[NYSC] Judge Spinner “Plaintiff’s Papers Raises Disturbing Issues”, “Appears To Run Counter To New York’s Statute of Frauds” BENEFICIAL HOMEOWNER SERV. CORP v. STEELE

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

MORTGAGE DOCUMENTS MUST BE IN WRITING

AND EXECUTED ACCORDING TO STATUTE OF FRAUDS

EDITORS ANALYSIS: Every state has a statute of frauds — which in plain language means that there are certain types of transactions that won’t be enforced by the court, or where parts of the transactions won’t be enforced by the court without a written instrument executed in the form set forth in that state statute. That is the statute of frauds. It is designed to prevent fraud in the marketplace where people are most inclined to misrepresent, lie or otherwise misinterpret the terms of their “deal.”

A loan transaction where A lends money to be B must have a document where it recites that A loaned money to B. A document that says C loaned money to B refers to a different transaction. If C did not ever lend money to B then it describes a non-existent transaction. If A DID lend money to B then, if it is is a residential home mortgage, it must be in writing. The table funded loans of the “securitization era” do not, in most cases, have documentation between the actual lender and the borrower. State law, as far as I know, in every state requires that the loan be documented in writing IF it is to be enforced as a mortgage loan.

In virtually all cases during the securitization era, the documents do not describe the actual transaction. And thus the actual transaction is not documented. Besides the simple fact that the parties are not properly identified, the documents are missing essential parts of the transaction that were known to to the undisclosed lender but unknown to the borrower. This is why you need both a title analysis and a securitization analysis.

Documents that post-date the alleged date of “closing” would violate the statute of frauds if they are sought to be used against the borrower unless the borrower had either signed them with the appropriate formalities or had authorized them in a previous document that was executed with the proper formalities. Since the actual transactions intended by the parties with respect to splitting up the multiple revenue streams arising from a single transaction — the only one known to the buyer — are not recited in any document that the borrower signed, the initial transaction and any other alleged transactions after the initial transaction would violate the Statute of Frauds — at least as to any enforcement against the borrower, which means the transaction could not possibly have been secured by a lien at the time of “closing.” That being the case, no transfer of the non-existent lien would have any meaning.

States vary on what happens when the statute of frauds is violated but they are unanimous as to one thing — the transaction alleged to be enforceable is not enforceable as a mortgage loan if it violates the statute of frauds. Can this be corrected? Theoretically yes. The real lender can come forward and at least obtain a judgment for unjust enrichment requiring the borrower to pay back the money IF the enforcer has “clean hands” and otherwise proves that the money actually came from him.

The confusion amongst lawyers and the courts is that they know that a loan occurred and that the borrower agreed to some sort of obligation. The problem is that the real transaction is not documented. The parties who advanced the funds were remote investors whose agents “closed” these loans that violated a number of laws, including the statute of frauds. Thus the investors, seeing that (a) not all of their money went where it was supposed to go — into the funding of mortgages and (b) seeing that they could end up in tens of millions of pitched battles with borrowers who won’t agree to sign paperwork conforming to the statute of frauds, they have elected to sue the investment banker who sold them an empty bag — not containing toxic assets, but rather containing nothing at all.

[NYSC] Judge Spinner “Plaintiff’s Papers Raises Disturbing Issues”, “Appears To Run Counter To New York’s Statute of Frauds” BENEFICIAL HOMEOWNER SERV. CORP v. STEELE

1. [NYSC] Judge Spinner “Plaintiff’s Papers Raises Disturbing Issues”, “Appears To Run Counter To New York’s Statute of Frauds” BENEFICIAL HOMEOWNER SERV. CORP v. STEELE – 2011-02-07 10:09:32-05
   2011 NY Slip Op 50015(U) BENEFICIAL HOMEOWNER SERVICE CORPORATION, Plaintiff, v. STEPHEN STEELE, SUSAN STEELE, OCEAN BANK FSB, “JOHN DOE” AND “MARY ROE” (SAID NAMES BEING FICTITIOUS, IT BEING THE INTENTION OF PLAINTIFF TO DESIGNATE ANY AND ALL OCCUPANTS OF THE PREMISES BEING FORECLOSED HEREIN), Defendants. 2010-01996.Supreme Court, Suffolk County. Decided January 7, 2011.Jonathan D. Pincus, Esq, 95 Allens Creek […]

Tags: STATUTE OF FRAUDS
Posted in bubble, Corruption, Eviction, securities fraud |