SUBSTITUTION OF TRUSTEE: ANOTHER ACHILLES HEEL OF FRAUDULENT FORECLOSURES

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EDITOR’S NOTE: As pointed out by Paula, just like the credit bid at the so-called auction, the substitution of trustee is fraught with fraud. You have to ask — why is there a substitution of trustee in every case involving a securitized loan? I think the answer is that the original trustee won’t have any part of this process which could produce liability disproportionate to any reward.

The document itself, if fabricated, forged, notarized improperly, unrecorded, or recorded improperly, with the wrong date etc., may invalidate the notice of default, notice of sale, and at least taint all the other documents. And then there is the big question: exactly what are the duties of the trustee (the original) and the trustee (the substituted) and the trustee (of the pool)? Each one purports to supersede all others. And what point is the Trustee on the Deed of Trust, whether original or substituted, liable for subsequent misdeeds that amount to fraud?

For example, if the original trustee has knowledge (which all of them do now) that the substitution is invalid then the original trustee is still the trustee on the deed of trust. Why won’t they initiate the foreclosure process and fix the problem? Answer: Because they know they are dealing with fraudulent document, instructions and representations. The same rules probably apply to the substituted trustee. This area is ripe for title litigation and actions for damages for slander of title etc.

SUBMITTED BY PAULA NACHMAN

Paula L. Nachman

Tags: borrower, disclosure, foreclosure, foreclosure defense, foreclosure offense, Lender Liability, predatory lending, rescission, trustee
Posted in bubble, Corruption, Eviction, securities fraud |