STANDING: THE CRUX TO DEFENDING FALSE CLAIMS OF SECURITIZATION OF MORTGAGE LOANS

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.

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 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.

HOW CAN THE NOTE BE TRANSFERRED WITHOUT THE DEBT?

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.

Writ of Certiorari to SCOTUS: Transfers to Trusts Are Void, not Voidable

In observance of the Jewish holiday of Yom Kippur, my office will be closed Wednesday, September 23. The following article was scheduled in advance:

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See Anh N. Tran, et al. v. Bank of New York SCOTUS Certiorari_SRCH

READ THE ENTIRE BRIEF SLOWLY AND STUDY IT.

I think we have another case here where the pen of Justice Scalia (if they grant the writ and hear the case) will be dripping with sarcasm , just like we saw in Jesinoski. The New York Law says that the “transfer” to the REMIC Trust is void if it violates the terms of the Pooling and Servicing Agreement. The problem for the banks is that they MUST rely on the PSA in order to give standing to their trustee and servicer. If the trust does not have the loan, then the trustee has no authority over the loan and neither does the servicer. SO the Banks are trying to use the PSA and then Bar the borrower from inquiring as to its terms and provisions.

This isn’t an academic exercise. The Trusts are now known to have existed only on paper and not even registered in any state or anywhere else. They never had a bank account, they never received the money from the offering and sale of the trust’s certificates, they never had any money, they never had any liabilities, they never had any assets, and they they were never operated as a business in any sense of the word. Thus the Trust COULD NOT have acquired the loans because it never had the money to do so. And the paper transfers to the trust, all of which occurred in reality far beyond the date of the cutoff period would be void and mean nothing.

This is not a problem caused by the borrowers. It is a problem intentionally created by the banks so that behind curtains they could take or steal the money of investors, covering their tracks by making it appear that there was a transaction when there was none. The fundamental question presented to the courts is whether we are going to allow nonexistent parties to exercise rights in court with respect to nonexistent transactions.

The courts, once again, read into a perfectly clear and unambiguous statute and converted the word “void” to “voidable.” This is an impermissible “interpretation” of statute because it changes the law rather than clarifying it.

I recommend the brief because it appears to be complete, and it is the best (better than mine) brief on the subject of why the trusts do not have “prudential standing” which is a jurisdictional threshold question. It is clear to me that an entity created only on paper and never used for business activity, except for the purpose of foreclosure on a loan it does not own, is not an entity that should be given any right to appear in court.

One thing is clear: this brief should be used by all attorneys drafting memorandums of law on the subject of “Borrowers cannot invoke the provisions of the PSA because they are not third party beneficiaries.” If they were not third party beneficiaries then what assurance would the borrowers or the investors have that the certificate holders would receive the money promised to them? What assurance would the borrower have that a manufactured default would be declared despite the fact that the real creditors have been paid, or that a manufactured default would arise simply because the servicer and trustee refused to pay the creditors?

GAME OVER? VEAL CASE VINDICATES EVERY POINT REPORTED ON LIVINGLIES

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BURDEN OF PROOF SHIFTS TO PRETENDERS

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  1. “IN THIS CASE, ONE COMPONENT OF PRUDENTIAL STANDING IS PARTICULARLY APPLICABLE. IT IS THE DOCTRINE THAT A PLAINTIFF MUST ASSERT ITS OWN LEGAL RIGHTS AND MAY NOT ASSERT THE LEGAL RIGHTS OF OTHERS. SPRINT, 554 U.S. AT 589; WARTH, 422 AT 499; OREGON V LEGAL SERVS. CORP, 552 F. 3D 965, 971 (9TH CIR., 2009).

  2. “Civil Rule 17(a)(1) starts simply: “An action must be prosecuted in the name of the real party in interest… The modern function  of the rule… is simply to protect the defendant against a subsequent action by the party actually entitled to recover, and to insure generally that the Judgement will have its proper effect as res judicata.”

  3. “The party asserting it has standing bears the burden of proof to establish standing. Sumers v Earth Island Inst., 555 U.S. 488 (2009)

  4. “Real party in interest analysis requires a determination of the applicable substantive law, since it is that law which defines and specifies the wrong, those aggrieved, and the redress they may receive. 6A Federal practice and Procedure sec 1543 at 480-481

ILLUSION OF SECURITIZATION IS FALLING APART

COLLATERAL BENEFIT TO HOMEOWNER

RESULTING FROM DEFECTS IN PRETENDER LENDER CASE

IS NOT A REASON TO RULE AGAINST THE HOMEOWNER-BORROWER

In a decision filed June 10, 2011 — one year after oral argument — the BAP carefully analyzed the position of the borrower and the alleged creditor and came up with nothing to support the allegations that there was a creditor in the room. Standing being a jurisdictional issue wiped out AHMSI and Wells Fargo.

This one is for publication, which means it is controlling precedent for all bankruptcy Judges in the Ninth Circuit. In a nutshells, the claim of “holder” is not enough, even for a motion to lift stay where the burden is extremely light. Thanks to a growing number of bankruptcy lawyers who understand these issues and thanks to their skill in presenting it, Bankruptcy Judges are realizing two things (1) lifting the stay is misused by the movant by creating the appearance that the merits of the case have already been heard and decided and therefore are engraved in stone under the doctrine of collateral estoppel and the Rooker-Feldman doctrine and (2) nipping abuse of process in the bud is the proper way for the courts to handle the pretender lenders.

It is very clear that this represents a sea change in the judicial attitude toward the pretender lenders. The documents don’t add up. So if anyone wants to come in to a court alleging that they can foreclose on the property or collect on the debt, they need to have real evidence which means live witnesses testifying under oath that they have personal knowledge and can authenticate the documents and other evidence proffered by the pretenders. These people don’t exist.

The bottom line is that there is no claim, an objection to the proof of claim will obviously be upheld in view of this ruling, and the homeowner is going to get their home free and clear of any encumbrances or debts unless the real creditor shows up — which is unlikely since the investors are busy suing the investment banks that sold them the bogus mortgage bonds.

LAWYERS ARE SHARPENING UP THEIR PENCILS GETTING READY TO FILE MOTIONS FOR REHEARING AND RECONSIDERATION IN AND OUT OF BANKRUPTCY COURT.

QUOTES FROM THE CASE:

“We hold that that a party has standing to seek relief from stay if it has a property interest in, or is entitled to enforce or pursue remedies related thereto, teh secured obligation that forms the basis of its motion.”

“We hold that a party has standing to prosecute a proof of claim involving a negotiable promissory note secured by real property if, under applicable law, it is a “person entitled to enforce the note” as defined by the Uniform Commercial Code.”

“The Dorchuck letter is just that; a letter, and nothing more. Mr. Dorchuck does not declare that his statements are made under penalty of perjury, nor does the document bear any other traditional elements of admissible evidence.”

“No basis was laid for authenticating or otherwise admitting the Dorchuck letter into evidence at any of the hearings in this matter.”

“Wells Fargo presented no evidence as to who possessed the note and no evidence regarding any property interest it held in the Note.”

“the purported assignment from Option One to Wells Fargo does not contain language affecting the assignment of the note. While the Note is referred to, that reference serves only to identify the mortgage. Moreover, the record is devoid of any indorsement of the Note from Option One to Wells Fargo. As a consequence, even had the second assignment been considered as evidence, it would not have provided any proof of the transfer of the note to Wells Fargo. At most, it would have been proof that only the mortgage, and all associated rights arising from it, had been assigned.”

“given the carve out of the Note at the beginning… the relative pronouns “therein”, “thereto” and thereon” more naturally refer back to the obligations contained in the mortgage, such as the the obligation to insure the property, and not to an external obligation such as the Note…. Although the clauses might be sufficiently vague to permit parol evidence to clarify their intended meaning, no such evidence was offered or requested.”
“STANDING  is a threshold question in every federal case, determining the power of the court to entertain the suit.”

“Prudential standing ” ’embodies judicially self-imposed limits on the exercise of federal jurisdiction.'” Spring, 554 U.S. at 289 (quoting Elk Grove, 542 U.S. at 11); County of Kern F. 3d at 845.

“IN THIS CASE, ONE COMPONENT OF PRUDENTIAL STANDING IS PARTICULARLY APPLICABLE. IT IS THE DOCTRINE THAT A PLAINTIFF MUST ASSERT ITS OWN LEGAL RIGHTS AND MAY NOT ASSERT THE LEGAL RIGHTS OF OTHERS. SPRINT, 554 U.S. AT 589; WARTH, 422 AT 499; OREGON V LEGAL SERVS. CORP, 552 F. 3D 965, 971 (9TH CIR., 2009).

“Civil Rule 17(a)(1) starts simply: “An action must be prosecuted in the name of the real party in interest… The modern function  of the rule… is simply to protect the defendant against a subsequent action by the party actually entitled to recover, and to insure generally that the Judgement will have its proper effect as res judicata.”

“The party asserting it has standing bears the burden of proof to establish standing. Sumers v Earth Island Inst., 555 U.S. 488 (2009)

“Real party in interest analysis requires a determination of the applicable substantive law, since it is that law which defines and specifies the wrong, those aggrieved, and the redress they may receive. 6A Federal practice and Procedure sec 1543 at 480-481

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