Facially Invalid Recorded Documents

The view proffered by the banks would require them to accept declarations of fact from potential borrowers without any indicia of truth or reliability. It is opposite to the manner in which they do business. Currently they have it both ways, to wit: for purposes of borrowing you must submit documents that are facially valid without reference to external evidence and which can be easily confirmed but for purposes of foreclosure, none of those conditions apply. 

As part of the the scheme of “securitization fail” (see Adam Levitin) banks, servicers and third party vendors have been creating, fabricating and executing documents that are not facially valid nor do they comply with industry standards or even common sense. But once recorded judges take them “at face value” by assuming that somehow the document makes sense, when it clearly does not comport with law or logic. Defenders of foreclosure act at their peril when they fail to attack the facial validity of the documents upon which the foreclosure claims rely.

In a recent article written by Dale Whitman for the ABA he states the following “Conclusion. The recording system is archaic and fraught with the potential for yielding wrong conclusions. Conversion by many recording jurisdictions to computer-based electronic indexes has been helpful, but most of the legally problematic flaws continue to exist. Title insurance has been invaluable in making the weight of the recording system bearable, but it adds a further layer of complexity as buyers try to understand the limitations of their title policies. It seems unlikely that major changes will occur, so it is essential that real estate lawyers understand the peculiarities and limitations of our present system.” (e.s.)

As he points out recording is not required to make a document valid, but once it is recorded the document takes on a life of its own. It also presents numerous trapdoors and pitfalls that should be analyzed before answering the initiation of a foreclosure proceeding with any action on behalf of the homeowner including the motion to dismiss in judicial states, the answer, affirmative defenses and the Petition for TRO or lawsuit for wrongful foreclosure.

see what you didn_t know about recording acts_whitman (2).authcheckdam

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Common sense tells you that for a document to mean anything it must say enough that a reasonable person would be able to confidently draw meaning from it. Analyzing the facial validity of documents used in foreclosure reveals a pattern of misrepresenting the facial validity and misdirecting judges into NOT looking closely at the documents from which they are making assumptions and thence to legal conclusions that bind homeowners into proving matters beyond their control.

I proffer here an analysis that I just completed (our TERA report) as an example.

  1. We have already seen documentary proof that BONY Mellon does not receive the proceeds of the sale of property subject to the power of sale in a nonjudicial state or the forced sale in a judicial state. There are many reasons for this.
  2. Analysis of the facial validity of the use of various names and descriptions reveals the absence of an actual party, unless extrinsic “parole) evidence is added. Hence the documents upon which the above language relies does not support facial validity.
  3. BONY Mellon is said to be the “successor to JP Morgan Chase.” It is not and never has been a successor to JPMorgan Chase. There is nothing in the public domain to support that assertion. There is no instrument attached and no description of any transaction in which, as to this subject property and loan, we can ascertain how BONY Mellon became the successor to JPM Morgan Chase. Hence the documents in which BONY Mellon appears are not facially valid and are defective in terms of proof of title. This could be corrected by affidavit or any process that is allowed in the state where the property is located but it hasn’t been done on record, and there is no evidence to suggest that it has been done but is not recorded. The usual and acceptable manner of phrasing such a succession, if it were true, would be “as successor to JP Morgan Chase pursuant to that certain agreement of transfer by and between JPMorgan Chase (and /or other parties) and BONY Mellon dated July 6, 200X.” The absence of such description leaves the reader to pursue extrinsic or parole evidence to determine if the succession is documented and if so whether that documentation is facially valid. This is all absent.
  4. The succession suggests that it is in the role of trustee. There is no instrument attached and no description of any transaction in which, as to this subject property and loan, we can ascertain how BONY Mellon became the successor Trustee to JPM Morgan Chase. Hence the documents in which BONY Mellon appears as trustee are not facially valid and are defective in terms of proof of title. This could be corrected by affidavit or any process that is allowed in the state where the property is located but it hasn’t been done on record, and there is no evidence to suggest that it has been done but is not recorded. The usual and acceptable manner of phrasing such a succession, if it were true, would be “as successor to JP Morgan Chase, trustee pursuant to that certain agreement of transfer by and between JPMorgan Chase (and /or other parties) and BONY Mellon dated July 6, 200X.” The absence of such description leaves the reader to pursue extrinsic or parole evidence to determine if the succession is documented and if so whether the documentation is facially valid. This is all absent. The absence of a description of a specific trust and trust instrument is yet another factor that renders the instrument facially invalid, but theoretically correctible.
  5. This leads to a further question of extrinsic evidence being required. Other than by the use of parole evidence (outside the information contained on the document itself) the reader cannot ascertain the existence or description of a specific trust organized and existing under the laws of any jurisdiction. In addition, the issue of a transfer or change of trustees of a trust, if one can be found, is not supported by language such as “pursuant to the provisions of the trust agreement dated the 3rd day of May, 200Y in which the trust named ‘Structured Asset Mortgage Investment II, Inc. Bear Stearns ALT-A Trust’ was created under the laws of the State of New York”. Without such reference the facial validity of the instruments remains invalid although theoretically correctible. Without the knowledge of the legal existence of the trust being confirmable by public record, there is no support for the implied trust. Without support for the implied trust and the trust agreement creating it, there is no obvious support for how trustees could exist or be changed. Without support on the face of the instruments for how trustees of a trust could be changed, the description of the change of trustees is merely a declaration that is not supported by anything on the face of the document.
  6. JPMorgan is implied to have been the trustee of the potentially nonexistent trust. Once again the implied assertion leaves the reader to determine if the trust was created pursuant to the laws of any jurisdiction, and if JPMorgan was named as trustee for the trust.
  7. In either event both BONY Mellon and JPMorgan are described to be acting in a representative capacity on behalf of “holders… of pass through certificates” and not as “trustees” of any “trust.” The certificates are identified as Mortgage Pass Through Certificates Series 2004-12. The reference to being a “trustee” and the implied representation of the holders of certificates would be acceptable if the “holders” were described as beneficiaries. The extrinsic evidence often shows that such holders are not beneficiaries. This leads to the question of how and why there is representation of the holders, apart from the alleged trust, Is the representation implied from the trust agreement that is not described? Is the representation the result of some other trust or agency agreement? It is not possible to ascertain the answers to these vital questions without resort to extrinsic evidence, thus making the instruments relying upon such language, facially invalid.

Every state has statutory requirements for an instrument to be facially valid. A deed between Donald Duck and Mickey Mouse as Grantor and Grantee respectively would not be facially valid because both the grantor nor the grantee are fictitious names of cartoon characters and unless used as a egla fictitious name for an actual entity doing business under that name the document could not be corrected to become a valid document suitable for recording.

Yet county recorders are allowing the recordation of millions of documents across the country with exactly that defect. By allowing such documents to be recorded they are lending support to the legal presumption that Donald and Mickey are real people with rights to transfer interests in real property and even foreclose on real property. At the end of the chain of written documents someone holds paper that is recorded but based upon a chain of title with two large gaps in it — Donald and Mickey, and by the time the foreclosure occurs probably Minnie Mouse as well (or maybe Fannie or Freddie whose names are being used, just like the “REMIC trustees”, but who have no part in any transaction involving the subject loan).

Back to Real Property 101.

  1. Who is the grantor? If that cannot be readily determined from the face of the instrument the instrument is facially invalid.
  2. Who is the grantee? If that cannot be readily determined from the face of the instrument the instrument is facially invalid.
  3. What is the effective date of transfer? If that cannot be readily determined from the face of the instrument the instrument is facially invalid.
  4. What is being transferred? If that cannot be readily determined from the face of the instrument the instrument is facially invalid — or, in the case of a mortgage or beneficial interest in a deed of trust if the instrument declares a transfer but without the underlying debt, the instrument is facially invalid and unenforceable both because of state statutes regarding facial validity and the UCC Article 9 requiring value to be paid (see above linked article).
  5. What is the legal description of the property affected? If that cannot be readily determined from the face of the instrument the instrument is facially invalid.

An instrument that is not facially valid should be returned by the recording office with notes specifying what needs to be corrected. This vital step is being overlooked on all documents relating to foreclosures. If rules, laws and procedures were followed with regard to such documents there would not be any foreclosure or, if the corrections could actually be made, there would be no defense. It is in the valley between those two notions that all foreclosures based on “successors” are based.

By overlooking the obvious lack of clarity on the face of the documents county recorders keep creating a vacuum that the banks are only too happy to fill with MERS — an IT platform that is the opposite of tamper-proof allowing virtually anyone with a login and password to create the illusion of authority where none existed before. Hence the use of MERS and other systems to give depth to the illusion of facial validity.

The conclusion is that documents containing the language described above should not have been recorded.  The county recorder should have rejected such documents as being facially invalid, requiring additional documents to be attached, if they existed.

Such language is a substantial deviation from custom and practice as well as common sense and logic.  Custom and practice of the same banks that are listed in the language described above requires that they not accept such language without the additional documentation and confirmation of facts that are declared on the face of the instrument.  Common sense dictates that the reason why such custom and practice exists is that most fraudulent schemes involve written instruments in which various declarations are made that are untrue or lack support.  For purposes of recording, any declaration on the face of the instrument that requires the attachment or description of documents that are readily available in the public domain would be unacceptable, much as, for example, a deed without a signature.  The property must be described with precision (or later corrected by affidavit), the grantor must be described with precision (or later corrected) and the grantee must be described with precision (or later corrected).  Without the required corrections, the documents are facially invalid.

For purposes of case analysis, the absence of facially valid documents, even though they were improperly recorded, negates the potential use of legal presumptions arising from the facial validity of documents.  Therefore such documents should be rejected without proper foundation in connection with the use of such documents for any purpose, and the attempt to introduce such documents into evidence in any court or administrative proceeding.

In the case currently under analysis, this means that the proceedings in which the property was allegedly foreclosed, were themselves all improper and based upon invalid terms.  Whether this renders the proceedings void or voidable depends upon case law and interpretations of constitutional due process.

However it is safe to say that based upon the above analysis, it is obvious that all such documents including the deed upon foreclosure are defective in several material respects.  Therefore, our conclusion is that the current title chain in the county records regarding this property is at best clouded.  The procedures for correcting clouded title vary from state to state and are subject to both federal and state laws.  Individual research on each case in each state is required before taking any action.

The view proffered by the banks would require them to accept declarations of fact from potential borrowers without any indicia of truth or reliability. It is opposite to the manner in which they do business. Currently they have it both ways, to wit: for purposes of borrowing you must submit documents that are facially valid without reference to external evidence and which can be easily confirmed but for purposes of foreclosure, none of those conditions apply. 

 

Beware of Thieves and Con Artists

I know that the first line of thieves and con artists are viewed by many as the banks and the “servicers” and the “trustees.” But the second wave are those who prey on the emotional turmoil of homeowners and get them to deed their homes into some sort of convoluted entity that will (1) shred the homeowners credibility in court and (2) essentially allow the new thief to get into your living room before the old thief has a chance to do so. In all events none of these schemes will ever do anything substantive to save a home, although some of the schemes may delay the judgment and sale for a short period of time.

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

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With the single exception of recording a notice of rescission I don’t see any plan by which a homeowner can preserve their rights in a foreclosure that is allowed by a judge to proceed. In nonjudicial states there MIGHT be one more: filing a corrective substitution of trustee returning the original trustee to the deed of trust. Anything in the chain of title on public records that is properly filed may well give homeowners a leg up and preserve rights when the issue of title finally comes front and center. The banks are proceeding under cover of title insurance. But in my opinion that cannot last and the title companies will file for bankruptcy protection in many cases.

It will be interesting to see what happens later when courts are faced with the consequences of their own decisions — creating and augmenting a title nightmare. Ultimately I think the rescission will have the effect that Federal law requires. Until then homeowners must seek to preserve their rights. They might find out years later that they still own the home they thought was long gone. This specific strategy requires very little money and certainly does not require deeding your home to another person leaving them to claim the asset and leaving you with the same apparent “debt” you had before.

People facing foreclosures are generally in severe emotional distress. Their home and their lifestyle are being threatened and the likelihood they will lose is in the statistics. As a result their judgment is impaired. In their desperation they will grasp at straws potentially destroying any hope of saving their home.

Although far more homeowners are winning their cases than a few years ago, it is nonetheless true that the deck is stacked against them. Some people, meaning well, have attempted to reverse the schemes from the banks by doing the same crazy documentation tactics that the banks.

Those schemes have failed because of the assumption by the judges that when the banks do it, which might include fabrication and forgery, they are merely patching up the paperwork on a valid debt. When homeowners do it, as Judges see it, it is to escape a legitimate debt. Both assumptions are wrong. Those judges are wrong but it seems counterintuitive.

This underscores the need for a lawyer: just because you found a statute or case that shows you are right and the bank, servicer or trustee is wrong doesn’t mean you will win. Trial court orders and judgments are final even if they are wrong. If you fail to appeal or preserve your rights in some other way, they stay final. Going to a smooth talking nonlawyer is likely the first step in jumping off of a legal cliff. BUT if the nonlawyer is attached to an actual lawyer, the outcome changes.

The problem with some of the schemes is that they are not per se illegal. But they lead to one result — the homeowner pays money and then loses the house. The moral of the story is don’t go with someone who is offering a nonexistent magic bullet. If it is so crispy clear and it works you would have heard about it already. Use a lawyer. Get references. Choose wisely.

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.

 

Banks Flexing Their Muscle at Clerk’s Offices

Call about our rescission package. 954-495-9867 or 520-405-1688.

This is not a legal opinion. Consult with an attorney licensed in your jurisdiction.

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I just had a client tell me that the Clerk accepted his notice of interest in real property but not the attachments to his Notice of Interest in Real Property,as specified by F.S. §712.05. .

*The grounds stated by the clerk was that the notice of rescission was an attachment but could not be recorded because the Clerk determined that the notice of rescission was barred by the statute of limitations (which by the way they got wrong); the Clerk said the attachment of the notice of rescission to a facially valid recordable document was wrong and the Clerk would not accept it because the notice of rescission had to be sent within three days of the alleged loan.

*The fact that we are in litigation before a court of competent jurisdiction (which is also contested) in which we are contesting whether consummation ever occurred and if so when, was ignored with the implicit finding by the clerk that notice of rescission was barred by a statute of limitations — explicitly arrogating to the Clerk, the power to decide substantive issues.

*This is so obviously wrong that we can only conclude that the banks are exercising a corrupt influence on the office of the Clerk.

It appears that the Clerk’s office are crossing the line between being a clerk and being a judge. In my opinion the analysis below would be true in Florida and from what I hear from other lawyers, in all 50 states.

*People filing rescissions in the county records should, if the recording is refused by the Clerk, write a letter to the head of the administrative organization that constitutes the recording office in each jurisdiction where this is happening. If necessary it should be escalated to the county attorney. And if that doesn’t work it should be escalated to the level of bringing suit against the Clerk’s office for acting like a judge or jury when they have no such statutory powers.

Every state has laws setting forth the the legal requirement for recording an instrument where deeds and mortgages are recorded in the public records.

*Every state has a system of clerk’s to review each document and determine whether the document facially meets the requirements for recording.

*Every state has a court system to decide issues concerning real property and everything else.

*A facially valid document that complied with statutory requirements for filing in the county records can NOT be refused by the Clerk based upon their opinion of substantive law or the effect that the document will have on title. Only Judges sitting in courts of competent jurisdiction can do that. To say otherwise would be to allow a clerk to decide the permits of an issue without going through due process of lawsuit, answer, verdict and judgment.

In my opinion and in the opinion of many other lawyers and judges, the Clerk’s office has NO authority to make a determination as to whether the notice of rescission was valid, effective, defective or anything else. If the notice of rescission is an attachment to a facially valid instrument affecting title to real property and if that facially valid instrument refers to the notice of rescission as an exhibit, then the Clerk has NO DISCRETION to refuse the recording, as long as the appropriate fees are paid.

Their authority is limited to whether the filing meets the statutory requirements for filing an instrument affecting real property in the county records. They are playing on the bank side, which is not what they are supposed to do.

Recording the Rescission

Livinglies Team Services: see GTC HONORS Services, Books and Products

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For more information please email us at gtchonors.llblog@gmail.com or call us at 954-495-9867 or 520-405-1688

This is not legal advice on your case. Consult a lawyer who is licensed in the jurisdiction in which the transaction and /or property is located.

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LAWYERS AND JUDGES TAKE NOTE: “Section 1635(a) nowhere suggests a distinction between disputed and undisputed rescissions, much less that a lawsuit would be required for the latter.” Justice Scalia, Jesinoski v Countrywide. [EDITOR’S NOTE: The only possible meaning to this is that the homeowner can use a letter and then, if it is disputed, it must BE BROUGHT to A COURT OF COMPETENT JURISDICTION to vacate the rescission. An order that denies a motion to dismiss for lack of jurisdiction based upon the fact that the rescission was sent does nothing to change the fact that the rescission was effective as of the date it was mailed and still is effective by operation of law. The only way it can be removed is with another operation of law that is properly brought by the real party in interest. An order vacating the rescission without any pleading requesting that relief does absolutely nothing except assure that the judge’s order will be reversed. And if the rescission is recorded before the foreclosure judgment (judicial states) or sale (nonjudicial states) the judgment and sale are void respectively.]
 Every state has its own forms and requirements and fees for filing anything in the public records. It is wise to record any rescission that was sent regardless of the timing, in my opinion, but that would be subject to advice from a lawyer in your jurisdiction. Litigation is expected on numerous issues after the nonjudicial cancellation of the loan contract, note and mortgage. Here are some of the issues that might be presented when the rescission is sent and/or recorded:
  1. Since the rescission is effective upon mailing, the loan contract, note, and mortgage are void (not voidable). This means in states whose recording statutes are either “notice” or “hybrid”, anything that transpired after that in which the note or mortgage were used for collection, enforcement or foreclosure are also void. Title would then stay with the homeowner if the homeowner does not know that he/she still has title. Any deed issued in foreclosure would accordingly be a wild deed.
  2. If the state recording statutes are purely “race” then if the notice of rescission was not recorded before the foreclosure, the foreclosure sale and deed might well be binding even if it was “fraudulent” or otherwise wrong or illegal.
  3. State statutes of limitation might effect (limit) the ability to collect damages for trespass or wrongful foreclosure, breach of contract or other common law or statutory remedies. The FDCPA might help depending upon how long it has been since the notice of rescission was sent.
  4. If the notice of rescission is sent and recorded before the foreclosure judgment in judicial states or before the sale in nonjudicial states, then in all states it would appear that the the loan contract, note and mortgage were rendered void at the moment of mailing, by operation of law, which is the same thing as a judge’s order declaring the note and mortgage void.
  5. There is no provision in the TILA rescission statutes that allows any lender, creditor or servicer to contest the rescission with a letter. That power is only given to the borrower. Their subsequent action in proceeding to foreclosure “judgment” should be subject to being vacated because they were obtaining relief based upon a void instrument — the mortgage (and the note).
  6. In a strictly “notice” state, as long as they knew about the rescission the foreclosure is automatically wrongful and actionable, in my opinion. “Notice” might need to include a third party purchaser, who often does know of the existence of the borrower’s defenses and does know about the rescission. The issue here is that at the time of the rescission it was widely and wrongly believed that a lawsuit was necessary to make the rescission effective (i.e., the borrower had to plead and prove a case for rescission under common law rules). TILA rescission is exactly the opposite. So everyone, including appellate courts (other than the Supreme Court of the United States) was proceeding under the wrong assumption.
  7. The action following rescission should not be to establish the effectiveness of the rescission. That is already complete by operation of law.
  8. The action could be enforcement of the rescission if filed within one year of the date of mailing of the rescission. At the end of that period, the borrower is barred from filing an enforcement action and the “lender” assuming they have done nothing, is barred from claiming the debt.
  9. After the expiration of one year from date of mailing of the notice of rescission, the action would be simply for quiet title and perhaps trespass (see above). This action could be brought during the one year period either in lieu of enforcement or with enforcement. An action for injunction preventing the banks, servicers or trustees from attempting to use the void note and mortgage might also be advisable.
  10. If an action for enforcement is brought during the one year period it is important not to plead as though the rescission might not be effective. it is a fact. See Jesinoski. The relief sought is NOT to have a declaration from the court that the rescission was valid. The pleading must assume that it is already legally binding as per 15 USC 1635 et seq and that the only issues remaining are the duties of the “lender” who should not be described as a lender but only someone who has asserted the rights of a lender, holder, mortgagee, beneficiary or servicer or trustee.
  11. An attack on standing is appropriate at every step when the “servicer” or Lender” seeks to challenge the rescission without filing an actual lawsuit or pleading. The banking side of the equation has NOT been granted the power to contest with anything other than some other recognized “operation of law.” The only such exercise would be a lawsuit seeking to vacate the rescission on the grounds that it was wrongful or deficient in some way.
  12. STANDING: This is where most cases will be won or lost. Since the note and mortgage were rendered VOID as of the date of mailing, the party seeking to vacate the rescission would need to plead that they are injured by the rescission, to wit: they are going to lose the ability to enforce a legally binding debt. And they would need to establish standing WITHOUT the note and mortgage, which are void (see above).
  13. Thus the pleader would need to establish themselves as a party who either funded the loan and is still the creditor, or who has purchased the loan from someone who owned the loan because they funded it. This we believe is going to be impossible for the lenders because their money trail leads straight to investors whose money was used improperly and whose money was never paid to the trust that issued the mortgage backed securities. The investors were left out in the cold without a mortgage backed security issued by any entity that had mortgages, without a note and without a mortgage. That leaves them with empty promises from the “Servicer” and no enforcement mechanism to collect from either the borrower or the investment bank. None of that is the fault of the borrower.

The Florida Statute below shows the intent of recording such notices. Using the form that is already approved by statute makes recording a lot easier:

712.05 Effect of filing notice.

(1) A person claiming an interest in land or a homeowners’ association desiring to preserve a covenant or restriction may preserve and protect the same from extinguishment by the operation of this act by filing for record, during the 30-year period immediately following the effective date of the root of title, a written notice in accordance with this chapter. Such notice preserves such claim of right or such covenant or restriction or portion of such covenant or restriction for up to 30 years after filing the notice unless the notice is filed again as required in this chapter. A person’s disability or lack of knowledge of any kind may not delay the commencement of or suspend the running of the 30-year period. Such notice may be filed for record by the claimant or by any other person acting on behalf of a claimant who is:

(a) Under a disability;
(b) Unable to assert a claim on his or her behalf; or
(c) One of a class, but whose identity cannot be established or is uncertain at the time of filing such notice of claim for record.

Such notice may be filed by a homeowners’ association only if the preservation of such covenant or restriction or portion of such covenant or restriction is approved by at least two-thirds of the members of the board of directors of an incorporated homeowners’ association at a meeting for which a notice, stating the meeting’s time and place and containing the statement of marketable title action described in s. 712.06(1)(b), was mailed or hand delivered to members of the homeowners’ association at least 7 days before such meeting. The homeowners’ association or clerk of the circuit court is not required to provide additional notice pursuant to s. 712.06(3). The preceding sentence is intended to clarify existing law.

(2) It shall not be necessary for the owner of the marketable record title, as herein defined, to file a notice to protect his or her marketable record title.
History.s. 5, ch. 63-133; s. 798, ch. 97-102; s. 3, ch. 97-202; s. 1, ch. 2003-79; s. 7, ch. 2014-133.

Assignment must exist in writing, even if the court says it doesn’t need recording

Dan Hanacek, who will be at the conference in Emeryville tomorrow, and Charles Cox can be reached through our customer service number 520-405-1688. Dan is a lawyer with whom I am engaged in mentoring and resourcing in Northern California cases and Charles helps people all over the country. The tide is turning. The basic principles of title in place for hundreds of years, TILA in place for dozens of years and RESPA in place for dozens of years will yet win the day. Title analysis and attorney advice is crucial to making the write choices and communication with a party purporting to be either a lender or servicer. Don’t assume you know what they are saying is correct. Not even the original note can be admitted because of the thousands of instances in which the “original” is a Photoshopped version that is not the original note and therefore does not contain the original signature of the borrower.

Editor’s Note:

With Banks and servicers playing fast and loose with the rules of procedure, the rules of evidence and black letter law it well to remember BASIC BLACK LETTER LAW. An assignment without delivery is probably a nullity. An assignment that isn’t even in writing is (a) not proper under most existing laws and (b) requires the allegation of an oral “assignment” to be explained as to why it wasn’t in writing before, just like a lost or destroyed note.

The assignment can only be valid and used if the assignee is capable of accepting it, paying for it and either acceptance is for the assignee or as an authorized agent. The Notice Default does not give the Trustee or even the original mortgagee where there has been an assignment, the right to declare default. Then it becomes the representation of the trustee, who is supposed to be objective and disinterested in the result.

For the Trustee to issue a notice of sale and notice of default on behalf of the supposed beneficiary, means that the trustee is no longer accepting the responsibilities of the trustee to act with due diligence and good faith toward both the trustor and the beneficiary.

Hence the substitution of trustee is an offer which has not and cannot be accepted. Any actions taken by the trustee in a notice of default or any other notice or collection letter is out of bounds. The only reason the banks do this is to hide behind yet another layer of people and entities so when the arrest warrants are issued, they can claim plausible deniability that the wrong procedure was being followed. This is poppycock. The beneficiary supposedly knows whether or not he is the creditor entitled to submit a credit bid at auction based upon the the existence of a properly kept loan receivable account reflected on the CREDITOR’s books.

This is just another example where the banks and servicers have borrowed the identity of the creditor, claimed that said identity is private and privileged, and then used it for their own advantage to the detriment of both the lender-investor and the borrower.

Witness this exchange between two of our golden boys — Dan Hanacak and Charles Cox:

Dan wrote:

1624.  (a) The following contracts are invalid, unless they, or some
note or memorandum thereof, are in writing and subscribed by the
party to be charged or by the party's agent:
   (2) A special promise to answer for the debt, default, or
miscarriage of another, except in the cases provided for in Section
2794.
   (3) An agreement for the leasing for a longer period than one
year, or for the sale of real property, or of an interest therein;
such an agreement, if made by an agent of the party sought to be
charged, is invalid, unless the authority of the agent is in writing,
subscribed by the party sought to be charged.
 
Would this section not require the following:
  1. Assignments must be in writing as they are “…for the sale of real property, or of an interest therein.”
  2. Immediately contradict the Gomes holding as it assumes that the authority of the agent has already been subscribed by the party to be charged and pre-empts any challenge by the injured party to the alleged contract.

And Charles Cox wrote back:

I’ve just been drafting argument against TDSC (in opposition to their demurrer)  for the proposition of their authority (as an agent for the beneficiary) in which (as is common) they attempt to use an agent they have assigned, to record a NOD (usually prior to an assignment being recorded) which I refute as follows:

In P&A p.10:26-p.11:27: TDS wrongfully states a “title company representative as agent for T.D.” could validate a Notice of Default which by the terms of the purported Deed of Trust (“NOD”.)  By the terms of the purported Deed of Trust, a NOD is required to be executed or caused to be executed by the “Lender” not the trustee nor the Trustee’s sub-agent as was done here (see Compl. Exh. 1 p.13 ¶ 22 second paragraph.) TDS’s citations are inapposite relating to “authorized agents” (meaning, authorized by the principal, not by another agent.)  Pursuant to CCC § 2304, an agent cannot act for an agent without the express authority of the principal.  CCC § 2322(b) does not allow an agent to define the scope of the agency (which TDS is attempting to do here).  CCC § 2349(4) requires authorization by the principal.  CCC § 2350 states an agent’s sub-agent is the agent of the agent, not of the principal and has NO connection to the principal.

TDS misstates CCC § 2349(1) as it relates to allowing an agent to delegate acts which are purely mechanical.  The statute actually states:

“An agent, unless specially forbidden by his principal to do so, can delegate his powers to another person in any of the following cases, and in no others:
1. When the act to be done is purely mechanical (emphasis added)”
   Note the statute states “another person” not another agent or sub-agent.  The alleged “notice of default” TDS refers to (Plaintiffs are not sure which one, having not been identified in TDS’s P&A but assume as follows:) was signed by “LSI TITLE COMPANY AS AGENT FOR T.D. SERVICE COMPANY,” NOT merely by “a title company representative”  or “person” as statutorily authorized.  This, notwithstanding that authorizing recording a Notice of Default is hardly “purely mechanical.”  This is yet another attempt by TDS to mislead the Court.  
   TDS’s citation of Wilson v. Hyneck cannot be relied on because it is an unpublished opinion and is inapposite anyway. 
    TDS’s further arguments (P&A p.11:5-27) fail for the reasons detailed above.

Plaintiffs Complaint contains sufficient facts constituting Plaintiffs’ cause of action specifically against TDS.  Nothing stated in this section of TDS’s Demurrer provides available grounds sufficient to sustain Defendants’ Demurrer (see p.2:19-25 above.)

Defendant fails to meet the legal standards to sustain its Demurrer.  See Plaintiffs’ Section III below.

Defendant’s Demurrer is without merit and must be overruled.

Amazing how these guys fail to accept responsibility for anything they do!

Charles
Charles Wayne Cox
Email: mailto:Charles@BayLiving.com or Charles@LDApro.com

 

SELLOUT TO MERS MEMBERS — AMNESTY!?: FANNIE MAE ISSUES NEW GUIDELINES ON RECORDING ASSIGNMENTS

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EDITOR’S NOTE: It appears as though Fannie Mae is trying to give some wiggle room to banks and servicers under the guise of new guidelines. But State law prevails and the guidelines are only effective as a matter of contract between FANNIE and correspondent lenders. One thing is clear, FANNIE is trying to legitimize MERS. It requires the following:

  1. the lender must report the MERS registration when it delivers the mortgage to us (by entering the applicable MIN on the Loan Schedule or Schedule of Mortgages). After we purchase or securitize the mortgage, we will notify MERS to ensure that the MERS records are updated to reflect our ownership interest. [Editor’s Note: This is a quasi government agency that was nationalized. MERS is a private recording system that is essentially unsecured — any person gaining a password and user ID can use it indefinitely to change the records. FANNIE should be eliminating MERS not including it in its operations. This is an attempt to say that MERS is a legitimate operation and that FANNIE will continue using it. It gives the impression that what they are doing it right, when in fact it is contributing to the title mess that is growing into nightmarish proportions throughout the United States]
  2. the lender will need to report our ownership interest to MERS when it registers the mortgage [Editor’s Note: This is a tricky way of leaving it to the correspondent lender to determine if the transfer to FANNIE has made proper and complete. It will be used by Banks to say that the administrative rules create a presumption of validity when in fact the requirements of state law either have not been met or it will be used to block borrower’s attempts to find out if State law has been followed. Once again attention to diverted from the discrepancies between (a) what they did at closing with the borrower (b) what they said they would do for the investor and (c) what they actually did with the money.
  3. After we purchase or securitize the mortgage, we will notify MERS to ensure that the MERS records are updated to reflect our ownership interest [Editor’s Note: This is doubletalk. If they purchase the mortgage, which they virtually never do except in cases of default, then they are the owner if they get a complete chain of title and properly executed documents by properly authorized people. If they securitized the mortgage, which is nearly always the case then they don’t own it. Why would they report to anyone, much less MERS that they own the loan? Once again attention to diverted from the discrepancies between (a) what they did at closing with the borrower (b) what they said they would do for the investor and (c) what they actually did with the money.
  4. For mortgages in existing Fannie Mae servicing portfolios, the lender will need to report our ownership interest to MERS when it registers the mortgage. (Note: If the original assignment of the mortgage to Fannie Mae was recorded in the public records, the servicer will first need to prepare an assignment from Fannie Mae to MERS and send it to us for execution. [Editor’s Note: THEY ARE DOING IT AGAIN! ASSIGNING INTERESTS TO MERS WHEN MERS EXPRESSLY DISCLAIMS ANY INTEREST IN THE NOTE OR MORTGAGE BY CONTRACT AND BY ADVERTISEMENT.]
  5. MERS will promptly notify us when a lender reports that we have an ownership interest in mortgages that it is registering with MERS. [THEY ARE DOING IT AGAIN. Leaving it to banks, servicers and MERS to sort out ownership of the loan without regard to the financial realities of the loan — whether payments have been made by obligors other than the borrower on the promissory note, whether the loan has been paid off in whole or in part by the servicer, insurer, credit enhancement or Federal bailout.]
  6. The lender will not need to include in the delivery package for a MERS-registered mortgage a copy of the assignment of the mortgage to MERS, nor will the lender be required to prepare and submit an unrecorded assignment of the mortgage to Fannie Mae, unless we specify otherwise for a particular transaction or transactions. [This is a blatant sellout to the Banks and servicers. It basically says that FANNIE will regard the package as in proper form and authentically transferred if the mortgage is MERS-registered. That is nuts. It means that they are formalizing the institutionalization of uncertainty in the marketplace. If this is allowed. Nobody will know the true owner of the loan from any public record, and therefore no owner and no lender will ever know if they really have a priority interest in the property. State statutes do not, in any case, allow MERS to pre-empt the county recording system. Yet that is exactly what FANNIE is attempting to do here.
  7. If a loan is registered with MERS and the servicing of the mortgage is subsequently transferred to another lender that is a MERS member, the transferee will not need to prepare an unrecorded assignment of the MERS-registered mortgage as part of the custody documents unless we specify otherwise for a particular transaction or transactions.
  8. if servicing of a MERS-registered mortgage is transferred to a lender that is not a member of MERS, or if the MERS registration for an active mortgage is terminated for any reason, an assignment from the servicer to Fannie Mae in recordable form but unrecorded will be required. [THUS A MERS MEMBER IS ELEVATED TO A POSITION HIGHER THAN THE NORMAL PERSON WHO MUST FOLLOW STATE LAW. MERS MEMBERS, ACCORDING TO FANNIE, DO NOT NEED OT FOLLOW THE LAW.]

Submitted BY NANCY DREWE on 2011/11/11 at 8:03 am

https://www.efanniemae.com/sf/guides/ssg/relatedsellinginfo/mers/pdf/merspolicy.pdf

Federal Home Mortgage dba FANNIE MAE (FORCE UPON ‘COMMERCE’ UTILIZING ‘MIN#’ ASSIGNMENT PRIOR TO SECURITIZATION.

Rules and Instructons to Correspondent Lenders

– For new mortgage deliveries to Fannie Mae, the lender must report the MERS registration when it delivers the mortgage to us (by entering the applicable MIN on the Loan Schedule or Schedule of Mortgages). After we purchase or securitize the mortgage, we will notify MERS to ensure that the MERS records are updated to reflect our ownership interest. (PLEASE NOTE THAT IT IS IMPORTANT TO REGISTER THE MIN ON THE MERS SYSTEM PRIOR TO DELIVERY OF THE LOAN (AND THE ASSOCIATED MIN) TO FANNIE MAE.)

-For mortgages in existing Fannie Mae servicing portfolios, the lender will need to report our ownership interest to MERS when it registers the mortgage. (Note: If the original assignment of the mortgage to Fannie Mae was recorded in the public records, the servicer will first need to prepare an assignment from Fannie Mae to MERS and send it to us for execution.) MERS will promptly notify us when a lender reports that we have an ownership interest in mortgages that it is registering with MERS.

• The lender will not need to include in the delivery package for a MERS-registered mortgage a copy of the assignment of the mortgage to MERS, nor will the lender be required to prepare and submit an unrecorded assignment of the mortgage to Fannie Mae, unless we specify otherwise for a particular transaction or transactions.

• If a loan is registered with MERS and the servicing of the mortgage is subsequently transferred to another lender that is a MERS member, the transferee will not need to prepare an unrecorded assignment of the MERS-registered mortgage as part of the custody documents unless we specify otherwise for a particular transaction or transactions. However, if servicing of a MERS-registered mortgage is transferred to a lender that is not a member of MERS, or if the MERS registration for an active mortgage is terminated for any reason, an assignment from the servicer to Fannie Mae in recordable form but unrecorded will be required.

• The lender will be responsible for the accurate and timely preparation and recordation of security instruments, assignments, lien releases, and other documents relating to MERS-registered mortgages and must take all reasonable steps to ensure that information on MERS is updated and accurate at all times. The lender will also be solely responsible for any failure to comply with the provisions of the MERS Member Agreement, Rules, and procedures and for any liability that it or Fannie Mae incurs as a result of the registration of mortgages with MERS or any specific MERS transaction.

Fannie Mae Guides and with the terms and conditions of the lender’s Master Agreement or any negotiated contract that it has with us, unless we specify otherwise. In addition, MERS’ failure to perform any obligation with respect to a MERS- registered mortgage does not relieve the lender (or the mortgage servicer) from its responsibility for performing any obligation required by the terms of its Fannie Mae contracts or the provisions of the Fannie Mae Guides.

For more information, please visit the AllRegs® website (http://www.allregs.com/efnma/) and perform a search under Fannie Mae Single Family for MERS.
MORNET is a registered trademark of Fannie Mae. MERS is a registered trademark of Mortgage Electronic Registrations Systems, Inc. and AllRegs is a registered trademark of Mortgage Resource Center Corporation.

JUDGE MARGERET MANN (SO. CA BKR) PLUNGES INTO DETAILS AND COMES UP WITH WELL-REASONED DECISION

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AURORA LOAN SERVICES LLC, SCME MORTGAGE BANKERS INC, ING BANK FSB, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS ALL BITE THE DUST, SUBJECT TO LIABILITY AND NO ABILITY TO FORECLOSE WITHOUT COMPLYING WITH LAW.

Salient points of Judge Mann’s Decision:

  1. TRUTH IN LENDING  was dismissed because they were time-barred. LESSON: Don’t ignore TILA claims or TILA audits. Get a forensic Analysis as early as possible, assert them immediately, assert rescission as soon as possible. TILA has teeth, but if you assert it late in the game.
  2. YOU CAN’T FORECLOSE ON UNRECORDED INSTRUMENTS: Judge Mann came right out and said the California Supreme Court would not and could not decide otherwise. Any other holding would defeat the purpose of recording and create uncertainty in the marketplace. This will cause a lot of grief to pretenders. It is getting harder for them to come up with people who are willing to lie, forge or fabricate documents. Getting a notary to affix their signature and seal will soon be a thing of the past unless the signature, the person and the document is real.
  3. THE ASSUMPTION THAT THE LOAN IS IN DEFAULT IS STILL A PROBLEM: As long as lawyers and pro se litigants are willing to concede that the obligation was in default, they are giving up their largest chip — i.e., that the loan was not in default and the loan was not subject to a perfected lien for the same reason that the court cites in its opinion. Our loan level analysis shows repeatedly that in most cases the servicer is continuing to make payments and reporting to investors that the loan is performing even as they send delinquency letter’s notices of default and notices of sales. The Court missed this point because nobody brought it up. Don’t expect the Court to do your work for you. If you have reason to believe that the servicer is still paying on your loan you should be stating that the loan is not in de fault, denying any delinquency to the creditor and objecting to any action that is based upon the premise of “default.” Note that if the servicer is paying your bills, the servicer MIGHT have a right of action against you, but it certainly isn’t under the terms of the note or mortgage.
  4. THE ASSUMPTION THAT A VALID PERFECTED MORTGAGE LIEN EXISTS IS STILL A PROBLEM: Again, the problem is not with the Courts but with the lawyers and pro se litigants who simply assume that this is not an issue. Put yourself in the banks’ shoes. If all you had were nominees for undisclosed principals on the note and mortgage would you be OK with that? No? Then the lien was never perfected, which means for legal purposes it doesn’t exist. Just because it shows in black and white doesn’t make it true. LESSON: Deny the lien exists, deny it was perfected and make them prove how it was perfected. They can’t. In most cases neither the mortgage originator nor the nominee beneficiary (MERS) had a disclosed lender or beneficiary, nor did they incorporate the real terms of  the payment to the investor/lenders. If this was a law school exam and the student wrote that the loan was perfected, the grade would be “F”.
  5. THE ISSUE OF FEDERAL PREEMPTION AND THEREFORE JURISDICTION AND VENUE ARE STILL IN FLUX: This Judge found that federal preemption prevents the homeowner from alleging TILA as state claims. The courts are not decided on this and the issue of res judicata and Rooker -Feldman will come into play once the issue is really resolved with finality. Beware then how you assert a claim and that you don’t let the statute of limitations run out by failing to assert the right claim under TILA in the right court. better to get dismissed than to find out that you are time-barred.
  6. WRONGFUL FORECLOSURE IS A TITLE ISSUE NOT A FAIRNESS OR TECHNICAL ISSUE: Judge Mann, correctly in my opinion, states that an assignment from MERS must be allowed in order to clear up title. But, she states that without recording an interest within the chain of title, you have no right to foreclose under the states recording laws. I think this is right, and I think it applies in all 50 states. LESSON: Plead your wrongful foreclosure, slander of title and quiet title cases as title cases and stop adding extra things that you think may them juicier. Either the title is right or it is wrong. There is no middle ground.
  7. MERS ISSUE IS STILL OBSCURE: While the assignment from MERS, if recorded clears up one part it leaves another part undecided again because it wasn’t raised properly. There is a difference between “bare record title” and an “interest in the land.” The MERS assignment is like a quit-claim deed from someone without any interest in the land and used to clear up the chain of title on paper, but it does not convey any interest. MERS on its website and in the public domain specifically disclaims any interest in the obligation, note or mortgage. That is its selling point to members who use its “Service.” And that is why it can’t foreclose and it is subject to cease and desist orders from regulators. As with other affidavits or quit-claims to clear up apparent clouds on title, the recorded assignment or quitclaim does nothing to convey a larger interest than that possessed by the grantor. LESSON: If the pretenders want to foreclose they can’t rely on the MERS assignment. They must file a credible affidavit that states that the affiant was the undisclosed principal in the original transaction with the borrower and that it joins in or separately assigns the actual interest in the obligation, note or mortgage. In my opinion, this is the only way to perfect the original “lien.” Whether it will relate back to the original transaction is an issue the courts must decide.
  8. NO DIFFERENCE BETWEEN A DEED OF TRUST AND A MORTGAGE: Pretenders who try to elevate a deed of trust above a mortgage are headed for a brick wall. Courts never liked non-judicial foreclosure in the first place. They are not about to to reverse centuries of law and provide higher status to a non-judicial foreclosure or the instruments that allow it. ONLY the statutes that provide for extra care on the part of the trustee are constitutional, since due process is the only way anyone in this country can be deprived of life, liberty or property. LESSON: Pound on the issue that the pretender cannot prevail in a judicial foreclosure so they are trying to get away with it in a non-judicial foreclosure. If you want to see how this will eventually unfold, look at Florida and other states that had similar issues in their “Contracts for deed.” Despite clear contractual language the courts have universally held they are mortgages and that they must be foreclosed as mortgages.
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