CHECKLIST — FDCPA Damages and Recovery: Revisiting the Montana S Ct Decision in Jacobson v Bayview

What is unique and instructive about this decision from the Montana Supreme Court is that it gives details of each and every fraudulent, wrongful and otherwise illegal acts that were committed by a self-proclaimed servicer and the “defective” trustee on the deed of trust.

You need to read the case to see how many different times the same court in the same case awarded damages, attorney fees and sanctions against Bayview who persisted in their behavior even after the judgment was entered.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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This case overall stands for the proposition that the violations of federal law by self proclaimed servicers, trusts, trustees, substituted trustees, etc. are NOT insignificant or irrelevant. The consequences of merely applying the law in a fair and balanced way could and should be devastating to the TBTF banks, once the veil is pierced from servicers like Bayview, Ocwen et al and the real players are revealed.

I offer the following for legal practitioners as a checklist of issues that are usually present, in one form or another, in virtually all foreclosure cases and the consequences to the bad actors when the law is actually applied. The interesting thing is that this checklist does not just represent my perspective. It comes directly from the Jacobson decision by the high court in Montana. That decision should be read, studied and analyzed several times. You need to read the case to see how many different times the same court in the same case awarded damages, attorney fees and sanctions against Bayview who persisted in their behavior even after the judgment was entered.

One additional note: If you think about it, you can easily see how this case represents the overall infrastructure employed by the super banks. It is obvious that all of Bayview’s actions were at the behest of Citi, who like any other organized crime figure, sought to avoid getting their hands dirty. The self proclamations inevitably employ the name of US Bank whose involvement is shown in this case to be zero. Nonetheless the attorneys for Bayview and Peterson sought to pile up paper documents to create the illusion that they were acting properly.

  1. FDCPA —abusive debt collection practices by debt collectors
  2. FDCPA who is a debt collector — anyone other than the creditor
  3. FDCPA Strict Liability 
  4. FDCPA for LEAST SOPHISTICATED CONSUMER
  5. FDCPA STATUTORY DAMAGES
  6. FDCPA COMPENSATORY DAMAGES
  7. FDCPA PUNITIVE DAMAGES
  8. FDCPA INHERENT COURT AUTHORITY TO LEVY SANCTIONS
  9. CUMULATIVE BAD ACTS TEST — PATTERN OF CONDUCT
  10. HAMP Modifications Scam — initial and incentive payments
  11. Estopped and fraud: 90 day delinquency disinformation — fraud and UPL
  12. Rejected Payment
  13. Default Letter: Not authorized because sender is neither servicer nor interested party.
  14. Default letter naming creditor
  15. Default letter declaring amount due — usually wrong
  16. Default letter with deadline date for reinstatement: CURE DATE
  17. Late charges improper
  18. Extra interest improper
  19. Fees even after they lose added to balance “due.”
  20. Notice of acceleration based upon default letter which contains inaccurate information. [Not authorized because sender is neither servicer nor interested party.]
  21. Damages: Negative credit rating — [How would bank feel if their investment rating dropped? Would their stock drop? would thousands of stockholders lose money as a result?]
  22. damages: emotional stress
  23. Damages: Lost opportunities to save home
  24. Damages: Lost ability to receive incentive payments for modification
  25. FDCPA etc: Use of nonexistent or inactive entities
  26. FDCPA Illegal notarizations
  27. Illegal notarizations on behalf of nonexistent or uninvolved entities.
  28. FDCPA naming self proclaimed servicer as beneficiary (creditor/mortgagee)
  29. Assignments following self proclamation of beneficiary (creditor/mortgagee)
  30. Falsely Informing homeowner they cannot reinstate
  31. Wrongful appointment of Trustee under deed of trust
  32. Wrongful and non existent Power of Attorney
  33. False promises to modify
  34. False representations to the Court
  35. Musical entities
  36. False and fraudulent utterance of a document
  37. False and fraudulent recording of a false document
  38. False representations concerning “US Bank, Trustee” — a whole category unto itself. (the BOA deal and others who “sold” trustee position of REMICs to US Bank.) 

Bank Fraud From the Top Down

MERS is not, as its proponents claim, a device for eliminating the recording charges on legitimate purchases and sales of mortgage loans; instead it is a “layering” device (another Wall Street term) for creating the illusion of such transfers even though no transaction actually took place.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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I recently had the occasion to ghost write something for a customer in relation to claims based upon fraud, MERS, and “Successors.” Here is what I drafted, with references to actual people and entities deleted:

  •  MERS was created in 1996 as a means for private traders to create the illusion of loan transfers. On its website MERS states emphatically that it specifically disclaims any interest in any debt and disclaims any interest in any documentation of debt (i.e., a promissory note) and specifically disclaims any interest in any agreement for collateralizing the obligations stated on the note.
  • There is no agreement in which MERS is authorized as an agent of any creditor. The statement on the note and/or mortgage that it is named as nominee for a “lender” is false. No agreement exists that sets forth the terms or standards of agency relationship between the Payee on the subject “note” or the mortgagee on the subject mortgage. MERS is merely named on instruments without any powers to exercise on behalf of any party who would qualify as a bona fide mortgagee or beneficiary.
  • No person in MERS actually performs ANY action in connection with loans and no officer or employee of MERS did perform any banking activity in relation tot he subject loan. MERS is a passive database for which access is freely given to anyone who wants to make an entry, regardless of the truth or falsity of that entry. It is a platform where the person accessing the MERS IT system appoints themselves as “assistant secretary” or some other false status in relation to MERS. MERS is not, as its proponents claim, a device for eliminating the recording charges on legitimate purchases and sales of mortgage loans; instead it is a “layering” device (another wall Street term) for creating the illusion of such transfers even though no transaction actually took place.
  • Hence there is no basis under existing law under which MERS, in this case, was either a nominee for a real creditor and no basis under existing law under which MERS, in this case, could possibly claim that it was either a mortgagee or beneficiary under a deed of trust.
  • MERS has not claimed and never will claim that it is a mortgagee or beneficiary.
  • The lender, under the alleged “closing documents” was also a sham nominee. None of the parties in the alleged “chain” were at any times a creditor, lender, purchaser, mortgagee, beneficiary, or holder of any note. None of them have any financial interest or risk of loss in the performance of the alleged “loan” obligations.
  • Plaintiff reasonably relied upon the representations at the “Closing” that the originator who was named as Payee on the note was lending her money. But in fact the originator was merely acting as a broker, conduit or sales agent whose job was to get the Plaintiff to sign papers — an event that triggered windfall compensation to all the participants (except the Plaintiff), equal to or even greater than the amount of principal supposedly due from the “loan.”
  • In fact, the originator and multiple other parties had entered into a scheme that was memorialized in an illegal contract violating public policy regarding the disclosure of the identity of the “lender” and the compensation by all parties who received any remuneration of any type arising out the “Closing of the transaction.” The name of the contract is probably a “Purchase and Assumption Agreement” — a standard agreement that is used in the banking industry after the loan has been underwritten, approved and funded. In the case at bar those parties entered into the Purchase and Assumption Agreement before the subject “loan” was closed”, before the Plaintiff even applied for a loan.
  • The source of the money for the alleged “loan” was a “dark pool” (a term used by investment bankers) consisting of the money advanced by investors who thought they were buying mortgage bonds issued by a Trust, in which their money would be managed by the Trustee. In fact, the Trust is either nonexistent or inchoate having never been funded with the investors’ money. The dark pool contains money commingled from hundreds of investors in thousands of trusts.
  • The investors were generally stable managed funds including pension, retirement, 401K money for people relying upon said money for their living expenses after retirement. They are the unwitting, unknowing source of funds for the transaction described as a “closing.” Hence the loan contract upon which the Defendants rely is based upon fraudulent representations designed to mislead the court and mislead the Plaintiff and the byproduct of a broader scheme to defraud investors in “Mortgage backed securities” that were issued by a nonexistent trust that never owned the assets supposedly “backing” the “security” often described as a mortgage bond.
  • Thus the fraud starts with the misrepresentation to investors that the managed funds would be managed by a trustee and would be used to acquire existing loans rather than originate new loans. Instead their funds were used directly on the “closing” table by presumably unwitting “Closing agents.” The fact that the funds arrived created the illusion that the party named on the note and mortgage was actually funding the loan to the “borrower.” This was a lie. But it explains why the Defendants have continually refused to provide any evidence of the “purchase” of the loan by the parties they claim to form a “Chain.”
  • In the alleged “transfer” of the loan, there was no purchase and no payment of money because at the base of their chain, the originator, there was no right to receive the money that would ordinarily be a requirement for purchase of the loan. There also was no Purchase and Assumption Agreement, which is basic standard banking practice in the acquisition of loans, particularly in pools.
  • As Plaintiff as recently learned, the originator was not entitled to receive any payment from “successors” and not entitled to receive any money from the Plaintiff who was described as a “borrower.” In simple accounting terms there was no debit and so there could be no “corresponding” credit. And in fact, the originator never did receive any money for purchasing the loan nor any payments that were credited to a loan receivable account in its accounting records. Yet the originator executed or allowed instruments to be executed in which the completely fraudulent assertion that the originator had sold the loan was memorialized.
  • The “closing” was completely improper in which Plaintiff was fraudulently induced to execute a promissory note as maker and fraudulently induced to execute a mortgage as collateral for the performance under the note. Plaintiff was unaware that she had just created a second liability because the debt could not be legally merged into an instrument that named a party who was not the lender, not a creditor, and not a proper payee for a note memorializing a loan of money from the “lender” to the Plaintiff.
  • The purpose of the merger rule is to prevent a borrower from creating two liabilities for one transaction. The debt is merged into the note upon execution such that no claim can be made on the debt. None of these fine points of law were known to Plaintiff until recently. The reason she did not know is that the originator and the rest of the parties making claims based upon the fraudulent “loan” memorialized in the note all conspired to withhold information that was required to be disclosed to “borrowers” under Federal and State Law.
  • In the case at bar, the debt arises from the fact that Plaintiff did in fact receive money or the benefit of payments on her behalf — from third parties who have no contractual, constructive or other relationship with the source of funds for the transaction. The note is based upon a transaction that never existed — a loan from the originator to the Plaintiff. The debt is based upon the receipt of money from a party who was clearly not intending to make a gift to Plaintiff. The debt and the note are two different liabilities.
  • Assuming the original note exists, Plaintiff is entitled to its its cancellation and return, along with release and satisfaction of the mortgage that collateralizes the obligation set forth on the sham promissory note.
  • In the interim, as this case clearly shows, the Plaintiff is at risk of a second liability even if she prevails in her claim that the note was a sham, to wit: Under UCC Article 3, if an innocent third party actually purchases the mortgage or deed of trust, the statute shifts the risk of loss onto the maker of the instrument regardless of how serious and egregious the practices of the originator and the background “players” who engineered this scheme.
  • Further the financial identity and reputation of the Plaintiff was fraudulently used without her knowledge and consent to conduct “trades” based upon her execution of the above referenced false instruments in which many undisclosed players were reaping what they called “trading profits” arising from the “closing” and the illegal and unwanted misuse of her signatures on instruments in which she was induced to sign by fraudulent misrepresentations as to the nature and content of the documents.
  • Plaintiff suffered damages in that her title was slandered and emotional distress damages and damage to her financial identity and reputation. Further damages arising from violation of her right to quiet enjoyment of the property was violated by this insidious scheme.

California Suspends Dealings with Wells Fargo

The real question is when government agencies and regulators PLUS law enforcement get the real message: Wells Fargo’s behavior in the account scandal is the tip of the iceberg and important corroboration of what most of the country has been saying for years — their business model is based upon fraud.

Wells Fargo has devolved into a PR machine designed to raise the price of the stock at the expense of trust, which in the long term will most likely result in most customers abandoning such banks for fear they will be the next target.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see http://www.sacbee.com/news/politics-government/capitol-alert/article104739911.html

John Chiang, California Treasurer, has stopped doing business with Wells Fargo because of the scheme involving fraud, identity theft and customer gouging for services they never ordered on accounts they never opened. It is once again time for Government to scrutinize the overall business plan and business map of Wells Fargo and indeed all of the top (TBTF) banks.

Wells Fargo is attempting to do crisis management, to wit: making sure that nobody looks at other schemes inside the bank.

It is the Consumer Financial Protection Bureau (CFPB) that was conceived by Senator Elizabeth Warren who has revealed the latest example of big bank fraud.

The simple fact is that in this case, Wells Fargo management made an absurd demand on their employees. Instead of the national average of 3 accounts per person they instructed managers and employees to produce 8 accounts per customer. Top management of Wells Fargo have been bankers for decades. They knew that most customers would not want, need or accept 5 more accounts. Yet they pressed hard on employees to meet this “goal.” Their objective was to defraud the investing public who held or would buy Wells Fargo stock.

In short, Wells Fargo is now the poster child for an essential defect in business structure of public companies. They conceive their “product” to be their stock. That is how management makes its money and that is how investors holding their stock like it until they realize that the entire platform known as Wells Fargo has devolved into a PR machine designed to raise the price of the stock at the expense of trust, which in the long term will most likely result in most customers abandoning such banks for fear they will be the next target. Such companies are eating their young and producing a bubble in asset values that, like the residential mortgage market, cannot be sustained by fundamental facts — i.e., real earnings on a real trajectory of growth.

So the PR piece about how they didn’t know what was going on is absurd along with their practices. Such policies don’t start with middle management or employees. They come from the top. And the goal was to create the illusion of a rapidly growing bank so that more people would buy their stock at ever increasing prices. That is what happens when you don’t make the individual members of management liable under criminal and civil laws for engaging in such behavior.

There was only one way that the Bank could achieve its goal of 8 accounts per customer — it had to be done without the knowledge or consent of the customers. Now Wells Fargo is trying to throw 5,000 employees under the bus. But this isn’t the first time that Wells Fargo has arrogantly thrown its customers and employees under the bus.

The creation of financial accounts in the name of a person without that person’s knowledge or consent is identity theft, assuming there was a profit motive. The result is that the person is subjected to false claims of high fees, their credit rating has a negative impact, and they are stuck dealing with as bank so large that most customers feel that they don’t have the resources to do anything once the fraud was discovered by the Consumer Financial protection Board (CFPB).

Creating a loan account for a loan that doesn’t exist is the same thing. In most cases the “loan closings” were shams — a show put on so that the customer would sign documents in which the actual party who loaned the money was left out of the documentation.

This was double fraud because the pension funds and other investors who deposited money with Wells Fargo and the other banks did so under the false understanding that their money would be used to buy Mortgage Backed Securities (MBS) issued by a trust with assets consisting of a loan pool.

The truth has emerged — there were no loan pols in the trusts. The entire derivative market for residential “loans” is built on a giant lie.  But the consequences are so large that Government is afraid to do anything about it. Wells Fargo took money from pension funds and other “investors,” but did not give the proceeds of sale of the alleged MBS to the proprietary vehicle they created in the form of a trust.

Hence the trust was never funded and never acquired any property or loans. That means the “mortgage backed securities” were not mortgage backed BUT they were “Securities” under the standard definition such that the SEC should take action against the underwriters who disguised themselves as “master Servicers.”

In order to cover their tracks, Wells Fargo carefully coached their employees to take calls and state that there could be no settlement or modification or any loss mitigation unless the “borrower” was at least 90 days behind in their payments. So people stopped paying an entity that had no right to receive payment — with grave consequences.

The 90 day statement was probably legal advice and certainly a lie. There was no 90 day requirement and there was no legal reason for a borrower to go into a position where the pretender lender could declare a default. The banks were steering as many people, like cattle, into defaults because of coercion by the bank who later deny that they had instructed the borrower to stop making payments.

So Wells Fargo and other investment banks were opening depository accounts for institutional customers under false pretenses, while they opened up loan accounts under false pretenses, and then  used the identity of BOTH “investors” and “borrowers” as a vehicle to steal all the money put up for investments and to make money on the illusion of loans between the payee on the note and the homeowner.

In the end the only document that was legal in thee entire chain was a forced sale and/or judgment of foreclosure. When the deed issues in a forced sale, that creates virtually insurmountable presumptions that everything that preceded the sale was valid, thus changing history.

The residential mortgage loan market was considerably more complex than what Wells Fargo did with the opening of the unwanted commercial accounts but the objective was the same — to make money on their stock and siphon off vast sums of money into off-shore accounts. And the methods, when you boil it all down, were the same. And the arrogant violation of law and trust was the same.

 

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

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

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see http://4closurefraud.org/2016/06/10/opinion-here-ny-court-says-bank-of-america-must-disclose-communications-with-countrywide-in-ambac-suit/

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

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

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

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

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

Self Serving Fabrications: Watch for “Attorney in Fact”

In short, the proffer of a document signed not by the grantor or assignor but by a person with limited authority and no knowledge, on behalf of a company claiming to be attorney in fact is an empty self-serving document that provides escape hatches in the event a court actually looks at the document. It is as empty as the Trusts themselves that never operated nor did they purchase any loans.

Get a consult! 202-838-6345

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

If you had a promissory note that was payable to someone else, you would need to get it endorsed by the Payee to yourself in order to negotiate it. No bank, large or small, would accept the note as collateral for a loan without several conditions being satisfied:

  1. The maker of the note would be required to verify that the debt and the fact that it is not in dispute or default. This is standard practice in the banking industry.
  2. The Payee on the note would be required to endorse it without qualification to you. Like a check, in which you endorse it over to someone else, you would say “Pay to the order of John Smith.”
  3. The bank would need to see and probably keep the original promissory note in its vault.
  4. The credit-worthiness of the maker would be verified by the bank.
  5. Your credit worthiness would be verified by the bank.

Now imagine that instead of an endorsement from the payee on the note, you instead presented the bank with an endorsement signed by you as attorney in fact for the payee. So if the note was payable to John Jones, you are asking the bank to accept your own signature instead of John Jones because you are the authorized as an agent of John Jones.  No bank would accept such an endorsement without the above-stated requirements PLUS the following:

  1. An explanation  as to why John Jones didn’t execute the endorsement himself. So in plain language, why did John Jones need an agent to endorse the note or perform anything else in relation to the note? These are the rules of the road in the banking and lending industry. The transaction must be, beyond all reasonable doubt, completely credible. If the bank sniffs trouble, they will not lend you money using the note as collateral. Why should they?
  2. A properly executed Power of Attorney naming you as attorney in fact (i.e., agent for John Jones).
  3. If John Jones is actually a legal entity like a corporation or trust, then it would need a resolution from the Board of Directors or parties to the Trust appointing you as attorney in fact with specific powers to that completely cover the proposed authority to endorse the promissory note..
  4. Verification from the John Jones Corporation that the Power of Attorney is still in full force and effect.

My point is that we should apply the same rules to the banks as they apply to themselves. If they wouldn’t accept the power of attorney or they were not satisfied that the attorney in fact was really authorized and they were not convinced that the loan or note or mortgage was actually owned by any of the parties in the paper chain, why should they not be required to conform to the same rules of the road as standard industry practices which are in reality nothing more than commons sense?

What we are seeing in thousands of cases, is the use of so-called Powers of Attorney that in fact are self serving fabrications, in which Chase (for example) is endorsing the note to itself as assignee on behalf of WAMU (for example) as attorney in fact. A close examination shows that this is a “Chase endorses to Chase” situation without any actual transaction and nothing else. There is no Power of Attorney attached to the endorsement and the later fabrication of authority from the FDIC or WAMU serves no purpose on loans that had already been sold by WAMU and no effect on endorsements purportedly executed before the “Power of Attorney” was executed. There is no corporate resolution appointing Chase. The document is worthless. I recently had a case where Chase was not involved but US Bank as the supposed Plaintiff relied upon a Power of Attorney executed by Chase.

This is a game to the banks and real life to everyone else. My experience is that when such documents are challenged, the “bank” generally loses. In two cases involving US Bank and Chase, the “Plaintiff” produced at trial a Power of Attorney from Chase. And there were other documents where the party supposedly assigning, endorsing etc. were executed by a person who had no such authority, with no corporate resolution and no other evidence that would tend to show the document was trustworthy. We won both cases and the Judge in each case tore apart the case represented by the false Plaintiff, US Bank, “as trustee.”

The devil is in the details — but so is victory in the courtroom.

ABSENCE OF CREDITOR: Breaking Down the Language Of The “Trust”

The problem with all this is that the REMIC Trust never received the proceeds of sale of the MBS and therefore could not have paid for or purchased any loans. It had no assets. And THAT is why the Trust never shows up as a Holder in Due Course (HDC).  HDC is a very strong status that changes the risk of loss on a note. Under state law (UCC) of every state alleging and proving HDC status means that the entire risk shifts to the maker of the note (the person who signed it) even if there were fraudulent or other circumstances when the note was signed.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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A reader pointed to the following language, asking what it meant:

The certificates represent obligations of the issuing entity only and do not represent an interest in or obligation of CWMBS, Inc., Countrywide Home Loans, Inc. or any of their affiliates.   (See left side under the 1st table –  https://www.sec.gov/Archives/edgar/data/906410/000114420407029824/v077075_424b5.htm)

If an “investor” pays money to the underwriter of the issuance of MBS from a “REMIC Trust” they are getting a hybrid security that (a) creates a liability of the REMIC Trust to them and (2) an indirect ownership of the loans acquired by the trust.

The wording presented means that only the REMIC Trust owes the investors any money and the ownership interest of the investors is only as beneficiaries of the trust with the trust assets being subject to the beneficiaries’ claim of an ownership interest in the loans. But if the Trust is and remains empty the investors own nothing and will never see a nickle except by (a) the generosity of the underwriter (who is appointed “Master Servicer” in the false REMIC Trust, (b) PONZI and Pyramid scheme payments (I.e., receipt fo their own money or the money of other “investors) or (c) settlement when the investors catch the investment bank with its hand in the cookie jar.

The wording of the paperwork in the false securitization scheme reads very innocently because the underwriting and selling institutions should not be the obligor for payback of the investor’s money nor should the investors be allocated any ownership interest in the underwriting or selling institutions.

The problem with all this is that the REMIC Trust never received the proceeds of sale of the MBS and therefore could not have paid for or purchased any loans. It had no assets. And THAT is why the Trust never shows up as a Holder in Due Course (HDC).  HDC is a very strong status that changes the risk of loss on a note. Under state law (UCC) of every state alleging and proving HDC status means that the entire risk shifts to the maker of the note (the person who signed it) even if there were fraudulent or other circumstances when the note was signed.

By contrast, the allegation and proof that a Trust was a holder before suit was filed or before notice of default and notice of sale in a deed of trust state, means that the holder must overcome the defenses of the maker. If one of the defenses is that the holder received a void assignment, then the holder must prove up the basis of its stated or apparent claim that it is a holder with rights to enforce. The rights to enforce can only come from the creditor, directly or indirectly.

And THAT brings us to the issue of the identity of the creditor. This is something the banks are claiming is “proprietary” information — a claim that has been accepted by most courts, but I think we are nearing the end of the silly notion that a party can claim the right to enforce on behalf of a creditor who is never identified.

“Credit Bid” Comes Under Scrutiny in 9th Circuit

As I have been writing and talking about the forced judicial sales, my opinion has always been that in most cases there is an absence of evidence that the party making the credit bid was in fact the creditor thus entitled to make a “credit bid” at the auction. The credit bid is an allowance for the creditor to bid up to the amount of the debt owed to them without paying cash at the sale. This has been ignored since I first started writing about it. I think the credit bid is void and fraudulent if a non-creditor submits a credit bid when it is not the creditor. In nonjudicial states this is an easier proposition than in judicial states where a Final Judgment has been rendered.

This case is also notable because it finally addresses the issue of the liability of the Trustee on a deed of trust, concluding that if the party claiming to be the beneficiary was in fact not the beneficiary, and there is no evidence to suggest otherwise, the trustee is potentially liable. It would be helpful to pursue discovery against the Trustee, since it is always a “substituted trustee” that is in fact under the thumb or owned by the parties who are making self-serving declarations of their status as “beneficiaries” under the deed of trust. THAT of course provides grounds to object and challenge the substitution of trustee and everything that follows. If the self-proclaimed beneficiary is a nonexistent entity or otherwise does not conform to the statutory definition of a beneficiary, then it has no power to substitute a new trustee. And everything that the trustee does after that point is void. In discovery look for the agreement that says the new Trustee is indemnified and held harmless for all claims, violations etc. It’s there — but you need to force the issue.

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER. ALSO NOTE THAT THIS IS NOT YET PUBLISHED AND THEREFORE IS NOT MANDATORY AUTHORITY YET.
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Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
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see 9th Circuit decision, Jacobsen v. Aurora Loan Services, Case No. 12-17021

Wrongful foreclosure. We reverse the district court’s grant of summary judgment in favor of Aurora on the wrongful foreclosure claim. In California, the elements of a wrongful foreclosure action are (1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering. Sciarratta v. U.S. Bank Nat’l Ass’n, 202 Cal. Rptr. 3d 219, 226 (Ct. App. 2016). The district court erred by granting summary judgment on the ground that it found nothing wrong with the foreclosure sale.
First, the district court failed to review the record in the light most favorable to the non-movants when the district court assumed that the form of Aurora’s bid at the foreclosure sale was a cash bid. On appeal, the parties now agree that the form of the bid was a credit bid.
Second, a genuine dispute of material fact remains regarding whether Aurora properly made a credit bid. California law permits “present beneficiary of the deed of trust” to credit bid at the foreclosure sale. Cal. Civ. Code § 2924h(b). However, it is not uncontroverted that Aurora was the present beneficiary of the deed of trust. A deed of trust is “inseparable from the note it secures.” Yvanova v. New Century Mortg. Corp., 365 P.3d 865, 850 (Cal. 2016); see also Domarad v. Fisher & Burke, Inc., 76 Cal. Rptr. 529, 536 (Ct. App. 1969) (“[A] deed of trust has no assignable quality independent of the debt, it may not be assigned or transferred apart from the debt, and an attempt to assign the deed of trust without a transfer of the debt is without effect.”). The record contains evidence that Aurora did not “own” O’Brien’s loan before the foreclosure. ER 19-20, 136-38, 181. However, the record also contains evidence that Aurora is “currently in possession” of the original promissory note, which was endorsed in blank, although it is not clear from Aurora’s declaration when Aurora became the holder of the note.[4] [ER 179-80; 185-195]. It appears that there remains a question of fact whether Aurora was the “beneficiary” of the deed of trust at the time of the foreclosure and thus whether it was entitled to make a credit bid at the foreclosure sale, and we remand for the district court to address this issue in the first instance.
Moreover, in order to prevail on their claim of wrongful foreclosure, Plaintiffs must also show that they suffered prejudice or harm as a result of irregularities or illegalities in the foreclosure sale. Sciarratta, 202 Cal. Rptr. 3d at 226. Because the district court granted summary judgment to Aurora on a different ground, the court did not address the element of prejudice or harm. In the circumstances, we also deem it prudent to remand this claim to the district court to consider the prejudice question in the first instance. We therefore reverse the district court’s grant of summary judgment on the wrongful foreclosure claim and remand for further proceedings.[5]
AFFIRMED IN PART AND REVERSED AND REMANDED IN PART. The parties shall bear their own costs on appeal.
[**] The Honorable James V. Selna, United States District Judge for the Central District of California, sitting by designation.
[*] This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
[1] The district court did not address standing. However, “[w]e may affirm on any ground supported by the record, even it if differs from the rationale used by the district court.” Buckley v. Terhune, 441 F.3d 688, 694 (9th Cir. 2006) (en banc).
[2] We GRANT both parties’ requests for judicial notice.
[3] In their reply, Plaintiffs suggest that their cancellation of instruments claim survives their contention that the note and deed of trust were void ab initio. Because this argument was first raised in the reply brief, we deem it waived. Delgadillo v. Woodford, 527 F.3d 919, 930 n.4 (9th Cir. 2008).
[4] Note that in today’s modern mortgage world, the “owner” of the underlying debt (that is, the entity who will receive the ultimate economic benefit of payments from the note, less a servicing fee) and “holder” of the note (the party legally entitled to enforce the obligations of the note) are not always one and the same. See, e.g., Brown v. Wash. State Dep’t of Commerce, 359 P.3d 771, 776-77 (Wash. 2015) (discussing modern mortgage practices and the secondary market for mortgage notes; “Freddie Mac owns [borrower’s] note. At the same time, a servicer . . . holds the note and is entitled to enforce it.“)(emphasis added). It thus appears possible that the “beneficiary” under the deed of trust would follow with the note (and with the entity “currently entitled to enforce [the] debt”), rather than the income stream. See Yvanova, 365 P.3d at 850-51; see also Hernandez v. PNMAC Mortg. Opp. Fund Investors, LLC, 2016 WL 3597468, *6 (Cal. Ct. App. June 27, 2016) (unpublished) (if the foreclosing party “could properly and conclusively establish . . . that it did hold the Note at the [time of foreclosure], that would be dispositive and preclude a wrongful foreclosure cause of action because a deed of trust automatically transfers with the Note it secures—even without a separate assignment.”)(citing Yvanova).
[5] We also reverse the district court’s grant of Cal-Western’s motion to dismiss the wrongful foreclosure claim. The trustee must conduct the foreclosure sale “fairly, openly, reasonably, and with due diligence” “to protect the rights of the mortgagor and others.” Hatch v. Collins, 275 Cal. Rptr. 476, 480 (Ct. App. 1990). Here, the complaint alleges that Cal-Western’s acceptance of a void credit bid was unlawful. If the credit bid was void and the acceptance of the credit bid was unlawful, Cal-Western failed to conduct the foreclosure sale with due diligence, and thus the complaint states a claim against Cal-Western.

 

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