A Promissory Note is NOT a debt. It is evidence of the debt and terms of repayment.

Neil Garfield

I can remember back when Nova Law Center was an old building on what and been a World War II airstrip. My fellow students and I would satisfy our need for speed on those runways. That was in 1974.
I also remember my contracts professor, Samuel Bader (RIP). He pounded into our heads a simple but elusive fact of law. The note is not the debt. it is evidence of a debt. And he said that those who can remember and use this fact of law would do very well and those who couldn’t remember it or know how to use it would be condemned to the dustbins of historical law practice.

Securities brokerage companies marching under the flag of an “Investment Bank” understood this fact of law. The entire securitization scheme was based upon their knowledge of this fact and their knowledge that practically nobody makes that distinction when arguing a case.
Here is why it is important.

Anyone who can prove they gave money, property or services to another person can clearly claim that they must be paid, even if the amount to be paid was not clear at the time of the origination of the transaction. That is the debt. It exists even if there is no written instrument. It is enforceable without a written instrument. If you have a witness to the transaction all the better but you can show up as the sole witness to describe what happened and why the other person owes you money — without a single document.

The execution of a promissory note is evidence of a debt and the terms of repayment. But it is virtually worthless if the execution of the note is not merged with an underlying obligation as described above. Otherwise, there would be two liabilities arising from one transaction. A note without an underlying obligation is worthless.

Under modern law possession of the note PLUS a grant of authority to enforce it FROM the owner of the underlying obligation (i.e., the person to whom the money is legally owed) raises the status of a possessor (e.g. package delivery service) to a holder entitled to sue for recovery using the note as evidence of how the damages should be calculated and used in the final judgment in your favor.

THAT final judgment entitled you to a right of execution upon any property that is not protected by things like homestead laws. It does not entitle you to enforce a separate contract (mortgage) that says if you don’t pay the debt, your house can be sold at auction.

Nobody in any U.S. jurisdiction has the legal right to seek a foreclosure judgment or to use the power of sale in nonjudicial foreclosure UNLESS they have purchased the underlying obligation for value. This is how thousands of homeowners have escaped the gallows — by hammering on their right to seek evidence corroborating the fact recited in an assignment of mortgage that someone paid $10 and other valuable consideration.

This issue has become confused for many judges and lawyers. The mortgage or deed of trust will often state that the pledge of collateral contained within the mortgage instrument is meant to guarantee payments scheduled under the terms of the promissory note. Such provisions are in conflict with the laws of every U.S. jurisdiction. each of whom has adopted verbatim UCC 9-203.

It is true that you can introduce the promissory note as evidence of the debt and the schedule of required payments. But violation of the note provisions does not entitle anyone to pursue foreclosure without buying the underlying debt.

Many trial courts and appellate courts have latched onto the view that the possessor of the note is entitled to foreclose. That is clearly wrong and has been wrong for centuries. We allow for some liberality for people who want to get a judgment based upon the note alone, although ultimately at trial if there is no underlying obligation and no original transaction then there was no consideration. Such notes are subject to various defenses. While the actor seeking to enforce the note might get past a motion to dismiss they will most often lose at trial.

It is equally important that the reader take note of how the misapplication of the laws contorts reality and liability. Each maker of a promissory note is taking the risk that someone might actually pay for ownership of it and any underlying obligation. But no underlying obligation is conveyed if the grantor did not own it.

Such a purchaser under modern law is virtually immune from any normal defenses except fraud and such. The purchaser under that scenario is called a “holder in due course,” meaning they paid for it, without knowledge of the maker’s defenses and that they made the purchase in good faith.

The contortion of the rules surrounding enforcement of debts that use notes as evidence is further complicated by the misapplication of the laws governing holders in due course.

For good reason, no entity seeking foreclosure will claim to be a holder in due course. The reason is that they didn’t pay for it (violating 9-203), and/or they did not purchase it in good faith without knowledge of the maker’s defenses. If they alleged that they were holders in due course then they would add to the list of prima facie elements of this case — namely that they really and truly did pay for the assignment of the mortgage along with the underlying obligation.

So the current actors playing at foreclosure merely allege holder status (which is not true) and they expect to be treated as holders in due course. Unfortunately, the courts often oblige. But the failure of the judge to stop such antics is mostly based upon the weaponization of the judicial system, requiring the judge to accept the allegations as true and not to litigate or judge any issue that is not contested.

Even if the judge thinks there is doubt as to the status of the holder in due course or even just a holder, the judge is not allowed to turn the case around by raising objections that should have been raised by the affected party.

By conceding facts that are not in evidence, the maker is doomed to pay off at least one liability to a party that has no right to receive it.

Pig in a Poke

(Or is it?)

 

SO, WHERE DO WE BEGIN?

Let us start with “I really don’t understand this”. Be honest with yourself. If you did, I would have seen headlines by now.

Let’s look at [who][what][where][when][how]

[who] – Mortgage Bankers Association and its cronies. [what] – Faulty Security Instruments

[where] – Just about everywhere [public land records][judicial systems][stock market]

[when] – Beginning of design and creation of electronic promissory note registry [eNote] Registry.

[how] – Utilizing Transferable records [payment intangibles] as lawful [tangible] real property records

[ Not necessarily in that order]

CAN’T SAY ENOUGH ABOUT THIS ONE

I mentioned this many times that James McGuire explained this stuff years back in “Have A Note”. That document is full of education. There are also many other documents and charts providing educational information in regards to this MERS/GSE scheme. Actually James goes deeper than that. So, there is nothing new with my information, this is just my attempt to help others better understand what most appear not to.

MORAL OF THE STORY

Ever heard of the phrase “Pig in a Poke”? It dates back to the middle ages. Maybe it will help you better understand what the banks have done and are continuing to do. This “pig in a poke” scheme utilized a “pig” and a “bag” which purportedly contained the pig. However, clever buyers failed to look in the bag to see if it really was a live pig. Instead, the clever buyer found out after the purchase, that there was no pig, only a cat. Pigs were a source of meat to eat. The cat was not. Hence “Buyer Beware”.

As for the banks and their associates, I think the phrase “Cat in a Bag” used in other particular countries fits this Intangible scheme more suitably because now the “Cat is out of the Bag”.

Take the pig in a poke scenario, and replace the [word] pig with a [tangible] Real Property mortgage, replace the [word] bag with MERS and replace the [word] cat with a Transferable Record [eNote]. Investors can see the eNote assuming it is a [tangible] real property mortgage, and just like the clever buyer, they too invested in a pig in a poke. The cat in the bag reveals that it is not a pig. The [transferable record][cat] reveals that it is not the [tangible promissory note obligation][pig]. The real property mortgage like the pig was something of value, where the eNote[transferable record] like the cat was not worth value as like the pig was.

Hence “Buyer Beware”.

THE eGAME

CRAFTING THE WORD

Ever hear of the phrase “word crafting”? You have realized the banks lawyers, attorneys etc, whom are looked upon as artists in a sense, have honed their skills and have a tool chest full of ways to craft words to fit their needs in the “mortgage scheme”. Mark Twain once wrote; “The difference between the almost right word & the right word is really a large matter -- it's the difference between the lightning bug and the lightning.” The banks “word crafters” and their “almost right” words have deceived many.

THE CONCEPT [Money via Wall Street Secondary Market]

It starts with an evil mind to create design and implement an illusionary scheme that would involve many deceptions. When the can spills over, only then will you know how many and whom these worms are.

The National eNote Registry is a compliance vehicle to satisfy certain requirements imposed by the Uniform Electronic Transactions Act (UETA) and the federal Electronic Signatures in Global and National Commerce Act (E-SIGN) so that the owner of an eNote (the

Controller) would have legal rights similar to those that a “Holder in Due Course” has with a paper negotiable promissory note. – National eNote registry Requirements, 2003.

Did the “legal rights similar” part confuse you? “so that the owner of an eNote (the Controller) would have legal rights similar to those that a “Holder in Due Course” has with a paper negotiable promissory note.”

If you are only looking at the tangible world, you don’t see anything. If you realize there is a [tangible] world and an [intangible] word, you probably understand that the [Controller] of the [eNote] has similar legal rights as if the [eNote] were a [tangible] paper negotiable promissory note. This does not mean the “Controller”[servicer] is a “Holder in Due Course” of a

[tangible] paper promissory note. The eNote has only similar characteristics. Since skills of word crafting are in action here, the clever representative of the “Lender” can bravely state or claim “So and so is the holder of the Note”. Sure they can say that. What is not being asked is “What Note is so and so the holder of? Is so and so the holder of a tangible promissory Note or the holder of an Intangible Electronic Promissory Note?”

With an intent to deceive whomever believes in these “payment intangibles”, these evil minds created a crime largest in U.S. history. Only time will tell. What is worse is the possibility of many people working in the corporate American government may be caught up in it also.

Duh? What is even worse than that is so many unsuspecting pension plans and 401k’s are invested in these [payment intangibles][transferable records] as [investments].

TOO BIG TO FAIL?

To begin with, it is probably a general consensus that that banks failed to keep up with the tangible mortgage paperwork. Especially the tangible stuff which makes up the secured obligation and also the collateral to secure that obligation which the courts and the banks say the

“mortgage follows the note” for a debt to be considered secured.

What seems to be the clog in the wheel as I see it is that most people only understand or possibly assume an understanding of a [tangible] mortgage [pig], but do not realize that an [intangible] mortgage is being used instead Hence a [Pig in a Poke][Cat in a Bag]. It appears that since the banks have slid under the radar since 2000 or even prior with a “thing” they call an

eMortgage, which is an electronic mortgage [cat] that is not the same as a tangible paper mortgage obligation [pig].

THE REAL DEAL [Real Property]

A real property mortgage starts with a [tangible] paper promissory Note [in writing] and collateral, probably a security instrument [paper mortgage][in writing]. There are (2) two party’s involved, a [borrower] and a [lender]. Both instruments together are purported to be a secured indebtedness. Prior to expiration of temporary perfection, the security instrument would be recorded in the county where the real property is located to continue perfection of that secured indebtedness. In Texas, this satisfies §192.001, Tex. Loc. Govt. Code requirement. Look at your state code if in different state. Each state has laws that govern real property. Any need to look at the UCC? Nope.

So, now you have the [borrower] and the [lender]. Also known as [obligor] and [obligee]. Also known as [debtor] and [creditor]. Also known as [grantor] and [grantee]. So many words for supposedly the same entities? Why? But what about [account debtor]? Did you realize there was an account debtor involved?

Through trickery another party somehow got involved to provide an additional illusion. A Bankruptcy Remote called MERS [Mortgage Electronic Registration Systems, Inc.] Could you possibly call it “Mutilated Every Recordation System”? It did a good job at it.

In Carpenter v. Longan, the U.S. Supreme court made it clear in stating the “mortgage follows the note”. The Texas Supreme Court again repeated this statement back in the 1930’s in

West v. First Baptist Church of Taft. Back then it was paper. Electronic mortgages were not around back then.

AN ILLUSION [The Transferable record called an eMortgage]

So why MERS? Electronic mortgages are eMortgages as the mortgage bankers association [mba] calls them. But the big problem with these eMortgages is that they are electronic. The way the [mba] has allowed its banks to apply ESIGN and UETA are absurd. Illegal at the most. Securities fraud too if you understand. Let me explain.

IN THE BEGINNING [ TANGIBLE mortgage loan]

The [originating lender] supposedly loans a [potential homeowner] money to purchase real property [paper mortgage loan]. The [potential homeowner][grantor] provides collateral in the form of title to real property that is conveyed to the [grantee] [potential homeowner] from the [seller][grantor] of the real property. Then the [grantor] [potential homeowner] conveys the real property to the [originating lender][grantee]. The [originating lender][grantee] provides title to real property to [trustee] until obligation extinguished. This was all accomplished with tangible paperwork involved. This should still be true today.

IN THE BEGINNING, PART II [ INTANGIBLE mortgage loan]

Take the above scenario and add an electronic twist to it.

When the [potential homeowner] originally and [tangibly] signed the paper promissory note or a contract with the [originating lender] to start the purported loan process, the [originating lender] scoured its electronic cloud [network] to locate a [warehouse lender] [could be another entity] that the [originating lender] as a [borrower] can obtain a line-of-credit. In turn the [originating lender][borrower] would pledge the [potential homeowner][borrower][grantor] [tangible] mortgage loan as a security to the [warehouse lender][lender] from the [originating lender][borrower] payment stream. The [payment stream] is monies that the [potential homeowner][borrower] would be paying to the [originating lender][lender].

For the [originating lender][borrower] eMortgage [eNote] to be considered acceptable to a government sponsored entity [GSE], specific guidelines must be met. One of the requirements is to use an electronic registration system for tracking eNotes. MERS is mentioned in GSE eMortgage implementation guideline books as the registration system to use.

All of this activity so far is accomplished prior to the [potential homeowner][borrower] closing on the [tangible] [paper mortgage loan]. Without the knowledge of hypothecation, the [potential homeowner][borrower] unknowingly signed a [tangible] security instrument that unbeknownst to the [potential homeowner][grantor] also included a third party that only functions in the [electronic transactions] world. In fact it only tracks [eNotes] called [transferable records]. The mba clearly described the “National eNote Registry”[NeR] back in 2003 that stated

this eRegistry does not track [tangible] paper promissory Notes. So why use MERS for paper mortgages? The “Pig in a Poke” eMortgage illusion.

PREMEDITATED ENOTE [ intangible mortgage loan]

Once the [originating lender][lender] holds a [potential homeowner][borrower] signature, the [originating lender][lender] as a premeditated act, determines a Mortgage Identification Number [MIN] to apply the [potential homeowner][borrower] paper mortgage loan to give the illusion to [everyone] that the [tangible] [paper mortgage] is registered and being tracked in a

“book entry system” called MERS orchestrated by members of this NeR.

Upon agreement between the [originating lender][borrower] and the [warehouse lender][lender] and in consideration for GSE requirements for eMortages [eNotes], these NeR entities register these premeditated MINS [eNotes] in the NeR, and through the agreement such as a MERS Warehouse Lender/Electronic Tracking Agreement, the [originating lender][borrower] will service such MINS in the NeR. This MIN [eNote] is then purchased and sold by investors either by the [eNote] or a partial interest in the [eNote].

In essence what you just read explains the loan process [eNote] an [account debtor][originating lender][borrower] created between itself and the [creditor][warehouse lender][lender][other Ner entity] in an intangible goods and services environment. This is not a [tangible] real property environment.

There is a very big difference. Real property is not governed by the Uniform Commercial Code [UCC]. Neither is real property governed by ESIGN and UETA.

Transferable records are personal property [payment intangibles] and not real property. Transferable records that are allegedly secured by real property are [payment intangibles] and governed by the UCC. Goods and Services are governed by the UCC. Hence the problem.

If the “Lenders” had followed the law, it might not be too bad, but the “Lenders” didn’t follow the laws. Instead the “Lenders” followed their lust for “greed”.

ACCOUNT DEBTOR [ intangible mortgage loan]

So what is a MERS member who registers and sells its [eNotes] called? They are called an Account Debtor according to UCC § 9-102. Definitions And Index Of Definitions

(3) "Account debtor" means a person obligated on an account, chattel paper, or general intangible. The term does not include persons obligated to pay a negotiable instrument, even if the instrument constitutes part of chattel paper.

If the MIN[eNote] information is viewed from something like a MERS Milestone;

In the image above, the [account debtor] American Mortgage Network, Inc is the party obligated on the MIN [eNote] which is held in an account [Org ID] registered on MERS eRegistry, which is by definition a [general intangible].

(42) "General intangible" means any personal property, including things in action, other than accounts, chattel paper, commercial tort claims, deposit accounts, documents, goods, instruments, investment property, letter-of-credit rights, letters of credit, money, and oil, gas, or other minerals before extraction. The term includes payment intangibles and software. - UCC § 9-102. Definitions

(61) "Payment intangible" means a general intangible under which the account debtor's principal obligation is a monetary obligation. UCC § 9-102. Definitions

From this example image above which reflects that American Mortgage Network, LLC registered an [eMortgage][eNote][payment intangible] in the MERS eRegistration System with a registration date of November 3, 2004. This example is proof of the [transferable record][eNote][payment intangible][electronic record].

The example would also show that American Mortgage Network, LLC would be considered the [account debtor] of the [payment intangible]. More on this later in the document.

Proof of this [payment intangible] scheme is clearly written in any security instrument involving MERS or a GSE. Public land records historically provides prime facie proof of the chain of title. Any [entity] involved in a lawful negotiation of the [potential

homeowner][borrower][grantor] [tangible] paper mortgage loan note, from originator to each subsequent purchaser would be identified in public land records via constructive notice to reflect a lawfully perfected chain of title.

What you do see in public land records is something the banks and the courts say can’t happen, bifurcation. Separation of the [tangible] note and [tangible] deed of trust [security instrument]. So, how did it happen. Answer is easy, simple ignorance. And it shows. Else this would have already been brought to light way before now.

IT TOOK TIME TO MAKE THIS WORK

How did it work you ask? It took some time to put this scheme in place, it didn’t just happen recently. The elevator version goes like this;

HYPOTHECATION [Pledging something they don’t have]

The “Lenders” decided to create a security instrument that was designed to give an illusion that the security instrument was a contract according to law <where ever>. What the security instrument actually accomplished was that it helped these “Lenders” in some demented state of mind, devise a way to confuse everyone with a combination of tangible and intangible, paper and electronic with a twist of law manipulation, making it the perfect “poke”.

This MERS/GSE security instrument simply allows the unsuspecting [potential homeowner][borrower][grantor] to unknowingly [tangibly] indenture the [tangible] security instrument and thus agreeing by ignorance with the [originating lender][lender] to separate the [tangible] security instrument from the [tangible] paper promissory note the [potential homeowner][borrower] indentured.

Through trickery, the [originating lender][lender] led the [potential homeowner] [borrower] to believe that the [tangible] mortgage would be registered with MERS. This is not true. What the [originating lender][lender] did was make scanned copies of the original [tangible] [mortgage] in an deceptive manner and [Offer] an identical MIN [eNote] [transferable record] electronically to investors in the secondary “payment intangible” market by claiming a value to the eNote.

There are severe problems with this MERS/GSE “eMortgage follows the eNote” scheme.

There is no eMortgage to follow the eNote. The “Lenders” themselves destroyed the [tangible] mortgage simply by “word crafting” within the four corners of the security instrument contract. Check it out for yourselves. It has been explained with many articles and charts along with where to find those sources to support it. What more could you ask for?

HOW IT WORKED

What happened in the eMortgage world is this. The [originating lender][lender] registered a MIN [eNote] with the MERS eRegistry. This MIN [eNote] is an electronic promissory note that is an intangible electronic record, called a transferable record. This [eNote] [MIN] is supposed to be governed by ESIGN and UETA. The illusion to this [eNote] is the misrepresentation that it is a [potential homeowner][borrower] tangible obligation when it is not. It is information retrieved from scanned copies of the once [potential homeowner][borrower] tangible paper instruments now attached to an [eNote] [MIN].

Let us look at the [eNote] transferable record that MERS members rely upon.

First the “Scope” of the law. [Texas Business and Commerce Code]; [See also 15 USC 7003]

Sec. 322.003. SCOPE. (a) Except as otherwise provided in Subsection (b), this chapter applies to electronic records and electronic signatures relating to a transaction.

• This chapter does not apply to a transaction to the extent it is governed by:
• a law governing the creation and execution of wills, codicils, or testamentary trusts; or
• the Uniform Commercial Code, other than Sections 1.107 and 1.206 and Chapters 2 and 2A.
• This chapter applies to an electronic record or electronic signature otherwise excluded from the application of this chapter under Subsection (b) when used for a transaction subject to a law other than those specified in Subsection (b).
• A transaction subject to this chapter is also subject to other applicable substantive law.

Section §322.03 does not apply to a transaction governed by the Uniform Commercial Code [UCC] because there is no real property securing it. So are transferable records out when it comes to the UCC? Don’t worry, real property is not governed by the UCC either.

Sec. 322.016. TRANSFERABLE RECORDS. (a) In this section, "transferable record" means an electronic record that:

• would be a note under Chapter 3, or a document under Chapter 7, if the electronic record were in writing; and
• the issuer of the electronic record expressly has agreed is a transferable record.
• A person has control of a transferable record if a system employed for evidencing the transfer of interests in the transferable record reliably establishes that person as the person to which the transferable record was issued or transferred.

Is this what confuses you? Is it that the “Lenders” point more to (a)(1) claiming the [eNote] was the [potential homeowner][borrower] obligation? It is not. Section 322.03(a) contains “and”. (a)(1) “and” (a)(2) “the issuer of the electronic record expressly has agreed is a transferable record”. So, the [eNote] is actually an [intangible debt obligation] created by the

“registrar” of the [eNote] and not the [potential homeowner][borrower] tangible note obligation. This is a separate [electronic] obligation and not a [tangible] paper mortgage obligation.

The [eNote] is the only electronic record registered in the MERS eRegistry. MERS members use the MERS [eRegistry] to track the [eNote]. MERS does not track [tangible] paper promissory notes. So who tracks a [tangible] paper promissory note? They didn’t.

REALIZING IT NOW?

By now you are realizing that the [originating lender][lender][borrower] is an “account debtor” of the [eNote] according to the [UCC]. The [subsequent purchaser] of the [eNote] only receives the value the [eNote] is worth. But the [Enote] has no value. The only value reflected for the [eNote] is whatever value that was keyed in at the time of the creation of the [eNote].

Besides that, the “Lenders” stripped the monetary value from the [tangible] promissory note and somehow created the same value in an eNote. Can’t do that. Not lawfully anyway.

THE “MORTGAGE SERVICER” IS A SERVICER

OF AN ENOTE MORTGAGE

The [originating lender][lender] basically claims that it is the holder of the [original mortgage loan]. Through this claim, the [originating lender][lender] registers an [eMortgage] in the MERS eRegistry. The [originating lender][lender] sells the [eNote] to a [subsequent purchaser] [change of servicer notice]. The [subsequent purchaser][change of servicer notice] then sells the [eNote] to another [subsequent purchaser] [change of servicer notice] whom through the cycle of trading stocks continues the process. Until some [determined] time, the [subsequent purchaser] of the eNote somehow determines a default. Next step foreclosure.

If you read “Alvie Explains It”, I mentioned our original loan started out with American Mortgage Network, Inc. dba AMNET Mortgage as purportedly the Originating Lender. Then a month past and I received a notice from Wells Fargo Home Mortgage [WFHM] that is was the

“mortgage servicer” of my alleged loan. I also noticed the loan number had changed. That mystery is now solved. The original loan number was the [tangible mortgage loan] and the new number provided by [WFHM] reflected the [eNote] [subsequent purchase] and not the negotiation of the [tangible mortgage loan] as I was led to believe that [WFHM] was [servicing].

So we find that when the alleged [mortgage servicer] changes, the eNote was transferred to another MERS eMember although nothing is reflected in public land records. Why should it? It has nothing to do with the [tangible][paper promissory note]. It is only an electronic transaction with an [eNote]. For a negotiation of the [tangible mortgage loan], the Note would be indorsed and per governing laws, an [assignment of mortgage] would be reflected in public land records to provide constructive notice of a new secured creditor change. But that did not happen.

THE DEAD / ZOMBIE FILE

ASS IGNMENTS? [Movement of the eNote or “Electronic negotiation of the eNote”]

A MERS Milestone provides the proof of an “actual notice” MERS members refer to.

Through MERS eDelivery, and according to the above MERS Milestone, the [eNote] was transferred to Wells Fargo Home Mortgage [electronic eNote transfer from one investor to another investor]. But this [eNote] is not the [tangible] paper promissory Note [tangibly] indentured by the [potential homeowner][borrower]. MERS does not track a paper promissory note. MERS only tracks eNotes. Wells Fargo Home Mortgage never recorded its lien continuation in public land records. So who tracks the paper?

PUBLIC LAND RECORDS [ Messed with almost Every Record in the System]

What did happen in public land records was some “Vice President” or “Assistant Secretary” allegedly claiming to be a MERS officer records something typically called

“Assignment of Note and Deed of Trust” in public land records. This was and is still a distraction to lure many into the “Robo-Signer” scandal? It is a cover up. Why waste time on it. There are bigger fish to fry. This colorable [recordation] is only an illusion because the fraudulent

“Assignment of Note and Deed of Trust” which is an electronic record has nothing to do with the

[potential homeowner][borrower][grantor] tangible mortgage loan. This “Assignment of Note and Deed of Trust” is proof that there was an electronic transfer [electronic negotiation of the eNote] in the MERS eRegistry, but it does not prove neither negotiation of the [tangible promissory note] or the transfer of the tangible [security instrument]. Because neither of the contracts can legally or lawfully exist now. The design of the tangible [security instrument] removed all legality to such contract even before it was recorded in public land records. Then the value was stripped from the [tangible] promissory note and that [tangible] value was somehow placed into the eNote. How can that legally happen? It can’t according to laws of negotiation.

THE FORECLOSURE

Here lies the confusion to the MERS/GSE scheme. MERS members have made a serious mistake when it comes to defaults. As it is clear that MERS members conduct business with

eNotes and not tangible paper promissory Notes. More “Lenders” claiming title to a security instrument that was defeated before it was ever recorded into public land records. More than that,

“Lenders” are using the “Account Debtor” Obligation to confiscate the real property of owners whom lawfully own it [potential homeowner][borrower][grantor]. The security instrument, called a Deed of Trust in Texas, is not anything the “Lender” can lawfully use for enforcement. These “Lenders” will actually have a time trying to collect upon a tangible promissory Note when it is shown that the “Lender” actually stripped the value from that tangible note and claimed it in a transferable record. There is no value to a Note if the amount was taken away.

What should have happened when the “default” was declared was that the current

“Controller” should have foreclosed upon the Account Debtor. In the example above, it would be AMNET. The eNote [intangible obligation] was not created by the [potential homeowner][borrower], it was created by a MERS member who became the account debtor responsible for a payment stream that does not lawfully exist anymore. Actually it didn’t before.

THE END

It is amazing how a [potential homeowner] can become an unsuspecting victim at the beginning and can later become a “deadbeat” in the eyes of the court and of the people. Its amusing to hear people whom have very little knowledge of this scheme then pass judgment upon these unsuspecting victims of the largest crime in U.S. history. What is even more amusing is the fact that these “typical” people do not even realize they are involved in this also. They pay taxes. The banks get the last laugh.

Again, all you need to do is read the articles and charts created by James McGuire. He did all the leg work so you don’t have to. All you need to do is go and verify what’s already been verified. A challenge was put to the world a few years back about this “mishap” and it has not been proven wrong anywhere yet.

“O daughter of Babylon, doomed to be destroyed, blessed shall he be who repays you with what you have done to us!”

Peace be with you,

 

Notice of Default and Paragraph 22 of the Standard Mortgage

Some think that there has been a dry spell for wins of homeowners beating the big banks. However the decision below shows otherwise and is very important for a couple of reasons. First it gives us more of a confirmed road map of how to make defenses in certain cases that have facts similar to this case…i.e. violations of Paragraph 22 of the mortgage, in regards to a notice of default (NOD), which we knew about but this decision emphasizes the importance of this type of defense. But also important…..Judge Gantz is back in full swing helping borrowers fight against illegal foreclosures. You will recall that he wrote the Freemont decision, Ibanez, and others…but then he seemed to have lost some momentum. However, with this decision, Judge Gantz is back in full stride protecting us from the criminal banks and their illegal foreclosure practices.

 

FEDERAL NATIONAL MORTGAGE ASSOCIATION vs. ELVITRIA M. MARROQUIN & others

 

 

NOTICE: All slip opinions and orders are subject to formal revision and are superseded by the advance sheets and bound volumes of the Official Reports. If you find a typographical error or other formal error, please notify the Reporter of Decisions, Supreme Judicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us SJC-12139

 

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FEDERAL NATIONAL MORTGAGE ASSOCIATION vs. ELVITRIA M. MARROQUIN & others.1 Essex. January 9, 2017. – May 11, 2017. Present: Gants, C.J., Lenk, Hines, Gaziano, Lowy, & Budd, JJ. Mortgage, Foreclosure, Real estate. Real Property, Mortgage, Sale. Notice, Foreclosure of mortgage. Summary process. Complaint filed in the Northeast Division of the Housing Court Department on June 18, 2012. The case was heard by David D. Kerman, J., on motions for summary judgment. The Supreme Judicial Court granted an application for direct appellate review. Cody J. Cocanig for the plaintiff. Dayne Lee (Eloise P. Lawrence also present) for Elvitria M. Marroquin. Joshua T. Gutierrez, Daniel D. Bahls, & Andrew S. Webman, for Lewis R. Fleischner & another, amici curiae, submitted a brief.

1 Julio E. Vasquez and Christopher Vasquez. GANTS, C.J. In Pinti v. Emigrant Mtge. Co., 472 Mass. 226, 227, 232 (2015), we held that a foreclosure by statutory power of sale pursuant to G. L. c. 183, § 21, and G. L. c. 244, §§ 11- 17C, is invalid unless the notice of default strictly complies with paragraph 22 of the standard mortgage, which informs the mortgagor of, among other things, the action required to cure the default, and the right of the mortgagor to bring a court action to challenge the existence of a default or to present any defense to acceleration and foreclosure.

We applied this holding to the parties in Pinti but concluded that our decision “should be given prospective effect only.” Id. at 243. We therefore declared that the decision “will apply to mortgage foreclosure sales of properties that are the subject of a mortgage containing paragraph 22 or its equivalent and for which the notice of default required by paragraph 22 is sent after the date of this opinion,” which was issued on July 17, 2015.Id. We did not reach the question whether our holding should be applied to any case pending in the trial court or on appeal. Id. at 243 n.25.

We reach that question here, and conclude that the Pinti decision applies in any case where the issue was timely and fairly asserted in the trial court or on appeal before July 17, 2015. Because we conclude that the defendants timely and fairly raised this issue in the Housing Court before that date, and because the notice of default did not strictly comply with the requirements in paragraph 22 of the mortgage, we affirm the judge’s ruling declaring the foreclosure sale void.

Background. In December, 2005, the defendants2 secured a mortgage loan in the amount of $312,000 from American Mortgage Express Corporation (American Mortgage) and, as security for the loan, granted a mortgage on their home to Mortgage Electronic Registration Systems, Inc. (MERS), which American Mortgage had designated as the mortgagee in a nominee capacity. MERS subsequently assigned the mortgage to Bank of America, N.A. (Bank of America), as successor by merger to BAC Home Loans Servicing, LP, formerly known as Countrywide Home Loans Servicing, LP. After the defendants failed to make their mortgage payments, the loan servicer, Countrywide Home Loans Servicing, LP, on October 17, 2008, mailed the defendants a notice of intention to foreclose (notice of default). The notice informed the defendants that they were in default and set forth the amount due to cure the default. The notice warned in relevant part:

2 The mortgage loan was secured by the defendants Elvitria M. Marroquin and Julio E. Vasquez. The limited record before us suggests that Christopher Vasquez is Marroquin’s son, and that a motion filed by the Federal National Mortgage Association to amend the summons and complaint to include him was granted by the Housing Court judge. For convenience, we refer to “the defendants” throughout this opinion.

“If the default is not cured on or before January 15, 2009, the mortgage payments will be accelerated with the full amount remaining accelerated and becoming due and payable in full, and foreclosure proceedings will be initiated at that time. As such, the failure to cure the default may result in the foreclosure and sale of your property. . . . You may, if required by law or your loan documents, have the right to cure the default after the acceleration of the mortgage payments and prior to the foreclosure sale of your property if all amounts past due are paid within the time permitted by law. . . .Further, you may have the right to bring a court action to assert the non-existence of a default or any other defense you may have to acceleration and foreclosure.”

The defendants did not cure the default, and in March, 2012, Bank of America gave notice and conducted a foreclosure sale by public auction of the mortgaged home. Bank of America was the high bidder at the foreclosure auction and subsequently assigned its winning bid to the Federal National Mortgage Association (Fannie Mae or plaintiff), which properly recorded the foreclosure deed conveying title of the property in May, 2012. On June 18, 2012, Fannie Mae initiated a summary process action in the Housing Court to evict the defendants from the property. On June 19, 2012, the defendants, representing themselves but assisted by counsel, filed an answer in which, by checking a box, they proffered as a defense to the eviction that “[t]he plaintiff’s case should be dismissed because it does not have proper title to the property and therefore does not have standing to bring this action and/or cannot prove a superior right to possession of the premises.”

For reasons not apparent from the record, Fannie Mae did not move for summary judgment until June, 2015, where, among other arguments, it contended that Bank of America had complied with the terms of the mortgage in exercising the power of sale, and specifically asserted that the notice of default had complied with paragraph 22 of the mortgage.3 On September 23, 2015, the defendants filed a cross motion for summary judgment in which they argued that the notice of default failed to strictly comply with the terms of paragraph 22 of the mortgage and that the defendants should be entitled to the benefit of our decision in Pinti even though the notice of default was sent well before the issuance of that opinion. In October, 2015, the judge granted the defendants’ cross motion for summary judgment and denied the plaintiff’s motion.

3 Paragraph 22 of the mortgage provides that in the event the borrower commits a breach of any term of the mortgage, prior to acceleration of the loan the lender must notify the borrower of “(a) the default; (b) the action required to cure the default; (c) a date, not less than [thirty] days from the date the notice is given to [the defendants], by which the default must be cured; and (d) that failure to cure the default on or before the date specified in the notice may result in acceleration of the sums secured by [the mortgage].”

Paragraph 22 further provides that such notice must inform the borrower “of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of the borrower to acceleration and sale.” It also declares that, if the default is not timely cured, the lender “may invoke the statutory power of sale.”

The judge found that the issue in Pinti had been “timely and fairly raised,” and concluded that our decision in Pinti should apply to all cases similarly situated that were pending in the trial court or on appeal where the issue had been timely and fairly raised before July 17, 2015. The judge also concluded that the notice of default failed to strictly comply with the requirement in paragraph 22 of the mortgage that the notice shall inform the borrower “of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of the borrower to acceleration and sale.”The judge found that, by stating, “You may, if required by law or your loan documents, have the right to cure the default after the acceleration of the mortgage payments and prior to the foreclosure sale of your property . . . ,” and “you may have the right to bring a court action to assert the non-existence of a default or any other defense you may have to acceleration and foreclosure” (emphasis added), the notice “significantly, and inexcusably, differed from, watered. . . down, and overshadowed the notice that was contractually and legally required by the mortgage.” He added that “there was no excuse for the difference in language “and that it was impossible to imagine any purpose for drafting a notice that failed to track the language of the mortgage “unless, of course, the purpose was to discourage [b]orrowers from asserting their rights.”4 After the judge issued his decision, the Appeals Court held in Aurora Loan Servs., LLC v. Murphy, 88 Mass. App. Ct. 726, 727

(2015), that the Pinti decision applies to cases pending on appeal where the claim that the notice of default failed to strictly comply with the notice provisions in the mortgage had been “raised and preserved” before the issuance of the decision. Although the issue was not before it, the Appeals Court declared that “the Pinti rule” did not extend to cases pending in the trial court. Id. at 732. Relying on this dictum, the plaintiff moved to vacate the judgment under Mass. R. Civ. P. 60 (b), 365 Mass. 828 (1974). The judge denied the motion, and the plaintiff appealed. We allowed the defendants’ application for direct appellate review. Discussion. 1. Application of the Pinti decision to pending cases. Our decision in Pinti was grounded in the requirement in G. L. c. 183, § 21, that, before a mortgagee may

4 The judge analogized the warning in the notice of default to a Miranda warning that informed a suspect before interrogation: “You [may] have the right to remain silent. If you give up the right [and if you have that right], anything you say or do [may] can and will be used against you in a court of law. You [may] have the right to an attorney. If you cannot afford an attorney [and if you have that right], one [may] will be appointed for you. Do you understand these rights as they have been read to you?”

exercise the power of sale in a foreclosure, it must “first comply[] with the terms of the mortgage and with the statutes relating to the foreclosure of mortgages by the exercise of a power of sale.”Because the power of sale is a “substantial power” that permits a mortgagee to foreclose without judicial oversight, we followed the traditional and familiar rule that “‘one who sells under a power [of sale] must follow strictly its terms’; the failure to do so results in ‘no valid execution of the power, and the sale is wholly void.’” Pinti, 472 Mass. at 232-233, quoting U.S. Bank Nat’l Ass’n v. Ibanez, 458 Mass. 637, 646 (2011). See Pryor v. Baker, 133 Mass. 459, 460 (1882) (“The exercise of a power to sell by a mortgagee is always carefully watched, and is to be exercised with careful regard to the interests of the mortgagor”).

Although it had long been established in law that the failure to strictly comply with the terms of a mortgage renders void an otherwise valid foreclosure sale, we gave our decision “prospective effect only, because the failure of a mortgagee to provide the mortgagor with the notice of default required by the mortgage is not a matter of record and, therefore, where there is a foreclosure sale in a title chain, ascertaining whether clear record title exists may not be possible.” Pinti, 472 Mass. at 243. Our concern was that a third party who purchases property that had once been sold at a foreclosure auction would not, through a title search, be able to determine whether the notice of default strictly complied with the terms of the mortgage. It would therefore be nearly impossible to eliminate the risk that the foreclosure sale would later be declared void and that the title would be returned to the foreclosed property owner. See id. We presumed that, after our decision in Pinti, mortgagees “as a general matter” would address this uncertainty by executing and recording “an affidavit of compliance with the notice provisions of paragraph 22 that includes a copy of the notice that was sent to the mortgagor pursuant to that paragraph.” Id. at 244.

However, we applied our ruling to the parties in Pinti, id. at 243, citing Eaton v. Federal Nat’l Mtge. Ass’n, 462 Mass. 569, 589 (2012), and deferred the question whether our holding “should be applied to any other class of cases pending on appeal.” Id. at 243 n.25. In Galiastro v. Mortgage Elec. Registration Sys., Inc., 467 Mass. 160, 167-170 (2014), we addressed that same issue in a closely parallel context. In Eaton, 462 Mass. at 571, we declared that a foreclosure by power of sale is invalid unless a foreclosing party holds the mortgage and also either holds the underlying note or acts on behalf of the note holder.

We applied this rule to the parties in Eaton, but otherwise gave the ruling prospective effect only. Id. In Galiastro, supra at 168, we extended the benefit of our decision in Eaton to litigants who had preserved this issue and whose cases were pending on appeal at the time that Eaton was decided. We declared that “[w]here multiple cases await appellate review on precisely the same question, it is inequitable for the case chosen as a vehicle to announce the court’s holding to be singled out as the ‘chance beneficiary’ of an otherwise prospective rule.” Galiastro, supra at 167-168, citing United States v. Johnson, 457 U.S. 537, 555 n.16 (1982), and Commonwealth v. Pring-Wilson, 448 Mass. 718, 736 (2007).

Limiting the application of prospective rulings to such a “chance beneficiary” would mean that something as arbitrary as the speed at which a case is litigated might determine its outcome, as only the first case raising this issue to reach the Supreme Judicial Court would get the benefit of the ruling. It would also greatly diminish the “incentive to bring challenges to existing precedent” by depriving similarly situated litigants “of the benefit for the work and expense involved in challenging the old rule.” Galiastro, supra at 169, quoting Powers v Wilkinson, 399 Mass. 650, 664 (1987).

The same principles underlying our decision in Galiastro to extend the Eaton rule to cases pending on appeal cause us to extend the Pinti rule to cases pending in the trial court where the Pinti issue was timely and fairly raised before we issued our decision in Pinti. In such cases, the homeowner-mortgagors are similarly situated to the plaintiffs in Pinti, because they presented the same arguments in the trial court that the Pinti plaintiffs presented to this court on appeal. All that distinguishes the homeowners in Pinti from the homeowners in this case is the pace of the litigation. The summary process complaint in this case was first filed in June, 2012; the complaint in Pinti seeking a judgment declaring that the foreclosure sale was void was filed in January, 2013. If this case had proceeded to judgment more promptly in the Housing Court, this appeal, rather than Pinti, might have been the one that established the so-called Pinti rule.5

Having so ruled, we now consider whether the homeowner defendants in this case timely and fairly raised a Pinti defense before the issuance of our Pinti decision. The judge found that they had, and we conclude that he was not clearly erroneous in so finding. We recognize that the defendants did not specifically allege that the mortgagee’s notice of default failed to strictly comply with the terms of paragraph 22 of the mortgage until they filed their cross motion for summary judgment on September 23,

5 We recognize that this ruling will increase the impact our Pinti decision may have on the validity of titles, but we expect the increase to be modest and that it will simply be part of the inherent “unevenness [that] is an inevitable consequence of any change in doctrine.” Galiastro v. Mortgage Elec. Registration Sys., Inc., 467 Mass. 160, 170 (2014), quoting Johnson Controls, Inc. v. Bowes, 381 Mass. 278, 283 n.4 (1980).

2015, more than two months after the issuance of our opinion in Pinti. But more than three years before that opinion, in June, 2012, they filed an answer as self-represented litigants where they checked the box proffering as a defense to the eviction that the plaintiff did not have “superior right to possession of the premises.”6 We need not consider whether the assertion of this affirmative defense alone was sufficient to give fair notice of a Pinti defense, because it is apparent from the plaintiff’s memorandum in support of its motion for summary judgment, which was filed one month before the issuance of our Pinti decision, that the plaintiff recognized that the defendants had alleged that the notice of default failed to comply with the terms of paragraph 22 of the mortgage. In that memorandum, the plaintiff argued that it had complied with the requirements of paragraph 22 and that it would be “irrational and fundamentally unfair” to declare the foreclosure proceeding void because of the purported minor differences between the language of the notice of default and that of the mortgage.

6 The full text of the defense, marked box no. 67 on the answer, states:”The plaintiff’s case should be dismissed because it does not have proper title to the property and therefore does not have standing to bring this action and/or cannot prove a superior right to possession of the premises. Wayne Inv. Corp. v. Abbott, 350 Mass. 775 (1966) (title defects can be raised as defense in summary process); G. L.239, § 1 (summary process available to plaintiff only if foreclosure carried out according to law).

“Where the plaintiff recognized that the defendants had raised the Pinti issue as a defense before our Pinti decision, the judge did not err in finding that the defendants fairly and timely raised the issue and therefore were entitled to the benefit of the Pinti decision.

Obligation of strict compliance. Having determined that the defendants are entitled to the benefit of our holding in Pinti, we must now address whether the notice of default strictly complied with paragraph 22 of the mortgage. It did not. Once a borrower has defaulted on a mortgage, G. L. c. 183, 21, authorizes the mortgagee to foreclose and sell the premises, provided it “first compl[ies] with the terms of the mortgage and with the statutes relating to the foreclosure of mortgages by the exercise of the power of sale.” Pinti, 472 Mass. at 232, quoting G. L. c. 183, § 21. As we explained in Pinti, supra at 236, “the ‘terms of the mortgage’ with which strict compliance is required — both as a matter of common law under this court’s decisions and under § 21 — include not only the provisions in paragraph 22 relating to the foreclosure sale itself, but also the provisions requiring and prescribing the preforeclosure notice of default” (footnote omitted). See Foster, Hall & Adams Co. v. Sayles, 213 Mass. 319, 322-324 (1913).

The notice of default in this case communicated much of what paragraph 22 requires but fell short in several crucial respects. Paragraph 22 requires that the notice “inform [the borrower] of the right to reinstate after acceleration and the right to bring a court action to assert the non-existence of a default or any other defense of [the borrower] to acceleration of sale.” Despite this language in the plaintiff’s own uniform mortgage instrument, the notice declared that the borrower “may, if required by law or [the borrower’s] loan documents, have the right to cure the default after the acceleration of the mortgage payments and prior to the foreclosure sale of [the borrower’s] property if all amounts past due are paid within the time permitted by law” (emphasis added). Similarly, the notice declared that the borrower “may have the right to bring a court action to assert the non-existence of a default or any other defense [the borrower] may have” (emphasis added).

We agree with the judge that this language in the notice “significantly, and inexcusably, differed from” the language in paragraph 22 of the mortgage, and “watered . . . down” the rights provided in that paragraph to the mortgagor homeowner. The phrase, “you may, if required by law or your loan documents, have the right to cure the default after acceleration,” suggests that the right to cure and reinstate is not available to every mortgagor, and that any such right is contingent upon the law or the provisions of other loan documents. But paragraph 19 of the mortgage specifically grants a mortgagor the right to reinstatement after acceleration, and sets forth the steps required to do so.This phrase instead suggests that the homeowner may need to perform legal research and analysis to discern whether the right to cure and reinstate is available.

Similarly, rather than unequivocally inform the borrower of the right to bring a court action to attempt to prevent a foreclosure by asserting that there was no default or by invoking another defense, the notice of default stated that the borrower may have the right to bring such an action. Here, too, the implication is that the right is merely conditional, without specifying the conditions, and that the mortgagor may not have the right to file an action in court.

The defendant contends that it accurately informed borrowers that they “may have” the right to bring a court action because they would have no such right if their court action lacked a good faith basis. But neither paragraph 22 of the mortgage nor the notice identified a bad faith exception to this right and we cannot reasonably infer that a borrower would understand that the “may have” language referenced such an exception.7

7 Because we find that the notice of default was not in strict compliance with paragraph 22, we need not address the We agree with the judge that, because the Pinti decision applies to this case and because the notice of default did not strictly comply with the requirements of paragraph 22 of the mortgage, the foreclosure sale is void.

8 Conclusion. The allowance of the defendants’ cross motion for summary judgment, as well as the denials of the plaintiff’s motions for summary judgment and for relief from judgment, are affirmed.

So ordered.

defendants’ contention that the plaintiff waived its argument that the notice was in strict compliance when it conceded that it was only in substantial compliance in the memorandum in support of its motion for summary judgment and at the hearing in the Housing Court.

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:

1. That your signature was as a maker issuer and therefore created value to the instrument
2. You negotiated with the party that you sat down at closing with
3. They accepted the instrument by negotiation
4. They were a federal reserved depository institution that could accept article three instruments by deposit
5. 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

A: Yes

Q: Are you in a home?

A: Yes

Q: Okay, so you're in the collateral.

A: Yes

Q: Okay and did you intend whenever you went to go get the home to get an obligation or a loan associated to that.

A: Yes

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.

A: Yes.

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?

No!

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)?