Mortgage foreclosure is the civil equivalent of the death penalty. in criminal cases. Many court decisions have enthusiastically supported that notion and attached much more stringent rules to the enforcement of a mortgage or deed of trust than they use in enforcement of a note. That is, until the last 20 years.

If you begin with the assumption that securitization is false, you start looking at the cover-up. Banks continue to win foreclosures because the truth is counterintuitive. Tactically the homeowner does not need to prove securitization fail in order to block a foreclosure. If that was the goal you would need to know and prove things that are in the exclusive possession, care, custody, and control of documents of third parties who are not even parties to the litigation nor mentioned in correspondence, notices or forms.

Successful defenders know that the securitization is faked and use that knowledge to ferret out relevant grounds to undermine and impeach testimony and documents proffered by lawyers for “stand-ins” called “naked nominees”, “lenders,” successors by merger, attorneys in fact, etc. wherein each such designation represents another layer of obfuscation.

Legal standing requires that the party who brings a foreclosure action must have legal injury resulting solely from nonpayment of the debt. The Federal Practice Manual published by and for Legal Aid describes and analyses gives good guidance that should be followed up with competent legal research of statutes and  cases in your state.

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.


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).



see Legal Aid Federal Practice Manual on STANDING

Published by the Sargent Shriver National Center on Poverty Rights

Here are some of the more salient quotes from the guide.

The law of standing has its roots in Article III’s case and controversy requirement.1 The U.S. Supreme Court has established a three-part test for standing. The “irreducible constitutional minimum of standing” requires the plaintiff to establish:

First … an “injury in fact”—an invasion of a legally protected interest which is (a) concrete and particularized, and (b) “actual or imminent,” not “conjectural” or “hypothetical.” Second, there must be a causal connection between the injury and the conduct complained of—the injury has to be “fairly … trace[able] to the challenged action of the defendant, and not … th[e] result [of] the independent action of some third party not before the court.” Third, it must be “likely,” as opposed to merely “speculative,” that the injury will be “redressed by a favorable decision.”2

So the ONLY party with standing to bring an action to foreclose on a mortgage is (a) the party who would suffer economic loss if the debt is paid (and the party entitled to payments on the debt) and (b) the party who would actually receive the proceeds of sale in a foreclosure action because they are holding a loan receivable reflecting ownership of the debt relating to the subject mortgage.

Both defense attorneys and judges have made the mistake of confusing standing to collect on a note, which does not necessarily require ownership of a debt, and standing to foreclose or otherwise enforce a mortgage which does require ownership of the debt. This is the law in every state under their adoption of the Uniform Commercial Code (UCC — Article 3 (NOTE) and Article 9 (MORTGAGE).

The cover for this erroneous conclusion is amply provided by the failure of homeowners to object resulting in default foreclosure sales. And further cover is provided by the fact that the delivery of the original note is presumed to be delivery of ownership of the debt. However, this is ONLY true if the execution of the note merged with the debt.

Merger ONLY occurs if the note and the debt are, in fact, the same, i.e., the Payee on the note is the same as the creditor who loaned the money. Banks have engaged in various illusions to cause courts to assume that merger occurred. But in fact, the substance of the loan transaction remains the same as what I wrote 10 years ago, to wit: (1) the sale of certificates naming an issuer without existence on behalf of the “underwriter”/”master servicer” of the nonexistent entity, (2) the underwriter taking the money and using it, in part, to fund loans through pre-purchase agreements (before anyone has even applied for loan) and through form warehouse loans that are in substance pre-purchase of loans.

Hence in all cases the money at the closing table came from the underwriter forwarding the funds to the closing agent. Since the money came from parties intending to be investors, the owner of the debt is (a) a group of investors (b) the underwriter or (c) both the group of investors and the underwriter, with the underwriter acting as agent. But the agency of the underwriter is at the very least problematic.

The underwriter may claim that the agency arises because of the Pooling and Servicing Agreement for the nonexistent “REMIC TRUST” to which the investors agreed. But the investors would be quick to point out (and have done so in hundreds of lawsuits) that the PSA and the “Trust” were sham conduits and fabricated documents to create the illusion that investor money would be entrusted to the named Trustee for administration within a trust, not a blanket power of attorney for the underwriter to use the money anyway they wished. It is the opposite of a power of attorney or agency because it arises by breach of the terms and conditions of the sale of the certificates.

While the standing test is easily stated, it can be difficult to apply. The Supreme Court has observed that “[g]eneralizations about standing to sue are largely worthless as such.”3

The Supreme Court also imposes “prudential” limitations on standing to ensure sufficient “concrete adverseness.”4 These include limitations on the right of a litigant to raise another person’s legal rights, a rule barring adjudication of generalized grievances more appropriately addressed legislatively, and the requirement that a plaintiff’s complaint must fall within the zone of interests protected by the statute at issue.5

The Supreme Court has made it clear that the burden of establishing standing rests on the plaintiff.6 At each stage of the litigation—from the initial pleading stage, through summary judgment, and trial—the plaintiff must carry that burden.7Standing must exist on the date the complaint is filed and throughout the litigation.8 Moreover, standing cannot be conferred by agreement and can be challenged at any time (e.s.) in the litigation, including on appeal, by the defendants or, in some circumstances, by the court sua sponte.9 Finally, plaintiffs must demonstrate standing for each claim and each request for relief.10  There is no “supplemental” standing: standing to assert one claim does not create standing to assert claims arising from the same nucleus of operative facts.11

The Supreme Court has held that, to satisfy the injury in fact requirement, a party seeking to invoke the jurisdiction of a federal court must show three things: (1) “an invasion of a legally protected interest,” (2) that is “concrete and particularized,” and (3) “actual or imminent, not conjectural or hypothetical.”12

In foreclosure cases, trial courts have nearly universally found that a party had standing because of legal presumptions without any proof of ownership of the debt. The good practitioner will drill down on this showing that the “presumption” is conjecture or hypothetical and that there is no harm in making the foreclosing party prove its status instead of relying on presumptions.

One last comment on both judicial and nonjudicial foreclosure. In typical civil cases if the defending party makes it clear that he/she is challenging standing, the party bringing the action must then prove it. In foreclosure cases judges typically adopt the position that the homeowner brought it up and must prove the non-existence of standing. This is the opposite of what is required under Article 3 of the US Constitution.

The party who “brought it up” is the foreclosing party. It manifestly wrong to shift the burden to the homeowner just because the foreclosing party asserts, or as in many cases, implies standing, In fact, in my opinion, nonjudicial foreclosure is constitutional but NOT in the way it is applied — by putting an impossible burden on the homeowner that makes it impossible for the homeowner to confront his/her accusers.

WHAT HAPPENS TO THE DEBT IF THE COURTS APPLY THE LAW? The debt still exists in the form of a liability at law and/or in a  court of equity. The creditor is a group of investors who have constructive or direct rights to the debt, and potentially the note and mortgage. The difference is that decisions on settlement and modification would be undertaken by the creditors — or designated people they currently trust. And that  means the creditors would be maximizing their financial return instead of minimizing it through intermediaries. But there is also the possibility that the investors have in fact been paid or have accepted payment in the form of settlements with the underwriters. Those settlements preserve the illusion of the status quo. In that case it might be that the underwriter is the actual creditor, if they can prove the payment.


Here is an analogy that might help this counterintuitive process.

Assume I own a car. I enter into an agreement with my friend Jane to sell the car to her. I sign the title and give it to her. Afterwards we both decide we didn’t want to do that. Jane pays nothing for the car. Jane does not get the car. Jane never uses the car. I still have and use the car and both Jane and I disregard the fact that I gave her a signed title. She does nothing with the title. Later in a loan application she lists the car as an asset. Then the car is stolen from me.

Who gets the insurance proceeds? The question is whether the title represents an actual agreement to buy the car. And all courts that would boil down to whether or not Jane paid me. She didn’t. I get the insurance proceeds because I lawfully applied for a duplicate title and received it.

But Jane still has one copy of the title signed by me in original form. She has also made copies of it that can be printed out with the appearance of an original. So far, she has sold the car 42 times and taken out 7 loans on the car.

One of the people that received the title records it with the DMV. There is a problem with that. I still have title and possession of the car. The gullible person who “bought” the car has a title signed by Jane, who has produced evidence that she received title from me. One Jane’s lenders on car stops receiving payments from Jane’s Ponzi scheme.

They “repo” the car and we go to court. The lender to Jane has no legal title even though they have what looks like an original title that is facially valid. Do I get my car back or does the lender” get to keep it.

One step further: if jane’s lender was actually a co-conspirator who accepted the false title and never gave a loan, does that change anything? I ask because this is exactly what is happening in nearly all foreclosures. The named “successor” in title engaged in no transaction to acquire the debt.

Transfer of the note was without regard to transferring the debt because neither the grantor nor grantee owned the debt. If the truth comes out, the transfer of the note will be seen as a sham paper transfer and the debt will be owned by whoever has money in the loan deal. Hence transfer of the note is not transfer of the debt. By denying the transfer of the note, the burden of proof should be on the would-be foreclosing party to show it was part of a real transaction.

Powers of Attorney — New Documents Magically Appear

For more information on foreclosure offense, expert witness consultations and foreclosure defense please call 954-495-9867 or 520-405-1688. We offer litigation support in all 50 states to attorneys. We refer new clients without a referral fee or co-counsel fee unless we are retained for litigation support. Bankruptcy lawyers take note: Don’t be too quick admit the loan exists nor that a default occurred and especially don’t admit the loan is secured. FREE INFORMATION, ARTICLES AND FORMS CAN BE FOUND ON LEFT SIDE OF THE BLOG. Consultations available by appointment in person, by Skype and by phone.


BONY/Mellon is among those who are attempting to use a Power of Attorney (POA) that they say proves their ownership of the note and mortgage. In No way does it prove ownership. But it almost forces the reader to assume ownership. But it is not entitled to a presumption of any kind. This is a document prepared for use in litigation and in no way is part of normal business records. They should be required to prove every word and every exhibit. The ONLY thing that would prove ownership is proof of payment. If they owned it they would be claiming HDC status. Not only doesn’t it PROVE ownership, it doesn’t even recite or warrant ownership, indemnification etc. It is a crazy document in substance but facially appealing even though it doesn’t really say anything.

The entire POA is hearsay, lacks foundation, and is irrelevant without the proper foundation be laid by the proponent of the document. I do not think it can be introduced as a business records exception since such documents are not normally created in the ordinary course of business especially with such wide sweeping powers that make no sense — unless you recognize that they are dealing with worthless paper that they are trying desperately to make valuable.

They should have given you a copy of the settlement agreement referred to in the POA and they should have identified the original PSA that is referred to in the settlement agreement. Those are the foundation documents because the POA says that the terms used are defined in the PSA, Settlement agreement or both. I want all documents that are incorporated by reference in the POA.

If you have asked whether the Trust ever paid for your loan, I would like to see their answer.

If CWALT, Inc. or CWABS, Inc., or CWMBS, Inc is anywhere in your chain of title or anywhere else mentioned in any alleged origination or transfer of your loan, I assume you asked for those and I would like to see them too.

The PSA requires that the Trust pay for and receive the loan documents by way of the depositor and custodian. The Trustee never takes possession of the loan documents. But more than that it is important to distinguish between the loan documents and the debt. If there is no debt between you and the originator (which means that the originator named on the note and mortgage never advanced you any money for the loan) then note, which is only evidence of the debt and allegedly containing the terms of repayment is only evidence of the debt — which we know does not exist if they never answered your requests for proof of payment, wire transfer or canceled check.

If you have been reading my posts the last couple of weeks you will see what I am talking about.

The POA does not warrant or even recite that YOUR loan or anything resembling control or ownership of YOUR LOAN is or was ever owned by BONY/Mellon or the alleged trust. It is a classic case of misdirection. By executing a long and very important-looking document they want the judge to presume that the recitations are true and that the unrecited assumptions are also true. None of that is correct. The reference to the PSA only shows intent to acquire loans but has no reference or exhibit identifying your loan. And even if there was such a reference or exhibit it would be fabricated and false — there being obvious evidence that they did not pay for it or any other loan.

The evidence that they did not pay consists of a lot of things but once piece of logic is irrefutable — if they were a holder in due course you would be left with no defenses. If they are not a holder in due course then they had no right to collect money from you and you might sue to get your payments back with interest, attorney fees and possibly punitive damages unless they turned over all your money to the real creditors — but that would require them to identify your real creditors (the investors who thought they were buying mortgage bonds but whose money was never given to the Trust but was instead used privately by the securities broker that did the underwriting on the bond offering).

And the main logical point for an assumption is that if they were a holder in due course they would have said so and you would be fighting with an empty gun except for predatory and improper lending practices at the loan closing which cannot be brought against the Trust and must be directed at the mortgage broker and “originator.” They have not alleged they are a holder in course.

The elements of holder in dude course are purchase for value, delivery of the loan documents, in good faith without knowledge of the borrower’s defenses. If they had paid for the loan documents they would have been more than happy to show that they did and then claim holder in due course status. The fact that the documents were not delivered in the manner set forth in the PSA — tot he depositor and custodian — is important but not likely to swing the Judge your way. If they paid they are a holder in due course.

The trust could not possibly be attacked successfully as lacking good faith or knowing the borrower’s defenses, so two out of four elements of HDC they already have. Their claim of delivery might be dubious but is not likely to convince a judge to nullify the mortgage or prevent its enforcement. Delivery will be presumed if they show up with what appears to be the original note and mortgage. So that means 3 out of the four elements of HDC status are satisfied by the Trust. The only remaining question is whether they ever entered into a transaction in which they originated or acquired any loans and whether yours was one of them.

Since they have not alleged HDC status, they are admitting they never paid for it. That means the Trust is admitting there was no payment, which means they were not entitled to delivery or ownership of the note, mortgage, or debt.


So if they did not allege they are an HDC then they are admitting they don’t own the loan papers and admitting they don’t own the loan. Since the business of the trust was to pay for origination of loans and acquisition of loans there is only one reason they wouldn’t have paid for the loan — to wit: the trust didn’t have the money. There is only one reason the trust would not have the money — they didn’t get the proceeds of the sale of the bonds. If the trust did not get the proceeds of sale of the bonds, then the trust was completely ignored in actual conduct regardless of what the documents say. Which means that the documents are not relevant to the power or authority of the servicer, master servicer, trust, or even the investors as TRUST BENEFICIARIES.

It means that the investors’ money was used directly for fees of multiple people who were not disclosed in your loan closing, and some portion of which was used to fund your loan. THAT MEANS the investors have no claim as trust beneficiaries. Their only claim is as owner of the debt, not the loan documents which were made out in favor of people other than the investors. And that means that there is no basis to claim any power, authority or rights claimed through “Securitization” (dubbed “securitization fail” by Adam Levitin).

This in turn means that the investors are owners of the debt but lack any documentation with which to enforce the debt. That doesn’t mean they can’t enforce the debt, but it does mean they can’t use the loan documents. Once they prove or you admit that you did get the loan and that the money came from them, they are entitled to a money judgment on the debt — but there is no right to foreclose because the deed of trust, like a mortgage, is made out to another party and the investors were never included in the chain of title because the intermediaries were  making money keeping it from the investors. More importantly the “other party” had no risk, made no money advance and was otherwise simply providing an illegal service to disguise a table funded loan that is “predatory per se” as per REG Z.

And THAT is why the originator received no money from successors in most cases — they didn’t ask for any money because the loan had cost them nothing and they received a fee for their services.


Amongst the cases I review and manage, the question was raised by one of the homeowners as to why I insisted on holding both the originator and subsequent intermediaries in the alleged securitization chain and/or table-funded loan where both the party alleging having (1) the capacity to sue see SEC Corroborates Livinglies Position on Third Party Payment While Texas BKR Judge Disallows Assignments After Cut-Off Date, (2) the standing to sue and/or the authority to initiate foreclosures and (3) financial injury where they allege sale or assignment of the note. The reason is simple from a tactical and legal point of view. I wish to close out their options to keep moving the goal posts.

Here is the answer I wrote to the customer, whose property is located in a judicial state. This particular person is being pro-active — always a wise choice — in that he has been making his payments, was told to to stop making payments if he wanted a modification which he did initially and then changed his mind and reinstated, and remains convinced he was the victim of various forms of fraud and crimes including false Appraisals of the supposedly fair market value of the property at the time of the loan closing or the alleged loan closing. His goal is not a free house. His goal is to pursue any rights you might have for modification or settlement of his claims with respect to the illusion of a loan closing and the office of a closing agent. As any reader of this blog knows, it is my opinion that any such loan closing was in fact an illusion and that all the parties participating in that illusion were paid actors pretending to be something they were not —  less creating plausible deniability for any of the improper actions of the intermediaries at the “loan closing.”

There is a reason why I insist on continuing the joinder of those two defendants. Embrace wants to be dismissed out with prejudice because it says that sold the loan to Wells. I want to say that they didn’t sell the loan to Wells.  If I prevail on that point then Wells Fargo is out as a plaintiff in any foreclosure they might file, and potentially out as a servicer since they might not be able to show any authority.  If that is the case then they owe you an accounting for all of the money they collected from you and a statement of what they did with the money that they collected from you. You might well have a cause of action against Wells Fargo for taking money under false pretenses.

 If I don’t Prevail on that point and somehow they are able to show that Wells Fargo paid for the loan and owns the loan by virtue of that payment, then Embrace is still a proper party in the action because they are the owner of record of a mortgage based on a note that was never funded by Embrace.  The issue here is whether or not the mortgage was transferred with the debt and that issue is tied closely with the issue of securitization, which both of them deny. I believe that I will be able to show that the loan is subject to claims of securitization on behalf of a loan pool that may never have existed or which might not exist now.  and if I am able to show that the loan pool was never funded and therefore could never have paid for the loan then the apparent authority of both defendants is eviscerated.

  Either way, I don’t want to let either of them out of the litigation quite yet.  If we prevail on the question of whether or not there was an actual sale and the sale was authorized (see my blog article from yesterday) then Embrace is the only party left on record in the recording office. At that point I would drill down on them to see whether or not they can show that they fulfill their part of the bargain with you, to wit: that you sign a note and they give you adequate disclosure under the law and they fund a loan to you. It is my position that they did not give adequate disclosure and that they did not fund a loan to you even if the loan was not securitized. The best they can say is that this was a table funded loan which is according to Reg Z of the Federal Reserve a predatory loan  per se if it was part of a pattern of conduct.

 Given the statistics and information we have about both defendants it is my opinion that the chances are 96% that the loan was allegedly sold into the secondary market where it is the subject of a potential claim from an asset pool. The problem I wish to reveal here is that the entire chain of ownership collapses on itself. The other problem that I want to addressed is who actually received the money that you pay every month and what did they do with it (who did they pay).  the strategy here is to show that regardless of whether or not a claim of securitization exists, there were co-obligors (Wells Fargo),  insurance payments and proceeds of credit default swaps and multiple resales all of which should be applied against the amount owed to the real creditor, whoever that might be, thus reducing the loan receivable.

 If I can tie the loan receivable to one which derives its value from the alleged loan made to you, even if the originator paid for it, then there is a strong argument for agency and allocation of receipts under which the payment of monthly payments and the receipt of insurance proceeds and the proceeds from other obligors (including but not limited to counterparties on credit default swaps) were received and kept, like in the Credit Suisse case. 

From that point forward it is a simple accounting task to allocate third-party receipts of insurance and hedge money to the benefit of the investors whether they received it or not. The auditing standards under the rules of the financial accounting standards Board would require a further analysis and allocation of the money received —  specifically the reduction of the loan receivable or bond receivable held by the investors (directly if the REMIC trust was ignored or indirectly if the agents for the trust purchased insurance and hedge products, the proceeds of which should have been credited to the investors.

 If the investors are the real creditors than the amount that they are entitled to have repaid to them does not exceed the amount they advanced. It practically goes without saying that if the money advanced from investors was based on their reasonable belief that they were acquiring title to the loans funded by the money advanced by the investors, they should recover part or all of their investment to the extent that the other players (see the SEC order against Credit Suisse) paid for insurance and hedge products using the money of the investors and kept the proceeds for themselves —-  thus explaining rising reports of profits in the banks who are supposedly merely intermediaries in the conduct of commerce which was in sharp decline.

 In the end, under a series of unjust enrichment and other common-law actions, as well as the requirements of statute and the terms of the promissory note executed by the borrower, all money received in that manner should reduce the principal balance due from the borrower because the creditor has already been paid either directly or indirectly through its agents who were either authorized or possessed of apparent authority.

In fact , the great likelihood is that the banks received substantial overpayments amounting to multiples of the original principal amount of the loan.  According to both law and the terms of the proposed agreement between the borrower and the apparent lender, subject to the terms of the documents themselves as well as state and federal law, the borrower is entitled to recover all such undisclosed payments and receipts which are defined under the truth in lending act as “compensation.”

 Thus while the creditors not entitled to any more recovery than the amount advanced under an alleged loan, the borrower is entitled to full recovery of all money paid in connection with or related to the loan received by the borrower, regardless of the original source of the loan and any agreements between the intermediaries in the alleged securitization chain that do not have the signature of the borrower on them. The reason is public policy. While securitization was not considered in the original passage of laws  it was the overreaching by banks to the disadvantage of consumers and borrowers that was sought to be discouraged by penalties that would be so great as to prevent the practice altogether.

 Usually it is money that is taken under false pretenses and the illusion of securitization claims is no exception. But in the case of the borrower it is the signature of the borrower that was obtained under the false pretenses that  the party obtaining the borrower’s signature. The consideration was the money advanced by an unrelated party tot he transaction (investor) who thought their money was first going through a REMIC trust that would give them certain tax advantages.



 Garfield, Gwaltney, Kelley & White

4832 Kerry Forest Parkway, Suite B

Tallahassee, Florida 32309

(850) 765-1236

Estoppel: When the Bank Tells You to Stop Making Payments

IMPORTANT PRACTICE NOTE: The use of the doctrine of estoppel on the facts presented in this article is only a temporary solution. If a representative of the bank told you to stop paying and then declared you in default and foreclose  it is unfair and that is exactly why we have the doctrine of estoppel. However, on these facts, the doctrine can only be applied for as long as the issue of modification or settlement is on the table. Whether it can be bootstrapped into an action for slander of title or breach of contract is an issue that will be decided by the courts.

My opinion is that on these facts the doctrine of estoppel will not serve as the foundation for an action for slander of title or breach of contract.

However, my opinion is that a lawsuit for intentional interference in the contractual rights of another could be brought if an intermediary between you and the servicer or between you and the creditor instructed you to stop making payments if you wish to seek a modification or settlement. 

If you are making that allegation you obviously want to say that the party who made that representation fraudulently induced you to believe that they have the authority to do it, but in fact lacked that authority inasmuch as  the sub servicer is almost certainly going to deny that they had the authority to make such representations.  In discovery the truth will come out —  the representative had been instructed to make those representations to homeowners by a sub servicer who lacked actual authority to make collections or decisions concerning the disposition of the loan because the entire paper trail of the securitization chain was false. This will enable you to sue both the representative and the sub servicer who gave the instruction. (Make sure you seek the advice of an attorney who is licensed in the jurisdiction in which a property is located and is familiar with these issues and does research to corroborate and fortify the arguments).

If you then received a declaration of default, notice of sale or a foreclosure lawsuit it could be argued that the intermediary was not a party with whom the homeowner was in privity. This argument would be fortified by a denial from the sub servicer that the intermediary had any authority make that statement.

If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-765-1236. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.


The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

EDITOR’S ANALYSIS AND COMMENT:  Judges seem to find it hard to believe that a creditor would tell the borrower to stop making payments. It sounds ridiculous. But the fact remains that the majority of the homeowners who have been declared in default were told exactly that by a representative with apparent authority to speak for the sub servicer and apparent authority to speak for the creditor.

I would suggest that anyone reading this article who has received that instruction from a person, party or institution draft an affidavit that is notarized that can be used by other parties to show the judge that this is a pattern of conduct that permeates the entire foreclosure industry. You can send those affidavits to me at  and without charge we will make those available to any lawyer or pro se litigant in need of those affidavits.  And by the way, let your lawyer draft the affidavit and retain an original copy which means you should be signing two of them each of which is notarized separately.

Those affidavits should include any information regarding subsequent correspondence, telephone calls or instructions from the same or different representative of the alleged sub servicer or creditor. And it should include any events in which the  sub servicer claim to have lost your submission of documents that were requested. As a practice hand, it is my opinion that no such submission should be made without a specific offer from the homeowner certified by a real estate professional.

This can subsequently be used as corroboration of the allegation that sub servicer neither considered the modification request or the modification proposal.  In addition it will fortify the allegation that the creditor was never informed of the offer and that therefore the sub servicer or representative is in violation of the laws of the nation and potentially of the state in which the property is located.

The Wall Street banks have created the illusion that they don’t want to foreclose but they have no other choice. In fact they have engaged in a pattern of conduct that made foreclosure an inevitable conclusion. Most people believe that the banks don’t want the property and therefore they would not foreclose if there was a real opportunity to settle or modified below with the assistance of the federal government under HAMP and HARP. Of course when you are dealing with Wall Street strategies the situation is  always more complex than the simplistic arguments used by attorneys seeking foreclosure or defending claims from borrowers.

It is hard to argue that the banks don’t want property when they have walked away from hundreds of thousands of homes that were emptied as a result of the wrongful foreclosure and eviction of the homeowner. In places like Cleveland and Detroit tens of thousands of homes were literally bulldozed because entire neighborhoods lost all of their residents and the homes became headquarters for drug deals and other illicit activities.

The simple truth is that the banks are not nearly as interested in the property as they are in the foreclosure. It is the foreclosure sale that creates the illusion of a stamp of approval from the state government that the entire securitization scheme was valid and it creates the reality of a presumption of the validity of the deed issued at the so-called auction of the property upon submission of  false credit bid from a non-creditor who is a stranger (not in privity) to the transaction alleged.

Their motivation is also quite simple, to wit: they have already received insurance proceeds and the proceeds of credit default swaps far in excess of the principal supposedly due on the note. If the loan were converted from “nonperforming” to “performing” it is highly likely that the Wall Street banks and their affiliates would be responsible for refunding the insurance money and proceeds of credit default swaps, all of which frequently amounted to multiples as high as 42 times the amount of the note.

The Dodd-Frank Law  makes it illegal for any servicer or representative of a creditor to engage in the consideration of a modification or settlement regarding the loan and at the same time pursue foreclosure. But even without that law, the doctrine of promissory estoppel accomplishes the same result.

I would point out that the reason that provision was made part of the Dodd-Frank  law was that there was no dispute as to the fact that servicers were encouraging people to stop making payments if they wanted to see an approval on a modification of their loan, a short sale of the property, or any type of settlement whatsoever.

The doctrine of promissory estoppel can be used both offensively in the nonjudicial states and defensively in the judicial states. It is important for a lawyer who is licensed in the jurisdiction in which the property is located to do the research on the statutes and case law dealing with promissory estoppel. The state and federal system do have differences.

In general, the elements of promissory estoppel consists of a promise or representation from one party that leads another party to reasonably rely on that promise or representation and act to their own detriment.  Generally it is not important that the benefits of the statement or action by the first party result in a benefit to that party. It is generally understood that the detriment to the homeowner as a result of the promise or representation may be all that is required in order to establish promissory estoppel, which of course must be properly alleged in a lawsuit or affirmative defenses depending upon whether the case is in a nonjudicial jurisdiction or a judicial jurisdiction.

There is no legal or business reason to tell a homeowner to stop paying if they want their loan modified, or if they want their property approved for short sale, or they want to settle with the creditor or creditors, the identity of which is closely guarded by the Wall Street banks and all of the parties in the securitization chain that turns out to be more of a paper chain of sham transactions than anything else.

The reason why homeowners are being told to stop making payments and why they are given trial modifications that are subsequently denied status as permanent modification is that the goal is foreclosure in order to keep the illicit proceeds of insurance and credit default swaps. As soon as the homeowners are told to stop making payments, and subsequent payments are often returned, the securitization parties are slowly edging the borrower into a position where it is impossible for them to make up the payments and therefore inevitable that the foreclosure will proceed. And the reason why becomes impossible for them to make up the payments is that they are told  that the back payments at worst will be added to the end of the loan. They are told this to make sure that the borrower spends the money and no longer has the money to bring the loan current.  It is a perfect storm for the Wall Street banks.

If the borrower is taken the trouble to send a qualified written request or a debt validation letter and will fortify the claim because the sub servicer or other representative will have failed to  provide proof of payment or funding for the acquisition or the origination of the loan and will have failed to provide proof of authority to represent the creditor and further failed to identify the creditor so that the authority to represent could be confirmed.

Sitting on the desk of the governor of the state of Florida is a crazy bill that would make it impossible for most homeowners to defend wrongful foreclosures. If he signs the bill into law the banks will be cheering, but not for long. Using the doctrine of estoppel the foreclosure will be stopped dead in most cases assuming the homeowner was in fact instructed to  cease making  payments and was promised that if they follow the rules their request for modification would be considered —  which is something which is required under existing federal law dating back to the time of TARP.

If the homeowner takes the position in litigation that all payments that were due were in fact paid, and that in fact the homeowner believes he has overpaid, a question of fact emerges that probably cannot be handled in the summary proceedings under what might be the new Florida law and similar laws passed in other jurisdictions.  If the homeowner also takes the position that he is neither in privity with nor does he owe any money to either the party bringing the foreclosure proceedings, this raises additional questions of fact that must be dealt with under the rules of evidence in a properly noticed hearing.

PRACTICE NOTE: Procedurally I have come to the opinion that in order to take control of the narrative away from parties who are essentially strangers to the transaction, lawyers should issue subpoenas rather than notices under the Rules of Civil Procedure. Those subpoenas should go out immediately upon receipt of any notice of foreclosure or any lawsuit seeking foreclosure. The subpoenas should ask for a competent witness to testify at deposition and require the witness produce proof of payment or consideration in the acquisition or origination of the loan. The subpoena should specify the type of information you are seeking, to wit: a canceled check, wire transfer receipt, and ACH confirmation, or check 21 confirmation. The failure of the opposing party to respond even if they file timely objections are motions to quash will raise issues as to the amount of any payment alleged to have been missed in the amount of any principal alleged to be unpaid. If I am right, the Florida law may well turn out to be a landmine for the banks from which they cannot recover.

Don’t Take Advice from Banks! It’s All Scripted to Get You in Foreclosure and then Default

INVESTMENT OPPORTUNITY: Why Do Banks Walk Away When Proof is Required?






If you are seeking legal representation or other services call our South Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. In Northern Florida and the Panhandle call 850-296-1960. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.


The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.


Editor’s Analysis: If you loaned money to someone and you lost the note or correspondence reflecting the terms of the loan would you forget about getting the loan repaid? Of course not. You would sue anyway and proves that you either directly loaned the money to them or that you paid real money to acquire the debt. You would get a judgment and you would record that judgment in the county records as a lien against any real property in the name of the borrower.

In the states that have passed laws and regulations regarding the collection of debt and the foreclosure of mortgages requiring the party seeking to collect on the debt or foreclose on a mortgage to show that they in fact own the debt and requiring the attorney to verify the debt, note, mortgage, and default, foreclosure activity and collection activity has dropped like a stone. This corroborates the basic premise of this blog.  Despite all efforts to create the appearance to the contrary, there is no debt, note, mortgage or default —  at least in terms of seeking collection and foreclosure.

The apparent presence of money arriving at the loan closing is a red herring that has thrown off the borrowers, their attorneys, and the courts. But the money never came from anyone with whom the borrower was led to believe to be the source of funding of the loan. Therein lies the problem for the Wall Street banks. If you follow the money trail it simply does not and cannot match up with the paper trail. That is why we have consistently told attorneys to hit hard and hit fast with subpoenas directed at producing competent witnesses and real proof that the loan was funded or acquired by anyone in what we now know is a false securitization chain.

As a trial lawyer with decades of experience I can tell you with great assurance that most cases are decided on the basis of who controls the narrative. It is through that lens that all of the so-called facts are perceived by the court. If you failed to object or moved to dismiss pleadings that omit any allegations or attachments showing financial injury to the party initiating collection or foreclosure proceedings, then you are allowing the narrative to slip away from you. The pretender lenders will fill the void you have created with proffers of facts and conclusions that are unsupported by anything in the record.

Analyzing the foreclosure activity on a national basis clearly shows that those states which require the actual proof and verification by the attorney have eliminated the logjam in the courts because there are no claims. There is only one satisfactory explanation for this phenomenon. If the claimants had anything resembling a canceled check, a wire transfer receipt, an ACH confirmation, or a check 21 confirmation, the change in the laws and regulations of those states requiring proof of payment and proof of loss (which are the elements of proof of ownership) would have produced no result in terms of the number of foreclosures filed or the number of servicers claiming to have the authority to collect monthly payments.

Therefore the only logical conclusion is that they do not have anything resembling proof of payment, proof of loss or proof of ownership. This leaves them in the naked possession of attempting to collect or foreclose on a nonexistent or unenforceable debt, note, mortgage or default.  it looks like criminal fraud and civil fraud to me.

 As for collection, the servicers are clearly relying upon the paper trail in the so-called securitization chain.  If the debt cannot be established through proof of payment and proof of risk of loss than the paper trail in the securitization chain is  a sham.  If the debt is not established there is no payment due.  if the debt is not established and there is no payment due, the claim of status as a sub servicer or Master servicer is without merit.  For these reasons  it is incumbent upon the attorney for the borrower to submit a challenge either in court or in accordance with federal law governing collections,  mortgages and foreclosures.


This is why I have suggested the business plan wherein investors produce hard money offering same to the court registry in bankruptcy or civil litigation. The investor(s) would offer to refinance the entire mortgage balance if the claimant can prove title to the loan — which means that the claimant, starting with origination of the loan would be required to show proof of payment all the way through the assignment or “securitization chain” in order to determine which party should be paid off and which party therefore could execute a release or satisfaction of the loan and mortgage. It’s no bluff on the part of the investor or the homeowner who jointly present the offer to pay off the debt in full. It is calling the bluff of the pretender lender.

If the claimant is able to do so, then they get every penny demanded. If they are not able to produce such elemental proof, the case is still over because they have admitted lack of standing, lack of subject matter jurisdiction, and lack of a qualified party to submit a credit bid at auction. In that case, the homeowner’s agreement with the investor is to execute a note and mortgage in an amount not exceeding 50% of fair market value of the real property at a fixed rate with 30 year amortization.

The return on investment is nearly infinite. GTC|Honors, a trade name of General Transfer Corporation owning this blog, will provide the legal work and packaging of the loans for resale into the secondary market. Since no more than $3 million is required to start this project space is limited to only qualified investors. This is not a formal offering but merely a solicitation of those who may want to receive a prospectus which they can review and decide whether or not to invest. The name of the Hedge Fund will be revealed only to those who request the prospectus and those who demonstrate in advance that they are qualified investors. Management will be by and through GTC|Honors (“Workouts with Honor”) which will receive a fee of 20% of the net profits after payment of all legal, accounting and other professional fees, costs and expenses. By way of full disclosure, the law firm of Garfield Gwaltney, Kelley and White will be getting part of the legal fees.

Proceeds of investment will be used strictly for formation and operation of the Hedge fund, and shall not be used for any salaries paid to management directly or indirectly. Management includes Neil F Garfield, and such other persons designated by him to share in management responsibilities. Do not send money without first receiving the prospectus and consulting with an attorney, accountant or other professional trusted adviser.

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14 American Housing Markets Struggling With Foreclosures

The Truth: Was the Loan Sold or Not?


If you are seeking legal representation or other services call our Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.
The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Editor’s Analysis: Suppose you wanted to foreclose on property for which you never made a loan. Suppose you don’t have a lien and never did. Suppose you wanted to do this on a grand scale. How could you get away with it?

If you start with the premise in the preceding paragraph then the entire foreclosure and mortgage mess comes into focus and makes a lot of sense. Conversely if you start with the premise that all mortgage claims are presumptively valid then nothing makes sense and when you try to fix it you get nowhere. That’s what the Florida legislature is attempting to do with Senate Bill 1666 (appropriately numbered).

If you start with the premise that the mortgage claims are valid then it is quite logical and appropriate to conclude that the attempts by borrowers to escape inevitable consequences of their own bad judgment are clogging the court system and that borrowers are essentially abusing their due process rights costing each state billions of dollars in one form or another. But you have to ask yourself why there has been a sudden meteoric rise in the percentage of cases in which the borrower vigorously defends and brings claims against the supposedly valid holder of the note. What if all your assumptions and presumptions are not valid?

This is the essence of the issue confronting the courts, borrowers and their attorneys. And in a display of extreme irony the Wall Street banks even have the borrowers and their attorneys convinced that the loan was closed and the loan was sold. “The Loan”  refers to the transaction that is memorialized in the loan documents. “The sale” refers to the transaction in which  the loan was sold by the owner of the loan to a buyer of the loan.

There are two key questions:

  1. The first (origination) fact pattern is usually the same.  A borrower applies to an entity that advertises itself as a lender and that “lender” agrees to loan the money to the borrower.  A closing agent contacts the borrower  with information concerning the closing of the loan.  The borrower goes to the closing,  the money appears, and the borrower signs a myriad of documents.  Here’s the question:  what if the  “lender” did not loan the money and either played the part of an undisclosed nominee, and unlicensed mortgage broker or licensed mortgage broker, and never had a valid legal claim to collect on the note or enforce the mortgage?
  2.  The second (assignment) fact pattern is also usually the same. In cases where there is litigation documents magically appear showing the assignment or endorsement of the loan using a claim of authority or the production of an apparent power of attorney. The assignment or endorsement frequently occurs more than once. There are actually two questions here: (A) assuming the facts in paragraph 1 above are true what difference does it make if there were one or 100 assignments? If there is no valid or perfected lien and the assignor never had a claim to collect on the “loan,” the assignment may give the appearance of propriety but it conveys nothing; (B) If the assignee never paid for the sale of the note how could the assignment transaction be considered complete?  The Uniform Commercial Code governing the creation and sale of negotiable instruments indicates that each transaction must be for value received or consideration.  Is the so-called assignment merely an offer lacking acceptance and payment?

 You can have 100 or 1000 pages of documentation, but without a completed underlying transaction nothing in the documentation will have any legal effect on anyone despite the apparent “weight of the evidence.”

 The point is actually very simple. Don’t get lost in the weeds of the documentation. The first question to be asked at the threshold is whether or not a transaction actually occurred containing the legal elements required for a completed transaction. If there is no consideration there is no transaction. If there is no transaction then there are no rights to enforce by or against anyone.

 The arguments about the holder of the note are frankly silly. In the absence of consideration the party holding the note is merely possessing the note without any rights of collection or enforcement. If it were otherwise then  any Courier, attorney or closing agent would be able to collect on the note and even foreclose on the mortgage leaving the lender out in the cold.

 Whether or not a party is a holder or holder in due course  is a question of law which raises presumptions if the proper foundation is established in order to conclude that a party is a holder or holder in due course. These are all legal conclusions and not factual issues.  In order to establish the legal conclusion of holder or holder in due course the proponent of that legal conclusion must have a prima facie case showing a legal transaction in which ownership of the loan was transferred. Imagine if it were otherwise: accepting the circular logic of the banks, if six people were sitting around a table with a note in the middle the one with the fastest hands would be able to collect on a note and foreclose the mortgage. This is not the law.

 As a tactical note, the practitioner should be relentless in the pursuit of the actual proof of payment (at origination or purported sale of the loan) without which there can be no proof of loss. If there is no proof of loss than there is no creditor. If there is no creditor there can be no credit bid at the time of auction of the property. And since that has occurred on a regular basis in all 50 states it would be fair to say that the sale of the property in foreclosure was never completed and that the homeowners still owns the home —  or is entitled to compensatory damages equal to the value of the home because of breach of contract,  slander of title, fraud etc.  I believe that the claim that is easier to pursue is the one for compensatory and punitive damages plus attorneys fees and costs of the action.

 In discovery what you are looking for is the actual wire transfer receipt, wire transfer instructions, ACH confirmation, cancelled check or Check 21 confirmation,  showing the name of the party who paid and the name of the party who received the payment.  Whether you are in small claims court or federal court the requirement is always the same. Any party seeking affirmative relief from the court must show that they were injured or damaged by the party whom they have sued. If they can’t show the payment and an unbroken chain of payments leading up and including the supposed assignment, then they have no claim because the court lacks jurisdiction and the party lacks standing to enforce or even consider a claim in which there is no injury.

 So the answer to the question posed in the title of this article is no, the loan was never sold. We know that because the investors deposited money with the investment bank and it was the investors’ money that funded the loan. Contrary to popular misconception the money from the investors was never used to fund any pool of assets or trust. It was used directly to fund loans and the various fees to undisclosed third parties contrary to the requirements of the truth in lending act. The investment by the investors into each loan was the only time  money changed hands which in turn means it was the only time that consideration existed.

 That is why you will never find payment from one party to another in the alleged securitization chain.  the truth is that there is no securitization chain and the banks intentionally failed to document the interest of the investors in each mortgage because the banks wanted to assert their own claim to ownership of the loan and the bogus securities allegedly backed by the loan. If they had been honest, then they would have taken the investor money, put it into an account that was owned by the asset pool, fund the loan from the asset pool and then document the transaction showing the interest  of the asset pool at the time of origination of the loan or at the time that the loan was in fact sold to the asset pool for payment received.

And THAT is why I say that the existence of MERS is proof of fraudulent intent. There would have been no need for MERS or anything like it (See Chase Bank and Wells Fargo) if the Banks were not going to trade securities based upon THEIR ownership of a loan they never made.

 If you prove these points in court I believe you will win the case.

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Illinois Takes A Step in the Right Direction

If you are seeking legal representation or other services call our Florida customer service number at 954-495-9867 and for the West coast the number remains 520-405-1688. Customer service for the livinglies store with workbooks, services and analysis remains the same at 520-405-1688. The people who answer the phone are NOT attorneys and NOT permitted to provide any legal advice, but they can guide you toward some of our products and services.
The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.

Editor’s Comment: Illinois has taken a step forward but they are still plagued by the wrong assumption — that the courts are dealing with a legitimate debt. There is no debt if it is paid and in many cases the original debt has been paid down or paid off by  third party mitigation payments from insurance and credit default swaps.

Remember the note raises the presumption of the existence of the debt which is rebuttable. It does not prove the loss. Without proof of loss there is no foreclosure or any other lawsuit for that matter. The party seeking relief must show they have been or will be injured in some way to get money damages, equitable relief (like foreclosure) or anything else. Without injury they don’t belong in court, which is why we have a jurisdictional rule regarding standing. No injury=no standing.

So the bad point about the new rules is that the forecloser must prove the debt, but it doesn’t specifically say they must plead or prove the loss. The problem with that is production of the note (whether the the real note or something that looks like the real note) raises the presumption of the debt. It also causes Judges to assume that the loss is self-evident — i.e., if someone has the note it is presumed that they paid for it and will suffer a loss of their expectancy of payment under the terms of the note.

If you don’t demand to see the canceled check or the wire transfer receipt and wire transfer instructions or other forms of actual payment of money (where it can be seen that money actually exchanged hands) then there is no consideration, the paper is not negotiable, the UCC doesn’t apply and the party seeking to foreclose has no standing because they have not been injured by the borrower, even if the borrower didn’t make any payments. At the root of this mess is a scheme of illusions created by the banks. Demand reality and you will get traction.

But there are also some good points about the new rules. The one requiring counseling for the homeowners would be good if the counselors knew what they were talking about and understood the perfectly valid defenses available to homeowners who got swindled into signing papers in favor of a company that never made a loan to them. From what I have seen, the counselors don’t have any idea about such things and it is merely a debt counseling session about getting your life in order, which is a good thing, but not what you can do about having your life turned upside down by an illegal foreclosure.

The part I like is the burden placed on foreclosers that would show that a modification is not possible. This is simple: if the results of foreclosure are that the net proceeds are substantially less than what the homeowner is offering, then the loan  can be modified. Demand should be made for the methodology and the person who calculated the modification for the forecloser and their authority to do so. And demand should be made for what contact they had with the “creditor.” Then you contact the creditor and find out (a) if they are the creditor (b) whether they were contacted and (c) how they feel about getting $150,000 from the homeowner rather than $50,000 from foreclosure.

As for the modification part, the banks are going to fake it just like they fake everything else. Be ready with an expert declaration that shows that the modification offered is far better than foreclosure, and that this is evidence of the fact that the servicer never even “Considered” the modification, which is violation of HAMP and HARP.

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