In 1776, the notion that no one is above the law was popular during the founding of the United States. Thomas Paine wrote in his pamphlet Common Sense that "in America, the law is king. For as in absolute governments the King is law, so in free countries the law ought to be king; and there ought to be no other."
The Federalist, commonly referred to as the Federalist Papers, is a series of 85 essays written by Alexander Hamilton, John Jay, and James Madison between October 1787 and May 1788.
The essays were published anonymously, under the pen name "Publius," in various New York state newspapers of the time.
Alexander Hamilton observed the judicial branch is not supposed to take its direction from “either the strength or the wealth of society,” The Federalist No. 78 (Alexander Hamilton), but in all cases apply the rule of law equally. Citizens must trust the courts to fairly apply the law to the facts before them in deciding cases.
The courts must declare the sense of the law; and if they should be disposed to exercise WILL instead of JUDGMENT, the consequence would equally be the substitution of their pleasure to that of the legislative body. The observation, if it prove any thing, would prove that there ought to be no judges distinct from that body.
Summary Judgement July 1 2014: MERS Loses Major Case in Pennsylvania
All deeds, conveyances, contracts, and other instruments of writing wherein it shall be the intention of the parties executing the same to grant, bargain, sell, and convey any lands, tenements, or hereditaments situate in this Commonwealth, upon being acknowledged by the parties executing the same or proved in the manner provided by the laws of this Commonwealth, shall be recorded in the office for the recording of deeds in the county where such lands, tenements, and hereditaments are situate. Every such deed, conveyance, contract, or other instrument of writing which shall not be acknowledged or proved and recorded, as aforesaid, shall be adjudged fraudulent and void as to any subsequent bona fide purchaser or mortgagee or holder of any judgment, duly entered in the prothonotary’s office of the county in which the lands, tenements, or hereditaments are situate, without actual or constructive notice unless such deed, conveyance, contract, or instrument of writing shall be recorded, as aforesaid, before the recording of the deed or conveyance or the entry of the judgment under which such subsequent purchaser, mortgagee, or judgment creditor shall claim. Nothing contained in this act shall be construed to repeal or modify any law providing for the lien of purchase money mortgages.
The mortgage (the lien against the property) and the note (the borrower IOU) are inseparable, and that trying to treat the note as separate and exempt from the recording requirement is a “willful and negligent” violation of statute.
The judge cited decisions from 1848 and 1850 and pointed out:
These holdings remain undisturbed despite the passage of more than 150 years and thus the underlying purpose behind the Pennsylvania recording acts remains clear – to provide notice to the public of the identities of those who hold an interest in real estate as well as notice of the true nature of the transaction on record…And in 1852, it was determined that the assignment of mortgages also fell within the recording acts…in 1863, the Pennsylvania legislature first decreed that such recording be mandatory.
The judge also found MERS could be held responsible for damages:
We likewise reject the proposition that MERS is not subject to liability because it is only an agent for its member-lenders. Indeed, as a general matter, an “agent” is a “person authorized by another (principal) to act for or in place of him; one intrusted with another’s business.
A mere assignment of the mortgage does not act as a lawful transfer of the note.
Because foreclosure regards two documents—a promissory note and a mortgage securing that note—standing to foreclose involves the plaintiff’s interest in both the note and the mortgage.
(“The parties do not dispute that Bank of America is a holder entitled to enforce the note. Bank of America currently has possession of the note, which is endorsed in blank.”)
Possession of an unindorsed note made payable to a third party does not establish the right of enforcement, just as finding a lost check made payable to a particular party does not allow the finder to cash it.
See, e.g., JPMorgan Chase Bank v. Harp, 2011 ME 5, ¶ 9, 10 A.3d 718 (stating that the plaintiff bank’s failure to establish its ownership of the mortgage renders it “vulnuerable to a motion . . . challenging [its] ability to foreclose” as a matter of standing); Saunders, 2010 ME 79, ¶ 15, 2 A.3d 289 (“Without possession of or any interest in the note, [a party] lack[s] standing to institute foreclosure proceedings and [may] not invoke the jurisdiction of our trial courts.”).
In re: Case OS-0244S-JHW John T. Kemp v. Countrywide NJ The debtor challenged the creditor's opportunity to enforce the obligation alleged to be due, based primarily on the fact that the underlying note executed by the debtor was not properly indorsed to the transferee, and was never placed in the transferee's possession. Under the New Jersey Uniform Commercial Code, the note, as a negotiable instrument, is not enforceable by the Bank of New York under these circumstances. The plaintiff/ debtor's challenge to the proof of claim is sustained on this record.
In re: Case No. 07-12832-WCH Ernest E. Jaaskelainen v Wells Fargo Corp. MA Summary; Option One holds a unsecured claim in the amount of $142,806.68. In light of the foregoing, judgment in favor of the Debtors.
In re: Tarrant Texas: Wilner lacks standing to invoke TRCP 735 to foreclose Re Order To Foreclose : In an attempt to collect a non valid debt obligation, the plaintiffs committed irreparable fraud by [a] not filing the required notice of assignments as required by the Texas Property Code.
In re: FERREL L. AGARD, Case No. 810-77338-reg that MERS must have specific powers from its "principal" to transfer the mortgage and promissory note, and that the transfer of the mortgage by MERS does not automatically also transfer the promissory note it secures. In wrapping up its decision, the court said, "However, even if MERS had assigned the Mortgage acting on behalf of the entity which held the Note at the time of the assignment, this Court finds that MERS did not have authority, as "nominee" or agent, to assign the Mortgage absent a showing that it was given specific written directions by its principal. "This Court finds that MERS's theory that it can act as a "common agent" for undisclosed principals is not support by the law. The relationship between MERS and its lenders and its distortion of its alleged "nominee" status was appropriately described by the Supreme Court of Kansas as follows: "The parties appear to have defined the word [nominee] in much the same way that the blind men of Indian legend described an elephant - their description depended on which part they were touching at any given time."
Because U.S. Bank’s rights can be no greater than the rights as transferred by its assignor – MERS – the Debtor argued that the Movant, acting on behalf of U.S. Bank, has failed to establish that it holds an enforceable right against the Property. (i.e,: MERS lacks standing to foreclose.)
Countrywide Financial executive Angelo Mozilo, chairman of the board and chief executive officer of Countrywide Financial until July 1, 2008, is often referred to as the inspiration for the system that would eventually become MERS. In 1992, Mozillo, then a much-admired and well-respected Mortgage Bankers Association of America board member, began devising systems to computerize and centralize industry operations along with technology expert Brian Hershkowitz.
MERS Mortgage Electronic Registration Systems, Inc. registered their trademark in 1997 having an address in Department on Disability Services at 1125 15th Street, NW,Washington, District of Columbia 20005 with a proposed new address in Virginia, admits that the very foundation of its business model as described requires that the Note and Mortgage travel on divergent paths.
The MERS servicing agreement among it's Member Servicers: states i.e,: "MERS agrees that in no event shall MERS’ status as mortgagee of record with respect to any MERS Designated Mortgage Loan confer upon MERS any rights or obligations as an owner of any MERS Designated Mortgage Loan or the servicing rights related thereto, and MERS will not exercise such rights unless directed to do so by the Lender."
From 2004 to 2008, Countrywide, Merrill Lynch and BAC together issued nearly $1 trillion of mortgage-backed securities to private investors; to-date nearly 25% of all these have defaulted. Federal US Judge Rakoff, appointed by President Clinton, has called these lending programs "brazen fraud" driven by "hunger for profits and oblivious to the harms thereby visited." BAC was fined $1.3 billion with regards to the dealings of Countrywide Financial in particular, which BAC acquired at the cusp of the financial crisis.
The DOJ insisted on another $16- $17 billion from BAC, with $9 billion allocated to cash fines and another $8 billion going towards consumer assistance. The consumer assistance would take the form of mortgage principal write-downs for struggling homeowners
Mortgage Servicing Fraud occurs post loan origination when mortgage servicers use false statements, book-keeping entries, fabricated assignments, forged signatures and counterfeit intangible Notes to take a homeowner's property.
Falsely claiming to be the owner/holder in due course of the tangible Note;
Requesting homeowners submit and resubmit loan mod paperwork multiple times that pays the bank $1,500 each time. File An OCC Complaint: It seems that servicers/banks cannot foreclose with an open OCC complaint. (The Bureau, the federal financial services watchdog, received 38,833 complaints about Bank of America between 2012 and 2014, In contrast, the CFPB received 26,055 complaints about Wells Fargo (NYSE: WFC); 20,057 gripes about JPMorgan Chase (NYSE: JPM); 14,882 complaints about Citibank (NYSE: C); and 9,272 complaints about Capital One Financial (NYSE: COF). Bank of America received 12,778 more complaints than the next highest competitor.)
Altering/modifying loan terms without the legal authority to do so;
Falsely claiming legal standing by use of names such as Trustee, Assignee, Nominee, Beneficiary, etc.;
Using fraud, false statements and evidence to invoke the jurisdiction of the court;
Preying on the ignorance of the court and homeowner;
Taking out forced-placed insurance on property they did not own;
Falsely claiming Pooling & Servicing Agreements, industry standards, rules, guidelines or other industry-authored writings supersede the law;
Failing to follow PSA, SEC and regulatory guidelines;
REMICs are a form of IRS tax shelter sold to investors as part of the mortgage-backed securities package (Real Estate Mortgage Investment Conduit (“REMIC”) pursuant to I.R.C. §§860A-G). The largest key to REMICs is that they are required to be passive vehicles, i.e., mortgages cannot be transferred in and out of the trust once the closing date has occurred (within 90 days), unless the trust can meet very limited exceptions under the Internal Revenue Code. I.R.C. §860G. The 90 day requirement is imposed by the I.R.C. to ensure that the trust remains a static entity. The mortgage-backed securities trust controlling documents, the Pooling & Servicing Agreement (PSA), requires that the trustee and servicer not do anything to jeopardize the tax-exempt status; PSAs generally state that any transfer after the closing date of the trust is invalid.
“Countrywide failed to ensure that the notes were properly assigned or endorsed. Countrywide failed to deliver the original notes to the trusts, or provided notes with incorrect terms, missing riders or missing notary seals,” “Because the trusts never became holders of these mortgages, defendants lacked authority to collect or foreclose on their behalf and never should have represented they could” AG Nevada
6-12-2014 W. FLETCHER, 9th Circuit Judge: IN RE: MORTGAGE ELECTRONIC REGISTRATION SYSTEMS (A document (re securitized mortgage) purporting to create an interest in, or a lien or encumbrance against, real property not authorized by statute, judgment or other specific legal authority is presumed to be groundless and invalid.) The CAC alleges that defendants filed false notices of trustee sale, notices of substitution of trustee, and assignments of deed of trust. The CAC alleges that these documents were notarized in blank and “robosigned” with forged signatures. Appellants seek damages and declaratory relief against clouding of their title based on these allegedly forged documents.
September 3 2014 Case No. 2D13-1786 A party seeking to foreclose on a note and mortgage must prove that it has standing to do so. To have standing to foreclose, the plaintiff must demonstrate that it holds the note and mortgage in question. Standing must be established at the time the complaint is filed. The bank's failure to prove a prima facie case warrants dismissal. Reverse and Remanded WALLACE, J., and RICE, ELIZABETH G., ASSOCIATE JUDGE, Concur.
PSA Excerpt: (re: Securitized Mortgage) The original Mortgage Note endorsed (A) in blank, without recourse, (B) to the Trustee, without recourse, or (C) to the Trust, without recourse, and all intervening endorsements evidencing a complete chain of endorsements from the originator to the endorser last endorsing the Mortgage Note, or, in the event of any Destroyed Mortgage Note, a copy or a duplicate original of the Mortgage Note (or portion thereof, as applicable), together with an original lost note affidavit from the originator of the Mortgage Loan, the Seller or the Company stating that the original Mortgage Note (or portion thereof, as applicable) was lost, misplaced or destroyed, together with a copy of the Mortgage Note (or portion thereof, as applicable)...
An action to foreclose must be brought by the real party in interest with regard to Owner's Note and Mortgage at the time the complaint is filed. Copies of documents aren’t enough to establish rights, just as copies of dollar bills wouldn’t be honored by a bank. (When the last endorser of the original Mortgage Note is unknown or a "true sale" of the Securitized Mortgage was imperfected, the servicer lacks agency to foreclose.)
FHFA The Home Foreclosure Process Identifying and describing the procedures and requirements that characterize an appropriately executed foreclosure process, FHFA-OIG seeks to provide useful context and understanding for policymakers and members of the public.
RE Non Judicial Foreclosures in AZ NV CA Mortgage Electronic Registry Systems DBA MERS MERSCORP NRS 357 False Claims Act The panel reversed the district court’s dismissal of Count I, seeking relief based on violations of Arizona’s false documents statute when the defendants (BAC MTC Financial DBA Trustees Corp., QLS, Cooper Castle, FNMA FHLMC etc.) allegedly filed false notices of trustee sale, notices of substitution of trustee, and assignments of deed of trust. The plaintiffs alleged that these documents were notarized in blank and “robosigned” with forged signatures.
False pretenses is a crime. In the case of false pretenses, the property is obtained by a lie.
A criminal charge of aiding and abetting or accessory can usually be brought against anyone who helps in the commission of a crime, though legal distinctions vary by state. A person charged with aiding and abetting or accessory is usually not present when the crime itself is committed, but he or she has knowledge of the crime before or after the fact, and may assist in its commission through advice, actions, or financial support.
“Wise men, when in doubt whether to speak or to keep quiet, give themselves the benefit of the doubt, and remain silent.”~ Napoleon Hill
Since the financial crisis began in September 2008, there have been approximately 5 million completed foreclosures across the country. THE FINAL WORD ON FORECLOSURE FRAUD
As of May 2014, approximately 660,000 homes in the United States were in some stage of foreclosure, known as the foreclosure inventory, compared to 1 million in May 2013, a year-over-year decrease of 37 percent. The foreclosure inventory as of May 2014 represented 1.7 percent of all homes with a mortgage, compared to 2.6 percent in May 2013. The foreclosure inventory was down 4.8 percent from April 2014, representing 31 months of consecutive year-over-year declines.
“Significant gains have been made in the last year to reduce the foreclosure stock,” said Mark Fleming, chief economist for CoreLogic. “Yet, these improvements are occurring disproportionately in non-judicial states. The foreclosure inventory in judicial states is averaging 2.1 percent, which is more than twice the 0.9 percent average that is occurring in non-judicial states.”
PEAK-TO-CURRENT PRICES FROM APRIL 2006: DOWN 13.5%
HOMES PRICES MAY 2013 TO MAY 2014: UP 8.8
This article is for information purposes and is not specific advice to any one reader.