It is in court that the “loan contract” is actually created even though it is a defective illusion. In truth and at law, placing the name of the originator on the note and/or mortgage was an act of deceit.
In a singular sweep of making public policy as opposed to following it, the Courts have been hell bent on letting strangers achieve massive windfalls through the illegal and improper use of state laws on foreclosure while ignoring Federal laws on TILA rescission, FDCPA and RESPA. The courts have a clear bias based upon the policy of allowing the financial industry to prosper while at the same time deeming individual consumers and homeowners worthy of sacrifice for the greater good.
This is evident in the ever popular questions from the bench — “what difference does it make, you got the loan, didn’t you.”
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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
In response to the question posed above most lawyers and pro se litigants readily admit they received “the loan.” The admission is wrong in most cases, but it gives the judge great clarity on what he/she must do next.
Having established that there was a loan and that the homeowner received it as admitted by the the lawyer or pro se litigant, there is no longer any question that the note and mortgage are void instruments as are the assignments, endorsements and powers of attorney that are proffered in evidence by complete strangers to the transaction.
The purpose of this article is to suggest that a different answer than “Yes, but” should be employed. In discussions with our senior forensic analyst, Dan Edstrom, he suggested an alternative answer that I think has merit and which avoids the deadly “Yes, but” answer.
We start from the presumption that the originator did not fund any transaction with the homeowner and in most cases didn’t have anything to with underwriting. The originator’s job was to sell financial products that were dubbed “loans.” “The loan” does not exist. Period.
Then we can assume that the first defect in the documents of the purported loan is that the the originator who unfortunately appears on the note as payee and on the mortgage (or deed of trust) as mortgagee or beneficiary was NOT the “lender.”
Hence placement of the name of the originator had no more foundation to it than placing the name of a closing agent or title agent or an attorney.
None of them are lenders or creditors. They are all vendors paid a fee for doing what they did. And neither is the “originator” (a term with various inconsistent meanings).
Admission to the existence of “the loan” contract is an admission contrary to (a) the truth and (b) your defense. Once you have admitted that you received the loan you are implicitly admitting that you were party to a valid loan contract, consisting of the defective note and mortgage.
As a matter of law that means that you have admitted the note and mortgage were not void or even voidable but instead you have presented a closed cage in which the Judge has no choice but to proceed on “the law of the case,” to wit: the assumption that there was a valid loan, that the originator made the loan, and that the note and mortgage are valid instruments that are both evidence of the loan and instruments that set forth the duties of the homeowner who has admitted to being a borrower under that “loan contract.”
So it is in court that the “loan contract” is actually created even though it is a defective illusion. In truth and at law, placing the name of the originator on the note and/or mortgage was an act of deceit.
In MERS cases, being the “nominee” of the “lender”(who was incorrectly described as the lender), means nothing. And THAT is why when my deposition was taken in Phoenix AZ for 6 straight days by 16 banks (9am-5pm) I told them what I have consistently maintained for the past 10 years: “You might just as well have placed the name of Donald Duck or some other fictional character on the note and mortgage.”
ALL of the named players were in fact fictional characters for purposes of being represented in a nonexistent transaction (between the originator/”lender” and the homeowner/”borrower.”) Hence the term “pretender lender.” And the actions undertaken after the homeowner was induced (a) to avoid lawyers and (b) to sign the note and mortgage as though the originator had in fact loaned them money were all lies. Hence the title of this blog “Livinglies.”
Bottom Line: WATCH YOUR LANGUAGE! Don’t admit anything. Don’t admit that the loan was assigned (say instead that a party executed a document entitled “assignment” which contained no warranties of title or interest.
Here is what Dan Edstrom wrote:
What difference does it make?
By Daniel Edstrom
DTC Systems, Inc.
What difference does it make, you got the loan didn’t you?
No, I did not get a loan, no I did not authorize “the loan,” no I did not mean to enter into a contract with anyone other than the party who was lending me money and no I did not receive money from the party claiming to be a lender. [Editor’s note: fraud in the inducement and fraud in the execution — or best, a mistake].
Yvanova v. New Century Mortgage Corp., 365 P.3d 845, 62 Cal. 4th 919, 199 Cal. Rptr. 3d 66 (2016). laid this out (without an in depth review) when the court said (emphasis added):
Nor is it correct that the borrower has no cognizable interest in the identity of the party enforcing his or her debt. Though the borrower is not entitled to 938*938 object to an assignment of the promissory note, he or she is obligated to pay the debt, or suffer loss of the security, only to a person or entity that has actually been assigned the debt. (See Cockerell v. Title Ins. & Trust Co., supra, 42 Cal.2d at p. 292 [party claiming under an assignment must prove fact of assignment].) The borrower owes money not to the world at large but to a particular person or institution, and only the person or institution entitled to payment may enforce the debt by foreclosing on the security.
Here is more, much more:
Identification of Parties
The following is from: Jackson v. Grant, 890 F.2d 118 (9th Cir. 1989).
If an essential element of the contract is reserved for the future agreement of both parties, there is generally no legal obligation created until such an agreement is entered into. Transamerica Equip. Leasing Corp. v. Union Bank, 426 F.2d 273, 274 (9th Cir.1970); Ablett v. Clauson, 43 Cal.2d 280, 272 P.2d 753, 756 (1954); 1 Witkin Summary of California Law, Contracts §§ 142, 156 (9th ed. 1987). It is essential not only that the parties to the contract exist, but that it is possible to identify them. Cal.Civ.Code § 1558. See San Francisco Hotel Co. v. Baior, 189 Cal.App.2d 206, 11 Cal.Rptr. 32, 36 (1961) (names of seller and buyer are essential factors in considering whether contract is sufficiently certain to be specifically enforced); Cisco v. Van Lew, 60 Cal.App.2d 575, 141 P.2d 433, 437 (1943) (contract for sale of land must identify the parties to the transaction); Losson v. Blodgett, 1 Cal.App.2d 13, 36 P.2d 147, 149 (1934) (valid real property lease must contain names of parties).
And looking further at what Cisco v. Van Lew, 60 Cal. App. 2d 575, 141 P.2d 433 (Ct. App. 1943) actually says:
“There is a settled rule of law that a note or memorandum of a contract for a sale of land must identify by name or description the parties to the transaction, a seller and a buyer.” (Citing cases.)9
The statute of frauds, section 1624 of the Civil Code, provides that the following contracts are invalid unless the same or some note or memorandum thereof is in writing and subscribed by the party to be charged or by his agent:
“… 4. An agreement … for the sale of real property, or of an interest therein; …” In 23 Cal.Jur. page 433, section 13, it is said: “Matters as to Which Certainty Required.–The requirement of certainty as to the agreement made in order that it may be specifically enforced extends not only to its subject matter and purpose, but to the parties, to the consideration and even to the place and time of performance, where these are essential.” (Citing Breckenridge v. Crocker, 78 Cal. 529 [21 P. 179].) In that case it was held that when a contract of sale of real estate is evidenced by three telegrams, one from the agent of the owner of the property communicating a verbal offer, without naming the proposed purchaser; and second, from the owner to his agent, telling him to accept the offer; and a third from the agent addressed to the proposed purchaser by name, simply notifying him of the contents of the telegram from the owner, but not otherwise indicating who the purchaser was, the contract is too uncertain as to the purchaser to be enforced, or to sustain an action for damages for its breach. In that case it was held that the judgment granting a nonsuit was proper.(e.s.)
 The general rule stated in 25 Cal.Jur. page 506, section 34, is that
“a contract for the purchase and sale of real property must be mutual and reciprocal in its obligations. Otherwise, it is not obligatory upon either party. Hence, an agreement to convey property to another upon his making payment at a certain time of a named amount, without a reciprocal agreement of the latter to purchase and pay the amount specified, is unenforceable.” (See, also, 25 Cal.Jur. p. 503, sec. 32, and cases cited.)
This brings up many issues between a so called promissory note, which may or may not be a negotiable instrument, and a security instrument, which appears to be a transfer of an interest in real property.
The first question is: how can an endorsement in blank without an assignment EVER transfer an interest in real property? How can the security interest be enforced from a party that has not been identified?
– We know what the Supreme Court said in Carpenter v. Longan, 83 U.S. 271, 21 L. Ed. 313, 1873 U.S.L.E.X.I.S. 1157 (1873), but does that take the above into account? Does it need to? Does it conflict?
And then we have the issues of who advanced the money to fund the alleged loan closing, who are the parties to table funding, and what security interests or encumbrances were authorized by the homeowner PRIOR to delivery of the signed note and security instrument?
And further, the parties must exist and be identifiable. It is NOT ok if they existed in the past but do not exist now (at the time of the agreement or contract or assignment).
So the originator goes into bankruptcy and is dissolved, and then a year or more later they (somehow) record an assignment to another entity.
And in many cases the assignment from the originator comes after the originator already executed an assignment to one or more parties previously.
What really happens to a security interest when a company is dissolved or shutdown and they haven’t assigned it to another party or released the security interest? (and this is an interest in real property where the release or assignment has to be in writing).
What really happens if it is a person and they die? And then a year later the deceased assigns the security interest to somebody else?
In CA. the procedure for real property transactions is to comply with CA. Civ. Code 1096, which provides the following:
- Civ. Code 1096
Any person in whom the title of real estate is vested, who shall afterwards, from any cause, have his or her name changed, must, in any conveyance of said real estate so held, set forth the name in which he or she derived title to said real estate. Any conveyance, though recorded as provided by law, which does not comply with the foregoing provision shall not impart constructive notice of the contents thereof to subsequent purchasers and encumbrancers, but such conveyance is valid as between the parties thereto and those who have notice thereof.
See: Puccetti v. Girola, 20 Cal. 2d 574, 128 P.2d 13 (1942).
All of Prince’s property (real and personal) went into probate after he died. When they finally sell his real property, it won’t (or shouldn’t) be from Prince to John Doe, it should be something like Jerry Brown, executor of the estate of Prince to John Doe.
Filed under: foreclosure | Tagged: "the loan", assignment, endorsement, loan contract, Mortgage, mortgagee, mortgagor, nominee, note, Payee, TRUTH | 7 Comments »