Arizona Hears Oral Argument

MOST POPULAR ARTICLES

GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE

People are asking what I think after hearing the oral argument. Not much time here to go into detail but these are my impressions:

1. Oral Argument is only about 10% of the case. The rest is the briefs and the record on appeal. The briefs for borrowers were excellent but the record on appeal apparently was lacking some needed objections on evidence. Projecting a decision from oral argument is unwise. Their questions could relate only to those things that they wanted to eliminate from consideration.
2. The agreement that Deutsch was the real creditor was a patent example that nobody understood securitization.Unless the Vasquez case is one in a million, Deutsch did not own the debt, never did, and was never the lender. I think the Court is likely to use this agreement against the issuing a ruling that could have had better and more far reaching consequences. The whole point is that there is no basis to suppose that Deutsch was the owner because there was no evidence that it ever conducted a transaction in which it was other than a conduit or courier. This leaves both borrowers and prospective lenders or buyers in the dark, requiring the word and “indemnification” of an entity that might not survive the next financial storm.
3. The agreement that the remedy for ruling in favor of the borrower was re-noticing the sale was a missed opportunity to remind the court that Arizona has judicial foreclosure. Here was where the point should have been made that on-judicial foreclosure opens the door for mischief. If there is even a possibility that a party could achieve ownership over property on which it could not prevail in a judicial foreclosure, the loophole should be closed. The court could rule either way. Saying that the remedy borrowers are looking for would produce a de minimus effect the Court could say it isn’t worth construing the statute other than the way the banks want. Or they could say that since the remedy is readily available and non-judicial foreclosure needs to be followed to the letter, the recording of the assignment must be a prerequisite. More likely the Court will tell the legislature to do something about their statutes which will give the banks more opportunity to write their own ticket, since our legislature in Arizona is essentially run by the banks.
4. It was nice that one of the justices threw a bone to borrowers saying the equities favor the borrower.
5. It was nuts that the bank’s attorney came up with a whole new set of duties for the Trustee involving handling money paid by the borrower. If the Court thinks about this even for an instant, it demonstrates the fallacy of the bank’s position and represents somewhat of a breakthrough for the borrowers.
6. The oral argument by all parties lacked clarity. Nobody said exactly what they wanted from the court. In Q&A after the oral argument, the Chief Judge made a point of that (in general).
7. The assumption that everyone understood securitization was clearly evident and evens stated at one point. The fact is that their incorrect and naive assumptions about securitization led them all to believe that the original lien was perfected (without anything in the record determining when the alleged became the creditor and how that was accomplished. It resulted in the opening for the bank’s attorney to talk about negotiating bearer paper in the abstract when the PSA required non-bearer paper with recourse. Thus the bank attorney was able to talk in the abstract about perfecting an interest on transfer by mere delivery when the situation in fact did not fit the bearer paper transaction scenario.

All of this suggest, that the attorneys and the parties in law enforcement need to learn more about securitization and it is the reason why our COMBO report is so important in developing a record so that on appeal these traps can be avoided. what the Az Supreme Court will do is anyone’s guess. But I doubt if the opinion will be broad, being narrowed by the fact that Deutsch was considered a known creditor and that the borrower had actual notice of Deutsch with the first notice of default.

Tags: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND
Posted in bubble, Corruption, Eviction, securities fraud |