(OP-ED, first posted: September 4, 2018) —
The writer of this post is a paralegal and consultant to attorneys on matters involving chain of title, foreclosures and document manufacturing. The opinions expressed herein are that of the writer’s only and do not constitute legal or financial advice. Any use of the theories or ideas suggested in this post is entirely at your discretion and will probably result in disaster without the proper legal help. By the end of this “series” of posts, you should understand what RISK is!
WHY INSURANCE COMPANIES ARE “RISK AVERSE”
Like most of us who take the time to analyze the “odds” (remember the Hunger Games … “may the odds be ever in your favor”?), insurance companies make money betting on sure things. They don’t like paying out claims. They won’t insure individuals who may have a propensity to do “crazy shit” (like skydive, bungee jump, etc.) that might result in a serious accident or death. They won’t insure companies that have a higher risk than normal for being sued (for committing fraud, etc.). They also make exceptions to items within “the system of things” concerning real property, which is where this part of the evisceration of “the system of things” takes place.
If you’ve ever looked at a “Schedule B” in an Homeowner’s Indemnity Policy, you will see that things that aren’t recorded in the public records as part of a chain of title are exempt from coverage. Heck, if you’ve looked at a number of the exceptions on that portion of the policy, virtually everything that you could imagine, from encroachments against a registered legal description, riparian right or legal description changes due to accretion or avulsion, virtually every obvious thing that could be insured, isn’t. Then what is the policy worth spending extra money on? Because the insurance companies are willing to bet you won’t ever file a claim on anything having to do with title. That’s a sure moneymaker to them. Anything that has alleged “coverage” on it (or so you thought) is probably exempt thanks to “Schedule B”. Get your title policy out and look at Schedule B and you can easily spot what I’m talking about here. This is how insurance companies make most of their money. They exempt issues and activities that could result in them having to pay out claims. The insurance companies really didn’t understand the “risks” that were played on them in the securitization game either, which is why they filed lawsuits against many of the REMICs’ sponsor-sellers when they realized the “game was rigged” in favor of the banks. They were paying out too many claims on the seller’s title policies because the chain of title was all screwed up. As history has shown us, the sponsor-sellers of these REMIC trusts made off (Madoff) like bandits!
This is why actuarial tables are developed by the “bean counters”. Based on past performances of certain professions or activities, insurance companies know whether or not a certain profession is susceptible to risk; thus, the insurer having to pay out a claim to an injured party at some point. The insurance companies have had years of experience in paying (or not paying) out claims to know which professions and activities present the most risk; thus, they become “risk averse”, meaning, they run away from risk. It’s like the little guy who has a chance to walk away from a fist fight with a big guy twice his size. Not every scenario presents us with a David versus Goliath option … and that’s the battle homeowners have been fighting.
AGENCY, NEXUS AND CIVIL CONSPIRACY
Now we come to the part in the “story” where you are dealing with a foreclosure. Since I started doing research into “clouded titles” and discovered that part of the equation included the recording of certain documents, which make up a property owner’s chain of title, many of these documents appeared to have presented a certain “risk” of being challenged as to their validity. I don’t have to spend time (here) wasting the effort to explain the 2008 financial collapse and the resulting “cause and effect” of what was finally unveiled to Main Street … securitization … and the sloppy paperwork (or the lack thereof) that eventually crept its way into every county’s land records throughout the entire United States. Anyone that understands “robosigning” or “document manufacturing” or has read Clouded Titles knows what I’m talking about here.
As was revealed in both the Williamson County Real Property Records Audit and Osceola County Forensic Examination that my firm conducted, despite the fact that the mortgage loan servicers all agreed NOT to produce phony documents and record them in the land records in an attempt to “create standing” to foreclose, they’re still doing it anyway to this very day!
Each one of the parties involved in any Assignment or Mortgage or Deed of Trust had to establish a contractual relationship with one another. By signing agreements to provide certain provisions for each assignment, a “nexus” (or connection) was created that could tie all of the participating individuals or entities together. Each individual working within a company acts as an “agent” (or representative, whether an employee or independent contractor) of the principal. Agency is thus established by the party granting the status (the “grantor” of anything) within “the system of things” … NOT the Grantee (the agent). The agent however, in tandem with other agents from other nexuses created by outside party contracts, can be held liable for misrepresentation on a document and so can the principals themselves. If you sign an insurance policy and claim that you do not engage in activities that are “risk averse” and you go out and commit suicide (for example) within a 2-year period, the insurance company will not pay because they learned quickly (ab initio) that people who find themselves destitute (such as in the crash of 1929), take out a life insurance policy with whatever money they have left and then kill themselves (by jumping out a window) believing that their heirs will get money from the insurer, quickly got the attention of the insurance companies, who quickly developed a 2-year waiver of indemnity for killing yourself and conveniently called it a “suicide clause”.
When two or more actors are involved in the creation and execution of a document, each party becomes suspect (NOT GUILTY UNTIL PROVEN GUILTY) as to taking part in what could be alleged to be a civil conspiracy. I think many attorneys doing foreclosure defense have missed that part of the equation because they don’t bother to depose EVERY AVAILABLE PARTY that is represented within any given document being used as evidence against their clients. Why? Because depositions start at somewhere around $3,000 apiece and most homeowners don’t want to spend that kind of money. The “other side” will bring their attorney into the mix, who will object to virtually every question asked that is posited to prove that a contractual relationship existed somewhere, with the intention of thwarting anything discoverable that can be used to defeat the foreclosure or to seek damages. I also believe that many (not all) foreclosure defense attorneys are inherently lazy and would rather do the business model of “the taking of people’s money” [not necessarily at this firm (below), for which I find their name symbolic] and eventually watching them lose their homes anyway:
Not every state actually has a “cause of action” for civil conspiracy; however, every state has a cause of action for …
… and this is where “the system of things” starts to get interesting. When the same group or groups of individuals misbehave and participate in document manufacturing scams that deprive homeowners of their rights, they draw unwanted attention to themselves. Take Bryan Bly, Crystal Moore and Dhurata Doko for instance. They have all been deposed (more than once as I understand it from watching their deposition videos) and were asked questions about their “risky behaviors” in creating assignments of mortgage and deeds of trust. At the time these three were deposed, they were all employed by Nationwide Title Clearing, Inc. of Palm Harbor, Florida. By virtue of the name used, one should be able to assimilate what they mean by “title clearing”. In fact, this company boasts (online) that it has been involved in the recording of over 16,000,000 documents since its inception. It’s kind of like the McDonald’s of document mills (over 16-million served). In my book, that’s not something to brag about just to get clients. In fact, one of Core Logic’s attorneys (in a webinar I was privy to) declared that companies making up documents to “clear title” or “assign or transfer” mortgage loans or notes had better be careful in what they create and attest to for fear of retribution under the laws covering the Unauthorized Practice of Law (UPL), which is a felony in every state that has such a statute covering this “risky behavior”. Thus, one who KNEW OR SHOULD HAVE KNOWN that the behavior they’ve engaged in constituted a felony, could be deemed negligent. This also goes for attorneys working for the banks that are “suspect” for participating in the “process” (after recording, return to the ABC Law Firm). The law firm’s apparent involvement in creating (or directing the creation of) an assignment in order to foreclose becomes a party to the civil conspiracy.
Every attorney is bound by a state bar association’s Rules of Professional Conduct, each of which is drafted (in whole or in part) according to the national substantive rules promulgated by the American Bar Association. There’s a section on “Misconduct”, which can be used to punish attorneys who come into court and commit certain misdeeds, like relying on or making false and misrepresentative statements (in the court record or in open court). These attorneys are held to a higher standard, where they KNEW OR SHOULD HAVE KNOWN that what they were attesting to in writing or orally in open court, could be held against them personally and they could be held liable for their negligent behavior.
In “cutting to the chase”, banks and mortgage loan servicers (and title companies or document manufacturing companies who are working with them in creating documents to “clear title” or “create standing”) HAVE TO have a law firm representing them in court; otherwise, they can’t appear. If we use “the system of things” to “hold the attorney and his law firm’s “feet to the fire”, they would naturally be discouraged from appearing in court to represent their “entity”, which may have used false and misrepresentative statements in a document contained in their foreclosure arsenal. In other words, you wonder why law firms are “substituted out” right in the middle of a case? Look at the case and seek out what the firm being substituted out might have done that created a liability for itself that it is trying to distance itself from. The firms appear to be working in tandem to thwart any appearance of misbehavior that could be exposed for which they could, individually or as a firm, be held liable. Which is why law firms have E & O insurance (errors and omissions).
It’s all about the insurance … and what’s not covered … that they’re worried about! More details about insurance and bonding and the court’s responsibilities to NOT indulge felony behavior and the potential resulting liabilities for their actions coming soon to this blog post … stay tuned!