Insider Lawsuit Summarizes the BIG LIE About “Securitization.”

This is an insider case filed in April 2018. The ironic aspect of this case is the probability that Nationstar probably does not have standing. But that aside, for those who remain skeptics about what I have been writing about, here is an unexpurgated recitation of all the ways that all the loans, debts, notes and mortgages were fabricated based upon pure lies, making foreclosure a legal impossibility.

This is a case where a servicer has sued various parties, some of whom are players in the securitization game. The allegation is that the documents and assertions made by the Defendants were completely false and that none of them, despite the documents, had any nexus, right, title or interest to any of the loans, debts, notes or mortgages.

Lawyers would be doing themselves and their clients a favor by using this case as a drafting guide. But they can only do so after they have a achieved a level of knowledge to make sense out of all the chaos. If they do study the issue, even for a little while, they will have that “AHAH” moment and realize that the entire playing field is low hanging fruit for various types of lawsuits for compensatory and punitive damages.

Hat Tip Bill Paatalo

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 Complaint – Nationstar v Soria

Since the perspective is that of a claimed servicer that sometimes claims to be more than a servicer, you should remember that this is not 100% on point. Also not all of the Defendants are what they appear to be, so  don’t leap to conclusions about the specific actors named but rather recognize the truth when you read it. But it is very close. The allegations against these Defendants could just as well be used against all the securitization players.

And the knowledge that the lawyers for Nationstar had when writing this complaint clearly shows that Mr. Cooper and its lawyers had actual knowledge of the fictitious documents, entities and assertions made by the investment banks every day in court starting with “Good Morning your Honor, my name is John Smith and I represent the Plaintiff [a trust that does not exist]. This is a standard foreclosure case.”

Here are some interesting quotes from the allegations by Nationstar (now Mr. Cooper).

Who formed [West H&AJ]?
A: I did… .
Q: Has West H&A ever originated a single loan? A: Funded loan? . . . No. . . .

Q: [Y[ou were a complete stranger to this loan; correct?

A: Yeah. Suree……..

Q: [‘T]he assignment, who drafted it?

A: The assignment deed of trust, I wrote thatt…….. Q: Were you authorized by anyone other than yourself to assign this deed of trust? A: No.

“Defendants, strangers to the subject loans and having never lent a penny to anyone, created a criminal enterprise by which they hijacked ““thousands”” of mortgages via void assignments all in the name of ““helping”” borrowers.”

Q: [YJ]ou didn’t fund a single loan; correct?

A: No. Didn’t fund a single loan.

Q: [Y[ou were a complete stranger to this loan; correct?

A: Yeah, sure …

Q: The assignment, who drafted it?
A: The assignment deed of trust, I wrote that. …. . .

Q: Were you authorized by anyone other than yourself to assign this deed of trust?
A: No.

Over the last four (4) years, for the purpose of executing the scheme to 13 defraud, Defendants, together with others known and unknown, transmitted, and caused the transmission of, by means of wire and radio communication in interstate and foreign commerce, the following writings, signs, signals, and sounds which 16 constitute no fewer than thirty-eight (38) instances: …

Defendants falsely designated themselves as nominees for entities or sometimes used an outright fraudulent designation of another entity in order to gain credibility and trust, thus, purposely confusing the
public. Further, Defendants falsely advertised that they owned the hijacked properties for purpose of defrauding those individuals and creating confusion in the 6 marketplace. Finally, Defendants used the false claims to engage in deceptive practices to further their fraudulent acts. The following are no fewer than fourteen 8 (14) instances of the false information and deceptive acts perpetuated by Defendants.

 

What should I pay my attorney?

Like all professions the practice of law mostly involves activities that the client never sees. And it is the quantity and quality of work by the attorney that is the largest factor in getting a good result.

The best result is having the foreclosure dismissed or vacated with findings of fact that make it virtually impossible for the foreclosing party to try again. To get that result you need experienced trial counsel who does all the work he/she thinks is necessary to achieve the goal. Those are at the top of winning food chain.

If you must pay less then you must lower your goal or buy a winning lottery ticket.

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

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 TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

See VIDEO TERA EXPLAINED AND VIDEO HOW TO USE TERA REPORT

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

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There are some lawyers to whom I refer clients for representation.  Like me, they like to win — not merely justify a fee. They don’t consider “delaying the inevitable” to be a winning or even viable strategy, mainly because they don’t believe that foreclosure is inevitable. I consider their fees to be very reasonable.

On the issue of attorney fees, I have a story. When I first started practicing law I worked in the law office of what I then considered to be an “older” lawyer — i.e., a little more than 1/2 my present age. His wife was the bookkeeper. She was the one that had to argue with clients to pay the fees that were charged. Eventually people who were complaining or objecting said the obvious — that other lawyers charge less for the “same work” —  which was true. So she put up a sign in the waiting room that said the following:

“If you want nice fresh oats we can give them to you at a reasonable price. But if you are satisfied with oats that have already been through the horse, you can get them for a lot less.”

Moral of the story: It’s not the hourly rate you should be shopping for. And it’s not the length of time it takes to get there that counts. It’s the result. The only way to get legal representation is to pay for it. The question is cost of services vs cost of losing the home.

I hear many complaints from homeowners about how the lawyer didn’t do all the things that could have been done — discovery, motions, trial preparation etc. They are right in most cases that the lawyer did not do the work that now, in retrospect, the client would have liked. But in almost all cases, the problem was not with the lawyer; it was with the client who couldn’t pay or didn’t want to pay for the full work load.

To put numbers to this issue, if you are paying the equivalent of $100 per hour, don’t expect the lawyer to drop everything and concentrate for days on developing a defense narrative that the lawyer thinks he can “sell” to the trial court. If you are paying a few hundred dollars per month the result is the same. The lawyer owes you nothing except to provide the services you pay for.

If your retainer agreement calls for billing at $450+ per hour, you have every right to expect the full job to be done. Likewise if you are paying $2500+ per month, you can expect the full job to be done.

If you are paying $300 per month and expecting services worth $2500 per month you are mistaken. Those services will not be delivered which means that discovery, motions to compel, motions for summary judgment, depositions, trial preparation will either not get done at all or will be perfunctory.

I generally don’t litigate in court anymore. I serve as consultant, writer, researcher and expert witness on cases involving the securitization of debt. I have been actually licensed by government agencies and securities trade groups to do business literally on Wall Street in Manhattan and I did so. My hourly rate is $650 per hour for my time and $150 per hour for paralegal time. The fee is justified not only by our past successes but because we can actually accomplish more in less time and we win (not all the time). So while our customers are paying $650 per hour, in many cases it only takes an hour for me to do my work because I have so much experience with similar cases and fact patterns. Other less experienced lawyers either take much longer for the same job (thus increasing the cost of the project) or they might not take time to do what lawyers are really paid to do — think.

I am not engaging in a discussion about what our judicial system should look like. I am merely dealing with reality. In a capitalist economy where everything is measured in monetary value, everything happens because of money. It’s the fuel that pushes things along. Without the fuel, the horse simply lays down and takes a nap.

RESCISSION: When the Judge Gets it Wrong

WE HAVE REVAMPED OUR SERVICE OFFERINGS TO MEET THE REQUESTS OF LAWYERS AND HOMEOWNERS. This is not an offer for legal representation. In order to make it easier to serve you and get better results please take a moment to fill out our FREE registration form https://fs20.formsite.com/ngarfield/form271773666/index.html?1453992450583 
Our services consist mainly of the following:
  1. 30 minute Consult — expert for lay people, legal for attorneys
  2. 60 minute Consult — expert for lay people, legal for attorneys
  3. Case review and analysis
  4. Rescission review and drafting of documents for notice and recording
  5. COMBO Title and Securitization Review
  6. Expert witness declarations and testimony
  7. Consultant to attorneys representing homeowners
  8. Books and Manuals authored by Neil Garfield are also available, plus video seminars on DVD.
For further information please call 954-495-9867 or 520-405-1688. You also may fill out our Registration form which, upon submission, will automatically be sent to us. That form can be found at https://fs20.formsite.com/ngarfield/form271773666/index.html?1452614114632. By filling out this form you will be allowing us to see your current status. If you call or email us at neilfgarfield@hotmail.com your question or request for service can then be answered more easily.
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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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Based upon my own experience and what has been reported to me from around the country, most trial judges are making the mistake of confusing argument and facts when it comes to TILA Rescission. They are either expressly or tacitly ruling that at best, TILA Rescission is a claim or defense — which means that in order for Rescission to have any effect, it must be litigated. This is wrong and it has been expressly rejected by both the TILA Rescission Statute, and U. S. Supreme  Court in the Jesinoski decision.
I offer the following, drafted by me, as a response to when Court’s essentially overrule the the highest and final court in the land. I suspect that the resistance by trial judges to the effects of rescission will not be resolved, in most instances, without an appellate court saying for the second time that Courts are wrong when they disregard or try to change the wording of the TILA Rescission statute.
Comments are welcome: neilfgarfield@hotmail.com

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Motion for Reconsideration on Defendant’’s Motion to Dismiss For Lack of Subject Matter Jurisdiction
  1. A trial Court has the inherent authority to control its own interlocutory orders prior to Final Judgment. North Shore Hospital Inc. v Barber 143 SO 2d 849, 850 (Fla 1962).
  2. While non-final orders were not subject to a motion for rehearing, a trial judge nevertheless had the discretion to choose to entertain such a motion precisely because it had jurisdiction to control its non-final orders prior to entry of Judgment. Commercial Garden Mall v Success Academy Inc. 57 So 3rd 982 (Fla 2nd DCA 2011).
  3. An order denying a Motion to Dismiss is interlocutory. See Nationwide Ins Co. of Florida v Demo 57 So 3d 982 (Fla 2nd DCA 2011.
  4. Here this Court heard Defendant’s Motion to Dismiss on March 10, 2016 and denied, apparently without prejudice to raise the issue of rescission as a defense, Defendant’s Motion to Dismiss for lack of subject matter jurisdiction.
  5. TILA Rescission is neither a claim nor a defense. It is a legal act that has legal effect when completed. The only factual issues are whether the rescission was sent, which in this case is undisputed. TILA Rescission is effective as a matter of law, when mailed. Its effect is to void the note and void the mortgage and trigger specific statutory duties of the “lender” under 15 U.S.C. §1635 et seq. Jesinoski v Countrywide  574 U.S. ___ (2015) and Regulation Z. C.F.R. (Federal Reserve as succeeded by Consumer Financial Protection Board).
  6. The gravamen of what was argued before the Court was that the note and mortgage, being void by operation of law, could not be the subject of any legal action.
  7. Since the Plaintiff’s entire case rested on the use of two void instruments — the note and mortgage — and there is no allegation in the Plaintiff’s complaint asserting legal standing of an creditor seeking to collect on a debt, the Court does not have any justiciable issue before it. There is no count in Plaintiff’s complaint that seeks to recover on a debt, naming as Plaintiff the owner of the debt. In this case Plaintiff admits the Creditor (owner of the debt) is not the Plaintiff. The complaint seeks solely to enforce the paper instruments — the note and/or mortgage — both of which are now void by operation of law.
  8. There is also no lawsuit by any real party in interest seeking to vacate the rescission that has indisputably been sent, received and recorded in the County records — and which has been indisputably ruled as legally effective by the U.S. Supreme Court.
  9. At the hearing it was admitted by that the owner of the debt was the “investor” who was distinguished from the Trust.
  10. The rescission that was indisputably mailed and received removes standing of the putative Plaintiff. Without the note and mortgage, only the debt remains. And the only party with standing to seek collection on the debt is the Investor, who is not party to the instant action. And according to the TILA Rescission statute such a “creditor” must either first FULLY comply with the TILA Rescission statutory duties or first file a lawsuit to vacate the rescission (which currently has the same force and effect as an order of any court of competent jurisdiction).
  11. No lawsuit demanding that the Court vacate the rescission has been filed by anyone. Yet this Court has effectively granted such relief without any real party in interest, without a lawsuit seeking to vacate the rescission sent by borrower, and without any pleading in which a [proper party seeks to remove the recorded rescission that was filed in the County records. This Court instead is ignoring the rescission as though it does not have any legal effect despite the clear pronouncements of the TILA Rescission Statute, Regulation Z, and the clear and final ruling by a unanimous Supreme Court of the United States.
  12. Plaintiff lacks standing even if Defendant’s defenses based upon an untimely fabricated assignment are over-ruled.
  13. Defendants assert that this Court misapprehended argument and facts.
  14. The undisputed facts are that the TILA rescission was sent and received. The fact remains now that the rescission is effective and remains effective as a matter of law. The undisputed facts, as a matter of law, remain that the note and mortgage were both rendered void by operation of law by the sending of a letter of rescission by the alleged “borrower.”
  15. The Court’s decision was that the issue of the effectiveness of the rescission was a defense and not the proper subject of a Motion to Dismiss for lack of jurisdiction.
  16. The error asserted by Defendants is that this Court’s ruling essentially “over-rules” the Supreme Court of the United States in Jesinoski v Countrywide, a copy of which was provided to the Court  at the hearing. Defendants state the obvious: this court lacks authority to overrule the highest court in the land.
  17. To hold that rescission is a defense to be litigated flies in the face of the unanimous Supreme Court ruling that NO LITIGATION is required to make rescission effective. No Lawsuit is required. Jesinoski, Supra.
  18. Rescission is effective by operation of law. 15 U.S.C. §1635, Regulation Z. Jesinoski Supra — all of which state that rescission is effective as a matter of law when mailed and that no claim or lawsuit or ruling by any court is required by the borrower to make it effective.
  19. The effect of this Court’s ruling is to over-rule the Supreme Court of the United States and rewrite the TILA rescission statute that is a very clear and specific remedy WITHOUT  THE NECESSITY OF THE BORROWER RAISING THE ISSUE IN LITIGATION. The entire point of the TILA Rescission statute was to prevent “lenders’ from stonewalling the effect of the rescission. The rescission is immediately effective as a matter of law, when mailed.
  20. By ruling otherwise, this Court is following a rule of law explicitly rejected by the U.S. Supreme Court.
  21. This Court is following a rule of law that has been expressly repudiated by the highest and final court in the land. The effect of this Court’s ruling is to make the rescission NOT EFFECTIVE until it is raised in defense of a foreclosure and then only after the effectiveness of there rescission is litigated in a lawsuit. The U.S. Supreme Court says otherwise in a unanimous decision penned by the late Antonin Scalia.
  22. In the Jesinoski decision it was stated clearly and unequivocally that the rescission, whether disputed or not, IS effective upon mailing, without any further action on the part of the borrower. The burden of disputing (pleading and proving standing and a cause of action to vacate the rescission) falls solely and squarely on the parties who received the notice of rescission.
  23. The Jesinoski Court further explicitly stated that hundreds of trial and appellate courts across the land were wrong when they had previously ruled, as this court has just done, that the rescission was subject to litigation and that the “borrower” must bring a legal claim or lawsuit seeking to make the TILA Rescission effective..
  24. The Defendants assert that this Court’s apparent unfamiliarity with the Jesinoski decision, the TILA Rescission Statute and Regulation Z, combined with the Court’s understanding of common law rescission resulted in an erroneous ruling that was expressly and explicitly ruled out by the Supreme Court of the Untied States. This court may not read in the rules of common law rescission to a specific statutory scheme that is clear on its face.
  25. It is clear that the the Supreme Court of the United States has decided, as the Final Authority, that the TILA rescission statute is clear and unambiguous on its face, thus eliminating any right, authority or jurisdiction to read into or interpret the TILA Rescission statute. It is equally clear from the express wording of the Jesinoski decision that reading in common law rules of rescission is erroneous, as such “interpretation” was rejected by a unanimous Supreme Court as unlawful and wrong.
  26. There is no escaping the fact that the rescission is effective by operation of law.
  27. Accordingly, Defendants assert that this court has no room for interpretation or authority or jurisdiction to change or interpret the TILA rescission statute such that the borrower must raise rescission as a defense — a requirement that unlawfully denies the effectiveness of the rescission when mailed.
  28. Accordingly Defendants assert that this Court committed error by ruling that rescission was a defense requiring pleading and proof in order for the rescission to be effective as a matter of law. Defendants thus request this Court revisit the issue and correct its prior ruling.

Fla 4th DCA: The Starting Point is Standing — If You Don’t Have It, There is no Jurisdicition

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

This is not a legal opinion on any case. Consult with an attorney.

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see Rodriguez v. Wells Fargo

“The core element concerning to whom the note was payable on the date suit was filed was not proven.”

Bottom Line: You can’t file a lawsuit without standing. Judgment reversed with instructions to enter Judgment for the homeowner. And you can’t cure standing by getting it later. That would be like filing suit for a slip and fall in front of a super market, and once the suit was filed, you then go to the supermarket, get out of your car and proceed to slip and fall. And the second story is that the BURDEN OF PROOF is on the foreclosing party, not the homeowner.

Many courts are now leaning away from the legal fantasies being promoted by “servicers”, “trustees’ and other parties attempting to “foreclose” on debts that very often are (a) not owned by them (b) they have no authority to represent the owner of the debt (c) the alleged creditor is not showing a default on its books (d) on behalf of a Trust that (1) never operated (b) exists only on paper (c) with no bank account (d) no financial statements (no assets (e) no liabilities (f) no income (g) no expenses.

All this is becoming abundantly clear. The prior assumptions that allowed for some crossover between a holder and a holder in due course are giving way to another look, starting from the beginning. In this case there was no endorsement on the note at all. The Appellate court said that ended the inquiry. There was no lawsuit, it should have been dismissed and now judgment, entered by the Judge in West Palm beach is reversed with instructions to enter judgment for the Defendant homeowner.

In my opinion the courts are now being presented with the correct arguments and facts that leave them in a position where if they allowed these kinds of action they would be setting a precedent making it legal to steal.

And my question remains: IF THERE REALLY WAS A REAL TRANSACTION WHERE SOMEONE FUNDED THE LOAN AND SOMEONE ELSE BOUGHT THE NOTE THEN WHY DON’T THEY ALLEGE THAT THEY ARE HOLDERS IN DUE COURSE? If they alleged HDC status all they would need to prove is payment. No “borrower” defenses would apply. If they don’t have HDC status then on whose behalf is the foreclosure actually being filed, since the investors are getting paid anyway? I think the answer is that the servicer is converting a tenuous claim for volunteer payments on behalf of the borrower to investors who don’t know what loans they own; the real claim is that the servicer wants to “recover” servicer advances that it paid out of third party funds. These servicers are reaping windfalls every time they get a foreclosure sale.

This Court quotes approvingly from the UCC: “… the transferee cannot acquire the right of a holder in due course if the transferee engaged in fraud or illegality affecting the instrument.” And goes on to quote the statute “a person who is party to fraud or illegality affecting the instrument is not permitted to wash the instrument clean by passing into the hands of a holder in due course and then repurchasing it.” see § 673.2031

The court concludes that there is no negotiation of the note until an endorsement appears — which read in conjunction with the rest of the opinion means that the endorsement must be by someone who is either a holder in due course or a party representing a party who is a holder in due course. If no holder in due course exists, then there is no way to construe the instrument as a negotiable instrument and there is no way to construe the instrument as having been negotiated under the UCC. And THAT means they must prove every aspect of the transaction (starting with origination) without relying on the suspect instruments.

See also 4th DCA — Standing is “Foreclosure 101” Peoples v. SAMI II Trust

Assignee stands in the shoes of the assignor: It must prove the loan

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

This article ( and any other article on this blog) is no substitute for getting advice from an attorney licensed to practice in the jurisdiction in which the subject property or transaction is located.

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see http://www.lowndes-law.com/news-center/1797-two-layers-protection-lenders-need-know-about-floridas-holder-due

There is a difference between alleging you are the holder with rights to enforce and proving it. If the bank, trustee or servicer alleges that it has the right to enforce then they will survive a motion to dismiss. But if the borrower denies that allegation is true, the burden of proof falls on the party making the allegation — the bank, trustee, servicer etc. The mistake made by Judges and lawyers is that they don’t make the distinction between pleading and proof. As a result you get decisions that include multiple rulings that prevent the borrower from conducting adequate discovery and allow the party bringing the foreclosure action to skate by because “it has already been established” that they are a holder with rights to enforce. That being the case the courts further compromise the verdict and judgment by over-ruling objections from the borrower on grounds of relevance.

One of the key points I have been making for 8 years is that the party bringing the foreclosure essentially never says that it is a holder in due course. In fact, we have had cases where opposing counsel expressly denies that the Plaintiff is a holder in due course. That is particularly remarkable where the Plaintiff is, for example, Citimortgage, which maintains an ambiguous status, admitting that it is a servicer but not revealing the creditor or the basis on which they rely in alleging that they are the servicer.

The importance of holder vs holder in due course cannot be over-stated. And if the loan was alleged to have been transferred while the loan was already declared in default, there can’t be a holder or holder in due course because the UCC does not apply those terms to anything but a negotiable instrument which by definition must not be in default at the time of transfer. Otherwise it is not a negotiable instrument and the allegations and proof go the the issue of ownership of the debt.

It is interesting that the banks and servicers, etc. do not allege status as holder in due course. In many cases they have back-dated the assignment or endorsement to before the alleged default. Where the Plaintiff is a trust, all they would need to show is what is in the trust instrument (PSA): purchase in good faith without knowledge of borrower’s defenses. That would be the end of almost every case — the borrower is liable to a holder in due course and may bring claims only against the intermediaries or originator in damages. The foreclosure would be completed in record time and that would be the end of it, except for borrower’s claims for damages against parties other than the Plaintiff who proved they were a holder in due course — i.e., proof of purchase for valuable consideration without knowledge of the borrower’s defenses and in good faith.

The problem with court decisions over the last 10 years is that they treat the alleged “holder” as though they were a holder in due course without any allegation or proof that the foreclosing party purchased the loan, in good faith, without knowledge of borrower’s defenses. A holder is not better than the party before they were an alleged holder. And THAT party is no better than the party before and so on.The only exception to this is where the FDIC involved in certain types of take-overs.

Eventually you get to the origination of the loan. THAT loan contract must be proven by a holder in order to prevail in foreclosure. And as every first year law student knows there is no contract without offer, acceptance and consideration. If the originator did not fund the loan there is no contract and the closing violated Reg Z, which calls such transactions predatory per se (which in turn means that the foreclosing party presumptively has unclean hands and is not entitled to any equitable remedy much less foreclosure).

If an alleged holder did not actually purchase the loan, then they don’t own it. It really is that simple. If they don’t own it then they must allege and prove the basis of their allegation that they possess the right to enforce. That also requires a contract with offer, acceptance and consideration. The existence of assignment does not prove that such a transaction took place but it might be admitted in evidence as evidence that such a transaction took place. On the other hand it might not be admitted in evidence if there are defects relating the instrument to the proof of the matter asserted.

Even if admitted, the assignment is not dispositive. Upon cross examination, the witness will probably know nothing about any transaction in which ownership or the rights to enforce were transferred or conveyed. And it is at that point where Judges and lawyers commit error.  The assignment may then be struck from the record as lacking any foundation. This is not just a matter of hearsay. It is a question of how can the trier of fact rely upon an instrument (assignment) when there is nobody to testify that the transaction actually occurred? It is the same problem with the note executed at “closing.” How can the loan contract be completed if the payee on the note didn’t loan any money?

In the article cited above, the author makes the point easily:

As an assignee typically “stands in the shoes” of his assignor,7 without  the holder in due course doctrine and its federal counterpart, these allegations may defeat the purchaser’s action or make it much more difficult  and costly to pursue, especially given that the purchaser took no part in the these “bad acts,” and that the people who did take part (the  management and employees of the failed bank) may be difficult to reach and may have little incentive to cooperate with the purchaser. [e.s.]

most of these difficulties are eliminated by the powerful effect of the holder in due course doctrine as it can clear the way for the  purchaser to recover, even if there may have been prior “bad acts” of the failed bank, as the purchaser will acquire the loan free and clear of  most defenses—the so-called “personal defenses”— that the borrower could have asserted against the failed bank.8 The holder in due course  doctrine, when applicable, enables the purchaser to avoid liability for many of these “personal defenses” which may have been valid defenses to  an action brought by the failed bank, but do not impede the ability of a holder in due course to enforce the borrower’s obligation to repay the  loan.9 Generally speaking, these defenses are all defenses that would be available in a breach of contract action10 except for the “real defenses,” all of which involve either the original execution of the promissory note or its subsequent discharge in bankruptcy.11 These defenses  cannot be avoided, even by a holder in due course. Fortunately, any “bad acts” of the failed bank which may have occurred during the course of  the loan will hardly ever form the basis for a “real defense,” and thus can likely be avoided by a holder in due course.

THE RULE IN FLORIDA
In Florida, the holder in due course doctrine is now codified in statute,12 although it first began to develop in the English common-law as early  as the late 1600s and early 1700s and was codified in that country by the Bills of Exchange Act in 1882.13 The doctrine first became codified in  the United States in the early 1900s as states adopted the Uniform Negotiable Instruments Law, which was later supplanted by the Uniform  Commercial Code, which governs today.14

In order to be a holder in due course under current Florida law, a purchaser of a negotiable  instrument must generally satisfy three conditions. Specifically, the purchaser must have: (i) acquired an instrument that does not bear any  apparent evidence of forgery, alteration, or any other reason to call its authenticity into question;15 (ii) paid value for the instrument;16 and (iii)  acquired the instrument in good faith, without notice that it is overdue, dishonored, contains an unauthorized or altered signature, and without  notice of any claim to the instrument.17 If these three conditions are met, the purchaser will generally qualify as a holder in due course and  take the instrument free all “personal defenses” that the borrower could have asserted against the prior lender.

Confusion in The Courts: Pleading vs Proof

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

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A lot of the questions that come in to me relate to the issue of whether the ability to enforce a set of loan documents is a question of law or a question of fact. The answer, I think, is both.

The confusion seems to be on the issue of pleading vs proof. As a matter of law, the courts are largely correct as to their ruling on whether the Plaintiff in a judicial state is fine with alleging bare statements of ultimate facts upon which relief could be granted. But where the judges go astray, based upon improper legal reasoning advanced by the banks, is that they apply the same pleading requirements at trial or even summary judgment.

At trial they must prove the transactions upon which they rely. If the allegation from the owner or the denial and affirmative defenses of the homeowner raise an issue of fact as to the authenticity, validity or enforceability of the paperwork relied upon by the bank, then the bank must prove the underlying transaction. If the homeowner does not raise that issue of fact, then the court is correct in allowing virtually anything in as evidence and awarding the foreclosure to the bank.

But that said, to return to yesteryear, Judges are supposed to actually review the paperwork even in an uncontested situation to see if there are inconsistencies or even something that jumps out at them this is plainly wrong. for example, if the default letter says that for reinstatement, you must pay $6700 in monthly payments to bring the account current and your monthly payments are $3100, the letter is defective. How many months are they saying you are in default? It’s a simple matter of division. This also throws off the date of the alleged default, so there is no compliance with paragraph 22 provisions.

Similarly, if the foreclosing party is saying they have rights to enforce, that is enough to plead their case. But at trial they must tell the story of how they came into the right to enforce the paper. It is this latter part where the courts have erred and where the reversals from appellate courts are coming from. The presumptions at the pleading stage do not apply to the burden of proving facts.

I think the courts are coming around on this issue but it must be presented properly. A thief can sue on the note he stole even if he forged a blank or special endorsement. He will survive a motion to dismiss although law enforcement might be waiting in the back of the room to arrest him.

The presumption at the pleading stage is that possession implies being a holder. And being a holder implies being a holder with rights to enforce, and potentially one might even infer that the holder is a holder in due course. But at trial where the facts are contested, the thief must tell the story of his possession and rights to enforce. The fact that the actual payee or holder does not know the note was stolen does not or should not shift the burden of proof onto the homeowner to prove facts that are exclusively within the knowledge and care, custody and control of the thief.

The homeowner must merely deny that the thief is a holder with rights to enforce.

Pleading Wrongful Foreclosure

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

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see https://fightforeclosuredotnet.wordpress.com/2013/12/12/what-homeowners-must-know-about-pleading-their-wrongful-foreclosure-cases-in-the-courts/
The above link provides some very good guidance about pleading wrongful foreclosure although it appears to relate more to non-judicial states than judicial states. Remember that pleading fraud not only requires specificity but must be proved. The fact that the foreclosure filing was wrong is one thing but proving it was fraudulent rather than negligent or breach of contract is quite another.

If you are in active litigation then seeking sanctions might be either an alternative or something in addition to a separate lawsuit that arises when the case is decided in favor of the homeowner. As we have seen over the last few years, the grounds upon which these cases are decided in favor of the homeowner vary widely. Some decisions show that the acts of Deutsch or Chase or Wells Fargo or CitiMortgage et al were committed with full knowledge of what they were doing and that they were playing a shell game on the court and on the borrower. Those cases seem more conducive for fraud or spurious litigation or wrongful foreclosure. A decision based upon non-compliance with paragraph 22 — defects in the notice of default or right to reinstate or notice of acceleration might be the subject of abuse of process and might not. But without more in the proof or opinion from the Court the issue of fraud or intentional tort of some other kind seems more difficult.

Lack of standing means the homeowner wins but it does not mean necessarily that a case for fraud or wrongful foreclosure will be successful. The opposition will respond (affirmative defense) that the mistake in standing does not establish any entitlement to damages or any other action by the court because the right to foreclose still exists on behalf of some entity. But this defense is basically a crystal ball defense unless there is an established creditor who is legally pursuing collection on the loan.

Cases in which the bank blocked the sale or refinance of the property, or unilaterally tried to avoid a modification, or where the borrower was in fact current when actions by the bank forced the borrower into the illusion of default are the best cases, in my opinion, for a wrongful foreclosure.

In short, the law is murky on these issues because the whole truth about securitization “fail” has not been fully absorbed and processed by the judicial system. Right now most judges are making rulings based upon the assumption that securitization is irrelevant — a view that is inconsistent with the the alleged right of the beneficiary or mortgagee to initiate foreclosure and pursue collection. The rights to do so exist in the PSA which is often admitted into evidence. Thus the same court that accepts the PSA into evidence will often rule that the provisions that require servicer advances (hence, no default as per books of the Trust or Holders of Certificates) or PSA provisions that block any right to pursue foreclosure or collection by the Trustee or the Trust are not relevant. But the general rule is that once a document is admitted into evidence the parties can use it any way they want.

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