Foreclosures: The Lie We Are Living

Most people, including homeowners, believe that the homeowners do owe the money and that the entities that are attempting to foreclose should win. That is why the free house myth is so pervasive.

The result is that foreclosures are being granted to entities that (a) do not exist or (b) have nothing to do with the loan, debt, note or mortgage or both. The benefits of foreclosure all run in favor of the megabanks and against the real parties in interest, the investors. These banks have managed to separate the debt from the paperwork in a highly effective way that can be, but usually isn’t, challenged on cross examination and well-founded objections.

The truth is that the homeowners do not owe any money to the people who are collecting or enforcing the loan. End of story. The rest is a lie.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

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

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see tps-third-party-strangers-in-mortgage-cases/

One of my favorite lawyers is getting discouraged. He says that it is virtually impossible for a homeowner to successfully defend a foreclosure action especially if it involves a blank endorsement (bearer paper). Foreclosure defense is indeed an uphill battle but it is one in which the homeowner can — and should — prevail.

I don’t agree with the premise that homeowners will and should lose foreclosure cases. I think most of the foreclosures are built on an illusion created and fabricated by the megabanks. I think we would have won the cases we won even without the standing issue, with or without blank or special indorsements.

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The compounding error that keeps recurring is the difference between enforcement of the note and enforcement of the mortgage. You can enforce the note without owning the debt but you can’t enforce the mortgage without owning the debt. But in court they are conflated because few people draw the distinction.
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Possession of bearer paper (the note) raises a presumption that the debt was transferred. But that is a rebuttable presumption and proof at trial should be required as to the transfer (purchase) of the debt for value. But if the debt was actually transferred that would mean it was purchased for value. And if it was purchased for value then any transferee with half a brain would assert status of a holder in due course. They don’t assert HDC status because they didn’t pay value for the debt because the debt was never transferred and the fictitious delivery of the original note was intended to deceive the homeowner, his/her lawyer and the court.
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If a trust is involved, the existence of the trust should be pled and proven. Nobody is raising that issue even though it is a winner.
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It is an uphill battle and many judges will disregard the appropriate arguments because they don’t see or don’t want to see the consequences of their assumptions and bias.
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As a result we have a name being used as a DBA by multiple layers of conduits that don’t lead back to the actual owner of the debt. Homeowners did not create this problem nor should they suffer the consequences of bank chicanery. Banks did it because the big lie was extremely overwhelmingly and pornographically profitable. Banks have already made windfall profits on the loan whether the borrower pays or not. They then get an extra windfall by foreclosing because they can. At the same time the foreclosure sale raises yet another false presumption that everything that went before the sale was valid and authorized.
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This all happens under the cover of why should homeowners get a windfall free house? Most people don’t believe that the banks are getting a windfall for an investment that has been paid off multiple times. They believe the lie that the homeowner’s debt is still out there and belongs to someone who ultimately is connected to the entities that seek foreclosure or collection. It is a lie. Windfall results are more common than most people realize. It frequently happens that one litigant, because of a decision or the wording some legislation will get a windfall. In many cases the question is which party should get the windfall?
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The real question is who should get the windfall that has been created by the banks? Should it be the banks who have already profited in multiples of the loan amount or the homeowner whose signature and credit reputation was used as the foundation for the multiple sales of his loan? On a level playing field, the courts ought to tilt toward the homeowners who have mostly been lured into loans based upon wildly false appraisals on terms that they could not afford — and remember that under law the affordability of the loan is the responsibility of the lender, not the borrower.
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Finding excuses to rule in favor of a foreclosing party that usually doesn’t even exist much less own the debt, note and mortgage is simply the wrong way to go. This is not a matter of policy for the legislature although the legislatures could intervene. It is a matter of equity and foreclosures are in a court of equity not at law. The party who caused the mess and who brought the country to its knees should not be the party who is rewarded with a foreclosure to cover a nonexisting loss.
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If the investors were included I could see why both investors and homeowners would be considered victims and how the court could rule in favor of the investors. But the investors are decidedly NOT involved. They are unaffected by foreclosure of the loans because in reality they have only received a promise to pay from one of the megabanks doing business as “XYZ Trust”. They are completely uninformed about the debt or its enforcement and do not get the proceeds of a foreclosure sale.
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The underwriting is done by the megabank but the loan comes from investors who believe they are investing in a trust when in fact they are merely making a deposit with the underwriting investment bank.
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The whole reason why these banks were converted from investment banks to commercial banks over a weekend was not just to gain access to the Fed window to sell worthless mortgage bonds. It was because they had already been acting as though they were commercial banks by taking money from investors and merely starting an “account” for each of the investors wherein the only party who could draw money out of it was the “bank.”
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So after our experience in the courts, it is unfair to homeowners and unfair to us as the attorneys who made it happen, to say that it is impossible for homeowners to win foreclosure cases. Good cross examination, and trial practice including the use of well-founded objections still wins the day more often than not. 

How to Deal with the “Free House” Bias

If you are dealing with a bias held by most judges the only effective way of dealing with it is to meet the challenge head-on. If you dance around it it looks like you are trying to “get off on a technicality.”

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consent to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORMWITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

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

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A client asked me this morning about he “free house” bias and whether that will interfere with the decisions and ruling of the court. The answer is “of course it does.” And I again raise the issue that nobody wants to talk about — whether it is right or proper to voir dire the judge not just for bias, but for prejudgment decision before the case started. Here is the response I sent:

The answer to your “free house” question is this: You are correct in identifying that problem. We always start with presumption that the presiding judge will carry that bias with him/her into the courtroom.
However, as I have repeatedly found, once you pierce the foreclosure case, the credibility of the would-be foreclosing party declines to the point where the biased judge will ordinarily rule in favor of the homeowner — faced with inescapable legal defects in the position and assertions made by parties without standing.
But there are exceptions — judges who, in addition to having bias, have already ruled in their minds. For them the proceedings are a sham requirement and a test to see if the judge can APPEAR fair and impartial.
Countering the “free house” mindset first requires a demonstration that the homeowner is well aware that he can neither seek nor get a free house. That requires a presentation that concedes the fact that even if the note and mortgage were completely void, the debt remains and a judgment on that debt will result in a  judgment lien that could be foreclosed by the owner of that debt. That “concession” take the angst out of the “free house” conundrum for the judge and will often be an effective predicate to establishing the primary defense narrative.
So the question is not whether the homeowner will get a free house; it is whether this party seeking to foreclose title and take possession of this home has any right to do so. To say otherwise would be an invitation for anyone to fabricate documentation and foreclose, especially in cases where the homeowner concedes, relying upon false documentation of a false party. That scenario I have seen multiple times where the foreclosure is complete, the homeowner has moved out and basically forgotten about the house. The homeowner is later served with process or given notice that the house was foreclosed AGAIN by a different party.

Challenging the “Free House” Myth

Unless you are banker stealing homes through the fraudulent abuse of the foreclosure process there is no free house.

It is not rationale nor legal for anyone to tell a homeowner that because he or she cannot identify the source of funds for their “loan” the creditor MUST be in the chain of the party making the claim. It isn’t the fault of the homeowner that the paperwork was used to cover up fraud or negligence.

But every time a homeowner wins they do not necessarily get a free house nor exoneration from the debt that is owed to SOMEBODY even if they don’t know who it is.

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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The bar remains high and we all know it. The court is not going to hand down a decision for the “borrower” unless there is something plainly wrong about it. In order to be plainly wrong, we need some narrative that puts the court back on its heels and to directly challenge the notions that a victory for Flaherty means that he gets a free house. The banks have stepped up their “free house” mythology in light of the Supreme Court decision in Florida.

The challenge here is to to present the case in a manner that makes the “free house” myth irrelevant and to do it in a compelling presentation. While the easiest way of doing that would be to allege simply that this is a fraudulent scheme, we can’t prove that without adequate responses to discovery. But the Courts are allowing the banks to skate through without responding to discovery even when the allegations clearly make the scheme an issue.

This is why the banks file motions to strike OR simply argue that the homeowner’s pleadings don’t state a case or defense.

So we are left with the consequences of the scheme. But that leaves fertile ground for many approaches. The focus should be on procedural aspects and away from “winning” the case on motions. The object is to win the pending motion on the grounds that due process demands it. The trick here is to find a way to ask the judge “What if all this is an illusion?” without asking it in those words. That is an uphill climb.

We cannot ignore the fact that the bench is biased in favor of the banks. Their presumption that the homeowner received a loan and should be required to pay it back or lose his home permeates everything. The greater hurdle is that their presumption comes from an era when those things were axiomatically true before Wall Street started with this scheme. And now everything is being subjected to claims of “securitization.” Even cell phone payments. “Securitization” has been institutionalized based upon a false foundation, but in theory there is nothing wrong with it.

The money trail remains the primary path toward victory for the homeowner. But it is true that there are certain aspects of the money trail that are none of your business when defending the homeowner. The fact that the banks defrauded investors and stole their money is compelling proof, once established, that the trusts were never funded and thus never purchased the loans. It also suggests but does not prove where the money came from for the “loan closing.” It came from a dark pool formed by the banks and consisting of the stolen money.

Knowing that, rather than proving that, is key to establishing the narrative. And now there are instances in which the “new” REMIC Trust actually does pay for the paper even though the Seller never owned the debt and the paper was based upon a fictitious transaction in which the Payee on the note never loaned any money — leading to the conclusion that the debt was never merged into the note; but this also leads to the conclusion that the risk shifts to the maker of the note when the note is purchased for value, in good faith and without knowledge of the borrower’s defenses. The new Purchaser” who really paid consideration (assuming they REALLY paid) could conceivably be a holder in due course. The focus then shifts to showing that there was no good faith and that there was complete knowledge of the borrower’s defenses on the part of the purchaser.

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Knowing that the parties making the claim have no legal basis for doing so and no monetary reason for doing so — because the source of funds were victims of fraud — allows the litigator to focus on the factual and legal consequences. But the art form required here is to do that without making it look like you are allowing the homeowner to slip away from the debt. Getting there means getting past preliminary motions and aggressively pursuing discovery (unless you think that the bank’s case is defective enough such that it would be better to wait until trial to defend).

Yale Law Review: “In Defense of “Free Houses”

MEGAN WACHSPRESS, JESSIE AGATSTEIN & CHRISTIAN MOTT published an article that takes dead aim at the “free house” controversy. In the Yale Law Review they come to the conclusion that (1) the house isn’t free to any homeowner even if they escape the mortgage and (2) the projected social cost of  market values are wrong. But probably the most stinging criticism of the judicial system is that judges are abandoning the rule of law for ad hoc rulings whose only purpose is to avoid a result the judge doesn’t like.

Unfortunately, the article does not fully address the issue of why the banks are failing to prove what is ordinarily a slam dunk case. The authors seem to assume that the debt is legitimate and that it is mainly a paperwork problem. I would add my usual comment: if the banks simply had continued with the standard procedures they would not have had any paperwork problems no matter how many times the loan was sold. The greater evil that is not addressed in case decisions and law review articles is that this was all part of fraudulent scheme and THAT is why the banks had to resort to more fraud (in documentation).

We should remember that banks basically drafted the statutes and are the source of all paperwork on consumer loans, especially mortgage loans. For hundreds of years they knew how to do it, knew how to keep it and rarely misplaced anything. It strains belief to think that suddenly the banks  forgot what took hundreds of years to develop. The more insidious reason is what is feared to be the nuclear option — that the mortgages, notes and loan contracts were all an illusion, even if the money was real.

In the end, for reasons other than those expressed on these pages, the authors come to the same conclusion that I did — the “free house” is going to the banks every time a foreclosure is granted.

Here are some quotes from their article that I think are self-explanatory.

When addressing faulty foreclosures, courts are afraid to bar future attempts to foreclose—that is, afraid of giving borrowers “free houses.” While courts rarely explain the reasoning behind this aversion, it seems to arise from a reflexive belief that such an outcome would be unjust. Courts are therefore quick to sidestep well-established principles of res judicata in favor of ad hoc measures meant to protect banks against the specter of “free houses.” [e.s.]

This Comment argues that this approach is misguided; courts should issue final judgments in favor of homeowners in cases where banks fail to prove the elements required for foreclosure. Furthermore, these judgments should have res judicata effect—thus giving homeowners “free houses.” This approach has several benefits: it is consistent with longstanding res judicata principles in other forms of civil litigation, it provides a necessary market-correcting incentive to promote greater responsibility among foreclosure litigators, and it alleviates the tremendous costs of successive foreclosure proceedings.

In a foreclosure suit, the bank must generally prove the following: (1) the homeowner has signed both the note (the underlying loan) and the mortgage assigning the house as collateral for that note; (2) the bank owns the note and mortgage; (3) the homeowner still owes a debt to the bank; (4) the homeowner is behind on that debt; and (5) the bank has accelerated that remaining debt in accordance with the terms of the note itself. When a bank fails to prove these elements, a judge is legally required to rule in favor of the homeowner.

Recently, courts have been inundated with suits where homeowners question the bank’s ability to prove the second element. Litigation over “proof- of-ownership” issues in foreclosures is a growing nationwide problem; sampling suggests a ten-fold increase between the periods immediately preceding and following the 2007 collapse of the housing market.

To demonstrate ownership without expending more resources than pooling and servicing agreements allotted, bank employees signed hundreds of thousands of affidavits asserting that they had seen and could attest to the contents of original documents demonstrating ownership of the underlying mortgage. Although such affidavits were a legally acceptable means of demonstrating such ownership, a significant number of them were actually fraudulent.

…ethical transgressions have affected hundreds of thousands of foreclosures.

Judge Schack, a trial judge sitting in the New York Supreme Court for Kings County, has repeatedly sanctioned law firms for bringing improper foreclosure suits when he has independently discovered the inadequacy of the plaintiffs’ evidence as to defendants’ indebtedness or plaintiffs’ ownership of the note. See, e.g., Argent Mortg. Co. v. Maitland, 958 N.Y.S.2d 306 (Sup. Ct. 2010); Wells Fargo Bank v. Hunte, 910 N.Y.S.2d 409 (Sup. Ct. 2010); NetBank v. Vaughn, 841 N.Y.S.2d 827 (Sup. Ct. 2007).

By focusing on the immediate consequence of a ruling for homeowners, the courts ignore perverse incentives created by allowing banks to continue to externalize the costs of their mistakes.

…one approach—that taken by the Florida and Maine Supreme Courts—is to bend the rules of res judicata to avoid a windfall for homeowners. This approach creates few benefits and significant economic problems. In this Part, we argue that further subsidizing banks’ poor litigation practices results in deadweight loss by contributing to negative public-health outcomes and by disincentivizing banks from improving their servicing and litigation techniques. We also explain how granting winning homeowners “free houses” will not negatively affect the mortgage market.

…broader social subsidization of irresponsible [bank] behavior.

…prolonged foreclosure proceedings create negative social externalities, depressing surrounding homes’ resale value, reducing local governments’ tax revenues, and increasing criminal activity.44 Foreclosures also appear to have significant effects on community members’ physical and mental health, and correlate with increased rates of depression, anxiety, suicide, cardiovascular disease, and emergency-care treatment.

…although judges have expressed concern about homeowner windfalls, the alternative creates a windfall for banks that cut corners in managing and prosecuting foreclosures. The risk and costs of losing foreclosures should already be internalized in the price of current mortgages. Empirical studies suggest that greater protection for mortgagors historically corresponds to slightly higher mortgage rates among lenders. These studies indicate that lenders adjust the price of mortgages based on what they anticipate the cost, and not just the likelihood, of foreclosures will be.

 

DEBT vs. Note: What is the difference?

 current trial court decisions are getting reversed because the courts are waking up to the reality of the rule of law. What they have been following is an off the books rule of “anything but a free house.”

the Courts may think they are saving the financial system, the economy and our society from disintegration, but in truth they are undermining all three.

A recent Yale Law Review article eviscerates the assumptions of a “free house” for the homeowners and destroys the myth that somehow that policy has saved the nation. Yale-In Defense of Free Houses 2016 03 23

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

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Like many other cases, current trial court decisions are getting reversed because the courts are waking up to the reality of the rule of law. What they have been following is an off the books rule of “anything but a free house.” A recent Yale Law Review Article eviscerates the assumptions of a free house for the homeowners and destroys the myth that somehow that policy has saved the nation.
The Trial Judges are making the assumption that there is an underlying debt and an underlying liability of the homeowner to make a payment to the parties in litigation even if the paperwork was found to be defective. Or worse, they are disregarding the rule of law altogether and ruling for the banks and servicers because of policy reasoning (a province exclusively reserved to the legislative branch of government and excluded from the judicial branch).

The key legal analysis goes back to basic contract law pounded into our heads in the first year of law school, to wit: the note is not the debt, it is evidence of the debt.” So if there is no debt and the homeowner challenges on that basis, the homeowner SHOULD win every time. The mistake made by pro se litigants and lawyers alike is that they cannot conceive of the notion of “there is no debt.” That’s because they don’t complete the sentence, to wit: There is no debt owed to the beneficiary or claimed beneficiary on the deed of trust (non judicial states) or there is no debt owed to the mortgagee or claimed mortgagee named in the mortgage.”

Basic contract law: an enforceable contract must contain three elements and a hidden fourth element. The three key elements without which there can be no enforcement are OFFER, ACCEPTANCE AND CONSIDERATION. The hidden fourth element is that contracts in violation of public policy are void.

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In nearly all cases where there are claims of securitization and most where no such claims are brought forward (but still exist) they are missing consideration (i.e., PAYMENT) from the origination and/or acquisition of the loan. The DEBT was never created in favor of the party receiving documents.
The documents, including the note refer to a transaction in which the originator loaned money to the homeowner. This is nearly always NOT true. And the contract, even if it existed, is part of a larger plot to defraud both the borrowers and the investors in which the originators, brokers, servicers, Master Servicers and Trusts are the fraudsters.
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These cases thus involve contracts to violate both laws and public policy — particularly those in which prior agreement is executed in which the parties to agree to create table funded loans as a pattern and practice — something which REG Z clearly says is PREDATORY PER SE.
Either predatory or predatory per se mean something or they don’t. But if they mean anything they set the bar such that parties who violate this provision cannot claim “clean hands.” And if the court of equity is being asked by the violators for the equitable remedy of foreclosure sale based upon, at best, dubious documentation (without proof of the debt or who owns the debt) then the availability of foreclosure should be barred.

Lawyers must meet this challenge head-on and stop pussy footing around. If the alleged loan was table funded, then there was never any completed loan contract. If the money came from a third party, then that third party has the right to the note and mortgage — if the note and mortgage are executed in favor of that third party or if the “originator” was in privity with the third party through contract. There is no other way.

BUT if the identified third party was just a conduit for a source of funds outside the circle of the originator and the party through whom the funds were sourced, then the homeowner owes the DEBT to someone else. What Wall Street banks did in its simplest form is to relieve the investors of money in such a way that the investors would see very little of it ever returned because the Wall Street banks had reached for and grabbed the holy grail of finance — selling financing for nonexistent entities and keeping the proceeds.

And the same logic then applies. If the FOURTH party was somehow in privity (contract) with the originator then the homeowner owes the debt to that fourth party. BUT unless the note and mortgage are properly delivered and executed in favor of the fourth party, neither the fourth party nor any agent or “servicer” for the fourth party can claim rights under the note and mortgage which should never have been released, delivered or recorded in the first place.

In short, without BOTH the money trial and the paper trail being synchronized there is no loan contract. And that means there is no valid note or mortgage which are then VOID ab initio. Can the real source of funds collect? Yes of course, but they do not own a claim that is secured by a mortgage or deed of trust. And they cannot use the note as direct evidence of the debt. This has always been the law. Ironically, nearly all “borrowers” would gladly execute notes and mortgages with the real investors that would be fully enforceable and would represent workouts that would protect both the investor and the borrower. But in order to do that, the banks and servicers in the false securitization industry must be benched and a new group of entities employed directly by investors must arise.

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As stated in the recent Yale Law Review article, document defects do not occur as a result of any action or fault of the alleged borrower and there is no reason not to apply the rule of law to any situation, much less one in which a party can lose their personal residence.

The theory of anything except a free house for the homeowner is full of holes that are amply challenged in the Yale Law Review article. As the authors point out, the trial judges may think they are saving the financial system, the economy and our society from disintegration, but in truth they are undermining all three.

See Yale-In Defense of Free Houses 2016 03 23

Banks Brace for Pain: Statute of Limitations on TILA Rescission and TILA Claims

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

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TILA remedies and requirements actually address the “free house” complaint head on: If banks misbehave in material and important ways (as defined by statute and not in the minds of a judge or lawyer) then yes, the homeowner should get a free house. That is what all three branches of the Federal government have said and no re-interpretation of TILA rescission or TILA remedies will be allowed since last week when the Supreme Court unanimously decided that TILA meant what it says. Any Judge or lawyer who thinks otherwise is in fairyland. The fact that a Judge doesn’t “like” the result of a “free house” (as the Judge perceives it) means nothing. The Judge is required to apply the law as decided by the United States Supreme Court.

Practically everyone is asking questions about whether the statute of limitations starts running from the date the documents were signed on the alleged loan or if it could start at a later time. The answer is a grey area, but as pointed out by James Macklin last night on the Neil Garfield show, there is a legal doctrine called equitable tolling that could suspend the start of the running of the statute of limitations for TILA rescission and TILA claims.

“The equitable tolling principles are to be read into every Federal Statute of Limitations unless Congress expressly provides to the contrary in clear and unambiguous language, see: Rotella v. Wood 528, 549, 560-61,120 S. Ct. 1075, 145 L. Ed. 2d 1047(2000). Since TILA does not evidence a contrary Congressional intent, it’s statute of limitations must be read to be subject to equitable tolling, particularly since the Act is to be construed liberally in favor of consumers.”

Basically the doctrine says that the statute starts to run, unless otherwise provided in the statute, when the claimant knew or should have known or most have known of the grounds for, in this case, TILA Rescission or TILA claims. The basis of that is obvious to anyone involved with these fake mortgages and fraudulent foreclosures for 8 years like I have. The very facts that give rise to TILA rescission and other TILA claims, are intentionally withheld by the parties at the fake closing where the borrower signs settlements documents, the note and the mortgage.

The strategy of the banks has been to wait out three years and then pursue foreclosure and when the borrower raises TILA defenses, the answer is that the statute of limitations has run. With the recent unanimous Supreme Court decision that effectively smacked thousands of lawyers and judges in the face for re-interpreting basic law and the specific and express provisions of TILA, this bank strategy should no longer work.

So now if you gave notice of rescission within three years of the date of the fake closing, your mortgage is null and void “by operation of law” and the “lender(s)” are required to give you (a) a satisfaction of mortgage for county records (b) a canceled original note (c) refund all the money you paid at closing for points, fees, costs etc. and (d) refund all the money you ever paid for interest and principal on the loan. Your debt becomes unsecured and there is no requirement for you to offer them any money at all in order to have the TILA rescission (“I hereby rescind my loan”) be effective. If you EVER sent such a notice within the three year period then your mortgage was void by operation of law at that time — unless the “lender(s)” filed a lawsuit (within 20 days of receipt of your notice of rescission) seeking declaratory relief saying your rescission was not based on any mistakes, errors, omissions or misbehavior on their part.

So all those hundreds of thousands of letters sent back to borrowers saying their letter of rescission was not effective were wrong. Dead wrong. And all those foreclosures that happened anyway were wrongful and void. And THAT means that what I said in 2008 is now true — that hundreds of thousands of homeowners who sent notices of rescission still own their homes even though on paper their homes were sold to third parties. The only thing that could interfere with that conclusion would be a state statute that existed at the time of the fraudulent sale  that said that you have 1 year or some other length of time to challenge the title.

So now that we know that nearly all the loans were table funded and therefore “predatory per se” (REG Z) the question becomes when did the three year statute of limitations begin to run.

There are two schools of thought on this. The first one is simple, as one caller on the Neil Garfield Show pointed out last night. If the disclosures were intentionally withheld, then even the three day rescission might still be available because the deal never actually closed and because the disclosures were fraudulent.

But in any event the statute would start to run as soon as the “borrower” found out that there were multiple people involved in his fake closing that were never disclosed — all of which undisclosed parties were involved in serving as conduits or aggregators and all of whom were paid an undisclosed amount of money arising out of the “closing.” So it is possible that even though your loan was the subject of a faked closing in 2005, you might still have a right to rescind and should send the notice of rescission since it forced the burden of proof onto the pretender lenders. This is especially important in nonjudicial states where the borrower must sue to prevent foreclosure and there is confusion over the alignment of parties.

Incidentally to drill in the point that this statute has teeth, the “lender” must pay the borrower all money paid including what was paid to third party vendors. The loss falls on the “lender” for misbehaving. If it didn’t bother the US Government (Congress, President and Supreme Court) when it passed TILA that the borrower would get a “free house” why should it bother anyone else?

MERS Assignments VOID

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see http://www.msfraud.org/law/lounge/mers-auroraslammed.pdf
While there are a number of cases that discuss the role of Mortgage Electronic Registration Systems (MERS), this tells the story in the shortest amount of time. MERS was only a nominee to track the off-record claims from multiple parties participating in what we call the securitization of loans. It now appears that the securitization in most cases never took place but the banks and their affiliates are foreclosing in the name of REMIC trusts anyway, relying on “presumptions” to “prove” that the Trust actually purchased and took possession of the alleged loan. In every case I know of  where the homeowner was allowed to probe deeply into the issues of whether the Trust actually received the loan, it has either been determined that the Trust didn’t own the loan, or the case was settled before the court could announce that ruling.

Decided in April of last year, this case slams Aurora, who was and remains one of the worst offenders in the category of fraudulent foreclosures. The Court decided that since the basis of the claim was an assignment from MERS who had no interest int he debt, note or mortgage, there were no “successors.” This logic is irrefutable. And as regular readers know from reading this blog I believe the same logic applies to any other party who has no interest in the debt, note or mortgage — like an unfunded “originator” whose name appears on not only the Mortgage, like MERS, but also on the note.

Judges have trouble with that analysis because in their minds they think the homeowner is trying to get a free house. Even if that were true, it doesn’t change the correct application of law. But the opposite is true. The homeowner is trying to stop the foreclosing party from getting a free house and the homeowner is trying  to find his creditor. I actually had a judge yesterday rule that the source of funds, ownership and balance was essentially irrelevant. Discovery on nearly all issues was blocked by his ruling, leaving the trial to be a very short affair since the defenses have been eliminated by that Judge by express ruling.

The attorney representing the bank basically argued that the case was simple and that anything that happened prior to the alleged default was also irrelevant. The Judge agreed. So when a trial judge makes such rulings, he or she is basically narrowing the issue down to when we were just starting out in 2007 in what I call the dark ages. The trial becomes mostly clerical in which the only relevant issues are whether the homeowner received a loan and whether the homeowner stopped paying. All other issues are treated as irrelevant defenses, including the behavior of the “servicer” whose authority cannot be questioned (because of the presumption raised by an apparently facially valid instrument of virtually ANY sort).

The moral of the story is persistence and appeal. I believe that such rulings are reversible potentially even as interlocutory appeals as to affirmative defenses and discovery. If anyone files a lawsuit they should be required to answer all potential questions about that that lawsuit in good faith. That is what discovery is for. The strategy of moving to strike affirmative defenses is meant to cut off discovery to the point where no defenses can be raised or proven. And cutting off discovery is what the foreclosers need to do or they will face sanctions, charges of fraud, perjury and worse when the real facts are revealed.

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