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Dec
03

Consumers Beware of Gas Well Leases, Especially Around the Holidays

By | Securitization-MBS

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For those contracts professors who teach Peevyhouse v. Garland Coal & Mining Co., 382 P.2d 109 (Okla. 1962), there is a modern version this 1962 case going on right now in the gas drilling context. In the venerable Peevyhouse case, Willie and Lucille Peevyhouse owned a farm that contained coal deposits, and entered into a contract with Garland Coal & Mining Co. allowing Garland to strip mine the coal, in return for a royalty. In the contract, Garland promise that the land would be restored once they were done. The court refused to enforce the clean-up provision, however, finding it incidental to the main purpose of the contract. The land was left a hot mess.

Yesterday’s New York Times reported on the perils of modern gas well leases. It reported that many homeowners in Pennsylvania, Colorado, and West Virginia have seen their water sources contaminated as a result of such drilling and that based upon a review of the New York Times of over 3,000 lease and other documents, fewer than half of the landowners had any recourse under the contracts for the contamination or for the waste pits being left on the land after the fact.

There are significant parallels between these gas leases and the Peevyhouse contract. Both are one-sided to say the least. Gas leases are peddled in Texas, Maryland, New York State, Ohio and the other states mentioned above by people called landsman, who have their own trade association and who frequently hawk the leases in rural poor areas, especially around the holidays when people need extra cash. The drilling companies often leave dangerous waste on the land and the leases do to require then to clean up. If they do clean up, the costs are frequently deducted from the revenues the landowner receives. The risks of land and water contamination are not pointed out to the landowners. The leases last 3-5 years but can be extended indefinitely by the drilling companies, making it hard for consumers to ever get out of the arrangements. The article says eight states have state laws requiring drilling companies to clean up their messes but the others do not. Another example of consumer beware.

Aug
16

Credit Card Securitization and Skin-in-the-Game

By | Securitization-MBS

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I have a new paper on credit card securitization and what it teaches us about the likely effectiveness of the Dodd-Frank Act's skin-in-the-game risk retention requirements. Credit card securitization has long required 4%-7% credit risk retention (cf. 5% under Dodd-Frank).  

I argue that when combined with other features of credit card securitization it was actually counterproductive at aligning issuer/securitizer and investor incentives and likely contributed to rate-jacking. Instead, credit card securitization didn't go off the rails like mortgage securitization because of the existence of implied recourse, effectively 100% skin-in-the-game. This suggests that skin-in-the-game cannot be relied upon as a one-size-fits-all cure. Its effectiveness will instead depend on the other securitization features with which it is combined.  

If you're interested in going into the sausauge factory of credit card securitization, there's plenty of gore and detail here for you. If you're interested in the connections between credit card securitization and rate-jacking, there's something here for you. And if you're interested in whether Dodd-Frank's risk retention requirements will be effective, there's something here for you too.  

The (overly long) abstract is below the break:

The Dodd-Frank Act’s “skin-in-the-game” credit risk retention requirement is the major reform of the securitization market following the housing bubble. Skin-in-the-game mandates that securitizers retain a 5% interest in their securitizations. The premise behind skin-in-the-game is that it will lessen the moral hazard problem endemic to securitization, in which loan originators and securitizers do not bear the risk on the ultimate performance of the loans. 

Skin-in-the-game requirements have long existed in credit card securitizations. Their impact, however, has not been previously examined. This Article argues that credit card securitization solves the moral hazard problem not through the limited risk retention of formal skin-in-the-game requirements, but through implicit recourse to the issuer’s balance sheet. 

Absent this implicit recourse, skin-in-the-game would actually create a severe incentive misalignment between card issuers and investors because card issuers have lopsided upside and downside exposure on their securitized card receivables. The card issuers bear a small fraction of the downside exposure, but retain 100% of the upside, should the card balance generate more income than is necessary to pay the investors. 

The risk/reward imbalance creates a distinct problem because the card issuer retains control over the terms of the credit card accounts. Prior to the Credit CARD Act of 2009, the issuer could increase a portfolio’s volatility through rate-jacking: when interest rates and fees are increased, some accounts will pay more and some will default. Per the Black-Scholes option-pricing model, the increased volatility benefits the issuer because of the risk-reward imbalance. 

Despite the problems posed by the risk-reward imbalance, credit card securitization avoided the excesses of mortgage securitization. The explanation for this is that credit card securitization features complete implicit recourse. Implicit recourse exists because credit card securitization is not about risk transfer, but instead about regulatory capital arbitrage and creating a funding and liquidity source for the issuer. 

The implication of this study is that skin-in-the-game requirements alone may be insufficient to ensure against moral hazard problems in securitization. Instead, the effectiveness of skin-in-the-game is highly dependent on its interaction with other variable features of securitization transactions.
Mar
07

From The Clerk of Court- “There is no need to PANIC” (Which means to me that it’s time to panic.)

By | Weidner

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foreclosure-titlesOkay.  The Clerk of Court takes the time to reach out to all the readers in a major metropolitan area.  Just when I think I cannot get more blown away with what’s happening in our country and in our courts, something even more extraordinary happens. BUT THIS MAY BE ONE OF THE MOST EXTRAORDINARY YET….PLEASE READ ON.

As Florida’s foreclosure crisis continues, I suggest that property owners conduct regular and routine public records searches, every six months to a year, for faulty liens and other documents that may be filed against their property.

Just as you would run a credit report to protect your identity and credit rating, Manatee County property owners may go to ManateeClerk.com and conduct a public records search. An easy step-by-step guide is on the homepage.

An astronomical number of foreclosure cases have been filed in Florida in the past few years. As the foreclosure process and “foreclosure mills” came under scrutiny for inaccurate documentation and other issues, the need to show clear and accurate title to one’s own property came to the forefront.

There is no need for panic. This is a preventive measure that homeowners should take just to be sure there are no issues with their title. From my office’s website, a property owner can conduct a completely free search any time of day, any day of the week.

What should homeowners do if they find a filing or document that does not look familiar or is not theirs? Homeowners do have recourse. The first step is to contact the party that filed so they can correct the information. The filing party’s contact information is readily available on the document. If the dispute cannot be resolved, the homeowner can file a civil case to remedy the record.

People who own property in other Florida counties can search directly on that county clerk’s website or conduct a public records search on myfloridacounty.com.

R.B. “Chips” Shore

Bradenton

Read Sarasota Tribune Article

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Aug
01

Analysis and Stories of Quiet Title Action

By | Foreclosure Blog News, Homeowner Resources, Weidner

3 Comments

And an upcoming book too which I can’t wait to buy and read. I have always believed that quiet title actions are the key to this whole mess — basic  black letter law applied fairly and consistently with the law of contracts, the law of property, and the recording laws of each state. It helps to be able to know more than your opponent when it comes to the securitization of your loan. This is a good read.

Comment on Mass Extinction of Pools Becomes Clearer by Dave Krieger

Today, July 30, 2010, 13 hours ago | Dave Krieger
Avirani and Indigo …

I have been working on a book about this whole mess for quite some
time and it is about to be published. The book presents several angles
on attacking the lenders. Your takes on WITHOUT RECOURSE are a
blessing, since you are citing case law.

All of these posts (pertaining to anonymous) do come with a caveat.
Bear in mind when you post that the banks are reading this blog too. I
happen to know of a few law firms right now (foreclosure mills) that
read this blog on a daily basis. I also know of a few judges that are
reading this blog as well. All of this I know through direct contact
with clients, as well as assisting their attorneys as a paralegal with
case work.

RE: UCC … every case is state specific. You can’t quote the federal
UCC because the states have adopted it into their own versions and
altered it to please the political machinery. Max Gardner told me
this. In my research for the book, I have talked to hordes of
attorneys about this stuff and they are very candid when they say that
these foreclosure mills, all part of the grand scheme, are fully
briefed by the banking community as to how to answer these suits and
what they can and cannot get away with. The mavericks that tend to
become arrogant (like Stern) get caught bringing fraud on the court.
Aside from that, the individual attorneys I have spoken with admit
that they do not have the resources to share information as readily as
the foreclosure mill networks do. This is why we have a problem.
Attorneys have egos and the more successful ones know that if an
outside source brings them something credible that sounds plausible
enough to win with then there’s a chance the homeowner is going to get
results.

Seemingly expected … not all of the stuff I share with the hosts of
this blog get shared with the community. When you know that the “other
side” is watching what homeowners are posting on this and other
related blogs, you will find bits and pieces of interjections that are
designed to sway the reader or as in a court case, “get them off
point”. The best way for a defendant lender to win is to get the
Plaintiff homeowner off point, to where the plaintiff goes off on
serious, unproven, unchartered, unsupported (without case law)
conspiracy theories that have no merit because they are just that,
theories.
This is true … your allegations of disinterested counter parties
lodging false information on these blogs has merit.
One can only verify through (1) research; and (2) discovery.

This is why I wrote my book on quiet title actions (along with
everything else in the kitchen sink). In order to weaken the other
side, thousands of lawsuits a week are going to have to get filed,
because there are NOT enough foreclosure mills to defend them. True,
the court system will be clogged like a sewer with these actions.
True, a lot of these banks will typically get their attorneys to
remove the case to federal court, thinking they can get a slam dunk on
diversity jurisdiction (multiple defendants from other states makes in
federal according to their rationale) so they can get a 12(b)(6)
ruling. This is why the entire cause must be centered around quieting
title.

Instead of going after all of these counts, as I have seen in the
past, take only the quiet title as your lead cause and build your case
using key points (not as counts, but as predicators) … this is what I
have seen the good attorneys do in their pleadings … and believe me …
these class actions inure to the benefit of the attorneys that file
them and because of the class, only one law firm needs to take it on.
If you’ve got thousands of homeowners filing quiet title suits in
state court (sticking to state statutes) the lenders do not know how
to react. They usually are in the driver’s seat, foreclosing on the
homeowners. They have a scheme for that. They have a tested
methodology that has worked up to a point. They know what they can get
away with … at least up until now. You will notice that the suits that
are winning are individually filed or individually defended.

If you do not have the Federman decision … I would be happy to send it
to you, as it doesn’t seem to be posted on here. The last paragraph of
the order invites Bank of America and MERS to come forward and produce
documentation to prove agency. Hon. Arthur Federman is a very smart
and highly regarded bankruptcy judge. It’s just too bad that people
don’t read his decisions BEFORE filing bankruptcy. (I sent the Order
to Neil but I haven’t seen any reference to it being posted on here
yet. hint hint)

The banks either (1) can’t produce the note; or (2) tie themselves in
some way through contract to prove agency. I write about that in my
book. These flaws are NOT hard to prove. I have talked to attorneys
who say that the banks’ attorneys come into court with a pomposity
that reeks when they walk in the door. They are not expecting any
attorney to be able to wade through the gobbledygook of paperwork and
arguments they present, because generally, the homeowner has hired a
lawyer that doesn’t know his a** from a hole in the ground. (Neil is
right on that point.)

In quiet title actions, supporting state case law is very relevant,
because the judges’ law clerks can research it and apply it to your
case. If you start putting in federal questions, you give the other
side cause celebre to remove it to federal and slam dunk you. Quiet
title actions are a state right and no federal judge can quiet title
to property sitting in state jurisdiction. The filings are in the
county recorder’s offices (and I seriously doubt that 99.9% of all
borrowers signing the Deed of Trust even knew what the hell they were
signing).

The theories of who loaned who credit and who got paid first and who
got screwed second is NOT the crux of your case. It’s the original
documentation that created the fraud and the subsequent filings in the
county courthouse that become part of your quiet title action. You
see, most states declare in statute that as long as you retain
possession at the time you file a quiet title suit, you can move
forward, even if you are in foreclosure. Some states even allow quiet
title actions to be filed POST FORECLOSURE, POST EVICTION! Again, this
is state specific, where federal law and rules cannot be applied. This
I know from research. I cannot give this out as legal advice
obviously.

Blogs are great sharing tools provided the information being shared is
credible and can be verified.

The lenders’ foreclosure mills shrink up like a man with erectile
dysfunction when placed under this kind of stress, because of the
burden of proof is virtually split between the Plaintiff, who makes
allegations supported by case law and the Defendant lender that has to
tie all of the ends together. Once the quiet title action is filed the
lender can’t go back in and record documentation after the fact to
perfect their security interest … they have to bring it into open
court, where you can impeach it. I have two successful quiet title
actions under my belt personally, so I know how they work.

I also happen to know what the “four corners” rule/doctrine is. It’s
the entire content of the page taken as a whole versus the specifics
contained therein. This is very useful in wrongful foreclosure
actions. Couple a wrongful foreclosure action with quiet title … and
then find your state statute that makes it a state jail felony to file
such fraud with the county court clerks/recorders/register of deeds …
bring the local county recorder and the DA into your case; show them
the docs; show them where they are suspect; get them on your side; the
judges ruling on your cases are more likely to see reason because you
have the county working with you to stomp out fraud. Even as a pro se
Plaintiff (which I shudder to think could pull this off, but could) it
would lend a lot of credibility to your case if you have outside
sources with credibility jumping into the fray. This is how County
entities that record documents, such as deeds of trust, become aware
as to WHY they are being deprived of income because of MERS. … and let
me tell you here and now MERS ain’t no Viagra. If you look at your
original deeds of trust and see who the players are, you will figure
out WHY the whole thing is a fraud, without me having to get on here
and tip my research to the banks who are wondering the same thing.

Comment on Mass Extinction of Pools Becomes Clearer by gwen caranchini

Today, July 30, 2010, 13 hours ago | gwen caranchini
This is a great post from Dave who I am using myself to help me in my
pro se case–I am a former trial attorney of some 30 yeasr in civil
rights cases in Fed and State Courts so “pro se” for me is a bit
different. Dave is always right on with his case law and his theories.
The def are attempting to remove my quiet title action to fed ct and I
am objecting. I have also filed a complaint with the FBI alleging the
fraud in the HAMP program based upon what is going in in my case and
the fraud in the MERS filings which when you look at all the docs at
the courthouse TOGETHER the fraud becomes clear in several different
ways. Dave is the brightest paralegal I have ever met and should be a
lawyer. I have never had one thing he sent me prove to be wrong–this
guy has also got the common sense approach to this and is not out
there with legal theories that are hard to prove. He knows too what
dis we need. You all would do well to listen to him, get his posts and
use his services.

Comment on Mass Extinction of Pools Becomes Clearer by gwen caranchini

Today, July 30, 2010, 11 hours ago | gwen caranchini
Stupendous Man–the case Dave is referring to is “In Re Box” decided
June 3 before Arthur Federman in the United States Bankruptcy Court
for the Western District of Missouri. I sent dave that case. It is a
wonderful decision, especially the last page. A bit of an update on
that case as I spoke to the Trustee’s office as a followup. Apparently
BAC continues to ask to be heard at creditor’s meetings on this matter
even after relief from stay was denied BAC. The trustee is refusing to
acknowledge BAC has a position at the creditor’s meeting because it
has not proved it holds the note in question as Judge Federman found.
The last page of Federman’s decision told BAC that when they had the
note or claimed to have the note they could ask for an evidentiary
hearing that showed they had the note and could establish agency for
being able to seek foreclosure on the note. To date, some 7 weeks
later, they have yet to do so and given that the Trustee continues to
deny them the right to speak at creditor’s meetings.

Comment on Mass Extinction of Pools Becomes Clearer by Dave Krieger

Today, July 30, 2010, 11 hours ago | Dave Krieger
The basic quiet title actions follow to form and purpose. You use
whatever basis for your claim as necessary. There are a lot of
templates you can use out there. Many attorneys use ProDoc which have
state specific stuff in it. If you look at cases that are specific to
your cause and you go to the law library to look them up … find cases
that are specific to your area or where someone has filed pleadings in
a court near you. Then go to that court with the case # and get a copy
of the pleadings directly from the case file. You can then see how it
was formatted. Before you pay for pleadings though, make sure the
outcome was positive via the case cite. No sense pulling case
pleadings that were incorrectly plead. The case cite itself will tell
you whether or not the case was successful in the case of the
homeowner. My two quiet title actions were against a defunct
corporation in Arkansas over resort property I acquired from the
state. They did not challenge, thus I was awarded. I didn’t have to
prove fraud. This is part of how you make money on tax deed sales, by
quieting title BEFORE you sell. Since I invest in real estate, quiet
title actions have been a particular interest of mine for some time.


Filed under: foreclosure
Jul
26

Actual Fraud and Constructive Fraud and Other Fraud

By | Foreclosure Blog News, Homeowner Resources

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From M. Solimon

Editor’s Note: Pretty Good Entry From M. Solimon discussing aspects of fraud. I would add the following:
  1. FRAUD: A false statement wherein the speaker knows it is false, intends for it to be relied upon to the detriment of the receiver, who does reasonably rely on it to his/her financial detriment.
  2. FRAUD IN THE EXECUTION: A trick where the signor believes he/she is signing something other than what the document says it is. Probably applicable in the mortgage mess because the truth is people did not know they were signing the equivalent of their own financial destruction whereas the parties presenting the document pretended it was a standard mortgage loan that had been properly subject to industry standard verification and underwriting standards.
  3. FRAUD IN THE INDUCEMENT: A lie causing a person to execute a document, and otherwise meeting the definition of FRAUD as above. Examples “This is the fair market value of your new house,” or “Housing prices always go up, nevr down,” or “we’ll be able to refinance the property, give you more money out of it, all before the time for reset of the payments.”

Deceit and fraud are defined separately in statutes. Under Civ. Code §§1709 and 1710, deceit is defined in simple terms. See Civ. Code §§1572 for both actual fraud and 1573constructive fraud.

Loook at Liability for actual fraud is limited to acts committed by or with the connivance of a party to a contract with the intent to deceive another party to the contract and induce that party to enter into the contract. Look under Civ. Code §1572

Deceit is appropriate under a material beach or perhaps cause of action. The notion of a lender, who willfully deceives its borrowers or customers leading to foreclosure so to remedy an investor issue and to avoid recourse.

]I suggest you use it there or for the servicing argument for showing the willful intent to induce the consumer homeowners of a right to modifications ad compliance with 2923. to alter his or her position towards litigation (and eat up the balance of legal reserves their intended for a defense and their attorneys). These guys, I know all too well and it’s all too much. The consumer’s injury or risk is liable for any damage suffered as a result of the deceit. [Civ. Code §1709] etc, etc.

My take on this is too isolate the actual fraud that consists of any of the following acts, committed by or with the connivance of a party to a contract who is the assignor and its agents and not the successors.

The argument is it is with willful intent a lost beneficial interest woefully deceives a trustor or mortgagor to the contract, solely to induce the other party to enter into the contract [see Civ. Code §1572]:

Deceit and Actual Fraud combined

•Servicing rights violate SEC 1122 AB,
•Accounting rules violations under FAS 140, FIN 115,
•Trust assets are restricted to passive investments,
•Lenders controlling interest revoke the powers of sale and foreclosure,
•Parties lack standing to bring a foreclosure by appointment,
•Conspiracy to commit fraud where Trustee, Beneficiary and Transferee are all one in the same
•Bid rigging at trustee sale
•Fraud perpetrated against the country recorder
•A nominal interest has powers that conflict in the original assignment,
•Violations of the Code of federal regulations “CFR”
Your feed back will be critical and evident where I have gone as far as I can. It’s not getting through to skilled litigators that still don’t get it. Maybe I am lacking your codifications eloquence and ledger capacity to zero into the abuses of GAAP in more subtle terms; LOL!

he head of the OCC stated in 2009 “I don’t know why getting relief from offering modifications is not working?”

It’s simple “BECAUSE LENDERS FORECLOSING DON’T OWN THE ASSETS THEY SOLD ….for starters.

That said, even after the effort and inability for the US Secretary to further tweak FASB to get them to completely roll over.

Few are winning here. Even Judges who are deciding the matter favorably are commenting from a wrong perspective. There is no demand on UCC judicial interpretations for perfection in a bonefide sale.

The District Courts hearing these chapter proceedings provide comments after deciding the matter favorably are merely suggesting it’s all about “get it right next time”. That wrong where it says’s to a lender they can bring it back, even when a decision is favorable.

The key arguments come down to the fact the lender transfers each receivable as a “whole loan” sale. For Pete’s sake, looks at the general ledger where the asset was entered as a “Receivable” and “Loan Held for Sale”.

That’s not “Loan Held to Maturity” but “Sale”.

The cost to capitalize and reserve a 30 year loan held to maturity defeats the arguments lenders are making that “they did not sell the subject loan. It’s the old “blank assignment” gimmick. Its arguments are lost in court where the problem peaks the Judges curiosity and that’s about it.

We know the value of the open assignment argument is defining for the court where it’s a bank surety and liquidity play. It’s also a GAAP disclosure fraud.

Therein the consumer is disadvantaged arguing defects after being instrumental in a lenders shuffling of assets for maintaining REPO requirements and in its pursuit for shareholder earnings and profitability.

My take on the matter is to let them have the consumer’s home. The consumer then makes the lender pay the price of foreclosure claiming recognition, for reclassifying the sales as debt and restating earnings.

These UD attorneys are so smart that they may cost these bank power houses a debt load totaling about $3 trillion and more in liabilities left off the books. It’s a scary thought actually where you put Citigroup out while not looking and as they still struggle with a $65 billion tax tab carried by consumer taxpayers. BAC may end fighting for their life with a private right to call receivership.

Foreclosures cannot continue in violation of GAAP and where lenders circumvent basis accounting laws while continuing to force the sale treatment issue and while denying they are controlling assets.

It’s the best of both worlds with sale on the front side and as if it was leveraged borrowing upon liquidation and egress.

As we sit I’ll show you the subtle instances of apparently innocent manipulation and confusion befallen o to the courts from errors and omissions which lenders are getting away with. That is happening as the courts say . . . . So what!

The errors and omissions are the desperate means for seeking to maintain some semblance of SFAS140 adherence while employing lawyers as third parties appointed by agents of agents by a nominal interest.
I personally have given up on the right MERS arguments as MERS is entitled to act as an accommodation and even a nominal interest, possibly.

It’s just so easy for one to see the obvious that it has become lost. The nominee cannot execute instruments upon being replaced by the signature below it. Hello guys, right! That’s the purpose of the nominee! And, while one courts rules in favor of the consumer it misses the call.

Something basic is getting lost and I’m not getting through. Unique “floating” entities cannot appear from nowhere to execute assignments by virtue of meritless appointments.

If one of your cases is picked up by the Fed it should register a nice settlement . As one District court judge put it with disgust. . . “The SEC is turning into a penalty and fine system where they are to quick to settle the matter for a couple hundred million every time allowing the defendants’ to save face.”

“That’s not bad!

The US AG office thinks there is a case for bid rigging but I’m not sure the AG’s office knows where to look. Yet as one Judge told me in court “speak English.”

The precise and distinct GAAP and FASB rules violation are clearly demonstrated in each foreclosure. Lenders are violating GAAP even with the recent codification, including revisions and interpretation.

It’s all mind boggling when you consider the distance in communication here and counsel’s alternative to grab the lowest hanging fruit. . . .A RESPA audit (what is that anyway) and a QWR that together are just not going to cut it.

These bank execs fail to realize maybe that these and other Enron style crimes, like those stated in the Fastow confessional, will gets you 10 years . . .at least.

M.Soliman
Witness to Counsel
Expert.witness@live.com


Filed under: foreclosure
Jun
28

WITHOUT RECOURSE: Hangman’s Noose

By | Foreclosure Blog News, Homeowner Resources

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By Collete McDonald

Editor’s Note: Ms. McDonald hits the nail on the head with this article. You should incorporate it word for word in any relevant memoranda. Why is this important?

Because most of the “notes” (assuming they were the real notes and were timely indorsed and not back-dated) are presented as having been indorsed “without recourse.” Your opposition is counting on the fact that you don’t know the UCC, and you don’t know anything about indorsements.

This is another case where the instrument could appear valid on its face but for the fact that it is a fake. In this case the words “without recourse” on a note (executed as evidence of an obligation on a home loan) is contradicted by the very instrument that authorizes the indorsement — the PSA (Pooling and Servicing Agreement). The PSA ALWAYS provides for conditions, terms and provisions that are exactly the opposite of “without recourse.” These conditions have a negative effect on the negotiability of the instrument. So not only do we have a case where the “assignment” or indorsement” was merely an offer that was never accepted (and could not be accepted as per the terms of the PSA) but you also have an instrument that could not be negotiated under the terms expressed on it.

WHAT ARE THE CONDITIONS EFFECTING THE INDORSEMENT “WITHOUT RECOURSE?”: Well the main one is that the pooling and servicing agreement states that if the loan becomes non-performing, the assignor must replace it with either cash or another performing loan. Nothing could be more clear that the indorsement was WITH RECOURSE.

The bottom Line: Most if not all “assignments” or “indorsements” are without effect, which means that the party having legal title to the instrument is the party named on it. And THAT means that each time the opposition attempts to establish authority under the chain of securitization, they are actually making the case that they have no such authority. You can’t come to court and say I am the Trustee for asset backed Pool XYZ which has ownership of this loan” and then turnaround and say you also have authority (legal authority supporting the power of sale in non-judicial states and the standing to foreclose in judicial states) to represent the “lender.” Not if the “lender” is named on the note as payee and on the mortgage or deed of trust as the lender.

If they want to establish some equitable right to enforce the note, they MUST file a judicial action.

WITHOUT RECOURSE:

A phrase used by an endorser (a signer other than the original maker) of a negotiable instrument (for example, a check or promissory note) to mean that if payment of the instrument is refused, the endorser will not be responsible.

An individual who endorses a check or promissory note using the phrase without recourse specifically declines to accept any responsibility for payment. By using this phrase, the endorser does not assume any responsibility by virtue of the endorsement alone and, in effect, becomes merely the assignor of the title to the paper.

A without recourse endorsement is governed by the laws of commercial paper, which have been codified in Article 3 of the Uniform Commercial Code (UCC). The UCC has been adopted wholly or in part by every state, establishing uniform rights of endorsers under UCC § 3-414(1).

A without recourse endorsement is a qualified endorsement and will be honored by the courts if certain requirements are met. Any words other than “without recourse” should clearly be of similar meaning. Because the payee’s name is on the back of the note, he is presumed to be an unqualified endorser unless there are words that express a different intention. The denial of recourse against a prior endorser must be found in express words. An implied qualification, based on the circumstances surrounding the endorsement to a third party, will not be recognized by the courts. An assignment of a note is generally regarded as constituting an endorsement, and the mere fact that an instrument is assigned by express statement on the back does not make the signer a qualified endorser.

The qualification without recourse, or its equivalent, is limited to the immediate endorsement to which it applies. It may precede or follow the name of the endorser, but its proximity to the name should be such as to give a subsequent purchaser reasonable notice of the endorsement to which it applies.

A person might agree to accept a check without recourse if the person believes she could collect the money in question. Often the purchaser of such a note will acquire it at a substantial discount from the face value of the note, in recognition that the purchaser can only seek to collect the money from the original maker of note.

An example of a without recourse note is a personal check written by A, the maker, to B, the payee. B, in turn pays off a debt to C by endorsing the check and adding the without recourse phrase. If A’s bank refuses to pay C the check amount because A has insufficient funds in his checking account, C cannot demand payment from B. C will have to attempt to collect the money from A.


Filed under: CDO, evidence, foreclosure, foreclosure mill, GTC | Honor, HERS, Investor, Mortgage, Pleading, STATUTES, trustee Tagged: assignment, Collete McDonald, conditions, indorsement, legal title, negotiable instrument, PSA, UCC, UCC § 3-414(1)., without recourse
Jun
28

Freddie Mac / Bank of America / Taylor Bean Whitaker – IMPORTANT INFO & STATEMENT REGARDING ASSIGNMENTS… TRANSFERS… NOTE OWNERSHIP!!!

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Freddie Mac / Bank of America / Taylor Bean Whitaker – IMPORTANT INFO & STATEMENT REGARDING ASSIGNMENTS… TRANSFERS… NOTE OWNERSHIP!!!

Today, June 21, 2010, 31 minutes ago | Foreclosure Fraud “Indeed, it appears as though many loans and other mortgage-related assets have been double and even triple-pledged to various constituencies“

6 21 10-Freddie-Objection-to-Boa-in-Re-Taylor-Bean-amp-Whitaker-Mortgage-Corp1

6 21 10 Boa-Answer-to-Freddie-Objection-in-Re-Taylor-Bean-amp-Whitaker-Mortgage-Corp1

By Nye Lavalle

In my 1999 21st Century Loan Sharks Report, I coined and defined the term “Predatory Mortgage Securitization” (see

http://en.wikipedia.org/wiki/Predatory_mortgage_securitization)  in my report from MY PERSONAL RESEARCH AND ANALYSIS I DEFINED SOME THE FOLLOWING PRACTICES THAT DEFINED Predatory Mortgage Securitization….

Securitizations that are termed and classified as “whole loan” and “true” sales “without recourse” that are really financing mechanisms with undocumented side deals and agreements for recourse which may not be able to be classified as investments in real estate and may have tax and reporting consequences for purchasers; Stamping, filing and recording loan and mortgage instruments that indicate loan was sold “without recourse” when in fact there were recourse provisions; Failing to record in country records the true and real ownership, assignment and endorsements of promissory notes, deeds and other mortgage documents which were part of sale, assignment or transfer; Knowingly accepting via computer tapes the principal balances of loans offered for securitization when the servicers, investment bank or securitizer has knowledge that problems or potential fraud existed in the servicing operation of the bank, servicer, broker originating, selling, assigning or transferring the loan; Knowingly accepting via computer tapes the principal balances of loans offered for securitization when the servicers, investment bank or securitizer has knowledge that problems or potential fraud existed in the servicing operation of the bank, servicer, broker originating, selling, assigning or transferring the loan and the new owners, servicer and assignee securitizing the loan pool does not possess the full and complete loan transaction histories for each borrower; Knowingly accepting loans and not disclosing to investors problems with loan documentation; missing, altered or fraudulent documentation in loan file; chain of titles and ownership; threatened legal actions; current regulatory actions or complaints made about loans assigned; Reporting problems or improper custody, maintenance and control of promissory notes, deeds and other loan documents; Offering for sale and securitization interests in notes, deeds or other mortgage instruments that the servicer or securitizer does not have a real interest in; Offering for sale and securitization interests in notes, deeds or other mortgage instruments that the servicer or securitizer does not have in their custody or control; Offering for sale and securitization interests in notes, deeds or other mortgage instruments that the servicer or securitizer has offered for sale to someone else; Offering for sale and securitization interests in notes, deeds or other mortgage instruments that the servicer or securitizer is owned by someone other than party identified in the prospectus; In essence on thousands of occasions I stated to regulators, CEOS, banks, Fannie and Freddie that the practices of the banks were that they were double and multi-pledging assets and pledging paid off and refinance notes to securitizations.  This is something April, Max and I have discussed for years now.  Now, they come and admit that each of my allegations were true  Without analyzing the deal, as complex as they are, you WILL NEVER KNOW IF THE FORECLOSING PARTY HAS “ANY” RIGHT TO FORECLOSE!!!

The motives I identified for the “Blank Endorsements” and missing assignments and “pre-notarized” “Blank Assignments” and “Blank Allonges” that “were placed into the “custodial/collateral” files were to be able to:

Multi-pledge collateral (Notes) so as to cook the books; In case of bankruptcy, allow the entity in possession of the notes to simply transfer to another entity to be decided or themselves the notes etc… so as to keep out of the bankruptcy estate of the bankrupt creditor; To pretend to show that a “true sale” occurred when in reality the so-called lenders were financing their receivables; Complete and change chains in titles to notes that were toxic where fraud was known and HDC could be achieved; Shuffle the ball (note) under the shell (owner) so as to subvert TILA, RESPA, and FDCPA claims and other lawsuit claims and any related HDC and assignee liability issues.

Now, in BOA’s Motion in the TBW case, they prove my allegations that the notes were multi-pledged and my statement for years that unless you see where each note comes on and off the books, and review the custodial documents, you will NEVER KNOW WHO OWNS THE NOTE and has any right to accelerate, amend, modify, settle, payoff, satisfy, return, and cancel the note, let alone authority or standing to foreclose.

Here is the key part from the motion….

On numerous occasions, the Debtor has informed the Court and other parties in interest that one of the biggest challenges in this case will be sorting out the competing claims to cash and other assets that flowed through the Debtor’s accounts prior to the bankruptcy filing.

Indeed, it appears as though many loans and other mortgage-related assets have been double and even triple-pledged to various constituencies. According to the Debtor, the largest single source of disputed funds—more than $548 million according to the Debtor’s Second Interim Reconciliation Report—relates to Freddie Mac. Indeed, BofA believes that there were improper diversions of Ocala loans and assets from TBW to Freddie Mac, and Ocala may have valid ownership claims with respect to a substantial portion of assets that relate to Freddie Mac. Accordingly, there can be little doubt that BofA, in its representative capacities with respect to Ocala, has a valid and pressing need for information regarding Freddie Mac’s extensive relationship with the Debtor, which is directly relevant and necessary to evaluate the Debtor’s property, liabilities, and financial condition. In just a few weeks, the Debtor intends to file an Asset Reconciliation Report that will identify with greater specificity (but, importantly, not resolve) the remaining issues with respect to ownership rights. As a result, the need for BofA to gain access to documents in Freddie Mac’s possession has become particularly urgent.

Among other things, BofA needs to obtain documents from and examine witnesses at Freddie Mac to (1) evaluate competing claims against the estate, (2) test the assumptions contained in the Asset Reconciliation Report, and (3) examine Freddie Mac’s claim of ownership with respect to certain mortgage assets and its custodial arrangements with Colonial Bank for those assets. Despite these time sensitivities, Freddie Mac has so far blocked BofA’s ability to obtain any of this information, including those documents that have already been produced to the Debtor and counsel for the Committee. In its objection, Freddie Mac goes to great lengths to characterize the BofA 2004 Motion as overly burdensome, massively expensive, improperly motivated, and generally disruptive to the ongoing discovery between the Debtor and Freddie Mac. Even if such arguments had any merit under the circumstances (which they do not), the simple fact remains: nearly three months after the Court entered its order on the Debtor’s Rule

2004 motion authorizing and directing examination of Freddie Mac, BofA has not been able to review a single document… Be sure to sift through the files below… Fascinating…


Filed under: foreclosure
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