cruz v aurora by judge margaret mann aug 2011 -you can't foreclose on unrecorded instruments!!

8/4/2019 Cruz v Aurora by Judge Margaret Mann Aug 2011 -YOU CAN'T FORECLOSE ON UNRECORDED INSTRUMENTS!!

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Case 11-90116-MM Filed 08/11/11 Doc 42 Pg. 1 of 16



Commentary by esteemed Neil Garfield, ESQ. & MBA & founder of the

LivingLies blog. We thank Mr. Garfield.

8/23/2011

AURORA LOAN SERVICES LLC, SCME MORTGAGE BANKERS INC, INGBANK FSB, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS ALLBITE THE DUST, SUBJECT TO LIABILITY AND NO ABILITY TOFORECLOSE WITHOUT COMPLYING WITH LAW.

Salient points of Judge Mann’s Decision:1. TRUTH IN LENDING was dismissed because they were time-

barred. LESSON: Don’t ignore TILA claims or TILA audits. Get aforensic Analysis as early as possible, assert them immediately,

assert rescission as soon as possible. TILA has teeth, but if youassert it late in the game.

2. YOU CAN’T FORECLOSE ON UNRECORDED INSTRUMENTS: Judge

Mann came right out and said the California Supreme Courtwould not and could not decide otherwise. Any other holding

would defeat the purpose of recording and create uncertaintyin the marketplace. This will cause a lot of grief to pretenders.

It is getting harder for them to come up with people who arewilling to lie, forge or fabricate documents. Getting a notary to

affix their signature and seal will soon be a thing of the pastunless the signature, the person and the document is real.

3. THE ASSUMPTION THAT THE LOAN IS IN DEFAULT IS STILL APROBLEM: As long as lawyers and pro se litigants are willing to

concede that the obligation was in default, they are giving uptheir largest chip — i.e., that the loan was not in default and

the loan was not subject to a perfected lien for the samereason that the court cites in its opinion. Our loan level analysis

shows repeatedly that in most cases the servicer is continuing

to make payments and reporting to investors that the loan isperforming even as they send delinquency letter’s notices of

default and notices of sales. The Court missed this pointbecause nobody brought it up. Don’t expect the Court to do

your work for you. If you have reason to believe that the

servicer is still paying on your loan you should be stating thatthe loan is not in de fault, denying any delinquency to thecreditor and objecting to any action that is based upon the

premise of “default.” Note that if the servicer is paying yourbills, the servicer MIGHT have a right of action against you, butit certainly isn’t under the terms of the note or mortgage.

4. THE ASSUMPTION THAT A VALID PERFECTED MORTGAGE LIEN

EXISTS IS STILL A PROBLEM: Again, the problem is not with



the Courts but with the lawyers and pro se litigants who simply

assume that this is not an issue. Put yourself in the banks’shoes. If all you had were nominees for undisclosed principals

on the note and mortgage would you be OK with that? No?Then the lien was never perfected, which means for legal

purposes it doesn’t exist. Just because it shows in black andwhite doesn’t make it true. LESSON: Deny the lien exists, denyit was perfected and make them prove how it was perfected.They can’t. In most cases neither the mortgage originator nor

the nominee beneficiary (MERS) had a disclosed lender orbeneficiary, nor did they incorporate the real terms of the

payment to the investor/lenders. If this was a law school examand the student wrote that the loan was perfected, the grade

would be “F”. 5. THE ISSUE OF FEDERAL PREEMPTION AND THEREFORE

JURISDICTION AND VENUE ARE STILL IN FLUX: This Judge

found that federal preemption prevents the homeowner fromalleging TILA as state claims. The courts are not decided on

this and the issue of res judicata and Rooker -Feldman willcome into play once the issue is really resolved with finality.

Beware then how you assert a claim and that you don’t let thestatute of limitations run out by failing to assert the right claim

under TILA in the right court. better to get dismissed than tofind out that you are time-barred.

6. WRONGFUL FORECLOSURE IS A TITLE ISSUE NOT A FAIRNESSOR TECHNICAL ISSUE: Judge Mann, correctly in my opinion,

states that an assignment from MERS must be allowed in orderto clear up title. But, she states that without recording an

interest within the chain of title, you have no right to forecloseunder the states recording laws. I think this is right, and I

think it applies in all 50 states. LESSON: Plead your wrongful

foreclosure, slander of title and quiet title cases as title casesand stop adding extra things that you think may them juicier.

Either the title is right or it is wrong. There is no middleground.

7. MERS ISSUE IS STILL OBSCURE: While the assignment from

MERS, if recorded clears up one part it leaves another partundecided again because it wasn’t raised properly. There is adifference between “bare record title” and an “interest in the

land.” The MERS assignment is like a quit-claim deed fromsomeone without any interest in the land and used to clear upthe chain of title on paper, but it does not convey any interest.MERS on its website and in the public domain specifically

disclaims any interest in the obligation, note or mortgage. That



is its selling point to members who use its “Service.” And that

is why it can’t foreclose and it is subject to cease and desistorders from regulators. As with other affidavits or quit-claims

to clear up apparent clouds on title, the recorded assignment orquitclaim does nothing to convey a larger interest than that

possessed by the grantor. LESSON: If the pretenders want toforeclose they can’t rely on the MERS assignment. They mustfile a credible affidavit that states that the affiant was theundisclosed principal in the original transaction with the

borrower and that it joins in or separately assigns the actualinterest in the obligation, note or mortgage. In my opinion, this

is the only way to perfect the original “lien.” Whether it willrelate back to the original transaction is an issue the courts

must decide. 8. NO DIFFERENCE BETWEEN A DEED OF TRUST AND A

MORTGAGE: Pretenders who try to elevate a deed of trust

above a mortgage are headed for a brick wall. Courts neverliked non-judicial foreclosure in the first place. They are not

about to to reverse centuries of law and provide higher statusto a non-judicial foreclosure or the instruments that allow it.

ONLY the statutes that provide for extra care on the part of thetrustee are constitutional, since due process is the only way

anyone in this country can be deprived of life, liberty orproperty. LESSON: Pound on the issue that the pretendercannot prevail in a judicial foreclosure so they are trying to getaway with it in a non-judicial foreclosure. If you want to see

how this will eventually unfold, look at Florida and other statesthat had similar issues in their “Contracts for deed.” Despite

clear contractual language the courts have universally heldthey are mortgages and that they must be foreclosed as

mortgages.

OTHER COMMENTARY (NOT NEIL)Viable CALIF 17200 claim. MERS is not off the hook on this one. MERS

remains a party to the 8th and 10th causes of action and I hope yourprecious MERS gets their asses handed to them on a plate.

cruz v aurora by judge margaret mann aug 2011 -you can't foreclose on unrecorded instruments!!

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