Freddie and Fannie: Plaintiffs? Standing? Modification?

“It should be noted that the Law Offices of David Stern, Esq. were summarily discharged by virtually of its clients including the Plaintiff in the action below. That discharge was based upon allegations that the law office had engaged in a pattern of conduct of producing robo-signed, unauthorized forged documents that were fabricated for the purposes of litigation. The Court is encouraged to take note of the removal of said law firm in this case, and the hundreds of articles and formal announcements of Freddie in the public domain.

As stated below the alleged movement of fabricated documents belies the allegation that Freddie Mac ever had any interest in the subject loan. No allegation nor any proof offered that Freddie was or even could be a lender. The court is requested to take judicial notice of the public announcements from Freddie in which its enabling legislation and documents show that there is only two ways that this quasi-public entity can become involved in a specific loan, and neither of them allow Freddie to be named as the lender nor as plaintiff in a foreclosure action.

It seems plausible that the primary purpose and actions of Freddie were at work here — guarantee of the loan in which case it could not possibly have brought the action because the payment of the guarantee is based upon the loss to the claimant which is computed after final liquidation of the property. Hence Freddie had no loss or any economic interest in the debt, loan, note or mortgage, thus depriving it of any claim of standing. In fact, the bringing of this action would Cause the loss which might otherwise have been mitigated by settlement and/or modification — which was somehow achieved and which now the Plaintiff insists should not have been enforced.

On the other hand, the same sources suggest that Freddie could purchase the loans using bonds of REMIC trusts. No such transaction is suggested by the pleading or the proof offered on behalf of Freddie.

In fact, no allegation nor offer of proof was ever offered in the court below as to how Freddie came to be named as Plaintiff — or for that matter whether they know of the existence of this action or have been given the opportunity to approve or disapprove. No witness or document from Freddie was ever alleged or produced or proffered as evidence. Defendant in the court below challenged Freddie to answer claims that it had not established standing, which is a jurisdictional issue. Freddie is principally a guarantor whose name should not be used in mortgage foreclosures according to its own pronouncements.

At the time of filing of the complaint there was no recorded assignment of the note or mortgage. The evidence produced by Freddie or on behalf of Freddie showed that delivery of the debt, note and mortgage could not possibly have occurred,  to wit: no party whose authority to “represent” Freddie as agent or otherwise received said documents and no allegation nor any proof was offered that Freddie even acquired the loan, debt, note or mortgage through payment of value in good faith without knowledge of the borrower’s defenses (i.e., as a holder in due course).

The allegation is made that Freddie is a holder, which means that the plaintiff in the court below admits that it had NOT purchased the loan for value in good faith with no knowledge of borrower’s defenses. If Freddie was not the holder in due course, the actual owner of the debt, note and mortgage, then who fits that description? The answer is neither apparent from the record nor evidence from the pleadings nor the proof in the record below.

Pure logic required that if someone claims to be a holder and the “holder” is claiming rights to enforce, that those rights to enforce must be conferred from some set of documents, fact or both. There is nothing in the record in the allegations or proof as to why Freddie is named as “holder”, whether it had rights to enforce, or how it came to possess the rights to enforce — which of necessity would require the production of a witness or document or both showing that Freddie was named as agent to collect by the actual creditor.

This of course would require the identification of the actual creditor a basic right under all lending laws governing fair practices and  preventing predatory lending. To hold otherwise would allow any stranger to the transaction to self proclaim itself as a party with rights to enforce contrary to the rights of the actual creditor.

But worse, naming Freddie as a mere holder belies its central purposes as a quasi governmental entity. If Freddie is a mere holder who won’t even claim that it has rights to enforce or show how it has rights to enforce, how is the consumer, the government or anyone else to determine the identity of the true creditor? In foreclosures this is especially important since ONLY an actual creditor on the actual secured debt can submit a credit bid in lieu of cash at the auction of the property — and only that party can be paid if the borrower seeks to redeem the property.