2022: Recap of what we know about foreclosures and securitization
by Neil Garfield
Here is a line from another lawyer that I spoke with:
“The investment banks were not selling securities and they can’t say that they were because if they did say that then they would be saying that they were subject to registration requirements for initial public offerings. Their entire position is based on the assertion that compliance with SEC rules is barred by legislation in 1998-1999.
The investment banks were borrowing money under the false label of “certificate” that was nothing more than a nonconforming non negotiable unsecured discretionary promissory note — i.e., the common moniker of “IOU.” So it was a loan and not the sale of any security. Hence, no securitization. The use of SEC.gov is a ploy.
Similarly, homeowners were not borrowing money; they were getting paid for their appointment as issuers of base instruments used for the “sale” of “Certificates” and other derivative products by the investment banks. So no loan and no loan account despite the issuance of the promissory note and mortgage.”
STRATEGIES AND TACTICS
There are several stages or phases of confronting the banks:
1. Start the confrontation early — creating tracks in the sand:
o Complaint to CFPB
o Complaint to State AG
• Challenging Notices in Court:
o Notice of Substitution of Trustee
o Notice of Delinquency
o Notice of Default
2. Defending Foreclosure Process:
o Defensive pleadings
Petition for TRO (nonjudicial)
o Post Judgment and Post Sale Motions and Actions
Change of parties
Notice of payment to a third party
o Proactive and Offensive Strategies and Tactics
Collateral lawsuit for Declaratory, Injunctive and Supplemental Relief
Bad faith claims against title insurers
Actions to reform original transaction
Offers of Judgment and Offers to Pay
Each one of the above is an expenditure of time, money, and effort. Each step up the ladder increases the total amount spent in fees on each step. Each step requires investigation, research, and consultation with a qualified, licensed forensic expert. Depending upon the resources of the homeowner, the goal can be set higher and higher up to and including the probability (no guarantee) that the homeowner will win and may even have grounds to file a quiet title action after defeating the foreclosure claims. Each step requires greater and greater time consumption for the lawyer.
Lawyers who assert representation of the opposition have received instructions to litigate far beyond the point when it is obvious they’re likely to lose. This tactic has been sued for centuries basically relying on the premise that the weaker opponent is not the one who lacks facts or law, but rather the one who lacks financial resources or will to continue.
Each of the above steps represents an opportunity to obtain at least a somewhat favorable settlement result. But none of them presents a guarantee nor will any favorable result, settlement, modification, or conclusion unless the homeowner persistently and aggressively litigated each issue and is able to withstand the initial losses with judges who don’t believe that homeowners have any meritorious defenses.
THE NEW DESCRIPTION FOR BACKGROUND OF TRANSACTIONS WITH HOMEOWNERS THAT ARE LABELED AS MORTGAGES
From the inception of the mortgage meltdown individual judges across the country have found that the evidence to support foreclosure claims — or any claims relating to an unpaid loan account — are absent or insufficient.
The clear conclusion is that most if not all of the labels used by the financial industry are and have always been meant to deceive, mislead and confuse people who are not versed in current investment banking practices. These labels include but are not limited to the following:
• Loan account number
• Loan account
• Payment History
• Attorney in fact
• Power of Attorney
• Securities administrator
• Mortgage acquisition trust or company
• Securities Administrator
• Risk manager
• Title Insurer
• Title insurance
• Credit default swap
• Mortgage loan schedule
• Mortgage-backed security
• Secured and unsecured
All of the above are valid legal terms. But in the securitization and foreclosure infrastructures that are fabricated, they don’t mean what most people think they mean. As a result, most homeowners end up expressly or tacitly admitting facts and laws about which they know nothing. By denying both the express allegations and the implied assertions, the homeowner vastly increases his or her chances of success.
The fundamental issues in virtually all residential foreclosures that have been revealed and established, and set forth on record in findings of fact and conclusions of law by judges, administrative agencies, and law enforcement all revealed by investigation and litigation Discovery and cross-examination) are the following:
1. When tested, all of the presumptions attached to apparently facially valid documents fail.
2. The lynchpin for all such attempts is the ability of a lawyer to say and submit almost anything under the legal doctrine of litigation immunity. Unless the attorney can be shown to have actual knowledge of the falsity of his assertions to the court, he or she is protected. Deceitful players can supply the lawyer with false documents and false statements that will only be uttered in court by the lawyer.
3. The issues that are not being raised now are those attached to the “Payment History” and other records that are proffered to the court as business records that are exempt from the rule against hearsay. Those records are offered as though they were records of a “servicer” who receives, processed, accounts for, and disburses money that is paid or extracted from a homeowner or his or her home. 1. But such companies that are claimed to be “servicers” do not perform any of those services and all information submitted under their name is supplied by third-party companies who answer to investment banks, not the “servicer”. The records and the Payment Histories are false documents containing mostly false information and implied information about “loans.”
4. By the time the “case” goes to court, there is no loan account receivable on the books and records of any person or business entity. Enforcement of a promise to pay is therefore barred under current law.
5. The proceeds from the liquidation of property using the foreclosure process go to investment banks who receive such funds as additional revenue. Neither payments from the homeowner nor money from foreclosures ever reduces any loan account receivable due from them because no such account exists.
6. Securitization as it is now used in practice results — in substance — in the immediate payoff of the actual, virtual or equitable loan account. By not recording receipts as credits to a loan account, the players maintain the illusion that the loan account remains unpaid until they voluntarily stop claims of rights to administer, collect or enforce the false representation of an unpaid debt.
7. All such foreclosure claims use false information on fabricated documents that are forged, backdated, and robosigned to create the illusion of an existing valid transfer of the nonexistent loan account.
8. Because most homeowners do not possess the required resources of time, money, and energy and because government agencies have failed to enforce even their own settlements agreements with players who promise to stop using fabricated documents, the defense side of these cases is rarely litigated in proper fashion.
9. Favorable trial court decisions for homeowners who invest in their defense are mostly kept out of sight and under-reported because they are all confined to the trial court level which does not receive the attention given to appellate decisions.
10. Favorable appellate court decisions are virtually nonexistent — except for extremely narrow technical issues. This is because when the homeowner persists and obtains a victory in trial court one of two things happens:
1. A confidential settlement that often includes expungement of the court record.
2. No appeal: the risk of an opinion being issued, even if the foreclosure lawyers prevailed, was far greater than the loss of the case.
The Peculiar Corruption at the Heart of Most Foreclosure Cases
by Neil Garfield
I would ask HUD, and CFPB why they are not investigating and fining entities like PennyMac and Wells Fargo who frequently start cases in which the lawyers claim they are the creditor and then later admit to only being the servicer without ever actually identifying the party who maintains and a trust account or a loan account receivable. In what other universe would a judge hear “OK I am not the Plaintiff” and let the show go on anyway?
And maybe the key question is this: Why do you regulatory agencies continue to promote the idea that (a) foreclosures are used to repay debt and (b) that the investment banks issuing certificates were issuing mortgage-backed securities. Where is the SEC on this?
Even the most cursory investigation would reveal that neither of those concepts is true. And the only reason that almost everyone believes otherwise is that the agencies whom we are supposed to trust, are saying things and acting as though there is no need for an inquiry.
I have homeowners losing their homes and starting arguments with me because they don’t understand legal procedure or the elements of a prima facie case. Here is the bottom line: Homeowners generally cannot pay for a proper legal defense which can cost thousands if not tens of thousands of dollars. They are losing their homes because they are prevented from defending their homes.
But homeowners and other consumers who are using payments plans and other financial instruments of mass destruction have no reason to know about legal procedure, rules of evidence, pleading, motions, hearings, statutes, case decisions, rules, regulations, and orders.
Wall Street is getting away with the largest economic crime in human history simply because virtually all access to the courts has been chilled, stymied, or eliminated. Any attempt to use collective action and pool resources is met with opposition from the FTC and even the bar associations.
And the reason they have the burden of defending their homes against immoral, illegal, and inequitable claims masquerading as attempts to pay off nonexistent loan accounts is that the regulatory agencies are not doing their job.
Who Owns Your Mortgage Note?
Have you ever asked who owns your mortgage note? A better question to ask is, “If I paid off my mortgage loan tomorrow, would I get clear and equitable title to my real property?” If your mortgage loan contract was converted into a mortgage backed security and sold to an investment trust on Wall Street you might not!
If you are thinking of applying for a loan modification, or refinancing through the Home Affordable Refinance Program (HARP), Home Affordable Modification Program (HAMP), or other program(s) under the Making Home Affordable (MHA) initiative there are a few things to consider.
First, remember that the entity who claims to own your mortgage loan is not automatically the same entity that may be servicing your mortgage loan. A loan servicer is a debt collections company that sends you mortgage statements, takes your payments each month, and if you have an escrow account, pays your homeowner’s insurance and property tax bills. But who really owns your mortgage loan?
If you want to find out here are a few things you can do:
- Ask the servicer. Your loan servicer is legally obligated to tell you the name, address, and telephone number of the owner of your loan as shown in their records. It’s a good idea to ask them in writing officially with a “Qualified Written Request” via certified mail while keeping a log of your communications. The name of your servicer should be on your mortgage statement, but you can also use the MERS link below.
- Original lender. Your loan may have never been sold, and still kept as a “portfolio loan” with the original lender. That’s the way loans used to be done!
- Fannie Mae. In reality, many loans are sold to FNMA aka “Fannie Mae”. See Fannie Mae loan lookup tool.
- Freddie Mac. Similar story with Federal Home Loan Mortgage Corporation (FHLMC) aka “Freddie Mac”. See Freddie Mac loan lookup tool.
- Mortgage Electronic Registration Systems, Inc. (MERS) is a big online registry designed to replace the costly process of publicly recording mortgage ownership at the local government level with a private electronic version that allows the swapping of mortgages with no friction at all. MERS tracks both the servicing rights and ownership of mortgage loans in the United States, although the accuracy has been called into question. See MERS ServiceID lookup tool. You can also call them at 888-679-6377 FREE.
- Search the Securities and Exchange Commission (SEC) for the alleged trust that claims they are the owner of your mortgage loan: https://www.fraudstoppers.org/how-to-search-the-sec-for-a-securitized-trust
- Register for a Free Mortgage Fraud Analysis and Securitization Search. Complete our Mortgage Fraud Analysis form and we will conduct a free securitization check to see if your mortgage loan contract was converted into a mortgage backed security and who really owns your note. If your loan was securitized than you may have legal standing to sue your lender, or current loan servicer, for mortgage fraud and quiet title. Find out more by completing our Mortgage Fraud Analysis form or call us at 773-877-3655 and we will help you get the facts and evidence you need to get the legal remedy you deserve.
Cases like the Glaski v. Bank of America and Jesinoski v. Countrywide Home Loans may have provided hope for homeowners who were victims of mortgage and foreclosure fraud. But they did not strike at the heart of the real problem behind the securitization of millions of mortgage loans.
The Glaski decision states that if some entity wants to collect on a debt they must first legally own that debt. Furthermore, if that entity is claiming ownership by way of an Assignment, it must prove that Assignment is legally valid.
The Jesinoski case addressed a borrower’s right to rescind, or cancel, their mortgage loan contract under the Truth in Lending Act (TILA) by only providing written notice to the lender, without filing suit. A loan is rescinded at the time the rescission letter is mailed. If the lender wants to refute or fight the rescission they must file an action to do so, and they have limited time to do so.
If your mortgage was securitized (the practice of pooling mortgages and selling their related cash flows to third party investors as securities) then it was part of a table funded transaction. In a table funded transaction the borrower named on the note is NOT in debt to the lender (“Pretender Lender”) because they signed the note in the capacity of an Accommodation Party, or co-signer for the purpose of incurring liability on the instrument without being a direct beneficiary of the value given for the instrument!
The broker, or originator, of the loan is pretending to loan money to the alleged “Borrower“, but in reality they trick the alleged “Borrower” into co-signing on a note that is pledged as collateral on a warehouse line of credit with the funding bank.
It is illegal for banks to loan credit, they can only loan money!
But if the Pretender Lender is not the entity putting up the funds, then there is no underlining indebtedness between the alleged “Borrower” and the originator who is named on the note. And if there is no underlining indebtedness between the parties named on the note, then the mortgage (or deed of trust) vaporizes into nothingness, and is legally unenforceable as a matter of law.
If your mortgage loan contract was part of a table funded transaction and converted into a mortgage backed security that was sold to an investment vehicle, or trust, on Wall Street, then you may have legal standing to rescind your mortgage loan contract, and sue your “Pretender Lender” for Special Damages equal to triple the original amount of your note, plus clear and equitable title to your home!
Fraud Stoppers is part of a National Private Members Association that provides back office litigation support to law firms, foreclosure defense advocacy groups, and pro se litigants nationwide. Our Private Members Association can help you sue your lender for mortgage fraud, with or without an attorney.
Then after our free mortgage fraud analysis is done, we can scheduled a free potential cause of action consultation to discuss your loan and lawsuit in detail and help you get started filing your state and federal lawsuit for the remedy that the law entitles you to, and that you deserve!
You can save 60% to 70% in legal fees when you get your lawsuit started yourself, Pro Se, (without an attorney), and then bring in a local attorney to help you at trial, where you need them the most! This way you can get the best of both worlds: Save money in legal fees, and get the professional help you need at the same time!
FRAUD STOPPERS Private Members Association (PMA) has a PROVEN WAY to help you save time and money, and increase your odds of success, suing the banks for mortgage and foreclosure fraud.
Our primary focus is helping you get clear and marketable title to your property by arguing that the actions of the banks have made the security provisions of the mortgage/deed of trust unenforceable as a matter of law.
Stop Foreclosure, Sue for Breach of Contract
Now is the perfect time to stand up for your legal rights and sue for beach of contract, mortgage fraud, and foreclosure fraud because the legal tide is beginning to turn, and homeowners are starting to win! In 2016 the California Supreme Court ruled in Yvanova v. New Century Mortgage Corporation (Case No. S218973, Cal. Sup. Ct. February 18, 2016) that homeowners have legal standing to challenge an assignment of the mortgage loan contract in an action for wrongful foreclosure on the grounds that the assignment(s) is/are void. Obviously if the court had ruled differently, the banks would have had carte blanche to forge mortgage assignments with wild abandon. In fact, without a system of endorsements and assignments it would be impossible to determine who has a legitimate interest in the property!
In THE PAPER CHASE: SECURITIZATION, FORECLOSURE, AND THE UNCERTAINTY OF MORTGAGE TITLE ADAM J. LEVITIN writes “the mortgage foreclosure crisis raises legal questions as important as its economic impact. Questions that were straightforward and uncontroversial a generation ago today threaten the stability of a $13 trillion mortgage market: Who has standing to foreclose? If a foreclosure was done improperly, what is the effect? And what is the proper legal method for transferring mortgages? These questions implicate the clarity of title for property nationwide and pose a too- big-to-fail problem for the courts.
The legal confusion stems from the existence of competing systems for establishing title to mortgages and transferring those rights. Historically, mortgage title was established and transferred through the “public demonstration” regimes of UCC Article 3 and land recordation systems. This arrangement worked satisfactorily when mortgages were rarely transferred. Mortgage finance, however, shifted to securitization, which involves repeated bulk transfers of mortgages.
Like many other cases, current trial court decisions are getting reversed because the courts are waking up to the reality of the rule of law. What they have been following is an off the books rule of “anything but a free house.” However a recent Yale Law Review Article eviscerates the assumptions of a free house for the homeowners and destroys the myth that somehow that policy has saved the nation. You can read the Yale Law Review article “In Defense of “Free Houses” for more information on this tide change.
To facilitate securitization, deal architects developed alternative “contracting” regimes for mortgage title: UCC Article 9 and MERS, a private mortgage registry. These new regimes reduced the cost of securitization by dispensing with demonstrative formalities, but at the expense of reduced clarity of title, which raised the costs of mortgage enforcement. This trade-off benefited the securitization industry at the expense of securitization investors because it became apparent only subsequently with the rise in mortgage foreclosures. The harm, however, has not been limited to securitization investors. Clouded mortgage title has significant negative externalities on the economy as a whole.
If your loan contains fraud or it was securitized then your lender may have breached your mortgage loan contract, and therefore your mortgage loan contract could be legally challenged in a court of law. If your mortgage loan contract is declared legally void, then any assignments of the mortgage loan contract, or subsequent assignments, could also be declared legally void.
Securitization is the process of taking an asset and transforming them into a security. A typical example of securitization is a mortgage-backed security (MBS), which is a type of asset-backed security that is secured by a collection of mortgages. Keep in mind that it is perfectly legal for banks to create mortgage-backed securities (MBS’s); however there are significant legal ramifications that will either harm you, or benefit you, depending on what actions you take in response to the fact that your mortgage or deed of trust is legally void resulting in your property, in reality, being unsecured, just like a unsecured credit card debt. What’s in your wallet?
This is why we recommend that you take immediate action and sue for the remedy the law entitles you to, and that you deserve. Treble damages and clear and free title to your home. Not sure if your loan contains mortgage fraud or if it was securitized, no problem, we will do a free mortgage fraud analysis and free Bloomberg securitization search for you.
Many of the programs that had modest success in the early days have fallen into disfavor as banks have enacted strategies to counter their progress. The banks are not going to go down without a serious fight. They have a large arsenal of tools to use, and the legal muscle to keep the industry off balance. This is not a static game. The reason that banks have been successful, for the most part, in protecting the large number of mortgages that were securitized is that there is an intricate web of legal theories that they hide behind to justify what they have done. In effect, they have created a shell game where the ball seems to move around in defiance of the laws of physics.
The banks are relying on a complex interaction between UCC 3 commercial paper law, UCC 9 securitization law, bailment law, agency law and local laws of the jurisdiction where the property is located. They would have us believe that what they have been doing since the 1970’s is perfectly legitimate. Many lawyers who have challenged the banks have gotten close to exposing the scheme only to find that judges retreat away from the complexity of the legal theories involved and fall back on procedural barriers under the auspices of protecting the equitable interests of the banks and their agents.
FRAUD STOPPERS Foreclosure Defense Program has moved the bar forward in many substantial ways:
- Our Private Administrative process is a targeted approach to Informal Discovery:
- 3-501. PRESENTMENT or States equivalent
- Mortgage Error Resolution/Request for Information: If you believe there is an error on your mortgage loan statement or you’d like to request information related to your mortgage loan servicing, you must exercise certain rights under Federal law related to resolving errors and requesting information about your mortgage loan. If you think your credit report, bill or your mortgage loan account contains an error, or if you need more information about your mortgage loan, you send a written letter concerning your error and/or request.
- Cutting edge mortgage fraud examination and court ready lawsuits and trial ready evidence to win your case
- Nationwide foreclosure defense attorneys and Pro Se litigation education and support products and services
Subsection of Presentment (example Covenant 8 of UCC3 Note) shows NOTE and under paragraph 1 states: “BORROWER’S PROMISE TO PAY: In return for a loan that I have received, I promise to pay….
MULTI STATE FIXED RATE NOTE–Single Family–Fannie Mae/Freddie Mac UNIFORM INSTRUMENT Form 3200 1/01 (page 1 of 3 pages) Covenant:
I and any other person who has obligations under this Note waive the rights of Presentment and Notice of Dishonor. “Presentment” means the right to require the Note Holder to demand payment of amounts due. “Notice of Dishonor” means the right to require the Note Holder to give notice to other persons that amounts due have not been paid.
- 15 U.S. Code § 1692g – Validation of debts
Often a debt collector cannot validate a debt and therefore cannot legally enforce collections.
- Truth In Lending Act (TILA RESCISSION) codified in 12 CFR Part 226 (Regulation Z); particularly§ 226.34 Prohibited acts and §226.32 sub-paragraph (ii) et seq. predatory lending practices
A mortgage loan covered by the Truth in Lending Act may be rescinded by mailing a Rescission Letter to the purported lender, forcing the purported lender/creditor to oppose that rescission with a lawsuit within 20 days or lose all opposition rights.
- The primary focus of the legal aspect of our program revolves around taking the theories and best practices that have been most successful around the country and make refinements.
“Here, the specific defect alleged is that the attempted transfers were made after the closing date of the securitized trust holding the pooled mortgages and therefore the transfers were ineffective.
- Our program seeks to avoid getting mired in the complexity of the various areas of law involved, instead focusing on a simple, focused approach that makes it harder for judges to avoid the strength of our core arguments.
- The PMA trustees and executive team have a diverse set of skills and significant experience in the core areas that will improve the success factors for our operations.
We have spent an exhaustive amount of time analyzing all of the cases that have been successful in resolving mortgage securitization problems. We have designed our legal information litigation strategy to hit the banks hard and fast where they are most vulnerable.
Our primary focus is on getting clear and marketable title to the property by arguing that the actions of the banks have made the security provisions of the mortgage/deed of trust unenforceable.
Instead of fighting the foreclosure itself head-on, we argue that none of the banks or their agents has the right to enforce the foreclosure provisions of the Mortgage/Deed of Trust. In effect, if none of the banks have standing to enforce the foreclosure provision, we are entitled AS A MATTER OF LAW to a declaratory judgment of Breach of Contract (Security Agreement) that is res judicata, i.e., a permanent ban on foreclosure.
The Stand & Fight Program is a complete program that provides you with everything you need:
- Administrated Process
- Court Ready Chain of Title Investigation and Signed Affidavit
- Complaint along with all exhibits
- Legal Research
- Legal Briefs
- Case Management for Local Civil Rules of Procedures
- Training and Support
Take action right now and get the FACTS and HELP that you need to gain the legal remedy that the law entitles you to, and that you deserve!