22 Affirmative Defenses To Stop Foreclosure
What is an affirmative defense?
In Criminal and Civil law, an Affirmative defense is a fact or set of facts that if proven by the defendant, nullifies or mitigates the legal consequences of the defendant’s otherwise unlawful conduct.
How can it help me stop foreclosure?
By using a combinations of the affirmative actions on this list at the right time, home owners can establish the foundation of a foreclosure defense case. An overall combination of cell crafted affirmative actions, quality evidence by means of forensic mortgage auditing, and comprehensive lawsuit with well targeted motions are a homeowners best defense against mortgage fraud.
1. Standing. The Plaintiff is not registered to do business in the State of Florida and therefore unable to maintain this action and the court does not have jurisdiction. See Fla. Stat. 607.1502(1) and 607.1501(a), (g) and (h).
The complaint fails to join indispensable parties, specifically the loan originator and the loan servicer(s) and the complaint fails to adequately show the chain of title demonstrating that Plaintiff is in fact the real party in interest with standing to bring this action.
2. Unclean Hands. Upon information and belief, Plaintiff and/or its predecessor(s) in interest had unclean hands in their course of dealing with Defendant because the several facts alleged herein below, and Plaintiff also wrongfully refused reinstatement.
3. Violation of TILA. Upon information and belief, Plaintiff and/or Plaintiff and/or its predecessor(s) in interest violated various provisions of the Truth in Lending Act (“TILA”), which is codified at 15 U.S.C. section 1601 et seq. and Regulation Z section 226 et seq. by interalia:
a) failing to deliver to the Defendant two copies of notice of the right to rescind (with all of the pertinent statutory disclosures)
b) failing to properly and accurately disclose the “amount financed”
c) failing to clearly and accurately disclose the “finance charge”
d) failing to clearly and accurately disclose the “total of payments”
e) failing to clearly and accurately disclose the “annual percentage rate”
f) failing to clearly and accurately disclose the number, amounts and timing of payments scheduled to repay the obligation
g) failing to clearly and accurately itemize the amount financed.
The transaction was subject to TILA and rescission rights since it was a consumer credit transaction involving a lien or security interest placed on the Defendant’s principal dwelling, and was not a residential mortgage as defined in 15 U.S.C. 1602(w), because the mortgage was not created to finance the acquisition of the dwelling. As a result, Defendant is entitled to rescind the transaction and elect to do so.
4. Violation of RESPA. Upon information and belief, Plaintiff and/or Plaintiff and/or its predecessor(s) in interest violated various provision of the Real Estate Settlement Procedure Act (“RESPA”), which is codified at 12 U.S.C. section 2601, et seq. by, interalia:
a) Failing to provide the Housing and Urban Development (HUD) special information booklet, a Mortgage Servicing Disclosure Statement and Good Faith Estimate of settlement/closing costs to Defendants at the time of the loan application or with three (3) days thereafter) Failing to provide Defendants with an annual Escrow Disclosure Statement for each of year of the mortgage since its inception;
c) Giving or accepting fees, kickbacks and/or other things of value in exchange for referrals of settlement service business, and splitting fees and receiving unearned fees for services not actually performed;
d) Charging a fee at the time of the loan closing for the preparation of truth-in-lending, uniform settlement and escrow account statements.
5. Violations of HOEPA. Upon information and belief, Plaintiff and/or its predecessor(s) in interest violated various provisions of the Home Ownership Equity Protection Act
(“HOEPA”) pursuant to 15 USC § 1639 et seq. by failing to make proper disclosures and
committing intentional predatory lending by including prohibited terms. These violations provide an extended three year right to rescission and enhanced monetary damages for the Defendants.
6. Extortionate Extension of Credit. Upon information and belief, Plaintiff and/or Plaintiff and/or its predecessor(s) in interest are guilty of an extortionate extension of credit pursuant to §687.071(1)(e), Florida Statutes, which defines it as “any extension of credit whereby it is the understanding of the creditor and the debtor at the time an extension of credit is made that delay in making repayment or failure to make repayment could result in the use of violence or other criminal means to cause harm to the person, reputation, or property of any person.” In this case, Plaintiff and/or its predecessor(s) in interest are guilty of such an extension of credit because at the time of the loan, it was understood that Defendants’ failure to repay the loan could result in the use of criminal means by the Plaintiff to cause harm to Defendants’ or others’ persons, reputation or property, including trespass on Defendant’s property, perjury, mail and wire fraud, and Racketeer Influenced and Corrupt Organization (RICO) violations, as long as Plaintiff and/or its predecessor(s) in interest thought they would not be caught.
7. Fraud. Upon information and belief, the alleged Note and Mortgage and other loan documents, were induced by the fraud of the Plaintiff and its predecessors in interest and its co-conspirators, and are therefore void and unenforceable. Specifically, the originator of the loan and its co-conspirators made the following representations:
a) Before the loan was made, the originator and/or its co-conspirators (hereinafter referred to collectively as “Plaintiff and/or its predecessor(s) in interest”) represented to Defendants that they had superior knowledge, information, skill and ability to Defendants in making mortgage loans, and that they would be looking out for the best interests of Defendants in the financing process and, in effect, protecting and promoting Defendants’ benefit;
b) Before the loan was made, the Plaintiff and/or its predecessor(s) in interest
represented to Defendants that:
(1) Defendants would receive the best mortgage available
(2) that it would be a “good” loan, and
(3) it would be of substantial benefit to Defendants.
c) The representations described in a) and b) above were made for the purpose of inducing Defendants to enter into the loan transaction.
d) The representations were false and known by Plaintiff and/or its predecessor(s) in interest to be false at the time the representations were made and at the time the loan was made, in that:
e) The Plaintiff and/or its predecessor(s) in interest did not have superior knowledge, information, skill and ability to Defendants in making mortgage loans as represented or did not use the same for the benefit and best interest of Defendants;
f) The Plaintiff and/or its predecessor(s) in interest did not look out for Defendants’ best interest or protect and promote Defendants’ benefit;
g) Defendants did not receive the best loan available;
h) The loan was not a “good” loan;
i) The loan was not in Defendants’ best interest, but rather was in the best interest and to the benefit of the Plaintiff and/or its predecessor(s) in interest;
j) Defendants reasonably relied on the representations by the Plaintiff and/or its predecessor( s) in interest to their detriment.
k) The Plaintiff and/or its predecessor(s) in interest failed to disclose all costs, fees and expenses; charged excessive fees, gave kickbacks and made payments of fees to parties not entitled to receive them, and failed to provide Defendants with all disclosures required by law.
1) To confuse, bamboozle and defraud Defendants, the Plaintiff and/or its predecessor(s) in interest intentionally scheduled the closing with insufficient time at the closing for Defendants to have the time to actually read the documents requiring Defendants’ signature.
m) Plaintiff and/or its predecessor(s) in interest, with the intent to defraud, intentionally failed to provide the loan closing documents in advance of the closing.
n) The only parties who benefited from the loan were the Plaintiff and/or its
predecessor(s) in interest and their service providers.
8. Payment. Upon information and belief, Defendants have made all payments required by law under the circumstances; however Plaintiff and/or its predecessor(s) in interest improperly applied such payments resulting in the fiction that Defendants were in default. Defendants are entitled to a full accounting through the master transaction histories and general ledgers for the account since a dump or summary of said information cannot be relied upon to determine the rightful amounts owed.
Further, the principal balance claimed as owed is not owed and is the wrong amount; the loan has not been properly credited or amortized. Additionally, Plaintiff placed Forced Insurance on the property and is attempting to collect on property taxes, insurance and fees not owed.
9. Violation of Unfair and Deceptive Trade Practices Act. Upon information and belief, in addition to the facts alleged in the preceding paragraphs, the Plaintiff and/or Plaintiff and/or its predecessor(s) in interest also violated the Unfair and Deceptive Trade Practices Act, F.S. 501.201, et seq. by:
a) Failing to promptly and/or properly pay taxes or insurance premiums when due, so that the maximum tax discount available to Defendants could be obtained on Defendants’ property and so that insurance coverage on the property would not lapse.
b) Failing to provide Defendants with an annual statement of the escrow account kept for payment of taxes and insurance.
c) Failing to properly disclose at or prior to closing all costs, fees and expenses
associated with the loan;
d) Charging excessive fees and making payments of fees to parties not entitled to receive them;
e) Obtaining a yield spread premium (YSP) based upon the “selling” of a higher interest
rate, and/or non disclosure of the range of interest rates for which Defendants
f) All such actions by Plaintiff and/or its predecessor(s) in interest are unconscionable acts or practices, and/or unfair or deceptive acts or practices in the conduct of trade or commerce in violation of §501.204, Florida Statutes, and entitle the Defendants to a setoff, recoupment or civil penalty, nominal and actual damages, attorney’s fees and costs.
10. Unconscionability. In light of all of the foregoing foreclosure defenses, and on the face of the purported loan documents, the terms and circumstances of the Note and Mortgage were unconscionable when made and were unconscionably exercised, it is unconscionable to enforce the Mortgage by foreclosure.
11. Failure to Join Indispensable Party. Plaintiff has failed to join an indispensable party. Willey v. W. J. Hoggson Corporation, 90 Fla. 343, 106 So. 408 (1925), contends that since the note and mortgage involved in this litigation are payable to a business trust, any action on those instruments must be brought by all the members of the trust-not just the trustees.
12. Rescission. The mortgage and note which are the subject of this action have been rescinded and therefore the mortgage(s) and note(s) are void.
13. Unclean Hand. Plaintiff has unclean hands due to its actions described below and therefore is prohibited from obtaining equitable relief of foreclosure. As a matter of equity, this Court should refuse to foreclose this mortgage because acceleration of this note would be inequitable, unjust, and unconscionable. Plaintiff has waived the right to acceleration due to intentionally misleading and reckless conduct for which it is liable.
14. Lack of Jurisdiction. This court lacks jurisdiction over the subject matter. It appears on the face of the complaint that a person other than the Plaintiff was the true owner of the claim sued upon at the time this action was filed and that the Plaintiff is not the real party in interest and is not shown to be authorized to bring this foreclosure action.
15. Failure to Provide FDCPA Notice. Plaintiff brought this action without providing notice to Defendant of Defendant’s right to dispute the debt, pursuant to the Fair Debt Collection Practices Act. As indicated in the Notice attached to the Complaint, filed September 1, 2007, but not served upon Defendant until April 13, 2008. Plaintiff is required to notify Defendant, pursuant to 15 U.S.C §§ 1601, et seq., that Defendant may dispute the debt and Plaintiff is required to provide verisifcation fo the debt. Defendant hereby disputes the debt and demands that Plaintiff verify the debt in accordance with the Fair Debt Collection Practice Act. Plaintiff is required to suspend litigation until verification of the debt at issue.
a) Plaintiff alleges ownership of the note and mortgage in question.
b) Plaintiff is liable for actions of ABC Mortgage and/or its agents.
c) ABC Mortgage and/or its agent used unjustified pressure to make Mr. Doe sign the mortgage, including telling him that he would be liable for the closing costs if he did not go through with closing.
d) Mr. Doe was harmed by ABC Mortgage’s action.
17. Failure to State a Claim for Which Relief May Be Granted.
a) Plaintiff filed a claim to re-establish a lost note.
b) Plaintiff claims the right to re-establish such note under Fla. Stat. §673.3091.
c) Fla. Stat. §673.3091 provides only for re-establishment of negotiable instruments as defined under Fla. Stat. §673.1041.
d) The note at issue is not a negotiable instrument as defined under §673.1041 because it does not contain an unconditional promise to pay and/or other requirements to qualify as a negotiable instrument.
e) Therefore Fla. Stat. §673.1041 does not apply to transfer or enforce the promissory note at issue in this foreclosure action.
f) Therefore, Plaintiff has failed to state a claim for which relief may be granted.
18. Failure to Timely Serve Complaint.
a) Complaint was filed on February 13, 2008.
b) However, Defendant was served on July 3, 2008.
c) Pursuant to Fl. R. Civ. Pro. 1.070(j), Defendant is required to be served within 120 days after filing of the initial pleading.
d) Plaintiff served Defendant approximately 170 days after filing the initial pleading.
19. Fraud in the Inducement.
i. Plaintiff alleges ownership of the note and mortgage in question.
ii. Plaintiff is liable for actions of ABC Mortgage and/or its agents.
iii. ABC Mortgage and/or its agents made false statements and/or omissions regarding a material fact;
iv. ABC Mortgage and/or its agents knew or should have known the representation was false;
v. ABC Mortgage and/or its agents intended that the representation induce plaintiff to act on it;
vi. Mr. Doe suffered damages in justifiable reliance on the representation.
20. Quiet Title.
Plaintiffs request this Honorable Court to enter its judgment against Defendants declaring the Mortgage, null and void; canceling the Mortgage of record; quieting title to the property owned by Plaintiffs and against Defendants and all persons claiming under Defendants; and granting costs of this action and such other relief as the Court may deem proper.
21. No Written Notice Of Consumer Debt Assignment.
Pursuant to F.S 559.715 Plaintiff must give Defendant written notice of the debt assignment within 30 days after the assignment.
22. Promissory Note Not Authentic.
Defendant, pursuant to F.S 673.3081 challenges the authenticity of each signature on the Note introduced by the Plaintiff.
Why You Should Never Make an Admission to a Contract of Indebtedness
We understand the operating documents of the Pooling and Servicing Agreement and if the security evidence by the mortgage security instrument, conveyed with the tangible note negotiation, before the cut off data of the REMIC.
We are absolutely familiar with how you would sit down and break down a true sale from party A from party B to convey the security and to maintain the fiduciary duty under the Common Law Deed of Trust to release and reconvey, release and reconvey, to maintain clear and marketable title.
So, we know the foundation under the UCC for that.
Then, we also understand the underlying arguments that the banks and their attorneys use against people making securitization foreclosure defense arguments, which may have done a proper statement of fact as to what’s required to accomplish a true sale between all these parties and maintain perfection over the lien.
However the banks and their attorneys are going to succeed by not having a Chain of Title, by stating that they negotiated the note in Bearer Form under Article UCC 3205 Sub section B with no payee named as a bearer instrument.
This essentially gives them a purported temporary perfection of the original holder, while they physically transfer the instrument, by daisy chain, which doesn't require for them to maintain a Chain of Title, until the instrument is specially endorsed.
This is how the banks and their attorneys beat almost everybody from New York to California on standing, and whether or not they had a secured interest over the lien; because nobody has a the way to argue against whether or not they made the instrument of bearer paper and physically negotiated it, because they weren’t required to maintain a Chain of Title in that aspect.
So that’s how the banks and their attorneys are able to win nine times out of ten. Because what they're saying is that in the negotiation under 3205 B, the security followed the note, whenever the custodian of record received the instrument prior to the cut-off date, making the note and the security securing trust property before the cut-off date.
That's how the banks and their attorneys are able to beat you.
So let’s reverse engineer this, let's take that note all the way back to the closing, and reverse the whole concept and transaction.
What you have to be able to show is that you have one purported transaction, concealing the realistic transaction.
Did the lien’s beneficial interest maintain perfection, and was it therefore eligible to be negotiated with the note in that capacity, as statutorily required?
However what that would require that you were the actual creditor and that you actually made that note as a maker issuer, for the purposes of being the beneficiary of the debt that was created.
This is what the banks and their attorneys want you to believe in the matter of equity:
- That your signature was as a maker issuer and therefore created value to the instrument
- You negotiated with the party that you sat down at closing with
- They accepted the instrument by negotiation
- They were a federal reserved depository institution that could accept article three instruments by deposit
- They gave you consideration in the form of cash, not Ultra Vires, for your promise to pay instrument executing an underlying indebtedness contract
Well in an IRC 1031 Like Kind Exchange, Table Funded Securitized Mortgage Loan Transaction that didn't happen. That did not happen; that negotiation, acceptance and consideration is not what a table funded securitization transaction is!
So the money is not created from your signature, negotiated and then the note negotiated between state to state physically, that doesn’t happen in a table funded transaction. Rather it's in direct reverse engineer - the money was created from the sale of the certificates and the special deposit, special purpose vehicle on Wall Street.
They take the certificate holders funds to the securities to special deposit the pool of assets. That pool of assets is used in the SPV alternative investment opportunity through the warehouse line of credit, and that's what the sponsor bank is using as the table funding credit in the transaction itself.
So yes, we would have some arguments like robo-signing and the improper negotiation, transfer, and delivery of the mortgage loan contract all the way through the securitization scheme, as part of the material defects found in the transactional scheme itself - but what we don't want to do is provide any language as an admission to you being the account debtor.
You also want to make sure you understand what is meant by using terms like the “alleged debt”, because you're going to piss the Judge off, really badly; a lot of people do it. Because, they don't know how to speak to the transaction as it relates to what that means.
So let me give you the perspective that the Judge is going to have. The Judge is only looking at the intent of the contract. So all the little details, the semantics of this right now, the first thing the Judge is going to do, is look at it from a cursory equity standpoint.
Q: Did you intend to get a home
Q: Are you in a home?
Q: Okay, so you're in the collateral.
Q: Okay and did you intend whenever you went to go get the home to get an obligation or a loan associated to that.
Okay, yes that's obvious or else you wouldn't be in the collateral
Q: Okay so you're in the collateral - an obligation exists - and you also pledged a lien to encumber your property to secure that obligation, so that if you couldn't perform on the contractual payment obligation the holder of the obligation would have the lien to enforce, do a foreclosure sale to enforce an ultimate means of collection.
Okay. So just looking at the intent of the contract, you are in the collateral, you know that you signed something at the closing- there's an obligation – and it's in default.
The institutions claiming to be the holder of that obligation and to be the secured party of record via an assignment of the security instrument perfected in public record.
Are there any other parties that are involved in this transaction?
And if some other financial institution was holding an obligation and saw that deed of trust or signed with a deed of trust recorded on public record, they would immediately file to acquire the title and they would be there defending their right to the obligation and the collateral itself.
So because there's no other financial institution showing up claiming to be the holder and to having a subsequent assignment of deed of trust or mortgage recorded for enforcing through a foreclosure action - than nine times out of ten - the Judge is going to give the party holding the obligation the benefit of the doubt as a matter of the intent of the contract.
So, in terms of the intent of the contract, this is where it becomes so viable for you to understand, what your capacity into the transaction is.
When the judge ask you:
“Did you sign the note - in the effort to get the collateral?”
Your answer is “Yes.” - But you need to be able to specify the answer to yes as “well yes your honour but I’m not the account debtor. I signed into this transaction as an accommodation party or guarantor. The party that I signed as a guarantor for, made available the obligation through a securitization transaction without my knowledge and purportedly negotiated the security evidence by the deed of trust/mortgage lien that I pledged to them, uniquely, to secure these receivables in this transaction as well.
What I need to know your honour is does my lien secure the tangible contractual obligation or does it secure the receivables?”
The answer to the receivables is no. You cannot attach article 9 to the UCC receivables (securities) to enforce a lien on real property. A lien on real property under revised article nine is not secured by a lien on real property, so article nine does not fit the common law argument that the transfer of an obligation carries the beneficial interest of the lien and the lien itself.
Here is the lie that the banks almost always defeat homeowners with.
"Here's a copy of the note your honour, the security follows the obligation we all know that."
Yes, that’s accurate, under common law and U.S. Supreme Court. Carpenter v. Longan (1872) the note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.
Furthermore under revised article 9 of the Uniform Commercial Code (UCC) the banks do not necessarily have to record each transfer of the mortgage loan contract in public records; all they have to do is, in essence, be in possession of the note and they can claim rights to enforce it.
Therefore you need to be able to be able to explain (and prove) how your capacity is to the obligation. “Your honour I am not the account debtor. I was a guarantor to this party. I am not a guarantor to everybody else that claims to be the holder of the obligation"
And it’s their capacity of an accommodated party to the certificate holders on Wall Street. They're not the real creditors. Their job is to put the certificate holders into funds associated to your payment string.
All of this is predicated on laying the proper order of operations, in line with statutory capacities, that clearly part and parcel and separate the root question of: Does revised article nine and liens on real property secured defaulted receivables in a securitization transaction?
That's your root question.
You just have to be able to have it all put in the proper sequence in statutory capacities, as it relates to your state, and what took place in order to defend the lien itself the property.
How have you been harmed?
In pre-foreclosure it's not so much that you've actually been harmed, it's whether or not they have clean hands in the transaction. So this, at its root is an Equitable Estoppel issue. In the like kind exchange transactional scheme there is a senior secured party and a junior secured party – the originator of the loan (named on the note as the lender) is the senior secured party, and the trustee for the REMIC trust is the junior secured party.
But it's one transactional scheme, its one organism, so you have to be able to show that they - in the race of diligence - that the junior secured party made sure that the originator recorded that underlying security of trust, so they could perform the rest of the transaction. But ten years later upon default of the receivables, to cause an assignment of the beneficial interest of evidence about your underlying security instrument, that security instrument doesn't maintain perfection from now, until infinity. You can lose perfection over that lien.
So, having the proper capacity, order of operations, and then statement of facts of how they lost perfection, and to show that it is inequitable for the holder of the receivables to attempt to cause an assignment of the underlying security instrument, because they were only negotiated the receivables, with unclean hands. That’s what you have to show that they don't have an equitable claim to.
Hypothecation is a third party pledging collateral on your behalf. So, let's say for instance, if you pledged the real property to the originator party on the ten thirty one exchange transaction scheme you specifically gave legal title to that party. Not to the trustee under that instrument, and the beneficiary of the security instrument. The beneficiary of the security instrument then in turn pledged a separate and subsequent value - which is the proceeds of the real property.
Let me give you an example. Consider a wheat field. The land is the real property, but the Wheat and the Harvest are the proceeds of the real property.
In this securitization transaction the original secured party is granting the proceeds, the actual required collateral to the real property and hypothecating that proceed as the payment intangible, which is the transferable record on the obligation.
So, you have to be able to show that it's under revised article nine; it does not apply to liens on real property. It may apply to title loans, student loans, and unsecured obligations, but it does not apply to liens on real property.
Remember, it's either you sold the contract in its entirety to a successor and interest through a true sale; or you sold the underlying tangible value of the contract.
Remember when people paid off their loans and they received their notes and their deed back, and they would have deed burning parties?
That doesn't happen anymore because that transactional scheme where that was your note, that you made and negotiated with a bank that could accept it, deposit it, and give you real money for a loan so you could purchase the property. That’s the savings and loan model.
In that transaction the bank you contracted with actually risked giving you real money, and was going to hold that thirty year instrument until its full rate of return. Its portfolio division wanted to buy that obligation and they underwrote you as your credit worthiness and they gave you the loan. You had skin in the game, you qualified financially and they were willing to take a risk on you. That was a real contract between you and the bank.
But what happened with the securitization bubble is they lifted the Glass–Steagall Act and the Gramm Bliley Leach Act and they made way for this transactional scheme were they could divert the risk of creating the money, which was done by lying and cheating the certificate holders through a perspective supplement which was pre-fabricated on the yield spread of those securities, under the nineteen thirty three, thirty four Security and Exchange act.
So they went to Standards & Poor’s and they got all those credit enhancements and they pre-sold those securities. Well that’s what the special deposit is for the REMIC trust, the trust vehicle; the special purpose vehicle. So, through special deposit, they generated those funds with the sale of the securities, that’s what makes the credit swaps available for the sponsor bank, to work with the originator to the table fund transaction.
Once you’re able to understand the blue print of the transaction and then you set the order of operations in place, and then you couch the interested parties, and then couch their capacity, and then what are they negotiating and what’s its statutory intangible interest, and what governs that, and once you set the mouse trap in place, and it can follow the order of operation it’s not that complicated.
To get to the root question you just have to be able to see all of that and to be able to understand the root question.
The root question is “in what capacity did you sign the note (as maker/issuer) or as an (accommodation party/guarantor)?
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