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“How to Beat the Banks at Their Own Game”

Home Forums General EHTrust/EHT Topics and Creative Real Estate Financing “How to Beat the Banks at Their Own Game”

This topic contains 30 replies, has 0 voices, and was last updated by Avatar of darryl darryl 8 years, 5 months ago.

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  • #34103
    Avatar of darryl
    darryl
    Member

    @Buzzbox wrote:

    Darryl,

    Wow, Great stuff! This will take sometime to absorb. I’m working on it.

    How this information ties into understanding how to achieve a mortgage settlement is key.

    Can settlement, when armed with this knowledge, allow the matter to be resolved administratively, or must one revert to judicial action at some point?

    I also wonder, whether a forensic examination of the loan documents and processing are needed?

    A judicial action is necessary and a forensic examination isn’t needed.

    #34104
    Avatar of buzzbox
    buzzbox
    Participant

    Thinking this through a bit:

    It seems to come down to who is left standing. By standing I mean, a person or entity who holds original documents and who can show, if called upon to do so, that said documents were properly and cleanly obtained, according to the UCC requirements, transferred from one person to another without a critical flaw in the process.

    A very careful study then of the transactions occurring in the sale or assignment transfers, from closing, seems key, as well as the use of MERS, if one is to locate and identify all the fatal faults in the process. Perhaps this will be sufficient to show that no person can properly claim standing as a holder in due course.

    We then use the P.S.A. and securitization process to determine what further influence and manipulation of the note and collateral documents was employed, to reveal what has happened.

    All this information, (you must assemble the facts first) which properly documented, becomes our set of persuasive arguments to present for judicial review. That is, to show that no person, in this long chain, has standing or is a holder in due course.

    The question is how does one go about organizing and collecting this information?

    #34105
    Avatar of buzzbox
    buzzbox
    Participant

    Some additional comments with respect to the information above and to the mortgage process:

    3. The Definition of “Loan”

    Thought – The Note and Mortgage documents are inseparable to be legally valid, since the mortgage describes some of the note conditions. One without the other makes both invalid and worthless.

    4. The Definition of “Debt”

    Thought – Debt does not exist in a so called mortgage loan as the bank does not provide any assets, nor does the buyer borrow from the bank.

    What Constitutes a “Negotiable Instrument?”

    (3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain

    Thought – This forces combination of the note and mortgage making them inseparable. In essence a single instrument that describes the terms and conditions of the transaction.

    #34106
    Avatar of buzzbox
    buzzbox
    Participant

    This is really fascinating stuff – understanding is beginning to emerge, the more I read.

    There’s a lot of opportunity for missteps to occur in the “transfer” process – especially in light of the fact that most processing by the transferors will have been done by clerical help who do not have a clear understanding of what it is they are doing or its impact. The focus will have been, just process the paperwork. No person is ever going to challenge it.

    Wish I had more time to work on this and think about it.

    TTYL

    #34107
    Avatar of buzzbox
    buzzbox
    Participant

    For success to be achieved, judicial action is required (as pointed out earlier by Darryl), if in my opinion, the homeowner who:

    1. Chooses to respond to a foreclosure action.
    2. Wants to try for a mortgage modification/adjustment.
    3. Wants to go after mortgage settlement/cancellation.

    In order that enforcement can be obtained through court action, which would not be obtainable if administrative means are employed.

    To get the facts, and in order to pursue any of the above actions effectively, requires an audit of the securitization process to determine where the breaks and documentary faults in the chain of transfers have occurred, with respect to the specific note and mortgage instruments involved.

    Ownership and possession of the original note and mortgage are also a key element in the process. The predatory lender must be made to show proof of standing to have both jurisdiction and success in the matter, without it, their action will be dismissed.

    Once a solid understanding of the home-owners loan origination and its subsequent path through the securitization process has been achieved, to identify and unravel sufficient evidence of fraudulent handling, one is then in a position to proceed in court with a high probability of success, provided their case can be properly presented. Although this can likely be done Pro se, use of a skilled attorney might be the more prudent course to follow.

    To formulate and present ones case in court, research is required regarding what others have done successfully, particularly as it relates to ones own case.

    Another issue not yet addressed is, which court provides the best opportunity of success?
    Bill G. has pointed out that the Federal Bankruptcy Court may be a very effective means because of time line limitations and to force much quicker response from predatory creditor claimants while at the same time avoiding delaying and confusing tactics by claimant’s counsel.

    There is also the matter of clearing title to make sure the property can be resold without difficulty and Title Insurance obtained. This may require a separate Quiet Title action.

    Hopefully Darryl can redirect if I’m overlooking something – for me, this is still early days.

    TTYL

    #34108
    Avatar of buzzbox
    buzzbox
    Participant

    Darryl, do you have anymore insight you are willing to share. Here is a summary of my current findings.

    STANDING – Fundamentals in response to a foreclosure action

    1. Claimants under Article 3 of the UCC they must be able to show they are a “Holder in due course” of the negotiable instrument (note). UCC 1-201(21)(A) defines “holder” as “the person in possession of a negotiable instrument that is payable either to or to an identified person that is the person in possession.”

    2. To have “Standing”, the claimant must have a direct injury or be authorized by statute to foreclose.. Usually the claim will be based on statutory authority relying upon UCC 3-301 which provides the holder (claimant in possession) of the instrument (note) with the right to enforce.

    3. UCC 3-104 then defines “instrument” as “an unconditional promise or order to pay a fixed amount of money” thus an instrument is a promissory note. Instruments under the UCC do not include mortgage deeds or deeds of trust.

    4. The claimant that can “produce the note” has nothing more than the right to enforce it. But, the foreclosing party is not trying to enforce the note but rather the mortgage deed or deed of trust that describes the lender’s rights to the property and how to exercise those rights.

    5. UCC 3-301 expressly limits the enforcement of notes, thus, no court can expand its reach to mortgage deeds or deeds of trust.

    6. UCC 3-205 explains that a note become payable to bearer through an endorsement in blank, when, the person to whom the note is payable writes on it ”pay to the order of”, leaves a blank space and then signs below the blank space. The endorsement can be on the note or on a page attached to the note called an “allonge”. Endorsing the note in blank makes the note “bearer paper” which means whoever holds or possesses it has the right to enforce it.

    7. UCC 3-309 provides for non-possession when the claimant does not have possession but can enforce the note provided it can prove that it once had possession and the right to enforce. The “lost note affidavit” is the method employed to do this.

    8. Debtors should take the position that merely producing the note or lost note affidavit does not establish ownership and demand compelling evidence of ownership, which will be very difficult for a claimant to do.

    9. Mortgage Securitization note transfers overlay the above fundamentals, precluding any specific party from a lawful foreclosure as the note has become unenforceable. This is so because the rules and restrictions that have been imposed upon the purported debtor, that are extrinsic to the note and mortgage as originally executed, render the note and mortgage unenforceable.

    10. Further, the lender on the mortgage note who became instrumental in the sale of the note thus knows they are no longer the holder of the note.

    11. In order to qualify as a REMIC (one of the primary tax objectives of securitization) all steps in the contribution and transfer process must be true and complete sales between the parties and must be accomplished within a three month window with every note properly endorsed between entities. Faults in this process may disallow the pass through tax benefits, while providing an incomplete ownership trail.

    12. Any “pass through” tax benefit of a REMIC, requires that all legal and equitable interest in the mortgages held in the name of the trust are vested in the investors. If anyone, other than the investors makes a claim for foreclosure they may be defrauding the investors, the homeowners and the court.

    13. Once the securitization certificates have been issued, the mortgage note has become unalienable. It cannot be transferred, sold or conveyed as it has now been changed in an irreversible way as a part of the pool. An SPV cannot sell any individual mortgage because individual mortgages are not held individually by the certificates holders. Nor can the certificate holders sell the mortgages as all the certificate holders have are securities, which can be traded publically. Thus the certificate holders have no beneficial interest in any individuals note nor do they each hold undivided fractional interest in a note which, when added together collectively total 100%. For the certificate holder there is no note! They do not have possession nor can they enforce it.

    #34109
    Avatar of buzzbox
    buzzbox
    Participant

    Here’s my latest thinking:

    Once an underwater homeowner has reached the conclusion that they must prepare to deal with anyone claiming to have the right to foreclose on the homeowners property, here is a proposed series of steps that could be followed, with investor (IB), participation:

    This is a proposal employing a systematic procedure in an effort to both stop the foreclosure and to obtain a release of the mortgage lien

    1. Find a competent real estate/bankruptcy attorney and place on retainer.
    2. Have the homeowner accept the Warranty Deed, and record it.
    3. Make a review of what shows in the public record to determine if MERS is named as nominee and/or mortgage transfers have occurred.
    4. Request (order) a securitization report to determine the promissory note transfer trail. If the report shows unrecorded transfers, “robo” signing, or other evidence of irregularities, then a sound case may exist to remove the lien,
    5. Form and convey the property title to the trustee of a land trust.
    6. Assign a 90% beneficial interest in the land trust to a newly formed entity that will have no other assets, other than the assigned beneficial interest. It will however, as provided for as part of the assignment, accept and take full responsibility for all encumbrances on the property while relieving the homeowner of same and grant to the entity the power of direction in handling the affairs of the trust.
    7. This entity will be formed by the investor (IB), having the IB as its single stake holder. It will execute a separate agreement with the homeowner that should the entity be successful in removing the mortgage lien a percentage of any equity gained as a result will be shared between the parties.
    8. The homeowner, (or a new tenant) enter into a triple net lease agreement with the land trust to provide an income stream to enable the lien obligations to be serviced.
    9. The beneficial entity notifies the current loan servicer by certified mail that the property has been conveyed into a land trust and that all future mortgage payments will be placed in an escrow account waiting for the true holder in due course to prove standing and make a valid claim.
    10. Pay the insurance premiums and taxes directly, while waiting for a response.
    11. Notify by certified mail, each of the three credit bureau’s explaining that you are holding future payments in escrow pending lender disclosure, putting them on notice that any negative credit reporting related to the mortgage be placed in abeyance until a determination of who owns the mortgage (note and deed of trust/mortgage) has been made.
    12. The likely response will be a threat to foreclose for withholding payments on the loan, either from the current servicer or a related claimant. At some point a Notice of Default will be issued.
    13. Issuance and receipt of an NOD from a foreclosing claimant would trigger the beneficial entity to file bankruptcy under chapter 11, claiming that there are no secured creditors known.
    14. In response to the automatic stay the claimant will identify themselves and make their position known, in response to which our legal advisor files a motion to dismiss or prove standing.
    15. Their proof of standing, once submitted can be attacked.
    16. Assuming that we have done our homework and have developed effective and specific arguments, to destroy any nominee claims by MERS, show that the note and mortgage cannot be enforced by the servicers, trustee or others involved in the securitization pool, nor the certificate holder investors, nor can any other claimant in the note transfer process prove ownership (not just hold) the note and mortgage.
    17. This will lead to a hearing with the bankruptcy trustee which should cause the note to become unsecured and allow a negotiated settlement favorable to the homeowner and IB. The debt will still exist without a valid creditor claimant, however the property title will be free and clear of the lien, reinforced by the earlier warranty deed acceptance.
    18. Next a Quiet Title action should be commenced to clear away any remaining title concerns and to provide a new platform for title insurance as the securitization process makes the title insurance matter a real concern with respect to a satisfaction of recorded mortgage – that is, who will issue it?

    The above is my present view, a speculation, of what may be an effective means of achieving clear title, given the abusive way the mortgage bankers and Wall Street have cooperated and manipulated the mortgage system to their sole advantage.

    This will not be an easy process and will require a limited investment to cover the various costs involved. I would appreciate any thoughts, oversights, concerns, or ideas to improve and critique this process.

    None of the above should be considered legal advice as I am not an attorney.

    #34110
    Avatar of buzzbox
    buzzbox
    Participant

    After carefully considering Gary’s posting “A fight I have to win”, which is a real mind/eye opener, it has become obvious that the judiciary can easily ruin the best laid plans of mice and men through bias, incompetency and simply laziness to truly understand the case that faces them, so they rule in favor of what they’ve done in the past.

    Very difficult to overcome that.

    #34111
    Avatar of buzzbox
    buzzbox
    Participant

    I now believe that initiating a Quiet Title action can and should be filed once the securitization process has been revealed, and the details known, rather than wait until a later time, as I’ve noted above. There is no valid reason to wait and eventually it will have to be filed as there is no entity in a position to properly issue and record satisfaction of the recorded lien.

    Now with respect to taking the position that no loan was ever made in the first place. I believe this approach can be argued in a separate legal action, should the BK Trustee not see things the way we do, and allow the deed of trust to be recognized as an instrument that secures the lien. We can of course clear the foreclosure since we’ve set aside (escrowed) the funds to do so, and thus still own and possess the property.

    #34112
    Avatar of buzzbox
    buzzbox
    Participant

    Trying to keep this thread alive and gain some more input.

    First, you must believe a mortgage loan was never made and are capable of documenting and proving it, second, that you understand that the UCC should prevail to determine who is, or is not, the owner and holder of the note and deed of trust, and thirdly, fully understand that if the note has been pooled in a securitization process and as a result that no one has standing, then you are in a position to guide your counsellors to a successful outcome toward obtaining a full lien release. Once this trio of facts is understood we can proceed with confidence, while continuing to read, research and review whatever related statutory and case law you can find.

    From our members point of view, and as a business proposition, once an underwater homeowner has reached the conclusion that they must prepare themselves to deal with anyone claiming to have the right to foreclose, and need help, here is a proposal which employs a systematic procedure to both stop any foreclosure action and to obtain a release of the mortgage lien.

    SUMMARY OUTLINE:

    1. Find a competent real estate/bankruptcy/securitization attorney, review what you have in mind, and then when comfortable, place them retainer. Otherwise keep looking until you have found the right litigator. It may require more than one attorney depending on their skill sets.

    2. Make a personal review of what shows in the public record to determine if MERS is named as nominee, mortgage assignments/transfers have occurred, or pooling and securitization is evident. Make a judgment call whether to proceed or not.

    3. Enter into an option agreement with the homeowner and take control.

    4. Have the homeowner accept the Warranty Deed, and record it to close the title issue which was purposefully left open in the closing process so that liens could be recorded against the open title. This acceptance must be done prior to making a land trust conveyance of the real property.

    5. Request (order) a securitization report to determine the promissory note transfer trail. If the report shows unrecorded transfers, “robo” signing, or other evidence of irregularities or fraud, then a sound case likely exists to remove the lien,

    6. Form an EHT land trust and convey the property title to the trustee of the land trust.

    7. Assign a 90% beneficial interest in the land trust to a newly formed entity (a business trust is recommended, as any jurisdictional registration may be avoided and a properly formed business trust qualifies to file bankruptcy). It will have no assets, other than the assigned beneficial interest. It will however, as provided for as part of the assignment, accept and take full responsibility for all encumbrances on the property while relieving the homeowner of same and grant to the entity the power of direction in handling the affairs of the trust. Leave the SB with a 10% beneficial interest to be able to show that a transfer of the property (sale) has not occurred.

    8. This entity, formed by the investor (IB), has the IB as its single stake holder and funder. It will execute a separate agreement with the homeowner that should the entity be successful in removing the mortgage lien a percentage of any equity gained as a result will be shared between the parties.

    9. Next a Quiet Title action should be commenced to clear away title concerns and to provide a new platform for title insurance as the securitization process makes the title insurance matter a real concern with respect to a satisfaction of recorded mortgage – that is, who will issue it? I now believe that initiating a Quiet Title action can and should be filed once the securitization is correctly identified and the pooling details known, rather than wait until a later time. There is no valid reason to wait and eventually it will have to be filed as there may be no entity in a legal position to properly issue and record satisfaction. Further, if successful it will have become the primary means to clear title.

    10. The homeowner (or a new tenant), must enter into a triple net lease agreement with the land trust to provide an income stream to enable the lien obligations to be serviced. This is vital should bankruptcy be called for as the BK court will require that loan payments be continued, into escrow or otherwise.

    11. The beneficial entity notifies the current loan servicer by certified mail that the property has been conveyed into a land trust and that all future mortgage payments will be placed in an escrow account waiting for the true holder in due course to prove standing and make a valid claim.

    12. Pay the insurance premiums and taxes directly, while waiting for a response.

    13. Notify by certified mail, each of the three credit bureau’s explaining that you are holding future payments in escrow pending lender disclosure, putting them on notice that any negative credit reporting related to the mortgage be placed in abeyance until a determination of who owns the mortgage (note and deed of trust/mortgage) has been made. Here we are attempting to protect or limit any credit damage to the homeowner.

    14. The likely response will be a threat to foreclose for withholding payments on the loan, either from the current servicer or a related claimant. At some point a Notice of Default will be issued.

    15. Issuance and receipt of an NOD from a foreclosing claimant would trigger the beneficial entity to file bankruptcy under chapter 11, claiming that there are no secured creditors known. This places us in the Federal Bankruptcy court and subjects the claimants to proving their claim within short time parameters rather than months, even years, of legal time waste we would have to suffer going through the regular civil court procedures. The risk still remains that the BK trustee or court will act inappropriately if our case is not properly presented and argued.

    16. In response to the automatic stay the claimant will identify themselves and make their position known, in response to which our legal advisor files a motion to dismiss or prove standing.

    17. Their proof of standing, once submitted can be attacked.

    18. Assuming that we have done our homework and have developed effective and specific arguments, we can destroy any nominee/beneficiary claims by MERS, show that the note and mortgage cannot be enforced by the servicers, trustee or others involved in the securitization pool, nor the certificate holder investors, nor can any other claimant in the note transfer process prove ownership (not just hold) the note and mortgage.

    19. This will lead to a hearing with the bankruptcy trustee which should cause the note to become unsecured and allow a negotiated settlement favourable to the land trust beneficiaries. The debt will still exist without a valid creditor/claimant, however the property title will be free and clear of the lien, reinforced by the earlier warranty deed acceptance.

    20. With respect to taking the position that no loan was ever made in the first place. I believe this approach can be argued by commencing a separate legal action, should the BK Trustee not see things the way we do, that is the BK trustee rules that the lien is secured. We can of course clear the foreclosure, upon dismissal, since we’ve set aside (escrowed) the funds to do so, and thus still hold the beneficial interest in the trust property.

    #34113
    Avatar of buzzbox
    buzzbox
    Participant

    I’m struggling to understand why it might be viable to try and arrange an equity sharing arrangement with a pretender lender. To do so successfully, it seems to me, requires the original loan would have to be held by a lender directly and not be part of a securitization loan pooling. Otherwise you’ll find yourself dealing with a fraudulent enterprise who have no standing to enter into an equity sharing arrangement.

    Therefore, I suggest not wasting any energy or resources on that approach but rather proceed with something along the lines already suggested earlier. Hopefully others can provide some thoughts or ideas on how all this can be improved.

    Darrel’s earlier comments got me going on this issue which has lain dormant for some time, as other matters have occupied my attention. However, I’ve decided to make this a primary challenge for 2013 to see whether or not clear title can be obtained in this state using this process.

    Please review and critique the process suggested above so that we can all learn and benefit from the collective insight.

    #34114
    Avatar of dave salcido
    dave salcido
    Member

    An equity share offer to a pretend lender is contingent upon their ability to proof up.

    If they can proof up, an equity share should be offered to give the homeowner the best chance to maintain control of their asset.

    If they cannot proof up, they may expose themselves with damaging statements and/or documentation that can be used as future evidence of non standing. This is evidence that can be included in a Quiet Title Action.

    #34115
    Avatar of buzzbox
    buzzbox
    Participant

    Fundamentally, when it is known that there is an absence of assignments and recordings, which causes you initiate suit against a lender for quiet title, you are, in fact, claiming that the lender has been paid in full on the promissory note and that the lender has lost any power to enforce the mortgage. You are demanding that the lender prove it is, in fact, a party of interest on the mortgage note while alleging you have the deed and that there is a mortgage recorded against the property which has been satisfied in full.

    This brings about the need (for the homeowner) to accept the Warranty Deed and get it recorded to precede a quiet title filing. In almost all closings the warranty deed is never accepted at closing but rather is left open and incomplete. In order to claim you have the deed, I believe you must accept it and get it recorded.

    Anyone have any observations on accepting the deed and when to do it?

    #34116
    Avatar of dave salcido
    dave salcido
    Member

    @Buzzbox wrote:

    Fundamentally, when it is known that there is an absence of assignments and recordings, which causes you initiate suit against a lender for quiet title, you are, in fact, claiming that the lender has been paid in full on the promissory note and that the lender has lost any power to enforce the mortgage.

    A- I do not hold that position. Without having access to the entire chain of assignments, I have no clue who was paid in full or who wasn’t. I have no idea who can enforce and who can’t. I am motioning the court to quiet title because a real party of interest did not show up for an evidenciary hearing to claim ownership of rights, therefore, title is clouded and the court is motioned to clear title. That’s it.

    You are demanding that the lender prove it is, in fact, a party of interest on the mortgage note while alleging you have the deed and that there is a mortgage recorded against the property which has been satisfied in full.

    A- Nothing has been proven to be satisfied nor do I care to find out. I just want to eliminate invalid liens on title.

    This brings about the need (for the homeowner) to accept the Warranty Deed and get it recorded to precede a quiet title filing. In almost all closings the warranty deed is never accepted at closing but rather is left open and incomplete. In order to claim you have the deed, I believe you must accept it and get it recorded.

    A- A warranty deed is evidence of a voluntary sale or transfer of a property between a seller and a buyer (new owner) that is almost always recorded in a timely manner to identify the new owner. The new owner does this to let the world know he is the owner. This is a simple recording and there’s not much more to read into this.

    Anyone have any observations on accepting the deed and when to do it?

    #34117
    Avatar of buzzbox
    buzzbox
    Participant

    It has been my understanding, that under common law, for a Warranty Deed to be valid and enforceable it must fulfill a number of requirements. Here, the point I’m making, and hoping to discuss to gain a more solid clarity through dialog with other board members, is that one of those requirements is, that the deed must be “delivered” to and “accepted” by the grantee (homeowner) for it to be valid.

    At closing it is usual for the warranty deed to be recorded first, that is before other closing documents such as a deed of trust. The flaw in the process from the homeowner’s point of view is that at closing, rarely, if ever do they go through the process of accepting the warranty deed, before it is recorded and likely no attention is paid to it during closing after the grantor (seller) has executed it. In fact they may never even see it at closing.

    What, in fact, does happen, is that the homeowner executes the Deed of Trust transferring legal title to the trustee, which then holds the document as security for the alleged debt between the borrower and lender. Thus, in effect, title does not reside with the homeowner, even though it appears that way, as an incomplete instrument, the warranty deed, has been recorded and is now on public view. This is a purposeful act on the part of the lenders and escrow closers so that the title remains open for the attachment of the lien.

    Now, with respect to quiet title.

    Given the above, it’s my present view that prudence dictates that the homeowner should proceed to perfect title in their name by recognizing that even if granted lien release by court action, through dismissal or otherwise, the title to the property is subject to liens until the warranty deed is closed and made valid by the homeowner filing a Certificate of Acknowledgement and Acceptance of Warranty Deed.

    The concern I have is that if this is not done, and title is routinely and subsequently conveyed to a the trustee of a land trust, then is being conveyed openly as an incomplete and invalid instrument, should the title status be challenged in the future. Quiet Title does not foreclose a lender(s) from mounting an attack after the fact, with new evidence not available earlier, or for any other persuasive reason, although they would be unlikely to do so.

    In defense, selling the property on, as quickly as possible, may be the wisest course once quiet title is secured.

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