Show Me the Money!!!Posted on November 11, 2013 by Neil GarfieldApparently I have been unsuccessful in getting the main point across about the so-called securitization of loans — show me the money is the demand, not show me the note.First, in most cases, the securitization process never happened despite the pile of paper generated by the sham securitization scheme. The “mismanaged” money of investors really amounts to intentionally NOT depositing the investor money into the trusts that had issued the bonds. It also represented a wholedifferent world of underwriting that broke every rule in the book for risk management. But that was thepoint. They wanted the risk to be higher than was advertised so they could bet, on inside information that only the banks had, that the loans and bonds would fail or be substantially diminished roughly in proportion to the drop in real estate prices.So they needed loans to fail or at least for market conditions to change such that the banks could declare a “credit event” and collect insurance and other money that should have gone to investors.But the point is that the loan closings, were, for the most part, a complete sham with strawmen at every seat at the closing table except for the borrowers who were completely unaware of who they were taking a loan from and under what conditions.

The problem that I am still encountering with both homeowners and their foreclosure defense attorneys is the disconnect between knowing the money arrived at the closing table and the wrongful conclusion that it must have come from the payee on the note and the mortgagee on the mortgage.In most cases the payee was a strawman, the mortgagee was a strawman, and the lender was a strawman. The worst part is that they were strawmen in a fictitious transaction — i.e. the loan never occurred which is why in common pleading today the foreclosing party scrupulously avoids alleging that a loan was ever made to the homeowner. They don’t want the burden of proof on them in their complaint that there was a loan because there was no loan.

BASIC PLEADING ERROR: Instead of alleging the loan and financial injury they skip to the signing of the documents. Yes, the homeowner signed many documents, but the bargain was that the homeowner would get a loan from the people with whom he had accepted an offer. The loan was consideration for the contract, and without consideration there is no enforcement of any contract.

This is the sticking point in the minds of many lawyers, including foreclosure defense attorneys. In fact, even the client finds it hard to believe he never had a deal with the people on the signed documents. After all money DID show up at the closing table, so how could deny the loan?And why should the homeowner win in litigation with the foreclosing party when it is so obvious that thehomeowner did receive money, and therefore by operation and presumption of law was obliged to pay itback?I am trying to make this as simple as possible and directly address the issue that lawyers are having applying the true facts of the transaction to the requirements of contract law and property law evolved over centuries.Mere knowledge of a loan does not make anyone a lender. If I know you received a loan from anyone that gives me no rights. If anything, my knowledge might be an invasion of privacy if you didn’t tell me.An enforceable contract requires offer by one party, acceptance by the other party and CONSIDERATION passing between those parties. This is basic contract law. Skirting the requirements of contract law and property law opens Pandora’s box with hope crushed and annihilation a certainty. It is because avoiding basic precepts of law eliminates certainty in the marketplace for any transaction.The real description of the real transaction is simple: in most cases the investors gave money to investment bankers under false pretenses but the money was given and the investment bankers had it. That was a real transaction, even though the paperwork that supposedly provided the terms of the investment were completely ignored. The investor money was being held by the investment bank. Real money and no doubt that occurred.Next, for simplicity sake, the investment bank funded the origination or acquisition of loans through a series of conduits, some of which included regional banks who don’t show up as foreclosing parties but who made billions acting as conduits to scrub the money before it was received by the closing agent.The net effect was a wire transfer from an entity with no relation or connection to the homeowner, the closing agent, the lender, the payee, the mortgagee, the mortgage broker or the originator. The wire transfer is received by the closing agent and applied to a “closing” that was a sham. The paperwork wasthere and the money was there, but the money never came from the parties to the paperwork.

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In some cases (perhaps 20-25%) the loans were acquired in the same way but there was no need to have a closing agent, to make it look like a bona fide transaction was taking place. In most cases, the loan origination was a complete sham.So who is the lender? It can only be the the investors who were the actual source of funds. But, as we have seen in multiple lawsuits from lenders, insurers, credit default swap counterparties, and the federal government, the banks claimed to be the lender since the money looked like it had come from them, even tough they were violating the terms of their agreement with the investors and were acting as an agent or conduit for the investors.So then I am asked, what difference does that make? The answer is that the paperwork makes it seem that the loan was an executed contract with offer, acceptance and consideration, but it failed in reality because none of the parties to the written documents were in fact a lender, creditor or took part in any way in any real transaction with the homeowner. The moment after the loan documents were signed, the homeowner could not obtain a satisfaction of mortgage and return of the paid note, because the investors were the only people who could sign such documentation.But the investors could not return the original note because they never received it. And even if they received it, someone else had their name on the note as the payee. And the investor could not execute a satisfaction of mortgage that would have cleared the title of that encumbrance because they had never received the mortgage document, nor any assignment, nor was their name on the mortgage or deed of trust as beneficiary, mortgagee, lender or anything else.So the bottom line is that the paper trail is just that — a trail of paper unsupported by any real transaction. If it were otherwise you can bet the Banks would be producing canceled checks and wire transfers and telling me to shut up. But in my cases, they are fighting me tooth and nail so they are not ordered to produce it. But they are telling me to please shut up.A paper trail can only be one thing under law — evidence of a transaction. The debt is created when themoney is received and by law the debtor is the receiver of the funds and the creditor is the source of the funds. First thing we learn in Contracts 101 is that the note is not the debt, it is evidence of the debt. The mortgage is not the debt, and it isn’t even evidence of the debt. it is a separate agreement toprovide enforcement mechanisms for the note.But the note was executed with the expectation that the homeowner would be getting money from the payee on the note. They didn’t get money from the payee on the note (in most cases). In fact, they didn’t get money from any of the parties disclosed to them in the disclosure statements and HUD settlement forms required by law. To make matters worse, the homeowner did not receive money from ANYONE in the paper trail. So this was not a table-funded loan, this was an UNFUNDED loan transaction which makes it unenforceable.The current practice of not claiming in the allegations of the foreclosing party that a loan ever took place is an effort to force the homeowner to state it as an affirmative defense — thus violating due process. The homeowner should be able to simply deny the allegation which would keep the burden of proof on the foreclosing party. Then the foreclosing party would need to show proof of payment in orderto make a prima facie case.Instead judges are allowing the complaint to supposedly state a cause of action without alleging the loan and without alleging financial injury which opens Pandora’s box in discovery. So let’s look at the complaint and what it means. The foreclosing party need only allege that the homeowner signed the paperwork, and didn’t comply. the rest is history and “inevitable.”The principles of pleading are that there must be a present controversy that is not hypothetical or to beinferred. The simple rule is that you must make a short plain statement of ultimate facts upon which relief could be granted.Alleging the execution of a document by one party without alleging that it was part of an enforceable and executed contract is alleging that you have evidence of something but you won’t say whether anything actually happened. Therefore you won’t say if you have financially damaged. This flies in the face of the basic rule of construction in filing a complaint:DUTYBREACH OF DUTYDAMAGESCAUSATIONIn contract law, this means a duty imposed by a contract that is enforceable. I submit that it is basic bold black letter law that if you don’t allege a transaction conducted pursuant to a contract based uponthe essential elements of offer, acceptance and consideration you have failed to state a cause of action and you have failed to establish the foundation for alleging that you were damaged.

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Further, I submit that the failure to make such allegations fails to invoke the jurisdiction of the court over the parties or the property or the rents. And I further submit that any judgment rendered without a proffer of evidence of the loan of money by the parties in the paper trail is void, based upon fraud andshould be vacated.Simple reasoning: if those complaints are not dismissed for lack of jurisdiction and judgements are entered, the homeowner is stuck with possibility that someone will show up with the real promissory note and be able to prove it was their money that the homeowner received. What will be the defense ofthe homeowner in that position? That is why we have laws, rules of civil procedure, and pleading requirements. If those foreclosure sales are not vacated, the fact is that anyone holding property subject to claims of securitization will never be able to get rid of the mortgage encumbrance even if they pay it off in full asdemanded by some party in the paper trail. They cannot sell the property and warranty title, they cannot refinance, and they cannot modify or settle the claims without the real source of money being involved in the process.

Look First at the Loan Closing

Posted on December 16, 2013 by Neil GarfieldIn thinking about how to present the issues in cases where the loans are part of a securitization process,whether successful or unsuccessful, I realized that one of the things that I failed to do was bring the attention of the court to the the cornerstone of the transaction — the loan closing, rather than the the actual chronological first step which is the selling forward of empty mortgage bonds to investors. I realized that if I was sitting on the bench and the matter before me was the foreclosure of a mortgage that was facially correct and recorded in the county records, any argument that starts with securitization is going to seem like side-stepping the real issues. So I am working on going outside the chronological order of reality and starting with the middle point, which is the loan contract and loan closing.Every contract must have an offer, acceptance and consideration. Every first year law student knows that. In the case of mortgage loans, the loan contract consists ofOFFER: I OFFER TO LOAN YOU MONEY PROVIDED YOU REPAY ME ON THE TERMS SET FORTH ON THE NOTE.ACCEPTANCE: YOU ACCEPT THE OFFER AND SIGN THE NOTE AND MORTGAGECONSIDERATION: I GIVE YOU THE MONEYThe problem is that the above scenario is not the usual scenario with 96% of all mortgages between 2001-2009. If I don’t give you the money, there is no contract and even though you signed the note, I have no right to record the mortgage because I never loaned you the money. You were fooled by the factthat money appeared at the closing table just as I said. But the money wasn’t my money and I didn’t lend it to you. But you signed the note and mortgage to me. What I have just done is probably fraudulent and certainly a table funded loan in violation of the Federal Truth in Lending Act. When the Judge says “did you sign the note?”, he is only asking half the required questions. The other half should be asked of the forecloser “did the payee on the note make the loan?” The answer in most cases is no, and in all cases as to the assignment of the loan, no value was paid by the assignee for the transfer to the assignee. The loan should either have been originated with the name of the actual source of funds on the note and mortgage or the assignment should have been recorded in the name of the trust when the loan was acquired. But then the wholesale rejection of common underwriting standards would have been exposed and most of the loans would never have been made.The reason why Judges and lawyers are missing the mark in many cases is that the loan contract is not the one they are thinking about. In the great majority of loan contracts the actual source of funds is NOT the party who is named as Payee or mortgagee. The actual party who made the loan is either the group of Trust beneficiaries or the actual REMIC trust where the trust was funded. The loan contract is implied by law and undocumented. And the terms are not necessarily what was stated in the note and mortgage. The lenders agreed to a loan with different terms than the terms set forth in the note and mortgage. The contract for loan that everyone has their eye on is written but never completed. The originator offers a loan provided that the borrower agrees to the terms presented and executes the loan

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closing papers. In plain language the originator is saying “I agree to loan you money provided you agree to the terms of repayment and you execute the loan closing documents.” You agree and execute the loan closing documents but then the originator who made the offer does not make the loan. The result by any interpretation is that there is no enforceable contract. In fact, there is an implied duty to return the documents to the borrower marked cancelled.The originator has no documentation showing that it was acting as agent for the trust beneficiaries or the trust. Even if such documentation existed, it would have required that the originator act as agent for the Trust or the trust beneficiaries without disclosure to the borrower. Such a provision requiring nondisclosure would violate Federal law (TILA) and would therefore be void.But the money appears at the closing table anyway, unknown to the borrower, from the trust beneficiaries who thought their money would first be used to fund the REMIC trust where they would getcertain tax benefits. The receipt of the money by the borrower creates an obligation to repay implied by law — the assumption being that it wasn’t a gift.Thus when the Judge asks “Did you sign the note and mortgage” he or she is only asking half of the essential questions. The other half should be directed to the foreclosing party “did you make the loan”?The forecloser would then be forced to explain why they should collect on a debt that was created outside of their cloud of parties and entities. This is why they don’t allege they are the holder in due course because THAT would require them to prove they have the note and mortgage “for value” and that they didn’t have actual knowledge of the borrowers claims and defenses. The borrower would only need to deny such an allegation thus forcing the burden of proof onto the forecloser — a burden that no forecloser these days can meet unless it is a local bank loan.Instead of alleging that the Forecloser is a holder in due course, they carefully allege that they are the holder with implied rights to enforce because the documents appear to be valid on their face. But a holder is subject to the defenses available in any breach of contract action including non-performance —I.e. The denial that the originator ever made the loan. Then they stonewall discovery on questions about the wire transfer receipt that would reveal who made the loan. At trial the borrower should have objections and motions in limine after properly seeking to enforce discovery and getting no results except more objections.If the homeowner raises the issue of payment of the loan from the originator they are properly challenging the existence of a valid contract, which was never formed because of the failure of performance by the originator. Most loans during the mortgage meltdown period fit this scenario.The end result should be that the debt cannot be enforced by the foreclosing party because no entity in their “securitization” cloud ever performed the essential act required by the loan contract — performing the act of delivering money as a loan to the homeowner. Hence no debt was created between THOSE parties.Non stop servicer advances are payments to the creditors — the trust beneficiaries (investors) — of the trust whether or not the borrower is paying the required payments under the note.This could also be grounds for challenging the default saying that there was no default from the creditor’s perspective because they continued to receive their expected payments. Or it could be grounds for saying they waived the default or that the default was cured while they were accepting the servicer advances. The creditor is only allowed to be paid once on your loan.Assuming the court accepts that argument, you have established that there are not one, but two loan contracts — the one that the lender saw, and the one that the borrower saw. That would mean there was by definition no meeting of the minds, which is a basic term used in contract law. If the money frominvestors actually funded the trust, then they could argue that there was nothing wrong with the two contracts because the borrower’s loan contract was with the trust. But our retort would be that if the borrower’s contract was with the trust, why were they not on the note?These are Razor thin distinctions that must be carefully argued or presented by an expert. The goal would be to discredit the initial loan transaction such that the loan was not secured because the real contract was an implied contract at law rather than the written one you signed. If the written one is void, then the debt exists, but it is not secured by a mortgage, hence there could be no foreclosure.Collection could only be by the trust in a judicial case brought against you that could be discharged in bankruptcy. I don’t know how the homestead exemptions work in California bankruptcy court, so we would need to be careful about how this would be used. In any event, amounts received from insurance contracts and the like would be deducted along with offset for appraisal fraud — but realize that appraisal fraud can only go so far. You must prove what the real value of the home was (not presume or guess at it) at the time of the loan transaction, which could be the modification or refi which would be when the real value had already plummeted while the loan amount was higher. The difference between

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the appraised value and the real value could be the an element of consequential damages, and if you can prove malevolent intent you could ask for punitive damages.While I have been writing about these things for years it is only now that some judges are beginning to loosen up to listen to the realities of securitization — that it was a fraudulent scheme to deprive investors of their money and the promised secured enforceable loans. The investors all sued saying the loans were NOT enforceable even though they had supposedly been transferred into the trust. These arethe lawsuits that the banks are settling every week or every other week for hundreds of millions or billions of dollars. The largest so far is Chase who just paid $13 Billion to settle claims of fraud, misrepresentation, and mismanagement of funds.For more information about your loan, go to http://www.livingliesstore.com and get one of the COMBO’s.

ATTENTION LAWYERS: ARE SERVICER ADVANCES ARGUABLY A NOVATION

Posted on January 2, 2014 by Neil Garfield

Where “servicer” advances to the trust beneficiaries are present, it explains the rush to foreclosure completely. It is not until the foreclosure is complete that the payor of the “servicer” advances can stop paying. Thus the obfuscation in the discovery process by servicers in foreclosure litigation is also completely explained. Further this would open the eyes of Judges to the fact that there may be other co-obligors that were involved (insurers, credit default swap counterparties etc.). Thus while the creditor is completely satisfied and has experienced no default, the servicer is claiming a default in order to protect the interest of the servicer and broker-dealer (investment bank). It is a lie. — NeilF Garfield,http://www.livinglies.me

This is not for layman. This is directed at lawyers. Any pro se litigant who tries doing something with this is likely to be jumping off a legal cliff so don’t do it without consultation with a lawyer. If you ARE alawyer, you might find this very enlightening and helpful in developing a strategy to WIN rather than delay the “inevitable.”

I was thinking about this problem when the servicer advances are paid. Such advances arein an amount that satisfies the creditor. If the creditor is named as the real party in interest in a foreclosure, there is an inherent contradiction on the face of the situation. Someone other than the creditor is alleging a default when the creditor will tell you they are just fine — they have received all scheduled payments. Even though it is most likely that the money came from the broker-dealer I was thinking that this might be a novation or a failed attempt at novation. A definition of novation is shown below. Here’s my thinking:1. the receipt of payment by the trust beneficiaries satisfies in full the payment they were to receive under the contract between them and the REMIC trust.2. if the foreclosure action is brought by the trust or the trust beneficiaries, directly or indirectly, they can’t say that they have actually experienced a default, since they have payment in full.3. Some entity is initiating the foreclosure action and some representative capacity on behalf of of the trust or the trust beneficiaries as the creditor. If the borrower has ceased making payments and no other payments are received by the trust or the trust beneficiaries relating to the subject loan then it is arguably true that the borrower has defaulted and the lender has experienced the default.4. But in those cases where the borrower has ceased making payments but full paymenthas been sent and accepted by the lender as identified in the foreclosure action, does notseem possible for a declaration of default by that lender to be valid or even true.5. But it is equally true that the borrower has ceased making payments under an alleged contract, which the foreclosing party is alleging as a default relating to the lender that has been identified as such in the subject action.6. In actuality the servicer advances have probably been paid by the broker-dealer out of a fund that was permitted to be formed out of the investment dollars advanced by the investors for the purchase of the mortgage bonds. Presumably this fund would exist in a trust account maintained by the trustee for the asset-backed trust. In actuality it appears

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as though these funds were kept by the broker dealer. The prospectus specifically states that the investors can be repaid out of this fund which consists of the investment dollars advanced by the investors.7. But these nonstop servicer advances are designated as payments by the servicer.8. And it is stated in the pooling and servicing agreement that the nonstop servicer advances may not be recovered from the servicer nor anyone else.9. That means that the money received by the trust beneficiaries is simply a payment of the obligation of the trust under the original agreement by which the trust beneficiaries advanced money as investors purchasing the mortgage bonds.10. In other settings such payments would be in accordance with agreements in which subrogation of the payor occurs or in which the claim is purchased. Here we have a different problem. At no point here is the entire claim subject to any claim of subrogationor purchase. It is only the payments that have been made that is the subject of the dispute. That opens the door to potential claims of multiple creditors each of whom can show that they have attained the status of a creditor by virtue of actual value or consideration paid.11. But regardless of who makes payments to the trust beneficiaries or why they made such payments, the trust beneficiaries are under no obligation to return the payments. Hence the trust beneficiaries have experienced no default and the alleged mortgage bondavoids the declaration of a credit event that would decrease the value of the bond. That keeps the investors happy and the broker dealer out of hot water (note the hundreds of claims totaling around $200 billion thus far in settlements because the broker dealer didn’t do many of the things they were supposed to do to protect the investors). NOTE ALSO: The payment and acceptance of the regularly scheduled payments to the trust beneficiaries would cure any default in all events.12. But the entity that has initiated the foreclosure action is still going to argue that the borrower has breached the terms of the note and has failed to make the regularly scheduled payments and that therefore the borrower is in default. But they cannot say that the borrower defaulted in its obligation to the creditorsince the creditor is already satisfied.13. Even where we have successfully established that the origination of the loan occurredwith the funds of the investor and not the named payee on the note or the named mortgagee on the mortgage, a debt still exists to the investors for the amount that is not paid by anyone. This debt would arise by operation of law since the borrower accepted the money and the investor lenders are the source of that money.14. So the first issue that arises out of this complex series of transactions and a complex chain of documents (that appear to reflect transactions that never occurred), is whether the creator of this scheme unintentionally opened the door to allow a borrower to stop making payments and require the servicer or broker-dealer to continue making nonstop servicer advances the satisfying the obligation to the so-called secured creditor alleged inthe initiation of the foreclosure action. If the obligation is indefinite as to duration, this might have a substantial impact on the amount due, the amount demanded and whether the original notice of default was fatally defective in stating the amount required for reinstatement and even claiming the default.15. I therefore come to the second issue which is that in such cases a second obligation arises when the first one has been satisfied by the payment from a third-party. The second obligation is clearly not secured unless a partial assignment of the mortgage and note has been executed and recorded to protect the servicer or broker-dealer or whoevermade the payments to the trust beneficiaries under the nonstop servicer advances. This clearly did not occur. And if it did occur it would be void under the terms of the trust instrument, i.e., the pooling and servicing agreement.16. The only lawsuits I can imagine filed by the party who made such payments to the trust beneficiaries are causes of action against the homeowner (not to be called a “borrower” anymore) for contribution or unjust enrichment. And as I say, there could be no claims that the debt is secured since the security instrument is pledged to the trust

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beneficiaries and executed in favor of a third party that is different from the party that made the nonstop servicer advances to the trust beneficiaries.17. I am therefore wondering whether or not novation should be alleged in order to highlight the fact that the second obligation has been created. Some sort of equitable novation would also allow the Judge to satisfy himself or herself that he or she is not encouraging people to borrow money and not pay it back while at the same time punishing those who created the mad scheme and thus lost the rights set forth in the security agreement (mortgage, deed of trust etc.).Based on the definition below, it mightbe that the novation could not have occurred without the signature of the borrower. But the argument in favor of characterizing the transactions as a novation might be helpful in highlighting the fact that with the undisputed creditors satisfied, that no default has occurred, and that any purported default has been waived or cured, and that we know that a new liability has been created by operation of law in favor of the party that made the payments.18. And that brings me to my last point. I would like to see what party it is that claims tohave made the non-stop servicer payments. If the payments came from a reserve pool created out of the investment dollars funded by the investors, it would be difficult to argue that the borrower has become unjustly enriched at the expense of the broker-dealer. The circular logic created in the prospectus and pooling and servicing agreement would obviously not be construed against the borrower who was denied access to the information that would have disclosed the existence of these complex documents and complex transactions, despite federal and state law to the contrary. (TILA and RESPA, Reg Z etc.)COMMENTS are invited.

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FROM WIKIPEDIA —In contract law and business law, novation is the act of either:

1. replacing an obligation to perform with a new obligation; or

2. adding an obligation to perform; or

3. replacing a party to an agreement with a new party.In contrast to an assignment, which is valid so long as the obligee (person receiving the benefit of the bargain) is given notice, a novation is valid only with the consent of all parties to the original agreement: the obligee must consent to the replacement of the original obligor with the new obligor.[1] A contract transferred by the novation process transfers all duties and obligations from the original obligor to the new obligor.For example, if there exists a contract where Dan will give a TV to Alex, and another contract where Alex will give a TV to Becky, then, it is possible to novate both contracts and replace them with a single contract wherein Dan agrees to give a TV to Becky. Contrary to assignment, novation requires the consent of all parties. Consideration is still required for the new contract, but it is usually assumed to be the discharge of the formercontract.Another classic example is where Company A enters a contract with Company B and a novation is included to ensure that if Company B sells, merges or transfers the core of their business to another company, the new company assumes the obligations and liabilities that Company B has with Company A under the contract. So in terms of the contract, a purchaser, merging party or transferee of Company B steps into the shoes of Company B with respect to its obligations to Company A. Alternatively, a “novation agreement” may be signed after the original contract[2] in the event of such a change. This is common in contracts with governmental entities; an example being under the United StatesAnti-Assignment Act, the governmental entity that originally issued the contract must agree to such a transfer or it is automatically invalid by law.The criteria for novation comprise the obligee’s acceptance of the new obligor, the new obligor’s acceptance of the liability, and the old obligor’s acceptance of the new contract

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as full performance of the old contract. Novation is not a unilateral contract mechanism, hence allows room for negotiation on the new T&Cs under the new circumstances. Thus, ‘acceptance of the new contract as full performance of the old contract’ may be read in conjunction to the phenomenon of ‘mutual agreement of the T&Cs.[1]Application in financial markets

Novation is also used in futures and options trading to describe a special situation where the central clearing house interposes itself between buyers and sellers as a legal counter party, i.e., the clearing house becomes buyer to every seller and vice versa. This obviatesthe need for ascertaining credit-worthiness of each counter party and the only credit risk that the participants face is the risk of the clearing house defaulting. In this context, novation is considered a form of risk management.

Dan Edstrom Cites Failure to Actually Close EscrowPosted on January 1, 2014 by Neil Garfield

Getting the closing instructions and the closing documents, including the wire transfer receipts and wiretransfer instructions, one is able to piece tog ether that escrow was never properly closed. This could mean that escrow is still open — leaving open the option of a three day rescission. Dan points out in response to me post that there is considerable support to attacking the escrow to prove that the originator is not the lender. The issue that I failed to explain in my post is that the note was never delivered to the originator. This, combined with the failure of the originator to fund the loan, pretty much locks the door on the note or mortgage being valid enforceable instruments no matter how many times they recorded, assigned, indorsed or anything else. My post ishttp://livinglies.wordpress.com/2013/12/26/beforeyou-open-your-mouth-or-write-anything-down-know-what-you-are-talking-about/

EDITOR’S NOTE: So I amend my prior comments to add the second question, which has many subparts as explained below: (1) did the originator pay for the loan that the borrower received? and (2) was escrow closed? (including amongst other things, did the originator receive delivery of the note and mortgage?). In reviewing thousands of cases (I think only Lynn Symoniak might have exceed the number of cases I have reviewed) I have come to the conclusion that the answer to both questions is NO — when the origination of the loan was part of or subject to claims of a securitization scheme.This underscores the scheme of theft by the Wall Street Banks. First they divert the money from investors from a trust into their own pocketed. Then they divert the documents that were supposed to protect the the investor to naked nominees that are controlled by the Banks, not the REMIC trust. Now they want to add insult to injury and throw the homeowner out of his home because “THE Loan” is in default, when the the only loan is the one that arose by operation of law between the investor lenders and the homeowner borrower and NOT the loan described in the note and mortgage. The escrow closing says otherwise.

Here is Dan Edstrom’s Response (Thanks Dan) Excellent source of information for lawyers. Here is what I think is critical that you need to include anddiscuss.My assumptions are that it is well established that escrow requires specific performance (at least this is true in CA, and probably all other states).My assumptions are that the following is generally true in all states.Without fulfillment of the conditions precedent to closing escrow, escrow cannot close (specific performance).If escrow never closed you have failure of delivery of an instrument. The conclusive presumption of delivery avails an alleged note holder nothing if escrow did not close. In CA it is stated this way:No delivery of the note, within the meaning of section 3097 of the Civil Code, took place. As the court says in Sousa v. First California Co. (1950), 101 Cal.App.2d 533, 539 [225 P.2d 955],“Only after strict compliance with the condition imposed … does the escrow holder begin to hold for the party thereby entitled. …” Bogan v. Wiley (1949), 90 Cal.App.2d 288, 292 [202 P.2d 824], holds, “No rule is better

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settled than the one that the payee gets no property in a negotiable instrument until its delivery.” And Todd v. Vestermark (1956), 145 Cal.App.2d 374, 377 [302 P.2d 347], states: “… a delivery or recordation by or on behalf of the escrow holder prior to full performance of the terms of the escrow is a nullity. No title passes.”You could state what you listed in your article a different way (that the payee provided no considerationat loan closing): [EDITOR'S NOTE: POSSESSION VERSUS AUTHORITY OR RIGHT TO ENFORCE THE INSTRUMENT]Yet these respondents recognize the rule that a security interest serves as an incident to the debt (Civ. Code, 2909), and on oral argument before this court admitted “if we didn’t have a promissory note, andif it … wasn’t an obligation … [t]here would be nothing for that security to secure; so it couldn’t exist.” Moreover, as the decisions have held, the mere recordation of a deed of trust by the escrow holder, in accordance with the trustor’s instructions, does not establish delivery. Thus in Jeannerette v. Taylor (1934), 2 Cal.App.2d 568 [38 P.2d 831] (petition for hearing in Supreme Court denied), the “title company, following plaintiff’s instructions, recorded a deed to the property which she had signed and acknowledged, the defendant being named therein as the grantee. Following this the title company … mailed the recorded deed to defendant.” The court then stated: “The evidence shows that this was done without express authority. … No one who had possession of the deed was authorized by plaintiff to deliver the same to the defendant. The delivery to the title company was for the limited purpose of recordation. No authority was thereby conferred to make delivery, and its act in mailing the instrument to the defendant did not have the effect of passing title …” (Pp. 569-570.)Holder and Holder in due course may not apply if there was no consideration and escrow never closed:Since Builders did not become a holder in due course, the conclusive presumption of delivery avails respondents nothing. (Civ. Code, 3097.) The cited case of Baker v. Butcher (1930), 106 Cal.App. 358, 367[289 P. 236], does not apply; respondent Walker’s admission 231*231 that his rights depend upon the status of Builders as a holder in due course proves fatal.The following quote seems to agree with what you are saying, that the Plaintiff can sue based on the obligation or the contract:Respondents fourthly and finally contend that the conception of the payment of $4,022.14 as a condition precedent to delivery necessarily must void the entire transaction or work an unjust enrichment to appellants. In essence this contention suggests that appellants must rescind the contract in order that no unjust enrichment accrue to them; that, having elected to accept certain contractual benefits, they must ignore Henderson’s breach of his duties. Yet respondents seek to collect upon a noteunder which appellants are not obligated for want of delivery; respondents’ rights properly rest only upon the underlying contract or in quasi-contract. Thus, as is stated in Jacobitz v. Thomsen, supra (1925), 238 Ill.App. 36–”the note never became an obligation binding, as such, upon the defendants. … The reversal in this case, however, will be without prejudice … to any right Thullen may have to recoverfrom defendants whatever sum, if any, may be due from them under the terms of the original contract … or the value of work, labor and materials furnished. …” (Pp. 38-39.) Gray v. Baron, supra (1910), 13 Ariz. 70, 74, likewise points out–”Under the terms of the escrow agreement and the facts … there was no such delivery of the note … and … the judgment entered by the court for the plaintiff requiring the payment of the note … [must be reversed as] outside of the issues set forth in the pleadings. … The theory of the trial court seems to have been that the plaintiff had established a cause of action based upon the breach of a contract to purchase the stock. The error of the trial court was … in attempting to enforce such a cause of action … in an action based simply upon the promissory note, and not one basedupon the breach of the contract to purchase.”All of the above quotes come from Borgonova vs. Henderson, 182 Cal.App.2d 220 (1960), attached.Getting back to the conditions precedent, here are some that I have seen. But keep in mind that all of the loan closing documents I have seen are different. Some bring up certain conditions different from others (your mileage may vary). The following are all from one loan closing (notice the impossibility of meeting the conditions precedent):BORROWERS CLOSING INSTRUCTIONSYou are authorized to deliver and/or record the above and close in accordance with the estimated closing statement contained herein (subject to adjustment);and when you can procure/issue a 06-ALTA Loan w/Form 1 – 1992 coverage from Policy of Title Insurancefrom Fidelity National Title Insurance Company with a liability of $500,000.00 on the property described in your Preliminary Report No. 4008203, dated August 16, 2005, a copy of which I/we have read and hereby approve.

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SHOWING TITLE VESTED IN:[borrowers names ...]FREE FROM ENCUMBRANCES EXCEPT:[...]6. A First Deed of Trust, to record, securing a note for $500,000.00 in favor of Mortgage Lenders Network USA, Inc..LENDERS CLOSING INSTRUCTIONSNamed Lender who provided the closing instructions: Mortgage Lenders Network USA, Inc.[...]Residential Funding Corporation has a security interest in any amounts advanced by it to fund this mortgage loan and in the mortgage loan funded with those amounts. You must promptly return any amounts advanced by Residential Funding Corporation and not used to fund this mortgage loan. You alsomust immediately return all amounts advanced by Residential Funding Corporation if this mortgage loan does not close and fund within 1 Business Day of your receipt of those funds.Closing Agent/Attorney acknowledges the foregoing instructions and understands that failure to properlyfollow set of instructions may result in legal recourse by MORTGAGE LENDERS NETWORK USA, INC.Identified conditions precedent in this case that may not have been met:

1. No exception on Borrowers Closing Instructions for the security interest claimed by Residential Funding Corporation (who by the way was the sponsor of thousands of attempted securitization transactions) in the Lenders Closing Instructions

2. No exception on Borrowers Closing Instructions for the security interest claimed by MERS on the Security Instrument (Deed of Trust in this case), which states “Borrower understands and agrees that MERS holds only legal title to the interests granted by the Borrower in this Security Instrument…”

3. Approximately $329,000 was sent to Ocwen Loan Servicing to pay off an earlier 1st lien. Ocwen was not the payee, beneficiary, mortgagee or assignee and was not listed on any recorded document. A few weeks after closing, Ocwen recorded a full reconveyance stating that they were the beneficiary. However, Ocwen was a stranger to the chain of recorded documents. In this case the Borrower contends that payment was sent to the wrong party (the alleged note holder, beneficiary and assignee was New Century Mortgage Corporation) and the reconveyance isa wild deed. Thus Residential Funding sent approximately $329k to Ocwen and the Borrower never received the benefit of the bargain as this money was never given to the Borrower or used for the Borrowers benefit. Thus the encumbrance remains.

4. The payee provided no money to escrow and the escrow company had full knowledge of this (in fact every other party had knowledge of this fact except the homeowner who was the least sophisticated party present).

In my opinion if the borrower was fooled at loan closing, the escrow should not have closed. That is unless the escrow company was fooled also. But they were not fooled – they knew everything.Remember also that the homeowner never sees MERS or the above loan closing instructions until they are put before the Borrower on the day of signing. Up until about 2010 I would say that there was no homeowner who could have remotely understood what any of the above meant.

Before You Sign Anything, File Anything, Consider the Statute of LimitationsPosted on December 31, 2013 by Neil Garfield

With tens of thousands of cases running many years before foreclosure is started and with many cases ripe for dismissal for lack of prosecution, the Banks are in a full court press attempting to get modifications or even going to trial on cases they know are problematic at best. I am receiving scores ofreports of cases dismissed on the grounds they are barred that the statute of limitations has run.If grounds exist for dismissal (check with a lawyer who really knows) the case cannot be refiled if the statute of limitations has run. If the case has not started and you have been living in the home for years without paying, the statute may have already run or you might be able to “run the statute.” (Check with an attorney licensed in the jurisdiction in which the property is located).The meaning of the statute of limitations is simple: everyone with a claim has a right to bring it. BUT

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the Courts will not entertain any action that is stale. There are two ways the case might be stale — (1) the statute of limitations which is by definition a statute passed by the legislature of each state and (2) the common law doctrine of laches that might be supplemented by statutes or rules of procedure (laches is rarely applied). Laches on its own is generally a weak defense. But combined with the one year rule in Florida, for example, for prosecuting the case forward, it might have more teeth. But you would need to show inaction for a long period of time (i.e., no suit filed) PLUS the failure to prosecute. There are specific rules of civil procedure covering the dismissal of a cause of action for failure to prosecute.Applying the meaning of the statute as applied to mortgage foreclosures is apparent. The foreclosing party has sent a notice of default and acceleration because you didn’t make a payment or they have no sent a notice and you have not been making a payment. The time to sue on the note and mortgage is based is usually based upon the statute of limitations as applied to contracts, but there might be some states that specify mortgage foreclosures. If the “Bank” has run the statute of limitations they can never attempt to sue on the note or mortgage again and in non-judicial states they cannot file a notice of default and notice of sale.There are things that delay or “toll” the statute of limitations like various payment plans or agreements like modifications (that could even re-start the statutory period), bankruptcy and anything else that prevents the claimant from filing the claim for damages or foreclosure. Each case must be examined as to the running of the statute of limitations. In Florida the statute is 5 years. So for example if the last payment you made was November of 2008, then the next payment due was in December of 2008. That is when the statute starts running. If the Bank in Florida, which is a judicial state, has not actually filed suit in foreclosure, they are probably now barred from doing so.PRACTICE NOTE: THE BANKS ARE FREQUENTLY MAKING AN ERROR WHEN THERE IS A MODIFICATION AGREEMENT PRESENT THAT MIGHT ENABLE YOU TO GET THE CASE DISMISSED FOR YOUR CLIENT AND, IF THE CASE IS STALE UNDER THE STATUTE, THE DISMISSAL COULD BE “WITH PREJUDICE” OR EVEN IF NOT WITH PREJUDICE IT WOULD AMOUNT TO THE SAME THING. The error they are making is that they take the date of the initial “default” (which of course can be challenged on many grounds that have been explained on this blog) and they sue on the default of the note instead of the the default in the modified note terms. The time to bring that up is as close to trial as possible when they can’t do anything about it. In Florida, this would force them to refile in the face of statutory requirements that requires them to be the owner of the loan.For this reason I am suggesting to our own analysts as well as all the rest of the analysts assisting attorneys and pro se litigants to include the relevant statute of limitations in their report.Here is a link that can assist you. I caution anyone about using this list. Things change so you need to look up the actual statute and the language of the statute might be such that only an attorney who has researched the statute will be able to gave an opinion as to whether it applies in your case. http://www.nolo.com/legal-encyclopedia/statute-of-limitations-state-laws-chart-29941.htmlFor homeowners and lawyers seeking litigation assistance please call 520-405-1688 or go to http://www.livingliesstore.com

US Bank, BofA, LaSalle Bank and Other Trustees Slammed the Door on Their Own ToesPosted on December 30, 2013 by Neil Garfield

NOTE: THE FOLLOWING IS A LEGAL ANALYSIS THAT MAY OR MAY NOT APPLY TO CASES ON WHICH YOU ARE WORKING. IT IS REALLY MEANT FOR ATTORNEYS WHO ARE REPRESENTING PARTIES IN FORECLOSURE LITIGATION. No lay person should assume that anything in this article is true or applies to their case. Nobody should use this information without carefulconsultation with a knowledgeable attorney licensed in the jurisdiction in which the subject property is located. This may or may not have applicability to other securitized debt including student loans, auto loans etc. Each case rests on its own merits. Do not assume that there is any magic bullet that ends any case in favor of the borrower.For Litigation Support for Attorneys in all fifty states, please call 520-405-1688. For general search and information products, consultations and services please go to http://www.livingliesstore.com.

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MBS TRUSTEES HAVE NO RIGHT TO BRING FORECLOSURE ACTIONSSEE QUOTES FROM US BANK WEBSITE

Upon analysis, research and reflection it appears as though the game could be over in the US Bank cases, the Bank of America cases, and any case in which the foreclosing party is identified as the Trustee. US Bank clearly has no right or even access to the foreclosure process. How do we know? Because US Bank says so on its own website. SEE https://www.usbank.com/pdf/community/Role-of-Trustee-Sept2013.pdf.

Here are some notable quotes from the US Bank websites which references materials to make their own assertions apply to all trustees over MBS trusts:“Parties involved in a MBS transaction include the borrower, the originator, the servicer and the trustee, each with their own distinct roles, responsibilities and limitations.”

“ U.S. Bank as Trustee:“As Trustee, U. S. Bank Global Trust Services performs the following responsibilities:Holds an interest in the mortgage loans for the Benefit of investorsMaintains investors/securities holder recordsCollects payments from the ServicerDistributes payments to the investors/securities holderDoes not initiate, nor has any discretion or authority in the foreclosure process (e.s.)Does not have responsibility for overseeing mortgage servicers (e.s.)Does not mediate between the servicers and investors in securitization deals(e.s.)Does not manage or maintain properties in foreclosure (e.s.)Is not responsible for the approval of any loan modifications (e.s.)“All trustees for MBS transactions, including US Bank have no advanced knowledge of when a mortgage loan has defaulted.“ Trustees on MBS transactions, while named on the mortgage and on the legal foreclosure documents, are not involved in the foreclosure process.”“ While trustees are listed on mortgages, and therefore in legal documents as well, as the owner of record, its interest is solely for the benefit of investors. The trustee does not have an economic or beneficial interest in the loans and has no authority to manage or otherwise take action on the loans which is reserved for the servicer.” (e.s.)“Additional sources of information:– American Bankers Association White Paper, The Trustee’s Role in Asset-backed securities, dated November 9, 2010,http://www.aba.com/Press+Room/110910Roleofatrustee.htm “– The Trust Indenture Act of 1939In several cases I am litigating, the servicer seems to be saying that they approve the foreclosure but do not want the turnover of rents. This brings up the question of whether the notice of default was sent by the Trustee, who according to the attached information would not even know if the default is being “called,” in which case the notice would be fatally defective. The fatal defect would be that it is not a function of the Trustee if the PSA has the usual language. That function is exclusively reserved for the Servicer. Since the PSA probably has language in it that restricts the knowledge of the Trustee to virtually zero, and certainly restricts the knowledge of the Trustee as to all receipts and disbursements processed by the sub-Servicer, the broker dealer (investment bank), and the Master Servicer. Thus the Trustee of the MBS trust is the last party on whom one could depend for information about a default — except that if “Servicer advances” (quotations usedbecause the money is coming from the investment bank) then the Trustee would presumably know that from the creditor’s point of view, there is no default.

A NOTICE OF FILING could be sent to the Court with the full pdf file from the US Bank website while the smaller pdf file containing excerpts from the full pdf file could be attached as an exhibit to the Motion. THIS WILL HAVE BROAD RAMIFICATIONS FOR THOUSANDS OF FORECLOSURE CASES ACROSS THE COUNTRY. IF THE TRUSTEE INITIATED THE FORECLOSURE, EVERYTHING IS VOID, NOT VOIDABLE ACCORDING TO NEW YORK AND DELAWARE LAW. ACTIONS COULD BE BROUGHT BASED UPON JURISDICTIONAL GROUNDS FOR WRONGFUL FORECLOSURE THUS TURNING EACH FORECLOSURE CASE INTO AN ACTION FOR DAMAGES OR TO REGAIN TITLE SINCE THE SALE WAS BOGUS.

But the complexity gets worse. If the action should have been brought by the servicer, but the

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creditor was really a funded trust who was legally represented by a properly authorized servicer, then the bid by the Trustee at the auction might have been valid. Hence the attack should be on theforeclosure process itself rather than the credit bid.Not to worry. I don’t think any of the Trusts were funded — or to put it more precisely, I have found no evidence in the public domain that any of the MBS trusts were in fact funded the way it was set forth in the prospectus and pooling and servicing agreement. There does not appear to be any actual trust account over which the Trustee has control. Hence both the existence and capacity of the Trust and the Trustee are issues of fact that must be decided by the Court.That leaves the MBS trusts with no money to originate or acquire mortgages. So who really owns theloans? This is why in Court on appeal, the attorneys agree that they don’t know who owns the loans.But what they really mean, whether they realize it or not, is that they don’t know if any of the loans are secured by a perfected mortgage. If none of the parties in their “chain” actually came up with money or value, then the lien is not perfected or valid. The mortgage would be subject to nullification of the instrument.If the question was really who owns the loans, the answer is simple — the investors who put up the money. We all know that. What they are dancing around is the real nub of the confrontation here: Since we know who put up the money and therefore who owns the loan, was there any document orevent that caused the loan as owned by the investors to be secured? The answer appears to be no, which is why the investment banks are all being sued every other day for FRAUD. First they diverted the investor money from the trust and then they diverted the title from the trust beneficiaries to one of their own entities. The actions of the investment banks constitutes, in my opinion, an intervening tortious or criminal act that frustrated the intent of both the borrowers (homeowners) and the lenders (investors).

So the real question is whether the Court can be used to reform the closing and create a loan agreementthat is properly enforceable against lender and borrower. That appears to require the creation of an equitable mortgage, which is held in extremely low regard by courts across the country. And then you have questions like when does the mortgage begin and what happens to title with respect to interveningevents?The simple answer, as I said in 2007, is do some sort of amnesty and reframe the deals to reflect economic reality allowing everyone to bite a bullet and everyone to cover their losses but avoid, at this point another 6 million families being displaced. My experience with borrowers is that the overwhelmingmajority would sign a new mortgage document that is enforceable together with a new note that is enforceable and leaves all issues behind even though they know they could push the issue further. The borrower s are a lot more honest and straightforward than their banker counterparts. The deal should essentially be between the investors and the homeowners.The question is whether the case is dismissed, possibly with prejudice, or if they can try to substitute the servicer as the Plaintiff in a style that would or might read “SPS, as servicer, on behalf of ????, Trustee for the asset backed trust” or “on behalf of the trust beneficiaries.”

The further question is whether the complaint could be amended. But if the servicer didn’t send the NOTICE OF DEFAULT, there is nothing to amend since on its face, the Notice of Default was sent by a party who not only was not authorized to start the process but who was expressly precluded from having any knowledge of the default.This in turn leads to the further question of whether the verification was valid if signed on behalf ofUS Bank or any other party “as trustee” on the complaints to foreclose.

The smaller file tells the whole story we have been arguing and it should be attached. I would attach the smaller one page synopsis of quotations from their website. It leaves no room for interpretation — trustees do not, and cannot initiate foreclosures or anything else relating to enforcement. They may not meddle in the foreclosure and they may not meddle or mediate in settlement or mediation. Here is the smaller file:US BANK ROLE OF TRUSTEE

As to Bank of America, the situation is even more dire —-http://www.federalreserve.gov/newsevents/press/orders/20070914a1.pdf

contains the Federal reserve Order approving the Bank of America – LaSalle merger. I can

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find no such order for the CitiMortgage-ABN Amro mortgage. It is also true that I can find no evidence that the BOA merger was completed whereas there is plenty of evidence thatthe Citi-ABN merger was in fact completed. This means that CitiMortgage became the parent company of LaSalle Bank.While it is theoretically possible for an ACQUISITION of LaSalle to have taken place in which BOA acquired LaSalle Bank, no evidence exists that any such transaction exists between BofA and Citi. It is clear that Citi completed its deal in September of 2007 at around the same time that BOA was getting the approval order shown above on the federal reserve website. But most curiously the Fed does not mention the Citi-ABN Amro deal. What we know for sure is that there was no MERGER between BofA and Citi.In my opinion based upon review of this order from the Federal Reserve and other pronouncements from the FED, this order was either never officially issued in actuality or it never was used. In the absence of further contrary information which I have not been able to uncover, thus far, the irrefutable conclusion is that BOA never became the successor by merger to LASalle Bank. Therefore BOA was never the trustee for the asset backed REMIC trust. Therefore, the transaction to which US Bank refers granted US Bank nothing even if the position of trustee is determined to be a commodity — an idea that would create havoc in the marketplace.

As for whether US Bank as trustee for MBS trusts has standing, the answer is no and they have absolutelyno right, obligation or even access to the foreclosure or settlement process. In the same REMIC out in California, I am the expert witness on a case in which the same trust is represented by Chase as servicer. The case has not caught up with the fact that Chase has sold or transferred servicing rights to SPS (Select Portfolio Services) or at least that is what they say.

This being the case, several questions arise:

Since this information from the public domain is on the U.S. Bank website without any disclaimers, are we sure they authorized the foreclosure and the action for turnover of rents? Or are they going to say it was an error by the law firm? Who is actually the client of the opposing law firm — the trust beneficiaries, the trust,, the trustee or US Bank who doesn’t really appear to be the trustee?

The same question could be asked of Bank of America who says they are or were a trustee based upon a dubious series of announcements that seem to lack the same underlying transactions as all securitized loans that report a transaction has taken place (i.e.., on the note the contract is implied because the borrower agrees to repay a loan to a lender that never gave them the money).

Neil, What Are You Really Saying in Plain EnglishPosted on December 28, 2013 by Neil Garfield

That is the question one of my callers asked.So let me try to explain the mortgage monstrosity in short plain statements. Based upon my analysis of information in the public domain, there are two ways that anyone claim a loan was securitized — carvedup into pieces and then sold to multiple buyers or bundled with other loans. Either way — carving or bundling is meant to decrease risk. If one loan goes bad it is only a small part of the entire portfolio of loans you bought so the perception of risk is reduced.There are two types of transactions in which a loan enters the stream of claims of securitization — origination and acquisition. Origination is what it sounds like — money from the investors is used to fundthe loan. Acquisition is a purchase of the loans with investor funds from someone who made the loan without the help or money of anyone else. Either way, it is the money of investors that is used and therefore they are the only ones paying value for the loan. Therefore they are the creditor.There are two ways that the investors money can enter the system — Purchasing mortgage bonds or direct funding. Either way there is an intermediary party aggregating or carving the loans up. And here is the problem, to wit:The investor money was used for direct funding of the loan origination or direct funding of the purchase of the loan. But the loan documentation named some third party that didn’t loan or purchase the loan. My analysis indicates that not only was there no agency agreement between the investors and the party

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NAMED as the originator or purchaser, but that this was an intentional act of deception. The broker dealers selling the bond were selling a security issued by a REMIC trust.But instead of giving the trust the money, they kept it and tacked on fees. And instead of using the investors’ money to make loans through a trust they converted a direct funding transaction in which the investors should have been named the lenders into an acquisition from a “third party” thus creating a “profit” for the broker dealer. The profit was the sale of the loan the investor already owned to a trust that was never funded. They took junk mortgages and sold them as platinum loans — creating an entirely fictitious profit for the broker dealer and increasing the risk of loss to investors exponentially.So the investor had his money split into two pieces — neither of which was the purchase of the bond, which is why all those investors and agencies and law enforcement are accusing the broker dealer of fraud. One piece was used to fund the origination or purchase of the loan and the other piece was a pool of money that would be used for Servicer advances and extra trading profits on fictitious trades generated internally by the broker dealer. This process creates a lying mortgage securing a lying note. And that is why the investors are saying the paper is unenforceable.The banks have done a good job of blaming the borrowers for the fraud. But it is clear that no borrower even understands this process now, much less as the designer of the scheme. The broker dealers racked up huge profits through theft of investor money that should have been used to fund the origination or acquisition of mortgage loans but was used instead to create a slush fund. The fact that SOME of the money was used for loans is not good enough because that changed the whole deal and created a loan transaction with the borrower in which the actual lender was left out and the designated lender was a party controlled by the broker dealer to create fictitious transactions or purchase insurance on loans thebrokers didn’t own.In cases like this the law is clear. Victims of the fraud must receive as much restitution of their investment as possible. And the perpetrators of the fraud are not allowed to enforce any “contracts” (loans) that they created under false pretenses to both the lender and the borrower. It is called unclean hands. So unless the foreclosing party can show a money trail that leads to the doorstep of the foreclosing party they have nothing but dirt on their hands.Does this create a free house for the borrower? In most cases the answer is no. Because the borrowers were putting down earnest money and equity in their homes to get these wondrous loans that were too good to be true based upon appraisals of pricing that were coerced.The bottom line is that the perpetrators of false schemes may not be allowed to keep the benefit of themoney they stole nor the benefit of contracts they created under false pretenses to both the lender andthe borrower.Does that help?

WSJ Reveals Where All the Stolen Money From the System Is SittingPosted on December 27, 2013 by Neil Garfield

FROM SHADOW BANKING TO SHADOW WAREHOUSINGAs I have previously stated, the Banks have literally stolen trillions of dollars from pension funds, municipalities, states, federal agencies, sovereign wealth funds and private investors. Estimates range from $3-$20 Trillion. So where did they put that money? They didn’t keep it in currency (too easy to trace and too easy to claw back). They are keeping it in natural resources which are (a) practically as liquid as cash and (b) likely to go up in value rather than keeping the stolen money in cash. The fact that they have already been fined for committing violations and crimes with the storage and movement of our natural resources is not stopping them any more than the fines and penalties they paid in the great group of mortgage-related settlements now totaling an estimated $200 Billion. Chump change when you have stolen trillions of dollars.The foreclosures? That’s just the finishing touch on the last scheme. Now the new one is starting in natural resources. They figure they have pretty much won the mortgage confrontation. Not on my watch!Millions of tons of metal stored in “shadow warehouses”04:29 AM ET · JPM

• The WSJ shines a light onto “shadow warehouses,” a hidden system of facilities that store tens ofmillions of tons of aluminum, copper, nickel and zinc across the globe for banks, hedge funds and

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commodity merchants. [Editor's Note: If you were wondering where all the hidden compensation from real estate loans went --- is this recoverable under TILA?]

• The warehouses operate outside the London Metal Exchange’s system, are unregulated, and don’t provide details of their holdings. As a result, it’s unclear how much metal is held in the shadow system. This lack of visibility could cause major price swings.

• The WSJ article follows allegations that warehousing companies have artificially boosted the price of metals, particularly aluminum. [Just as they artificially boosted the illusion of price in the mortgage bubble]

• Companies that operate metals warehouses include Goldman Sachs (GS), Glencore Xstrata (GLCNF) and JPMorgan (JPM), although the latter is looking to sell its commodities unit.

• Relevant tickers include VALE, AA, AWC, KALU, MNSF, CENX, NOR, BHP,RIO, ACH.• ETFs: DBC, JJC, DBB, DJP, GSG, RJI, GCC, USCI, CFD, JJN, JJT, BOM,RGRC, CPER, CTF, RJZ, GSC,

LSC, GSP, JJU, DEE, BDD, BOS, JJM, DYY,DDP, DJCI, LD, CMD, BCM, CUPM, UCI, RGRI, UCD, UBM, FOIL, BDG, LEDD,CMDT, SBV, USMI, DPU, NINI, FTGC, CSCB, CSCR, HEVY

Read more at Seeking Alpha:http://seekingalpha.com/currents/post/1483261?source=ipadportfolioapp_email Darline Spencer commented on a link LivingLies Blog shared.Darline wrote: “It is not over yet! I can promise you this what they have done will be exposed entirely ittakes time! Stand your ground as I have said if you have a home about to be foreclosed do not fold and run. even if you don’t have a lawyer. The day you go to court bring everyone you know with you to courtand make a stand and demand they show proof. The original docs. If people start calling the media with their stories and filling the court rooms with the your loved ones and friends affected by this the judges will be forced to demand the same. This is not the time to be silent. If you cant afford an attorney remember you have a voice USE IT. At that point what do you have to loose they are already have taken it as far as they are concerned now you need to fight back. I don’t believe in class action suits at this point because they just cover up the bigger issues and fail to properly defend the individual’s rights and steal more funds from settlements.”

Posted on December 27, 2013 by Neil Garfield

Editor’s note: in preparing a complex motion for the court in several related cases I endedup writing the following which I would like to share with my readers. As you can see, the issues that were once thought to be simple and susceptible to rocket docket determination are in fact complex civil cases involving issues that are anything but simple.This is a guide and general information. DO NOT USE THIS IF YOU ARE NOT A LICENSED ATTORNEY. THESE ISSUES ARE BOTH PROCEDURALLY AND SUBSTANTIVELY ABOVE THE AVERAGE KNOWLEDGE OF A LAYMAN. CONSULT WITH AN ATTORNEY LICENSED IN THE GEOGRAPHICAL AREA IN WHICH THE PROPERTY IS LOCATED.If you are seeking litigation support or referrals to attorneys or representation please call 520-405-1688.

SUMMARY OF ISSUES TO BE CONSIDERED

1) Whether a self proclaimed or actual Trustee for a REMIC Trust is empowered to bring aforeclosure action or any action to enforce the note and mortgage contrary to the terms of the Trust document — i.e., the Pooling and Servicing Agreement (PSA) — which New York and Delaware law declare to be actions that are VOID not VOIDABLE; specifically if the Trust document names a different trustee or empowers only the servicer to bring enforcement actions against borrowers.

2) Whether a Trustee or Servicer may initiate actions or take legal positions that are contrary to the interests of the Trust Beneficiaries — in this case creating a liability for the Trust Beneficiaries for receipt of overpayments that are not credited to the account receivable from the Defendant Borrowers by their agents (the servicer and the alleged Trustee) and the creation of liability to LaSalle Bank or the Trust by virtue

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of questionable changes in Trustees.3) Whether US Bank is the Plaintiff or should be allowed to claim that it is the Trustee

for the Plaintiff Trust. Without Amendment to the Complaint, US Bank seeks to be substituted as Plaintiff in lieu of Bank of America, as successor by merger with LaSalleBank, trustee for the Plaintiff Trust according to the Trust Document (the Pooling and Servicing Agreement) Section 8.09.a) A sub-issue to this is whether Bank of America is actually is the successor by

merger to LaSalle Bank or if CitiMortgage is the successor to LaSalle Bank, as Trustee of the Plaintiff Trust — there being conflicting submissions on the SEC.gov website on which it appears that CitiMortgage is the actual party with ownership of ABN AMRO and therefore LaSalle Bank its subsidiary.

b) In addition, whether opposing counsel, who claims to represent U.S. Bank may be deemed attorney for the Trust if U.S. Bank is not the Trustee for the Trust.i) Whether opposing counsel’s interests are adverse to its purported client or

the Trust or the Trust beneficiaries, particularly with respect to their recent push for turnover of rents despite full payment to creditors through non stop servicer advances.

4) Whether any Trustee for the Trust can bring any enforcement action for the debt including foreclosure, assignment of rents or any other relief.

5) Whether the documentation of a loan at the base of the tree of the assignments and transfers refers to any actual transaction in which the Payee on the note and the Mortgagee on the Mortgage.a) Or, as is alleged by Defendants, if the actual transaction occurred when a wire

transfer was received by the closing agent at the loan closing with Defendant Borrowers from an entity that was a stranger to the documentation executed by Defendant Borrowers.

b) Whether the debt arose by virtue of the receipt of money from a creditor or if it arose by execution of documentation, or both, resulting in double liability for a single loan and double payment.

6) Whether the assignment of mortgage is void on its face as a fabrication because it refers to an event that occurred long after the date shown on the assignment.

7) Whether the non-stop servicer advances in all of the cases involving these Defendantsand U.S. Bank negates the default or the allegation of default by the Trust beneficiaries, the Trust or the Trustee, regardless of the identity of the Trustee.a) Whether a DEFAULT exists or ever existed where non stop servicer advances have

been paid in full.b) Whether the creditor, under the debt obligation of the Defendant borrowers can

be allowed to receive more than the amount due as principal , interest and expenses. In this case borrower payments, non stop servicer advances, insurance, credit default swap proceeds and other payments by co-obligors who paid without subrogation or expectation of receiving refunds from the Trust Beneficiaries.

c) Whether a new debt arises by operation of law as a result of receipt of third party defendants in which a claim might be made by the party who advanced payment to the creditor, resulting in a decrease the account receivable and a corresponding decrease in the borrower’s account (loan) payable.i) Whether the new debt is secured by the recorded mortgage that the Plaintiff

relies upon without the borrower executing a security instrument in which the real property is pledged as collateral for the advances by third parties.

8) Whether turnover of rents can relate back to the original default, or default letter, effectively creating a final judgment for damages before evidence is in the court record.

9) Whether the requirements of a demand letter to Defendants for turnover of rents canbe waived by the trial Court, contrary to Florida Statutes.a) Whether equity demands that the turnover demand be denied in view of the fact

that the actual creditors — the Trust Beneficiaries of the alleged Trust were paid in

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full up to and including the present time.b) Whether, as argued by opposing counsel, the notice of default letter sent to

Defendant Borrowers is an acceptable substitute to a demand letter for turnover of the rents if the letter did not mention turnover of rents.

c) Whether the notice of default letter and acceleration was valid or accurate in view of the servicer non-stop advances and receipt of other third party payments reducing the account receivable of the Trust beneficiaries (creditors).i) Whether there was a difference between the account status shown by the

Servicer (chase and now SPS) and the account status actually shown by the creditor — the Trust Beneficiaries who were clearly paid in full.

10) Whether the Plaintiff Trust waived the DUE ON SALE provision in the alleged Mortgage.a) Whether the Plaintiff can rely upon the due on sale provision in the mortgage to

allege default without amendment to their pleadings.11) Whether sanctions should apply against opposing counsel for failure to disclose

essential facts relating to the security of the alleged creditor.Whether this (these cases) case should be treated off the “rocket docket” for foreclosuresand transferred to general civil litigation for complex issues

BeforeYou Open Your Mouth Or Write Anything Down, Know What You Are Talking AboutPosted on December 26, 2013 by Neil Garfield

EDITOR’S NOTE: By popular demand I am writing a new workbook that is up to date on thetheories and practices of real estate loans, documentation, securitizations and effective enforcement and foreclosure of the collateral (real property — i.e., the house). The book will be finished around the end of January. If you want to purchase an advance subscription to an advance copy we can give you a discount off the price of $599. You will receive the final edit drafts of each section as completed. And your comments might be included in the final text with attribution. This is an excerpt from what I have done so far( the references to “boxes” is a reference to artwork that has not yet been completed butthe meaning is clear enough from the words):[Note: I did borrow some phrases and cites from Judge Jennifer Bailey's Bench Book for Judges in Dade County. But things have changed substantially since she wrote that guide and my book is intended to update the various treatises, books and articles on the subjectof mortgage related litigation in the era of securitization]

INTRODUCTION

The massive volume of foreclosures and real estate closings have resulted in a failure of the judicial

system — both Judges and Attorneys to scrutinize the transactions and foreclosures and otherenforcement actions for compliance with basic contract law. This starts with whether there is an actualloan at the base of the tree of assignments, endorsements, powers of attorney etc. If the party at the

base of the tree did not in fact make any loan and was not possessed of any actual or apparent authorityto represent the party who DID make the loan, then the instruments executed in favor of the originator

are void, not voidable. This is simply because the loan contract like any contract requires offer,acceptance and consideration. Lacking any meeting of the minds and/or consideration, there was no

contract regardless of what one of the parties signed.

The interesting issue at the start of our investigation is how to define the loan contract. Is it a contractthat arises by operation of statutory or common law? Is it a contract that arises by execution of

instruments? What if the borrower executes an instruments that acknowledges receipt of money henever received from the party he thought was giving him the money? Is it possible for the writteninstruments to create a conflict between the presumptions at law arising from written, properly

executed instruments and the real facts that gave rise to a contract that was created by operation oflaw?

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These questions come up because there is no actual written loan contract. The borrower and lender donot come together and sign a contract for loan. The contract is implied from the documents and actionscontemporaneously occurring at or around the time of the loan “closing.” It appears to be a case of firstimpression that the borrower is induced to sign documents in favor of someone who, at the end of the

day, does NOT give him the loan. This never was a defect before the era of claims of securitization. Nowit is central to the issue of establishing the identity and rights of a creditor and debtor and whether the

debt is secured or unsecured.

Even where the loan contract is solid, the same legal and factual problems arise at the time of thealleged acquisition of the loan where assignments lack consideration because, like the above

origination, an undisclosed third party was the actual source of funds. Definitions: 1) Debt: in the context of loans, the amount of money due from the borrower to the lender. This may

include successors to the lender. In a simple mortgage loan the amount of money due, the identity of the borrower and the identity of the lender are clear. In cases where the mortgage loan is subjectto claims of assignments, transfers, sales or securitization by either the borrower or the party claiming to be the lender or the successor to the lender, there are questions of fact and law that must be determined by the court based on the method by which the money advanced to or on behalfof the borrower that leads to a finding by the court of the identity of the party who advanced the money for the origination of the debt or for the acquisition of the debt.

a) In all cases the debt arises by operation of law at the moment that the borrower receives the advance

of money from a lender regardless of the method utilized and regardless of the validity of any instruments that were executed by either the borrower or the lender.

i) The acceptance of the money by the borrower raises a strong presumption that the advance of money in the context of the situation was not a gift.

ii) In simple loans the legal instruments that were executed by the borrower at the loan closing

are presumptively supported by consideration as expressed in the note or mortgage and a valid contract presumptively exists such that the court can enforce the note and the mortgage.

b) The factual circumstances and any written instruments that were executed by the parties as part of a

loan contract govern terms of repayment of the debt.

c) Enforcement of the repayment obligation of the borrower requires either a lawsuit on the loan of money or a lawsuit on a promissory note.

i) If the lawsuit is on the loan of money plaintiff must state the ultimate facts upon which relief could be granted including the factual circumstances of the loan and the fact that the loan was made. In Florida — F.R.C.P. 1.110 (b), Form 1.936

ii) The lawsuit is on a note plaintiff must state the ultimate facts upon which relief could be

granted including that the plaintiff owns and holds the note, that Defendant owes the Plaintiff money, and state the amount of money that is owed. In Florida — F.R.C.P. 1.110 (b), Form 1.934

(1)Where the Plaintiff alleges it is a party by virtue of a sale, assignment, transfer or

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endorsement of the note, Plaintiffs frequently fail to allege the required elements in which case the Court should dismiss the complaint — unless the Defendant has already admitted the debt, the note, the mortgage, and the default.

(2)The burden of pleading and proving the required elements is on the Plaintiff and cannot

be shifted to the defendant without violating the constitutional requirements of due process.

(3)Requiring the Defendant to raise a required but missing element of a defective complaint

filed by a Plaintiff would require the Defendant to raise the missing element and then deny it as an attempt at stating an affirmative defense that raises no issue other than an element that was required to be in the complaint of the Plaintiff. This is reversible error in that it improperly shifts the burden of pleading onto the Defendant and requires the Defendant to prove facts mostly in the sole control of the Defendant and which would establish standing to bring the action.

d) In those cases where the loan is subject to claims of assignments, transfers, sales or securitization by

either party the court must decide on a case-by-case basis whether the legal consideration for the loan (i.e., the advance of money from lender to borrower or for the benefit of the borrower) supports the debt described in the legal instruments that were executed by the borrower at the loan closing.

i) If the Court finds that the legal instruments that were executed by the borrower at the loanclosing are not supported by consideration, then the debt simply exists by operation of law and is not secured.

(1)Such a finding could only be based on the court determining that the lender described in

the legal instruments is a different party than the party who actually loaned the money.

(2)Warehouse lending arrangements may be sufficient for the court to determine that the named payee on the note or the identified lender supplied consideration. The court must determine whether the warehouse lender was an actual lender or a strawman, nominee or conduit.

ii) If the court finds that the legal instruments that were executed by the borrower at the loan

closing are supported by consideration, then a valid contract may be found to exist that the court can enforce.

2) Mortgage: a contract in which a borrower agrees that the lender may sell the real property (as

described in the mortgage) for the purposes of satisfying a debt described in a promissory note that is described in the mortgage contract. It must be a written instrument securing the payment of money or advances made to or on behalf of the borrower. A lien to secure payment of assessments for condominiums, cooperatives and homeowner association is treated as a mortgage contract, pursuant to the enabling documents. See state statutes. For example, F.S. 702.09, Fla. Stat. (2010)

a) a mortgage, if properly perfected, creates a specific lien against the property and is not a conveyance

of legal title or of the right of possession to the real property described in the mortgage contract. See state statutes. For example section 697.02, Fla. Stat. (2010), Fla. Nat’l Bank v brown, 47 So 2d 748 (1949).

b) Mortgagee: the party to home the real property is pledged as collateral against the debt described in the note. Mortgagee is presumptively the party named in the mortgage contract. With the advent of MERS and other situations where there is an assignment of the mortgage (expressly or by operation oflaw) the named mortgagee might be a strawman or nominee for a party described as the lender. In such cases there is an issue of fact as to perfection of the mortgage contract and therefore the mortgage encumbrance resulting from the recording of the mortgage contract. See state statutes. For example

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F.S. 721.82(6), Fla. Stat. (2010).

i) In Florida the term mortgagee refers to the lender, the secured party or the holder of the mortgage lien. There are several questions of fact and law that the court must determine in order to define and apply these terms.

c) Mortgagor

d) Lender: the party who loaned money to the borrower. If the lender was identified in the mortgage

contract by name then the mortgage contract is most likely enforceable.

i) If the lender described in the mortgage contract is a strawman, nominee or conduit then there is an issue of fact as to whether any party could claim to be a secured party under the mortgage contract. Under such circumstances the mortgage contract must be treated as naming no identified secured party. Whether this results in a finding that the mortgage contract is not complete, not perfected or not enforceable is a question of fact that is decided on a case-by-case basis.

e) No right to jury trial exists for enforcement of provisions of the mortgage. However, a right to jury

trial exists if timely demanded provided that the foreclosing party seeks judgment on the note or the loan, to wit: financial damages for financial injury suffered by the Plaintiff.

i) Bifurcation of the trial for damages and trial for enforcement of the mortgage contract maybe necessary if the basis for the enforcement of the mortgage is non-payment of the note. Any properly raised affirmative defenses relating to setoff or enforceability of the note wouldbe raised in the case for damages.

ii) In that case the trial on the breach of the note would first be needed to render a verdict on

the default and then a trial on enforcement of the mortgage would be held before the court without a jury. Any properly raised defense relating to fees and other costs assessed in enforcement of the mortgage contract.

iii) A question of fact and law must be decided by the court in actions in which the plaintiff

merely seeks to enforce the mortgage by virtue of an alleged default by the plaintiff but doesnot seek monetary damages. Florida Form 1.944 (Foreclosure Complaint) is not specific as to whether it is allowing for a single trial without jury.

(1)Since foreclosures are actions in equity, no jury trial is required, but it can be allowed.

Since actions for damages require jury trial if properly demanded, it would appear that this issue was not considered when the Florida Form was created.

iv) The requirement that the Plaintiff must own the loan is a requirement that the Plaintiff is

not acting in a representative capacity unless it brings the action on behalf of a principal thatis disclosed and alleges and attaches to the complaint an instrument that confers upon Plaintiff its authority to do so.

v) Owning the loan means, as set forth in Article 9 of the UCC that the Plaintiff paid for it in

money or other consideration that was equivalent to money. The same thing holds true under Article 3 of the UCC for enforcement of the note if the Plaintiff seeks the exalted status of Holder in Due Course which requires payment PLUS no knowledge of defensesall of which must be alleged and proven by the Plaintiff. [1]

3) Note: a written instrument describing the terms of repayment or terms of payment to the payee or

a legal successor in interest. In mortgage loans the payor is often described as the borrower. This instrument is usually described in the mortgage contract as the basis for the forced sale of the

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property. The note is part of a contract for loan of money. It is often considered the total contract. The loan contract is not complete without the loan of money from the payee on the note. If the lender was identified in the note by name then the note is most likely enforceable.

[1] In non-judicial states where the power of sale is recognized as a contractual right, the issue is less clear as to the alignment of parties, claims and defenses. In actions to contest substitution of trustees, notices of sale, notices of default etc. it is the borrower who must bring the lawsuit and in some states they must do so within a very short time frame. Check applicable state statutes. The confusion stems from the fact that the Borrower is actually denying the allegations that would have been made if the alleged beneficiary under the deed of trust had filed a judicial complaint. The trustee on the deed of trust probably should file an action in interpleader if a proper objection is raised but this does not appear to be occurring in practice. This leaves the borrower as the Plaintiff and requiring allegations that would, in judicial states, be either denials or affirmative defenses. Temporary restraining orders are granted but usually only on a showing that the Plaintiff has a likelihood of prevailing — a requirement not imposed on Plaintiffs in judicial states where the lender or “owner” must file the complaint.

t’s A Wonderful Life! — The Lesson Is the Banker Gets to Keep the Money He StolePosted on December 25, 2013 by Neil Garfield

I never liked the Capra movie “It’s a Wonderful Life,” but I never remembered why. Dissapointment. So even though I like to watch my favorite movies more than once, I avoided watching this particular movie. It was just a knee jerk reaction for me. But my daughter and I watched tonight and I saw it through the eyes of a nearly 67 year old man instead of a 6-7 year old kid. And I ended up reliving my disappointment.You see when I watched it as a child I believed the movie would end with the old miser banker being wheeled in at the end and giving back the money he stole. 60 years later, not remembering the movie very well, I still expected the end to be one of slight redemption when the old man is wheeled in and gives George Bailey back the money that George thought Uncle Billie had lost. Disappointed again, only this time I was also infuriated. The banker, knowing he had come into the money by pure accident when Billie left it in the newspaper he was teasing Mr. Potter about, kept the money when he discovered it in full view of his associates who of course said nothing because of their fear that the old miser would not only fire them but ruin them. He was too big to fail.There is no reason for Mr. Potter to keep the money. It isn’t his and he knows it. But he is corrupt and heis corrupting the system with his money from city politics to federal influence. So he keeps it and doesn’t go to jail.As a child I believed in redemption and in some ways the Capra movie delivers it when the town people rally around Bailey and he is better off even without the return of the money from Potter. But the idealist in me expected that Potter would have returned the money anyway because he wouldn’t want to be thought of as a thief. But this doesn’t bother him, just like the mortgage fraud we have going on now.And tens of millions of people love this movie because of its uplifting message of good people appreciating the life and people they have. But am I the only one who was disappointed and infuriated that old Banker Potter got to keep the money he stole?Yes you could argue that Potter didn’t exactly steal it, but he knew it wasn’t his and if morality was enforced, the angel Clarence would have made sure everyone knew the Banker had the money that was threatening to put the Building and Loan Association out of business and ruining the reputation (like credit rating) of the perfectly innocent George Bailey who is content to make $45 dollars per week managing the small Building and Loan association. Bailey’s goal is to do the right things to maintain and build a community that maintains values of decency, morality and civility. His goal is to get by just like his shareholder-depositors. He has no interest in getting rich, which Potter offers him when George has a crisis of confidence.Potter’s goal is money and he doesn’t care if he turns his community into a pile of crap as long as he

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makes money doing it. In fact he likes it when things crash so he can buy bargains and in the process ruin the life and dream of thousands of people. Sound familiar?Not that the movie lacked morality and a good story about the way we see our lives. But Capra takes a definite shot at the banker by leaving him out of the glory at the end when the town people gather up far more money than needed to save George Bailey from bankruptcy and possibly jail. The bank examiner is in town to do his work. His first and only stop is to tally up the capital of George Bailey’s tiny Building and Loan Association but skips the bank that Mr. Potter owns. And Frank Capra tells us why when Potter tells us that a congressman calling Potter is told to wait on the phone when Potter is distracted by his petty jealousy of Bailey.The movie has a good moral at the end. If you live your life doing well by others, there is a pretty good chance they will do well by you. But in the end, the nasty miser is all about staying rich and gets richer because he gets money that belongs to another person and hides the fact. He gets to keep the $8,000 hestole from Bailey’s Building and Loan Association. The money Potter steals in the movie is only $8,000 or about $280,000 in today’s money — easily enough for bank auditors to close down the business of Bailey’s bank and is enough to add to the fortune of Potter. So the moral of the story is the opposite of the lesson — being a good person is a good thing but the successful bad person will always get his way. I reject that lesson and encourage you to do the same.The amount stolen this time by the likes of Mr. Potter is about $13 trillion, causing hundreds of billions of losses in pension funds alone and yet the government is concerned about the welfare of Mr. Potter instead of George Bailey. Tens of millions of families were displaced from their jobs and homes. I find that unacceptable, don’t you?

Federal Judge Slams Wells Fargo for Violation of Debt Collector’s Act in FloridaPosted on December 25, 2013 by Neil Garfield

EDITOR’S NOTE: this is why I am encouraging attorneys to take cases involving foreclosure, even if the foreclosure itself is problematic. The FDCPA federal counterpart essentially states the same rules. These cases allow for damages and recovery of attorneyfees that might aid in the cost of protracted litigation by a pretender lender. Most of my clients are receiving these contacts even after they have expressly told the caller that they are represented by counsel and even that there is a lawsuit pending. I would add that there is clearly a question as to whether the offer of modification is an admission against interest that the loan is in default and that therefore the current “default” is waived.Danielle Kelley of our firm Garfield, Kelley and White has been writing about this for some time. She firmly believes, and I agree with her, that the time has come to file these actions. I would suggest that a debt validation letter be sent under the FDCPA and that the “borrower” obtain a title and securitization report as well, in order to shore up the potential setoffs and counterclaims against the pretender lender. But the good part of this law is that even if the caller is in fact the true lender or creditor, they must follow the rules — or pay the penalty.

2013 U.S. Dist. LEXIS 172716, *

ANDREW CONKLIN, Plaintiff, v. WELLS FARGO BANK, N.A., Defendant.Case No. 6:13-cv-1246-Orl-37KRSUNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA, ORLANDO DIVISION2013 U.S. Dist. LEXIS 172716December 8, 2013, DecidedDecember 9, 2013, Filed CORE TERMS: collection, mortgage, debt-collection, phone, cell, collect a debt, telephone, solicitations, exemption, consumer, foreclosure, landline, factual allegations, security interest, express consent, prerecorded, foreclose, servicer, exempt, foreclosure action, emergency calls, business relationship, cellular phones, telephone-solicitation, categorically, communicate, pre-suit, exempted, notice

COUNSEL: [*1] For Andrew Conklin, Plaintiff: Richard S. Shuster, LEAD ATTORNEY, Shuster & Saben, LLC,

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Satellite Beach, FL.For Wells Fargo Bank, N.A., a foreign corporation, Defendant: Aaron S. Weiss, LEAD ATTORNEY, Carlton Fields, PA, Miami, FL; April Y. Walker, LEAD ATTORNEY, Carlton Fields, PA, Orlando, FL; Michael Keith Winston, LEAD ATTORNEY, Carlton Fields, PA – West Palm Beach, West Palm Beach, FL.JUDGES: ROY B. DALTON, JR., United States District Judge.OPINION BY: ROY B. DALTON, JR.OPINION

ORDERThis cause is before the Court on the following:

1. Plaintiff’s Complaint (Doc. 2), filed August 15, 2013;2. Defendant Wells Fargo’s Motion to Dismiss Plaintiff Andrew Conklin’s Complaint and Supporting Legal Memorandum (Doc. 12), filed August 28, 2013; and3. Plaintiff Andrew Conklin’s Response to Motion to Dismiss (Doc. 18), filed September 23,2013.

Upon consideration, the Court finds that Defendant’s motion is due to be denied.BACKGROUNDDefendant is the loan servicer on Plaintiff’s mortgage. (Doc. 2, ¶ 4.) In 2010, Defendant sued Plaintiff toforeclose on his house. (Doc. 18, p. 1.) Defendant allegedly continued to communicate about the foreclosure directly to Plaintiff after he was represented by counsel; this led Plaintiff [*2] to file a previous Florida Consumer Collection Practices Act (“FCCPA”) claim against Defendant. (Id. at 1-2.) Thatcase later settled. (Id. at 2.)Then, earlier this year, Defendant allegedly resumed calling Plaintiff’s cell phone. (Doc. 2, ¶¶ 16-18.) After one of the calls, Defendant left a voicemail stating: “This is . . . your mortgage servicer, calling in regards to your mortgage. . . . This is an attempt to collect a debt . . . .” (Id. ¶ 16.) Plaintiff accordingly filed this suit in state court, alleging that Defendant has violated the FCCPA and the Telephone Consumer Protection Act (“TCPA”). (Id. ¶¶ 10-26.) Defendant removed the case to this Court on the basis of federal-question jurisdiction. (Doc. 1.)Defendant now moves to dismiss the Complaint, arguing that it fails to state either an FCCPA or a TCPA claim. 1 (Doc. 12.) Plaintiff opposes. (Doc. 18.) This matter is ripe for the Court’s adjudication.

FOOTNOTES

1 Defendant also argues that Plaintiff failed to give pre-suit notice, which was allegedly required by Plaintiff’s mortgage. (Doc. 12, pp. 2-4.) First, this suit is about the calls, not the mortgage; thus, the mortgage is not “central” to the Complaint, and the Court declines to consider [*3] it at the motion-to-dismiss stage. See Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005). Second, the Court is skeptical that a contractual requirement of pre-suit notice to allow the other party an opportunity to cure a breach is applicable to this action, which is not on the contract itself. Nevertheless, because the Court declines to consider this argument now, it will not preclude Defendant from raising it at a later point.STANDARDSA plaintiff must plead “a short and plain statement of the claim.” Fed. R. Civ. P. 8(a)(2). On a motion to dismiss, the Court limits its consideration to “the well-pleaded factual allegations.” La Grasta v. First Union Sec., Inc., 358 F.3d 840, 845 (11th Cir. 2004). The factual allegations in the complaint must “statea claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). In making this plausibility determination, the Court must accept the factual allegations as true; however, this “tenet . . . is inapplicable to legal conclusions.”Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009). A pleading that offers mere “labels and conclusions” is therefore insufficient. Twombly, 550 U.S. at 555.DISCUSSIONI. FCCPAThe [*4] FCCPA provides that “[i]n collecting consumer debts, no person shall . . . [c]ommunicate with adebtor if the person knows that the debtor is represented by an attorney with respect to such debt . . . .” Fla. Stat. § 559.72(18). Defendant argues that Plaintiff has failed to state an FCCPA claim because: (1) enforcing a security instrument does not amount to debt collection within the meaning of the FCCPA; (2) Plaintiff has not alleged that Defendant was attempting to collect a debt; and (3) Plaintiff has not alleged that Defendant “communicated” with him within the meaning of the FCCPA.

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(Doc. 12, pp. 4-6.) The Court disagrees.It is true that “a mortgage foreclosure action itself” does not qualify as debt collection under the FCCPA. Trent v. Mortg. Elec. Registration Sys., Inc., 618 F. Supp. 2d 1356, 1360-61 (M.D. Fla. 2007) (Corrigan, J.) (noting that Fair Debt Collection Practices Act (“FDCPA”) case law applies to FCCPA cases); see also Warren v. Countrywide Home Loans, Inc., 342 F. App’x 458, 460 (11th Cir. 2009) (“[F]oreclosing on a security interest is not debt collection activity [for the purposes of § 1692g of the FDCPA].”). However, the action at issue here is not the invocation [*5] of “legal process to foreclose,” see Trent, 618 F. Supp. 2d at 1361, but rather debt collection calls made outside that judicialprocess. It is not as if these calls were made to notify Plaintiff of the foreclosure action or to attempt tocomply with the statute. Cf. Diaz v. Fla. Default Law Grp., P.L., No. 3:09-cv-524-J-32MCR, 2011 U.S. Dist. LEXIS 68541, 2011 WL 2456049, at *4 (M.D. Fla. Jan. 3, 2011) (Corrigan, J.) (“The timing of the filing of the foreclosure complaints [just weeks before the communications] confirms that defendant was not using the [alleged debt collection] letters in an attempt to collect the debt outside the foreclosure process.”). Rather, the calls were made years into the underlying foreclosure action, and after Plaintiff previously filed an FCCPA claim for this very same behavior, in an explicitattempt to collect a debt. (Doc. 2, ¶ 16 (“This is . . . your mortgage servicer, calling in regards to your mortgage. . . . This is an attempt to collect a debt . . . .”).) To try to claim now that these calls were made in an attempt to foreclose the security interest rather than to collect a debt is simply disingenuous. See Reese v. Ellis, Painter, Ratterree & Adams, LLP, 678 F.3d 1211, 1217 (11th Cir. 2012) [*6] (holding that a letter explicitly stating that the defendant was attempting to collect a debt plainly constituted debt-collection activity, and noting that “[t]he fact that the letter and documents relate to the enforcement of a security interest does not prevent them from also relating to the collection of a debt”). To give credence to that argument would be to give carte blanche to any holder of secured debts to harass consumers in the process of foreclosure, and as the U.S. Court of Appeals for the Eleventh Circuit aptly noted, “That can’t be right. It isn’t.” Id. at 1218.Plaintiff has alleged that Defendant bypassed his lawyer and called him directly to discuss payment on his mortgage and to attempt to collect a debt. (Doc. 2, ¶¶ 16-18.) This is precisely the kind of behavior that the FCCPA was designed to prevent. The Court therefore finds that Plaintiff has sufficiently stated an FCCPA claim, and Defendant’s motion is due to be denied on that ground.II. TCPAThe TCPA prohibits making any call using an autodialer to any cell phone, except for emergency calls or calls where the called party has given prior consent. 47 U.S.C. § 227(b)(1)(A)(iii). Defendant argues that all debt-collection [*7] calls, including those made to cell phones, are categorically exempt from the TCPA. (Doc. 12, p. 7.) However, the case on which Defendant relies for that proposition, Meadows v. Franklin Collection Serv., Inc., 414 F. App’x 230 (11th Cir. 2011), is distinguishable from the one at bar.In Meadows, the plaintiff was suing under two provisions of the TCPA which are inapplicable here: § 227(b)(1)(B), regarding landlines, 2 and § 227(c)(5), regarding telephone solicitations. 3 Id. at 235-36. Neither of those provisions apply in this case, as Plaintiff is suing under § 227(b)(1)(A)(iii), regarding cellphones. (See Doc. 2, ¶ 21.) Though Meadows does broadly state that “the FCC has determined that all debt-collection circumstances are excluded from the TCPA’s coverage,” that statement is dicta and is also qualified by the narrow holding of the case, which was specifically based on the landline and telephone-solicitation provisions. 414 F. App’x at 235.

FOOTNOTES

2 The court held that the defendant did not violate the landline provision because it had an existing business relationship with the intended recipient of the call and the call was made for a commercial, non-solicitation purpose—both explicit [*8] exemptions from that provision of the TCPA. Meadows, 414 F. App’x at 235 (citing In re Rules & Regulations Implementing Tel. Consumer Prot. Act of 1991, 7 FCC Rcd. 8752, 8773 (Oct. 16, 1992)(“[P]rerecorded debt collection calls would be exempt from the prohibitions on such callsto residences as: (1) calls from a party with whom the consumer has an established business relationship, and (2) commercial calls which do not adversely affect privacy rights and which do not transmit an unsolicited advertisement.” (emphasis added)).3 The court held that the defendant did not violate the telephone-solicitation provision because the calls made were debt collections, not telephone solicitations. Meadows, 414 F. App’x at 236. The court rightly noted that the FCC has determined that debt-collection calls are “not subject to the TCPA’s separate restrictions on telephone solicitations.” Id.(citation and internal quotation marks

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omitted) (emphasis added).Further, this Court must read that statement in Meadows in conjunction with the FCC ruling on which it relies, which provides that “prior express consent [in debt-collection calls made to cell phones] is deemed to be granted only if the wireless [*9] number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed.” In re Rules & Regulations Implementing Tel. Consumer Prot. Act of 1991, Request of ACA Int’l for Clarification & Declaratory Ruling, 23 FCC Rcd. 559, 564-65 (Dec. 28, 2007) (FCC Ruling). This ruling clarifies that not alldebt-collection calls to cell phones are categorically exempted from the TCPA—unlike the broad exemptions for landline debt-collection calls and telephone solicitations, which are based on the content of the call itself. See id. at 561-62 (“[P]rerecorded debt collection calls are exempted from Section 227(b)(1)(B) of the TCPA which prohibits prerecorded or artificial voice messages to residences.”), 565 (“[C]alls solely for the purpose of debt collection are not telephone solicitations . . . . Therefore, calls regarding debt collection . . . are not subject to the TCPA’s separate restrictions on ‘telephone solicitations.’”). Rather, with regard to cell phones, a debt collector must show that the debtor provided the number during the debt transaction; only then will a debt-collection call fall under the consent exception in [*10] the cell-phone provision. See Gager v. Dell Fin. Servs., LLC, 727 F.3d 265, 273 (3d Cir. 2013) (“The only exemptions in the TCPA that apply to cellular phones are for emergency calls and calls made with prior express consent. Unlike the exemptions that apply exclusively to residential lines, there is no . . . debt collection exemption that applies to autodialed calls made to cellular phones. Thus, the content-based exemptions invoked by [the defendant] are inapposite.”).In sum, debt-collection calls to cell phones are only exempt from the TCPA if the debtor had prior express consent, in the form of a number provided by the debtor during the transaction giving rise to that debt. See FCC Ruling, 23 FCC Rcd. at 564-65. As Plaintiff has pled that he did not give consent or alternatively revoked consent (Doc. 2, ¶¶ 22-23), he has adequately stated a TCPA claim, and Defendant’s motion is due to be denied on that ground. It will be Defendant’s task to prove consent at the summary-judgment stage.See FCC Ruling, 23 FCC Rcd. at 565 (putting the burden on the caller to show consent);see, e.g., Osorio v. State Farm Bank, F.S.B., 859 F. Supp. 2d 1326, 1330-31 (S.D. Fla. 2012) (reviewing the issue [*11] of consent and revocation on summary judgment).CONCLUSIONAccordingly, it is hereby ORDERED AND ADJUDGED that Defendant Wells Fargo’s Motion to Dismiss Plaintiff Andrew Conklin’s Complaint and Supporting Legal Memorandum (Doc. 12) is DENIED.DONE AND ORDERED in Chambers in Orlando, Florida, on December 8, 2013./s/ Roy B. Dalton Jr.ROY B. DALTON JR.United States District Judge

The Pleading Trap in the Foreclosures Brought by Persons in the “Securitization” CloudPosted on December 21, 2013 by Neil Garfield

One of the ways that judges are greasing the skids for fraud by the banks is that they ignore the basic requirement of pleading — that the complaining party plead the existence of a duty of the homeowner, breach of that duty and consequential damages as a result of that breach of that duty by the defendant homeowner. By failing to allege the ultimate fact that the originator actually made the loan, the banks are forcing the homeowner to file an affirmative defense instead of merely denying the allegation by the bank, which would place the burden of proof on the Bank — a burden that in most cases that they could not sustain.Instead of any allegation that the Forecloser became the holder in a transaction in which value was exchanged or paid by the Forecloser, the Banks ignore that allegation and force the homeowner to file an affirmative defense stating that there was no value paid or even involved in the alleged transfer of the mortgage and note. The foreclosing party escapes without be required to allege facts that it could never prove! This isn’t just bad pleading that is allowed to pass as stating a cause of action, it is a violation of statute.The complexity of the documentation and movement of money in fraudulent securitization schemes leads lawyers and judges to oversimplify the situation producing anomalous results. It may sound

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counterintuitive to say that a party may be “holding” the mortgage because if endorsement of the note but not be able to enforce the mortgage without showing and pleading they paid for it. But to say otherwise as the Banks insist, would allow sophisticated criminals to intervene and capture the propertywithout paying a dime for it. The crime here is that the investors who advanced the ONLY consideration in the whole deal are deprived of both the proceeds of collection AND the collateral promised as security for their advance of funds. As an analogy, the logic being used in many courts would allow John Smith to sue for personal injuries suffered by John Doe in a slip and fall in front of a supermarket never visited by Smith, who had never even been in the same State!As Ronald Ryan, Esq. of Tucson, Arizona pointed out years ago, the courts are confusing Article 3 and Article 9 of the UCC as adopted by each State. Nearly all the trial and appellate decisions are based on Article 3 despite the fact that ONLY Article 9 governs the enforcement and transfer of security agreements — including mortgages. That Article specifically requires that for a holder of the note to enforce the collection by sale of the collateral, the party seeking that affirmative relief must allege they paid for the mortgage. If there is no value paid, there is no enforcement of the mortgage. Period end of story.But judges are accepting arguments from counsel based on Article 3 of the UCC which has nothing to do with mortgages. The new law in Florida (inadvertently or not) essentially recognizes this for a lawful foreclosure of the mortgage collateral. This is a judicial doctrine that interferes with both due process and essential substantive law. The key reason the banks are not pleading they made a loan and that theywill suffer financial injury is because they didn’t make the loan (and neither did any predecessor) and since they didn’t pay value of any kind for the MORTGAGE there is no legal basis for alleging injury for enforcement under Article 9 of the UCC.Like it or not the legal requirement for jurisdiction — STANDING — once gain takes center stage.This informal judicial doctrine essentially converts judicial states to nonjudicial. Why? Because instead of the Forecloser having the burden of proving its case, the case is presumed, the burden of pleading is on the homeowner, and the burden of proof is placed on the homeowner to disprove a case that was never in the pleading of the Forecloser! Thus even if they DO prove it the Courts have entered judgmentfor foreclosure or denied Petitions for TRO in nonjudicial states, essentially treating the right to foreclose as an absolute right no matter who brings the action and no matter what economic interest the Forecloser has in the loan, debt, note or mortgage.This has evolved from judicial error in both trial and appellate courts by looking at Article 3 of the UCC and judicial confusion between holder and holder in undue course. The Forecloser never pleads it is a holder in due course — because it would be stating that it took the note FOR VALUE and WITHOUT NOTICE that the obligation had been declared in default and WITHOUT knowledge of the borrower’s defenses — not the least of which instead yes, they signed the note, but they never received the loan from the payee. The contract at the beginning was broken.Under Article 3 of the UCC the allegation that the collecting party is entitled to enforce as a “holder” merely asserts the existence of a contract as shown by the closing documents in which the homeowner signed the note, mortgage, and other papers at closing. It is NOT entitled to any presumption other thanthat it is in lawful possession of the note, nor that the contractual duties are valid and enforceable. But the Courts are going on “inevitability” and expediency to clear dockets while sealing the fate of borrowers and adding another chapter of fraud in the book being written by Wall Street banks.So the Courts have swallowed the bait hook line and sinker under BOTH ARTICLE 3 and ARTICLE 9 of the UCC.As an afterthought consider the implications for demand for a jury trial. If the would be Forecloser is relying strictly on Article 3 of the UCC, they might be waiving their right to foreclose which is governed by Article 9 and of course state law. An action for money damages is subject to a demand for jury trial. The right is constitutional so there is no state law preemption involved. Thus could cause bifurcation if they demand both an action on the collection of the note and the sale of the collateral (the mortgaged property). Thus in order to establish a prima facie case for foreclosure there would first need to be a jury verdict in favor of the pretender lender in a stated amount. Only then would the Forecloser be allowed to proceed on its claim to sell the property as collateral for the loan. OR as I have repeatedly suggested, the jury verdict might result in zero due to the pretender lender in which case the entire case would be defeated.Needless to say, before you try anything along these lines you must consult a licensed attorney in the

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jurisdiction in which your property is located. And to lawyers, I would suggest you study up on bills and notes so that you are clear in your presentation.I am pleased to report that Ronald Ryan, who gave me the above analysis, is now accepting cases again having cleared his docket. Lawyers and pro se litigants seeking representation in Arizona or litigation support involving Bankruptcy, state court litigation or Federal Court litigation are encouraged to contacthim. Listen carefully , because he goes fast. Like me, things that are obvious to him he sometimes assumes another lawyer or experienced pro litigant knows the basics. But this IS basic and most lawyers and judges do not pause to process this information, understand it or apply it.RONALD RYAN CAN BE REACHED AT 520-298-3333 or ronryanlaw@cox.net.For litigation support to attorneys please go to http://www.livingliesstore.com or call 520-405-1688.

Challenging Deeds Issued After Auction (Sale) of PropertyPosted on December 20, 2013 by Neil Garfield

One of the rewarding aspects of what I do is to see more and more people not only hopping on board, understanding securitization, but adding to the body of knowledge I have amassed. In the following article Bill Paatalo, who has done the loan level accounting for many of our readers, expands upon a topic that I have introduced (and of course Dan Edstrom) but not explained nearly as well as Bill does: seehttp://bpinvestigativeagency.com/time-to-challange-those-trustees-deeds/

EDITOR’S NOTE: I would add that where servicer advances are paid to the creditor (or who we think is the creditor), then there is often an overpayment, which might account for why the “credit bid” is lower than the total amount demanded by the servicer for redemption or reinstatement. This anomaly could void the notice of default and notice of sale and create a problem on the amount required for redemption after the so-called sale.The legal issue presented by Bill is whether the party who submitted the bid satisfies the state’s legal definition of a creditor who is allowed to submit a credit bid at closing in lieuof cash. This issue is fairly easily analyzed before any order or judgment is entered by a court.But afterwards, because of the rubber stamping, the judgments mostly state something along the lines that $XXXX.XX is owed by the borrower to the opposing party in litigation. The judgment is final until overturned by appeal or a motion to vacate.That Judgment makes them a possible creditor and even raises the presumption that theyare a creditor when in fact there was no evidence to support that finding in the order or judgment. And ordinarily the courts require that the motion or other attack be verified bya sworn statement from the homeowner. That gets tricky because without having an actual forensic report in your hands, how would the borrower even know about such things?The judgment can be attacked for fraud because the opposing party had never entered into a transaction wherein it paid value (see Article 9 of UCC) to originate or acquire the loan. Procedural rules vary from state to state on how this is done and the time limit fro such challenges. In fact, none of the people in the cloud of “securitization” paid anythingfor the loan, with the exception of the servicer who is credited with having paid servicer advances to the creditor when in fact it appears as though the servicer advances were paid by the investment bank who reserved money out of the pool of money advanced by investors to pay the investors out of their own money. Hence, we see the reason for calling the scheme a PONZI scheme. This is why the issue of STANDING keep bouncing back front and center.Without an attack on the Judgment I doubt if your state law will allow you to challenge the sale or the sale price. Obviously, before you act on anything on this blog, you need to consult with an attorney who is licensed and experienced in such matters and who practices in the jurisdiction in which your property is located.For those who are good with computer graphics, here are two drawings I recently made todescribe the process of securitization as it played out. The bottom line is that the investment bank diverted the money from the trust and diverted the documentation that

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was due to the investors to its own strawmen, trading on that documentation and making a ton of money while the investor/lenders and homeowner/borrowers lost either everything or a substantial amount of their wealth that ended up in the pocket of the banks. Anyone who is good with graphics is invited to donate their time to this website and make my hand drawn sketches easier to read and perhaps animated. Neil Garfield Securitization Diagrams 12-20-13

Posted by BPIA on December 18, 2013 bi Bill Paatalo:For the past couple of years, I have been providing clients with the internal loan level accounting data, which reveals in most instances of private securitization, that all payments “due” on the notes have been paid regularly by undisclosed “co-obligors.” Thus there becomes an issue of fact as to whether or not the “note” is actually in “default.” Word through the grapevine is that this particular argument is gaining some momentum in certain jurisdictions throughout the United States.Well now it’s time to use the same internal accounting data to attack those dubious “Trustee’s Deeds.” In non-judicial foreclosure states, a ”Trustee’s Deed Upon Sale” or Trustee’s Deed” is recorded after the foreclosure sale. Often, the property is sold back to the supposed creditor into what is called “REO” status. In cases where the subject loans were alleged to have been securitized, the Trustee’s Deed will typically state that the Trustee for “XYZ Mortgage-Backed Trust” was the “highest bidder” at the sale and paid cash in the amount of $………..(whatever dollar figure.) There are many reasons to question the validity of these documents; such as the actual parties submitting the “credit bids,” and whether or not any actual cash exchanged hands as attested to under notary acknowledgment. However,there is a way to provide evidence and proof that no such payment ever exchanged hands.The following language was extracted from a typical Trustee’s Deed:

In this particular case, the alleged amount owed in the “Notice of Default” was roughly $314,000.00. A check of the internal accounting for this particular loan (6-months after the sale) shows the loan in “REO” status with no such payment having ever been applied. In fact, the certificateholders (investors) are still receiving their monthly payments of P&I with the trust showing “zero” losses.This is good hard evidence that the sale and subsequent Trustee’s Deed filed in this case was a “sham” transaction.If your loan was alleged to have been securitized by a private mbs trust, and your home sold in similar fashion with a recorded Trustee’s Deed, contact me today (bill.bpia@gmail.com) to see if your Trustee’s Deed matches up with the internal accounting data.

Living lies now offers Expert Affidavits showing what was stated in the Trustee’s Deed as opposed to what has actually occurred behind the curtains. See http://www.livingliesstore.com. Most people ask for consults with me and/or the expert, like Bill, so their lawyer understands what to do with this information.

Third Party Payments Are So Important to Defending Foreclosure CasesPosted on December 20, 2013 by Neil Garfield

I keep getting inundated with creative arguments about the documentation, which is exactly the rabbit hole that the Banks want you to go down. It is a trap.Technical attacks on documentation are not going to win the day because in the end, it is public policy for negotiable instruments to be safe bets in the marketplace. You are not going to get excused from payment without payment or bankruptcy orders.But payment includes all payments received by the creditor and that is not just servicer advances. It

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includes insurance and other third party co-obligors who paid the broker dealers. They claim the insurance and other trading profits do not inure the benefit of the investors. But established law shows that by issuing the mortgage bonds in nominee “street name” they are at all times acting as agent for the investors. And all money from sales, insurance, credit default swaps etc must be credited first to the investor which means the creditor is satisfied up to the amount of money actually received by the creditor or by any authorized agent of the creditor even if the agent disclaims the principal agent relationship.Basic accounting rules require that if a deduction is made from the account receivable there must be a corresponding deduction in the account payable. If it were otherwise only payments received from the borrower could be credited to the account even if the borrower’s Aunt Alice specifically stated that this was to be credited to the borrower’s account. The problem for the Trust, amongst others, is that the law makes no distinction between “Aunt Alice” and any other payor who advances a payment for express purpose of satisfying an account receivable that derives its value from the debt of a person on whose behalf the payment is received and accepted.The argument about the so-called windfall to the borrower drops to the ground with a thud when the court is presented with parties who have unclean hands, who defrauded the investors in the first instance and who are defrauding the investors now even as they try to enforce the documentation that was an illegal diversion of title from the investors. Giving THEM the right to collect yet again or to foreclose on property and be named as the creditor to the detriment of the investors, is merely using the court to continue the fraud and theft.

Your Lender is the Federal Reserve SystemPosted on December 19, 2013 by Neil Garfield

It is difficult to state with certainty exactly how many ugly mortgage bonds have been purchased by the Federal Reserve. But if you put pencil to paper we can estimate the number. The published figures indicate there was a purchase of several hundred billion in these defective bonds when the financial collapse occurred. To be on the safe side we will use a figure of $300 billion. Since then the published articles indicate that the Fed has been purchasing bonds monthly. The amount of monthly purchases of the mortgage bonds appears to vary between $55 billion and $35 Billion. So if we use an average of $45 billion per month of mortgage bonds that have been purchased by the Federal Reserve. This has been going on for about 55 months. So the total monthly purchase of mortgage bonds is around $2,225 Billion or $2.225 Trillion. Hence the total purchases by the Fed could be reasonably estimated at $2.525 Trillion.This means that the Federal Reserve owns a substantial bulk of the bonds issued during the mortgage meltdown. Questions abound. The Federal Reserve knows the bonds were defective in a number of respects. But they are purchasing those bonds for the express purpose of propping up the financial system and presumably getting those bonds out of circulation. The question is why did they purchase these bonds from the banks? The banks were merely the intermediaries that created the REMIC trusts that issued the bonds. So are the he trust beneficiaries receiving this money? Nothing in the public domain indicates that the investors were paid by the banks that received this money. Since it was a purchase the bonds still exist which means that the largest investor in many trusts is the Federal Reserve. Is the Fed getting Servicer advances?But the largest question on my mind is why the Federal Reserve as an agency has not addressed the fundamental economic problem of economic inequality that was caused by a deeply flawed system of defrauding investors and borrowers into entering into loan deals that were (a) different from each otherand (b) could never work because of the values used for the loan and property?If you take the number of Foreclosures that have been rubber stamped through the system plus the bondpurchases by the Federal Reserve and add them together, the amount of “help” received by the banks isaround $3.5 Trillion. The amount of help given to homeowners is a tiny fraction of that amount. If the Federal Reserve wants economic growth, it should use its potential influence as the largest investor in the bonds to mandate settlements that make economic sense to both investors and to borrowers. This correction stops the financial aid to banks who are keeping the money. But it stimulates investment and incidence in the financial system and the capability of the middle class to spend and stimulate the

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•

economy.The main obstacle to fair settlements is the fact that we are still going through intermediary banks who we know have committed widespread fraud and whose balance sheets and income statements are being artificially inflated by showing values and profits that should not have been allowed. No new law is required. When you defraud investors the normal result upon discovery is restitution to those investors. If the investors (including the federal Reserve) are satisfied and seek no further payment on the debt due to these lenders, then a pro rata reduction of the debt supposedly owed by homeowners is merely the corresponding bookkeeping entry. The federal Reserve has an obligation to use its influence to force these settlements avoiding further displacement and further erosion of middle class wealth.

JP Morgan Sues FDIC for WAMU Cash Over Disputed Mortgage BondsPosted on December 19, 2013 by Neil Garfield

EDITOR’S NOTE: The dots are starting to get connected. Here JP Morgan who said they were the successor for everything that was WAMU turns out to be arguing that this didn’t actually happen and that some money is still left in the WAMU “estate.” The issue that is not raised is what else is in the WAMU estate? I content that there are numerous loans or claims to loans that were never transferred to anyone successfully and I think the FDIC and JPM both know that. Chase is trying to limit its exposure for bad bonds while at the same time claiming ownership or servicing rights for the underlying mortgages.Which brings me to a central procedural point: if these cases are to be properly litigated such that the truth of the transaction(s) comes out, then it cannot be done on the rocket docket of foreclosures. It should be assigned to regular civil litigation or even better complex litigation because the issues cannot be addressed in the 5-10 minutes that are allowed on the rocket docket.——————————————————————

• JPMorgan (JPM) has sued the Federal Deposit Insurance Corp. for a portion of the $2.7B remaining in the FDIC receivership that liquidated Washington Mutual following the sale of its branches and deposits to JPMorgan for $1.88B during the financial crisis in 2008.

• The lawsuit is the latest development in the dispute between JPMorgan and the FDIC over who should assume Washington Mutual’s legal liabilities, such as those related to the sale of problematic mortgage bonds.

• Meanwhile, JPMorgan has been sued by the State of Mississippi for alleged misconduct while going after credit-card users for missed payments. The bank’s sins include pursuing consumers for money they didn’t owe, Mississippi said.

• The state is the second to sue JPMorgan over the issue, the other being California, while 15 others are examining the matter. JPM is already in early settlement talks with 14 of them.

Read more at Seeking Alpha:http://seekingalpha.com/currents/post/1470511?source=ipadportfolioapp_email

About that Contract With the Investors (Trust Beneficiaries)Posted on December 18, 2013 by Neil Garfield

The deal offered to and accepted by the the real lenders (creditors/investors) who ended up being trustbeneficiaries to an unfunded trust with no assets, was that there would be multiple co-obligors so there was practically no way on earth that the investor could lose money — except of course in the case of fraud.AND fraud is what happened because the co-obligors were part of a vast system in which the loans were not securitized, not collateralized and not enforceable by any of the parties who seek enforcement.They ARE enforceable by investors but only under implied contract theory; and because the title to the loan was stolen by intermediaries the mortgage encumbrance to secure the debt is simply not there. Butit is being treated as though the mortgage encumbrance was valid. Eventually you will start seeing decisions that nullify the mortgage, nullify the note as to enforcement or but use the note as partial

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evidence of part of the deal.The contract that the investor relied upon when he made the loan, includes multiple parties, none of which were disclosed to the borrower and most of which received very liberal compensation that was also not disclosed to the investor or the borrower. Whether disclosure was required to the investors is not my concern. But disclosure to the borrowers is obviously required but was routinely and universally ignored.Dan Edstrom has provided his list of parties. As a senior securitization analyst, this is pretty complete. The point here is that the party borrowing the money agreed to a different deal than the the one offered by the lender. Neither the lender nor the borrower truly understood that they were both gettingscrewed in much the same way. And as most of you know, the Banks will do ANYTHING to stop borrowers from meeting up with lenders to compare notes. The conclusion of that meeting would most likely end in jail time for thousands of people. Here is a list of the co-obligors, conduits, transactions in which intermediaries claim (or have, with or without knowing it) some interest in the “securitized” transactions (i.e., the loans): Codebtorssub-servicermaster servicertrusteetrustswap providercap providerFDIC Repurchase AgreementsPMI providerpool insurance providercertificate guaranty insurance policyeach investor (subordinate, mezzanine, non-offered, etc.)fraud insurance policybankruptcy insurance policyoriginator (buy back agreements)sponsor (buy back agreements)depositor (buy back agreements)reserve fundsTARP fundscorporate guarantySurety BondsLetters of creditBlanket Fidelity BondMortgage errors and omissions and professional liability insurance policyExcess proceedsExcess recoveriesForeclosure ProfitsInvestment earnings

Are Servicer Advances Deductible Expenses for Homeowners?Posted on December 18, 2013 by Neil Garfield

Many homeowners get tax statements from entities claiming the right to file them, with an EIN that is problematic. We are having trouble linking the EIN with the name of the entity that sends the tax statement. More importantly or perhaps of equal importance is the question raised by individual homeowners and investors who have purchased multiple residential units and operate them as a business, renting them out as landlords.Despite my degree and experience in taxation, my knowledge is out of date on this subject. Nobody should take any action based upon this article without consulting a qualified tax professional. This article is for information purposes only. However, I pose the issue for those who do know, to comment onthe following scenarios:

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First in the homeowner who owns his single family residence but who has stopped paying the monthly amount demanded by the Servicer. In those cases where there are Servicer or similar advances, the creditor keeps getting paid the interest due under the bond agreement even though the Servicer is not receiving the interest allegedly due from the alleged borrower under the alleged note. The interesting issue here is whether the homeowner still owes the money to the creditor under the original note and mortgage agreement. As I have previously outlined in recent days the answer is no, the homeowner doesnot owe that money to the creditor claiming rights under the original borrower loan agreement. That would seem to be a gain. But the party who made such payments appears to have a new claim against the homeowner for contribution or unjust enrichment even though THAT claim is not secured. Thus, it is asserted, the payments were made on behalf of the homeowner in exchange for a claim to recoup the amounts advanced. Hence the conclusion that since the payments were made, the homeowner may deduct the Servicer advances from his income before paying taxes.Second is the company or person that bought multiple properties and created a business out of them. The same logic applies. They didn’t make payments to the Servicer but the payments of interest were obviously received by the trust beneficiaries like the scenario above. And like the homeowner they are subject to a claim to recoup the money advanced on their behalf producing a new debt, like the above, that is unsecured. That being the case, they ought to be able to deduct the Servicer advances as business expense deductions from the business (rental) income.If the entities in the alleged securitization chain or cloud oppose this and want the deduction themselves, then they must pick up the other end of the stick — I.e, that the payments they made as Servicer advances are not collectible from the borrower. Hence all such payments would reduce the original debt due the creditor and would not create a new debt due to the party who funded the Servicer advances. That party might be the Servicer as the name implies or it might be actually paid by the broker dealer who sold the mortgage bonds. Either way the creditor would appear to have received the interest income it was expecting under its deal, as presented by the broker dealer. Hence the trust beneficiary would be getting a statement from SOMEBODY stating that they had received the income fortax reporting purposes.An interesting litigation question is whether the creditors did receive such statements from one of the securitization parties, and whether it can be discovered which party sent the statement and what EIN they used. An interesting tax and discovery question is whether one of the securitization parties took the deduction after paying the creditor and must now have that deduction disallowed — especially if theServicer advances were taken out of a pool of money supplied by the creditor, which is most probably the case. It seems unlikely that the Servicer would actually be making such advances in such large volumes (where would they get the money?) and it seems equally unlikely that any other party would bedigging into their own pockets to make a payment for which they get a dubious claim against a defaulting homeowner.Perhaps the most interesting point here is that if the party who actually paid the “servicer advances” contests, they are admitting that the creditor received the payments and if they don’t contest it, they might still be admitting to the receipt of payments by the creditor during the pendency of the foreclosure action. The failure to disclose this in the accounting rendered to the court could be argued as fraud and grounds to overturn the foreclosure action, giving rise to an action for damages for wrongful foreclosure. The argument would be along the lines of no default and the ultimate defense of payment.

Crowd Sourcing on the Chase-WAMU Merger and the Owner of the LoansPosted on December 17, 2013 by Neil Garfield

LivingLies is crowd-sourcing this one. Send your transcripts, articles, letters to neilfgarfield@hotmail.com. We want to know what you have about the Chase WAMU merger and what effect your information has on the ownership of loans that were originated or acquired by WAMU. Remember there were multiple parties involved in this —

1. Washington Mutual and subsidiaries, some of which still exist independently,2. the ex-OTS (office of thrift supervision),3. the FDIC receiver Richard Schoppe,4. the US Trustee in WAMU bankruptcy,5. Washington Mutual itself apart from the estate created and kept by the receiver and

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6. Washington Mutual itself apart from the estate created and kept by the U.S. Bankruptcy trustee, and of course

7. Chase Bank whose merger document (on the FDIC website) with WAMU excludes loans and states that the consideration was zero for the merger.

Information about any of these and any cases in which the ownership of loans was at issue would be greatly appreciated. We will publish the list of resources as it grows.

US Bank Antics versus Their Own WebsitePosted on December 17, 2013 by Neil Garfield

Editor’s Note: In answer to the many inquiries we get, I am ONLY licensed in the State of Florida. The reason you see my name pop up in other states is that I am frequently an expert witness and trial consultant on cases, working for the lawyer who is licensed in that state. My law firm, Garfield, Kelley and White provides direct representation in mostparts of Florida and litigation support to lawyers in Florida and other states.Many lawyers are now well versed enough to proceed with only a little help from us. But some need our templates, drafting and scripts for oral argument of motions and other court appearances. I have not appeared pro hac vice in any case thus far and I doubt that I will be able to to do so. So if you want litigation support for your cases, the lawyer should contact my office at 850-765-1236. If you are unrepresented it will be much more challenging to provide such support as it might be construed as the unauthroized practice of law.

US Bank is popping up all over the place as the Plaintiff in judicial actions and the initiator of foreclosures in non- judicial states. It is one of the leading parties in the shell game that is mistaken for securitization of loans. But on its own website it admits against the interests that it has advanced in courts across the country, that it has NO POWER TO FORECLOSE or to pursue any other remedies.US Bank pops up as the foreclosing party as trustee for some supposedly securitized asset pool masquerading as a REMIC trust ( which we all know now was breached in virtually every way, which is why the IRS granted a one year amnesty for the trusts to get their acts together — an action of dubious legality).Both US Bank and the the Pooling and Servicing Agreement will usually state flat out that the servicer makes all decisions and takes all actions relating to the borrower and the borrower’s payments. There are several reasons for this one of which is the obvious conflict that could occur if the the servicer and the trustee were both bringing foreclosure actions.But the other reason, the hidden one, is that the banks want to keep the court’s attention on the borrower’s contract and keep it away from the lender’s contract which is quite different than the borrower’s contract. And THAT will invite inquiry as to how or even if the two contracts are related or connected such that the mortgage encumbrance gives rights to the trust beneficiaries such that the collection and foreclosure efforts will inure to the benefit of the trust beneficiaries in the REMIC trust.So why is US Bank violating both the content and intent of the PSA and its own website? In my own law firm I have two entirely different foreclosure cases — one in which US Bank is the foreclosing party and the other where the servicer started the foreclosure action. Both loans are claimed to be in the same trust although one is in California and the other is in Florida. Why would Chase bank as servicer started an action? Even worse, why did Chase bank start the action as though it was the creditor and claim that there was no securitization? [In the Florida case I am lead counsel whereas in the California case I am only an expert witness and consultant].I am not sure about the answers to these questions but I have some conjectures.In the Florida case, US Bank is bringing the case because the servicer can’t — it knows and its records show non-stop servicer advances to the trust beneficiaries of the REMIC trust that supposedly was funded and who purchased or originated the loans in the trust. In the California case, even though the servicer advances are still present it is non-judicial so it is easier for Chase to slip by without even pausing because unless the homeowner brings a legal action to stop the foreclosure sale it just happens.And then it is over.But Chase is treading on thin ice here which is why it is now transferring the servicing rights —- and therefore the rights to litigate — to SPS who did not make the servicer advances. Of course the servicer

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advances are probably actually paid by the broker dealer who is holding the money of the trust beneficiaries without THEM knowing that the broker dealer has not used their money entirely for mortgage loans — and instead took a large chunk out as a “trading profit” when it was a tier 2 yield spread premium that should have been disclosed at closing.One of the more interesting questions is whether the modification or refi of the loan renews the effect of TILA violations thus enabling the borrower to claim the undisclosed compensation, treble damages, interest and attorney fees. A suggestion here about that — most lawyers are ignoring the damage aspect of these cases and seeing the TILA has a defined statute of limitations that appears to have run. I would take issue as to whether it has in fact run, but even more importantly there is still an action for common law fraud unless blocked by a separate statute of limitations. The extra profits collected by those entities in the cloud of parties who served in various roles in the securitization process are all fair game for recovery or set-off against the amount claimed as due as principal of the loan. It can also be used to cause severe collateral damage — literally — because it would probably reveal that the mortgage encumbrance was never perfected by completion of the loan contract.Both Chase and US Bank are going into bankruptcy courts in Chapter 11 proceedings and demanding adequate protection payments while the bankruptcy is proceeding, knowing and withholding the fact that the creditor is being paid every month and there is no default from the creditor’s point of view. This would be important information for the debtor in possession and the his attorney and the Judge to know. But it is withheld in the hope that the borrower/debtor will never discover the truth — and in most cases they don’t, unless they get a loan level account report based upon a solid securitization report which is based upon a good title report. see http://www.livingliesstore.com.Both US Bank and Chase are wiling to endure awards of sanctions for misleading the court as a cost of doing business because the volume of complaints about their illegal and fraudulent activities is nearly zero when compared with the total of all state court, federal court and bankruptcy actions. But now they are treading on even thinner ice — they are seeking to get turnover of rents with people who own multiple properties. Their arrogance apparently overcame their judgment. The owners of multiple properties frequently have substantial resources to litigate against the US Bank and Chase and now SPS. The truth is coming out in those cases.Other Banks who say they are trustees simply direct the borrower or other inquirers to the servicer. But where US Bank is involved it is seeking profit at the expense of the trust beneficiaries and the owners ofthe real property involved. It seems to me that US Bank has gotten too cute by half and is now exposed to multiple actions for fraud. And I question whether the current revelations about US Bank BUYING the position of trustee has any legal support. I don’t think it does — not in the PSA, not in the statutes nor under common law.SEE US Bank Role-of-Trustee-Sept2013

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Hiring an Expert: What Are you Looking For in Foreclosure Litigation?Posted on May 6, 2014 by Neil GarfieldI have spent the last 7 years developing the narrative for an expert opinion that could be presented, believed and sustained in court. In writing to a probable new expert we will offer through the livinglies.store.com I summarized what attorneys should be looking for when they consult with an expertin structured finance (i.e., derivatives, securitization etc.).Here are some of the issues you want covered by the expert declaration and testimony in court. The basic rule of thumb is that the expert must have both the qualifications to testify as an expert and a persuasive narrative of why his conclusions are right. Without both, the testimony of the expert simply doesn’t matter and will be rejected.If you are a proposed expert in structured finance, then here is what I would want to know, and what I think lawyers should ask, depending upon what fact pattern is present in each case.One thing I need to know is whether you feel comfortable in talking about the ownership and balance ofthe loan.In one example American Brokers Conduit was the payee on the note and mortgage. We alleged that they didn’t loan the money. Our narrative ran something like this: if you ask me for a loan, and I respond “Yes just sign this note and mortgage” AND THEN you sign the note and mortgage AND THEN I don’t give you a loan, ARE YOU PREPARED TO SAY THAT THE NOTE AND MORTGAGE WERE DEFECTIVE IN A BASIC WAY, TO WIT: THAT THE SIGNATURE ON THE NOTE AND MORTGAGE WAS PROCURED BY FRAUD OR MISTAKE AND THAT WITHOUT THE IDENTIFICATION OF THE REAL CREDITOR BOTH INSTRUMENTS ARE DEFECTIVE.Would you, as a reasonable business person accept a note purporting to be a negotiable instrument under the UCC if you knew that the transferor neither funded the loan nor (if they purport to be a successor) paid for the assignment?What is your opinion of your position if you found out after acceptance of the note and mortgage that there was doubt as to whether the obligation was funded or purchased for value? What would you do or suggest to a client in either of those positions — (1) knowledge [or "must have known] or (2) no knowledge [and later finding out that there is doubt as to funding and purchasing for value]?Are you prepared to say that the fact that the borrower actually did receive money as a loan from another different party does not create a circumstance where the borrower is construed to convey any rights to anyone other than the source of funds or someone in actual privity with the lender — and that both note and mortgage are defective under normal recording statutes — and certainly not a commitment by the debtor to BOTH the source of the funds and the receiver of the signed promissory note and mortgage?In the one case referred to above, the corporate representative conceded that ABC didn’t loan the money. He was unable to explain what was transferred by ABC to Regents and from Regents to 1st Nationwide and thence to CitiCorp by merger. He admitted that “Fannie Mae was the investor from the start.” You and I understand that neither Fannie and Freddie are lenders. They are guarantors and they serve as Master Trustee for hidden REMIC trusts. (Do you know or agree with that assertion?)But the question is whether the note is actual “evidence of the debt” (the black letter definition of a promissory note when it contains a promise to pay) when the creditor is identified as a party who was not a lender. In the absence of disclosures of some representative capacity for an actual lender, are you prepared to testify that the note is unenforceable even if the debt is otherwise enforceable in relation to the actual source of funds?Or would you say that it is not enforceable by the stated payee but it might still be evidence of the debtand evidence of the terms of repayment to the third party source? How does the marketplace treat suchquestions in valuing a note and mortgage?The question is whether the expert actually believes and is willing to argue that these conclusions are true and correct. The expert must earnestly believe these assertions to be true, logically and legally.Is it acceptable to the prospective expert to see a result where the application of law and facts results in the homeowner getting his home free and clear — on the basis that the wrong party sued him or initiated foreclosure (in non judicial states), or that the notice of default, notice of acceleration, and statements of money due were wrong.The approach is an attack on ownership and balance. The balance would be wrong, even if the ownership was established, if the payments were not applied properly. The payments include all payments received by the creditor. That includes all servicer advances directly to trust beneficiaries, aswell as insurance and loss sharing payments (i.e., from FDIC and others) paid and received on behalf of the investors directly or the trust beneficiaries.

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Part of the reasoning here is that you really have an interesting problem. The Trust beneficiaries agreed to “loan” money to a REMIC trust in exchange for a complex formula of repayment under the indenture of the mortgage bond (contained in the Prospectus and Pooling and Servicing Agreement). Those terms are different than the terms signed by the homeowner.So there are two agreements — the mortgage bond and the mortgage note. Different parties, new parties are in the PSA as insurers, servicers,servicer advances etc. all resulting in a DIFFERENT payment from an assortment of parties expected by the creditor —different than the one promised by the debtor whether you refer to the note as evidence of the debt or not.Add the complicating factor that without evidence that the Trust was ever funded (i.e., without evidence that the broker dealer sent the proceeds from the offering prospectus to the trust) how do we answer the basic contract question: was there a meeting of the minds? The expectations of the lender (investors) and the borrower (homeowner)are entirely different and the documents used are completely different.How could the Trust have entered into any transaction for the origination or acquisition of loans withoutevidence of funding?On what basis can the Trustee or servicer claim any authority if the Trust was not funded and was essentially ignored? Does the expert agree that avoiding or ignoring the trust means avoiding and ignoring the prospectus AND the PSA, which contains the authority for ANYONE to act on behalf of the investors, who are no longer “trust beneficiaries” but just a group of investors without a vehicle for their investment?ESSENTIAL QUESTION: Is the expert prepared to testify about this aspect of structured finance — i.e., how do you connect up the debtor and the creditor? As an expert you would be expected to be able to testify on exactly that question.And finally there is testimony about the mortgage. If the mortgage secures the note (not the debt, necessarily), which is what is stated in the mortgage, then is the expert willing to testify that the mortgage was defective and should never have been recorded?Would it not be true, in your estimation, that if a homeowner executes a mortgage in favor of a party posing as a lender, and that party is not a lender to the homeowner, that you could testify that the moment such a mortgage is recorded it probably clouds title?Would you be willing to testify that based upon those facts, you would say that it is an unknown variableas to who to pay?Would you be wiling to testify that if you don’t know who to pay, you have no basis for trusting a satisfaction of mortgage from any party including the the original mortgagee?And lastly that if there is no basis on the face of the instruments or in recorded instruments to presume a valid creditor has been named, that no better presumptions would attach to any assignment, endorsement or other instrument of transfer?For information concerning expert declarations, consultations and testimony from experts with appropriate credentials to be qualified as an expert, or for litigation support, please call 954-495-9867 or 520-405-1688.

Using the Best Evidence Rule As You Follow the MoneyPosted on May 12, 2014 by Neil GarfieldThe Best Evidence Rule in Florida and Federal Courts Applied to Notes, Mortgages and AssignmentsThe problem with foreclosure litigation is that the homeowner is dealing with rebuttable presumptions about the testimony and the documents admitted into evidence. They are admitted into evidence because there is no timely objection from the homeowner or the foreclosure defense attorney.The note, mortgage and assignment are presumed to be valid instruments if they conform to the requirements of law as to form and content. In that case they are facially valid. That means there is a rebuttable presumption that there was a valid underlying transaction. Therefore. as a matter of law, thepaper presented is not just facially valid but also presumptive evidence that the transaction existed. This gets tricky in application and is one of the many reasons why lawyers should study up on courtroom procedures, evidence and objections.On the note, the underlying transaction is the debt. The debt exists not because of the note, but because Party A put money into the hands of Party B who accepted it. The debt arises regardless of whether or not a note was executed. The note is evidence of the debt and it is presumptive evidence that there was an underlying transaction in the amount of the note. The underlying transaction is therefore the payee putting money into the hands of the homeowner, who is the payor.

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On the mortgage, the underlying transaction is still the debt and the existence of the note, because a valid mortgage does not exist except if it is based upon an instrument in writing. The mortgage is not presumptive evidence of the existence of the underlying transaction (the actual loan of money from Party A to Party B). Under normal circumstances the existence of a properly executed mortgage would corroborate the evidence supplied by the note.On the assignment, the underlying transaction is a payment of money from Assignee to the Assignor. The assignment itself might be accepted by the court as presumptive evidence that such an underlying transaction exists (in the absence of an objection). If a proper objection is raised, the presumption vanishes.So what is a proper objection under these circumstances? Remember if you fail to raise the objection then the burden of proving the transaction did not happen falls on the homeowner. The objective here isto hold the bank’s feet to the fire and make them prove their case. And the reason for this is not to exercise your vocal chords. It is to show that the underlying transaction between the parties stated in the document proffered by the bank never took place. And the reason you are doing that is because those transactions in fact, never occurred.The hearsay rule is an appropriate objection because the document is being used to establish the truth of the matter implied — i.e., that there was an underlying transaction. But the better objection,in my opinion, is that the existence of the underlying transaction be subject to (1) lack of foundation and (2) best evidence. They are related in this instance.Under the rules of evidence, the note, mortgage and assignment are secondary documents that imply that a transaction took place but do not show facts to verify that the transaction actually occurred. Hence, the BEST EVIDENCE of the underlying transaction is the canceled check or wire transfer receipt showing the payment and implied acceptance of the money used to fund the loan or purchase the mortgage. Anything less than that is not admissible evidence — unless the objection is overlooked or waived. It would therefore be true that the debt from the homeowner allegedly owed to the payee on the note (and mortgage) or the assignee on the assignment is not supported by foundation in the usual circumstances.Special note here: I have seen in reported cases that it DOES occur that litigants, including banks, have doctored up copies of wire transfer receipts. Thus any effort to introduce the copy would be met by your objection on the basis of best evidence and the argument, if applicable, that the failure to disclosethe document prior to trial deprived you of your ability to confirm the authenticity of the document. Verification is possible but he banks, Federal reserve etc., will not make it easy on you so a court order will be helpful.Normally the corporate representative of the servicer is the witness. It will usually be established on voir dire or cross examination that the witness neither had access to nor ever personally viewed any records of the actual transaction and in fact never even saw the secondary evidence (the note, mortgage and assignment) until a few days before trial. Thus no testimony will be elicited, in the ordinary course of things, that the transaction took place (i.e., an ACTUAL transaction in which money from the payee was loaned to the homeowner or money from the Assignee was paid to the Assignor). Hence no foundation exists for any testimony or any document that the debt exists or that the loan was actually sold for consideration and then assigned.This is not a technical matter. If I agree to pay you $100 for your toaster oven, I can’t demand the appliance until I have paid it. If that was the agreement, then the underlying transaction is the payment of money. The evidence — the best evidence — of the payment is a canceled checkor wire transfer receipt. The exceptions to the best evidence rule do not seem to apply and there is no adequate explanation for why anything other than direct primary evidence of the transaction itself should be admitted.In searching the internet I found that a lawyer in West palm beach wrote a pretty good article on the subject although he was concentrating on the use of the best evidence rule in connection with duplicates. see http://www.avvo.com/legal-guides/ugc/what-is-the-best-evidence-rule-in-florida for the article by Mark R. Osherow, Esq.Here are some excerpts from that article.===================The best evidence rule, set forth in Fla. R. Evid.’90.952 and Fed. Rules Evid. 1001, provides that, where a writing is offered in evidence, a copy or other secondary evidence of its contentwill not be received in place of the original document unless an adequate explanation is

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offered for the absence of the original. Fla. R. Evid. ’90.9520-90.958; Fed. Rules Evid. 1002-1008….Public records authentication is provided for by section 90.955 and Rule 1005. Under section 90.956 and Rule 1006 voluminous writings, recordings, or photographs which cannot be conveniently examined in court may be presented in the form of a chart, summary or calculation. Of course, admissibility of a summary depends upon the admissibility of the underlying documents. In order to use a summary, timely written notice is required with prooffiled in court. Adverse parties must have sufficient time to investigate and inspect underlying records and summaries….Fla. R. Evid. Section 90.957. Section 90.958 and Rule 1008 set forth the situations where the court determines admissibility and where the jury determines factual issues such as the existence of a document, its content, and the contents accuracy.The best evidence rule arose during the days when a copy was usually made by a clerk or, worse, a party to the lawsuit. Courts generally assumed that, if the original was not produced, there was a good chance of either a scrivener’s error or fraud.… there is always a danger of a party questioning a document, so it is important to remember that, unless you have a stipulation to the contrary, or your document fits one of the exceptions listed in the statute, you must be ready to produce originals of any documents involved in your case or to produce evidence of why you cannot.

Why They Sue as Holder and Not as Holder in Due Course

Posted on May 13, 2014 by Neil Garfield

Parties claiming a right to foreclose allege they are the “Holder” and do not allege they are theholder in due course (HDC) because they are ducking the issue of consideration required by both Article 3 and Article 9 of the UCC. So far their strategy of confusion is working. They are directly or impliedly claiming they are the holder of the NOTE. They cannot claim they are the holder of the MORTGAGE, because no such status exists — they either own the mortgage encumbrance because they paid for it or they didn’t. If they didn’t pay for it, they cannot enforce it even if they still can enforce the note.The framers of the Uniform Commercial Code (UCC) had a plan they executed in Article 3 and Article 9 of the UCC, as adopted by 49 states (Louisiana, excepted). They had four (4) problemsto solve.Consider two possible fact patterns, to wit: first the payee (“lender”) did in fact fund the loan putting cash in the hands of the borrower or paying debts on the borrower’s behalf; second, thepayee (“originator”) gets the borrower to sign the note but fails or refuses or never intended tofund the loan of money to the borrower. In the first instance the note is evidence of a real debtwhereas in the second instance the note is not evidence of a real debt.This issue has been obscured by the fact that SOMEONE (“investors”) did fund a loan. The questions posed here is whether the investors received the protection of a note and mortgage and if they didn’t, what is the effect of advancing funds for a loan without getting the requiredevidence of the loan (Promissory Note) and without getting the collateral (Mortgage) that wouldordinarily apply.

The Four GoalsFirst, the UCC framers wanted to encourage the free flow of commerce by makingcertain instruments the equivalent of cash. The Payee should be able to use such instruments in trading for goods, services, or credit. This is the promissory note — a written instrument containing an unconditional promise to pay a certain amount. The timing of the payments, the amount, the terms, the method of payment must all be obvious from the face of the note without reference to any outside evidence (parol evidence) that could reduce or eliminate the value of the note. If there are questions or conditions apparent from the face of the

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instrument, it fails the test of a negotiable instrument or cash equivalent. That means that Article 3, UCC doesn’t apply.Second they wanted to protect the issuer of the note (the payor) from the effects of fraud, improper lending practices and other deprive lending policies and practices from any false claims for payment on the note. If the Payor (homeowner,borrower) received no benefit from the Payee but was somehow induced to sign the note in anticipation of receiving the benefit, then the Payee should not be able to collect from the Payor. This goal conflicts with the first goal only when thenote is sold to an innocent third party for value who had no notice of the defective nature of the origins of the note (Holder in Due Course -HDC).Thus third, in order to maintain the status of cash equivalent paper, they had to provide a mechanism in which an innocent third party was protected when they advanced money for the purchase of the note without having any notice of the borrower’s defenses. This would allow the buyer to sue the payor (borrower, debtor) and collect free of any potential defenses. The burden of the borrower’s claims would then fall on the borrower to collect damages against the original payee for wrongful acts. (Article 3, UCC, Holder in Due Course -HDC).And in order to allow all such notes to be enforceable regardless of the circumstances of their origin, any party holding the note (“Holder”) can enforce the note if they have physical possession of the note, even if they paid nothing forit, as long as it is endorsed to them. But if they are a HOLDER and not a HOLDER IN DUE COURSE then they sue subject to all of the borrower’s defenses. The central issue is whether the Holder has paid for the note, in which case they would be in HDC status or if they did not pay for the note, in which case they enforce subject to all borrower’s defenses — including the allegation that the original payee never made the loan.Fourth was the issue of forfeiture of collateral. This is considered the most extreme remedy under commercial law, analogous to the death penalty in criminal cases. (Article 9, UCC — secured transactions). It is one thing to preserve liquidity in the marketplace by protecting the investment of innocent third partieswho purchase negotiable instruments from defenses — and quite another to cause forfeiture of home or property. Here again, the language of Article 3 is used for anHDC — i.e., an assignment of the mortgage is enforceable ONLY if the Assignor paid for it and had no notice of borrower’s defenses.

So they devised a structure in which a bona fide purchaser of the paper without notice of the borrower’s defenses would be called a holder in due course. They could sue the borrower despite wrongful behavior by the original payee on the unconditional promise to pay (the note).In the event of fraud in the sale of the note, the new owner of the note could sue both the seller (Assignor, endorser or indorser).Then they considered the possibility of wrongful behavior: the issuance of such commercial paper would be a claim, but not negotiable paper — but if it was sold anyway it would be subject to the borrower’s defenses. This allows outside evidence (parol evidence) — which is to say that in this fact pattern, the promise to pay was conditional on the value and effect of the borrower’s defenses. The HOLDER of this instrument need not pay for the sale of the note and need not be ignorant of the borrower’s defenses. This holder could sue both the payor (borrower, debtor) and the party who transferred the note — depending upon the agreement that accompanied the transfer of the note by delivery and indorsement.The party who accepts indorsement without paying for the note or even knowing of potential borrower defenses can still enforce the note, but unlike the the HOLDER IN DUE COURSE, the Payor (Borrower) could raise all defenses to the original transaction. The UCC Article 3 calls thisa holder. A holder need not purchase the note and may have actual knowledge of the borrower’s defenses but can still sue the payor (borrower) for the principal amount due on the unconditional promise to pay.I have noticed that most judicial foreclosures are either in rem (foreclosures only) or the claim

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on the note is that the Plaintiff is a “holder.” If they have possession and it is indorsed, they are probably a holder entitled to enforce the note. But the Defendant can raise all available defenses just as he or she would do if the fight was with the originator of the note execution. And nothing is a better defense than the distinction between being the originator of the note execution and the originator of the loan. The confusion over the term “originator” has allowed millions of foreclosures to be completed despite the fact that the “holder” neither paid for the note nor could they claim they were ignorant of the borrower’s defenses.This confusion has led most courts to look at Article 3, UCC, instead of Article 9, UCC. Neither allow the claimant to sue on either the note or the mortgage without having paid for the assignment of the mortgage or delivery of the note, if the holder has actual notice of borrower’s defenses. In most cases the claimant either has the knowledge of the fraud and predatory practices at closing or is a made to order controlled company of a real party who has such knowledge.In conclusion, borrowers should prevail in foreclosure litigation in situations where the claimantis unable to prove the identity of the actual lender who advanced funds, or where the claimant has failed to purchase the mortgage.Based upon vast quantities of information in the public domain including investor lawsuits, insurer lawsuits and government agency lawsuits (all alleging FRAUD and mismanagement of funds) against broker dealers who sold mortgage bonds, it seems highly likely that in the 96% ofall loans between 2001-2009 that are subject to claims of securitization three things are true:(1) the securitization plan was never followed in most cases thus making the investors direct lenders without benefit of a note or mortgage and(2) none of the parties “holding” paper possess any of the qualities of a party who could have standing to foreclose and(3) claims still exist on the notes, even though they were not supported by consideration butthose claims are unsecured and subject to all defenses that could have been raised against the originator.

(4)

REBUTTABLE PRESUMPTIONS CREATE TRAP DOOR FOR BANKSPosted on May 26, 2014 by Neil GarfieldI think you should win this one if you do it right.The banks fall right through the trap door on this one —- they prove that there was probable cause to believe that they were a valid creditor on the note (UCC3) but not a valid enforcer under the deed of trust (mortgage) (UCC9).By alleging they are a holder and not a holder in due course they are admitting they didn’t payfor it and/or admitting that they took delivery with knowledge of the defenses of the borrower. That is basic black letter law, in my opinion. And one of the defenses is lack of consideration. either way they either need to show they paid for it — either directly with proof of a wire transfer receipt etc. or by getting a judgment on the note. THEN they can enforce the judgment. Neither way is non-judicial foreclosure permissible or constitutional.Thus by their own argument and admissions they are an unsecured creditor with no right to enforce the mortgage because there is no question that they never paid value or considerationfor the mortgage, which is the most basic requirement under UCC Article 9.They may be entitled to the presumption that they can enforce the note. And perhaps the burden of proof shifts to the borrower to rebut the presumption. But remember the presumption is that the note is evidence of the debt — it is never that the note IS the debt.If you have challenged the underlying transaction saying that the note refers to a transaction that never took place and therefore the note and the presumption of validity of the the note is rebutted — and if you are able to show the absence of an underlying transaction — simply asking for it and never getting it, then the note is not evidence of a debt and/or the assignment is not evidence of ownership of the mortgage (or deed of trust).

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The same holds true for the mortgage. There must be an underlying transaction for the assignment to have any legal effect. There must be a SALE of the note just as there must be a LOAN of money if someone wants to use the note as evidence of the debt.If there had been a sale of the loan, then they would be asserting the rights of a holder in duecourse. But they are not asserting that which means they are electing their remedies — they are choosing to sue on the note using the presumption of the validity of the note as evidence of the debt.Allowing them to enforce an interest in land is bootstrapping the presumption available for the note into a prejudgment seizure of an asset to satisfy a judgment that does not exist. All of this circular reasoning exists because the banks refuse to show the money. They refuse to show it because it doesn’t exist.Wipe the rebuttable presumption away and they have no case. The banks say that there is no reason for them to show consideration. They say that the presumption about the note ends the discussion. That is NOT why the presumption was created. The presumption was created because in most instances the underlying transaction is undeniably present and proof of it is a waste of time because nobody disputes it. That is precisely why it is a rebuttable presumptionas opposed to an irrebuttable presumption.If they want to sue on the note, let them. That is a judicial procedure. But then they must allege some things they cannot allege in good conscience — like anyone in their chain ever made a loan to the borrower or that anyone in their chain paid any money to purchase the loan. Or if that is swept aside, then they can sue as holder without the right of a holder in due course which means that the borrower can raise any defenses that could have been raised against the originator of the loan. And THAT includes lack of consideration.

Do Equitable Mortgages Exist?

Posted on May 29, 2014 by Neil Garfield

Consult with a lawyer licensed in the jurisdiction of the dispute before deciding or acting upon anything on this blog.I was taken to task for one of my comments by a person who is extremely knowledgeable in thebanking industry and with respect to mortgages. He was thrown off by appellate assertions thatin certain states and in certain situations assignment of the note is a virtual or “equitable” assignment of the mortgage as well. That is true certainly as between the parties to the sale of the loan — if a sale of the loan occurred.That is my point. If a genuine sale occurred the presumption of enforceability is almost irrefutable. Without the sale of the loan, an assignmentis virtually nothing. All you need is a warm body to deflect the spurious assertions of the would-be forecloser.It is true that endorsement and delivery of the note allows the holder to sue on the note. But itis also true that some appellate courts have gone off the reservation allowing foreclosure (enforcement of the mortgage) even in the absence of a genuine transaction anywhere in the chain of “securitization” . That is not what was intended by commercial transaction law, the UCC or anything else. In some states the presence of facially valid documents may allow for suit to be brought — subject to all possible defenses of the “borrower” including his denial thathe is a borrower. “Did you get the money” is used synonymously with “then you owe the debt” with horse blinders on the question of to whom the debt is owed.One lawyer in New York seemed to have gotten the Judge’s attention when he asked the Judge who was his cellphone carrier. The Judge said it was AT&T. And then the lawyer said, so what would you say to Sprint if they came in and demanded payment? You would say that as to Sprint, you are NOT a cell phone customer just as you are NOT a borrower in relation to someone who has neither loaned you money nor spent money purchasing your debt.Starting with a fraudulent transaction and allowing it to be compounded by wrongful foreclosure is clearly not what any legislature, any court precedent, or any government policy was intent on doing.

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Equitable mortgages do not exist in the law, per se. But there are numerous cases in which the idea was used to justify the result sought by the Court as the “proper” result.

And while if you push it there is no such thing as an equitable mortgage, there are particular circumstances under which it will be regarded as such — namely between a limited number of parties as litigants in the same lawsuit rather than “notice to the world” with nobody else on the horizon making a claim. In other words for purposes of a specific case and specific parties the mortgage is deemed effective — much as one might do when they enter into an IT agreement and they agree to treat the idea or business plan as patented in favor of one of the parties even though no application was made.Thus spawns the idea that equitable mortgages are permissible. They are not. Equitable assignments operate in much the same way. They cannot operate against the world, but they can operate against specific parties because the circumstances are deemed to demand it. The error in the courts is that are skipping a step and lured into doing so by skillful avoidance of thedistinction between a holder, a holder with rights to enforce and a holder in due course.To that extent, appellate courts who have either fallen into that trap or been trapped by the lack of proper presentation by the borrower, have nonetheless committed a grievous error based upon the assumptions that there PROBABLY WAS A REAL TRANSACTION INVOLVING THESE PARTIES OR SOMEONE IN THEIR CHAIN. MY POINT IS THAT IN MOST INSTANCES NO SUCH TRANSACTION EXISTS AND FORECLOSURE DEFENSE ATTORNEYS AND BANKRUPTCY ATTORNEYS SHOULD STOP ADMITTING ALLEGATIONS THAT ARE UNTRUE AND UNSUPPORTABLE.If an attorney doesn’t understand securitization, fact and fiction, then he or she should neitherrender an opinion nor act on it.

So the analysis comes down to the fact that there are no equitable mortgages, and there are noequitable assignments of mortgage — or else public records don’t mean anything— and then theentire marketplace would be uncertain as to title to virtually anything where a loan was collateralized. BUT a party can show that the instrument should nonetheless be enforced against a specific party whether properly executed, properly recorded or not using parol evidence, circumstantial evidence etc. to arrive at the truth. Just because it wasn’t in writing, unless the statute of frauds applies, doesn’t mean you don’t have a duty to perform under an oral contract. And if the writing was wrong and it is obvious from the facts presented by the parties that the writing was incorrectly drafted, then it is the SUBSTANCE that counts, not whatis in writing.To be specific, imagine that in an ordinary loan, the bank forgot to record the mortgage. Without some third party interposing a claim of superiority over the bank, the bank can nonetheless enforce the mortgage. If there were mistakes made, then the bank could simply ask for reformation of the contract and then foreclosure.THE BURDEN OF PROOF (PERSUASION) IS ON THE BANK NOT THE BORROWER: In order to do ANY of the things described above the bank would be required to show the real transaction and the real facts and the real money trail — unless the “borrower” failed to deny the allegations and object to anything but best evidence, non-hearsay, credible testimony and real business recordspresented by someone with complete access to all the records relating to this particular loan.

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How the Banks Literally “Made” Money Out of Nothing

Posted on June 30, 2014 by Neil Garfield

For the last few weeks I have been harping on the concepts of holder in due course, holder withrights of enforcement, and holder. They are all different. The challenge in court is to get them treated as different in Court as they are in the statutes.

The Banks knew through their attorneys that the worst paper in the world could be turned into real value if they could dress up junk paper and sell it to an unsuspecting innocent third party. They did it with junk bonds, and then they did it again when they created a strategy of creatingjunk bonds that looked like investment grade securities, got the Triple A rating from the agencies and even got them insured as though they were the highest quality and lowest risk investment — thus enabling stable managed funds to buy them despite restrictions on what such fund managers could buy as investments for their pension fund, retirement fund etc.

The reason they were able to do it is that regardless of the defective nature of the loan closing, including the lack of any loan of money by the “lender”, the law protects and presumes the validity of the paper, subject to defenses of the borrower that might defeat that value. The one exception that the Banks saw as an opportunity to commit fraud and get away with it is if they could manage to sell the unenforceable mortgage documents to an innocent third party who was acting in good faith, paid real value for the loan, and knew nothing about the predatory nature of the loans, lack of consideration, and other defenses of the borrower, then the paper, no matter how bad, could still be enforced against the person who signed it. It doesn’t matter if there was a real contract, or if the transaction violated Federal and state laws or anything else like that.

Such an innocent third party is called a holder in due course. And the reason, like it or not, is that the legislatures around the country and the Federal statutes, favor the free flow of “negotiable instruments” if they qualify as negotiable instruments. If you sign a note in exchange for a loan you never received (and especially if you didn’t realize you didn’t received a loan from someone other than the “lender”) you are taking a risk that the loan documents will be enforced against you successfully even though you could have defeated the original lender easily.

The normal process, which the Banks knew because they invented the process, was for a “closing” to take place in which the loan documents, settlements statements, note, mortgage and other papers are signed by the borrower, and then the loan is funded usually after final review by the underwriters at the lender. But in the mortgage meltdown there was no real underwriting but there was someone called an aggregator (e.g. Countrywide, ABn AMRO et al) who was approving loans that qualified to be approved for sale into investment pools. And in the mortgage meltdown you signed papers but never received a loan of actual money from the party in whose favor you signed the papers. They were unenforceable, illegal and possibly criminal, but those signed papers existed.

All the Banks had to do was to claim temporary ownership over the loans and they were able tosell the “innocent” pension fund managers on buying bonds whose value was derived from these worthless loan papers. If they didn’t know what was going on, they had no knowledge of the borrower’s defenses. If they were not getting kickbacks for buying the bonds, they were proceeding in good faith. That is the classic definition of a Holder in Due Course who can enforce the loan documents despite any real defenses the the homeowner might possess. The homeowner is the maker of the note and should have had a lawyer at closing who would insist on seeing the wire transfer receipt and wire transfer instructions to the escrow agent.

No lawyer worth his salt would allow his client to sign papers, nor would he allow the escrow agent to retain such signed papers, much less record them, if he knew or suspected that the documents signed by his client were going to create a problem later. The delivery of the note to a party who had NOT made the loan created two debts — one to the source of the loan

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money which arises by operation of law, and the other to whoever ended up with the paper even though there was a complete lack of consideration at closing and no money exchanged hands in the assignment or transfer of the loan, debt, note or mortgage.

Since the paperwork went into the equivalent of a food processor, the banks were able to change various data points on each loan, and create sales and disguised sales over and over again on the same loan, the same loan pool, the same mortgage bonds, the same tranche, or the same hedges. Now they even the the technology to deliver what appears to be an “original” note to as many people as they want. Indeed we have seen court cases where both foreclosing parties tendered the “original” note to the court as part of the foreclosure process, as is required in Florida.

Thus borrowers are stuck arguing that it is not the debt that cannot be enforced, it is the paper. The actual debt was never documented making it appear as though the allegation of 4th party funding seem ludicrous — until you ask for the wire transfer receipt and instructions, untilyou ask for the way the participating parties booked the transaction on their own financial statements, and until you ask for the date, amount and people involved in the transfer or assignment of the worthless paper. The reason why clerical people were allowed to sign away note and mortgages that appeared to be worth billions and trillions of dollars, is that what theywere signing was toxic waste — worse than unenforceable it carried huge liabilities to both the borrower and all the people who were scammed into buying the same worthless paper over andover again.

The reason the records custodian of the Bank or servicer doesn’t come into court or at least certify the “business records” as an exception to hearsay as permitted under Florida statutes and the laws of other states, is that no records custodian is going to risk perjury. The records custodian knows the documents were faked, never delivered, and not in the possession of the foreclosing party. So they get a professional witness who testifies he or she is “familiar with therecord keeping” at one servicer, but upon voir dire and cross examination they know nothing in their personal knowledge and are therefore only giving voice to what is contained on the reports he brought to trial — classic hearsay to be excluded from evidence every time.

Like the robo-signors and “assistant secretaries”, “signing officer,” (and other made up names) these people who serve as professional witnesses at trial have no actual access to any of the raw data contained in any record keeping system. They don’t know what came in, they don’t know what went out, they don’t know who paid any money into the pool because there are so many channels of money being paid on these loans (directly or indirectly), they don’t even know if the servicer paid the creditors the amount that was due under the creditors’ part of theloan contract — the prospectus and PSA.

In fact, there is no production of any information to show that the REMIC trust was ever funded with the investor’s money. If there was such evidence, we never would have seen forgery, fabrication and robo-signing. It wouldn’t have been necessary. These witnesses might suspect they are lying, but since they don’t know for sure they feel insulated from prosecutions for perjury. But those witnesses are the first people to be thrown under the bus if somehow the truth comes out.

Thus the banks literally created money out of thin air by taking worthless, fraudulently obtained paper (junk) and then treating it at some point as though it was negotiable paper thatwas sold to an Innocent holder in due course. Under the law if they claimed status as Holder in Due Course (or confused a court into believing that is what they were alleging), the paper suddenly was enforceable even though the borrowers’ defenses were absolute.

BUT THAT TRANSACTION NEVER OCCURRED EITHER. Numbers don’t lie. If you take $100 million from an investor and put it on the closing tables for the origination or acquisition of loans, thenyou can’t ALSO put the money in the REMIC trust. Thus the unfunded trust has no money to transaction ANY business. But once again, in the illusion of securitization, it looks real to judges, lawyers and even borrowers who feel guilty that fighting the bank is breaking some

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moral code.

Amazingly, it is the victims who feel guilty and shamed and who are willing to pay even more money to intermediary banks whose fees and profits passed unconscionable 10 years ago. I’m not sure what word would apply as we look at the point of unconscionability in our rear view mirror.

And they sold it over and over again. The reason why there was no underwriting standards applied was that it didn’t matter whether the borrower paid or not. What mattered is that the Banks were able to sell the junk paper multiple times. Getting 100 cents on the dollar for an investment you never made is very lucrative — especially when you do it over and over again oneach loan. It sure beats getting 5%. The reason the servicer made advances was that they were not using their own money to make payments to the investors. It is the perfect game. A PONZI scheme where the investors continue to get paid because the reserve fund and incoming investors are contributing to that reserve fund, such that the servicer has access to transmit funds to the investors as though the trust owned the loan and the loans were all performing. Yet as “servicers” they declared a default because the borrower had stopped paying (sometimes even if the borrower was paying).

And the Banks sprung into action claiming that the failure of the borrower to make a payment is the only thing that mattered. The Courts bought it, despite the proffer of proof or the demand for discovery to show that the creditor — the investors — were actually showing a default. I didn’t make this up. This is what the investors are alleging each time they present a claim or file suit for fraud against the broker dealer who did the underwriting on the mortgage bonds issued by the REMIC trust who should have received the money from the sale of the bonds. In all cases the investors, insurers, government guarantors, and other parties have alleged the same thing — fraud and mismanagement of funds.

The settlements of fines and buy backs and damages to this growing list of claimants on Wall Street is growing close to $1,000,000,000,000 (one trillion dollars). In all the cases where I havesubmitted an expert witness declaration or have given testimony the argument was not whether what I was saying was right, but were there ways they could block my testimony. They never offered a competing declaration or any expert who would contradict me in over 7 years in thousands of cases. They have never offered an explanation of how I am wrong.

The Banks knew that if they could fool the fund managers into buying junk bonds because they looked like they were high rated bonds, they could convince Judges, lawyers and even borrowers that their case was hopeless because the foreclosing party would be treated as a Holder in Due Course — even if they never said it — and even if they were the holders of junk paper subject to all of the borrower’s defenses. So far they have pillaged our economy with 6 million foreclosures displacing 15 million families on loans that were paid in full long before the origination or acquisition of the loan.

And here is their problem: if they start filing suit against homeowners for the money advanced on behalf of the homeowners (in order to keep the investments coming), then they will be admitting that most foreclosures are being filed for the sake of the intermediaries without any tangible benefit to the investors who put up the money in the first place. The result is like an old ribald joke, the Wolf of wall Street screws the investors, screws the borrowers, screws the third party obligors (including the government) takes the pot of gold and leaves. Only to add insult to injury they claimed non existent losses that were actually suffered by the investors who trusted the banks when the junk mortgage bonds were sold. And they were paid again.

Moving to Strike The “Witness” and Their “Business Records”

Posted on July 1, 2014 by Neil Garfield

The general practice of the servicers and trustees is to disclose a list of as many as 35 possible

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witnesses so that the Defendant homeowner cannot possibly perform due diligence investigation, deposition etc. The Judges got wise to this and agreed that disclosing 35 witnesses, 34 of whom you do not intend to call, is the same as no disclosure at all. So now the banks are filing a disclosure of one witness a couple of days before trial. In my opinion the attorney should move to strike the disclosure both as late (ordinarily the trial order requires such disclosure at least 45 days before trial), and as admission that they were playing games when they previously disclosed 35 witnesses. Attorneys vary on how to attack this through motions to strike, motions in limine, motions for continuance and even filing a motion for summary judgment on the eave of trial.

The filing of a disclosure that they only intend to use one witness (who may or may not have been listed on the original list of 35) is also an admission that their previous witness list disclosing 30+ witnesses was the equivalent of no disclosure at all. It also gives no information on who, where, what she is or does. or how to contact her. It does not even name her employeror capacity. Is she a corporate representative? It doesn’t say so. If she is just a fact witness and not put forward as corporate representative then they have no foundation for introduction of business records as exception to the hearsay rule.

Tracking one case in which the usual shell game of Plaintiffs and servicers has taken place, the witness that was suddenly disclosed 2 days before trial appears to be an employee of SPS, which ordinarily replaces Chase as servicer.

In one case, she is not a records custodian for US Bank, SPS, Chase or the investors. So she mustexplain in detail how she knows that the records they seek to introduce are “normal business records, kept in the ordinary course of business made at or near the time of each event.” How does she know that and more importantly how COULD she know that as to US Bank, the Trust, the trust beneficiaries who are the creditors (according to them), SPS and Chase who was previously the servicer.

The bullet point here is that the “records” she will seek to introduce are not a printout of the records at all. They are a REPORT in which data populates the report. She doesn’t know where the raw data is. The report was produced by the witness by simply pushing buttons on her computer. She didn’t have access tot he raw data, and she certainly did not have access to ALL of the records because she won’t have the the cancelled checks, wire transfers, or ANY information on distributions to creditors, without which she cannot testify as to the status of the account with the creditors (investors or trust) because the servicer only deals with the borrower.

ATTORNEYS NEED THE LATEST STATE AND FEDERAL LAW ON BUSINESS RECORDS EXCEPTION TO HEARSAY. THE RECORDS ARE HEARSAY AND THE REPORT PREPARED FOR TRIAL IS EXCLUDED BECAUSE IT IS INHERENTLY SELF SERVING AND NOT CREDIBLE. THE REPORT IS HEARSAY (REPORTING) ON HEARSAY (THE BUSINESS RECORDS). The Court is allowed to admit the documents as an exception to the hearsay rule ONLY if the business records exception is proffered and proven, with the burden entirely on the proponent of such evidence.

She can testify — maybe — as to the dealings between SPS and the borrower but not the receipts by the creditor from remittances or distributions by the servicer to the creditors (she has no access to that information), and certainly not the amounts received by the creditors in settlements, insurance, servicer advances, credit default swaps, and government assistance that was received by or on behalf of the creditor and that cured any “default” as described by the Trust instrument (PSA) . Therefore her testimony is incomplete even if accepted. She might testify as to the dealings with the borrower, but she cannot testify as to the receipt of servicer advances and other payments which is the REAL reason for the foreclosure.

It is becoming increasingly clear that these foreclosures are strictly for the benefit of the intermediaries and not the creditor investors. They are attempting to ride the coattails of the creditors so that their claim for refunds and cutoff of liability for refunds to third parties, can be cutoff. None of those things have anything to do with the investors who have been paid by

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servicer payments advanced regardless of whether the borrower was paying or not.

They want to say the trust or trust beneficiaries are the creditors and that therefore the foreclosure should proceed, but the truth is the creditors are not showing any default, have been paid, sometimes in full. The intermediaries are cloaking their independent claims against the borrower (independent from the mortgage debt) as though they are claims of the creditors,which they are not.

If the creditors are not here to say they are suffering a default as a result of non payment by the borrower there is no reason for the court to assume that such a default exists. That is part of the prima facie case of the party claiming the right to foreclose, despite the absence of a default recorded by the creditor. Having some new servicer come in with a professional witnesswho really knows nothing about how and where records are kept and can offer no personal knowledge of how and where those records are kept and who does that fails to offer personal perceptions and memory of those perceptions required for a competent witness in any case.

Thus the hearsay REPORTS prepared for trial fail for two reasons, — they are hearsay and they were prepared especially for trial. And they are excluded under the hearsay rule for another reason — the reports on hearsay reports on the raw data which is also hearsay unless that the raw data is shown and described as records that qualify under the business records exception.

Quiet Title and Statute of Limitations

Posted on July 7, 2014 by Neil Garfield

In the search for a magic bullet, many pro se litigants and even attorneys have ended up perplexed by laws and rules regarding an action to Quiet Title (frequently misspelled by pro se litigants as “Quite Title”). The purpose of this article is to add some context to the discussion and some reasons for my conclusion — that as more decisions emerge the action for Quiet Title will fade unless the mortgage of record is first nullified or canceled.

For context, let’s remember that the purpose of recording documents in the Public Records is to give certainty and notice to the world of transactions that can be recorded. If courts were toissue decisions to quiet title on recorded documents that are facially valid, the result would be chaos — nobody would know if they were really getting permanent title and title insurance companies would, for obvious business reasons, refuse to issue a title commitment or policy unless EVERYONE brought a quiet title action after every transaction and received a court order, suitable for recording that stated the rights of the stakeholders. This is precisely what the recording statutes are meant to avoid.

Now to the issue of the statute of limitations. Some states hold that even if there is an act of acceleration, the statute of limitations only applies to the monthly payments that were due during the statutory period that are now time-barred. Florida does not appear to be one of those states, and despite some decisions to the contrary, it doesn’t look to me like Florida will become one of them. In Florida it is generally accepted that the statute of limitations time bars any action after 5 years to collect a debt. You should check your state statutes because each state is different and don’t make any decisions without consulting a qualified attorney licensed in the jurisdiction in which your property is located.

So the thinking has gone in the direction of merely stating that the claim is time-barred if therewas an acceleration of the debt, and five years as passed. But the Romero v SunTrust decision (see below) from last year, raises the real issues. While the Bank had no right to bring a claim on the note, and presumably had no right to bring an action on the mortgage, the mortgage remains on record. Alleging that the statute of limitations bars any action on the note or mortgage does not invalidate the mortgage. If it is facially valid and properly recorded, it is there in the County records for all to see.

So the question arises “What happens at a subsequent closing on the sale of the property or

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refinance, and the Mortgagee (or party claiming to be the successor of the mortgagee) refuses to execute a satisfaction of mortgage without receiving payment?” Is THAT a claim that is time-barred? The answer is I don’t know, but I suspect that the refusal to execute a satisfaction of mortgage is an act that is separate from bringing an action to collect on a time-barred debt.

I suspect that an action for equitable relief demanding a Court order to force the Bank into executing a satisfaction of mortgage would fail. That is essentially the same as asking the Courtto issue a quiet title order stating that the mortgage is invalid — a precedent that raises numerous hazards in the marketplace. Essentially you are saying that you did have the debt, the bank is time barred from enforcing it, so you want the mortgage nullified or canceled. Several Courts have issued ruling consistent with this ruling so I don’t want to give the impression that what I am saying is the general rule — what I am saying is that I think my theoryof the action will become the general rule.

My theory, supported by case law in other states, is that you must have grounds to attack the validity of the instrument and win your case before you can then ask for a decision on Quiet Title. Fortunately, in the context of loans and title subject to claims of securitization, such an attack is eminently possible and likely to succeed on an increasing basis. But in order to do so, one must be very conversant in the claims of securitization generally and especially knowledgeable as to claims of succession or securitization in your specific case. Alleging that this particular defendant has been repeatedly found in court to lack the indicia of ownership orauthority to enforce a note and mortgage may not do you any good. You are still left with the question of what to do with a facially valid mortgage encumbrance recorded against the property. If the person you sued doesn’t own it, who does?

After years of avoiding the right strategies, lawyers are coming around to the idea that in orderto be truly successful in an action to remove the mortgage encumbrance, you need to have an allege facts to support the claim that the mortgage deed (or Deed of Trust) was invalid in the first instance or that it could not be enforced even if the statute of limitations was not applicable. THEN alleging the statute of limitations is a good idea as corroboration for your logic that the mortgage is invalid because it is unenforceable and without merit in all instances.

There are two such attacks that are promising:

1. Attack the initial closing as lacking consideration or giving rise to common law or statutory rescission. If statutory rescission applies, the law states that the encumbrance is terminated byoperation of law. (TILA). The allegation that the opposing bank is a “holder” (according to them) is insufficient to bar your attack on the initial closing. The problem of course is that the banks regularly confuse judges into applying the rules of a holder in due course when the Bank itself makes no such assertion. Hence, being able to remind or educate the judge on the differences between holders, holders with rights to enforce and holder in due course is essential and must be presented with clarity. If you don’t understand the differences you are not prepared for the hearing.

2. Attack the subsequent acquisition of the “loan”, debt, note and/or mortgage also as being a sham lacking in consideration AND of course in violation of the PSA. The point to remember here is that the “assignment” or “endorsement” (almost always fabricated, forged or unauthorized) is only an OFFER in which case the Trustee of the REMIC trust must accept the offer and then pay for it. In fact most PSA’s require a letter of opinion from counsel for the Trust indicating that no negative tax impact will result on the Trust’s REMIC status. Three thingswe know to be true in most cases: (a) the Trustee never accepted the transfer and (b) The trustnever paid for the loan and (c) a loan already declared in default is not susceptible to acceptance by the trust. Keep in mind that most trusts are governed by New York Law which says that such transactions are void, not voidable.

So let us assume that you have a receptive Judge who agrees that the transfer to the trust never occurred or even that the original loan documents lack consideration from the named

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Payee on the note (and of course the named Mortgagee/beneficiary under the Mortgage). In myopinion you are still only half way to home base. No home run yet, although I think the law will evolve where that IS sufficient to remove the mortgage encumbrance.

So now what? You have still sued parties whom you have proven have no interest in the mortgage. The question is whether you have eliminated the possibility of ANY party (who has nonotice of the action) having an interest in the debt, note or mortgage. And many judges will reply that you have put on a pretty good case but you still have not identified the creditor — anodd twist on the defensive actions in foreclosure cases.

My opinion is that you need to allege a fact pattern, where appropriate, that states that Wall Street investors advanced the money to the borrower without knowing that their money was not going through the trust. Hence a direct relationship arose by operation of law between the borrower, as debtor and the investors as creditors. Those investors are creditors not as Trust beneficiaries but rather personally, because the money never went through the trust. The allegation is that they were cheated by intervening fraudulent behavior or negligent behavior on the part of the broker dealer who sold them the securities of an empty REMIC Trust that never received the proceeds of sale of the REMIC RMBS.

At this point you can properly argue that the investors were entitled to a note and mortgage by virtue of the securitization documents that were used to fraudulently induce them to part with their money. The allegation should be that they didn’t get it and that putting the name of sham “nominees” did not accrue to the benefit of the investors but rather inured to the benefitof intermediaries who were not lending money in your transaction.

Either way, you say that as to the debt between the mortgagor homeowner and whoever else might be making a claim, the initial mortgage encumbrance is now and/or has always been invalid and unenforceable because they recite facts based upon a non-existent transaction, that the mortgage has been split from the note, that the note has been split from the debt, andthrough no fault of the homeowner, there is no note or mortgage inuring to the benefit of the actual creditors. The cherry on top is that there is no such thing as an equitable mortgage — forthe same reasons that courts are reluctant to grant quiet title actions — it would cause chaos inthe market place and raise uncertainty that the recording statutes are intended to avoid.

See Romero v SunTrust Statute of Limitations 9-3-2013

See also “a new and different breach” Singleton v Greymar Fla S Ct 882 So2d 1004 9-15-2004

And on collateral estoppel Kaan v Wells fargo Bank NA Case 13-80828-CIV 11-5-13

For further information, call 954-495-9867 or 520-405-1688.

Are you a candidate for Florida’s Hardest Hit Fund relief for Foreclosure Victims? See Florida Hardest Hit Fund

7 Years of Begging and Finally They See the Light

Posted on July 8, 2014 by Neil Garfield

Back in 2007-2008 I told the State of Arizona and other states that inquired, that they were owed a lot of money because of the failure to abide by state law regarding the recording of instruments. Taxes, fees, costs and expenses were never collected because of MERS and lesser known similar systems (See Chase Bank), resulting in billions of dollars in lost revenue while thesame offices got inundated with low cost (Lis Pendens) filings when the mortgage loans turned up in foreclosure courts. And that was just in the State of Arizona. Think about 50 States. The counties and states were hit with an avalanche, 6 million so far, of foreclosures and had to hire more staff, more judges and adopt questionable “rocket dockets” and incorrect interpretations of non-judicial statutory schemes.

The result, according to some studies was that the states lost money, the banks made money through dubious foreclosures, and the investors who were the source of nearly all the money

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loaned on residential homes ended up suing or begging for settlements. Government was crushed under debts and expenses that could not be paid. Arizona Finance admitted that the total was about $3 Billion which was almost exactly the same as the State deficit. After months of wrangling my plan was adopted by the leaders of the State Senate and House of Representatives, and the governor’s office. Then suddenly it went dark and various orchestrations of “Neil Garfield doesn’t know what he is talking about” were played around thecountry, with the Banks footing the bill.

Now a Judge in Pennsylvania has stated the obvious (see below) and Pennsylvania will be the first state to recoup billions of dollars in lost revenue and expenses, fines, interest and other charges — without spending a dime on lawyers, who are all proceeding on a contingency fee basis. Those lawyers are going to make a king’s ransom in fees.

Now a Federal Judge has seen the light and expressed himself quite clearly. The whole point of the public records system is to provide confidence in the system of title and giving buyers or lenders the comfort of knowing that they had what they thought they were getting. The whole purpose of MERS and similar schemes was to avoid the public records system — until it comes time to use them to foreclose on previously unrecorded transactions involving the mortgage. Judges around the country have expressed fear that our entire title system has been compromised — both publicly in Bar seminars and privately to me in interviews.

All this happened because the decision was made to force borrowers to shoulder the entire burden of the mortgage meltdown. This country has a habit of relying on a “free marketplace” where it is OK to promote debt and borrowing, including a hard sell and then blame people when they believe the commercials and sales script. We blame them for being in debt! In so doing we got people to rely on easy credit in lieu of a living wage. We did the same thing with tobacco products where nobody cool would be caught dead (every pun intended) without a cigarette hanging from their mouth. But when they get cancer or COPD we blame the smoker. And not to get too political, we did the same thing with immigration. The “free marketplace” did everything they could with local, state and federal government to bring in 11 million peoplewho would provide cheap labor, pay taxes and buy goods and services. Nobody cared whether they had papers and Reagan even granted them amnesty. Now we blame them all for being here.

The systemic problem is that we fail to match accountability with capability. Just because you can get a pension fund manager to part with $100 million doesn’t mean you are entitled to keep it. Just because you get a borrower to sign some papers that make no sense whatsoever, doesn’t mean the papers ought to be enforced — especially when it is at the expense of the pension fund. We have the intermediaries driving the train instead of the real parties in interest. The Banks are seen as too big to fail while the horrendous loss of confidence and net worth in most households (some of which are now under a bridge) is something we just need to suck up and get over. Our system was created to allow for plenty of room for chaos and even a bit of insanity. But when you have the inmates (Banks) running the asylum, then the benefits flow out of the system instead of flowing to those who are part of the society that is governed by our system of government.

http://www.timesherald.com/general-news/20140703/federal-judge-finds-mortgage-registry-company-violated-pa-statute-in-montgomery-county-lawsuit

It Was the Banks That Falsified Loan Documents

Posted on July 9, 2014 by Neil Garfield

I know it doesn’t make sense. Why would a lender falsify documents in order to make a loan? I had a case in which a major regional bank had their loan representatives falsify loan documentsby having the borrower certify that there were houses on his two vacant lots. The bank swore up and down that they were never involved in securitization.

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When the client refused to make such a false statement — the bank did the loan anyway AS THOUGH THE NONEXISTENT HOMES WERE ON THE VACANT LOTS. Thus they loaned money out ona loan that was guaranteed to lose money unless the borrower simply paid up despite the obvious loss. The borrower’s error was in doing business with what were obviously unsavory characters. True enough. But he was dealing with the regional bank in his area that had the finest reputation in banking.

He figured they knew what they were doing. And he was right, they did know what they were doing. What he didn’t know is that they were doing it to him! And they were doing it to him in furtherance of a larger fraudulent scheme in which investors were systematically defrauded.

When I took the client’s history all I had to hear was this little vignette and I knew (a) the bank was involved in securitization and (b) this loan was securitized BEFORE the closing and even before any application for loan was solicited or accepted by the bank. The client balked at first, not believing that a bank would openly declare its non-involvement with Wall Street whenthe truth would so easily be known.

But the truth is not easily known — especially when the bank is involved in “private label” trusts in which there are no filing with the SEC or other agencies.

The real question is why would the bank ask the borrower to certify the existence of two homesthat were never built? Why would they want to increase their risk by giving a loan on vacant land that supposedly had improvements? Or to put it bluntly, Why would a bank try to cheat itself?

The answer is that no bank, no lender, no investor would ever try to cheat themselves. The whole purpose of our marketplace is to allow market conditions to correct inefficiencies and moral hazards. So if the bank was cheating or lying, the only rational conclusion is not that theywere lying to themselves, but rather lying to someone else. They were increasing the risk of non repayment and decreasing the probability that the loan would ever succeed, while maximizing the potential for economic loss to the lender. Why would anyone do that?

The answer is simple. These were not “overly exuberant” loans, misjudgments or “risky” behavior situations. The ONLY reason or bank or any lender or investor would engage in such behavior is that it was in their self interest to do it. And the only way it could be in their self interest to do it is that they were (a) not lending the money and (b) had no risk of of loss on any of these loans. There is no other conclusion that makes any sense. The bank was being paidto crank out loans that looked valid and viable on their face, but in fact the loans were neither valid nor viable.

Why would anyone pay a bank or other “originator” to pump out bad loans? The answer is simple again. They would pay the originator because they were being paid to solicit originators who would do this and then aggregate over-priced, non-viable loans into bundles where the toplayer contained apparently good loans on credit-worthy individuals. And who would pay these aggregators? The CDO manager for the broker dealers that sold toxic waste mortgage bonds to unwitting investors. As for the risk of loss they created an empty unfunded trust entity upon whom they would dump defaulted loans after the 90 day cutoff period and contrary to the terms of the trust.

So it would LOOK LIKE there was a real lending entity that had approved, directly or indirectly, of the the “underwriting” of a loan. But there was no underwriting because there was no need for underwriting because the originators and aggregators never had a risk of loss and neither was the CDO manager of the broker dealer exposed to any risk, nor the broker dealer itself thatdid the underwriting and selling of the mortgage bonds.

Reynaldo Reyes states that “it is all very counter-intuitive.” That is code for “it was all a lie.” But we keep treating the securitization infrastructure as real. In the 2011 article (see below) inHuffpost, the Federal Reserve cited Wells Fargo for such behavior — and then the Federal Reserve started buying the toxic waste mortgage bonds at the rate of some $60 billion PER

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MONTH, which is to say that approximately $3 Trillion of toxic waste mortgage bonds have beenpurchased by the Federal Reserve from the Banks. The Banks settled with investors, insurers, guarantors, loss sharing agencies, and hedge counterparties for pennies on the dollar, but so farthose settlements total nearly $1 Trillion, which is a lot of pennies.

Meanwhile in court, lawyers are neither receiving nor delivering the correct message in court. They seek a magic bullet that will end the litigation in their favor which immediately puts themin a classification of lawyers who lose foreclosure defense cases. The bottom line: the lawyers who win understand at least most of what is written in this article, have drawn their own conclusions, and are merciless during discovery and/or at trial. Then the opposition files a notice of voluntary dismissal or judgment is entered for the homeowner “borrower.” Right now,these losses are acceptable to banks who are still playing with other people’s money. If lawyers did their homeowner and litigated these cases aggressively, the bank’s illusion of securitization would end. And THAT means most foreclosures would end or never be started.

Wells Fargo Illegally Pushed Borrowers into SubPrime Mortgages

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