WHY
ARE COURTS ALLOWING ENDORSEMENT IN
BLANK TO TRANSFER THE LOAN WHEN THE BASIS OF THE PROPONENT'S AUTHORITY
TO FORECLOSE IS A DOCUMENT THAT FORBIDS ACCEPTANCE OF ENDORSEMENTS IN
BLANK?
I
recently received a question from an old friend of mine who was a
solicitor in Canada and who is frustrated with our court system that
continues to assume the validity of loans that have already been
thoroughly discredited. He has attempted on numerous occasions to get
information through a qualified written request or a debt validation
letter and has attempted to verify the authority of any party to whom he
would address a request for modification of his loan in Florida. While
chatting with him online I realized that this information might be of
some value to attorneys and borrowers. The principal point of this
article is the old expression "what is good for the goose is good for
the gander." For those of you who are unfamiliar with the old expression
it means that there should be equality of treatment, all other things
being equal. In mortgage litigation is apparent that when an allegation
is made or a proffer is made through counsel rather than the
introduction of evidence, the courts continue to function from both a
misconception and misapplication of the Rules of Court and the rules of
evidence.
When
the case involves one institution against another, the same arguments
that are summarily rejected when they are advanced by a borrower are
given considerable traction because the argument was advanced by a
financial institution or financial player that identifies itself as a
financial institution. In fact, a review of most cases reveals a much
heavier burden on the party defending against the loss of their
homestead than the party seeking to take it --- which is a complete
reversal of the way our justice system is supposed to work. The
burden of proof in both judicial and nonjudicial states is
constitutionally required to be on the party seeking affirmative relief
and not on the party defending against it.
In
the nonjudicial states, in my opinion, the courts are violating this
basic constitutional requirement on a regular basis under circumstances
where the party announcing a right to enforce a dubious deed of trust,
collection on a dubious note, and therefore having the right to sell the
property without judicial intervention despite the inability of the
foreclosing entity to produce any evidence that it owns the debt, note,
mortgage rights, or even demonstrate a financial interest in the
outcome of the foreclosure sale; to make matters worse the courts are
allowing trustees on deeds of trust to be appointed or substituted even
though they have a direct or indirect financial relationship with the
alleged lender.
These
trustees are accepting "credit bids" without any due diligence as to
whether or not the party making the offer of the credit bid at auction
is in fact the creditor who may submit such a credit bid according to
the statutes governing involuntary auctions within that state. In
nonjudicial states the burden is put on the borrower to "make a case"
and thus obtain a temporary restraining order preventing the sale of the
property. This is absurd. These statutes governing nonjudicial sales
were created at a time when the lender was easily identified, the
borrower was easily identified, the chain of title was easily
demonstrated, and the chain of money was also easily demonstrated. Today
in the world of falsely securitized loans, the courts have maintain a
ministerial attitude despite the fact that 96% of all loans are subject
to competing claims by false creditors. The
borrower is forced to defend against allegations that were never made
but are presumed in a court of law. If anything is a violation of the
due process requirements of the United States Constitution and the
Constitution of most of the individual states of the union, this must be
it.
In
the judicial states, the problem is even more egregious because the
same presumptions and assumptions are being used against borrowers as in
the nonjudicial states. Thus in addition to being an unconstitutional
application of an otherwise valid law, the judicial states are violating
their own rules of civil procedure mandated by the Supreme Court of
each such state (or to be more specific where the highest court is not
called the Supreme Court, we could say the highest court in the state).
This is why I have strongly suggested for years that an action in
mandamus be brought directly to the highest court in each state alleging
that the laws and rules, as applied, violate constitutional standards
and any natural sense of fairness.
Here is the question posed by my Canadian friend:
(1) The documents are phony
documents (copies) produced by Ben Ezra Katz. It will cost me several
thousand dollars to have a document expert evaluate the documents and
then testify if they find them to be copies. At the beginning of this
case, The Plaintiff's attorney (Ben Ezra Katz associate) told the court
(I do have a transcript) that they has found the ORIGINAL documents
(note, mortgage, etc.) and that they had couriered the ORIGINAL
documents to the clerk of Court. They did a Notice of Filing which on
its' face states ORIGINAL documents. I can not afford a document expert,
however the AG in S. Florida has an open investigation into this case.
Would I be out of line in requesting that they include this case per-se
as part of their investigation and accordingly make a determination as
to if or if not the subject documents which are on file with the clerk
of court are originals or copies ??
(2) The only nexus that Wells Fargo produces to establish
themselves as a real party in interest is a hand filled out allonge
(copy attached). Please note that the signer only signs as "assistant
secretary" without further specifics. On the basis of what they provide
it is virtually impossible to depose this person to determine if she
actually did or did not sign this document, and if so what is her
authority to do so. I want to launch some sort of discovery that seeks
to discover what else the Plaintiff has which would support the alleged
allonge. Things such as any contracts, copies of any consideration, what
was the consideration, who authorized the transaction, etc. Do you
have any suggestions in this regard. I bounced this off my attorney and I
am not sure that we are on the same page. He wants to go to trial and
have the proven phony documents as the main thrust. I agree with that,
however I also would feel far better if we were able to cut them off at
the knees as to standing such as the alleged allonge is part of the
phony documents, and there are no documents that the Plaintiff can
produce to support not only its' authenticity, but its' legitimate legal
function. I do not like to have all of my eggs in one basket.
And here is my response:
You are most probably correct in your assessment of the situation.
If they lied to the court and filed phony documents you should file
motion for contempt. You should also file a motion for involuntary
dismissal based on the fact that they have had plenty of time to either
come up with the original documents or alleged facts to establish lost
documents. The affidavit that must accompany the allegation of lost
documents must be very specific as to the content of the documents and
the path of the documents and it must the identify the person or records
from which the allegations of fact are drawn. They
must be able to state with certainty when they last had the original
documents if they ever did have the original documents. If they didn't
ever have the original documents then an affidavit from them is
meaningless. They have to establish the last party had physical custody
of the original documents and establish the reason why they are missing.
If they can't do those things then their foreclosure should be
dismissed. The more vague they are in explaining what happened to the
original documentation the more likely it is that somebody else has the
original documentation and may sue you again for recovery. So whatever
it is that they allege should result in your motion to strike and motion
to dismiss with prejudice. As far as the attorney general's office you
are correct that they ought to cooperate with you fully but probably
incorrect in your assumption that they will do so.
I
think you should make a point about the allonge being filled out by
hand as being an obviously late in the game maneuver. You can also make a
point about the "assistant Sec." since that is not a real position in a
corporation. Something as valuable as a note would be reviewed by a
real official of the Corporation who would be able to answer questions
as to how the note came into the possession of the bank (through
interrogatories or requests for admission) and what was paid and to
whom for the possession and rights to the note, when that occurred and
where the records are that show the payment and how Wells Fargo actually
came into possession of the note or the rights to collect on the note.
As you are probably aware the predecessor that is alleged to have
originated the note or alleged to have had possession of the note must
account for whether they provided the consideration for the note and
what they did with it after the closing. If they say they provided
consideration than they should have records showing a payment to the
closing agent and if they received consideration from Wells Fargo they
should have those records as well.
But
the likelihood is that neither Option One nor Wells Fargo ever funded
this mortgage which means that the note and mortgage lack consideration
and neither one of them has any right to collect or foreclose. In
fact, since they are taking the position that the loan was not
securitized and therefore that no securitization documents are
relevant, neither of them can take the position that they are
representing the real party in interest as an authorized agent for the
real lender. And the reason you are seeing lawsuits especially by Wells
Fargo in which it names itself as the foreclosing party is that the
bank knows that Iit ignored and routinely violated essential and
material provisions of the securitization documents including the
prospectus and pooling and servicing agreement upon which investors
relied when they gave money to an investment banker.
In
that case, since you seek to modify the loan transaction and determine
whether or not it is now or is potentially subject to a valid mortgage,
you should seek to enforce a request for information concerning the
exact path of the money that was used to fund the mortgage. And you
should request any documentation or records showing any guarantee,
payment, right to payment, or anything else that would establish a loan
to you where actual money exchanged hands between the declared lender
and yourself. The likelihood is that the money was in a co-mingled
account somewhere --- possibly Wells Fargo --- which came from
investors whose names should have been on the closing and the closing
documents. Those investors are the actual creditors. Or at least they
were the actual creditors at the time that the loan money showed up at
the alleged "loan closing." Since then, hundreds of settlements and
lawsuits were resolved based upon the bank tacitly acknowledging that it
took the money and used it for different purposes than those disclosed
in the prospectus and pooling and servicing agreement. These settlements
avoid the embarrassing proof problems of any institution since they not
only ignored the securitization documents, more importantly, they chose
to ignore all of the basic industry standards for the underwriting of a
real estate loan because the parties who appeared to be underwriting
the loan and funding the loan had absolutely no risk of loss and only
had the incentive to close deals in exchange for sharing pornographic
amounts of money that were identified as proprietary trading profits or
fees.
And
the reason why this is so important is that the mortgage lien could
never be perfected in the absence of the legitimate creditor who had
advanced actual money to the borrower or on behalf of the borrower. This
basic truth undermines the industry and government claims about the $13
trillion in loans that still are alleged to exist (despite multiple
payments from third parties in multiple resales, insurance contracts and
contracts for credit default swaps). The abundant evidence in the
public domain as well as the specific factual evidence in each case
negates any allegation of ultimate facts upon which relief could be
granted, to wit: the money came from third-party investors who are the
only real creditors. The fact that the money went through intermediaries
is no more important or relevant than the fact that you are a
depository bank is intended to honor checks drawn on your account
provided you have the funds available. The inescapable conclusion is
that the investors were tricked into making unsecured loans to
homeowners and that the entire foreclosure scandal that has consumed our
nation for years is based on completely false premises.
Your
attorney could pose the question to the court in a way that would make
it difficult for the court to rule against you. If the lender had agreed
to make a loan provided you put up the property being financed PLUS
additional collateral in the form of ownership of a valid mortgage on
another piece of property, would the court accept a handwritten allonge
from you as the only evidence of ownership or the right to enforce the
other mortgage? I
think it is clear that neither the banks nor the court would accept the
hand written instrument as sufficient evidence of ownership and right
to collect payment if you presented the same instruments that they are
presenting to the court.
PRACTICE
HINT: In fact, you could ask the bank for their policy in connection
with accepting its mortgages on other property as collateral for a
business loan or for a loan on existing property or the closing on a new
piece of property being acquired by the borrower. You could drill down
on that policy by asking for the identification of the individual or
committee that would decide whether or not a handwritten allonge would
be sufficient or would satisfy them that they had adequate collateral
in the form of a mortgage on the first property and the pledge of a
mortgage on a second piece of property.
The
answer is self-evident. No bank or other lending institution or lending
entity would loan money on the basis of a dubious self-serving
allonge. There would be no deal. If you sued them for not making the
loan after the bank issued a letter of commitment (which by the way you
should ask for both in relation to your own case and in relation to the
template used by the bank in connection with the issuance of a letter of
commitment), the bank would clearly prevail on the basis that you
provided insufficient documentation to establish the additional
collateral (your interest in the mortgage on another piece of property).
The
bank's position that it would not loan money on such a flimsy assertion
of additional collateral would be both correct from the point of view
of banking practice and sustained by any court has lacking sufficient
documentation to establish ownership and the right to enforce. Your
question to the court should be "if justice is blind, what difference does it make which side is using an unsupportable position?"
