ANTI-DEFICIENCY STATUTE UPHELD IN ARIZONA

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M&I Marshall v Mueller Anti-Deficiency Statute upheld CV100804

One of the scare tactics that the Banks are using to confuse homeowners is that they will come after the homeowner after foreclosure claiming that they are entitled to a Judgment for the deficiency — the difference between the amount recovered from the foreclosed property and the amount they alleged was due. This case from Arizona squarely comes up in favor of the borrower. The mere intention to use the property as their principal dwelling is sufficient to invoke the statutory protection. Check the statutes of your state and consult an attorney before you assume you are protected.

But the protection is broader than that as a practical matter. The last thing the usual pretender lender wants to do is start a lawsuit where they are subject to the requirements of pleading a cause of action upon which relief could be granted. That is because they need to prove each and every allegation. And it is because they would be subject to discovery requests tracing the money on ALL transactions, direct or indirect affecting the balance due from the borrower. In virtually all cases it would be found that the amount claimed by the forecloser is different than what they reported to investors. THAT means the entire foreclosure is wrongful.

In addition, the great likelihood is that the money trail will lead to an inescapable conclusion — the documents in the securitization chain refer to transactions that never occurred. Each “endorsement” or transfer or sale is a document that refers to a transaction.  The transaction is the sale of the note and mortgage. The transaction did not occur if nobody actually paid for it. And they didn’t pay for it because the consideration was supplied long ago by the investors whose money was used to fund the mortgage. Thus each document in the claimed securitization chain refers to a transaction that did not ever happen and can’t happen.

(And the reason they didn’t do it right is because they needed to have some colorable right to claim rights to the loan even though they were only intermediaries. Their purpose was selling the loan multiple times, a process that would have been impossible if the investors were given the documents called for by the PSA. They needed a gap in time between the time of the closing with the borrower and the time that the actual transfer documents were created in favor of the investors or the investor pool).

And THAT in turn means that the substitution of trustee in non-judicial states is bogus. If the transaction transferring the loan never occurred then the documents of transfer are worth less than the paper they are written on, and the forgery, robo-signing and fabrication of documents is almost besides the point. If the substitution of trustee is bogus then all actions conducted by that “trustee” are equally bogus. That includes foreclosure, eviction etc.

NOTE: The same logic applies to the origination of the loan. In most cases the documents refer to a transaction that never occurred —- the loan of money to the borrower BY THE PARTY NAMED ON THE NOTE. At the very least, this fact alone should be sufficient to remove the foreclosure from non-judicial procedure and require the “creditor” to foreclose judicially. In court, parole evidence would allow the borrower to show that the “creditor” is relying upon a faulty transaction. At most, this fact might be sufficient to invalidate the mortgage lien and perhaps the note itself, leaving a naked obligation for which there is no documentation and for which there is obviously no collateral.

Tags: anti-deficiency states, bankruptcy, borrower, countrywide, creditor, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, Substitution of Trustee, TILA audit, trustee, WEISBAND
Posted in bubble, Corruption, Eviction, securities fraud |