Federal Appeal Slams Lawyers and Pretender Lenders with Sanctions for Misrepresentation on Ownership of Loan

Read it and use it: judge-youngs-decision-on-nosek

Challenge everything: As we have repeatedly stated, the entire position of the would-be foreclosers is a bluff and a fraud upon the court, the borrower and the system.

Non-judicial process is improper procedure and unavailable for securitized mortgages: These astonishing breaches of ethics, duties and contract law together with manipulation of procedure to the advantage of pretenders cause unfair and illegal things to happen without seeing the light of day — especially in “non-judicial states.

For the most part it is simply true that nearly all securitized mortgages are either void, unenforceable or rescindable. It is further simply true that such mortgages are neither in default nor subject to enforcement by intermediaries who do not own the loan.

I would go further and say that the transaction is not in reality a loan transaction but a disguised securities transaction violating not only TILA (and eliminating the exclusionary language for purchase money first mortgages) but securities laws, common law fraud, deceptive business practices and a whole host of other actions resulting in extinguishing the debt, satisfying the note through third party payment and thus extinguishing any right under the security instrument (mortgage or beneficial interest).

Everyone who is some stage of foreclosure and even people who are challenging their mortgages without being delinquent should be quoting from this case. I have extracted some of the quotes that are striking. We are on the edge of enlightenment — where the entire judiciary and legal profession comes to the realization that these mortgages are worthless and that a massive transfer of wealth from the banksters on Wall Street to the middle class is in process, restoring the equities and proper position of people who were targeted only because they could sign their name.

Notable quotes from Young Decision:

Because there is probable cause to believe the Ablitt firm has violated both the disciplinary rules of this Court and those of the Massachusetts Supreme Judicial Court, it is the duty of this Court to forward a certified copy of the Order of the Bankruptcy Court and this opinion to the Massachusetts Board of Bar Overseers for such action as it deems appropriate in the circumstances.

How is it that our profession, the legal profession – which could have and should have strongly counseled against the self interested excesses that set up the collapse – instead has eagerly aided and abetted those very excesses?  How could we (all of us who profess to be lawyers) have fallen so low?

“[A]n assertion purporting to be on the lawyer’s own knowledge, as in an affidavit by the lawyer or in a statement in open court, may properly be made only when the lawyer knows the assertion is true or believes it to be true on the basis of a reasonably diligent inquiry.”

Oscar Wilde once said “It’s not whether you win or lose, it’s how you place the blame.”1  This case presents the unedifying spectacle of a litigant and its lawyers engaging in
egregious misrepresentations and, now that they have been sanctioned for such misconduct, scrambling to pass the blame on to others much like the iconic Thomas Nast cartoon of The Tweed Ring.  Thomas Nast, Who Stole the People’s Money?, Harper’s Weekly, Aug. 19, 1871, at 764

Despite the fact that it had not held the loan since 1997 or serviced it since early 2005, Ameriquest and its attorneys made contrary representations.  It filed a proof of claim and an amended proof of claim in 2002 and 2003 prepared by Buchalter, listing itself as creditor without any reference to the assignment of the loan and without attaching a copy of the power of attorney.  It filed pleadings signed by the Ablitt attorneys in 2003 stating that it “is the holder of the first mortgage . . .”  It filed an Answer signed by the Ablitt attorneys in 2005 admitting the allegation that it is the holder of the first mortgage.  It conducted an eight-day adversary proceeding in 2006, with representation by Ablitt, without ever notifying the Bankruptcy Court that it was neither the holder nor the servicer of the note and mortgage.  Id. at 4-5.

The Bankruptcy Court was apprised of Ameriquest’s actual role only after it awarded $750,000 in emotional distress and punitive damages to Nosek, and she brought an action for trustee process to collect the funds on July 27, 2007.  Ameriquest, in its opposition to the trustee process action, stated in an affidavit that “Ameriquest merely collects these funds on behalf of their owners.  It does not own these funds . . .”  Id. at 2.
This was the first time the Bankruptcy Court learned that Ameriquest was not the holder of the loan, contrary to Ameriquest’s representations throughout the course of the
bankruptcy case.

“It is the creditor’s responsibility to keep a borrower and the Court informed as to who owns the note and mortgage and is servicing the loan, not the borrower’s or the Court’s responsibility to ferret out the truth.”

“It is worth repeating as a warning to lenders and servicers that the rules of this Court apply to them.  Their private agreements and the frenzied trading market for mortgages
do not excuse compliance with the Bankruptcy Rules any more than they would justify ignoring the Bankruptcy Code.”

“That the note and mortgage were subsequently assigned to a trust holding a pool of notes and mortgages by Wells Fargo’s predecessor, Norwest, is simply another example of the layers interposed between borrower and lender in today’s marketplace.
It cannot serve as a vehicle to deflect ultimate responsibility from Wells Fargo.”

The Bankruptcy Court was well aware of these principles, but nevertheless, in these circumstances rejected Ablitt’s argument that it was entitled to rely, without further inquiry, on information supplied by its client.  The Bankruptcy Court carefully explained that the Ablitt firm previously had commenced foreclosure proceedings and taken action against Nosek with respect to this same property on behalf of Wells Fargo as trustee, not Ameriquest.

It is in Ablitt’s utter disregard of its own internal files that the actionable violation of Rule 9011 is to be found.  Surely, had the Ablitt firm reviewed its own files, it would have been on inquiry notice that more was required than an uncritical acceptance of Ameriquest’s statements.  Those statements simply were not “objectively reasonable,” standing alone, in light of the prior foreclosure proceeding on behalf of Wells Fargo.

Tags: bankruptcy, borrower, disclosure, foreclosure defense, foreclosure offense, fraud, Lender Liability, predatory lending, securitization, trustee
Posted in Corruption, Eviction, Modification, securities fraud, Servicer |