I keep getting inundated with creative arguments about the documentation, which is exactly the rabbit hole that the Banks want you to go down. It is a trap.
Technical attacks on documentation are not going to win the day because in the end, it is public policy for negotiable instruments to be safe bets in the marketplace. You are not going to get excused from payment without payment or bankruptcy orders.
But payment includes all payments received by the creditor and that is not just servicer advances. It includes insurance and other third party co-obligors who paid the broker dealers. They claim the insurance and other trading profits do not inure the benefit of the investors. But established law shows that by issuing the mortgage bonds in nominee “street name” they are at all times acting as agent for the investors. And all money from sales, insurance, credit default swaps etc must be credited first to the investor which means the creditor is satisfied up to the amount of money actually received by the creditor or by any authorized agent of the creditor even if the agent disclaims the principal agent relationship.
Basic accounting rules require that if a deduction is made from the account receivable there must be a corresponding deduction in the account payable. If it were otherwise only payments received from the borrower could be credited to the account even if the borrower’s Aunt Alice specifically stated that this was to be credited to the borrower’s account. The problem for the Trust, amongst others, is that the law makes no distinction between “Aunt Alice” and any other payor who advances a payment for express purpose of satisfying an account receivable that derives its value from the debt of a person on whose behalf the payment is received and accepted.
The argument about the so-called windfall to the borrower drops to the ground with a thud when the court is presented with parties who have unclean hands, who defrauded the investors in the first instance and who are defrauding the investors now even as they try to enforce the documentation that was an illegal diversion of title from the investors. Giving THEM the right to collect yet again or to foreclose on property and be named as the creditor to the detriment of the investors, is merely using the court to continue the fraud and theft.
7 thoughts on “Why Third Party Payments Are So Important to Defending Foreclosure Cases”
And it wouldn’t just be a breach of fiduciary for the note seller or his agent to try to yet enforce the mtg / dot. The reason there’s a trust is because the right has been alienated, leaving the note seller and his agent with no right, long and short. The case I had and lost was about a crook who sold the note to A and later sold or hypothecated the dot to B. Bottom line was A had the right to the dot, B was out of luck (except for any cause of action against the crook), and neither note nor dot were enforceable against the borrower at that point – til the situation was remedied). I don’t recall who brought the action against the crook nor whether in that action, the court ordered B to fork over the mtg to A, but I’m certain of the rest.
justme- I like your material. I recall now something about a “trust”, which I mention for the person here (I forget) whose spouse got a loan but she didn’t. The lender is said to hold whatever it got in trust for the non-borrowing spouse and must return it – from my limited recollection. i don’t think your particular material is complicated or beyond the judiciary, whom at least theoretically get paid to think. If the seller still holds the mortgage – in trust – for the buyer of the note, it says – mo- the buyer has a right to the mtg and til it gets it, the mtg is held in trust by the note seller (which would include any agent of the note seller – think you know who). When a trust is created by agreement, a fiduciary is imposed by law, and I would say that holds true for a trust created by operation of law, as indicated in your material. In addition to other things, this is great material for people in AZ. If, as I contend, the law imposes a fid on the one still holding the mtg or dot (and there’s a distinction between a mtg -your material- and a dot to take into account just in case), the guy with the dot holds it in trust for the guy who bought the note and has no right to enforce. I’d go even further, into my ‘the note (alone) is unenforceable’ in that status if either the mtg loan contract or state law spells out ‘security first’. So to be clear, if I may, when MERS or anyone holds the mtg / dot as agent for the note seller, he is bound by the note seller’s fiduciary (from the created-by-operation-of-law trust) to the note buyer and may not enforce the mtg / dot (which it holds in trust for the note buyer).
lay opinions
Justme,
Here is where homeowners so far has made a costly mistake: they do not recognize that judges have limits. Serious ones. Beside a very short attention span (cultivated in law school where you learn to “scan” a document for the “important” info (terms of the contract, parties, consideration and hold harmless, indemnification agreement and such), judges have full dockets and only so much time to allot to each case.
Judges have prejudices as well and if you listen to any ambulance chaser peddling on TV, you hear where it comes from: “No one likes to go to court. No one sues unless he has a valid reason. Etc.” It’s ingrained in them.
Anything going beyond prejudice (the one who sues is therefore the one who was wronged) and contract “But judge, the original bank transferred and here is the transfer document. Plus, the borrower was fully aware it could be transferred. See judge? He signed off on it! The CONTRACT is clear about that part.” goes way past their comprehension. Judges are doing exactly what people are doing: they’re waiting for… GOVERNMENT to fix it.
Never met a judge who went beyond the call of duity. Never met a judge who worked late at night either. State employees.
Therefore, you need to keep it simple, direct, to the point and well-articulated.
And the argument is such :
“The principle of equitable assignment was set out by Wisconsin’s Supreme Court as far back as 1859, and has been described as follows:
The transfer of these notes … carried with it, by operation of law, all securities for their payment. The debt is the principal thing, and the securities are only an incident. The transfer of the former, therefore, carries with it the right to the securities, and amounts to an equitable assignment of them. No matter what the form of the security is, whether a real-estate or chattel mortgage, or a pledge of collateral notes, bonds, or other personal property, the purchaser of the principal takes with it the right to resort to these securities; and this is so, although the assignment or transfer does not mention them. The reason of this rule, within all the authorities, seems to be that when the mortgagee transfers the debt, without assigning the mortgage or other security, he becomes a trustee, and holds the security for the benefit of the owner of the note, and the latter may enforce the trust. The debtor is in no wise injured by such rule. He has agreed that the security shall stand for the payment of the debt, and it is of no consequence to him to whom it is paid. He has to pay it but once.”
……….He has to pay it only but ONCE. ….”he” being average Joe homeowner…..
This is the bank’s argument…..and where I fear the Judge will lay at rest his thoughts.
Perhaps wherever the debt has gone – why should it matter, he is not paying “that” debt, only HIS debt.
If course, “that” debt has been paid off, separated, ect. ect. – if proof can be had there was a debt i the first place.
We go into such depth with these matters……much depth the Judges are not willing to go into, is too complicated, or we cannot prove it…
In a typical fashion, this is beyond what most of us will be given the time of day to prove.
the problem is so many people do not know this and walk away. Discovery is the most important thing that must be court ordered. they will not produce, they cant produce. every one of us has a problem with accounting. where did our money go? we trusted the banks back then.
Broken chain of title. The entity that broke the chain of title is the entity that enjoys “unjust enrichment” Period.
ACHTUNG.
We just have to bring the issue of broken chain of title or clouded title.
“I keep getting inundated with creative arguments about the documentation, which is exactly the rabbit hole that the Banks want you to go down. It is a trap.”
Right!!!!!!!!!!!!!!!!!!!!
Follow the money: where did the lender’s money (if any) come from? Where did mine go?