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.
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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.
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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..
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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.
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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.
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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).
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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.
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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.
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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.
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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.

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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.
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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.
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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.
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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.

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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.
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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.
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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.
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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.
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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.
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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.
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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.

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

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.

How Does the Debt Get Transferred?

Basic Black Letter law: A debt can only be transferred by the owner of the debt. The owner of the debt may use agents or intermediaries to accomplish the transfer of the debt. If an intermediary executes a document of transfer without reference and identification of the owner of the debt, the document has potentially fatal defects.

Parole evidence may be admitted, upon discretion of a court of competent jurisdiction. But in the end, the party claiming authority to enforce the debt in a foreclosure of the mortgage or deed of trust must prove that it is doing so on behalf of the owner of the debt.

The simplest way of doing this is by alleging or asserting the name of the owner of the debt and the fact that the enforcer is representing the owner of the debt. In the absence of such allegation or assertion it is more likely than not that the enforcer is not representing the owner of the debt and therefore has no authority to enforce the foreclosure.

Promissory notes may be enforced without ownership of the debt. Mortgages and deeds of trust cannot. Article 9 of the UCC as adopted by all 50 states as their state law requires that the debt be owned or purchased for value as a condition precedent to the right of the claimant to enforce a mortgage through foreclosure.

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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The courts are hiding the issue but there is full consensus on the fact that a mortgage without ownership of the debt is useless. If you analyze the decisions it is always there. But the courts are creative in coming to the conclusion that the transfer of ownership of the debt MUST have occurred (even if it didn’t).

They are bridging that divide by making some legal presumptions like “why execute the assignment of mortgage if you were not transferring the debt?” This of course ignores the question of whether (1) the assignor owned the debt (2) the assignor also specifically referenced transfer of the debt either in the assignment of mortgage or in an indorsement on the note.

I have already explained in many different ways that the ownership of the debt is completely dependent upon actual payment of value and the assumption of the risk of nonpayment.  And I have often explained that the last person in the fictitious chain used by enforcers is virtually never the owner of the debt nor an authorized representative of the owner of the debt.

The rule is this: At some point in the fictitious chain, payment was not made because the loan was already sold. This could be as early as before the loan “Closing” to as late as the most recent assignment of mortgage. Note as well that where assignment of mortgage is abandoned at trial the case ceases to become a foreclosure case and converts solely to an action for damages for nonpayment on the note.

Transfer of the note is evidence of transfer of the debt. The matter asserted is that the debt was transferred. If the transferor of the note actually owned the debt, the evidence of transfer of the debt becomes fairly conclusive. But without evidence showing that the transferor owned the debt, no legal presumption should arise. And if the maker of the note challenges (denies) the transfer of the debt, the burden is on the enforcer to establish a chain of evidence starting with the owner of the debt. One way to put this in contention is simply denying that the note is held or owned by the enforcer which makes them prove it. In many cases the enforcer ahs been successful at fabricating a new “original.”

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There is also an issue that is more grounded in law: the delivery of the note signals transfer of the debt because the note is like the title to a car. You become the legal owner when you get it. When you receive the note the presumption arises that the only evidence of the debt has been transferred to the recipient. Whether the note really is the only evidence of the debt is of course subject to dispute and normally not true. Dozens of documents at closing reflect the existence of the debt but not necessarily the owner of the debt. The only real conclusive evidence of the debt is evidence of actual payment by the Payee on the note to or on behalf of the Maker.
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The creative courts dodge (1) the question about whether the prior possessor owned the note or debt and (2) whether the original note was actually physically delivered. In most cases only an image was delivered electronically, the original most likely having been destroyed or “lost.” Other sales of the image of the original note have almost always occurred. However, up to this point in time, the payoff to the underwriter/investment bank is not counted as reducing the receivable from the borrower to zero, even if the amount received is a multiple of the original note. If the investment bank was acting in the interest of investors to whom it sold Trust certificates, then the first money would have been return of capital to the investors and subsequent payoffs would have been shared between the underwriter and the investors.
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The problem of course is that there would be no subsequent sales without the illusion that the loan still exists. So the investment banks created a convoluted trail to make it appear that the receivable (debt) existed while at the same time not titling it as such in the name of anyone. It was a brilliant act of deception. And THAT is the reason why they won’t identify the creditor. And it is the reason why no bank has ever challenged a TILA rescission by filing a suit to vacate the rescission. THERE IS NO CREDITOR, DESIGNATED OR OTHERWISE. Hence all such enforcement claims lack legal standing. TILA rescission strips away the veneer. If the banks actually had a creditor they would have buried anyone using rescission with a simple lawsuit vacating the rescission. They don’t because they can’t.

Does the Debt Need to Transfer with the Mortgage?

The answer is yes but the movement of the debt is often, all too often, presumed to have occurred. After more than a decade of research and analysis I find no support for the informal “doctrine” that the debt, note and mortgage can be used interchangeably. But the human inclination is to treat them the same. In foreclosure defense it is the job of the advocate to establish the separate nature of each of them.

The debt is what arises, regardless of whether it is in writing or not, by virtue of money being paid to the recipient or paid on his/her/their behalf. The only way the debt is extinguished is by payment or a court order (e.g. bankruptcy) declaring that the debt no longer exists. The recipient of the money is the obligor. The party who paid the money is the obligee under the debt. The transaction itself gives rise to the duty to repay the loan. A writing (e.g. note or mortgage or deed of trust) that purports to relate to or memorialize the debt, is separate from the debt.

If the written instrument (note) is made payable to the obligee under the debt, then they both are saying the same thing. That causes the debt and the written instrument (note) to merge. That way the obligor does not subject himself to an additional liability (double liability) when he executes the note. The note is incident to the debt but not the debt itself. The mortgage is incident to the debt and is neither the note nor the debt itself.

The debt is a demand loan if there is no written instrument. The note, where merger has occurred, sets forth the plan of repayment. The mortgage (if merger occurred on the note) sets forth the plan for enforcement of the debt. The mortgage does not set forth the terms of enforcement of the note since the note already contains its own enforcement provisions.

If the debt and the note don’t say the same thing (i.e., if the obligee and the payee are different), the doctrine of merger does not apply. The obligation to repay still exists but not under the terms and conditions of any note nor is it subject to enforcement of the mortgage. The debt (obligation to repay), the note and the mortgage (or deed of trust) can each be transferred; but the transfer of one does not mean the transfer of all three. Transfer of a note or mortgage does not move the debt unless merger has occurred. And transfer of a mortgage without the debt is a nullity.

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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NY Case Citation

see NY Court: Transfer of a mortgage without transfer of the debt

Common sense is not necessarily the law or policy. Any number of people can enforce a note even if they don’t own the debt and even if they don’t actually have physical possession of the note (although there is a lot of explaining to do).

BUT nobody can enforce a mortgage unless they are the owner of the debt and the owner of the mortgage or the owner of the beneficial interest under a deed of trust. The assignment of a mortgage or DOT cannot, under any circumstances CREATE an interest in the debt by either party. The assignor must own the debt for the assignment to transfer the debt. All states agree that an assignment means nothing if the assignor had nothing to assign. Such an assignment confers no rights on the assignor and the assignee gets nothing even though the “assignment” document physically exists.

BUT a facially valid note is given many presumptions as to enforcement of the note and those presumptions have led courts to erroneously conclude and presume that the enforcer of the note is the owner of the debt.

The only party who is entitled to claim ownership of the debt (obligation) is the one who paid for it. Any party claiming to represent the owner of the debt must show the agency connection between themselves and the owner of the debt. All other “transfer” documents are fabrications.

The only way the “agent” can prove the “agency” is by disclosing the identity of the owner of the debt, who can corroborate the claim of agency — if the party identified can prove ownership of the debt. Self serving statements are not without some value but if the party proffering self serving statements is unable or unwilling to proffer corroborating evidence at trial or in response to discovery, their self serving statements must be given scant weight.

So in the above link the Court summarized the law in the same way that the courts in all states — when pushed — understand the law. Note the huge difference between alleging standing and proving standing. The allegation makes it through a motion to dismiss. Failure of proof of standing results in denial of summary judgment or any judgment.

“A plaintiff in a mortgage foreclosure action establishes its prima facie entitlement to judgment as a matter of law by producing the mortgage, the unpaid note, and evidence of the defendant’s default (see Loancare v Firshing, 130 AD3d 787, 788 [2015]; Wells Fargo Bank, N.A. v Erobobo, 127 AD3d 1176, 1177 [2015]; Wells Fargo Bank, N.A. v DeSouza, 126 AD3d 965 [2015]; Citimortgage, Inc. v Chow Ming Tung, 126 AD3d 841, 842 [2015]; US Bank N.A. v Weinman, 123 AD3d 1108, 1109 [2014]). Where, as here, a defendant challenges the plaintiff’s standing to maintain the action, the plaintiff must also prove its standing as part of its prima facie showing (e.s.)(see HSBC Bank USA, N.A. v Roumiantseva, 130 AD3d 983 [2015]; HSBC Bank USA, N.A. v Baptiste, 128 AD3d 773, 774 [2015]; Plaza Equities, LLC v Lamberti, 118 AD3d 688, 689 [2014]).” LNV Corp. v Francois, 134 AD3d 1071, 1071—72 [2d Dept 2015].

“[A] plaintiff has standing where it is both the holder or assignee of the subject mortgage and the holder or assignee of the underlying note at the time the action is commenced. (Bank of NY v. Silverberg, 86 AD3d 274, 279 [2nd Dept. 2011], U.S. Bank N.A. v. Cange, 96 AD3d 825, [*3]826[2d Dept. 2012]; U.S. Bank, N.A. v. Collymore, 68 AD3d 752-754 [2d 2009]; Countrywide Home Loans, Inc. v. Gress, 68 AD3d 709[2d Dpt. 2009].) Either a written assignment of the underlying note or the physical delivery of the note prior to the commencement of the foreclosure action is sufficient to transfer the obligation, and the mortgage passes with the debt as an inseparable incident (citations omitted). However, a transfer or assignment of only the mortgage without the debt is a nullity and no interest is acquired by it, since a mortgage is merely security for a debt and cannot exist independently of it (citations omitted). Where…the issue of standing is raised by a defendant, a plaintiff must prove its standing in order to be entitled to relief (citations omitted).” (e.s.)Homecomings Fin., LLC v Guldi, 108 AD3d 506-508[2d Dept. 2013].

How to Deal with the “Free House” Bias

If you are dealing with a bias held by most judges the only effective way of dealing with it is to meet the challenge head-on. If you dance around it it looks like you are trying to “get off on a technicality.”

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 FORMWITHOUT 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.

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

A client asked me this morning about he “free house” bias and whether that will interfere with the decisions and ruling of the court. The answer is “of course it does.” And I again raise the issue that nobody wants to talk about — whether it is right or proper to voir dire the judge not just for bias, but for prejudgment decision before the case started. Here is the response I sent:

The answer to your “free house” question is this: You are correct in identifying that problem. We always start with presumption that the presiding judge will carry that bias with him/her into the courtroom.
However, as I have repeatedly found, once you pierce the foreclosure case, the credibility of the would-be foreclosing party declines to the point where the biased judge will ordinarily rule in favor of the homeowner — faced with inescapable legal defects in the position and assertions made by parties without standing.
But there are exceptions — judges who, in addition to having bias, have already ruled in their minds. For them the proceedings are a sham requirement and a test to see if the judge can APPEAR fair and impartial.
Countering the “free house” mindset first requires a demonstration that the homeowner is well aware that he can neither seek nor get a free house. That requires a presentation that concedes the fact that even if the note and mortgage were completely void, the debt remains and a judgment on that debt will result in a  judgment lien that could be foreclosed by the owner of that debt. That “concession” take the angst out of the “free house” conundrum for the judge and will often be an effective predicate to establishing the primary defense narrative.
So the question is not whether the homeowner will get a free house; it is whether this party seeking to foreclose title and take possession of this home has any right to do so. To say otherwise would be an invitation for anyone to fabricate documentation and foreclose, especially in cases where the homeowner concedes, relying upon false documentation of a false party. That scenario I have seen multiple times where the foreclosure is complete, the homeowner has moved out and basically forgotten about the house. The homeowner is later served with process or given notice that the house was foreclosed AGAIN by a different party.
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