PSA ≠ Trust Agreement: The “Bare Naked Title” Trap Driving Modern Foreclosures
TL;DR: A Pooling & Servicing Agreement (PSA) is not a trust agreement. In many MBS foreclosures, only bare legal title is shifted—without any transfer of the underlying debt. Under UCC 9-203 (adopted verbatim in all U.S. jurisdictions), no one can enforce a mortgage or deed of trust unless they paid value for the underlying obligation. Use denials, discovery, and the right objections to keep the court focused on proof—not presumptions.
The Core Mistake: Treating the PSA as the Trust Agreement
Lawyers (and pro se homeowners) are repeatedly lured into arguing from the PSA as if it were the operative trust agreement. It isn’t—even when it says it is. A true trust agreement must identify:
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A trustor/settlor
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Identified beneficiaries
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Identified property (the “res”) that has actually been conveyed into the trust
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Terms instructing the trustee how to manage that property
Most PSAs lack one or more of these essentials. Look for missing exhibits (e.g., mortgage loan schedules) and for language that limits the trustee to bare legal title—with no interest in any debt, note, or mortgage.
“Bare Naked Title,” Wild Deeds & Weaponized Recording
County recorders must accept facially compliant documents—even when they conflict with recorded history. Wall Street weaponized that ministerial function:
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Bare naked title = a deed/assignment that says it transfers an interest, but the grantor had no title to give. (Search “wild deed.”)
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Most securitization documents imply title but avoid any warranty of title. That keeps the burden on homeowners to prove fraud by clear and convincing evidence—an almost impossible lift—while banks claim “that’s not what we meant.”
Result: Titles clouded by paper that presumes validity—without ever showing a real, value-paid transfer of the underlying obligation.
Why UCC 9-203 Ends the Charade
Every U.S. jurisdiction has adopted UCC 9-203. Bottom line:
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To enforce a security instrument (mortgage/deed of trust), the claimant must have paid value for the underlying obligation.
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You can’t “split” enforcement rights from the debt and still foreclose. If only “rights to enforce” were traded—without the debt—the lien is not enforceable.
This is why foreclosure proceeds never go to the “trust” or “trustee” named in the caption—they don’t own the obligation.
How Wall Street Built the Illusion
It was always theoretically possible to sell paper rights without the debt, but there was no business reason—until securitization engineered a market for bets on enforcement performance. To reconcile that with the law:
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Banks fabricated assignments/allonges to simulate debt transfers.
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Courts were nudged to presume authenticity from facially valid paper and court captions.
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Meanwhile, only a handful of firms actually knew the full architecture. There was no real “free market” correcting this—just information asymmetry.
The human cost: millions of foreclosures, with homeowners kept in the dark about who—if anyone—ever owned a loan account receivable.
PRACTICE ALERT: Denials Beat Pleading Fraud (Most of the Time)
Yes, many documents are forged or fabricated. But alleging fraud/forgery loads you with a higher burden (clear & convincing). A tighter path:
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Deny the key allegations (ownership, authority, default amount, standing).
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Use targeted discovery to demand corroboration:
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Who paid value for the underlying obligation?
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Where is the general ledger entry showing acquisition?
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Identify the trust res and the actual conveyance into the trust.
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Produce servicing bank accounts showing receipt/disbursement for a creditor with a loan account receivable.
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Move to compel; seek sanctions; then seek evidentiary sanctions (e.g., motion in limine barring reliance on uncorroborated documents).
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Object timely to hearsay, lack of foundation, best-evidence problems, and split-note/mortgage issues under UCC 9-203.
You don’t have to prove a grand scheme; you only need to show the claimant can’t prove the basics.
Quick Checklist: Spot the PSA/Trust Gap
When the caption says “XYZ Bank, as Trustee for [Trust Name]”:
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Ask for the actual trust agreement (not just the PSA) and trust res ledger.
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Demand the loan schedule exhibit and proof it existed when the trust supposedly acquired loans.
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Demand proof of consideration paid for your obligation (not just a note copy).
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Demand actual creditor accounting (loan account receivable on creditor’s books).
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If the trustee admits it holds only bare legal title, move to bar enforcement under UCC 9-203.
Strategic Framing for Court
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Your theme: “They have paper; they don’t have proof.”
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Your law: UCC 9-203 (value-paid prerequisite); hearsay & foundation rules; negotiability limits; trust-formation requirements under state law.
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Your ask: No evidence in, no judgment out. If they won’t (or can’t) show a value-paid transfer of the underlying obligation, the lien is not enforceable.
Final Thought
Alan Greenspan expected “the market” to correct nonsense. It didn’t—because there was no market in the legal truth of mortgage ownership, only in the appearance of enforceability. Courts can fix this—but only if you make them by focusing on proof of the debt’s ownership, not just the paper trail.
About the Author & Support
Neil F. Garfield, MBA, JD, is a Florida trial and appellate attorney (since 1977), former investment banker, securities broker/analyst, and financial analyst.
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Disclaimer: This post is educational only and not legal advice. Results are not guaranteed. Challenging “servicers” and claimants early can delay or derail enforcement—sometimes for many years—but every case is fact-specific.
