Colorado County Court Judge Gets It

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

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see Ruling on Motion RE Hearing December 4, 2015

Hat Tip Eric Mains

I have already commented on this case but there are issues that are becoming more clear as to jurisdiction and so a review of this case is warranted, where the Judge correctly declined to rule until a court of competent jurisdiction ruled on the issue of ownership. In so doing the court refused to grant the eviction order even though the sale had taken place and a deed was issued.

The Judge realized that as a county court judge he lacked jurisdiction to even hear the issue of whether the foreclosure sale was void. Hence he deferred any action on granting eviction until the issues of ownership were resolved. Why? Because eviction can only be granted to the owner of a the property. In this case there was a rescission in the mix. Hence any action after the rescission was mailed was void if it involved enforcing the alleged loan contract, note or mortgage.

As far as I know, there is no law or judicial doctrine that says that if the statutory or common law prohibits you from doing something, and then you do it anyway, that suddenly it becomes lawful because you did it anyway. Breaking the law would thus be changing the law.

The sub-point here that has reared its head and which virtually nobody is paying any attention is in the bankruptcy courts. People think of BKR judges as Federal Judges. Not so fast. They once were called magistrates and still rule subject to an appeal to the Federal District Judge.

It is doubtful, to say the least, that any bankruptcy action, whether 7, 11 or 13, can be continued where the home is a significant part of the estate if the there is a question of ownership, authority or balance raised by the Petitioner. Trustees, Judges and lawyers on all sides are missing the point here. The current trend of ignoring the defenses of the borrower are probably going to lead to a line of decisions that over-rules that practice. But more than anything, the question is whether the BKR judge has any jurisdiction to do anything other than follow the procedures in TILA Rescission as confirmed by SCOTUS.

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This case raises another huge potential problem for the banks on the TILA front, and on the possession front, in a nutshell: They ignored rescission, went ahead with foreclosure sale anyway. The State court ignores the rescission or the borrower does not raise TILA rescission in State Court, whatever. The property goes to sale, BUT, guess who credit bids? Hint, like usual , it ain’t the party who said they held the loan, oopsy! Homeowner won’t move out of the house, “Creditor” files for an eviction.

Think of situations like this where a Homeowner responds to eviction notice in court, “Your honor, First, I issued a TILA rescission before sale and they failed to respond, Second, they are not the proper owners, just look at the credit bid and see for yourself.”

Court says, “You are correct, we don’t have jurisdiction to hear such a claim”, OR they respond “OK we do have jurisdiction, but you can appeal this decision to a higher court”, either way, this is going to be a long haul for the claimed Plaintiff/owner, because getting the foreclosure in their favor does not equal possession, it may take them years and they may LOSE.

So trying to pretend like the rescission does not exist means you may not get possession. You may in fact be liable for quite a bit of damages, or lose even after winning a foreclosure action because a ruling in favor of TILA rescission in a federal or district court action may mean the foreclosure ruling can be overturned, potentially by quiet title, a rule 60 motion, or otherwise.

This opens a whole other dimension for homeowners, and against the banks. They have a judgment, but they can’t get the house, and are in limbo for a long time with possibly being overturned at a later date. Lesson here for them: Don’t mess with TILA, and don’t try to sneak in a credit bid post ruling that shows you were lying to the judge about ownership of the loan.

Federal and State Judges Think they Can Overrule the US Supreme Court

Jeff Barnes has put into words what I have been thinking about for several weeks. Barnes is a lawyer who has concentrated on foreclosure defense and has won many cases across the country. He is a good lawyer, which means that he understands how to get traction. So when he complains about Judges, people ought to sit up and take notice.

I think he has hit the nail on the head:

DISTURBING NEWS: CERTAIN JUDGES CLAIM THAT SUPREME COURT DECISIONS ARE NOT BINDING ON THEM
Posted on October 22, 2015

October 22, 2015

In recent months, we have been advised by homeowners in different states that certain Judges in those states have taken the position that decisions by either the Supreme Court of that state or decisions of the United States Supreme Court are not binding on them. Taking such a position violates the Judge’s duties as an officer of the Court, erodes confidence in the judiciary, and renders the public more suspicious of the court system than it already is.

A Judge is duty-bound to follow the “law of the land” whether they agree with it or not. A Judge cannot impose his or her own personal views as to whether the state or US Supreme Court made the correct decision on an issue: when a state Supreme Court or the US Supreme Court decides a specific legal issue, the law is established and Judges must follow it. State supreme courts (other than as so denominated in New York, as the “Supreme Court” is a lower level court in NY) and the US Supreme Court are the highest appellate courts, and their decisions establish “the law of the land”: a state Supreme Court decision establishes the law for that State, while the US Supreme Court establishes the law for the country.

In our experience, the overwhelming majority of Judges are fair, honest, considerate of the position of both sides, and take the law into account when rendering their decisions. The examples below are isolated, but the fact that two such examples have been recently brought to our attention is disturbing.

One of the cases which we were advised of concerned the use of Mr. Barnes’ successful appeal of the MERS issues in the Supreme Court of Montana, which by its decision established that MERS was not the “beneficiary” of a Deed of Trust despite claiming to be so. Although this decision was issued two years ago, the homeowner advised that when that decision was presented to a local Montana county Judge, the Judge took the position that he was not bound by the Supreme Court of Montana’s decision.

Another homeowner advised us that in a prior foreclosure-related hearing before a state court Judge that the Judge told the homeowner that he was not bound by decisions of the United States Supreme Court.

This contempt and disrespect for state Supreme Courts and the US Supreme Court is beyond disconcerting.  There is no reason why homeowners facing foreclosure should be treated adversely when a decision of a state or the US Supreme Court is in favor of them and presented to the Judge. “And Justice for All” means just that: it does not mean “except no justice for homeowners in foreclosure.”

Jeff Barnes, Esq.

see http://foreclosuredefensenationwide.com/?p=612

We see it in many cases involving rescission. It is isn’t that the Judge doesn’t understand. As pointed out by Justice Scalia in the Jesinoski decision the wording of the Federal statute on TILA Rescission could not be more clear and could not be less susceptible to judicial construction. In that unanimous decision of the US Supreme Court in January, 2015, the Court said that like it or not, notice of rescission is effective by operation of law when mailed and nothing else is required to make it effective. The court specifically said that common law rescission is different than the statutory rescission in the Truth in Lending Act.

In fact, the court was perplexed as to how or why any judge would have found otherwise. Thousands of Judges in hundreds of thousands of cases had refused to apply the plain wording of the TILA statute 15 USC 1635. Then came Jesinoski in which the Supreme court said there is no distinction between disputed and undisputed rescissions — they are both effective upon mailing by operation of law. That became the law of the land.

And yet, trial judges and even appellate court are again leaning toward NOT upholding the law and NOT forcing the banks to comply with statute. Many more are “reserving ruling” denying the homeowner remedies that are readily available through TILA Rescission. These courts don’t like TILA rescission. They don’t want to punish the banks for bad behavior. But that is what Congress wanted when they passed TILA 50 years ago.

As many Judges have said in their own written findings and opinions — if you don’t like the law then change it; don’t come to a court of law and expect a judge to change the law. Whether this will lead to some sort of discipline for Judges or simply make them vulnerable to being removed from the bench is unknown. What I do know is that when ordinary people come to realize that the foreclosure crisis could end now, thus stimulating our limping economy, they will likely vote accordingly.

Any Judge who refuses to follow the law as it is written and passed by a legislative body and signed into law by the executive branch (the {President or the Governor) has no right to be on the bench and should resign if his “moral compass” makes following the law so onerous that he or she cannot uphold the laws. In the absence of resignation, then momentum will likely rise and push the agenda of those people who want such judges removed involuntarily. Those Judges are acting against the most basic thrust of our society — that we are a nation of laws and not of men. We have a very well defined process of passing laws and that does not include any one person (on or off the bench) deciding on their own the way the law should read.

Clerks Illegally Bowing to Bank Pressure: Recording the Notice of Interest in Real Property with the Notice of Rescission attached.

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

This is for general information only and contains my general opinions on the subject NOBODY should use this article as a substitute from advance from an attorney licensed in the jurisdiction in which the subject property is located.

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The Banks are at it again — using their political power to influence officers of State and County government into refusing to perform ministerial duties required by State statutes.
The Clerks are rejecting any filing of the notice of rescission but some are getting through. It is a good idea to send it in by mail rather than show up in person. It should be a Notice of Interest in Real Property. The letter should appear to be from either a lawyer or title agent. If it looks like a homeowner they will inspect it. If it looks like business as usual then they will ordinarily process it without any scrutiny.

A number of people are gearing up to sue the Clerk for a Writ of Mandamus in order to force the Clerk to accept the recording of the Notice of Interest in Real Property with the Notice of Rescission attached. Before suing, the matter should, in my opinion, be escalated briefly, at least, to the County attorney and give him/her a chance to correct the situation. Any document that is properly filled out with formalities that are required by statute MUST be recorded by the Clerk. The Clerk does not have discretion as to what documents they record and no discretion as to what documents that can’t record.

There is also the possibility of escalating to the Florida Attorney General and the US Attorney General

In the event that the attorneys general or County attorneys ignore or delay it, then the Petition for Writ of Mandamus is probably a viable option. Forms for Writ of Mandamus are online but nobody should do this unless they have an attorney licensed in the correct jurisdiction. The complaint should (my opinion) [comments invited]

  1.  Establish jurisdiction in the State or Federal Court (I would say Federal at first glance), to wit: that TILA Rescission is a Federal Law and that the Clerk is refusing to allow implementation of the rights of the borrower under Federal Law.
  2. The complaint should NOT ask the Court to enter an order that says that the rescission was effective — that is not the proper subject for an issue between the property owner and the clerk.
  3. Establish jurisdiction and description of the parties — the Clerk and the party seeking to record, their residence etc.
  4. The State Law requiring the Clerk to record documents should be quoted verbatim
  5. The allegation should be made that any party with an interest in the real property has the right to record such interest and that the Clerk has not been delegated or authorized to exercise discretion as to whether to accept a properly drafted and executed Notice of Interest in Real Property.
  6. The allegation should be made that the Petitioner is a person, sui juris, with an interest in the real property, to wit: the Petitioner owns the property described on Exhibit “A” legal description and street address).
  7. The allegation should be made that the Petitioner rescinded the mortgage (and note) at page ____ of OR Book _____, as per the notice of rescission attached as Exhibit “B”.
  8. The allegation should be made that the rescission is effective by operation of law, and does not require any judicial determination of whether the rescission was effective or not. 15 USC § 1635 et seq. [Maybe cite Jesinoski]
  9. The allegation should be made that the effect of the rescission is to void the mortgage (and note), by operation of law.
  10. The allegation should be made that under the TILA Rescission statutes, the creditor is required to file a release of the encumbrance, but has failed or refused to do so and has not attempted to vacate the rescission within the time window provided by law (20 days from receipt of the rescission).
  11. The allegation should be made that the said mortgage continues to create the illusion of an encumbrance in the chain of title, thus affecting (preventing) the ability of the Petitioner to sell or refinance the property.
  12. The allegation should be made that in the absence of recording the Notice of Interest in Real Property, with the Notice of rescission attached, the mortgage would remain on record with no document releasing the encumbrance as required by Federal law.
  13. The allegation should be made that the Petitioner properly executed, witnessed and notarized a Notice of Interest in Real Property dated the __ day of ___, 201_ and presented same on the ___ day of ____, 201_ to the Respondent for recording by the Respondent. (see attached Exhibit “C”)
  14. The allegation should be made that the Respondent unlawfully refused to accept the aforestated Notice of Interest in Real Property for recording without any right, justification or excuse.
  15. The allegation should be made that Petitioner was neither granted nor delegated any authority to exercise discretion in the recording of a properly executed, witnessed and notarized Interest in real property.
  16. The demand clause should be something like “Wherefore, Petitioner prays this Honorable Court will enter an order commanding the Clerk of _______ County to accept the Notice of Interest in Real Property with its exhibits and, upon payment of the required fees, record same in the Public Records of ____ County.”
  17. Make sure it is served correctly. Expect the banks to mount some challenge to the suit. But there is nothing that they can say that is legally controlling. All they can do is not like it. If they wanted to seek a court order vacating the rescission they should have done so within the 20 days.

 

But more importantly it is none of their business — if the Clerk is mandated to record ANY document that fulfills statutory requirements, then the document gets recorded — just like the lis pendens in a foreclosure action — the issue of whether the lis pendens or the lawsuit were wrongfully filed is up to the parties and the courts to fight it out — it is NEVER up to the Clerk. Any argument to the contrary would require an administrative hearing apparatus that does not exist.

Rescission and Moving to Strike Pleadings of “Holder”

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

This is for general information only. Get a lawyer.

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THIS IS REALLY DIRECTED AT LAWYERS WHO ARE DEALING WITH RESCISSION. NO LAYMAN SHOULD ACT ON THIS WITHOUT CONSULTING WITH A LICENSED ATTORNEY IN THEIR JURISDICTION.

Among the zillions of email requests I have been receiving are emails from lawyers who are trying to get their heads around rescission. It seems to me that their problem is one of procedure rather than substance. So here is the answer I sent to one such lawyer.

I keep wondering about something here with respect to rescission. To be consistent with your position that the rescission was effective upon mailing and that the note and DOT are void, it would seem to me that the proper motion would be a motion to strike those portions of their brief dealing with the effectiveness of the rescission. The Supreme Court has already decided that.

But further — the record is devoid of any evidence that the parties attacking you are or ever were actual creditors. It seems to me that these parties lack standing to attack the rescission because their standing was only as good as them holding the note and mortgage which are now void. I think they are using a magician’s act — getting the court to assume they are lenders or creditors when in fact nothing in the record supports that. They insisted in the trial court that none of your foreclosure defenses were good because they were “holders”. But now they are “holders” of void instruments.

If anyone is going to be contesting the rescission they would need to do the following:

  1. They must be an injured party with standing — i.e., loss of finance charges on the loan along with fees etc that they loaned or paid for. Such a party cannot rely on void instruments to establish standing.
  2. They must file an action within 20 days of receipt of the rescission.
  3. The action would need to allege that the borrower rescinded the loan improperly.
  4. The prayer for relief would be to enter an order vacating the rescission because of whatever reason they think it was wrong.

Some courts are side-stepping this issue and allowing the foreclosure to proceed without ever granting relief that was sought by the “holder” who is being presumed as creditor. But they do so without ever entering an order vacating the rescission which means that the rescission is still standing and the note and mortgage are still void. It’s another pretender scenario. The banks and courts are pretending that the rescission was not effective even though it clearly is effective by operation of law on the day of mailing because the highest court in the land has accepted that with finality and unanimously.

What your opposition is doing here is creatively attempting to avoid basic pleading requirements and using motion practice and the appeal as a vehicle for sidestepping the basic requirements of getting relief in court. Hence the motions in the trial court and the brief in the appellate court should be struck with prejudice as raising issues that are untimely and on issues in which the jurisdiction of the trial court and the appellate court has not been invoked.

The Motion to Strike is based on jurisdiction which can be raised at any time. What you could be saying is that their brief should be struck because it is a disguised effort to obtain relief without ever having filed a lawsuit alleging a short plain statement upon which relief could be granted.

By filing the Motion to Strike it redirects the appellate court to the focus of your brief.

So in states where the homeowner sues somebody to stop them from attempting to enforce the note and mortgage, there is a tricky question of how to express the objection to standing and jurisdiction. To another lawyer I wrote:

This is legal procedure — not substantive arguments about why the banks are horrible. You need to have California cases on standing and jurisdiction. This is tricky because you are right, you did sue them so how can the court not have jurisdiction to hear arguments? The answer is that if I sue you for throwing a ball through my window, you can’t “answer” or file a “motion to dismiss” on the basis that I ran over your bicycle. You must file a counterclaim. They didn’t. So there is no jurisdiction to hear what is in essence a “Motion” instead of affirmative pleading of facts, standing and prayer for relief. I see no way that I am not right on this in view of the Supreme Court decision. Any other interpretation would mean that the rescission was NOT effective until a judge rules on it — directly opposite to the law of the land.

  1. You sued them for a TRO to stop them from proceeding with foreclosure.
  2. Your basis for doing includes the rescission.
  3. You did not sue them to make the rescission effective — hence you did not invoke the jurisdiction of the court on that point. In fact your point is that they are NOT the right parties to do anything and they have no standing and had no standing in the trial court except as to the issue of why they were acting like creditors when they were not.
  4. The fact that you sued them for one thing doesn’t mean they can “Defend” a case that was never filed and never needs to be filed — a lawsuit to make the rescission effective.
  5. Their defensive motions do not ask for the rescission to be vacated. Hence the court’s jurisdiction has NOT been invoked on that issue — neither side is pleading for relief that the rescission is either effective (you) or vacated (them).
  6. THAT is why the trial court did not and could not enter an order vacating the rescission. And THAT means that the rescission is still effective and time has run out on the ability of anyone to file an action to vacate the rescission.
  7. Thus THEY are attempting to do a little side step — since they obviously don’t have the ability to plead and prove they are the creditors or that they are representative of creditor X — they instead are trying the “everyone knows that…” defense so they are not required to plead or prove facts that would show the date of consummation, adequacy of disclosures, etc.
  8. The only way the trial court or any court could have entered an order vacating the rescission would be by pleading facts that include the rescission is complete but wrongful.
  9. The only way ANYONE could bring that claim for relief (Vacating the rescission) is if they had standing — according to THEIR pleading and their proof. They didn’t do that. They are seeking to walk around the TILA rescission procedures despite the clear language of the statute and a unanimous Supreme Court decision.
  10. You sued them because they were claiming to be holders of instruments entitling them to foreclose. Now that point is moot because the rescission is effective upon mailing and the instruments they claim to hold are void anyway.
  11. Thus it is improper for the banks, servicers, trustees etc. to file anything in court “contesting” the effectiveness of the rescission or assuming that the rescission was wrongful without filing a complaint alleging facts that establish standing, injury and the wrongful nature of the rescission. Their argument on appeal is the same as the court below — that the rescission was clearly wrongful or that it was somehow not effective because of no tender, no lawsuit etc.
  12. Hence their entire position is procedurally incorrect and should be struck. If they want the relief of vacating the rescission they must bring a lawsuit to do that — just as the statute says. Since they blew the time, not even the creditor can do that anymore and couldn’t anyway because they were at no time the actual creditors or “injured parties” by the allegedly wrongful rescission. Neither the trial court nor the appellate court has had their jurisdiction invoked by either the Plaintiff or the Defendant as to the whether the rescission was effective or should be vacated.

Lawyers for Banks: Ignore Rescission at Your Peril

I have received a copy of the comments made at a very recent seminar for lawyers who represent the servicers, trustees and the alleged trusts. While they fail to commit to writing the issues regarding standing to challenge a rescission, the rest of it is pretty much spot on. Their message is that ignoring or even rejecting the rescission by a letter is not a good idea and that anyone who does so, is acting at their own peril.

They also point out, as have others who have been writing on the subject for the last couple of weeks, that the rescission law, as it now stands, makes it perilous to trade in consumer loans, especially mortgage loans.

In short, the other side has come to the same conclusion that I came to in 2007. They don’t like it, but they understand what the TILA rescission statutes say about procedure, and that a unanimous Supreme Court in Jesinoski v Countrywide, essentially puts every mortgage loan “at risk” — an admission with enormous implications. They are not out of strategies to change things but they recognize they have an uphill battle.

The point about standing is, in my opinion, the most important by far. The TILA rescission is effective upon mailing by operation of law. It is a specific statutory remedy with its own procedures, although there is a cryptic provision in there that allows a judge to change the procedures. But in order to do anything about the rescission once it is effective, which means that the note and mortgage are void, the servicers et al must come up with a real creditor — without which they have nobody who has standing. This puts them on the grill. They have been fighting successfully to keep this information from the borrowers under claims of privacy and confidentiality.

Most lawyers are contesting these claims in a timid way. I ask the fundamental question: why not give the name of the real creditor who could show proof of payment and vault the claim to that of a holder in due course, instead of a holder or attorney in fact? I have represented banks in foreclosure actions. If these defenses were thrown at me I would be proactive — I’d show the creditor, show the proof of payment, and shut the borrower down on all of his defenses. Case over. But the truth is that there is no one party or even one single group that can be identified as the creditor, with or without the empty trusts whose names are used to create the illusion of negotiation of instruments under the UCC.

My sources and my understanding of what they did prevents them from even KNOWING the name of the creditor, which of course opens the door for the servicers to keep the money instead of passing it on to a defined creditor. How can this be? We know the homeowner got the benefit of money being put on the table. How hard can it be to determine whose money was put on the table?

The answer is simple even if it is incredible: they cannot identify the name of the creditor becasue (a) they don’t know and (b) because they have no way of figuring it out. At any one time the huge slush funds controlled by the Investment Banker acting as Master servicer for a nonexistent trust (no res), had money going in and out of it in thousands of ways per minute. At whatever the time was that funding traveled to the closing agent through a sham conduit, the banks simply don’t know which investors had money in that fund and what interest any of the investors had in a particular loan. It is like putting different fruits in a blender and setting it on puree. If someone now asks to have the banana that went into the blender, it is impossible to do.

THAT is the problem with standing in foreclosure actions and the same problem exists for challenging rescissions. But in rescission the issue is laid bare — they can’t rely on the void note and void mortgage for standing. They have to show the real transaction.

Patricia Rodriguez Tonight on the Neil Garfield Show

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Patricia Rodriguez returns tonight to talk about her Seminar on October 31, 2015.. Patricia is a good lawyer and particularly good at organizing cases. She will be talking about Foreclosure Defense, Rescission, Intakes of Clients, and of course the latest in what is happening on the ground in Southern California. One of her strong points is organization — something that most lawyers are not so great at doing. Her seminar will focus on the bricks and mortar of setting up a case for litigation or modification.

BIAS IN THE COURTS: UCC and TILA REVIEW

Our legal history has many examples of enormous errors committed by the Courts that were obvious to some but justified by many. The result is usually mayhem. The cause is a bias toward some underlying fact that was untrue at the time. Some examples include
  1.  the infamous Dred Scott decision where the Supreme Court ruled that a black man is not a person within the meaning of the constitution and therefore could not sue to protect his rights because he was not a citizen by virtue of the FACT that his ancestors had been brought to America as slaves. The underlying bias was considered axiomatically true: that “negroes” were fundamentally subhuman. It took a civil war that took 500,000 casualties and a constitutional amendment to change the results of that decision. We are still dealing with lingering thoughts about whether the color of one’s skin is in any way related to our status as humans, persons and citizens.
  2. the internment of Japanese Americans during World War II. The Supreme Court upheld that decision on the basis of national security. The underlying bias was considered axiomatically true: that people of Japanese descent would have loyalty to the Empire of Japan and not the United States. People of German descent were not interred, probably because they looked more like other Americans. As the war progressed and the military realized that people of Japanese descent were resources rather than enemies, the government came to realize that acknowledging these people as citizens with civil rights was more important than the perception of a nonexistent threat to national security. Americans of Japanese descent proved invaluable in the war effort against Japan.
  3. the Citizens United decision in which the Supreme Court gave the management of corporations a “Second vote” in the court of public opinion. The underlying bias was considered axiomatically true: that entities created on paper were no less important than the rights of real people as citizens. The additional underlying bias was that corporations are better than people.
  4. the hundreds of thousands of decisions from thousands of courts that relied on the fictitious power of the court to rewrite legislation that Judge(s) didn’t like. A current perfect example was reading common law (inferior, legally speaking) precedent to override express statutory procedures for the exercise and effect of statutory rescission under the Federal Truth in Lending Act. Over many years and many courts at the trial and appellate level the Judges didn’t like TILA rescission so they changed the wording of the statute to mean that common law procedures and principles apply — thus requiring the homeowner to file suit in order to make rescission effective, and requiring the tender of money or property to even have standing to rescind. This was contrary to the express provisions of the TILA rescission statute. Approximately 8 million+ people were displaced from their homes because of those decisions and the property records of thousands of counties have been forever debauched, likely requiring some legislative action to clear title on some 80+ million transactions involving tens of trillions of dollars. The underlying bias was considered axiomatically true: that the legislature could not have meant that individuals have as much power as big corporation and they should not have such power. Then the short Supreme Court decision from a unanimous court in Jesinoski v Countrywide made the correction, effectively overturning hundreds of thousands of incorrect decisions. A court may not interpret a statute that is clear on its face. A court may not MAKE the law.
  5. the millions of foreclosures that have been allowed on the premise that the “holder” of a note should get the same treatment as a “holder in due course.” More than 16 million people have been displaced from their homes as a result of an underlying bias that was and often remains axiomatically true: decisions in favor of homeowners would give them a free house and decisions that allow foreclosure protect legitimate creditors. Both “axioms” are as completely wrong as the decisions about TILA Rescission.
It is the last item that I address in this article. A holder in due course is allowed to both plead and prove only the elements of Article 3 of the UCC. Article 3 of the UCC states that a party who purchases negotiable paper in good faith without knowledge of the maker’s defenses and before the terms are breached is presumed to be entitled to relief upon making their prima facie case — which are the elements already listed here. Even if there were irregularities or even fraud at the time of the origination of the loan or at a later time but before the HDC purchased the paper, the HDC will get judgment for the relief demanded. A “holder” (on the other hand) comes in many flavors under Article 3 but they all have one thing in common: they are not holders in due course.
The fundamental error of the courts has been to treat the “holder” as a “holder in due course” at the time of trial. It is true that the holder may survive a motion to dismiss merely by alleging that it is a holder — but fundamental error is being committed at trial where the holder must prove its underlying prima facie case. It should be noted that the requirement of consideration is repeated in Article 9 where it states that a security instrument must be purchased by a successor not merely transferred. So regardless of whether one is proceeding under Article 3 or Article 9, no foreclosure can be allowed without paying real money to a party who actually owned the mortgage. The Courts universally have ignored these provisions under the bias that it is axiomatically true that the party seeking to enforce the paper is so sophisticated and trustworthy that their mere request for relief should result in the relief demanded. This bias is “supported” by an additional bias: that failure to enforce such documents would undermine the entire economy of the country — a policy decision that is not within the province of the courts. And deeper still the bias is that it is axiomatically true that the paper would not exist without the actual existence of monetary transactions for origination and transfer of the paper. These “axioms” are not true.
As a result, courts have regularly rubber-stamped the extreme equitable remedy of foreclosure in favor of a party who has no financial interest in the alleged paper, nor any risk of loss or actual loss. The foreclosures are part of a scheme to make money at the expense of the actual people who are losing money. If this was not true, there would have been thousands of instances in which the “holder” presented the money trail that supposedly was the foundation for the paper that was executed and delivered, destroyed or lost. They never do. If they did, the volume of litigated foreclosure cases would drop to a drizzle. And these parties fight successfully to avoid not only the burden of proof but even the ability of the homeowner to inquire (discovery) about the “transactions” about which the paper is referring — either at origination or in purported transfers. Backdating assignments and endorsements would be unnecessary. “Robo-signing” would also be unnecessary. And the constant flux of new servicer and new trustees would also be unnecessary. Many of these events consist of illegal acts that are routinely ignored by the courts for reasons of bias rather than judicial interpretation.
A holder in due course proves their prima facie case by
a) proffering a witness with personal knowledge
b) proffering testimony that allows the commercial paper to be admitted as evidence (the note). This evidence need only be to the effect that the witness, or his company, physically has possession of the original note and presents it in court.
c) proffering testimony and records showing that the paper (the note) was purchased for good and valuable consideration by the party seeking to enforce it. This means showing proof of payment for the paper like a wire transfer receipt or a cancelled check.
d) proffering testimony and records showing that the mortgage, which is not a negotiable instrument, was purchased withe the note.
e) proffering testimony and records that the transactions were real and in good faith
f) proffering testimony that the purchaser of the paper had no knowledge of the maker’s defenses
g) proffering testimony that no default existed at the time of purchase of the paper.
Because of bias, the Courts, just as they did with TILA rescission, have mostly committed fundamental error by allowing to alleged “holders” a lesser standard of proof than the party who is legitimately in a superior position of being a holder in due course. It starts with a correct decision denying the homeowner’s motion to dismiss but ends up in fundamental error when the court “forgets” that the enforcing party has a factual case to prove beyond mere possession of an instrument they say is the original note.
The holder, in contrast to the holder in due course, is not entitled to any such presumptions at trial, except that they hold with rights to enforce. They don’t hold with automatic rights to win the case however.
A holder proves its prima facie case by
a) proffering a witness with personal knowledge
b) proffering testimony and records that allow the commercial paper to be admitted as evidence (the note). This evidence need only be to the effect that the witness, or his company, physically has possession of the original note and presents it in court.
c) proffering testimony and evidence as to the chain of custody of the paper the party seeks to enforce.
d) proffering testimony and records together with proof of payment of the original transaction (a requirement generally ignored by the courts). This means proof that the original party in the “chain” relied upon by the party seeking to enforce actually funded the alleged “loan” with funds of its own or for which it is responsible (e.g., a real warehouse credit arrangements where the originator bears the risk of loss).
e) proffering testimony and records showing that the paper (note) was purchased for good and valuable consideration by the creditor on whose behalf the party is seeking to enforce it. This means showing proof of payment for the paper like a wire transfer receipt or a cancelled check.
f) proffering testimony and records showing that the mortgage was also purchased by the creditor for good and valuable consideration. This means showing proof of payment for the paper like a wire transfer receipt or a cancelled check.
g) proffering testimony and records that the transactions was real and in good faith
h) proffering testimony that no default existed at the time of purchase of the paper. Otherwise, it wouldn’t be commercial paper and the party seeking to enforce would need to allege and prove  its standing and its prima facie case without benefit of the note or mortgage.
It should be added here that the non-judicial foreclosure states essentially make it even easier for an unrelated party to force the sale of property. Those statutory procedures are wrongly applied leaving the burden of proof as to UCC rights to enforce squarely on the homeowner who in most cases is not even a “borrower” in the technical sense. Such states are allowing parties to obtain a forced sale of property in cases where they would not or should not prevail in a judicial foreclosure. The reason is simple: the procedure for realignment of the parties has been ignored. When a homeowner files an action against the “new trustee” (substituted by virtue of the self proclaimed and unverified status of a third party beneficiary under the note and mortgage), the homeowner is somehow seen as the party who must prove that the prima facie case is untrue (giving the holder the rights of a holder in due course); the homeowner is being required to defend a case that was never filed or alleged. Instead of immediately shifting the burden of proof to the only party that says it has the rights and paperwork to justify the forced sale. This is an unconstitutional aberration of the rights of due process. The analogy would be that a defendant accused of murder must prove he did not commit the crime before the State had any burden to accuse the defendant or put on evidence. Realignment of the parties would comply with the constitution without changing the non-judicial statutes. It would require the challenged party to prove it should be allowed to enforce the forced sale of the property. Any other interpretation requires the the homeowner to disprove a case not yet alleged, much less proven in a prima facie case.
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