JUDGE MARGERET MANN, IN SOUTHERN CALIFORNIA BK COURT, BRAVO!

JUDGE MARGERET MANN (SO. CA BKR) PLUNGES INTO DETAILS AND COMES UP WITH WELL-REASONED DECISION

Posted on August 23, 2011 by Neil Garfield

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AURORA LOAN SERVICES LLC, SCME MORTGAGE BANKERS INC, ING BANK FSB, MORTGAGE ELECTRONIC REGISTRATION SYSTEMS ALL BITE THE DUST, SUBJECT TO LIABILITY AND NO ABILITY TO FORECLOSE WITHOUT COMPLYING WITH LAW.

Salient points of Judge Mann’s Decision:

1. TRUTH IN LENDING  was dismissed because they were time-barred. LESSON: Don’t ignore TILA claims or TILA audits. Get a forensic Analysis as early as possible, assert them immediately, assert rescission as soon as possible. TILA has teeth, but if you assert it late in the game.


2. YOU CAN’T FORECLOSE ON UNRECORDED INSTRUMENTS: Judge Mann came right out and said the California Supreme Court would not and could not decide otherwise. Any other holding would defeat the purpose of recording and create uncertainty in the marketplace. This will cause a lot of grief to pretenders. It is getting harder for them to come up with people who are willing to lie, forge or fabricate documents. Getting a notary to affix their signature and seal will soon be a thing of the past unless the signature, the person and the document is real.


3. THE ASSUMPTION THAT THE LOAN IS IN DEFAULT IS STILL A PROBLEM: As long as lawyers and pro se litigants are willing to concede that the obligation was in default, they are giving up their largest chip — i.e., that the loan was not in default and the loan was not subject to a perfected lien for the same reason that the court cites in its opinion. Our loan level analysis shows repeatedly that in most cases the servicer is continuing to make payments and reporting to investors that the loan is performing even as they send delinquency letter’s notices of default and notices of sales. The Court missed this point because nobody brought it up. Don’t expect the Court to do your work for you. If you have reason to believe that the servicer is still paying on your loan you should be stating that the loan is not in de fault, denying any delinquency to the creditor and objecting to any action that is based upon the premise of “default.” Note that if the servicer is paying your bills, the servicer MIGHT have a right of action against you, but it certainly isn’t under the terms of the note or mortgage.


4. THE ASSUMPTION THAT A VALID PERFECTED MORTGAGE LIEN EXISTS IS STILL A PROBLEM: Again, the problem is not with the Courts but with the lawyers and pro se litigants who simply assume that this is not an issue. Put yourself in the banks’ shoes. If all you had were nominees for undisclosed principals on the note and mortgage would you be OK with that? No? Then the lien was never perfected, which means for legal purposes it doesn’t exist. Just because it shows in black and white doesn’t make it true. LESSON: Deny the lien exists, deny it was perfected and make them prove how it was perfected. They can’t. In most cases neither the mortgage originator nor the nominee beneficiary (MERS) had a disclosed lender or beneficiary, nor did they incorporate the real terms of  the payment to the investor/lenders. If this was a law school exam and the student wrote that the loan was perfected, the grade would be “F”.


5. THE ISSUE OF FEDERAL PREEMPTION AND THEREFORE JURISDICTION AND VENUE ARE STILL IN FLUX: This Judge found that federal preemption prevents the homeowner from alleging TILA as state claims. The courts are not decided on this and the issue of res judicata and Rooker -Feldman will come into play once the issue is really resolved with finality. Beware then how you assert a claim and that you don’t let the statute of limitations run out by failing to assert the right claim under TILA in the right court. better to get dismissed than to find out that you are time-barred.


6. WRONGFUL FORECLOSURE IS A TITLE ISSUE NOT A FAIRNESS OR TECHNICAL ISSUE: Judge Mann, correctly in my opinion, states that an assignment from MERS must be allowed in order to clear up title. But, she states that without recording an interest within the chain of title, you have no right to foreclose under the states recording laws. I think this is right, and I think it applies in all 50 states. LESSON: Plead your wrongful foreclosure, slander of title and quiet title cases as title cases and stop adding extra things that you think may them juicier. Either the title is right or it is wrong. There is no middle ground.


7. MERS ISSUE IS STILL OBSCURE: While the assignment from MERS, if recorded clears up one part it leaves another part undecided again because it wasn’t raised properly. There is a difference between “bare record title” and an “interest in the land.” The MERS assignment is like a quit-claim deed from someone without any interest in the land and used to clear up the chain of title on paper, but it does not convey any interest. MERS on its website and in the public domain specifically disclaims any interest in the obligation, note or mortgage. That is its selling point to members who use its “Service.” And that is why it can’t foreclose and it is subject to cease and desist orders from regulators. As with other affidavits or quit-claims to clear up apparent clouds on title, the recorded assignment or quitclaim does nothing to convey a larger interest than that possessed by the grantor. LESSON: If the pretenders want to foreclose they can’t rely on the MERS assignment. They must file a credible affidavit that states that the affiant was the undisclosed principal in the original transaction with the borrower and that it joins in or separately assigns the actual interest in the obligation, note or mortgage. In my opinion, this is the only way to perfect the original “lien.” Whether it will relate back to the original transaction is an issue the courts must decide.


8. NO DIFFERENCE BETWEEN A DEED OF TRUST AND A MORTGAGE: Pretenders who try to elevate a deed of trust above a mortgage are headed for a brick wall. Courts never liked non-judicial foreclosure in the first place. They are not about to to reverse centuries of law and provide higher status to a non-judicial foreclosure or the instruments that allow it. ONLY the statutes that provide for extra care on the part of the trustee are constitutional, since due process is the only way anyone in this country can be deprived of life, liberty or property. LESSON: Pound on the issue that the pretender cannot prevail in a judicial foreclosure so they are trying to get away with it in a non-judicial foreclosure. If you want to see how this will eventually unfold, look at Florida and other states that had similar issues in their “Contracts for deed.” Despite clear contractual language the courts have universally held they are mortgages and that they must be foreclosed as mortgages.

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Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor,Mortgage, securities fraud Tagged: | Aurora Loan Services LLC, bankruptcy, borrower,countrywide, CRUZ, disclosure, foreclosure, foreclosure defense, foreclosure offense,foreclosures, fraud, ING BANK FSB, LOAN MODIFICATION, MERS, modification, Mortgage Electronic registration Systems, quiet title, recording, rescission, RESPA, SCME MORTGAGE BANKERS INC, securitization, TILA, TILA audit, title, trustee, WEISBAND

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1. 

   leapfrog, on August 23, 2011 at 10:38 am said:

   Bravo, Judge Margeret Mann. Thank you for doing your job and applying the rule of law. That is ALL we homeowners ask. Apply the rule of law as it is meant to be applied – not biased in favor of the banks.

   What is WRONG with this country that a judge should be considered a hero/heroine for doing what he/she is supposed to do?

   Never mind, just a silly question. I already know the answer – our corrupt corporate-owned society.


2. 

   Jeff, on August 23, 2011 at 10:20 am said:

   In California, any homeowner that challenges a bank, the banks love to cite Gomes, Ferguson, etc. The banks feel that ANY challenge in California falls into the previously mentioned cases category. This judge in CA, follows the rule of law and distinguishes the B.S. the banks throw in her courtroom. Well done Judge Mann.

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BORROWERS BEWARE! THE FORMS ARE STILL INCREDIBLY DIFFICULT TO UNDERSTAND.

THE ESSENCE OF TILA: BORROWER’S BILL OF RIGHTS

Posted on July 23, 2011 by Neil Garfield

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EDITOR’S ANALYSIS: There is a reason why TILA, RESPA and HOEPA were enacted into law. The central theme, as clearly stated in a recent seminar led by lawyers for the banks, is to provide the consumer with a credible and understandable method of deciding between two or more potential loan offerings. The reason for these Federal Laws is to make certain that the borrower is given the information he/she needs to decide whether they want Deal A or Deal B — or none of the above.

These laws worked fairly well until wall Street stepped into the lending scenario with the illusion of securitization. The result was that the “disclosure documents” lied to the borrower. These documents took away the possibility of deciding between one loan or another and one lender or another because they intentionally misstated the identity of the lender in table-funded loans, which are identified by TILA and Reg Z as presumptively predatory loans.

The reason they are predatory is because a table-funded loan (funds and terms coming from an unidentified third party) actually tricks the borrower into thinking he/she knows the lender, thus eliminating the possibility for the borrower to reject the real lender.

The disclosure statements are also supposed to tell the borrower who is getting paid in their loan transaction and how much they are getting paid. Once again, the “disclosure” documents straight out lie to the borrower, by withholding vital information about the securitization scheme, without which the “lender” at the table would never have offered the loan.

If the securitization scheme was not in place at the time of the loan, the lender identified at closing would have had to assume risk, putting the loan on its financial statements as an asset (loan receivable) along with an entry for “reserve for bad debt”on the liability side of the balance sheet.

Of course it is easy to see why this disclosure was not made. Promises were made to the creditor (investor who advanced funds for a bogus mortgage-backed bond) including insurance, servicer obligations to continue payments, credit default swaps, and cross collateralization would have informed the borrower that the creditor was not getting the note they were signing.

The investors (I.E., THE REAL LENDER/CREDITORS) were getting a bond that included multiple sources of revenue to reduce the risk of non-payment from any of the parties who promised to pay. The borrowers would have learned that even if they made their payments on time, they could still be part of a pool that a Master Servicer would declare was in default or was subject to write-down, thus triggering payments from third parties.

The investment banks of course need to hide this information from borrowers who might be more likely to stop paying if they knew there were third party sources from which payments could be made. Any lawyer who knew these facts would have told them that it would be pretty difficult to declare the borrower in default when so many other people were obligated to pay for varying reasons that were not necessarily ties to whether the borrower made payments.

The robo-signing frenzy that ensued was a cover-up for obviously defective notes and mortgages that did not describe the actual transaction that took place — a single transaction in which investors advanced the money and borrowers received part of it, with the rest going to a myriad of third party players who were trading hedges, insurance and bets on the value of the mortgage bonds. Whether the homeowner actually made payments was and is almost irrelevant to the obligation of others (AIG, servicers et al) to make payments to the creditor either against principal, interest or both.

Nobody wanted the borrower to know what was really going on. But that is exactly what TILA, RESPA and HOEPA were all about — requiring the real lenders to show themselves, identify themselves, and disclose the identities of all the intermediary parties who were making money as a result of the money transaction between the investor and the homeowner.

The effect of this line of reasoning on RESCISSION remedies both under TILA (or HOEPA) is huge. The three day window is a “buyer’s remorse” window of opportunity where the borrower can reverse the transaction, no questions asked. If they go beyond the three-day window they have three years to cite a material violation and then give notice of rescission. Lenders want the courts to construe it as a claim of rescission but congress specifically worded the statute leaving it entirely within the hands of the homeowner and shifting the burden of the challenge to the “lender” who would be required to file a lawsuit (declaratory action) pleading and proving why the borrower should not be allowed to rescind.

The importance of rescission under TILA is that it gives the borrower the power to disconnect the mortgage lien from the property leaving the obligation unsecured. If there is a balance due from homeowner to “lender”, after the “lender” has returned all documents, filed the satisfaction (although Reg Z  says that the mortgage is terminated by operation of law upon sending of the notice to rescind) then the homeowner is obligated to tender a payment plan.

The failure to properly disclose the parties and terms and the outright lying that went on at nearly every closing, provides a window of opportunity to invoke the 3 day rule that starts from the date the disclosure is made. At this point, even with millions of foreclosures, the pretender lenders have still not identified the real lender or creditor and still have withheld the full accounting for the payments received by or on behalf of the real lenders or creditors. So, it would seem that the three-day right of rescission has not even begin to run in nearly all cases.

Now the new Consumer Financial Protection Bureau has inherited this problem and is charged withe responsibility of  making certain that at least future transactions comply with the law. But the future transactions include satisfactions, payoffs, foreclosures etc., all of which are predicated upon a false foundation of liens that were never perfected, defective and incurable. Politically it is a third rail to suggest that the banks be held tot he letter of the law. If the borrower showed up at closing by way of a straw-man the transaction would have been canceled or the “lender” would have cried “foul!” But now the shoe is on the other foot and what happens from this point forward is going to be interesting.

Sorting Through Lending Costs

The New York Times

By MARYANN HAGGERTY

PLENTY of people have ideas about what you should be told when you’re shopping for a mortgage, but for now, that may not be much help.

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Even before it officially opened for business on July 21, the Consumer Financial Protection Bureau, the federal agency created to oversee mortgage lending, started looking at loan shopping. The bureau is legally required to propose by July 2012 a way to streamline mortgage disclosure. It is exploring avenues for combining the two forms that borrowers get now — the three-page Good Faith Estimate and the two-page Truth in Lending Act form.

These forms tell would-be borrowers the terms of their loan — for instance, how payments on an adjustable-rate mortgage change. They also lay out fees.

Although interest rates grab attention, fees can make a big difference, said Eileen Anderson, senior vice president of the Community Development Corporation of Long Island, which provides home buyer education. The easiest way to compare loans, she said, remains the Annual Percentage Rate, or A.P.R. That calculation rolls in fees as well as the stated interest rate. Because lenders are required to follow the same formula, useful comparisons can be made. “That’s the best way to shop for a loan, whether it’s 10 years ago, or now,” she said.

In May, the Consumer Financial Protection Bureau solicited reactions to two versions of a form that combines the current forms onto one double-sided sheet. It received more than 13,000 comments. According to a bureau summary, people praised the effort, but had specific suggestions on layout and phrasing.

On June 27 the bureau posted two more revised versions. The comment period on them closed July 5; among those responding was the Mortgage Bankers Association, which said in a three-page Department of Housing and Urban Developmentoverhauled the Good Faith Estimate — an effort that involved years of soliciting comments and was mightily resisted by some in the lending industry. That form not only changed the way information was presented, but also required brokers and lenders to commit to many parts of their estimates — a big change, as previous estimates sometimes had little relationship to actual closing costs.

But the forms themselves are longer and, for some borrowers, more confusing than the previous ones, Ms. Anderson said.

The form is still “horrible, just horrible,” said Mark Yecies, an owner of SunQuest Funding, a lender in Cranford, N.J. “The G.F.E. doesn’t actually itemize the closing costs in such a way that makes it easy for a borrower to understand what they are.”

Still, he advises people to get the form from every lender they approach. “If you receive approximate closing costs in an e-mail or a form that is not the G.F.E.,” he said, “it doesn’t mean squat.”

He added that some lenders had become adept at manipulating the estimates, by providing interest-rate quotations that expire almost instantaneously, or by low-balling fees in instances where they have legal flexibility. “If you get two or three different G.F.E.’s and there’s several thousand dollars’ difference,” he said, “you know someone is playing games.”

But David Flores, a financial counselor with GreenPath Debt Solutions in New York, which provides home buyer education, says game playing is not as big a problem as it used to be. “We’re removed from the day when it was a 3 percent interest rate with a big asterisk,” with the asterisk leading to fine print about teaser rates, he said.

Borrowers seem to have learned a lot from the attention paid to shaky loans in the last few years, he said. “More people are asking the right questions when it comes to these adjustable rates and exotic loan types. More people are wise to them.”

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1. 

   E. Tolle, on July 23, 2011 at 4:26 pm said:

   Don’t be expecting the CFPB to come riding into D.C. on a white horse to save the day. While Amerika slept, the House passed a bill essentially neutering the new agency even before the Grand Opening paint had dried.

   In times passed, the oligarchy hid behind shuttered doors, doing their nasties out of sight. Now days, they’re in your face and even daring the populace to do anything about their over-reach. Obama has said that he’d veto any such bill. However, what he’s said he would do and what he has actually done has differed in every case to date. In the mean time, the only change Obama and crew have offered the average Amerikan is a change of address, as their home is sold out from under them.

   We’d better start reaching back people, before it’s too late. Matt Stoller:

   Two years ago at this time we were in the midst of a major battle about whether and to what extent Congress would stand up to Wall Street and financial industry special interests and change the failed program of deregulation that led to the financial crisis. One year ago we applauded the progress made with the passage of the Dodd Frank Wall Street Reform and Consumer Protection Act. Today we are celebrating the new Consumer Protection Bureau officially opening its doors– so that for the first time there is a cop on the beat ensuring fair play for consumers in the financial marketplace.

   But the battle for accountability and transparency is anything but over. Today the House has passed H.R. 1315 the ‘Consumer Financial Protection Safety and Soundness Improvement Act’– a bill title that would make George Orwell blush. In fact, HR 1315 would cut the CFPB off at the knees, and make it impossible for it to do the job we need it to: standing up for Main Street, even when Wall Street doesn’t want it to.

   Earlier this week, we released a poll with AARP and the Center for Responsible Lending that demonstrates widespread support for the CFPB and Wall Street reform. By a 3 to 1 margin Americans want financial firms held accountable and financial reforms to take effect. And they want the CFPB– created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010– to be up and running. By overwhelming margins and across the political spectrum they want the CFPB to make credit offers clearer, they want rules of the road for all kinds of financial companies, and they want an end to tricks and traps.

   Public Citizen was even more brutal in its assessment– and even more on target. Bartlett Naylor, Public Citizen’s Financial Policy Counsel:

   Public Citizen deplores the shameful vote in the House of Representatives today to emasculate the new Consumer Financial Protection Bureau. A House majority that votes against the interests of its own constituents who continue to suffer massive unemployment from the bank-caused recession has clearly lost its moral compass.

   There’s only one constituency that favors gutting the CFPB– abusive bankers. Unfortunately, the banking industry continues to funnel some of its profits into a lobby offensive to dismantle the new consumer agency so as to shield itself from the new cop on the beat enacted in the year-old Dodd-Frank law. And it paid off today.

   http://downwithtyranny.blogspot.com/2011/07/hr-1315-wall-streets-revenge.html

   Call your reps and tell them that you will not stand for this treasonous behavior. And then vote them all out next year, each and every one of them.

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