Another PennyMac Crash! CA Case for Homeowner

American jurisprudence is clearly still struggling with the fact that in most cases the forecloser either does not exist or does not have any interest in the loans they seek to enforce. In virtually all instances PennyMac is acting in the role of a sham conduit while allowing its name to be used as the front for a nonexistent lender.

Such foreclosers use semantics and legal procedure to create and cover-up the illusion of “ownership” of the debt (the loan) and the illusion of having the rights to enforce the note bestowed by a true creditor. This case opinion is correct in every respect and it conforms with basic black letter law in all 50 states; yet courts still strive to find ways to allow disinterested parties to foreclose.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Hat tip to Bill Paatalo
see GULIEX v. PennyMAC HOLDINGS LLC, Cal: Court of Appeal, 5th Appellate Dist. 2017 https://scholar.google.com/scholar_case?case=9436462246811997539&hl=en&lr=lang_en&as_sdt=2006&as_vis=1&oi=scholaralrt
This case amply demonstrates the following:
  1. The need for a chain of title report
  2. The need for a chain of title analysis
  3. The need for legal research and good memorandums of law
  4. The need to understand “chains of title” or “chains of events” and the laws applicable thereto (e.g. judicial notice, legal presumptions etc.)
  5. The need to formulate a presentation to the judge that is very persuasive.
  6. The need to appeal when trial judges don’t apply the law or don’t apply the law correctly.

The following are significant quotes from the case.

Plaintiff, a homeowner and borrower, sued the defendant financial institution for wrongs allegedly committed in connection with a nonjudicial foreclosure sale of his residence. Plaintiff’s main theory was that the financial institution did not own his note and deed of trust and, therefore, lacked the authority to foreclose under the deed of trust. (e.s.)

The financial institution convinced the trial court that (1) it was, in fact, the beneficiary under the deed of trust, (2) a properly appointed substitute trustee conducted the foreclosure proceedings, and (3) the plaintiff lacked standing to claim the foreclosure was wrongful. The financial institution argued its chain of title to the deed of trust was established by facts stated in recorded assignments of deed of trust and a recorded substitution of trustee. The trial court took judicial notice of the recorded documents. Based on these documents, the court sustained a demurrer to some of the causes of action and granted summary judgment as to the remaining causes of action. On appeal, plaintiff contends he has standing to challenge the foreclosure and, furthermore, the judicially noticed documents do not establish the financial institution actually was the beneficiary under the deed of trust. We agree. (e.s.)

As to standing, the holding in Yvanova v. New Century Mortgage Corp. (2016) 62 Cal.4th 919 (Yvanova) clearly establishes plaintiff has standing to challenge the nonjudicial foreclosure on the ground that the foreclosing party lacked the authority to initiate the foreclosure because it held no beneficial interest under the deed of trust. (e.s.)

As to establishing facts by judicial notice, it is well recognized that courts may take notice of the existence and wording of recorded documents, but not the disputed or disputable facts stated therein. (e.s.) (Yvanova, supra, 62 Cal.4th at p. 924, fn. 1; Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375 (Herrera).) Under this rule, we conclude the facts stated in the recorded assignments of deed of trust and the substitution of trustee were not subject to judicial notice. (e.s.) Therefore, the financial institution did not present evidence sufficient to establish its purported chain of title to the deed of trust. Consequently, the financial institution failed to show it was the owner of the deed of trust and had the authority to foreclose on plaintiff’s residence.

We therefore reverse the judgment and remand for further proceedings.

….

The Links in PennyMac’s Purported Chain of Title

“Links” in a chain of title are created by a transfer of an interest in the underlying property from one person or entity to another. An examination of each link in the purported chain of title relied upon by PennyMac reveals that certain links were not established for purposes of the demurrer. Our analysis begins with a description of each link in the purported chain (and each related document, where known), beginning with the husband and wife who sold the residence to Borrower and ending with the trustee’s sale to PennyMac.

Link One-Sale: Clarence and Betty Dake sold the residence to Borrower pursuant to a grant deed dated April 19, 2005, and recorded on June 30, 2005. The parties do not dispute this transfer.

Link Two-Loan: Borrower granted a beneficial interest in the residence to Long Beach Mortgage Company pursuant to a deed of trust dated June 21, 2005, and recorded on June 30, 2005. The parties do not dispute this transfer.

Link Three-Purported Transfer: Long Beach Mortgage Company purportedly transferred its rights to Washington Mutual Bank by means of a document or transaction not identified in the appellate record. Also, the appellate record does not identify when the purported transaction occurred. Borrower disputes the existence of this and subsequent transfers of the deed of trust. (e.s.)

Link Four-Purported Transfer: Washington Mutual Bank purportedly transferred its rights to JPMorgan Chase Bank, National Association in an unidentified transaction at an unstated time. (e.s.)

Link Five-Assignment: JPMorgan Chase Bank, National Association, successor in interest to Washington Mutual Bank, successor in interest to Long Beach Mortgage Company, purportedly transferred the note and all beneficial interest under the deed of trust to “JPMorgan Chase Bank, National Association” pursuant to an assignment of deed of trust dated July 25, 2011, and recorded on July 26, 2011.

Link Six(A)-Assignment: JPMorgan Chase Bank, National Association transferred all beneficial interest in the deed of trust to PennyMac Mortgage Investment Trust Holdings I, LLC pursuant to a “California Assignment of Deed of Trust” dated September 14, 2013, and recorded on November 15, 2013.

Link Seven-Trustee’s Sale: California Reconveyance Company, as trustee under the deed of trust, (1) sold the residence to PennyMac at a public auction conducted on November 20, 2013, and (2) issued a trustee’s deed of sale dated November 21, 2013 and recorded on November 22, 2013. PennyMac, the grantee under the deed upon sale, was described in the deed as the foreclosing beneficiary.

Link Six(B)-Purported Assignment: The day after the trustee’s sale, JPMorgan Chase Bank, National Association executed a “Corporate Assignment of Deed of Trust” dated November 21, 2013, purporting to transfer the deed of trust without recourse to PennyMac Holdings, LLC. The assignment was recorded November 22, 2013. This assignment was signed (1) after JPMorgan Chase Bank, National Association had signed and recorded the “California Assignment of Deed of Trust” described earlier as Link Six(A) and (2) after the trustee’s sale was conducted on November 20, 2013. Consequently, it is unclear whether any interests were transferred by this “corporate” assignment.

3. Links Three and Four Are Missing from the Chain

Postscript from Editor: This Court correctly revealed the fraudulent strategy of the banks, to wit: they created the illusion of multiple transfers giving the appearance of a solid chain of title BUT 2 of the transfers were fake, leaving the remainder of the chain void.

Glaski Court refuses to “depublish” decision, two judges recuse themselves.

Corroborating what I have been saying for years on this blog, the Supreme Court of the state of California is reasserting its position that if entity ABC wants to collect on a debt in California, then that particular entity must own the debt. This is basic common sense and simply follows article 9 of the Uniform Commercial Code. If a court were to adopt the position of the banks, then a new industry would be born, to wit: spying on people to determine whether or not they are behind on any payment to anyone and then beating the real creditor to court, filing a complaint and getting a judgment without the real creditor even knowing about it. The Supreme Court of the state of California obviously understands this.

This is not really complicated although the words used are complicated. If you find out that your neighbor is behind in payments on their credit cards, it is obvious that you cannot serve your neighbor and collect. You don’t own the debt because you never loaned any money and because you never purchased the debt. If you are allowed to sue and collect on the credit card debt, you and the court would be committing a fraud on the actual creditor. This is why it is absurd for lawyers or judges to say “what difference does it make who they owe the debt to?  They stopped making payments and they are clearly in default.”  Any lawyer or judge makes that statement is wrong. It lacks the foundation of the factual determinations required to establish the existence of the debt, the current balance of the debt after deductions for all payments received from all parties on this account, and the ownership of the debt.

In the first year of law school, we learned that the note is not the debt.  The note is evidence of the debt and the terms of repayment but it is not a substitute for the actual transaction documents. Those transaction documents would have to include proof of transfer of consideration, which in this case would mean wire transfer receipts and wire transfer instructions. The banks don’t want to show the court this because it will show that the originator in most cases never made any loan at all and was merely serving as a sham nominee for an undisclosed lender. The banks are attempting to use this confusion to make themselves real parties in interest when in fact they were never more than intermediaries. And as intermediaries that misused their positions of trust to misrepresent and create fraudulent “mortgage bond” transactions with investors that led to fraudulent loans being made to borrowers.

The banks diverted or stole money from investors on several different levels through multiple channels of conduit sham entities that they called “bankruptcy remote vehicles.” The argument of “too big to fail” is now being rejected by the courts. That is a policy argument for the legislative branch of government. While the bank succeeded in scaring the executive and legislative branches into believing the risk of “too big to fail” most of the people in the legislative and executive branches of government on the federal and state level no longer subscribe to this myth.

There are dozens of other courts on the trial and appellate level across the country that are also grasping this issue. The position of the banks, which is been rejected by Congress and the state legislatures for good reason, would mean  the end of negotiable paper. The banks are desperate because they know they are not the owner of the debt, they are not the creditor, they have no authority to represent the creditor, and their actions are contrary to the interests of the creditor. They are pushing millions of homeowners into foreclosure, or luring them into an apparent default and foreclosure with false promises of modification and settlement.

The reason is simple. Without a foreclosure sale at auction, the banks are exposed to an enormous liability for all the money they collected on the alleged defaulted loans. The amount of the liability is vastly in excess of the entire principal of the loans, which is why I say that the major banks are publishing financial statements that are based on fictitious assets and fictitious income. Nobody can ignore the fact that the broker-dealers (investment banks) are getting sued by investors, insurers, counterparties on credit default swaps, government agencies who have already paid for alleged “losses”, and government agencies that have paid on guarantees for mortgages that did not conform to the required industry-standard underwriting practice.

This latest decision in which the Glaski court, at the request of the banks, revisited its prior decision and then reaffirmed it as a law of the land in the state of California, is evidence that the courts are turning the corner in favor of the real creditors and the real debtors. The recusal by two judges on the California Supreme Court is interesting but at this point there are no conclusions that can be drawn from that.

This opens the door in the state of California for people to regain title to their property or damages for the loss of title. It also serves to open the door to discovery of the actual money trail in order to trace real transactions as opposed to fictitious ones based upon fabricated documentation which often contain forgery, backdating, and are signed by people without authority or people claiming authority through a fictitious power of attorney.

Glaski Court Reaffirms Law of the Land In California: If you don’t own the debt, you cannot collect on it.

Glaski Decision in California Appellate Court Turns the Corner on “Getting It”

8/8/13 NOTE: This decision was approved for publication and therefore applies to all cases within the district of the appellate court.

On the other hand we should not assume that they have arrived nor that this decision will have pervasive effects throughout California or elsewhere in the United States or other countries.

J.P. Morgan did suffer a crushing defeat in this decision. And the borrower definitely receive the benefits of a judicial decision that will allow the borrower to sue for wrongful foreclosure including equitable and legal relief which in plain language means reversing the foreclosure and getting damages. Probably one of the most damaging conclusions by the appellate court is that an examination of whether the loan ever made it into the asset pool is proper in determining the proper party to initiate a foreclosure or to offer a credit bid at a foreclosure auction.  The court said that alleged transfers into the trust after the cutoff date are void under New York State law which is the law that governs the common-law trusts created by the banks as part of the fraudulent securitization scheme.

Before you give them a standing ovation remember that it is possible for additional documentation to be created, fabricated and forged showing that despite the apparent violation of the cutoff date, the trustee has accepted the loan into the trust. This will most likely be a lie. I don’t think there is any entity acting as trustee of a trust that doesn’t know that it is under intense scrutiny and doesn’t want to be subject to liability that could amount to trillions of dollars advanced by investors with the purchase of bogus mortgage-backed bonds that were presumably managed by the trustee but in reality not managed at all  because the bonds were worthless. This gave the banks the opportunity to claim that they owned the bonds and therefore had an insurable interest which gave rise to the whole problem with AIG and AMBAC and other insurers or parties who had guaranteed the bond, the loan or any loss (credit default swaps).

The fact that the loan in this case was definitely securitized is also interesting. Of course Washington Mutual was stating to everyone that it was not involved in the securitization of mortgage loans when in fact nearly all of the loans originated became subject to claims of securitization. This case explains why I never say that the loan was securitized or that the loan was in any particular trust, to wit: I don’t believe that a funded trust exists with the ability to purchase loans and therefore I don’t believe the loans are in any of the asset pools. So when people ask me how they can prove which trust their loan is actually in, I reply that they are asking the wrong question.

What is being played out here in this case and hundreds of thousands of other cases is a representation by the foreclosing entity that the trust owns the loan when in fact it never owned the loan nor could it because the money that was advanced by investors was never deposited into the trust. We have the same banks representing to regulatory authorities and insurers that it is the bank and not the trust that owns the loan even though the bank merely made the loan using money advanced by investors who believed that they were buying mortgage-backed bonds. The truth is they were merely making a deposit into an account maintained by the investment bank. The resulting transactions do not qualify for exemption as securities or insurance under the 1998 law. Nor do they qualify for REMIC treatment under the Internal Revenue Code.

In other words if you take a close look and actually follow the path of the money and the path of the paper you will find that despite the pronouncements from the Department of Justice and other agencies, this is a simple fraud case using a Ponzi model. The hallmark of a Ponzi model is that it collapses as soon as the investors stop buying the bogus securities. If the government cares to do so it can freely prosecute the individuals and companies involved without any air of exemption under the 1998 law because none of the parties followed the securitization path presumed by the 1998 law. So we are back to this, to wit: a security is a security and subject to SEC regulations and insurance is an insurance contract subject to insurance regulators, and fraud is fraud subject to recovery of restitution, compensatory damages, punitive damages, treble damages etc.

You should remember when reading this decision that the appellate court was not ruling in favor of the borrower granting the substantive relief the borrower  was seeking. The appellate court merely reversed the trial court decision to dismiss the borrower’s claims. That only means that the borrower now as an opportunity to prove the elements of quiet title, wrongful foreclosure, slander of title, cancellation of instruments and relief under California’s version of unfair business practices. But the devil is in the details and proving the case requires aggressive discovery and aggressive preparation for trial. It is highly probable that the case will settle. The bank will probably be willing to pay almost any amount of money to avoid a judgment setting forth the elements of a wrongful foreclosure and how the bank violated the law.

The Bank will attempt to avoid any final order that undermines the value of loans that are subject to claims of securitization, because those loans supposedly support the value of the bogus mortgage-backed bonds sold to investors.  Any such final order would also undermine the balance sheet of J.P. Morgan and any other major bank carrying the mortgage bonds as assets on their balance sheet. If those assets are diminished, then the bank is not as well funded as it has been reporting. In fact, those assets might well vanish completely from the balance sheet of those banks, causing the banks to be seized by the FDIC and broken up into smaller pieces for regional and community banks to pick up. Hence this decision represents a risk factor that could eliminate the legal fiction created by smoke and mirrors from Wall Street banks, to wit: it is not the borrowers who are deadbeats, it is the banks who are broke and whose management has run off with billions and perhaps trillions of dollars that should be in the United States economy. The absence of that money lies at the root of our unemployment and low economic activity.

This Glaski case has many of the elements that we have been discussing for years. Fabricated documents, forgeries, perjury, false affidavits and no money trail to backup the story painted by the fabricated documents. And of course it has our old friend Washington Mutual Bank And the supposed take over by Chase Bank that never actually happened.

And it involves the issue of assignments and the fact that the assignment is not the transaction itself but only a report of a transaction. If the borrower proves that the transaction reported in the assignment or other instrument of conveyance never occurred, or if the borrower is successful in shifting the burden of proof to the bank to show that it did occur, the assignment will have no value whatsoever unless the transaction is present, to wit: that someone actually purchased the loan through the payment of money or other valuable consideration that was received by a party who actually owned the loan.

Thus even if Chase Bank were able to show that it entered into a transaction in which the loans were transferred (something we can find no evidence of which the FDIC receiver says never occurred) that would only be the equivalent of a quit claim deed, to wit: whoever received the consideration for the transfer of the loans was merely conveying any interest they had even if they had no interest at all. Hence the transactions by which Washington Mutual allegedly came to be the owner of the loan must be examined in the same way as the transaction between the Washington Mutual bankruptcy estate and chase bank.

You should also take note that the decision was published with the admonition that it is  “not to be published in the official reports.”  this is further indication that the court is concerned about the far-reaching effects of the decision and essentially tells trial judges that they do not have to follow it. So for those who wish to point to this decision and say “game over” we are not there yet. But I do think that we passed the halfway point and we are probably in the fifth or sixth inning of a nine inning game. Translating that to time, I would estimate that it’s going to take another three or four years to clean up this mess and that it might take several decades to clean up the title corruption that was created by the banks.

http://stopforeclosurefraud.com/2013/08/01/glaski-v-bank-of-america-ca5-5th-appellate-district-securitization-failed-ny-trust-law-applied-ruling-to-protect-remic-status-non-judicial-foreclosure-statutes-irrelevant-because-sa/

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