Category Archives: Op-Ed Piece

FLORIDA HOMEOWNERS SHOULD STAY OUT OF BK 7 COURTS IF THEY WANT TO FIGHT FORECLOSURES!

The author of this post is not giving legal advice, just reporting what’s out there.  You should consult a competent foreclosure defense attorney regarding such matters, as the contents in this post appear to reflect the court’s intolerance for homeowners who file bankruptcy to stop a foreclosure. 

OP-ED — 

Folks who are in trouble with their mortgages in Florida really need to strategize before taking the plunge into the abyss known as the Florida legal system, where state judges clearly have “agendas”, the Florida Legislature has “agendas” and the federal courts have “agendas” … all aimed at taking of property when you can’t make the payments on it.  It’s not often that the author of this post steers away from chain of title issues, but there appears to be widespread ignorance (or in the alternative, intolerance) on the part of the Sunshine State’s legal system, which makes things “not so shiny” anymore, given the recent spate of legislation and court actions.

STATE JUDGES

All one needs to do is examine court dockets to see how fast, over time, that Florida circuit judges have blindly assumed that the financial institutions coming before them actually own the promissory note they’re trying to enforce.  It would seem that judges simply rely on the blatant attack on the property owner as just because otherwise, why would this particular bank show up in court?   Because they can!  And they do!  And judges give them so much leeway that Florida homeowners are stymied for options.  This is why the State of Florida has so many zombie homes (despite what the politicians, economists and the media would have you believe) and shadow inventory that sits empty because of title issues.  In very few cases I’ve examined have I seen evidence within a transcript that allowed for a forensic examination of the note, to make sure it’s “original”, like the bank’s attorney says it is.  To show you that the inequity between state court systems is similar in nature, I’m consulting a case in New Jersey where the bank’s law firm sent a “cover lawyer” into court with what appeared to be a “faxed copy” of the note, claiming it to be the “original”.  I think most judges, even in light of the foreclosure defense attorney’s objections, could tell the difference, but nope … this judge said that the word of the law firm and the faxed copy of what it self-authenticated is good enough!  Can you believe that shit?

Another part of the equation is the existence of foreclosure defense lawyers who have seen fit to turn the foreclosure debacle into a cash cow by using delay tactics to keep property owners in their homes, despite the probable outcome that only about 1 in 25 cases brought into court makes it past the 810-day mark in a Florida foreclosure cycle.  Knowing that the odds are never “in their favor” (attributing the quotation to The Hunger Games), frustrated mortgagors then contemplate using bankruptcy court to dodge the “sale bullet”. However, things in Florida are about to change.

THE FLORIDA LEGISLATURE

Effective July 1, 2017, Florida homeowners who run to the bankruptcy court and get their promissory note discharged are going to find themselves without other options to fight the foreclosure.  See House Bill 471 here if you don’t believe me: fl-hb-471  It’s only two pages long and I’m sure you can read (if you’re reading this)!

Simply put, any documentation that is filed in Bankruptcy Court which would indicate surrender of the property (commonly seen in Chapter 7 cases) makes it legally okay for the bank’s attorney to submit that document that was filed in the Bankruptcy Court under penalty of perjury to a Florida circuit judge to get a Final Judgment of Foreclosure.  I see this as a definite negative if you’re trying to fight a foreclosure.  But then again, most homeowners are like electricity.  They want to take the path of least resistance; and declaring bankruptcy is certainly a hell of a lot cheaper than fighting a foreclosure through Florida’s appellate system.

It appears that folks don’t understand the difference between an in rem and an in personam action.  Enforcement of a security instrument, which in Florida’s case is a mortgage, can only happen when the party claiming to have an interest in the property can prove ownership.  An attack on the property through the recorded security instrument is an in rem action (like quiet title actions).  This is why I wrote the book The Quiet Title War Manual (with the professional help of California attorney Al West).  The book explains the difference between the note and the mortgage.  Folks who don’t get it should get this book and read it, because when Al West and I taught quiet title workshops, we hammered these basic principles into the heads of the attendees.  In personam actions are actions involving debt, which in this case is the promissory note, NOT the mortgage!   How convenient it is that the Florida legislature has come up with this House Bill in the wake of the recent court conflicts within the federal system!

THE FLORIDA FEDERAL COURTS

Let’s look at the case of In re Hookerin-re-hooker   Once you get past the first three paragraphs, you’ll understand why the Florida legislature did what it did to help the banks fight continuous counterattacks in state court.  Again, how convenient, to avoid further confusion in the courts.  Let’s just legislate this away, shall we?

Now we come to the slam dunk that affects the way the 11th Circuit Court of Appeals (which covers Florida), has ruled that Chapter 7 debtors who file a bankruptcy action and put forth a statement of intention to surrender the real property cannot later contest a foreclosure in the state court. in-re-failla   If you read the first paragraph of this PUBLISHED OPINION, and then read the background on the case, it appears that the homeowners wanted to “have their cake and eat it too”.  The Failla case simply states: “Debtors who surrender property must get out of the creditor’s way.”   The Florida Legislature (I believe) made sure that a bill was passed that shut off the trough at the source of the feed (so to speak).

No more hogs at the trough.  There have been so many different points of view, it’s understandable that the Florida legislature would pass a bill that state courts could point a finger at and say, “SEE?”   So for those of you thinking that running into bankruptcy court (in any state for that matter) and declaring your intent to surrender the property (God forbid, why would you do that?) under penalty of perjury is so confusing to some when their state court cases get shut down.

ANOTHER WHAMMY! 

It has also become relatively apparent that any homeowner that has placed themselves in the foregoing position and continue to litigate their foreclosure in the state courts of Florida are likely to get sanctioned!   Vexatious litigants are likely to wind up in jail on contempt charges!  I say this because of what happened to foreclosure defense attorney Stuart Golant, 70,  in the Palm Beach County courtroom of Senior Judge Howard Harrison for simply making a motion!

Florida homeowners have had the deck stacked against them by the courts and the legislature in favor of the banks when it comes to promissory note enforcement.  Once a mortgage has been recorded in the land records where the subject property is situated, all it takes is a missed payment and the door to “foreclosure hell” opens to swallow the homeowners whole.   I can’t help but wonder what kind of counseling homeowners have received, given the phone calls and emails I get regarding strategizing an in personam case against them.

ONE MORE TIME …

In a judicial foreclosure state like Florida, a lender comes to court and waves the promissory note around and claims it has the right to enforce the terms of the note!  It should be required to prove that the note is genuine, forensically.  Have the actual paper tested.  Have the ink tested.  Check for pixelation by blowing the note up on a computer screen to examine evidence the note was photoshopped.  Object to the note being entered as the original.  I believe a majority of securitized notes are copies of what was downloaded into the MERS® System and later shredded, as I’ve covered in previous posts.

Once the lender gets the note in front of the court and gets it admitted into evidence and gets the court to agree that U.C.C. Article 3 (Negotiable Instruments) exists and that the alleged lender has the right to enforce the note, THEN the Lender gets to enforce the Security Instrument, the in rem part of the equation.  The security instrument (Mortgage) is then “ripe for the picking”.  Believe it or not, most homeowners think that the lender is foreclosing on the mortgage.  That couldn’t be further from the truth!  The Lender is foreclosing on the Note.  Proving it has the right to enforce the Note means the Lender gets the right to enforce the Security Instrument, not until!

Bankruptcy Courts are designed to handle in personam scenarios.  In personam relates to debt.  Promissory notes are evidence of debt!   Recorded mortgages are evidence of security interests, not debt!   If you’re going to use the bankruptcy court to alleviate your personal obligation to the note, and liquidate it in a Chapter 7 bankruptcy proceeding, be prepared to move out of your home!

Thinking twice about running into Chapter 7 bankruptcy court to stop the sale?   The “system” is ready for you!   (Hint: This is why we have Chapters 11 and 13!)  No matter, if you live in any state where you think the “deck is stacked” against you, plan your “end game” BEFORE you go into default, not after!

And this is why I don’t talk about in personam issues much.  Homeowners really should get a financial education before they sit down at the closing table.

Tune into kdwradio.com every Friday night at 6:00 p.m. EST for my radio show, City Spotlight: Special Edition!   Order any of the author’s books by visiting Clouded Titles!

For those of you waiting for the new FDCPA book, it’s almost ready!   Pre-order your copy today!  (FDCPA actions are for dealing with debt collectors!)

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Filed under Financial Education, Op-Ed Piece

SCOTUS DECIDES TO ENTERTAIN CIRCUIT SPLIT ON FDCPA CREDITOR-DEBT COLLECTOR ISSUE!

BREAKING NEWS — (DC) 

The U.S. Supreme Court appears to have granted a Writ of Certiorari to petitioner Ricky Henson, et al in his case versus Santander Consumer USA, Inc. coming out of the nation’s Fourth Circuit Court of Appeals.  There have been numerous disagreements among the circuits as to what constitutes a “creditor” by definition versus what constitutes a “debt collector” by definition, within the Fair Debt Collection Practices Act (15 U.S.C. 1692a et seq).   More about these definitions are specifically noted through the new book FDCPA, Debt Collection and Foreclosures (by the author of this post), anticipated to be released in its first 256-page first edition, sometime around the end of this month (January, 2017).

There is evidence of deeply-entrenched conflict among the circuits, which involves the definition of a “creditor”, which is succinctly defined within the FDCPA as: (a.) any person who offers or extends credit (thereby creating a debt to the borrower); and (b.) any person to whom a debt is owed … and that of a “debt collector”, also succinctly defined as: (a.) any person whose principal purpose is to collect debts; (b.) any person who regularly collects debts owed to another; and (c.) any person who collects its own debts, using a name other than its own.  You can see where these so-called variance opinions have formed as cases involving FDCPA complaints have worked their way through each of the federal circuits.

The hinge pin here however, is that the FDCPA also states that a person is NOT a “creditor” if that person “receives an assignment or transfer of a debt in default solely for the purpose of facilitating collect of such debt for another.”  That, by definition, would make most mortgage servicers “debt collectors”, which consumers, as mortgagors, now find useful to wage war in federal court by using FDCPA actions!   This is one of the reasons this author did the research of over 400 FDCPA actions, some successful and others not successful, for the purposes of illustrating not only the circuit split in definitions, but also because the only way circuit splits can be resolved in finality is by a Supreme Court decision on the valid merits of the case.

OP-ED

The key word here is “default”.  The Federal Trade Commission and the Consumer Financial Protection Bureau both concur that the default status of a debt at the time it was acquired determines the status as to whether the entity is a “creditor” or “debt collector”.  The CFPB used this model in an action against a large bank, finding the bank violated the FDCPA by failing to send validation notices on student loan accounts there were in default at the time they were acquired from another bank.  This puts student loan borrowers in a very interesting litigation posture when debts get “assigned” to entities like Pioneer Credit Recovery, Inc., Van Ru Credit Corporation, The CBE Group and Immediate Credit Recovery, Inc. (to name a few) to collect, which comprise the larger number of entities assigned to collect student loan debt on behalf of the U. S. Department of Education, which is the alleged “guarantor” (which cannot be sued, so don’t even try it).  Every case the the author has reviewed involving a state-based corporation designed to monitor the accounts of student loan borrowers and the Department of Education, wherein the Plaintiff borrower sued them for alleged FDCPA violations, got tossed out.  The smarter consumers appear to be going after the actual debt collection agencies that have been assigned to collect the debt.

When a debt is in default and has been assigned or transferred to another entity who then attempts to collect the debt, here’s where the splits stack up:

The 4th, 9th and 11th Circuits have held that a person is not a “debt collector” unless its principal purpose is to collect a debt, regularly in the business of collecting debts owed to another, or collecting a debt using a name other than its own.  The 11th Circuit has come out with some very pro-consumer decisions (like Reese v. Ellis) that have helped homeowners fighting foreclosures in going after the law firms trying to collect a debt (NOT enforcing a security instrument … there is a difference) using a different name than the one it operates under as a creditor.  These three “tests” must be met, in addition to the court’s determination that the debt was indeed in default at the time it was acquired by the person claiming the right to collect it.  These three Circuits also rejected the argument that any person taking assignment of defaulted debts is regularly collecting debts owed to another because the debts were owed to a different creditor at the time of default.  You can plainly see where the banks and their servicers (as creditors and quasi-debt collectors) want to confuse the issue, which, it appears they have done, over time.  Now the Supreme Court gets to interpret what the FDCPA means and what it doesn’t mean when it comes to these definitions.

The 3rd, 6th and 7th Circuit decisions in conflict with the foregoing Circuits have focused predominantly on the exclusions from the definitions of “creditor” and “debt collector”, declaring that any person who takes an assignment of a debt in default is a debt collector, while a person who takes assignment of a debt that is NOT in default is a “creditor”, because they actually BOUGHT the debt.  The 7th Circuit went further in explaining that any person acquiring a debt stands in the shoes of that creditor and acts similarly, as opposed to simply acquiring the debt for collection, wherein it acts more like a debt collector, by the strictest defined sense of the FDCPA.

Additionally, Also, both the CFPB and the FTC have adopted the view that the default status of the debt at the time of acquisition determines whether the entity is a “creditor” or a “debt collector.” The CFPB took this approach in a recent consent order with a large bank, finding that the bank violated the FDCPA by failing to send validation notices on student loan accounts that were in default at the time they were acquired from another bank.

VALIDATION OF STUDENT LOAN DEBTS

The CFPB just recently reported that a larger number of student loan debts have afflicted those aged 62 and older to the tune of $66.7-billion!  That’s pretty scary, considering many of these debtors are co-signers for their children’s (and grandchildren’s) education.

It is seriously implied here that in addition to mortgage loans, student loans (car loans and credit cards), have also be securitized on Wall Street into “common law trusts”.  Mortgage loans get securitized into REMICs (which stands for Real Estate Mortgage Investment Conduits), while other securitized trusts are listed as to their designed use.

To make things a little more “interesting” … here is one sample debt validation response sent to a debt collector, who sent an “initial communication” to a student loan borrower in an attempt to collect a debt (the names of the borrower and debt collector have been purposefully changed to protect their identities):

Certified Mail, Return Receipt Requested Number:

 

Date of Debt Validation Correspondence
Name and address of Debt Collector

 

Re: Your Unsigned Debt Collection Letter, dated ______, 2017.

To Whom It May Concern:

I am in receipt of a PAST DUE NOTICE, dated “______, 2017” and am responding accordingly. I choose to respond point for point to what I allege is in fact, an initial communication letter from your debt collection agency.

This is to inform you that I am a “consumer” as defined under 15 U.S.C. 1692a(3).  Further, I deem you as a debt collector, subject to the Fair Debt Collection Practices Act, which I have a copy of, under 15 U.S.C. 1692a(5).

First, you have provided me with no written proof of any of the claims you have made in this letter.  You have listed debt collection account reference numbers that I am not personally knowledgeable of.

There is no proof provided in the initial communication I received as to who purchased any alleged student loans under any guarantee agreement bearing my name and personal identifying information.  You also failed to provide me with a copy of the guarantee agreement or any of the loan paperwork that you allege or claim I owe you that is in default.   Therefore, I am disputing the entire balance of what you claim I owe you and further require that you provide me with following:

(a.) Proof of all indebtedness, including copies of any alleged loan paperwork you have in your possession, on which you base your alleged claim of default;

(b.) Proof of the entire chain of custody of each promissory note you claim that the entity you are collecting for was “required to purchase”, including but not limited to, copies of the “guarantee agreement” for each of the alleged loans contained within your initial communication to me;

(c.) Please send me a full accounting of ALL sums due that have been applied to this alleged loan balance, including alleged default insurance payments, credit default swap payments and any other insurance that was purchased to cover the entirety of the loan should an alleged default occur, including correspondence showing the payout dates of these alleged policies;

(d.) If this loan was securitized, along with other student loans, please provide me with the name of the trust and location of its trustee, including the its full contact information and telephone number;

(e.) Since you have threatened me with the garnishment of my wages, and based on the United States Code section shown below, I demand to be provided an opportunity to view all my purported loan documents and a hearing at a location close to my home;

31 U.S.C. § 3720D: US Code – Section 3720D: Garnishment

(3) The individual shall be provided an opportunity to inspect and copy records relating to the debt.

(5) The individual shall be provided an opportunity for a hearing in accordance with subsection (c) on the determination of the head of the executive, judicial, or legislative agency concerning –

(A) the existence or the amount of the debt, and

(B) in the case of an individual whose repayment schedule is established other than by a written agreement pursuant to paragraph (4), the terms of the repayment schedule.

Please be advised that I am responding with the above verbiage as you have indicated in your letter that you may utilize additional collection efforts, including an administrative wage garnishment, tax offset or assigning these alleged loans to the U. S. Department of Education, who, unless you can provide me with proof to the contrary, guaranteed these alleged loans in the first place;

(f.) Please provide me with the Name and Address of the Original Lender / Creditor and all correspondence you have in your possession related to these alleged loans.

(g.) Please provide me with the exact location of my purported loan documents, signed by me, including a direct phone number; and

(h.) Please provide me with copies of all correspondence between your agency and the U. S. Department of Education, including all loan documents, and any documents you have in your possession, bearing my legitimate signature, that prove you have the right to collect this alleged debt, including any agreements signed between you and the alleged creditor you claim to be representing in your initial communication to me.

Please be advised that, in providing the above response, John Q. Consumer is not limiting or waiving any rights or remedies he may now or hereafter have, whether arising under your purported loan documents at law or in equity, all of which rights and remedies are expressly reserved.

Further, since I cannot take your telephone calls into court, this is a demand upon you that you are restricted from contacting me at my home, on my cellular phone or at my workplace regarding the collection of any of the foregoing, until you can fully satisfy the demands set forth in this letter.

Failure to completely respond will also result in an FDCPA action being filed against your company in the appropriate forum.

All further correspondence (including your answer and supporting documentation) may be sent to the address shown below.  I expect to hear from you in short order, as this letter is intended to give you notice that I am disputing the entirety of this debt in full.

Sincerely,
John Q. Consumer (address)

Enclosure: Copy of Debt Collection Letter

Again, I managed to acquire this from a “consumer”, who sent a variation of this letter, regarding a student loan debt.  This letter is a SAMPLE and does NOT constitute the rendering of legal advice for your particular situation and may not draw any conclusions of law or guarantee any legal outcome.  If you intend on using any form of this for your own personal use, you should be aware that you do so at your own risk.  After reading this letter, I was tempted to contact “John Q. Consumer” to see if the debt collector ever responded.  It would seem to appear that when the issue of securitization is brought up, this may create a real dilemma, because the student loan itself may have already been paid in full upon the default of the borrower!  Entire of tranches of student loans may have been paid off over time!

I just thought I’d let you, the blog subscriber, know that student loan borrowers are also using similar tactics, more of which are in the new book on the FDCPA, coming out shortly, which you can pre-order on the Clouded Titles website. The book also goes into detail about how debtors have used FDCPA actions to repeatedly sue debt collectors in order to make a part-time income!  It is fascinating to see what the mind can achieve and the human condition to accomplish!  I’ve actually included an “exploded” view of an FDCPA lawsuit, both applied individually and as a class action, so you can compare notes!  I think you’ll find the 256 pages worthy of your time and consideration.

Just because SCOTUS is deciding this narrow issue does not mean that FDCPA actions will be put “on hold” either.  The definitions of the FDCPA do merit clarification by the nation’s highest court, so the lower circuits will (once and for all) STOP QUIBBLING over what the terms really mean.  This is why it pays to know the FDCPA and get an education in debt collection before getting yourself into debt!

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Filed under Breaking News, FDCPA Education, Op-Ed Piece

POINT – COUNTERPOINT: SECURITIZATION FAILURE EXPLAINED

“JANE … YOU IGNORANT SLUT!”

(As exclaimed by Dan Akroyd to Jane Curtin on Saturday Night Live …)

Sorry … I had to do that because you can’t say that to opposing counsel in foreclosure court … as much as you’d like to!  Still, I’m not an attorney, I can’t render legal advice, but I have been listed on at least one attorney’s “expert witness list” for upcoming trials! 

My blood boils when I’m consulting at a foreclosure trial and I hear the bank’s attorney claim that the borrower has nothing to do with the PSA because I know damned well that the borrower (nor his counsel) has a comeback that they can waylay on the bank’s attorney in point-counterpoint fashion, which is why I went with the opener that I did.

The bank’s attorney doesn’t want the borrower opening up the subject of securitization failure, because in so doing, the REMIC finds itself without standing to foreclose.  End of story … because the last attempt is always (when Fannie Mae and Freddie Mac aren’t involved) the use of MERS (through servicer fraud) “assigning” a note a mortgage years later into a REMIC trust. Securitization failure may look obvious on paper (what’s recorded in the land records) but it cannot account for the path the note didn’t travel.

The last trial I attended, I saw the bank’s attorney “step in it”.  You could hear her tiny little heels squish in the pile of dung she just sunk into asking the expert witness (who understands securitization) about the “closing date”, then suddenly realizing that she opened Pandora’s Box.  Sadly, the foreclosure defense attorneys need to climb on board with this thought process, as elaborate as it might be.  I’m going demonstrably put it into as easy a graphic as I can, using various scenarios (“submitted for your approval”, as the Twilight Zone‘s Rod Serling would say from the grave). You have to educate the judge!  You have to!  I don’t care if the other side jumps up and down with objections, you have to keep on keeping on.

FEW ATTORNEYS REALLY “GET IT”

First, let me share a pdf with you, written by (in my book) one of the most brilliant attorneys on record:

charlies-wallshein_securitization-fail-part-one-001

The foregoing even has “affirmative defenses” included in this paper, if you know what you’re looking for.  Thanks to Charlie, I used a chunk of his explanation and diatribe in a Texas Rule 736 motion I drafted for use by counsel, which, when coupled with a Rule 12 motion by the attorney (a motion demanding to know who the law firm was representing in its Application to foreclose), the law firm “non-suited” the foreclosure case (made it go away)!

I shall further elaborate, as I do in chain of title assessments where the last party to allegedly have the note and mortgage transferred to them is the REMIC … years after the fact.  The borrowers and their attorneys focus on the Pooling and Servicing Agreement and miss the whole enchilada completely.  It’s not just the PSA we’re talking about here folks!  It’s the entire “sales pitch” … I’m talking about the 424(b)(5) prospectus (and none other than).

The PSA does NOT contain your loan number!  The prospectus contains your loan number!

The prospectus contains well more of the governing regulations than the PSA, all neatly signed under penalty of perjury under the Sarbanes-Oxley Act!   When the bank’s attorney says the Borrower has nothing to do with the Assignment, why then are you stumped?  Why can’t your attorney object?  It can’t be because of ignorance, right?

However, just because your loan number is listed within the prospectus doesn’t mean that your loan is actually in the pool (or made the pool before the cut-off date).  Look at it in the simplest of terms:

  1. Why do lenders use the MERS® System?  

The lenders use the MERS® System as a means to register and securitize mortgage notes within the secondary markets.  However, before the note (and its accompanying electronic paperwork) can be traded (transferred, sold, resold, multiple times over), it has to be digitally uploaded into the MERS® System, which was created for the purposes of electronically transferring the note!  

This is why (when you look at your loan on the MERS® Servicer ID page, the loan reads “ACTIVE”.   That means, it’s “actively” being transferred (potentially multiple times over) from one entity to another while the Servicer’s name remains constant.  When you see the word “INACTIVE”, it means the loan is no longer being traded, most likely because it is NON-PERFORMING!  Who could get away with selling non-performing loans?  Only in the securities market can you get away with that!  This goes back to the late Judge Arthur Schack in the HSBC v. Taher case, which was reversed and assigned to another judge, because the powers that be (the Appellate Department) said Schack went too far (in vetting the truth about robosigning using parties claiming to be officers of MERS). So, as long as the note doesn’t end up in its “final resting place” (as claimed by REMICs in millions of foreclosures), we have an “ACTIVE” note trading within the MERS® System.

2. The servicers who subscribe to the MERS® System purposefully abuse it!

The MERS® System, as I have previously noted in other posts, as well as in the OSCEOLA COUNTY FORENSIC EXAMINATION, allows servicers and their minions and subordinates within their default divisions or their contracted third-party document mills, to “manufacture” standing by creating assignments out of thin air, utilizing the name Mortgage Electronic Registration Systems, Inc., accompanied by what is proclaimed an “official title”, with only flimsy, non-notarized proclamations by William Hultman or his “successors” within MERSCORP Holdings, Inc. potentially attached to the pleadings as a means of “verification” of the use of the title by the “nominee” (who also thinks it’s a beneficiary, which it’s not).

Regardless of their “signing authority” or other Limited Power of Attorney proof of anything (as Limited Powers of Attorney can be falsely created to reinforce a claim by the REMIC that certain servicers are covered to do exercise certain powers under the power of attorney), there is nothing in the MERS Rules of Membership that forces the users of the MERS® System to “play by the rules”.  In fact, all of the users of the MERS® System have to “indemnify” MERS and its parent of any liability in connection with the creation of these documents, which means it’s “open season” in the fraud department in the creation of these documents.

   3. Parties outside of the MERS® System are allowed to participate with the servicers in creating the documents employing the use of the MERS® System! 

During the Osceola County Forensic Examination, my team discovered (in hundreds of assignments) the use a law firm in the creation of the assignments.  Many times, the assignment itself contained the words, “Prepared by:”, with either the name of the law firm, a law firm attorney or a non-lawyer working for the law firm.  My take here is that this is where you have RICO issues because the servicer, a law firm, a notary and multiple employees of both, are tasked with the creation of the document.  We are not just talking civil RICO issues here, but also criminal RICO, because the document is generally created under the direction of the law firm handling the foreclosure (in mortgage states), or in the alternative, a document processing company (e.g. LPS, CoreLogic, etc.) being involved in engineering the “proper parties” onto a piece of paper that is going to be relied upon in court to foreclose on the property.  The law firm handling the foreclosure will then rely on an assignment that it was involved in creating to steal the home, knowing full well that the assignment contains multiple misrepresentations which are not provable because the assignments clearly show the note and mortgage were transferred into the REMIC years after the Cut-off Date!

This is why I intend to write a follow-up paperback aptly titled, “How To Screw MERS!” (or something like that), to explain how to circumvent the MERS®System in your dealings in real estate (part of your due diligence before you buy a piece of property using a “MERS Member”, which is false, because the alleged “MERS Members” aren’t really “members”; they’re user-subscribers of the MERS® System, through the use of an executory contract with MERSCORP Holdings, Inc. (which is nowhere to be found on your note, your security instrument or the assignment).

4. The “Electronic Tracking Agreement – Warehouse Lender” clearly shows who the “players” are … and MERSCORP Holdings, Inc. is one of them!

If you look at the attached: eta_warehouse_template_v6-mers-and-borrower4, you will see what I am describing here, as to who the “electronic agent” really is. Is this disclosed to you at closing?  Hi there boys and girls, can you say “Truth-in-Lending Act violations right out of the gate?” … sure you can!  (playing on Mr. Rogers’ voice).

Do you see where your “name” is inserted as to “Borrower”?   Didn’t think so.  That’s because you’re not the Borrower, the originating lender or mortgage broker (like that pesky “Rocket Mortgage” and other digital online services that make it so easy to “get approved in minutes” for a mortgage loan).

Notice in the third paragraph where it says, “the Borrower is obligated to pledge the Mortgage Loans to the Lender”?  Notice the term used “Loans” is in the plural?  That’s because the “Borrower” in this agreement is the originating mortgage broker/lender and the “Lender” in this agreement is the “Interim Funding Lender” (like Countrywide, WaMu, IndyMac, etc.).  Look who the “Electronic Agent” is:  MERSCORP Holdings, Inc.!   What is an agent?  (hint: a nominee)

Then why isn’t MERSCORP Holdings, Inc. (the parent of MERS, the entity with all the money) plainly stated on your loan paperwork, including your Note? Where is the Truth-in-Lending Act when you need it regarding non-disclosure of the real “truth”.  It was hidden from you at closing?  That might even bring about suspicion for a RESPA violation as well.

Notice within Paragraph 4 of this agreement where it says that the “Lender and the Borrower desire to have certain Mortgage Loans registered on the MERS® System (defined below) such that the mortgagee of record under each Mortgage (defined below) shall be identified as MERS;”   Did you ever sign a paper like this at closing?   I’ll save you the time looking for it.  You didn’t.  That’s because the “Borrower” in this agreement, involving the placement of your loan into the MERS® System IS NOT YOU!  Did you agree to that?   Didn’t think so.  But it sure the hell explains how your loan got “registered” on the MERS® System, doesn’t it?

This was all created to be part of the securitization process.  This is why the entire process is flawed … and why it needs to be eliminated … and why the parties who created it need to be in prison!  The MERS®System is the platform through which the RICO acts were committed.  Indemnification or not, the platform is there … and it’s knowingly being abused.

YOUR NAME AND ORIGINAL LOAN NUMBER IS ON THE ASSIGNMENT!

This begs the question: How can you NOT be involved?  The assignment is talking about your very loan and mortgage (or deed of trust) being conveyed by the employees of the mortgage loan servicer (who can’t get the originating lender to do it because it’s more than likely defunct), whose employees create the document out of thin air, under the instruction from: (a.) one of the major title companies; (b.) the foreclosure mill attorneys involved in the litigation; and (c.) a third-party document mill tasked by the servicer to keep the transaction at arms length to avoid suspicion.  In any case, the document is a fraud.  They know it. And you know it.  But the judges don’t know it because no one knows how to tell the judge a thing or two about the real aspects of securitization because they know that 99% of these assignments are fraudulent and by ruling against the bank on securitization failure, they would open up a “three-ring circus” in their courtroom while jeopardizing their political futures.

The servicer uses its own “loan number” which generally does not match yours.  But when the bogus assignment is drafted (and many times backdated for a purpose) by the servicer’s employees or that of the law firm or third-party document mill, your original loan number and name is on the assignment.  Why not simply ask the judge to take your name off that document (since you’re not involved in it) and we’ll call it a day?   You know how that will end up, right?

You first have to object to the attorney’s comment that you’re not involved in the PSA, because technically, the PSA talks in general about operations within the REMIC itself.  If you’re going to enter the PSA as evidence, you’re shortchanging yourself and your case.  What you should be entering is the entire 424(b)(5) prospectus.  It still costs $4.00 a copy from sec.gov on their forms page.  They have a contract with United Parcel Service to ship it to you at no charge.  You pay $4.00.  Get the whole prospectus.  The front end of the prospectus is what contains the cut-off and closing date, not the PSA.  Have you ever noticed that, or did you just take someone’s word for it?

exhibit-9_occ-asset-securitization-comptrollers-handbook

Notice the foregoing “Page 8” and where it came from … the 1997 Comptroller’s Handbook issued by the Office of the Comptroller of the Currency.  This handbook was issued before MERS Version 3 came into being.  Notice how the first paragraph below the diagram talks about the Borrower being a party to the securitzation chain?   Do you understand why?  Because in simple fashion, in order to make the chain work (the whole system), the Borrower’s payments facilitate the income stream to the investors, who received non-recourse bonds on the Closing Date (or Start-up Date, according to IRS terminology) of the REMIC.

That is, unless securitization failure occurred at the Start-up Date.  This begs the use of an expert witness at trial to can testify as to the facts, followed by the use of depositions of the parties creating the document (the assignment) to reinforce the fraud being plied on the court.

Actually, securitization failure occurred BEFORE that!  It occurred at the Cut-off Date!

It couldn’t have happened because after the note and mortgage was uploaded into the MERS® System database (owned by now-MERSCORP Holdings, Inc.), I believe the original paperwork was no longer needed and was shredded.  My forensic examiners and I have heard this on more than one occasion, right out of the mouths of the bankers!  Thus, when the Borrower went into default: (a.) the servicer handling the loan dummied up an assignment, knowing already that it didn’t have the original loan; (b.) the servicer went into the MERS® System and downloaded the “uploaded electronic copy” and printed it out and took it into court (after adding a bunch of other “allonges”, “indorsements” to the note to try to tie the chain of title together with the chain of custody of the note.

Let me be clear here!  I do not believe that the allonges and the indorsements were completely added until AFTER the original note was retrieved from MERS. The latest article by Neil Garfield, which contains a statement: “I have obtained confirmation from a large bank vendor (Visionet Systems, Inc.) that it rectifies “lost notes” by reapplying the “signature images” upon stored copies. –Bill Paatalo, December 10, 2016.” goes to the core of the following scenario:

My wife and I attended a trial in Fort Myers, Florida where Bill Paatalo was admitted as an “expert witness”.  I went for two reasons.  First, I wanted to see what kind of questions the bank’s attorney and the judge were going to ask Bill about his expertise and the facts of the case; and second, we had dinner with Bill after that to further discuss the case, which ended up without a Final Judgment being issued that day (in court) because the judge wanted more education, in the form of trial briefs by the attorneys, which were due yesterday (I have not seen the brief).

This clearly also shows that the Notes were, at one time (as I suspected) electronic copies.  And riddle me this (as the Riddler said to Batman) … where do you think Visionet Systems, Inc. got the copy of the note?  Visionet is NOT a user of the MERS® System (check for yourself like I did) and therefore, they had to get the note from somewhere (more than likely the servicer, who IS a user of the MERS® System).  This now begs the deposition of someone at Visionet Systems, Inc. to verify this chicanery.

There are at least two cases supporting this conclusion! 

If you’ll simply Google a pdf of “In re Saldivar” (Texas) and “Glaski v. Bank of America” (California), you can see from these two cases that the court finally recognized that if the note and mortgage (or deed of trust) weren’t assigned until years after the Cut-off Date”, there is no verifiable evidence of WHEN or IF the note and security instrument actually “made it into the pool of loans” within the REMIC trust! This is what Bill Paatalo testified to at trial in Fort Myers.  When attacked by the bank’s attorney on the possibility that the note and mortgage made the cut-off date and that the assignment was strictly a memorialization of that fact, Paatalo responded to the “fact” that the assignment itself shows the date of the assignment being two years after the REMIC closed; thus, there is no possibility that the governing rules of the REMIC were complied with.  I am referring to the entire 424(b)(5) prospectus here, NOT just the PSA!

The OCC clearly contemplated that the Borrowers were the parties signing the notes and security instruments, which contained the provision (in paragraph 19 or 20, depending on which long form security instrument was employed at that time) that “the note, or a partial interest in the note” may be sold or transferred. It says nothing about the parties involved in that transaction, the “boss of the note” at foreclosure proceedings, or securitization of the loan.

Not only is the chain of title screwed up (because the right hand doesn’t know what the left hand is doing), certain parties came in contact with each other to “dummy up” paperwork to steal the house.  It’s that plain and simple.

That my friends, is a short-form explanation of the formula for securitization failure in roughly 3200 words, despite the fact I’m not an attorney nor do I render legal advice.  Share this with everyone because the life you save may be that of someone you don’t know that desperately needs to view this educational post!

BTW: For those of you wanting a progress report on the new FDCPA book I’m working on … I’ve about 40 pages to go!  I’m trying to get it done by the end of the year!  It contains some real damning information every “consumer” should know about, from foreclosures, to credit cards and car loans to student loans … all of which have been securitized … including relevant case law to back up the education I provide in this book! 

Dave Krieger, Clouded Titles

 

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Filed under Chain of Title Education, Op-Ed Piece

NINTH CIRCUIT RULES AGAINST THE ROBINSONS!

BREAKING NEWS — OP-ED! 

In what the poster of this blog deems as a completely off-point issue of contention, the U.S. Ninth Circuit Court of Appeals has ruled that if you don’t name MERS in your quiet title action in California, the courts will simply ignore that you did not quiet title as to MERS, it will rule that you violated MERS rights by not noticing it in the first place!   See the attached ruling: 59-1-courts-memorandum-12-16-16

This also means that when you name MERS, the contract, which says MERS has the contractual right to foreclose on you, even though there wasn’t an assignment of deed of trust recorded when the quiet title action was taken, it means that if MERS is in the deed of trust, you have to name them because the contract says that they are a beneficiary and a nominee too!  Apparently the 9th Circuit thinks that the same party can be both the beneficiary (which was not certified to the California Supreme Court by the 9th Circuit to determine the same thing that Oregon and Washington did in their respective MERS-related cases), and that MERS suffered harm because they weren’t allowed to come in and outsource and outspend the homeowners by removing their quiet title actions to federal court, claiming diversity because of the value of the note, which they have no interest in.  Sadly, in this case, there was no pending foreclosure, so what right did the 9th Circuit have to bring that up.  Where in the contract does it say MERS has the right to assign anything?  Wait!  MERS doesn’t assign anything!  The members of MERSCORP, it’s parent, who’s not even stated in the contract, provides the platform for the alleged document fraud!   MERS’ Board of Directors needs to be in prison!

Now, using this ruling, I challenge all of the attorneys studying the aspects of this ruling exactly how much liability MERS assumes as the agent of a defunct lender when it comes into court and attempts to enforce its agreement with a lender that is no longer in business, without having to provide any proof whatsoever, because what MERS will do is flake out on your discovery (and I want MERS to know I wrote the discovery for this case) and refuse to answer simple “yes” or “no” answers, calling them vague and overbroad.

This battle is not over yet.  A 4-page Memorandum, which I deem as chickenshit by the 9th Circuit, needs to be challenged because there is something rotten about the way that Judge Philip Gutierrez wrote a 13-page Opinion and then turned around and did a complete 180-degree flip in a subsequent 10-page Opinion which the 9th Circuit affirmed.

I’m not an attorney, so I can castigate the judges, unlike attorneys, which have a strict guideline to uphold the integrity of the judiciary.

Integrity of the judiciary … hmm … now that’s another subject for another day.  We know there’s something rotten going on here when quiet title actions are no longer sacred and we have to summon agents of defunct lenders to court.  Time for a 70-millon-member class action lawsuit against MERS, brought by about 20 law firms?   Don’t laugh … it may be in the works!  I’d like to see what liabilities they can heap on MERS and make stick!  Civil RICO?   After all, MERS does provide the platform for all of this apparent servicer fraud, right?

Someone is going to have to have the patience and the bucks to bring this entity down.  They have not done one bit of good for the counties’ revenue streams, which is why the State of Connecticut virtually tripled the fees for all MERS-originated mortgages.  I say, all the states now have a blueprint to make more money … vote to raise your MERS-originated recording fees.  How about … $1500 a pop?

UPDATE: Also, I might also add that you should notice the decision in Robinson was UNPUBLISHED, which means MERS nor any other foreclosure mill can use it as a citation (however, MERS will attempt to do so, you can bet on it!).

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Filed under Breaking News, Op-Ed Piece, Quiet Title Education

SURVIVING FORECLOSURE

Op-Ed … 

One of the greatest achievements in life is being able to own a home.  It’s an outward sign of wealth building.  It’s one of the biggest financial commitments that a person can make, not necessarily one they should make.

The banking industry in America continues to survive despite all of the scandal that continues to plague them.  Many folks survived the economic fiasco of 2008 because the entire economy was not affected.  When only a marginal number of homeowners are affected, seemingly, the rest of the country simply falls asleep, chalking up the massive foreclosure market as a “numbers game”.  Investors came out of the woodwork, thinking they were getting a great deal, when in fact, 99% of all of the foreclosure actions conducted in this country are illegal.

The reason these foreclosures are illegal can be summed up in one word: securitization.

Most people that signed on to mortgage loans between 2003 and 2008 had no idea that they were going to be victimized by an entity called Mortgage Electronic Registration Systems, Inc. and its parent, now known as MERSCORP Holdings, Inc.  It has been communicated to me by numerous attorneys that the MERS® System was created specifically for the purposes of online digital transfers of promissory notes within the secondary mortgage market and that any claim by MERS that it has any part of “title” to your property is superfluous folly.  MERS and its parent have continuously fought that in courts across America.  It is impossible to see why a court system would give a for-profit private entity that is not in the business of lending money beneficial status.  Some states have figured that flaw out, too late to avoid creating conflicting case law.  If the states wanted to be smart about it, they would do what Oregon counties are doing, patterning their suits after Multnomah County’s case, which resulted in a $9-million settlement, something unheard of, unless you want to keep MERS and its hierarchy out of prison.  In my book, criminal RICO is afoot here and MERS has provided the platform for that to occur in the form of servicer fraud.  Servicer’s employees are allowed to robosign and backdate assignments, falsify authority and manufacture standing for lender’s who are not “the boss of the note” which is what, largely in part, makes these 99% of the foreclosures illegal.

On the backside of this equation, homeowners who are unwilling to challenge the beast are fleeing their homes in record numbers and the shadow inventory still continues to plague the real estate market.

But what of the homeowners?

As I have stated on this blog before (in previous posts), 75% of those being served with foreclosure notices vacate their properties within thirty (30) days of notice.  The other 20% of those vacate their homes after being made aware an issuance of a final judgment of foreclosure or notice of a sale date.  The 95% was ill prepared to retain counsel to even challenge their foreclosure and the greater majority never even showed up to court to contest their foreclosure (in mortgage states).  The banks know this.  It’s a numbers game.  The banks are at a financial advantage because they’ve made all their money off of interest earned (as do the servicers with all of their fees added into the mix) and the banks have a legal fund to fight with.  Bank of America is estimated to spend roughly $2-billion annually in legal fees, most of which goes to fighting homeowners just like you and I in court.  Whether or not Bank of America can actually prove it has standing to foreclose depends on how many assignments their servicing unit manufactures, because that’s exactly what they do when there’s a default (someone stops making their mortgage payments).

Of the 5% of the remaining homeowners, 3-4% of them duke it out in court.  The other 1-2% take “cash for keys” or negotiate a loan modification, albeit the party negotiating with them probably doesn’t have the right to enter into a loan modification agreement at all.  I would estimate that roughly less than 1/2-percent actually succeed in getting a loan mod at all.  Most of the major banks, who are monitoring and servicing their alleged secondary market REMICs, who have no skin in the game, would rather have your house than put up with giving you a loan mod.

Contrary to what the banks and the media would have you believe, only about 1% of the 95% of homeowners end up actually “homeless”.  Living in your vehicle also constitutes as being “homeless”, about as much as living in a tent city, illegally living in a storage unit or under a bridge or on a sidewalk.  These 1% are seen on street corners panhandling for money.  Surprisingly, there are also racketeers that panhandle to make their mortgage payments (or go party on their gains, which in my book is totally dishonest).  It’s hard to tell who’s who because they all dress the part and carry cardboard signs.

The other 94% are either living with family members or have become substandard renters while they attempt to regroup.  If bankruptcy was utilized to “buy time”, a negative credit score of about 450 points will tank the debtor’s ability to recover for at least 3 years.  My problem with helping out many of these homeowners in “short sale” position is that I am suspicious of the bank’s real interest in the property.  If I look in the county land records, what am I going to find?   No matter.   Short sales are preludes to foreclosures.   If I see a spate of short sales in any given market, foreclosures are about 90 days behind them.  Remember, the bank would rather have your house.  They have no skin in the game and the longer they stay “in the game”, the more potential there is to discover their misdeeds.  Their mission is to cash out and this is what has made them rich.

I have been getting numerous texts and emails from folks who have told me what they have done to survive a foreclosure.  Unlike me, who had a rental property I could move into when I did a strategic default on my primary residence in 2003 (and later sold it for a handsome profit, which turned into a scheme that made me mortgage free), most homeowners have no “end game”.   They made no plans. Most made no plans because they live from paycheck to paycheck.   I heard one investor say, “Working hard builds character.”  Well, that may be true but if there’s more month at the end of the money, character has no place in contingency planning.  People will do amazing things.

I beg to hear of your story on this post, as it will give inspiration to others who are faced with similar plights.  Please comment. 

I have also heard that people have utilized an outbuilding or barn, moved it onto a piece of vacant land (either one they owned or owner financed) and built a house out of it.  It’s primitive, but at least it’s a roof over your head.  So are mobile homes, if you can find them cheap enough.   I lived in one for 4 years and fixed it up so it didn’t even look like a mobile home inside.  I made a handsome profit selling it when I made my next move.  I am one of those that is not complacent.  No matter what happens, I am resolved and determined to bounce back.  I paid off the mobile home in one year and invested about $4500 fixing it up over time.  The owner of the land I bought was happy when I sold it because he got paid in full when he was facing a family medical crisis and needed the funds badly; so it was a “helping hand” to him.  At least I had clear title.

This is a problem for many homeowners because fighting a foreclosure means proving the title is jacked up.  This is no fun when you don’t know what you’re looking for.  This is why many homeowners don’t do what you’re doing and subscribe to this blog and do research into chain of title.  If everyone in America did the kind of research you and I do, we wouldn’t be in this mess in the first place.  This country’s economy would have bounced back on its own and we wouldn’t be depending on politicians to fix it for us.

We are in an upturn real estate market (in most of America) and this begs for opportunity.  I always like real estate investing because it means creating wealth through equity positioning.  If you are NOT in a position to give up, it would be better to rebound into another investment property as soon as possible, even if it’s owner financed.  This is why (in the book Clouded Titles) I talk about having garage sales and liquidating stuff on Craigslist and places like that, because “lightening the load” affords opportunity when downsizing.  This is part of the end game plan for most folks.  You may have some other ideas, which I welcome here, because I want to know what you did to survive a foreclosure.  So do my other readers.  Despite the setbacks you faced, try to have a happy holiday season.

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Filed under Financial Education, Op-Ed Piece