Foreclosure Defense: Module 5

Look, if you are going to sue someone and want to accuse them of some wrong doing, you better have proof. The person doing the accusing (the Plaintiff) has the burden of proof.

Before you can go to court, you must have some sort of grievance that you are seeking relief on.  For example, you had a contract, and the other person broke the contract, therefore, you suffered as a result of that breach.  This is called a Cause of Action.  In other words, “why are you suing this guy?  What wrong did he do to you?”

There are a number of different causes of action you can accuse the other party of.  For example, breach of contract, fraud, tortious interference, etc.  Another very special type of cause of action is called a Quiet Title Action.  These types of “Actions” (an Action is legal jargon for a civil action…or a civil suit) are done when there is a cloud of Title issue that needs to be resolved.

As a Title owner (ie. you are the lord of your land), you have an obligation to defend your title against encroachments.  For example, if I started to lay my fence 3 feet into your land and you say nothing…and then 5 years later, I sell my land, and change the legal description to include that extra 3 feet…and you say nothing, then that extra 3 feet is mine.

Let’s discuss the Deed of Trust and Mortgage to see how this all fits in.

The Deed of Trust is a special Trust that is created specifically so that you (the landlord) temporarily grants your title in trust to that new Trust to secure against the promissory note.  When you create a Trust, you appoint a Trustee.  You also give that Trustee the power to sell your property in the event of a default of the promissory note.  This is the vehicle and mechanism your “lender” uses to foreclose and sell your house.  The same goes with a Mortgage in a Judicial State, except there is no need for a Trustee.  ie. there are no Trustees in a Judicial State. In the event that there is a problem with the promissory note or deed of trust, then there is an issue called “cloud of title”.

When a title is clouded, you will have a problem selling your house.  Let me give you an example.

Let’s say the County places an imminent domain claim on a strip of land on your property to lay down some pipes.  They then record this on your county records.  But because of budget cuts, they decided not to lay the pipes, but forgot to give you your land back.  2 years later, you are trying to sell your house.  It will be stopped because you are selling part of a land you don’t own (ie. the strip for the unlaid pipes).

In order to uncloud the title, you will need to seek a Quiet Title Action. As we discussed, your promissory note has been permanently converted into a stock.  It has also been fully discharged.  The language on your Deed of Trust says “This Deed of Trust secures a promissory note”, and if the promissory note is destroyed through permanent conversion, then the Deed of Trust secures nothing.  This is just like the situation with the strip of land with the unlaid pipes.  It’s lost property.  It’s unclaimed land.

As the Title owner, you have an obligation to defend your land and title. This is why we need to do a Quiet Title Action to reclaim our land to resolve the controversy.  In a Quiet Title Action, we basically issue a challenge to all parties wishing to lay claim on our property to come forth to provide proof of claim.

However, remember the rule of court is, the Plaintiff has the burden of proof.  In the following parts, we will go into uncovering proof. If you haven’t done so, please watch the 4 hour video series (this is available for you for free as a member of the Foreclosure Defense Program, normally it is worth $29) where we go through the specifics about establishing the burden of proof.  It is important for you to understand how the mechanics work together.

We will be suing your lender in State Court (this is called Circuit Court or Superior Court in California).  Typically, the State Rules of Civil Procedure and State Rules of Evidence will govern State Courts.  However, since we don’t know which State you are from, and for the most part, these rules are pretty similar, we’re going to talk about the Federal Rules of Evidence governing the admissibility of photocopies.

Specifically, we want to talk about Rule 1002 and Rule 1003.  Please click on these and read up on them. These should be similar with your State Rules of Evidence.  You should consult your own State’s Rules of Evidence to confirm. Basically, what will happen is your “lender” will bring to court photocopies of the Deed of Trust and Promissory Note to claim their rights as proof of claim in your Quiet Title Action.  The thing is…it is admissible unless you learn to object. The rules of evidence is simple.  A photocopy is admissible unless it is unfair to admit the photocopy in lieu of the original.

What you need to know is, under Uniform Commercial Code, your promissory note is a one of a kind negotiable instrument, just like a cheque. You can not go down to a bank and cash a photocopy of a cheque.  It has to be the real thing. Your promissory note contains the only legally binding chain of title.

A photocopy made years ago does not contain the chain of title. Basically, the argument is “sure, I signed a loan with you then, but we know you sold it. Can you prove that you still own it?”

Opposing Counsel will say, “but Your Honor, the plaintiff has the burden of proof.  He/She is alleging that we sold the note. Where’s the proof?”

And that’s where we are stuck.

If you do not have proof when you file a civil action, your case will be tossed out.  It is classified under “failure to state a claim”.

What typically happens when you file an action, opposing counsel will file a Motion to Dismiss.  They ALWAYS DO IT.  Expect it. (watch the video).  In order to survive the Motion to Dismiss, you must have sufficient proof.

And if you haven’t bought Jurisdictionary, please please do it.  This is an EXCELLENT resource if you intend to go to court.  I can not stress how much I love this product.  This product will save your life.

The first and simplest evidence we can bring to court is called Evidence of Movement.

In an Evidence of Movement situation, you closed with Bank A (let’s say Stearns Lending), who sells it to Countrywide (Bank B), who then got acquired by Bank of America (Bank C) ….who then securitizes the note into New York Mellons Bank Trust Series 12345. So, the Deed of Trust names Bank A as the Beneficiary.  But Bank C wants to foreclose.  Bank C comes to the court with a Deed of Trust pointing at Bank A (Stearns Lending).  Where is the Chain of Title on the Promissory Note that gives Bank C (BofA) the Right to enforce the note? If you have a situation like this, you might not need to get a securitization audit, although getting one would make your case much stronger and more likely to succeed. Often times, Bank C would come to the Court claiming “Your Honor, we have reacquired the note and now have the right to foreclose.”

If you encounter this situation, you must learn to object. 1) Show me the perfected chain of title.  If you have sold it, then you lost your right to enforce. Under U.S.Code Title 12: Banks and Banking PART 226—TRUTH IN LENDING (REGULATION Z), a servicer does not have the rights of a lender if it has acquired the note for the purposes of administration. . 2) Please stipulate for the record whether the note is part of a pooling and servicing agreement.  Please stipulate whether the note has been securitized.  Please stipulate who “New York Mellons Bank Trust Series 12323(of course yours will be different)” is, are they a REMIC? 3)

If the loan has been securitized, did you reacquired the note as an unsecured debt in the secondary securities market?  Are you acting in the capacity of a debt collector as governed under 15 U.S.C. §1692? Remember, this is fraud at its greatest.  Only the top echelon bankers know this scam.  Even their own Counsel do not know the scam that is being perpetrated here.  He is just taking his client’s word at face value.  He is hearing “we bought the note back” and accepts that the bank now has the right to foreclose. They don’t. Most homeowners who are confronted with this situation don’t know the scam either and run out of juice. Do you see how we structure our arguments here?  It was never “Show me the note”.  We are attacking them on the “show me standing” and “show me that you are the real and beneficial party of interest who has the right to enforce the note”.

If you can find the specific pooling and servicing agreement that contains your loan, you will find a lot of very interesting things that will break your case wide open.  Specifically, within the PSA, the originator must have delivered the note to the PSA within 90 days of closing.  This is often never done…or done in time. If you request for matching accounting records for this transactions, it will likely show that their own PSA clauses were not complied with…so you have a defective assignment…making your loan/deed of trust void. Be sure to read this REALLY GOOD ARTICLE from Matt Weirdner in Florida.   <- IMPORTANT MUST READ

Recently, the Comptroller of the Currency issued a Stop order for all of the top 14 servicers from foreclosing until they have undergone a review of their foreclosure procedure AND all future foreclosures have to verified by an independent third party.  I have included this report in the Reference file (found in Module 1) under: Banks Consent orders

Take a look at this.

Find your servicer listed here (if you can).  Then be sure to enter this as evidence to your case (whether to have the case dismissed in a Judicial process) or filing a quiet title in a non-Judicial process (in Module 6 and 7)  to stop the foreclosure.

Let the judge know that there’s a stop order in place by the agency that controls banking.  And that your “lender” is breaking the law. You will want to put a Motion for Judicial Notice of these cases and stop orders and attach it to your case…and TRO.  If you don’t know how to do this, use the Memorandum of Law in the Documents as a template.

Click here to see the press release directly from the Office of the Comptroller of the Currency.

We have lot’s of cases in the “Reference” file in Module 1 (please download and read these if you haven’t already done so.).

I have read literally thousands of documents and saved the very best for you in this Reference file.  Within Reference, you will also see a number of cases regarding MERS. Pay particular attention to: mers-citibank-not-real-parties-CA.pdf.

Take a look at this post: http://privateaudio.homestead.com/MERS.html.

It has a lot of good notations about who MERS is and what they can and can not do.  This is very important for you to understand if you are going to defend your points in court.

To see if your loan is being serviced by MERS, come here: https://www.mers-servicerid.org/sis/ You will find in the Reference download in Module 1 that has a list of case laws against MERS.  Be sure to take a look at these and include them/quote them in your  Action.

There is a good chance Fannie Mae or Freddie Mac owns your loan.  If you can find your properties here, then you can present this as evidence that your servicer (so called “lender”) is not a real party of interest.  This is critical evidence to bring forth in your civil action.  You must include this as a claim in your suit.

To find out whether Fannie Mae owns your note, please come here. Freddie Mac’s database is here.

IMPORTANT: DO THIS NOW.  Research whether these guys own your Note.  If so, then you have a crucial piece of evidence to bring to court. Remember, the investor is just a majority shareholder but is not in fact The Holder in Due Course…and therefore is not a real party of interest either.

Why is this so important?  This is a US Supreme Court ruling that says the Deed of Trust is the peripheral, and the Promissory Note is the “Thing”.

Imagine if you will, that the Deed of Trust is the tail, and the Promissory note is the dog.  He who owns the dog controls the tail.  He who controls the tail does not wag the dog.

Your lender will want to come in to lay claim on your title only showing ownership to the Deed of Trust without disclosing who the real and beneficial owner of the promissory note.  This is admissible unless you know to object.  If you quote this law when there is evidence of movement, then this will stop them in their tracks. Basically, it’s the same thing.  “Show me you have subject matter jurisdiction over this controversy”, “show me your proof of claim and title”.  He who controls and owns the promissory note, controls the Deed of Trust.

Look, State Civil Code requires that every party of interest in your property must record their interest at County Records.  So, any loan assignments must be recorded.  Any notices must be recorded.

To gather your evidence, you should head down to your local county recorder’s office and request for a complete printout of all recorded documents for your property from the date of subject loan. Go down and talk to your county recorder.  They will usually be able to help you get the “title search dump”.

You should get certified copies because you will likely need it for litigation. What you are trying to find is instances where there is evidence of movement…ie. the loan has been sold or securitized, but there was no corresponding evidence recorded at the County.

Also, if we want to show that MERS did an assignment of our Deed of Trust improperly (ie. we will be accusing them of fraudulent/invalid assignment in our Quiet Title Action), then having the documents to prove that they have done the Deed is critical in building evidence against our “lender”. Depending on how many documents/pages you have, this might set you back up to quite a bit of money in printing costs…and take about an afternoon. Obviously, if you already have copies of these documents…eg. you’ve already received the Notice of Default, then you don’t need to print these. This is a lot of work and might be a bit tricky.

Be patient and persistent. Another thing you should do is to customize the pre-written affidavit for your county recorder 001-County Affidavit.doc

For those of you who do not have clear evidence of movement, for example, you closed with Countrywide and the loan got acquired by Bank of America.  Or your loan went through Chase and is now just a servicer, or GMAC (and GMAC is now servicing), then getting a Securitization Audit might be a way to go.

Remember, as the Plaintiff, you have the burden of proof. Banks HATE HATE HATE these as it exposes their fraud.  It will be like having a photo of a bank robber with a gun aimed at a teller.  It’s them caught with their hands in the cookie jar…and it puts opposing counsel in a position of having to explain to the judge why he should not be sanctioned for bringing fraud before the court.

If banks hate these then it is good for us. Unfortunately, finding your loan in a pooling and servicing agreement is like finding the proverbial needle in a haystack.  It takes SO MUCH time. Law firms typically charge around $2000 for a securitization audit…some attorneys charge up to $4000 for one. We’ve found a great company who can do it for just $1495.  (non members pay $1795 for this service).

So, let’s go back to our role playing session earlier.

Opposing Counsel:  “but Your Honor, the plaintiff has the burden of proof.  He/She is alleging that we sold the note.  Where’s the proof?”

You:  “Your Honor, please see Exhibit C in our evidence as part of our initial complaint.  On Page X, you will find our loan listed as a permanent fixture in an SEC filing for the New York Mellons Bank Trust Series 1232342 REMIC in which this loan has been securitized.”

Judge: “Counsel, what do you have to say to that?”

Opposing Counsel:  “I don’t know about this your Honor.  I was informed by my client that they bought back the loan.”

You:   “Counsel, are you aware of FAS 140?  Under the Financial Accounting Standard 140, it says that once a loan has been sold into a pooling and servicing agreement, the lender forever loses control of the asset.”

“Are you aware that this loan is a permanent fixture of the New York Mellons Bank Trust Series 1232342 REMIC?”

“Where is the Chain of Title that gives your client the right to enforce the promissory note?”

“Are you aware that the promissory note has been discharged in the REMIC as a bad debt and that the individual share holders have received tax credit for this loss?”

“Are you aware that once a debt has been discharged, it loses its ability to collect?”

“Are you aware that your client bought the note as a discharged debt and an unsecured instrument?”

“I motion the court to have Counsel stipulate that you know with first hand knowledge that the note has not been discharged as a non-performing asset.”

if he can not, then say… “I motion the court to sanction opposing counsel for bringing fraud before the court.  Counsel misrepresents the facts in order to deceive the court.”

Take a look at this sample audit below:

Your audit also comes with a fully court admissible Affidavit.  What’s more, it is backed up by a fully QUALIFIED EXPERT WITNESS.  This is important because many supposed “securitization auditors” out there are a joke.  They would go for a weekend seminar and pay a few thousand dollars to be “certified”.  Just because they are “certified”, does not make them a credible expert witness, and when they are cross examined, their testimony will be struck from the record.

Also, other companies charge as much as an extra $600 for an affidavit alone.

Here’s an excerpt from our sample:

Look, I get it.  You are in a tight financial position.  Unfortunately, each audit takes about 20 hours of time from our auditor.  He is in high demand and there’s only one of him.  He is being used by attorneys to gather evidence all day long for their clients.

If you take the time to look at the samples, you will see how much time is invested in each audit.

Our goal has always been to make our services AS AFFORDABLE AS POSSIBLE FOR OUR MEMBERS.  Seriously, we are squeezing this price as low as possible for our members.

We will need the following scanned and emailed to info@consumerdefenseprograms.com

We can not proceed until you have provided us with all of the above documents.

Look, I know times are tough.  Coming up with $1495 is hard to do.  But having a securitization audit is one of the best chances you have to prevailing to expose the fraud. See sample of Sample Securitization Audit from Our Expert.

Disclaimer and Notice: This audit is done by a third party and has nothing to do with Consumer Defense Programs.

Want to have someone prepare all your pleadings for you once you get your Audit?  This way, you don’t have to worry about researching prior case laws, your local Rules of Civil Procedures, etc.

With this package, we will not only go through your documents with a fine tooth comb. to create the best Audit money can buy…once we have the audit, we will send it over to our paralegal firm who will then prepare all the paperwork for you so you can just file it in pro se without an attorney.

What’s more, we will cover all the ongoing paperwork…all the ongoing responses, additional motions, and request for discovery documents for you.

Disclaimer and Notice: This audit is done by a third party and has nothing to do with Consumer Defense Programs.