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I just came my confirmation hearing for my Chapter 13 bankruptcy this morning.

As a background, I filed for Chapter 13 bankruptcy in the middle of October, one day before my scheduled sale date because my TRO had elapsed to stop the sale of my property.

Bank of America then filed a copy of the promissory note with the back included with a “Pay to the Order of” – endorsed in blank with the court as their proof of claim for the bankruptcy.

We then filed an objection to their proof of claim stating that it appears that the note is a Bearer Note…and only a person in physical possession would have standing to enforce the note.

Bank of America then filed a response to our objection stating that they had possession of the note and intend to present it at the appropriate time. Under the bankruptcy filing in their proof of claim, they are stating for the record that they are a secured creditor due to their successor interest to Countrywide through acquisition.

Here’s where they run into a pickle. They are not the creditor at all. They are in fact a servicer for a securitized loan. We have evidence from Bank of America that states that the owner of the note is a Freddie Mac Trust. This little fact is going to cause them a lot of problems moving forward.

When we went to court today, the Judge was willing to accept their argument that they had possession of the note and that would be sufficient proof of claim.

We objected to this stating an important Federal Appellate Court ruling in re: Veal.

In Veal, it was decided that mere possession of the note was insufficient proof of claim because the creditor also had to provide proof as to how they came into possession of the note and under what purpose.

The Judge in this case is now setting my case for trial sometime in the next 90 days time frame out. Since we will be going to trial, we are now entitled to enter and request certain discovery evidence from Bank of America.

One of the things we will be asking is to have a representative from Bank of America who can answer depositions with first hand knowledge as to the nature and purpose of the transfer and movements of the note.

The problem that Bank of America is faced with is that now that they have stated for the record that they are a secured creditor of the instrument and not a servicer…they can never go back. There are certain rights, privileges and obligations of a holder of the instrument that needs to be proven.

Moving forward, we will obviously be asking for specific clarity as to the nature and purpose of the the transfer and ownership interest Bank of America has. As a debtor in bankruptcy, I have the right to ascertain who the creditor of the debt obligation with absolute certainty. Under the bankruptcy, the burden of proof is on the creditor.

This is why we recommend people to go into the bankruptcy venue where possible. Obviously, bankruptcy is not something one should enter into lightly but ultimately, if this is a matter of whether or not you get to stay in your home or get kicked onto the streets, the choice is pretty simple.

I will keep you posted with the progress of my case as it progresses.

Vince

As many of you know, most so-called “lenders” are not lenders at all. They sold their interest in the note and are acting as services to collect the money for the REMIC that holds the note.

When you challenge the debt under the Fair Debt Collections Practices Act(FDCPA), often times, these lenders come back saying “we are not governed under the Fair Debt Collections Act and it does not apply to us.”

I call bullshit on this.

Here’s why.

1) I have personally received a letter from Bank of America admitting that they are governed under the FDCPA. You will note that at the same time their attorneys filed a Motion to Dismiss to have my case dismissed citing that the FDCPA does not apply to them.

2) Various courts around the country have conclusively ruled on this issue. For instance see in RE: Karl John REINKE v. Northwest Trustee Services, Inc., a Washington Corp.; Aurora Loan Services LLC, a Delaware Corp.; BAC Home Loans Servicing Inc., fka Country Wide Home Loans Servicing LP, a Texas Corp.; Home Capital Funding, a California Corp.; First American Title Insurance Co., a Washington Corp.; Lawyers Title Insurance Co., a Nebraska Corp.; Winstar Mortgage Partners, Inc., a Minnesota Corp.; Mortgage Electronic Registration Systems, Inc., a Delaware Corp., Defendants.
Bankruptcy No. 09–19609.Adversary No. 09–01541.Oct. 26, 2011

Here, the court ruled that the FDCPA does apply in the court opinion.

3) A Servicer is not the original creditor. It collects the debt on behalf of a third party. This makes them a Third Party Debt Collector.

Under the definition of the FDCPA 15 USC 1692a § 803, It defines a Debt Collector as follows:
The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another. Not- withstanding the exclusion provided by clause (F) of the last sentence of this paragraph, the term includes any creditor who, in the process of collecting his own debts, uses any name other than his own which would indicate that a third person is collecting or attempting to collect such debts. For the purpose of section 808(6), such term also includes any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the enforcement of security interests. The term does not include—
(A) any officer or employee of a creditor while, in the name of the creditor, collecting debts for such creditor;
(B) any person while acting as a debt collector for another person, both of whom are related by com- mon ownership or affiliated by corporate control, if the person acting as a debt collector does so only
or persons to whom it is so related or affiliated and if the principal business of such person is not the collection of debts;
(C) any officer or employee of the United States or any State to the extent that collecting or attempting to collect any debt is in the performance of his official duties;
(D) any person while serving or attempting to serve legal process on any other person in connection with the judicial enforcement of any debt;
(E) any nonprofit organization which, at the request of consumers, performs bona fide consumer credit counseling and assists consumers in the liquida- tion of their debts by receiving payments from such consumers and distributing such amounts to credi- tors; and
(F) any person collecting or attempting to collect any debt owed or due or asserted to be owed or due another to the extent such activity
(i) is incidental to a bona fide fiduciary obligation or a bona fide escrow arrangement;
(ii) concerns a debt which was originated by such person;
(iii) concerns a debt which was not in default at the time it was obtained by such person; or
(iv) concerns a debt obtained by such person as a secured party in a commercial credit transac- tion involving the creditor.

However, one very key issue you need to be aware of is this.  The FDCPA only applies to consumer debts.  This means if you own an investment property, then this is not covered.  Sorry.  You can not have it both ways.

Why is this Important?

1) If a servicer is covered under the Fair Debt Collections Practices Act, then you can dispute the debt under 15 USC 1692g § 809.  This means once a consumer disputes the debt, all collection activity must cease…including a foreclosure action.

2) Each violation of the act carries a penalty of up to $1000.

3) This gives you a valid cause of action to file your lawsuit against your “lender”.  Often times, when a pro se litigant files an Action, the bank responds with a “Motion to Dismiss for Failure to State a Claim”, which basically says “you don’t have any reason to sue us.  This is frivolous.”

If you can show the court that “here’s the law, here’s how and when they broke the law, and here’s how I am damaged” then you have a valid cause of action.

Good luck.

Keep fighting.

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Some of you may have heard of a man who recently gained a property for a total of $16 by registering a claim with the local county under Adverse Possession laws.

So, for those more adventurous souls out there, this might be something you might want to try.

As you know, there are literally tens of thousands of homes in your city (assuming you live in a major metropolis), that are abandoned/unoccupied due to foreclosure.  These homes are an eye sore and are not maintained.  In general, people in the neighborhood prefer that the home goes to a good family.  So, all you have to do is, if you are struggling with your current home, you might just want to find another home near by (or not)…and ask the neighbors about the house…how long it’s been abandoned, etc…and then just register an adverse possession claim with the county.  Here is Kenneth Robinson’s adverse possession claim form.  Just copy this and customize it for your own.

Sometimes, when you are faced with an uphill battle, it might be easier to think creatively…like upgrading the house to a better abandoned property and let the bank have the old one.

Be sure to share your success with us.

Good luck.