 98 as a business record. Id.

Hence, in this case, the Court cannot exercise its discretion to admit the prior servicer’s
records into evidence as Plaintiff’s witness failed to satisfactorily establish a foundation to
warrant finding those records are trustworthy.

A. The Legal Fiction That Ocwen’s Loan Boarding Process In This Case
Verifies The Accuracy, Reliability of Correctness of the Prior
Servicer’s Records

30. At trial, Ms. Keeley explained that she received training on Ocwen’s loan
boarding process which qualified her to give testimony to lay the foundation for the prior
servicer’s records under the business records exception.

31. Ms. Keeley testified the loan boarding process involved two steps. First, Ocwen
confirmed that the categories for each column of financial data from the prior servicer matched or corresponded to the same name Ocwen used for that same column of financial data. Ocwen confirmed the figures from the prior servicer transferred over such that the top figure from Litton became the bottom figure for Ocwen. The court notes that when testifying about Ocwen’s boarding process, Ms. Keeley appeared to be merely repeating a mantra or parroting what she learned the so called boarding process is without being able to give specific details regarding the procedure itself.1 Her demeanor at trial although professional, was hesitant and lacking in confidence in this court’s estimation as the trier of fact.

32. Ms. Keeley admitted there was absolutely no math done to check the accuracy of
the prior servicer’s records or numbers. The loan boarding process’ verification to ensure the trustworthiness of the prior servicer’s records is therefore a legal fiction. In this case, Ocwen simply accepted the prior servicer’s numbers as true without any effort to audit or confirm their accuracy. The only confirmation appears to have been the check a carryover of figures from one servicer’s columns to the columns of another.

33. Moreover, Ms. Keeley testified loans with “red flags” would never be allowed to
board onto Ocwen’s system until the prior servicer resolved them. However, Ms. Keeley also admitted she has witnessed loans that went through the boarding process that had misapplied payments and substantially incomplete loan payment histories from the prior servicer.

34. The existence of misapplied payments and incomplete payment histories in loans
that went through the loan boarding process contradicts any suggestion that the boarding process identifies red flags and/or clears them, such that Courts can trust the reliability of their records.

35. To support the court’s concern regarding the lack of foundation of the so called
boarded records in this case, the Court takes Judicial Notice of the Consent Order entered in the matter of Ocwen Financial Corporation, Ocwen Loan Servicing, LLC by the New York State Department of Financial Services dated December 22, 2014. This Consent Order documents Ocwen’s practice of backdating business records that it failed to fully resolve “more than a year after its initial discovery.”

36. Therefore, the Court finds Plaintiff failed to inquire into the accuracy, reliability
or trustworthiness of the prior servicer’s payment history. Ocwen’s own payment history merely accepts the prior servicer’s records as accurate without question unless the numbers were challenged at some point after the loan boarding process. That is simply not enough to for this court to accept the prior servicer’s records as trustworthy and admit them into evidence here. A mere reliance by a successor business on records created by others, although an important part of establishing trustworthiness, without more is insufficient. Bank of New York v. Calloway, 157 So.3d 1064, 1071 (Fla. 4th DCA 2015). As such, this Court exercised its discretion to sustain Defendant’s objections to both payment histories as inadmissible hearsay. Therefore Plaintiff lacked evidence of an essential element of proof, damages, warranting an involuntary dismissal.

B. Plaintiff’s Failure to Lay a Predicate for Prior Servicer Litton’s
Breach or Default Letter

37. Plaintiff made the unusual effort of seeking to introduce over an inch thick stack
of default letters generated by Litton prior to filing this action.

38. Plaintiff failed to lay a proper business record foundation for these default letters
and the Court exercised its discretion to sustain Defendant’s hearsay objection to their admission.

39. Ms. Keeley testified there was no attempt during Ocwen’s loan boarding process
to check the accuracy of the breach letters. The loan boarding process merely verified that all the prior servicer’s PDF documents for the subject loan were uploaded to Ocwen’s system.

40. At the onset, the Court noted that the first two default letters in the inch thick
stack which Plaintiff sought to admit into evidence were inexplicably dated a week apart and had a $1,900 difference in the amount required to cure the default. The Court rejects Plaintiff’s mere suggestion that the difference is explained by the fact that the loan has an adjustable rate mortgage. Plaintiff produced no reasonable explanation for the $1,900 difference.

41. Moreover, Ms. Keeley testified that in the training she received about Ocwen’s
loan boarding process, she learned that Litton, the prior servicer used an outside vendor to actually mail out the default letters. Therefore, without more, the admission of the default letters mailed by an outside entity not testifying in court creates a double hearsay problem as there is no evidence of a boarding process of that third party vendor’s mailing practices and procedures. Nor did the Ocwen representative testify that she had received training regarding the procedure used by the third party vendor in mailing the default letters.

42. Furthermore, to compound the double hearsay hurdle, Defendant’s counsel
impeached Ms. Keeley’s testimony at trial with her deposition taken in December of 2015, wherein she testified she did not know how the prior servicer mailed the default letters. The Court cannot reconcile Ms. Keeley’s deposition testimony and her trial testimony where she testified she learned about the third party vendor’s mailing procedure during her Ocwen boarding process training. This inconsistent testimony calls into question the veracity of her testimony and further undercut’s Plaintiff’s evidentiary foundation for the proposed documents.

C. Plaintiff Failed To Prove Standing By Virtue of an Endorsement and
an Assignment of Mortgage Created For Purposes of Litigation That
Both Miss a Key Line in the Title of Ownership, namely the Depositor

43. Plaintiff, HSBC Bank USAS, National Association, as trustee for Freemont Home
Loan Trust 2005-B mortgage Backed Certificates, Series 2005-B, failed to prove it is the proper owner and holder of the Defendant’s loan by virtue of the endorsement on the note or the assignment of mortgage.

44. Both the endorsement and the assignment omit the Depositor, Freemont Mortgage
Securities Corporation, from the transaction which constitutes a fatal break in the chain of title.

45. The Defendant presented the testimony of their expert witness, Ms. Cully, who
testified that the endorsement on the note is contrary to the instructions in §2.01 of the PSA that required a complete chain of endorsements, which would include the Depositor, to be placed on the face of the note so long as space allowed.

46. The Court notes there is ample space on the face of the note for endorsements.
Therefore, the Court finds that the undated specific endorsement from the originator directly to the trust found on the back of the note is inherently untrustworthy.

47. The Court further questions the validity of the endorsement in that Plaintiff
violated the Court’s order to produce the custodian’s records or documents showing when and how the endorsement was affixed to the original note.

48. In addition, the Court accepts Ms. Cully’s testimony that the form of the
endorsement and assignment would be grounds for the Trust to reject this loan pursuant to the PSA. There is not a complete chain of endorsements on the face of the note. The PSA required no assignment of mortgage, only that the Trust appear in the MERS system as the loan owner.

49. For these reasons, the Court finds Plaintiff failed to prove its standing to foreclose
the note and mortgage in this action.

III. The Promissory Note Is Not A Negotiable Instrument

50. The Court gives great weight as the trier of fact to the testimony of Defendant’s
expert witness, Kathleen Cully. Ms. Cully is a Yale Law School graduate that worked her entire career in structured finance transactions since 1985. She was extremely well versed in the Uniform Commercial Code. Among many other tasks and accomplishments, Ms. Cully testified that she led the Citigroup team that created the first pooling and servicing agreement ever. She led Citigroup’s Global Securitization strategy. The Court finds Ms. Cully eminently qualified as an expert witness in the area of securitized transactions and their interplay with the Model Uniform Commercial Code.

51. Ms. Cully gave extensive testimony explaining that the negotiability of a
promissory note is not a consideration in the securitization model. Securitization sells pools of thousands of mortgages with ever having an intention to sell each loan by individual negotiation.

52. Moreover, securitization routinely involves the sale of non-negotiable instruments
such as car loans, rent receivables, even David Bowie’s intellectual property rights.

53. The Court finds Ms. Cully’s testimony gives a highly credible analysis of the
Model Uniform Commercial Code as it related to the note and mortgage for the subject loan. Her testimony on the negotiability of the promissory note is attached as Exhibit A. The Buset Note is attached as Exhibit B and the Buset Mortgage is attached as Exhibit C.

54. The Court applies Ms. Cully’s reasoned analysis as it relates to the note and
mortgage for the subject loan and to Article 3 of Florida’s Uniform Commercial Code.
However, it is axiomatic that all promissory notes are not automatically negotiable instruments.

55. The Court recognizes that no Florida appellate court has yet to consider Ms.
Cully’s analysis. The Court has reviewed the recent Fourth DCA opinion in Onewest Bank FSB v. Nunez, (2016 WL 803542 (Fla. 4th DCA March 2, 2016)) which found the Uniform Secured Note provision contained in the promissory note does affect its negotiability because it merely references the mortgage and cites provisions governing rights in collateral and acceleration.

56. The Nunez opinion states the controlling UCC law on negotiability as:
“Florida has adopted the Uniform Commercial Code, including its provision on
negotiability and enforcement of negotiable instruments. Under section
673.1041(1), Florida Statutes (2013), the term “negotiable instrument” means:

[A]n unconditional promise or order to pay a fixed amount of money, with
or without interest or other charges described in the promise or order, if it:
…..
(c) Does not state any other undertaking or instruction by the person
promising or ordering payment to do any act in addition to the
payment of money . . .

Section 673.1061, Florida Statutes (2013), defines “unconditional” by stating
those conditions that prevent it from being unconditional:

(1) Except as provided in this section, for the purposes of s. 673.1041(1), a
promise or order is unconditional unless it states:
(a) An express condition to payment;
(b) That the promise or order is subject to or governed by
another writing; or

(c) That rights or obligations with respect to the promise or
order are stated in another writing.

A reference to another writing does not of itself make the promise or order conditional.
(2) A promise or order is not made conditional:
(a) By a reference to another writing for a statement of rights with respect to
collateral, prepayment, or acceleration. . . .” Id. at *1-2.

57. The Uniformed Note Provision in Nunez is identical to that found in the
Defendant’s Promissory Note herein which provides:
In addition to the protections given to the Note Holder under this Note, a
Mortgage, Deed of Trust, or Security Deed (the “Security Instrument”),
dated the same date as this Note, protects the Note Holder from possible
losses that might result if I do not keep the promises that I make in this Note.
That Security Instrument describes how and under what conditions I may be
required to make immediate payment in full of all amounts I owe under this Note.
Some of these conditions are described as follows: . . . Id. at *1 (emphasis added).

58. This Court does not address the provision described in the Nunez opinion, instead
grounding this decision on a myriad of other provisions of the Mortgage establishing the Note is subject to and governed by the Mortgage, rendering the note a non-negotiable instrument.

59. Among other things, the additional protections routinely change the “fixed
amount of money” due under the promissory note and require additional undertakings and instructions for the borrower beyond the mere repayment of money.

60. First, at page 2 of the mortgage, sub-section (G) expressly provides that “‘Loan’
means the debt evidenced by the Note, plus interest, any prepayment charges and late charges due under the note, and all sums due under this Security Instrument, plus interest.” (emphasis added).

61. Paragraph 3 of the Mortgage provides for the payment of taxes and interest on the
property. These payments are not described in the Note, which requires payment only of
principal, interest, late fees and costs and expenses of enforcement.

62. The Court finds the amounts due under the Mortgage are “other charges” that are
not “described in” the Note, as required by §673.1041(1), Florida Statutes. That alone destroys negotiability.

63. Furthermore, Plaintiff’s complaint seeks damages for all sums due under the Note
and “such other expenses as may be permitted by the mortgage.” Standard mortgage servicing industry practice treats all sums due under the note and mortgage as the “loan” payoff amount or the total amount needed to liquidate in full all monetary obligations arising under both the Note and the Mortgage—the Loan, as defined in the Mortgage—not just the Note.

64. Not only does that payoff amount include charges not described in the Note, it is
much more than a mere “reference” to the Mortgage “for a statement of rights with respect to collateral, prepayment or acceleration”—it means that the Note is effectively “subject to or governed by” the Mortgage, which in turn means that it is not unconditional. See Fla. Stat. §673.1061. That also destroys negotiability of the Note.

65. This Court finds that the Note is non-negotiable as the amounts payable under the
Complaint include amounts not described in the Note and as the Note does not contain an
unconditional promise to pay.

66. The promise is not unconditional because the Note is subject to and/or governed
by another writing, namely the Mortgage. Moreover, rights or obligations with respect to the Note itself—as opposed to the collateral, prepayment or acceleration—are stated in another writing, namely the Mortgage.

67. Moreover, the UCC definition of “holder” would necessarily include a thief that
takes by forcible transfer. However, a thief would never be entitled to the equitable relief of foreclosure. Defendant correctly cites to ¶1 of the promissory note that expressly provides a different definition of “Note holder” from the definition of holder under Fla. Stat. §673.3011.

68. The promissory note defines the term “Note Holder” at ¶1 as “anyone who takes
this Note by [lawful] transfer and who is entitled to receive payments under this Note.”

69. By its terms, ¶1 requires that any subsequent party attempting to enforce the note
prove they came into possession of the note by lawful transfer and have the right to receive payments under the Note. This provision establishes the parties’ intention to contract out of the UCC definition of holder, so as to limit the right to enforce only to those who proved ownership.

70. The Court finds the amounts due under the mortgage are “additional protections”
from possible losses that protect the Note Holder pursuant to the Uniform Secured Note
provision. The protections necessarily affect the fixed amount of money due under the note.

71. The Court further notes Plaintiff’s complaint seeks all sums due under the note
and mortgage. Standard mortgage servicing industry practice treats all sums due under the note and mortgage as the “loan” payoff amount or the total amount needed to liquidate in full all monetary obligations arising under both the Note and the Mortgage.

72. At page 4 of the mortgage, Uniform Covenant 2 entitled “Application of
Payments or Proceeds” provides that “payments be applied in the following order of priority: (a) interest due under the Note; (b) principal due under the Note; and (c) amounts due under Section 3 [of this Security Instrument]. Any remaining amounts shall be applied first to late charges, second to any other amounts due under this security Instrument, and then to reduce the principal balance of the Note.” (emphasis added).

73. As payments are applied to amounts due under both the note and mortgage, this
Court finds the Uniform Covenant 2 in the mortgage must be read as an integrated agreement with the promissory note that will necessarily change the fixed amount of money due thereunder.

74. At the first paragraph of page 7, the mortgage provides: “Any amounts disbursed
by lender under this Section 5 shall become additional debt of Borrower secured by this Security Instrument. These amounts shall bear interest at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.”

75. Therefore, pursuant to the Uniform Secured Note Provision of the note and
Section 5 of the mortgage, forced placed insurance premiums become additional debt secured by the mortgage bearing interest at the note rate which changes the “fixed amount of money” due.

76. At page 8 of the mortgage are two provisions which involve rights or obligations
with respect to the promise or order stated in another writing and constitute instructions and undertakings of the borrower to do acts in addition to the payment of money.

77. At ¶6 of the mortgage the borrower is obligated to occupy the property as a
principal residence within 60 days after signing the mortgage and must continue to occupy the property as Borrower’s principal residence for a least one year.

78. At ¶7, Borrower is obligated to maintain the property and permit lender to
conduct inspections, including interior inspections, upon notice stating cause for the inspection.

79. At ¶8 of the mortgage, “Borrower shall be in default if” borrower gave materially
false or misleading information during the loan application process or concerning Borrowers occupancy of the property as Borrower’s principal residence.

80. At ¶9 of the mortgage entitled, “Protection of Lender’s Interest in the Property
and Rights Under this Security Instrument” the mortgage states “any amounts disbursed by Lender under this Section 9 shall become additional debt of Borrower secured by this Security Instrument. These amounts shall bear interest at the Note rate from the date of disbursement and shall be payable, with such interest, upon notice from Lender to Borrower requesting payment.”

81. At ¶14 of the mortgage entitled “Loan Charges” provides for refunds of such
charges and states: “the Lender may choose to make this refund by reducing the principal owed under the Note or by making a direct payment to Borrower.” Again these additional protections for the Note Holder provided in the Uniform Secured Note provision in the note necessarily affect the “fixed amount of money” due under the note.

82. The Court grants Defendants’ Motion for Involuntary Dismissal and enters
judgment in favor of the Defendants who shall go forth without day.

83. The Court reserves jurisdiction to award prevailing party attorney’s fees and
to impose sanctions against Plaintiff under the inherent contempt powers of the court for fraud on the court, and such other orders necessary to fully adjudicate these issues.

84. Plaintiff is ordered to produce a corporate representative with most
knowledge regarding its efforts to comply with the discovery order dated April 27, 2015, for deposition at the offices of Defendant’s counsel within 15 days from the entry of this order.

DONE AND ORDERED in Chambers at Miami-Dade County, Florida, on 04/26/16.

No Further Judicial Action Required on THIS
MOTION
CLERK TO RECLOSE CASE IF POST
JUDGMENT
_____________________________
BEATRICE BUTCHKO
CIRCUIT COURT JUDGE

Copies furnished to:
Defendant’s counsel: Jacobs Keeley, PLLC., 169 E. Flagler Street, Ste. 1620, Miami, FL 33131,
efile@jakelegal.com

Plaintiff’s counsel: Brock and Scott, 1501 NW 49th Street, Ft. Lauderdale, FL 33309,
flcourtdocs@brockandscott.com
http://stopforeclosurefraud.com/2016/04/29/hsbc-v-joseph-t-buset-ocwen-guillotined-in-florida-bench-trial-and-then-rapped-for-oh-so-filthy-hands-order-granting-defendants-motion-for-involuntary-dismissal-for-u-n-c-l/

Why Are the Banks Abandoning Homes? Hundreds of Thousands of Homes Bulldozed After Foreclosure

For More Information and assistance please call 954-495-9867 or 520-405-1688

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No reasonable person would abandon this many homes after taking the trouble to foreclose on them. There is an obvious preference for foreclosure over workouts, modifications, short sales, resales, and other tools. This shows clearly that loss mitigation is not one of the factors in the minds of those who say they represent investors or REMIC trusts.

So they must have a reason to force the sale of a home other than loss mitigation. The people initiating these foreclosures and subsequent abandonment are acting against the interest of the investors who actually put up the money for the “securitization fail” that I identified and Adam Levitin named.

Thus it must be concluded that those who control the foreclosure process at the big investment banks benefit in some way other than loss mitigation. That can only mean one of two things:

  • The people making the decision make more money foreclosing than in pursuing workouts, modifications, or other settlements and/or
  • The people making the decision are using the foreclosing process to institutionalize “securitization fail” and thus avoid trillions of dollars in liability owed to the investors, insurers, guarantors, counterparties on hedge products, the borrowers and local, state and federal government.

This can only mean that the purpose of the foreclosure is not to mitigate damages to the actual lender or creditor. They don’t want performing loans even if it means that the homeowner is paying off the entire balance of the loan. And they make it difficult if not impossible to get a correct figure for a payoff.

So if the money is not the issue, and the house is not really in issue why do they pursue foreclosures, fabricate documents to do it and use robo-signers and robo witnesses to force through foreclosures on homes they will only abandon at the end of the process?

Should we not be asking whether good faith and clean hands have been established to justify the equitable remedy of forfeiture of the home?

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In South Florida news this morning, local Sheriffs are banding together to board up more than 1,000 homes in Lake Worth. In each case the home was foreclosed. In most cases, the homeowner applied for a modification and was told they could not apply until they were 90 days in arrears. In most cases, all efforts at modification were turned down under the guise that the investors refused to modify or workout the loan. That was most probably a lie. Neither the servicer nor the Trustee or other “enforcer” ever went to the investors with a single workout plan.

Continuous allegations of fraudulent foreclosures on predatory and fraudulent loans have been “settled” but not with the effected homeowners nor with local governments and homeowner associations who are deeply effected by this tragic fraud on the courts, the borrowers, the governments, and the society at large — as millions of jobs were lost and hundreds of thousands of businesses closed down as their customers were displaced from their homes (around 16 Million people directly displaced by fraudulent foreclosures thus far).

As foreclosures continue to increase in number (despite news reports to the contrary) more homeowners are being forced out of their homes, including many that were in the family for generations. The houses, now empty, lay dormant sometimes for 6 years or more before the actual “auction” sale takes place. During that time, miscreants move in creating meth labs, crack houses, safe houses for gangs etc. In the end the property is abandoned, and it leads to more foreclosures and more abandonment. Eventually entire neighborhoods are converted to ghost towns reducing the property values to zero — perfect for an intermediary who wants to cheat investors. The foreclosure sale and abandonment show the recovery at zero. Investors are even told that they should be happy that they didn’t incur further liability than their investment in the property.

In most states, effort to reclaim the homes have failed because they were stripped of the vital mechanical systems and even building materials — a new industry resulting from this process of foreclosure and abandonment. The local property taxes are unpaid for years — leading to forever where the homes are completely abandoned and demolished. But the local government is stuck with the bill because with the new construction from the false boom created by the banks they expanded infrastructure and social services (police, fire, medical etc.).

Meanwhile the same local government is being told that their investment in mortgage bonds have produced losses. So they are stuck with the double whammy of non-payment of property and other taxes plus a direct loss incurred from the “securitization fail” scheme. I believe that attorneys ought to take cases on contingency where local government files suit against the banks. The allegation should be made that not only did the banks NOT act in good faith, they acted in BAD faith because they had no right to foreclose on false papers created at the closing of a loan wherein the borrower and investors were unaware of the true nature of the transaction.

Articles of Deception: PSA and Reynaldo Reyes Affidavit for Deutsch Bank as Trustee

WITHOUT CONFUSION AND OBFUSCATION, COMBINED WITH STONEWALLING, THERE WOULD BE NO FORECLOSURE OF ANY DEBT SUBJECT TO CLAIMS OF SECURITIZATION —- NEIL GARFIELD, WWW.LIVINGLIES.ME

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

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Hat tip to Carol Molloy who sent me the affidavit

See Reynaldo Reyes Affidavit New Jersey Union County 2010 CCF11162014

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Reynaldo Reyes, AVP of Deutsch Bank said to a borrower, in a taped interview, that the whole scheme was “counter-intuitive.” In plain language that means that nothing is what it appears to be. And THAT in turn means that disclosures” were deceptive or “counter-intuitive.” And THAT means that the disclosures at closing were also “counter-intuitive” or deceptive. Reyes in a sworn affidavit drafted many times and edited by various top level attorneys for the banks has submitted an affidavit on behalf of Deutsch Bank but which will be used by Banks to try to legitimize their deceptive tactics. Again, to put it simply, they were lying to everyone — investors, borrowers, regulators, law enforcement, Congress, and the President.

Witness the following paragraph from Reyes’ affidavit. Here he says in the affidavit in Paragraph 1, that the Trustees serve the Trust. But then he takes it all back by saying that the Servicers perform all the functions of administering the loans — not on behalf of the Trustee, but rather on behalf of the Trust. THAT can only mean that the named Trustee, is not the Trustee. It means that the power of administering the Trust assets is with the servicers. Does that mean the servicers should be sued for wrongful foreclosures? Then why is the Trust named or the Trustee named?

So the beginning of the PSA, which designates a Trustee, is merely window dressing to give the impression that Deutsch Bank is the Trustee with all the powers of a Trustee, when in fact, the servicer is the one who performs most or all of the functions of a Trustee. But they do so giving the impression that they must go back to the Trustee or the “investor” when in fact they assert the power to do everything. In their circular reasoning, they could say to the court that they must get approval from the investor and then leave the court room. Then they speak for the investors, according to the servicers. So now they come back to the homeowner or homeowner’s counsel and say the application for modification or settlement has been declined. Whether that assertion turns out to be true after analysis in court is another story.

This is contrary to the position taken by U.S. Bank and Deutsch Bank and BONY Mellon in foreclosure cases where they sue for foreclosure in their own name as Trustee for the REMIC Trust. It also accounts for why they sometimes sue as Trustees for the certificate holders, and sometimes even get away with saying they are trustees only for the certificates delivered to the investors. This of course makes no sense, since they are neither holding nor asserting ownership over the certificates.

Paragraph 7: No entity services loans on behalf of the trustees. The trustees and the loan services that are appointed by the the PSA’s each perform their designated functions on behalf of the trusts. In other words, loan servicers to service mortgage loans that have been pooled and sold into a securitization trust are performing services on behalf of the trusts, not on behalf of the trustees.

Then we get to Paragraph 10 which admits that the Trustee has neither any accounts nor any information or business records of its own. According to this paragraph 10, the Trustee receives loan level data from the servicers “to facilitate certain payments to bondholders.” But wait here comes the language that takes all THAT away: “However, for a number of trusts” [unspecified, but probably all of them] “a party other than the Trustee handles those payments responsibilities.” And then the rest is taken away by his statement that “With respect to the Trusts for which the Trustees serve as a Trustee but not as securities administrators, the Trustee do not receive loan level data.”

Get it? Just like the PSA, Reyes’ affidavit says one thing and then takes it all away in the next breath. The fact is that in virtually no case is the Trustee the securities administrator. And that, Reyes, says means that the Trustee neither gets loan level data, nor does it make payments to the bondholders. “Other parties” perform those functions. Who? The servicer who is according to Reyes the party with the actual powers of the Trustee. So why is Deutsch claiming to be a Trustee.

The answer is very simple — MONEY. The sellers of mortgage bonds pay Deutsch to rent their name to underwriters to make it appear as though an independent fiduciary is handling the money, the purchase or origination of loans, and the enforcement or modification of loans. This is meant to deceive the investors into a false sense of complacency. The same is true for borrowers, although at this point “complacency” would hardly be the word.

Everyone believed the wording at the beginning of the PSA and practically nobody read the PSA from end to end to see that the beginning was sales material and the end was a hodgepodge of obfuscation to make it difficult if not impossible to determine the identity of the players or what they were doing. This analysis can certainly NOT be done without reference to the underlying transaction in which we see who actually sent money to originate the loans, from whom they received the money etc.

The fact is that that while most people think the Trusts acquired the loans by sale of the loans into the trust, the evidence shows that practically none of them were sold to the Trust. The only logical conclusion from the facts at hand is that the investors’ money was pooled in an entirely different scheme while hiding behind claims of securitization.

The investors money was used directly, without their knowledge or consent, to fund origination of loans like the toxic Pick a Pay, reverse amortization, payment increase cap (usually 7.5%) that results in what appears to be affordable payments, but also results in uncontrolled liability.

A $139,000 loan that I recently analyzed, indicates the eventual liability could be nearly $4 million — all at the end of 30 years of payments, resulting in an undisclosed hidden balloon payment in the 13th payment and every payment thereafter which thanks to the miracles of compounding interest and an adjustable rate that could go as high as over 12% APR process an obligation that looks affordable but is infinitely not affordable. The interest alone on the new principal (original balance + deferred interest on negative amortization loan) could exceed $24,000 per month on a $139,000 loan.

Then you get to paragraph 11: Here the affidavit produces more obfuscation by referring to the Master Servicer who might (or might not) be responsible for performing any duties. But in the PSA you see the ultimate authority for virtually everything lies with the Master Servicer, who also turns out to be the the underwriter and seller of mortgage bonds. And since we now know that the Trustee had neither trust accounts nor any control or responsibility for the accounts, THAT makes it impossible for the Trustee to have received any proceeds from the sale of bonds issued by the Trust.

Since a Trust cannot operate except through the Trustee by law (see New York law and the law of your state for more information) it is an inevitable conclusion that there were no accounts established for the Trust in the manner expected by the investors who bought the mortgage bonds. And since there was no money in the Trust, the Trust could not have originate or purchased any loan documents, regardless of whether or not there was in fact an underlying loan transaction at the base of the chain relied upon by these parties when they foreclose.

Then Reyes gets to the meat of why he submitted the affidavit. BONY Mellon did the same thing by a lawsuit and so have hundreds of investors, insurers, guarantors, holders of loss mitigation hedge contracts, whose cases have been quietly settled. Reyes states that “the Trustee would not be in the best position to address further inquiries by the Court concerning any possible ‘irregularity in the handling of foreclosure proceedings.’” So to put it simply, Reyes is disclaiming any role in foreclosures and trying to distance Deutsch bank from wrongful foreclosures [i.e. most or nearly all of them] despite its APPARENT AUTHORITY.

Examination of the PSA reveals deep within its pages, prohibitions and restrictions against either the Trustee or the bond purchasers (“trust beneficiaries”) from knowing or even inquiring about anything involving the business of the trust, which we already know never existed because the trust never received its IPO (bond sale) money. This is why servicers assert control over the settlement and modification process. This is why they say the investor declined the modification or settlement because they never contacted the investor or the trust or the Trustee.

The truth is that the servicers assert, in the final analysis, the right to speak for the investors even thought they have a patent CONFLICT OF INTEREST RESULTING FROM SERVICER ADVANCES. A true servicer would be required to mitigate the damages and minimize the losses. Servicers have no interest in doing that because they can make a ton of money for having advanced the principal and interest payment to the creditors from an account that contained the investors money and that would count, as stated in the PSA, as payment in full to the creditor — so the creditor could not declare a default against the servicer.

And THAT is why these foreclosures are pushed through, among other reasons, [avoiding workouts, modifications and settlements] to wit: the foreclosures proceed even though the creditors (investors) are being paid right through the date of foreclosure. The reason is the banks want to “recover” those “advances” (paid from money stolen from the investors) not from the borrower and not from the creditors, who have already been paid, but through a claim against the final liquidation of the property to a third party “innocent” purchaser. BY controlling the foreclosure process, the servicer gets paid a lot of money and protects the banks against claims for refunds and damages arising out of the improper loan practices, loan processing by the servicer, and wrongful foreclosures.

So far the servicers have fooled the courts into thinking that their claim to recover servicer advances is somehow secured. It isn’t. In order to do that the court would be required to issue a declaratory judgment specifying the breakup of the mortgage lien on a continual basis for each servicer advance or find that the total advanced by the servicer from the underwriter’s controlled slush fund, is subject to an equitable mortgage lien. Equitable liens are not accepted in virtually any court because ti would require the buyer of property to make exhaustive investigation into matters that a re not contained on the face of the note or mortgage.

PRACTICE NOTE FOR LAWYERS:

You might want to get the court to take judicial notice of the affidavit and just to be on the safe side get a certified copy of it. You might want to file a motion for involuntary dismissal based upon the affidavit of Reyes who was THE person in charge of the trustee “program.” Think also about a subpoena for Reyes to appear at trial, if there is one.

Reyes is saying that only the servicer can enforce. And he is saying that when the servicer acts, it does so for trust NOT THE TRUSTEE. So the Trustee, according to him is not a proper party to bring the action. The inference corroborates what I have been saying all along. It is that the investors are the real parties in interest and the servicer is acting in a representative capacity — IF IT IS THE TRUSTEE NAMED IN THE TRUST INSTRUMENT (THE PSA).

The Big Cover-Up in Our Credit Nation

Regulators have confirmed that there were widespread errors by banks but that the errors didn’t really matter. They are trying to tell us that the errors had to do with modifications and other matters that really didn’t have any bearing on whether the loans were owned by parties seeking foreclosure or on whether the balance alleged to be due could be confirmed in any way, after deducting third party payments received by the foreclosing party. Every lawyer who spends their time doing foreclosure litigation knows that report is dead wrong.

So the government is actively assisting the banks is covering up the largest scam in human history. The banks own most of the people in government so it should come as no surprise. This finding will be used again and again to say that the complaints from borrowers are just disgruntled homeowners seeking to find their way out of self inflicted wound.

And now they seek to tell us in the courts that nothing there matters either. It doesn’t matter whether the foreclosing party actually owns the loan, received delivery of the note, or a valid assignment of the mortgage for value. The law says it matters but the bank lawyers, some appellate courts and lots of state court judges say that doesn’t apply — you got the money and stopped paying. That is all they need to know. So let’s look at that.

If I found out you were behind in your credit card payments and sued you, under the present theory you would have no defense to my lawsuit. It would be enough that you borrowed the money and stopped paying. The fact that I never loaned you the money nor bought the loan would be of no consequence. What about the credit card company?

Well first they would have to find out about the lawsuit to do anything. Second they could still bring their own lawsuit because mine was completely unfounded. And they could collect again. In the world of fake REMIC trusts, the trust beneficiaries have no right to the information on your loan nor the ability to inquire, audit or otherwise figure out what happened tot heir investment.

It is the perfect steal. The investors (like the credit card company) are getting paid by the borrowers and third party payments from insurance etc. or they have settled with the broker dealers on the fraudulent bonds. So when some stranger comes in and sues on the debt, or sues in foreclosure or issues of notice of default and notice of sale, the defense that the borrower has no debt relationship with the foreclosing party is swept aside.

The fact that neither the actual lender nor the actual victim of this scheme will ever be compensated for their loss doesn’t matter as long as the homeowner loses their home.  This is upside down law and politics. We have seen the banks intervene in student loans and drive that up to over $1 trillion in a country where the average household is $15,000 in debt — a total of $13 trillion dollars. The banks are inserting themselves in all sorts of transactions producing bizarre results.

The net result is undermining the U.S. economy and undermining the U.S. dollar as the reserve currency of the world. Lots of people talk about the fact that we have already lost 20% of our position as the reserve currency and that we are clearly headed for a decline to 50% and then poof, we will be just another country with a struggling currency. Printing money won’t be an option. Options are being explored to replace the U.S. dollar as the world’s reserve currency. No longer are companies requiring payments in U.S. dollars as the trend continues.

The banks themselves are preparing for a sudden devaluation of currency by getting into commodities rather than holding their money in US Currency. The same is true for most international corporations. We are on the verge of another collapse. And contrary to what the paid pundits of the banks are saying the answer is simple — just like Iceland did it — apply the law and reduce the household debt. The result is a healthy economy again and a strong dollar. But too many people are too heavily invested or tied to the banks to allow that option except on a case by case basis. So that is what we need to do — beat them on a case by case basis.

National Honesty Day? America’s Book of Lies

Today is National Honesty Day. While it should be a celebration of how honest we have been the other 364 days of the year, it is rather a day of reflection on how dishonest we have been. Perhaps today could be a day in which we say we will at least be honest today about everything we say or do. But that isn’t likely. Today I focus on the economy and the housing crisis. Yes despite the corruption of financial journalism in which we are told of improvements, our economy — led by the housing markets — is still sputtering. It will continue to do so until we confront the truth about housing, and in particular foreclosures. Tennessee, Virginia and other states continue to lead the way in a downward spiral leading to the lowest rate of home ownership since the 1990’s with no bottom in sight.

Here are a few of the many articles pointing out the reality of our situation contrasted with the absence of articles in financial journalism directed at outright corruption on Wall Street where the players continue to pursue illicit, fraudulent and harmful schemes against our society performing acts that can and do get jail time for anyone else who plays that game.

It isn’t just that they escaping jail time. The jailing of bankers would take a couple of thousand people off the street that would otherwise be doing harm to us.

The main point is that we know they are doing the wrong thing in foreclosing on property they don’t own using “balances” the borrower doesn’t owe; we know they effectively stole the money from the investors who thought they were buying mortgage bonds, we know they effectively stole the title protection and documents that should have been executed in favor of the real source of funds, we know they received multiple payments from third parties and we know they are getting twin benefits from foreclosures that (a) should not be legally allowed and (b) only compound the damages to investors and homeowners.

The bottom line: Until we address wrongful foreclosures, the housing market, which has always led the economy, will continue to sputter, flatline or crash again. Transferring wealth from the middle class to the banks is a recipe for disaster whether it is legal or illegal. In this case it plainly illegal in most cases.

And despite the planted articles paid for by the banks, we still have over 700,000 foreclosures to go in the next year and over 9,000,000 homeowners who are so deep underwater that their situation is a clear and present danger of “strategic default” on claims that are both untrue and unfair.

Here is a sampling of corroborative evidence for my conclusions:

Senator Elizabeth Warren’s Candid Take on the Foreclosure Crisis

There it was: The Treasury foreclosure program was intended to foam the runway to protect against a crash landing by the banks. Millions of people were getting tossed out on the street, but the secretary of the Treasury believed the government’s most important job was to provide a soft landing for the tender fannies of the banks.”

Lynn Symoniak is Thwarted by Government as She Pursues Other Banks for the Same Thing She Proved Before

Government prosecutors who relied on a Florida whistleblower’s evidence to win foreclosure fraud settlements with major banks two years ago are declining to help her pursue identical claims against a second set of large financial institutions.

Lynn Szymoniak first found proof that millions of American foreclosures were based on faulty and falsified documents while fighting her own foreclosure. Her three-year legal fight helped uncover the fact that banks were “robosigning” documents — hiring people to forge signatures and backdate legal paperwork the firms needed in order to foreclose on people’s homes — as a routine practice. Court papers that were unsealed last summer show that the fraudulent practices Szymoniak discovered affect trillions of dollars worth of mortgages.

More than 700,000 Foreclosures Expected Over Next Year

How Bank Watchdogs Killed Our Last Chance At Justice For Foreclosure Victims

The results are in. The award for the sorriest chapter of the great American foreclosure crisis goes to the Independent Foreclosure Review, a billion-dollar sinkhole that produced nothing but heartache for aggrieved homeowners, and a big black eye for regulators.

The foreclosure review was supposed to uncover abuses in how the mortgage industry coped with the epic wave of foreclosures that swept the U.S. in the aftermath of the housing crash. In a deal with the Office of the Comptroller of the Currency and the Federal Reserve, more than a dozen companies, including major banks, agreed to hire independent auditors to comb through loan files, identify errors and award just compensation to people who’d been abused in the foreclosure process.

But in January 2013, amid mounting evidence that the entire process was compromised by bank interference and government mismanagement, regulators abruptly shut the program down. They replaced it with a nearly $10 billion legal settlement that satisfied almost no one. Borrowers received paltry payouts, with sums determined by the very banks they accused of making their lives hell.

Investigation Stalled and Diverted as to Bank Fraud Against Investors and Homeowners

The Government Accountability Office released the results of its study of the Independent Foreclosure Review, conducted by the Office of the Comptroller of the Currency and the Federal Reserve in 2011 and 2012, and the results show that the foreclosure process is lacking in oversight and transparency.

According to the GAO review, which can be read in full here, the OCC and Fed signed consent orders with 16 mortgage servicers in 2011 and 2012 that required the servicers to hire consultants to review foreclosure files for efforts and remediate harm to borrowers.

In 2013, regulators amended the consent orders for all but one servicer, ending the file reviews and requiring servicers to provide $3.9 billion in cash payments to about 4.4 million borrowers and $6 billion in foreclosure prevention actions, such as loan modifications. The list of impacted mortgage servicers can be found here, as well as any updates. It should be noted that the entire process faced controversy before, as critics called the IFR cumbersome and costly.

Banks Profit from Suicides of Their Officers and Employees

After a recent rash of mysterious apparent suicides shook the financial world, researchers are scrambling to find answers about what really is the reason behind these multiple deaths. Some observers have now come to a rather shocking conclusion.

Wall Street on Parade bloggers Pam and Russ Martens wrote this week that something seems awry regarding the bank-owned life insurance (BOLI) policies held by JPMorgan Chase.

Four of the biggest banks on Wall Street combined hold over $680 billion in BOLI policies, the bloggers reported, but JPMorgan held around $17.9 billion in BOLI assets at the end of last year to Citigroup’s comparably meager $8.8 billion.

Government Cover-Up to Protect the Banks and Screw Homeowners and Investors

A new government report suggests that errors made by banks and their agents during foreclosures might have been significantly higher than was previously believed when regulators halted a national review of the banks’ mortgage servicing operations.

When banking regulators decided to end the independent foreclosure review last year, most banks had not completed the examinations of their mortgage modification and foreclosure practices.

At the time, the regulators — the Office of the Comptroller of the Currency and the Federal Reserve — found that lengthy reviews by bank-hired consultants were delaying compensation getting to borrowers who had suffered through improper modifications and other problems.

But the decision to cut short the review left regulators with limited information about actual harm to borrowers when they negotiated a $10 billion settlement as part of agreements with 15 banks, according to a draft of a report by the Government Accountability Office reviewed by The New York Times.

The report shows, for example, that an unidentified bank had an error rate of about 24 percent. This bank had completed far more reviews of borrowers’ files than a group of 11 banks involved the deal, suggesting that if other banks had looked over more of their records, additional errors might have been discovered.

Wrongful Foreclosure Rate at least 24%: Wrongful or Fraudulent?

The report shows, for example, that an unidentified bank had an error rate of about 24 percent. This bank had completed far more reviews of borrowers’ files than a group of 11 banks involved the deal, suggesting that if other banks had looked over more of their records, additional errors might have been discovered.

http://www.marketpulse.com/20140430/u-s-housing-recovery-struggles/

http://www.csmonitor.com/Business/Latest-News-Wires/2014/0429/Home-buying-loses-allure-ownership-rate-lowest-since-1995

http://www.opednews.com/articles/It-s-Good–no–Great-to-by-William-K-Black–Bank-Failure_Bank-Failures_Bankers_Banking-140430-322.html

[DISHONEST EUPHEMISMS: The context of this WSJ story is the broader series of betrayals of homeowners by the regulators and prosecutors led initially by Treasury Secretary Timothy Geithner and his infamous “foam the runways” comment in which he admitted and urged that programs “sold” as benefitting distressed homeowners be used instead to aid the banks (more precisely, the bank CEOs) whose frauds caused the crisis.  The WSJ article deals with one of the several settlements with the banks that “service” home mortgages and foreclose on them.  Private attorneys first obtained the evidence that the servicers were engaged in massive foreclosure fraud involving knowingly filing hundreds of thousands of false affidavits under (non) penalty of perjury.  As a senior former AUSA said publicly at the INET conference a few weeks ago about these cases — they were slam dunk prosecutions.  But you know what happened; no senior banker or bank was prosecuted.  No banker was sued civilly by the government.  No banker had to pay back his bonus that he “earned” through fraud.

 

 

A NEW FACE in Government Activism in Securitization Scam

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Editor’s Comment:

Anyone who wants the job of being the county recorder takes a risk of being blamed for all the warts and defects that come out after they take office. So when somebody runs for public office without prior real estate experience like a Nurse, you know that community activism is on the rise and we all know why. The shell game and run-around that the banks and servicers are playing can only work so long.

The facts remain that the county recorders across the country fully understand that title is corrupted but they are mostly elected officials, a member of  a major political party and thus follow orders when told to do the Texas 2-step when it comes to removing illegal documents from the recording system or requiring proof of the authenticity of the documents and declarations in the documents.

We need many more people to run for office where it counts — the county level, get rid of the hacks who refuse to sue the banks for screwing up title, refuse to collect fees that are owed and would help the county budget, and refuse to hold those who submitted false filings accountable. THAT is where the banks have little influence. That is where they are weak politically. The lower the political office the less influence the bank has in preventing actions that would embarrass the mega banks.

Eventually the truth will all come out. It is seeping in through all the windows and doors. The logjam will break and we’ll know everything. And what we are going to find is that most mortgages were recorded without any transaction commenced between the the parties recited on the documents. We’ll find that the record is devoid of any real documentation between the real lenders (who might be impossible to determine with certainty because of commingling of funds in escrow accounts that ignored the existence of the REMICs). All that means is that the mortgages were fraudulently filed and therefore the foreclosures are invalid. There lies the path to salvation to our economy. Instead of the big boys getting a handout, the little people who were scrunched into the dirt by the boots of Wall Street titans are going to get a break.

Support with your money , effort and contacts and networking every candidate on the local level who runs for office on the platform of rejecting these illegal documents and throwing out the deeds of foreclosure based upon illegal mortgages and illegal, fabricated, forged and unauthorized documents.

Foreclosure Fraud Combatant Eyes Clerk of Court Role in Florida

By Jon Prior

Florida has been ground zero for foreclosure fraud, but even with multibillion-dollar settlements and federal consent orders, the state’s financial services industry may face new scrutiny from a community activist who’s taken a critical look at the industry and its practices.

Lisa Epstein, who’s running for clerk of court in Palm Beach County, was once an oncology nurse. For most of her career she saw her patients strike deals with their banks when they ran into debt problems, particularly with mortgage payments, once they became ill.

But when the housing crisis struck and foreclosures mounted, that changed. Banks and mortgage servicers overloaded with delinquent loans struggled with the paperwork and the complexity of linking struggling borrowers with decision-makers. To speed up the foreclosure process, reams of documentation was mishandled, signed improperly and filed at county courthouses.

In 2007, Epstein noticed her patients were no longer being helped. They were being rushed through the foreclosure system.

“That was my first hint that there was something very different,” Epstein said during a HousingWire interview.

So began her advocacy work in Florida fighting against banks and third-party firms handling the foreclosure process. In June, she was placed on the ballot for clerk of court of Palm Beach County, the third largest clerk office in the state.

If elected in August, she will be in charge of many things, including managing an overloaded docket, acting as treasurer and chief financial officer of the county’s funds, and most importantly, serving as the keeper of public record.

Her major focus will be on what she claims is a broken system, surrounding the cloudy chain of title flaws filed with the counties to this day. If state funding allows, she said she will perform wide-scale audits of the entire county database and develop reforms — even if that means shutting down the process entirely.

“I don’t know if it is fixable,” Epstein said. “But these are not truly legal instruments that convey proper property ownership. Conducting any sort of real estate transaction or sorting who really owns the loans in many cases will become an enormous legal burden because of the morass of documentation fraud.”

The Florida system remains a nightmare after the collapse of the Law Offices of David J. Stern in March 2011. Several other firms came under investigation and some settled claims before being shut down. The $25 billion foreclosure settlement involving 49 states (Oklahoma didn’t participate) includes language that will hold servicers accountable for any third-party firms that handle any aspect of a foreclosure filing.

Consent orders with the Office of the Comptroller and the Federal Reserve will also force servicers to monitor these firms, specifically Mortgage Electronic Registration Systems and Lender Processing Services ($23.87 1.23%).

New foreclosure filings in Palm Beach County increased in May by 3.6% from the previous month as servicers are looking to restart the process. The 1,356 new filings was 61% above levels seen in the year-ago period.

Both Epstein and incumbent Sharon Bock, who’s held the office since 2003 and is running for re-election, are concerned with keeping up because of pending budget cuts.

“We expect that our foreclosure division is one that will be heavily affected by these budget cuts,” Bock said in a statement accompanying the numbers last week. “My fear is if the trend of increased filings continues as it has in recent months, we will not have the ability to keep up with the volume. We will do our best, but it will be a challenge.”

Mortgage servicers have stated they’ve ended past robo-signing practices and are installing new policies to reduce risk in the system. Few, if any, borrowers, they claim, were foreclosed on improperly because of past flawed practices.

But the financial industry is watching this election closely. Should Epstein prevail, her appetite for audits and new investigations could wipe out any restart to an already backlogged foreclosure process.

Some county record keepers in other states already launched investigations of their own, some founded on faulty claims, but some may have real consequences. A report in one Massachusetts county claimed 75% of mortgage assignments were invalid. Another in San Francisco attempted to show similar results through an audit but shrivels under scrutiny through California case law.

The treasurer for the clerk of courts in two Michigan counties filed lawsuits against Fannie Mae and Freddie Mac to get fees levied during the recording of foreclosure property transfers. The GSEs used a government tax status to escape the fees, an exemption now being challenged.

Epstein said she would be on board with taking all of these actions and suggested the federal government go even further with a wide-scale probe. For this, Epstein is running into a lot of pushback. Her race against Bock has become one of the most heated in the local Florida elections.

“We have to solve a fraudulent process that is hurting our property value taxes, hurting our ability to do a short sale, hurting our ability to work with lenders,” she said. “It’s hurting the faith that there would be some protection. It’s damaging our court systems and yet our court systems are allowing this go on and on.”

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