We
have seen a number of cases in which the bank is refusing to cooperate
with a sale that would pay off the mortgage completely, as demanded, and
at least one other case where the homeowner deeded the property without
any agreement to the foreclosing party on the assumption that the
foreclosing party had a right to foreclose, enforce the note or
mortgage. There is a reason for that. They don't want the money, they
don't even want the house --- what they desperately need is a
foreclosure judgment because that caps the liability on that loan to
repay insurers and CDS counterparties, the Federal Reserve and many
other parties who paid in full over and over again for the bonds of the
REMIC trust that claimed to have ownership of the loan.
This should and does alert judges that something is amiss and some of their basic assumptions are at least questionable.
I
strongly suggest we all read the Renuart article carefully as it
contains many elements of what we seek to prove and could be used as an
attachment to a memorandum of law. She does not go into the issue of
their being actual consideration in the actual transactions because she
is unfamiliar with Wall Street practices. But she does make clear that
in order for the sale of a note to occur or even the creation of a note,
there must be consideration flowing from the payee on the note to the
maker. In the absence of that consideration, the note is non-negotiable.
Thus it is relevant in discovery to ask for the the proof of the the
first transaction in which the note and mortgage were created as well as
the following alleged transactions in which it is "presumed" that the
loan was sold because of an endorsement or assignment or allonge. To put
it simply, if they didn't pay for it, then it didn't happen no matter
what the instrument or endorsement says.
The
facts are that in many if not most cases the origination of the loan,
the execution of the note and mortgage and the settlement documents were
all created and recorded under the presumption that the payee on the
note was the source of consideration. It was easy to make that mistake.
The originator was the one stated throughout the disclosure and
settlement documents. And of course the money DID appear at the closing.
But it did not appear because of anything that the originator did
except pretend to be a lender and get paid for its acting service.
Lastly, the mistake was easy to make, because even if the loan was known
or suspected to be securitized, one would assume that the assignment
and assumption agreement for funding would have been between the
originator or aggregator (in the predatory loan practice of table
funding) and the Trust for the asset pool. Instead it was between the
originator and an aggregator who also contributed no consideration or
value to the transaction. The REMIC trust is absent from the agreement
and so is the ivnestor, the borrower, the isnurers and the
counterparties to credit default swaps (CDS).
If
the loan had been properly securitized, the investors' money would have
funded the REMIC trust, the Trust would have purchased the loan by
giving money, and the assignment to the trust would have been timely
(contemporaneous) with the creation of the trust and the sale of the the
loan --- or the Trust would simply have been named as the payee and
secured party. Instead naked nominees and disinterested intermediaries
were used in order to divert the promised debt from the investors who
paid for it and to divert the promised collateral from the investors who
counted on it. The servicer who brings the foreclosure action in its
own name, the beneficiary who is self proclaimed and changes the trustee
on deeds of trust does so without any foundation in law or fact. None
of them meet the statutory standards of a creditor who could submit a
credit bid. If the action is not brought by or on behalf of the creditor
there is no jurisdiction.
Add
to that the mistake made by the courts as to the accounting, and you
have a more complete picture of the transactions. The Banks and
servicers do not want to reveal the money trail because none exists. The
money advanced by investors was the source of funds for the origination
and acquisition of residential mortgage loans. But by substituting
parties in origination and transfers, just as they substitute parties in
non-judicial states without authority to do so, the intermediaries made
themselves appear as principals. This presumption falls apart
completely when they ordered to show consideration for the origination
of the loan and consideration for each transfer of the loan on which
they rely.
The
objection to this analysis is that this might give the homeowner a
windfall. The answer is that yes, a windfall might occur to homeowners
who contest the mortgage or who defend foreclosure. But the overwhelming
number of homeowners are not seeking a free house with no debt. They
would be more than happy to execute new, valid documentation in place of
the fatally defective old documentation. But they are only willing to
do so with the actual creditor. And they are only willing to do so on
the actual balance of their loan after all credits, debits and offsets.
This requires discovery or disclosure of the receipt by the
intermediaries of money while they were pretending to be lenders or
owners of the debt on which they had contributed no value or
consideration. Thus the investor's agents received insurance, CDS and
other moneys including sales to the Federal reserve of Bonds that were
issued in street name to the name of the investment bankers, but which
were purchased by investors and belonged to them under every theory of
law one could apply.
Hence
the receipt of that money, which is still sitting with the investment
banks, must be credited for purposes of determining the balance of the
account receivable, because the money was paid with the express written
waiver of any remedy against the borrower homeowners. Hence the payment
reduces the account receivable. Those payments were made, like any
insurance contract, as a result of payment of a premium. The premium was
paid from the moneys held by the investment bank on behalf of the
investors who advanced all the funds that were used in this scheme.
If
the effect of these transactions was to satisfy the account payable to
the investors several times over then the least the borrower should gain
is extinguishing the debt and the most, as per the terms of the false
note which really can't be used for enforcement by either side, would be
receipt of the over payment. The investor lenders are making claims
based upon various theories and settling their claims against the
investment banks for their misbehavior. The result is that the investors
are satisfied, the investment bank is still keeping a large portion of
illicit gains and the borrower is being foreclosed even though the
account receivable has been closed.
As
long as the intermediary banks continue to pull the wool over the eyes
of most observers and act as though they are owners of the debt or that
they have some mysterious right to enforce the debt on behalf of an
unnamed creditor, and get judgment in the name of the intermediary bank
thus robbing the investors, they will continue to interfere with
investors and borrowers getting together to settle up. Perhaps the
reason is that the debt on all $13 trillion of mortgages, whether in
default or not, has been extinguished by payment, and that the banks
will be left staring into the angry eyes of investors who finally got
the whole picture.
READ
CAREFULLY! UNEASY INTERSECTIONS: THE RIGHT TO FORECLOSE AND THE UCC by
Elizabeth Renuart, Associate Professor of Law, Albany Law School ---
Google it or pick it off of Facebook
