1099-C Received from “Servicer”

My personal take on this is that borrowers who receive this form for “forgiveness of debt” should probably send a letter or form of contest to the IRS stating the objection to the filing of the 1099-C. The objection or contest should state, in most cases, that this has been filed by a party who had no right, title or interest in the loan and that the form is not indicative of any final resolution of the debt, which is owned by third parties unrelated to the filer.

One of  my favorite legal research firms just published a short blurb on the subject:

The Lawletter Vol 43 No 7 Charlene Hicks—Senior Attorney, National Legal Research Group

To date, no consensus has been reached among courts throughout the United States on the question as to whether a creditor’s issuance of an IRS Form 1099-C results in the extinguishment of the reported debt in favor of the debtor. Form 1099-C bears the title “Cancellation of Debt,” and, according to the IRS, a creditor should issue this form to the debtor for any year in which a debt is cancelled. Depending on the state in which the debtor resides, a creditor’s issuance of a Form 1099-C may have the effect of barring further collection efforts and of completely discharging the reported debt.             The two divergent approaches taken by courts on this issue result in opposite outcomes. The majority approach is illustrated by the Fourth Circuit’s opinion in FDIC v. Cashion, 720 F.3d 169 (4th Cir. 2013).

Read more at: http://www.nlrg.com/legal-content/the-lawletter

My opinion is this: if the filer had no right to collect or enforce it follows that it had no right to cancel the debt. This ploy is enabling hundreds of companies to take tax deductions costing taxpayers billions of dollars. Meanwhile recipients of these fabricated forms with false information are stuck wondering whether they now owe tax on debt forgiveness. I think they don’t owe anything and that after they file a letter of protest or objection, the false income on the 1099-C should be ignored.

Older Forensic Title Analyses Need Updating — Even Ours

 A recent request from an old client brought to mind the changes that have occurred, as in her case, since 2011 — more than 7 years ago.
A quick review indicates that the facts were correct but the conclusions need tweaking. And the title record should be updated. Many new laws and case decisions have occurred since that report was finished and many new facts have been revealed about these older transactions.

For example it now appears that our assumption about the flow of payments was incorrect.
  1. Your payments were being made to a subservicer who was forwarding money on a separate contract to a Master Servicer.
  2. The Master Servicer then authorized, in its sole discretion, third parties to make certain payments to investors who had purchased certificates issued in the name of a trust, which turns out to not exist.
  3. The trust name was being used as a fictitious name for the named underwriter of the certificate offering. But the actual transaction was not an underwriting; it was simply a sale by the party posing as underwriter (implying it was working for a third party, presumably the nonexistent trust).
  4. By contract, the investors purchased their right to receive money arising out of a promise to pay issued by the named underwriter (i.e., seller) that was unrelated to the terms of repayment on any note.
  5. And most importantly the investors waived any right, title or interest to the loans, debts, notes or mortgages.
  6. Thus you can see that actions undertaken in the name of the holders of certificates or a REMIC Trust or the Trustee of a REMIC trust are all fabricated, to hide the fact that the obligation of the borrower has been transformed into an unsecured obligation to pay intermediaries who converted the investors’ money and thus claim to be principals entitled to enforce a debt in which they had no investment.
  7. Most of the documents uploaded to SEC.gov, if at all, are either unsigned or incomplete (or both) lacking a mortgage loan schedule or any reference to a particular loan. Such documents are ONLY uploaded to SEC.GOV which has no power to charter or approve any entities nor their filings, as long as they have been granted access to upload documents. Their existence on SEC.GOV means nothing.
  8. An assignment without actual transfer of the debt is without effect. In virtually all cases involving false claims of securitization no payment of any kind was ever made by any party in the chain for the origination or purchase of the loan. Our Case Analysis examines the issues arising from transfer of a promissory note which can cause legal presumptions to arise concerning ownership of the debt and transfers thereof.
  9. Analysis of the fictitious “trust” documents reveals the absence of essential elements of a trust hence leading to the conclusion that no actual trust was intended notwithstanding the illusions and implications contained in the documents themselves and the representations of attorneys and representatives of “servicers” to the contrary. Upon case analysis (apart from title analysis contained in our TERA report) the following basic elements of a trust are usually absent.
    1. Complete signed trust instrument
    2. Trustee with powers to administer the affairs of the trust and the trust assets
    3. Trustor/settlor creating the trust.
    4. Beneficiaries of the trust
    5. RES: anything that has been entrusted to the named trustee to manage on behalf of the beneficiaries
My suggestion, if the issues are still pending, is that you order the current TERA and the PDR PLUS, which includes a recorded CONSULT.
CLICK HERE TO ORDER CONSULT (not if you order PDR)
CLICK HERE TO ORDER PRELIMINARY DOCUMENT REVIEW (PDR BASIC or more probably the PDR PLUS, in your case — includes CONSULT)

California Form Hiding in Plain Sight

In cases where the CA foreclosure is being filed on behalf of the named Trustee (e.g., US Bank, Deutsch Bank etc.) for the certificates or the certificates holders — or where the it is ambiguous as to what or who the named trustee is asserted to be representing, there is a form demanding disclosure of the certificate holders and a requirement that they file an affidavit stating that they are beneficiaries of the deed of trust and agreeing to which other beneficiaries, owning more than 50% of the beneficial interest under the deed of trust may represent all of them.

Where the assertion is clearly that US Bank (or whoever) is trustee for a specifically named Trust, this would not seem to apply — unless you show that they can’t prove the trust exists and owns the subject loan.

In the absence of an agreement then it would appear that all holders of the certificates must be disclosed. If someone claims to represent the holders of certificates that party would need to show the source of its authority to directly represent the certificate holders. Remember that certificate holders are not, contrary to popular error, beneficiaries.

This might be an effective tool to force the pretenders to assert that the vehicle is the trust which is a beneficiary qualifying under the laws of California or any other states that has passed a similar statute.

Remember there is a huge difference between the beneficiary(ies) under the deed of trust and the beneficiaries (nonexistent) of a REMIC Trust (nonexistent).

============================

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.
I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM.
A few hundred dollars well spent is worth a lifetime of financial ruin.
PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.
Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
===========================

information on Majority Action Affidavit -3

Majority Action affidavit form – Exhibit B (1) (1)

california/2013/code-civ/division-3/part-4/title-14/chapter-2/article-1/section-2941.9

2013 California Code
Civil Code – CIV
DIVISION 3. OBLIGATIONS
PART 4. OBLIGATIONS ARISING FROM PARTICULAR TRANSACTIONS
TITLE 14. LIEN
CHAPTER 2. Mortgage
ARTICLE 1. Mortgages in General
2941.9
Universal Citation: CA Civ Code § 2941.9 (2013)

(a) The purpose of this section is to establish a process through which all of the beneficiaries under a trust deed may agree to be governed by beneficiaries holding more than 50 percent of the record beneficial interest of a series of notes secured by the same real property or of undivided interests in a note secured by real property equivalent to a series transaction, exclusive of any notes or interests of a licensed real estate broker that is the issuer or servicer of the notes or interests or any affiliate of that licensed real estate broker.

(b) All holders of notes secured by the same real property or a series of undivided interests in notes secured by real property equivalent to a series transaction may agree in writing to be governed by the desires of the holders of more than 50 percent of the record beneficial interest of those notes or interests, exclusive of any notes or interests of a licensed real estate broker that is the issuer or servicer of the notes or interests of any affiliate of the licensed real estate broker, with respect to actions to be taken on behalf of all holders in the event of default or foreclosure for matters that require direction or approval of the holders, including designation of the broker, servicing agent, or other person acting on their behalf, and the sale, encumbrance, or lease of real property owned by the holders resulting from foreclosure or receipt of a deed in lieu of foreclosure.

(c) A description of the agreement authorized in subdivision (b) of this section shall be disclosed pursuant to Section 10232.5 of the Business and Professions Code and shall be included in a recorded document such as the deed of trust or the assignment of interests.

(d) Any action taken pursuant to the authority granted in this section is not effective unless all the parties agreeing to the action sign, under penalty of perjury, a separate written document entitled Majority Action Affidavit stating the following:

(1) The action has been authorized pursuant to this section.

(2) None of the undersigned is a licensed real estate broker or an affiliate of the broker that is the issuer or servicer of the obligation secured by the deed of trust.

(3) The undersigned together hold more than 50 percent of the record beneficial interest of a series of notes secured by the same real property or of undivided interests in a note secured by real property equivalent to a series transaction.

(4) Notice of the action was sent by certified mail, postage prepaid, with return receipt requested, to each holder of an interest in the obligation secured by the deed of trust who has not joined in the execution of the substitution or this document.

This document shall be recorded in the office of the county recorder of each county in which the real property described in the deed of trust is located. Once the document in this subdivision is recorded, it shall constitute conclusive evidence of compliance with the requirements of this subdivision in favor of trustees acting pursuant to this section, substituted trustees acting pursuant to Section 2934a, subsequent assignees of the obligation secured by the deed of trust, and subsequent bona fide purchasers or encumbrancers for value of the real property described therein.

(e) For purposes of this section, affiliate of the licensed real estate broker includes any person as defined in Section 25013 of the Corporations Code who is controlled by, or is under common control with, or who controls, a licensed real estate broker. Control means the possession, direct or indirect, of the power to direct or cause the direction of management and policies.

(Added by Stats. 1996, Ch. 839, Sec. 3. Effective January 1, 1997.)

 

U.S. Sues UBS for Fraudulent Sales of RMBS But Still Manages to Get It Wrong

The bottom line is that the loans themselves were fatally defective in terms of the loan documents. The money was delivered but not by the named “lender” nor anyone in privity with the named lender. At all times nearly all of the loans were in actuality involuntary direct loans from investors who had no knowledge their money was being used to originate loans without any semblance of due diligence.

All the other parties were conduits and brokers for conduits. None of them were brokers for a plan of investment to which investors agreed. and all of them were based upon fraudulent inflated appraisals.

In equity, as I have repeatedly said, the debt, regardless of to whom it is owed, should be reduced by the excess appraisal amount, a fact that ought to be presumed when anyone attempts to bring an action in collection or foreclosure.

This is because the source of the loan, regardless of who it might be in actuality, assumed the risk of loss associated with affordability and most importantly the risk from a false inflated appraisal. Licensed appraisers warned congress as early as 2005 when 8,000 of them petitioned Congress to do something about them being forced to either bring in false appraisals or not get any work at all.

Contrary to popular myth there is no such responsibility for borrowers to figure out if they really can afford the loan or if the appraisal is accurate. That is the state of the law under the Truth in Lending Act. The “conventional wisdom” that home buyers and borrowers don’t need a lawyer or a financial adviser on the largest investment of their lives leaves a vacuum where consumers are entirely at the mercy of predatory and fraudulent operators like Wells Fargo, Bank of America, Citi, Chase, US Bank, Deutsch, and others.

“Don’t bother getting a lawyer. Save your money. They can’t change anything anyway.” That is the catch phrase used to make certain that the fraud being perpetrated on consumers will not be revealed until it is too late and the courts presume that the fraud never occurred (or that if it did occur, it’s somehow too late to complain about it).

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

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

===========================

Hat tip to Dan Edstrom

see United States vs UBS

see https://dtc-systems.com/us-sues-ubs-to-recover-penalties-for-fraud-in-the-sale-of-rmbs-securities/

So once again the Federal government sues a major bank for fraud and corruption causing “catastrophic” damages to investors and fails to mention any losses to homeowners. Piling the entire loss on the backs of homeowners is the third rail. Nobody touches that because of the erroneous perception that the rule of law is contrary to public policy. That may come as something as surprise to those of you who thought we were a nation of laws and not public policy decided behind closed doors.
*
The successful myth perpetrated by the banks is that since borrowers stopped paying the wrong people on their loan, that they should nevertheless  be held liable and lose their home to the wrong people because otherwise (a) borrowers would get a free house and (b) applying the rule of law would undermine the financial system. Both the premise and result are contrary to good sense and our existing laws. The courts generally twist themselves into pretzels to avoid the law and arrive at the public policy result rather than the legal one.
*
Everyone is willing to accept that the entire securitization process was a gigantic process to perpetrate fraud and, as some lawyers who resigned rather than draft securitization documents, part of a “criminal enterprise.” But somehow the victims are only investors who are still called “beneficiaries” even though it is well established that the trusts named in foreclosure lawsuits never participated in a single business transaction and were neither organized nor existing under the law of any jurisdiction, much less the owner of loans..
*
Once again the suit fails to state that the loans were at best problematic in the sense that transactions utilizing undisclosed third party money compromised the efficacy of the loan closing documents.
*

And once again it doesn’t say that the securitization plan itself was fraudulent in that the entities represented as owning the loans did not exist and/or did not own the loans. It also doesn’t say that the use of fraudulent inflated appraisals (a) hurt homeowner and and that therefore (b) UBS lured investors into an investment plan fraught with liabilities.

Nor does the new lawsuit say that investors were promised that their interests would be remote enough to avoid liability for lending violations and bankruptcies of the originators but in fact the money from investors was directly used in the loans and did not go through the alleged “Trusts” that were supposedly purchasing loan portfolios from aggregators who in fact had no interest in the loans and were merely conduits for a paper chain bearing no relationship to the money trail.
*
But it does hint at what the banks were doing. The review of the loans by UBS was simply a sampling and that sampling, was in fact a method of picking low hanging fruit to serve as benchmarks. From that false process of sampling, UBS hoped to avoid liability for mischaracterizing the real defects in the securitization process. In other words they were using their cherry-picked samples to describe the entire “loan portfolio” which in fact was neither owned nor conveyed to the special purpose vehicle (REMIC Trust) that was created (on paper only).
*
You may remember that in my seminar in Malibu in 2008, I described this process as covering a pile of dogshit with gold plating. In the end it is still almost entirely dogshit.
*
Thus we have revealed the unwillingness of Federal law enforcement to get to the real issue, which would in fact protect both investors and homeowners — the fraudulent nature of the loans themselves, the fraudulent nature of the so-called loan portfolios, and the fraudulent enforcement of documents that fraudulently named the wrong party as the lender and are fraudulently brought to courts on a mass basis for fraudulent enforcement that keeps adding to the pain  and anger of Americans who continue to suffer from the discard of the rule of law in favor of “public policy.”

The Economics of Justice

There is no doubt in the minds of most serious trial lawyers who dig deep enough that homeowners can and should win all or most of the foreclosure cases. There is also little doubt that homeowners will lose by default or by inadequate presentation and well-founded attacks on the foreclosing party’s existence and ownership of the loan.

But in the absence of a well founded presentation, in the absence of well founded objections and in the absence of appropriate cross examination and aggressive investigation and analysis, a complete stranger will emerge as the victor in a fight over whether the home should be sold in foreclosure.

This leaves the homeowner and the investor whose money was used to fund or acquire the loan in the dust. It eliminates workouts that are best for both the investors and the homeowners. It rewards the culprits who condemned this country to more than a decade, so far, of strife and inequality of wealth. And it happens because of a defect in the judicial system that is wholly reliant on the financial resources of parties to a dispute.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

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

===========================

see The Truth About American Mortgages

I listen to a phone message message. The air of despair is evident in the voice of a homeowner who desperately wants to stay in her home. She correctly believes that the parties seeking foreclosure sale of her property are complete strangers to the loan and the property. She would do a workout with anyone who is entitled to her payments, assuming the debt still exists.
*
She knows in her bones that what is happening is legally and morally wrong. But she can’t do anything about it without spending thousands of dollars on trial lawyers, forensic analysts and ghost writers. In the end she knows that even in cases of blatant fraud, even when it is clear that she is a victim of illegal behavior, the party with the money has multiple layers of lawyers at their disposal who work tirelessly to make every wrongful act appear right.
*
It sounds like she is drifting. I can ask around but it is unlikely that any lawyer will take on her case without some upfront retainer and assurance that future fees will be paid. I know this is unfair but this is how our system has always worked. Organizations like Legal Aid do not generally accept cases involving foreclosure defense.

*
The American judicial system boils down to this: if you want representation in a courtroom and it is not a criminal matter, you are on your own. People who commit wide scale fraud across the country generally have deep or nearly infinite pockets. They have lawyers for their lawyers. The bottom line is that anyone can commit fraud and get away with it if they have the assistance of lawyers drafting the documents to make the illusion seem real and more lawyers to represent “clients” in court that either don’t exist or who have no nexus to the loan, debt, note or mortgage. The only risk in committing fraud is the risk of targeting a victim who has equal access to lawyers, money and investigators. Consumers are fair game.
*
The appropriate defense of foreclosure actions would include private investigators and aggressive discovery, in addition to carefully worded pleadings and motions. It would require adept lawyers who understand how to present a motion, how to play the discovery game and how to use well-founded objections and good cross examination at trial.
*
If the homeowner had deep or infinite pockets, the cost of defense would be over $100,000 and in at least one case of mine was close to $200,000. Very few homeowners have access to that kind of money. If they did, they would have won most of the time. And now that fee awards have virtually been eliminated in a twist of a legal fiction, there is little hope of collecting fees from the foreclosing party except as damages for wrongful foreclosure and related claims.
*
Even on the fee awards that exist, the generally accepted amount of “appropriate” or “reasonable” fees is usually set at around $25,000-$50,000. Sometimes that is right but more often it is not. So a lawyer seeking to recover his fees upon winning the case is going to get, in the best of circumstances a fraction of the billable time he/she spent on the case.

*
Lawyers are required to do some pro bono work, but those cases typically take a back seat to the cases where the client is paying “full freight.” So file research and analysis is scarce when the fees are low or nonexistent. In large firms pro bono cases are frequently treated with the same respect as clients paying the fees. But that is because they can. A solo practitioner needs to pay his own mortgage and living expenses. Taking a foreclosure defense case pro bono and giving it all it deserves would mean virtually endless hours spent in investigation, analysis, legal research and strategic planning for presentations.
*
So the upshot is that really good legal representation is scarce even from the best of trial lawyers. And getting any legal representation is getting increasingly difficult because lawyers don’t like losing. They also privately admit that they don’t want to “look silly” or “anger the judge” because deep inside they believe their client does owe the money and it doesn’t matter who is collecting. It doesn’t matter that a typical loan workout would have eliminated most foreclosures. They are going to lose most of the time without presenting a well focused defense based upon the lies, fabrications and forgeries that are used to pursue foreclosures.
*
Most lawyers go through the motions and are content to say that at least they bought time for their clients. It’s easy for me to say that it shouldn’t work that way. Lawyers should seek to win because they can win. But reality sides with the lawyers who do not have clients who are able to pay the going rates for legal representation or who cannot pay the extra amounts necessary to present a full throated defense.
*
But reality  does not side with lawyers who refuse to work on contingency in an action for damages based upon false and fraudulent presentation of falsified evidence. For lawyers who take the time to truly understand what the banks have done, they will then understand why the homeowner should not only be able to avoid foreclosure, but should also get monetary damages including in many cases punitive damages.
*
But it takes a genuine belief on the part of the lawyer to do it. Most lawyers don’t have that belief because they are ignorant of the true facts and the law. Those lawyers who have done the work have been rewarded handsomely for their efforts in what are not confidential settlements under seal of confidentiality. I know because I have seen many of them but I am restricted as well.
*
In every system lawyers are not required to work unless they get paid a reasonable fee. Unfortunately reasonable fees are usually beyond the means of the typical homeowner.
*
So like the other intrepid homeowners who won’t give up their home without a fight, you must piece together a defense using your own skills, perhaps a paralegal, a forensic analyst and ghost writers like me to get you over the top. You are right that you should win because most foreclosures are fraudulent and probably criminal schemes. And that is why homeowners do win cases — if they present their defense correctly and they are able to gain access to some attorney who can guide them on trial practice.

Hawaii Supreme Court: Yes to wrongful foreclosure counterclaim BEFORE foreclosure is completed and no to”plausible” pleading

Now that the courts are no longer in fear of precipitating an economic meltdown, it’s time to return to legal decisions instead of political decisions. The Hawaii Supreme Court has done just that in a common sense decision that sweeps aside most of the Wall Street arguments against allowing homeowners to raise the fraudulent foreclosure issue. The decision goes back decades in reaffirming the law and the intent of the rules of civil procedure.

The bottom line is that homeowners must be allowed an opportunity to prove their claim at the same time they are defending a foreclosure action. This levels the playing field and hopefully is a harbinger of future decisions from the high court in each of the states.

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

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

===========================

see Landmark Hawaii Supreme Court Case

BANK OF AMERICA, N.A., SUCCESSOR BY MERGER TO BAC HOME LOANS SERVICING, LP FKA COUNTRYWIDE HOME LOANS SERVICING LP, Respondent/Plaintiff-Appellee, vs. GRISEL REYES-TOLEDO, Petitioner/Defendant-Appellant,

Remember that while this decision could be used as persuasive authority, it is not binding authority over the courts of any state other than Hawaii.

There are several parts to this decision each consistent with the others.

  1. On a motion to dismiss, plausibility of the allegations are now irrelevant. The homeowner must be given the opportunity to prove the allegations of the complaint. As the Court correctly points out, the plausibility test requires some consideration of some facts that have not been proven or disproven. Hence the plausibility test conflicts directly with the presumption, on a motion to dismiss, that all allegations are true. “Notice pleading” is the law in Hawaii and purportedly is so in many other states where plausibility tests are nonetheless applied. This opinion may go a long way to reversing that erroneous trend.
  2. Notice pleading requires only a short plain statement of ultimate facts upon which the relief sought could be granted. But I would add that the rules about fraud and deceit are still in play, i.e., I don’t believe that any state, including Hawaii would allow a count sounding in fraud without giving some examples in the pleading of the misleading and/or deceitful way that the defendant(s) acted. This decision basically addresses violation of statute and similar kinds of actions.
  3. The implication of this decision is that the pleading should be short and that the homeowner must be given a fair chance to prove his/her allegations.
    1. I am quite certain that this Court would insist on allowing discovery to penetrate far more deeply that is currently generally allowed.
    2. The arguments that the actual transactions and the actual creditor’s identities are private, proprietary and remote was silly to begin with.
    3. This decision will be used by practitioners in Hawaii to demand access to records and to get it through court orders. This alone will result in a landslide of settled cases under seal of confidentiality — if lawyers for homeowners insist on such discovery.
  4. Further moving the ball forward, this Court decided emphatically that claims of wrongful foreclosure can be filed in a counterclaim against the parties involved with the  initiation of wrongful or illegal foreclosure proceedings. That means that contrary to California law and other states, the homeowner does not need to wait to file the claim.
    1. This is a two edged sword. It virtually mandates the filing of the wrongful foreclosure claim because the clock is probably ticking on the statute of limitations the moment the foreclosure is initiated by either judicial or nonjudicial means.
    2. The California doctrine has always been ridiculous and anti-consumer. By denying access to the courts for what is already known to be a wrongful foreclosure based upon false documentation they tie both hands behind the backs of attorneys representing homeowners in foreclosure cases.
    3. Knowing this, most lawyers are now declining representation of homeowners despite clear defects, lies and fabrication of documents relied upon by the lawyers supposedly representing a foreclosing party that many times does not even exist.
    4. Hence the doctrine that wrongful foreclosure claims ONLY arise after the foreclosure is complete produces an absurd result. Once the homeowner proves his/her claims they shouldn’t have lost their home, their life-style and their credit reputation, all based upon illegal acts that were known at the outset, the only remedy under that doctrine is money damages.
  5. The decision also addresses the very important issue of standing. Simply stated, if some party is designated as the foreclosing party, it is the duty of that party and the attorney representing that party to perform sufficient due diligence as to
    1. whether the entity exists,
    2. whether it has possession of the note,
    3. whether the note is endorsed to them by a party who owned the debt,
    4. whether the mortgage or deed of trust was assigned to them by a party that owned the mortgage and the debt, and
    5. whether the debt was in fact transferred from a party who owned the debt to the party claiming the right to foreclose.
  6. If they fail or refuse to perform that due diligence they are violating the law in Hawaii and most likely in dozens of other states. In Hawaii that alone gives rise to a cause of action for damages if damages can be proven, which in most cases is fairly easy. So they are liable for damages if they didn’t perform due diligence.
  7. If they did perform the due diligence and filed knowing that the threshold markers of legal standing are absent, it is malicious abuse of process, it is breach of statutory duties, and it is fraud because the filing of the the lawsuit is a representation that the due  diligence was completed and showed legal standing. And it is probably RICO.

Summary: While it is difficult to predict how and when other states will react to this opinion, it seems likely that this decision in the State of Hawaii will make jurists in other states very uncomfortable. The bias to rule for the alleged foreclosing party just received a blow to any rationality supporting that bias.

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

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

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

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

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

Let us help you plan for trial and draft your foreclosure defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

I provide advice and consent to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.

PLEASE FILL OUT AND SUBMIT OUR FREE REGISTRATION FORM WITHOUT ANY OBLIGATION. OUR PRIVACY POLICY IS THAT WE DON’T USE THE FORM EXCEPT TO SPEAK WITH YOU OR PERFORM WORK FOR YOU. THE INFORMATION ON THE FORMS ARE NOT SOLD NOR LICENSED IN ANY MANNER, SHAPE OR FORM. NO EXCEPTIONS.

Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).

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

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see Legal Aid Federal Practice Manual on STANDING

Published by the Sargent Shriver National Center on Poverty Rights

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

HOW CAN THE NOTE BE TRANSFERRED WITHOUT THE DEBT?

Here is an analogy that might help this counterintuitive process.

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

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

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

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

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

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

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

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