Chains for Fools

1. Note that Jessica Jenkins signs as Attorney in Fact for Landsafe Title Corporation and Recontrust Company NA as Trustee. This might be a conflict of interest and it certainly raises questions of authority. From what we have seen, the authority is lacking in that there are no documents that were properly and timely executed by other people with authority to represent the organization whose signatory appears as agent in fact or under power of attorney. It is the same as a chain of title problem. If there is no chain of authority, there is a “break” in the chain. That break might be fatal and it might be fixable depending upon the level at which it occurred and whether the companies in the chain are still in existence.
2. Even if the authority were somehow presumed to be present, that authority could ONLY be to execute the document. It would not, as is frequently presumed, authorize the use of the document nor require its enforcement or acceptance. For example, if the document was an assignment of a 2004 loan that is in default, with the assignment being in 2009, the document could not be used even if it was authorized. The reason is that the securitization pool was closed out by contract and statute 5 years before and the assignment of a non-performing loan into the pool would be rejected automatically by the terms of the pooling and servicing agreement.
3. If this is a conflict of interest, it might be used to invalidate the document but more likely, it’s value would be to show that the conflict corroborates your argument that he or she had no authority to execute the document in the first place and that no entity was bound by that signature. If no entity was bound by the signature, then nothing happened, legally speaking. It is what we call in the law a “nullity.”
4. In the mortgage world before securitization, these hairsplitting distinctions often did not alter the outcome because the level of complexity was so much lower. A Judge could figure out what the deal was and determine whether a lien was perfected or not and make a decision all in about 30 minutes. The current context requires painstaking analysis of each step — something that most judges outside of bankruptcy court are loathe to do. So the presentation should include visual aids and narrow down to the weakest points in the various “chains.” In the real world, the weakest points in the chain are those with which the Judge would agree if presented in short, concise manner. If you can present it to a layman and the person can tell you what it means you have a good argument. If you present it to a Judge and you don’t grab his attention and keep it, that means you have a bad argument.
   

PRACTICE HINT: FIND SOMETHING YOU ARE SURE THE JUDGE WILL ACKNOWLEDGE AND AGREE AND START FROM THERE — EVEN IF IT IS THAT THESE ARGUMENTS SOUNDED HOKEY TO YOU WHEN  YOU FIRST HEARD THEM. THAT IS USUALLY SOMETHING MANY JUDGES WILL AGREE ON. TAKE THE JUDGE ON A SHORT JOURNEY OF LEARNING USING YOURSELF AS A FOIL — A TACTIC THAT IS USUALLY MORE ENGAGING THAN MERELY ARGUING POINTS OF LAW.