Mnuchin as Treasury Secretary: Lackey for the TBTF Banks

Mnuchin was and remains “the guy between the guys.” Billed as the organizer of OneWest his role was to provide a layer between the founders and the rest of the world. His prospective appointment As Secretary of the US Treasury means that the TBTF banks would have a lackey to do what the banks wanted the US Treasury to do.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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It is reported that OneWest foreclosed on 40,000 homes. I have already described to you that Foreclosures sponsored or initiated by OneWest were very often done in the name of another entity. For example, Fannie Mae or Freddie Mac. Those are not counted in the number of homes foreclosed by OneWest. My experience is that the number of homes foreclosed where OneWest was the party “pulling the strings” (not entirely accurate since control was centralized far from OneWest) is at least equal to the number reported for foreclosure cases in which OneWest was the foreclosing party.
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The average “originated” principal amount of debt in which a homeowner received financial benefit from a direct receipt of funds or funds paid out on behalf of the homeowners to pay off an old “loan” or to pay the seller is reported as an average of $225,000.
The rest is arithmetic. If you multiply the number of foreclosures reported (40,000) times the principal amount of debt that a rose from the origination of transactions with homeowners on refi or prospective homeowners who were buying ($225,000) then you get a total of $9,000,000,000.
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If you look at the deal between the FDIC, the US Bankruptcy Trustee for IndyMac, and OneWest, you will not find $9 billion in consideration for the purchase of loans by OneWest from the IndyMac estate. Both the FDIC and the US Bankruptcy Trustee were under a duty to maximize the return to creditors. They did not receive $9 billion for sold loans because there were no loans to sell. OneWest principals merely put up or promised to commit around $1-$2 Billion in capital to qualify as a bank and to take over the service contracts and brick and mortar locations of IndyMac. This is nearly identical to the Chase-WAMU deal.
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But there is more: under a very lucrative loss sharing agreement with the FDIC, OneWest submitted claims to the FDIC to cover 80% of the alleged losses on nonperforming loans and then, after getting paid, proceeded to foreclose for the whole amount. 
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There is no evidence of any particular loan or pool of loans being sold to OneWest for any consideration that traveled from OneWest to either the FDIC as receiver or the US Bankruptcy trustee for the state of IndyMac. Yet OneWest followed the industry practice of stepping AS THOUGH they were the creditor, claiming they were the holder of negotiable paper because the real creditors — investors who advanced money as though they were buying real MBS (which were bogus securities issued by a nonexistent entity that never did any business) — were unaware of the status of their claim against the REMIC Trusts that were ostensibly purchasing loan portfolios but lacked the funding to do so because the Trusts never received the proceeds of sale of the MBS. 
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Second, OneWest did not actually have any business records. They are all  fabricated or outsourced (or both) to a subdivision of several different “servicing” entities that are directed by LPS/Blacknight. LPS is tasked with (1) selecting the Plaintiff or beneficiary of a foreclosure (2) collecting and creating records (3) fabrications and forgeries (and robosigning) of assignments, endorsements etc.
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Bottom Line: OneWest foreclosed on loans in which it was neither the owner nor the servicer. While it acquired servicing rights from IndyMac, the real servicers were selected by “Master Servicers” (underwriters/TBTF Banks) of the nonexistent trusts. So while IndyMac theoretically had servicing rights for the most part the actual job of servicing was done elsewhere, under the watchful eye of LPS. Thus when OneWest acquired the IndyMac servicing “business” it was in a actuality acquiring nothing.
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Thus approximately $9 billion in foreclosures, as reported in the media resulted in windfall profits to OneWest of a percentage of the liquidated properties, estimated total at around $6 billion, around two thirds of which $6 billion) was given to the “Master Servicers” as “recovery” of “servicer advances” (which neither came from the servicers nor were they advances as the payments were taken from dynamic dark pools consisting mostly of investor money), netting $2 Billion to OneWest plus “servicing fees” despite the fact that they performed very little or no servicing.
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The organizers of OneWest were billionaires that went into it on the premise and promise that they would make a few billion dollars, although they were never entirely clear on where the profits were coming from. OneWest was then sold after the windfall the profit projections slumped because there were practically no more alleged IndyMac originated “loans” to foreclose. The PR spin was that they were getting out because their temporary agreement to operate OneWest was expiring. But the real reason was that there was nothing left to plunder and the founders were getting increasingly uncomfortable about where the money was coming from. OneWest could have easily slipped into the roles occupied by Ocwen, SPS, Bayview et al etc and “acquired” more loans in Re-REMIC deals, but the founders wanted no part of it.
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Homeowners lost their homes on the premise that they thought they had a legitimate loan from a legitimate lender. But IndyMac was originating loans under pre-sale agreements that were effective BEFORE even the applications for loans were received. The Purchase and Assumption Agreement provided that the actual lender’s identity would be withheld from the borrower (a direct violation of TILA). The money for the funding of the alleged loan transactions came from the dark pools, the constituents of which were robbed of their right to the notes and mortgages. The irony is that the counterparty to IndyMac’s Purchase and Assumption Agreements were mere conduits and in many cases sham conduits.
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Mnuchin was and remains “the guy between the guys.” Billed as the organizer of OneWest his role was to provide a layer between the founders and the rest of the world. His prospective appointment As Secretary of the US Treasury means that the TBTF banks would have a lackey to do what the banks wanted the US Treasury to do. This greases the wheels of false securitization. The banks have never stopped in their “perfect” crime wave and are if anything speeding up with false and sometimes true claims of securitization of just about anything — including “servicer advances.” That adds insult to injury in that they are using their scheme of theft from investors and selling rights to participate in the scheme to investors. In the end, it is simply a scheme to use other people’s money and then step into their shoes without them knowing it.

California Suspends Dealings with Wells Fargo

The real question is when government agencies and regulators PLUS law enforcement get the real message: Wells Fargo’s behavior in the account scandal is the tip of the iceberg and important corroboration of what most of the country has been saying for years — their business model is based upon fraud.

Wells Fargo has devolved into a PR machine designed to raise the price of the stock at the expense of trust, which in the long term will most likely result in most customers abandoning such banks for fear they will be the next target.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see http://www.sacbee.com/news/politics-government/capitol-alert/article104739911.html

John Chiang, California Treasurer, has stopped doing business with Wells Fargo because of the scheme involving fraud, identity theft and customer gouging for services they never ordered on accounts they never opened. It is once again time for Government to scrutinize the overall business plan and business map of Wells Fargo and indeed all of the top (TBTF) banks.

Wells Fargo is attempting to do crisis management, to wit: making sure that nobody looks at other schemes inside the bank.

It is the Consumer Financial Protection Bureau (CFPB) that was conceived by Senator Elizabeth Warren who has revealed the latest example of big bank fraud.

The simple fact is that in this case, Wells Fargo management made an absurd demand on their employees. Instead of the national average of 3 accounts per person they instructed managers and employees to produce 8 accounts per customer. Top management of Wells Fargo have been bankers for decades. They knew that most customers would not want, need or accept 5 more accounts. Yet they pressed hard on employees to meet this “goal.” Their objective was to defraud the investing public who held or would buy Wells Fargo stock.

In short, Wells Fargo is now the poster child for an essential defect in business structure of public companies. They conceive their “product” to be their stock. That is how management makes its money and that is how investors holding their stock like it until they realize that the entire platform known as Wells Fargo has devolved into a PR machine designed to raise the price of the stock at the expense of trust, which in the long term will most likely result in most customers abandoning such banks for fear they will be the next target. Such companies are eating their young and producing a bubble in asset values that, like the residential mortgage market, cannot be sustained by fundamental facts — i.e., real earnings on a real trajectory of growth.

So the PR piece about how they didn’t know what was going on is absurd along with their practices. Such policies don’t start with middle management or employees. They come from the top. And the goal was to create the illusion of a rapidly growing bank so that more people would buy their stock at ever increasing prices. That is what happens when you don’t make the individual members of management liable under criminal and civil laws for engaging in such behavior.

There was only one way that the Bank could achieve its goal of 8 accounts per customer — it had to be done without the knowledge or consent of the customers. Now Wells Fargo is trying to throw 5,000 employees under the bus. But this isn’t the first time that Wells Fargo has arrogantly thrown its customers and employees under the bus.

The creation of financial accounts in the name of a person without that person’s knowledge or consent is identity theft, assuming there was a profit motive. The result is that the person is subjected to false claims of high fees, their credit rating has a negative impact, and they are stuck dealing with as bank so large that most customers feel that they don’t have the resources to do anything once the fraud was discovered by the Consumer Financial protection Board (CFPB).

Creating a loan account for a loan that doesn’t exist is the same thing. In most cases the “loan closings” were shams — a show put on so that the customer would sign documents in which the actual party who loaned the money was left out of the documentation.

This was double fraud because the pension funds and other investors who deposited money with Wells Fargo and the other banks did so under the false understanding that their money would be used to buy Mortgage Backed Securities (MBS) issued by a trust with assets consisting of a loan pool.

The truth has emerged — there were no loan pols in the trusts. The entire derivative market for residential “loans” is built on a giant lie.  But the consequences are so large that Government is afraid to do anything about it. Wells Fargo took money from pension funds and other “investors,” but did not give the proceeds of sale of the alleged MBS to the proprietary vehicle they created in the form of a trust.

Hence the trust was never funded and never acquired any property or loans. That means the “mortgage backed securities” were not mortgage backed BUT they were “Securities” under the standard definition such that the SEC should take action against the underwriters who disguised themselves as “master Servicers.”

In order to cover their tracks, Wells Fargo carefully coached their employees to take calls and state that there could be no settlement or modification or any loss mitigation unless the “borrower” was at least 90 days behind in their payments. So people stopped paying an entity that had no right to receive payment — with grave consequences.

The 90 day statement was probably legal advice and certainly a lie. There was no 90 day requirement and there was no legal reason for a borrower to go into a position where the pretender lender could declare a default. The banks were steering as many people, like cattle, into defaults because of coercion by the bank who later deny that they had instructed the borrower to stop making payments.

So Wells Fargo and other investment banks were opening depository accounts for institutional customers under false pretenses, while they opened up loan accounts under false pretenses, and then  used the identity of BOTH “investors” and “borrowers” as a vehicle to steal all the money put up for investments and to make money on the illusion of loans between the payee on the note and the homeowner.

In the end the only document that was legal in thee entire chain was a forced sale and/or judgment of foreclosure. When the deed issues in a forced sale, that creates virtually insurmountable presumptions that everything that preceded the sale was valid, thus changing history.

The residential mortgage loan market was considerably more complex than what Wells Fargo did with the opening of the unwanted commercial accounts but the objective was the same — to make money on their stock and siphon off vast sums of money into off-shore accounts. And the methods, when you boil it all down, were the same. And the arrogant violation of law and trust was the same.

 

Who is the Creditor? NY Appellate Decision Might Provide the Knife to Cut Through the Bogus Claim of Privilege

The crux of this fight is that if the foreclosing parties are forced to identify the creditors they will only have two options, in my opinion: (a) commit perjury or (b) admit that they have no knowledge or access to the identity of the creditor

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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see http://4closurefraud.org/2016/06/10/opinion-here-ny-court-says-bank-of-america-must-disclose-communications-with-countrywide-in-ambac-suit/

We have all seen it a million times — the “Trustees”, the “servicers” and their agents and attorneys all beg the question of identifying the names and contact information of the creditors in foreclosure actions. The reason is simple — in order to answer that question truthfully they would be required to admit that there is no party that could properly be defined as a creditor in relation to the homeowner.

They have successfully pushed the point beyond the point of return — they are alleging that the homeowner is a debtor but they refuse to identify a creditor; this means they are being allowed to treat the homeowner as a debtor while at the same time leaving the identity of the creditor unknown. The reason for this ambiguity is that the banks, from the beginning, were running a scheme that converted the money paid by investors for alleged “mortgage backed securities”; the conversion was simple — “let’s make their money our money.”

When inquiry is made to determine the identity of the creditor the only thing anyone gets is some gibberish about the documents PLUS the assertion that the information is private, proprietary and privileged.  The case in the above link is from an court of appeals in New York. But it could have profound persuasive effect on all foreclosure litigation.

Reciting the tension between liberal discovery and privilege, the court tackles the confusion in the lower courts. The court concludes that privilege is a very narrow shield in specific situations. It concludes that even the attorney-client privilege is a shield only between the client and the attorney and that adding a third party generally waives that privilege. The third party privilege is only extended in narrow circumstances where the parties are seeking a common goal. So in order to prevent the homeowner from getting the information on his alleged creditor, the foreclosing parties would need to show that there is a common goal between the creditor(s) and the debtor.

Their problem is that they can’t do that without showing, at least in camera, that the identity of the creditor is known and that somehow the beneficiaries of an empty trust have a common goal (hard to prove since the trust is empty contrary to the terms of the “investment”). Or, they might try to identify a creditor who is neither the trust nor the investors, which brings us back to perjury.

Self Serving Fabrications: Watch for “Attorney in Fact”

In short, the proffer of a document signed not by the grantor or assignor but by a person with limited authority and no knowledge, on behalf of a company claiming to be attorney in fact is an empty self-serving document that provides escape hatches in the event a court actually looks at the document. It is as empty as the Trusts themselves that never operated nor did they purchase any loans.

Get a consult! 202-838-6345

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

If you had a promissory note that was payable to someone else, you would need to get it endorsed by the Payee to yourself in order to negotiate it. No bank, large or small, would accept the note as collateral for a loan without several conditions being satisfied:

  1. The maker of the note would be required to verify that the debt and the fact that it is not in dispute or default. This is standard practice in the banking industry.
  2. The Payee on the note would be required to endorse it without qualification to you. Like a check, in which you endorse it over to someone else, you would say “Pay to the order of John Smith.”
  3. The bank would need to see and probably keep the original promissory note in its vault.
  4. The credit-worthiness of the maker would be verified by the bank.
  5. Your credit worthiness would be verified by the bank.

Now imagine that instead of an endorsement from the payee on the note, you instead presented the bank with an endorsement signed by you as attorney in fact for the payee. So if the note was payable to John Jones, you are asking the bank to accept your own signature instead of John Jones because you are the authorized as an agent of John Jones.  No bank would accept such an endorsement without the above-stated requirements PLUS the following:

  1. An explanation  as to why John Jones didn’t execute the endorsement himself. So in plain language, why did John Jones need an agent to endorse the note or perform anything else in relation to the note? These are the rules of the road in the banking and lending industry. The transaction must be, beyond all reasonable doubt, completely credible. If the bank sniffs trouble, they will not lend you money using the note as collateral. Why should they?
  2. A properly executed Power of Attorney naming you as attorney in fact (i.e., agent for John Jones).
  3. If John Jones is actually a legal entity like a corporation or trust, then it would need a resolution from the Board of Directors or parties to the Trust appointing you as attorney in fact with specific powers to that completely cover the proposed authority to endorse the promissory note..
  4. Verification from the John Jones Corporation that the Power of Attorney is still in full force and effect.

My point is that we should apply the same rules to the banks as they apply to themselves. If they wouldn’t accept the power of attorney or they were not satisfied that the attorney in fact was really authorized and they were not convinced that the loan or note or mortgage was actually owned by any of the parties in the paper chain, why should they not be required to conform to the same rules of the road as standard industry practices which are in reality nothing more than commons sense?

What we are seeing in thousands of cases, is the use of so-called Powers of Attorney that in fact are self serving fabrications, in which Chase (for example) is endorsing the note to itself as assignee on behalf of WAMU (for example) as attorney in fact. A close examination shows that this is a “Chase endorses to Chase” situation without any actual transaction and nothing else. There is no Power of Attorney attached to the endorsement and the later fabrication of authority from the FDIC or WAMU serves no purpose on loans that had already been sold by WAMU and no effect on endorsements purportedly executed before the “Power of Attorney” was executed. There is no corporate resolution appointing Chase. The document is worthless. I recently had a case where Chase was not involved but US Bank as the supposed Plaintiff relied upon a Power of Attorney executed by Chase.

This is a game to the banks and real life to everyone else. My experience is that when such documents are challenged, the “bank” generally loses. In two cases involving US Bank and Chase, the “Plaintiff” produced at trial a Power of Attorney from Chase. And there were other documents where the party supposedly assigning, endorsing etc. were executed by a person who had no such authority, with no corporate resolution and no other evidence that would tend to show the document was trustworthy. We won both cases and the Judge in each case tore apart the case represented by the false Plaintiff, US Bank, “as trustee.”

The devil is in the details — but so is victory in the courtroom.

ABSENCE OF CREDITOR: Breaking Down the Language Of The “Trust”

The problem with all this is that the REMIC Trust never received the proceeds of sale of the MBS and therefore could not have paid for or purchased any loans. It had no assets. And THAT is why the Trust never shows up as a Holder in Due Course (HDC).  HDC is a very strong status that changes the risk of loss on a note. Under state law (UCC) of every state alleging and proving HDC status means that the entire risk shifts to the maker of the note (the person who signed it) even if there were fraudulent or other circumstances when the note was signed.

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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A reader pointed to the following language, asking what it meant:

The certificates represent obligations of the issuing entity only and do not represent an interest in or obligation of CWMBS, Inc., Countrywide Home Loans, Inc. or any of their affiliates.   (See left side under the 1st table –  https://www.sec.gov/Archives/edgar/data/906410/000114420407029824/v077075_424b5.htm)

If an “investor” pays money to the underwriter of the issuance of MBS from a “REMIC Trust” they are getting a hybrid security that (a) creates a liability of the REMIC Trust to them and (2) an indirect ownership of the loans acquired by the trust.

The wording presented means that only the REMIC Trust owes the investors any money and the ownership interest of the investors is only as beneficiaries of the trust with the trust assets being subject to the beneficiaries’ claim of an ownership interest in the loans. But if the Trust is and remains empty the investors own nothing and will never see a nickle except by (a) the generosity of the underwriter (who is appointed “Master Servicer” in the false REMIC Trust, (b) PONZI and Pyramid scheme payments (I.e., receipt fo their own money or the money of other “investors) or (c) settlement when the investors catch the investment bank with its hand in the cookie jar.

The wording of the paperwork in the false securitization scheme reads very innocently because the underwriting and selling institutions should not be the obligor for payback of the investor’s money nor should the investors be allocated any ownership interest in the underwriting or selling institutions.

The problem with all this is that the REMIC Trust never received the proceeds of sale of the MBS and therefore could not have paid for or purchased any loans. It had no assets. And THAT is why the Trust never shows up as a Holder in Due Course (HDC).  HDC is a very strong status that changes the risk of loss on a note. Under state law (UCC) of every state alleging and proving HDC status means that the entire risk shifts to the maker of the note (the person who signed it) even if there were fraudulent or other circumstances when the note was signed.

By contrast, the allegation and proof that a Trust was a holder before suit was filed or before notice of default and notice of sale in a deed of trust state, means that the holder must overcome the defenses of the maker. If one of the defenses is that the holder received a void assignment, then the holder must prove up the basis of its stated or apparent claim that it is a holder with rights to enforce. The rights to enforce can only come from the creditor, directly or indirectly.

And THAT brings us to the issue of the identity of the creditor. This is something the banks are claiming is “proprietary” information — a claim that has been accepted by most courts, but I think we are nearing the end of the silly notion that a party can claim the right to enforce on behalf of a creditor who is never identified.

Why The Investors Are Not Screaming “Securities Fraud!”

Everyone is reporting balance sheets with assets that derive their value on one single false premise: that the trusts that issued the original mortgage bonds owned the loans. They didn’t.

SUPPORT LIVINGLIES!

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This article is not a substitute for an opinion and advice from competent legal counsel — but the opinion of an attorney who has done no research into securitization and who has not mastered the basics, is no substitute for an opinion of a securitization expert.

Mortgage backed securities were excluded from securities regulation back in 1998 when Congress passed changes in the laws. The problem is that the “certificates” issued were (a) not certificates, (b) not backed by mortgages because the entity that issued the MBS (mortgage bonds) — i.e. the REMIC Trusts — never acquired the mortgage loans and (c) not issued by an actual “entity” in the legal sense [HINT: Trust does not exist in the absence of any property in it]. And so the Real Estate Mortgage Investment Conduit (REMIC) was a conduit for nothing. [HINT: It can only be a “conduit” if something went through it] Hence the MBS were essentially bogus securities subject to regulation and none of the participants in this dance was entitled to preferred tax treatment. Yet the SEC still pretends that bogus certificates masquerading as mortgage backed securities are excluded from regulation.

So people keep asking why the investors are suing and making public claims about bad underwriting when the real problem is that there were no acquisition of loans by the alleged trust because the money from the sale of the mortgage bonds never made it into the trust. And everyone knows it because if the trust had purchased the loans, the Trustee would represent itself as a holder in course rather than a mere holder. Instead you find the “Trustee” hiding behind a facade of multiple “servicers” and “attorneys in fact”. That statement — alleging holder in due course (HDC) — if proven would defeat virtuality any defense by the maker of the instrument even if there was fraud and theft. There would be no such thing as foreclosure defense if the trusts were holders in due course — unless of course the maker’s signature was forged.

So far the investors won’t take any action because they don’t want to — they are getting paid off or replaced with RE-REMIC without anyone admitting that the original mortgage bonds were and remain worthless. THAT is because the managers of those funds are trying to save their jobs and their bonuses. The government is complicit. Everyone with power has been convinced that such an admission — that at the base of all “securitization” chains there wasn’t anything there — would cause Armageddon. THAT scares everyone sh–less. Because it would mean that NONE of the up-road securities and hedge products were worth anything either. Everyone is reporting balance sheets with assets that derive their value on one single false premise: that the trusts that issued the original mortgage bonds owned the loans. They didn’t.

Banks are essentially arguing in court that the legal presumptions attendant to an assignment creates value. Eventually this will collapse because legal presumptions are not meant to replace the true facts with false representations. But it will only happen when we reach a critical mass of trial court decisions that conclude the trusts never owned the loans, which in turn will trigger the question “then who did own the loan” and the answer will eventually be NOBODY because there never was a loan contract — which by definition means that the transaction cannot be called a loan. The homeowner still owes money and the debt is not secured by a mortgage, but it isn’t a loan.

You can’t force the investors into a deal they explicitly rejected in the offering of the mortgage bonds — that the trusts would be ACQUIRING loans not originating them. Yet all of the money from investors who bought the bogus MBS went to the “players” and then to originating loans, not acquiring them.

And you can’t call it a contract between the investors and the borrowers when neither of them knew of the existence of the other. There was no “loan.” Money exchanged hands and there is a liability of the borrower to repay it — to the party who gave them the money or that party’s successor. What we know for sure is that the Trust was never in that chain.

The mortgage secured the performance under the note. But the note was itself part of the fraud in which the “borrower” was prevented from knowing the identity of the lender, the compensation of the parties, and the actual impact on his title. The merger of the debt into the note never happened because the party named on the note was not the party giving the money. Hence the mortgage should never have been released from the closing table much less recorded.

So if the fund managers admit they were duped as I have described, then they can kiss their jobs goodbye. There were plenty of fund managers who DID look into these MBS and concluded they were just BS.

“Credit Bid” Comes Under Scrutiny in 9th Circuit

As I have been writing and talking about the forced judicial sales, my opinion has always been that in most cases there is an absence of evidence that the party making the credit bid was in fact the creditor thus entitled to make a “credit bid” at the auction. The credit bid is an allowance for the creditor to bid up to the amount of the debt owed to them without paying cash at the sale. This has been ignored since I first started writing about it. I think the credit bid is void and fraudulent if a non-creditor submits a credit bid when it is not the creditor. In nonjudicial states this is an easier proposition than in judicial states where a Final Judgment has been rendered.

This case is also notable because it finally addresses the issue of the liability of the Trustee on a deed of trust, concluding that if the party claiming to be the beneficiary was in fact not the beneficiary, and there is no evidence to suggest otherwise, the trustee is potentially liable. It would be helpful to pursue discovery against the Trustee, since it is always a “substituted trustee” that is in fact under the thumb or owned by the parties who are making self-serving declarations of their status as “beneficiaries” under the deed of trust. THAT of course provides grounds to object and challenge the substitution of trustee and everything that follows. If the self-proclaimed beneficiary is a nonexistent entity or otherwise does not conform to the statutory definition of a beneficiary, then it has no power to substitute a new trustee. And everything that the trustee does after that point is void. In discovery look for the agreement that says the new Trustee is indemnified and held harmless for all claims, violations etc. It’s there — but you need to force the issue.

THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER. ALSO NOTE THAT THIS IS NOT YET PUBLISHED AND THEREFORE IS NOT MANDATORY AUTHORITY YET.
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Get a consult! 202-838-6345

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see 9th Circuit decision, Jacobsen v. Aurora Loan Services, Case No. 12-17021

Wrongful foreclosure. We reverse the district court’s grant of summary judgment in favor of Aurora on the wrongful foreclosure claim. In California, the elements of a wrongful foreclosure action are (1) the trustee or mortgagee caused an illegal, fraudulent, or willfully oppressive sale of real property pursuant to a power of sale in a mortgage or deed of trust; (2) the party attacking the sale was prejudiced or harmed; and (3) in cases where the trustor or mortgagor challenges the sale, the trustor or mortgagor tendered the amount of the secured indebtedness or was excused from tendering. Sciarratta v. U.S. Bank Nat’l Ass’n, 202 Cal. Rptr. 3d 219, 226 (Ct. App. 2016). The district court erred by granting summary judgment on the ground that it found nothing wrong with the foreclosure sale.
First, the district court failed to review the record in the light most favorable to the non-movants when the district court assumed that the form of Aurora’s bid at the foreclosure sale was a cash bid. On appeal, the parties now agree that the form of the bid was a credit bid.
Second, a genuine dispute of material fact remains regarding whether Aurora properly made a credit bid. California law permits “present beneficiary of the deed of trust” to credit bid at the foreclosure sale. Cal. Civ. Code § 2924h(b). However, it is not uncontroverted that Aurora was the present beneficiary of the deed of trust. A deed of trust is “inseparable from the note it secures.” Yvanova v. New Century Mortg. Corp., 365 P.3d 865, 850 (Cal. 2016); see also Domarad v. Fisher & Burke, Inc., 76 Cal. Rptr. 529, 536 (Ct. App. 1969) (“[A] deed of trust has no assignable quality independent of the debt, it may not be assigned or transferred apart from the debt, and an attempt to assign the deed of trust without a transfer of the debt is without effect.”). The record contains evidence that Aurora did not “own” O’Brien’s loan before the foreclosure. ER 19-20, 136-38, 181. However, the record also contains evidence that Aurora is “currently in possession” of the original promissory note, which was endorsed in blank, although it is not clear from Aurora’s declaration when Aurora became the holder of the note.[4] [ER 179-80; 185-195]. It appears that there remains a question of fact whether Aurora was the “beneficiary” of the deed of trust at the time of the foreclosure and thus whether it was entitled to make a credit bid at the foreclosure sale, and we remand for the district court to address this issue in the first instance.
Moreover, in order to prevail on their claim of wrongful foreclosure, Plaintiffs must also show that they suffered prejudice or harm as a result of irregularities or illegalities in the foreclosure sale. Sciarratta, 202 Cal. Rptr. 3d at 226. Because the district court granted summary judgment to Aurora on a different ground, the court did not address the element of prejudice or harm. In the circumstances, we also deem it prudent to remand this claim to the district court to consider the prejudice question in the first instance. We therefore reverse the district court’s grant of summary judgment on the wrongful foreclosure claim and remand for further proceedings.[5]
AFFIRMED IN PART AND REVERSED AND REMANDED IN PART. The parties shall bear their own costs on appeal.
[**] The Honorable James V. Selna, United States District Judge for the Central District of California, sitting by designation.
[*] This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.
[1] The district court did not address standing. However, “[w]e may affirm on any ground supported by the record, even it if differs from the rationale used by the district court.” Buckley v. Terhune, 441 F.3d 688, 694 (9th Cir. 2006) (en banc).
[2] We GRANT both parties’ requests for judicial notice.
[3] In their reply, Plaintiffs suggest that their cancellation of instruments claim survives their contention that the note and deed of trust were void ab initio. Because this argument was first raised in the reply brief, we deem it waived. Delgadillo v. Woodford, 527 F.3d 919, 930 n.4 (9th Cir. 2008).
[4] Note that in today’s modern mortgage world, the “owner” of the underlying debt (that is, the entity who will receive the ultimate economic benefit of payments from the note, less a servicing fee) and “holder” of the note (the party legally entitled to enforce the obligations of the note) are not always one and the same. See, e.g., Brown v. Wash. State Dep’t of Commerce, 359 P.3d 771, 776-77 (Wash. 2015) (discussing modern mortgage practices and the secondary market for mortgage notes; “Freddie Mac owns [borrower’s] note. At the same time, a servicer . . . holds the note and is entitled to enforce it.“)(emphasis added). It thus appears possible that the “beneficiary” under the deed of trust would follow with the note (and with the entity “currently entitled to enforce [the] debt”), rather than the income stream. See Yvanova, 365 P.3d at 850-51; see also Hernandez v. PNMAC Mortg. Opp. Fund Investors, LLC, 2016 WL 3597468, *6 (Cal. Ct. App. June 27, 2016) (unpublished) (if the foreclosing party “could properly and conclusively establish . . . that it did hold the Note at the [time of foreclosure], that would be dispositive and preclude a wrongful foreclosure cause of action because a deed of trust automatically transfers with the Note it secures—even without a separate assignment.”)(citing Yvanova).
[5] We also reverse the district court’s grant of Cal-Western’s motion to dismiss the wrongful foreclosure claim. The trustee must conduct the foreclosure sale “fairly, openly, reasonably, and with due diligence” “to protect the rights of the mortgagor and others.” Hatch v. Collins, 275 Cal. Rptr. 476, 480 (Ct. App. 1990). Here, the complaint alleges that Cal-Western’s acceptance of a void credit bid was unlawful. If the credit bid was void and the acceptance of the credit bid was unlawful, Cal-Western failed to conduct the foreclosure sale with due diligence, and thus the complaint states a claim against Cal-Western.

 

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