Is PennyMac Just a Front for Blackrock? How does anyone revive a dead debt?

see 888_Garfield v Blackrock

The answer is that there is no relation between Robert Garfield and myself. So skip that.

This opinion reveals the intricacies that I have actually avoided in my articles but which are now being forwarded to me by readers. In the unending quest to find a creditor who does not exist, things get even more confusing than they already were.

I have always said that PennyMac was a shill for Blackrock and Citi. Here, in this opinion, is an ample description of the control that Blackrock exercised over PennyMac, as a founding investor and controlling entity that worked in partnership with other entities.

The bottom line is that entities like PennyMac, Ocwen, Specialized Loan Service, etc are basically sham conduits designed to advance the false illusion that they represent creditors. If you look at their financial statements you can easily see how the Wall Street banks basically keep them afloat just to preserve the illusion of a corporate veil.

The bottom line is whose  interests these companies are serving when they claim to be servicers? Are they to be considered servicers just because they sent self-serving letters proclaiming themselves to be servicers? And in substance how they they make a claim to administer, collect or enforce a debt when they do not represent (a) anyone who owns the debt or (b) anyone who represents the owner of the debt? 

This is relevant because there is only one proffer of evidence as to the debt and nonpayment,  to wit: the payment history. Those are proffered as business records of the “servicer”. There are two things  to focus on: (1) those records do not establish ownership of the debt, financial loss or injury and (2) those are not records of the named plaintiff unless the named Plaintiff is the owner of the debt.

So the bottom line is that objections and motions to strike should be used against any proffer of payment history by any company purporting to be a servicer. The objection is lack of foundation.

Unless there is testimony and documentary evidence showing that the existence of a legal relationship between the claimed servicer and the claimant who owns the debt  — by reason of  having paid for it (as opposed to claiming it because of a void assignment or unenforceable endorsement) those documents are strictly hearsay and not admissible under the business records exception. But the objection must be timely and properly raised and you better have case law on hand to support your objections and motion to strike if necessary.

The argument against you will be that possession of the note is evidence of ownership of the note and that ownership note is evidence of ownership of the debt. That is not necessarily true but it is often treated that way in court.

So the argument, with case law in hand and copies of the statutes (especially Article 9 §203 UCC as adopted by all U.S. jurisdictions), is that possession of the note without rights to enforce entitles the possessor to nothing — not even a presumption. If the court chooses to assume or presume that mere possession is evidence of the right to enforce the note then it is a rebuttable presumption. You rebut it by discovery showing that there was no sale of the debt by anyone who owned it — despite documents memorializing transactions that never occurred.

Rights to enforce the note are ultimately derived from ONLY one source — the party who paid value for it in exchange for a conveyance of ownership of it, from someone who owned it. Your opposition will show documents that imply or even assert such transactions but those documents are invariably false. The demand is simple. Produce the proof of payment from the buyer of the obligation to the seller.

Rule of thumb to remember: if the claim is securitization, it never happened. No sale of any debt owed by any homeowner is ever sold to investors. There was no securitization despite all the claims and documents implying the contrary. All you need to do is ask for proof of sale, proof purchase and proof of payment. they can’t produce it because no such sale ever occurred.

This is no mere technicality. And it’s not the fault of the homeowner that the foreclosure mill doesn’t actually have a client or claim.

What you need to realize is that the reason there is no real client or claim is that the homeowner transaction was not a loan. It was presented as a loan in order to draft the homeowner into a highly profitable securitization plan in which the role of lender was extinguished along with the debt. At the end of the day there is nobody holding the debt as an asset on their books. 

Without the homeowner issuing the note and mortgage the securitization cycle could never have been started or completed. What was securitized? A lot of mythical ideas that took on value in the marketplace because of the mistaken assumption that someone owned the debt.

What did the homeowner get for his/her role in securitization? Nothing. What is the current value of the debt? Nothing.

The ONLY legal procedure that could bring the debt back to life is in reformation, with doctrines of quasi contract and quantum meruit applied. Then and only then does the debt have meaning — after the court decides how much compensation the homeowner was entitled to receive had they been told of the true nature of the transaction.

But in order to get reformation the claimant must ask for it and plead the elements for reformation. Wall Street doesn’t want to do that because it means sharing the securitization pie. With an average of $12 generated for each dollar of a homeowner transaction, the pot is big enough to reward both homeowner and investors (as the only real parties in interest) with a fair share of the scheme and to get assurances that were implied when they entered into the transaction. Such implied assurances are contained within lending and securities statutes requiring conformity with law and regulations.

The real bottom line, once courts take responsibility and jurisdiction over the real transaction, is that the debt can be revived and a claimant can be designated even though they don’t own the debt (if the newly declared quasi contract asserts the provision).

But that will always mean an offset or award to homeowners and investors for the fair share of a scheme about which they knew nothing (homeowners) or very little (investors).

The debt, note and mortgage can therefore only be legally enforced after the court determines a net amount due from the homeowner to the newly designated claimant after reduction for compensation that should have been paid to the homeowner. 

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