Disinformation against Democratic Principles

In a perverse way many if not most borrowers lost everything in 4 ways — their home, their retirement money that was used to fund the loans, their savings that was used to try to save the home and their jobs when upon the largest loss of household wealth in history the economy tanked. It didn’t help that corporations were able to strangle workers into giving up their economic freedom and hard won rights with the threat of shipping their jobs overseas, only to lose their jobs anyway.

The closer one gets to the target the more flack is fired at you. Lately there have been posts on my blog obviously written by lawyers or trolls for the banks.   Their intent is to undermine all the arguments against the current judicial and regulatory policy of allowing the banks to run wild and then to reward them for their obvious misbehavior. My answer is that in a nation of laws, such policies take us away from democratic principles and away from due process, accountability and punishment for those who break our laws and those who manipulate the economic marketplace to their own exclusive advantage.

The bank arguments are stale by now. The “free house” myth is just that — a fictional account of what never was true. Out of the thousands of homeowners who have won cases against the banks, none of them received or wanted a free house. Practically all of them wanted a modification — i.e., a correction to economic reality that would preserve value on both sides of the equation (source of funds at risk and homeowner).

We continue to see every effort to force all cases into foreclosure and to prevent modifications where a workout would be desirable for both creditor and debtor. The modification process is aimed at either getting a foreclosure or an “in-house” modification. Either way the Master Servicer (for a Trust that doesn’t exist and does not own the loan) gets to keep the proceeds and the investor gets nothing or next to nothing.

The problem remains that the so-called servicers are not serving the interests of the creditor side of the equation. They are clearly serving the interest of Wall Street in search of greater profits to be made on the heels of the windfall that Wall Street received in the run up to the mortgage meltdown. These “commentators” are ignoring the fact that there was a mortgage meltdown and they are insisting that the false appraisals, high prices and the recession caused by the banks should be and must be the exclusive burden of homeowners and that the interests of the banks are more important than our vanishing middle class. Fabrication, forgery, robo-signing, and robo-witnesses simply don’t count as long as the banks win. That bears little resemblance to law. It is the wild wild west.

These comments even reference “borrower crookedness.” In order to believe that one would have to to believe that tens of millions of Americans had a secret meeting in which they decided to fleece institutional investors, even if those investors were using the pension money for the same people who were at that mythological meeting. They seek to characterize borrowers as deadbeats as though they wanted to default — rather than homeowners who had paid substantial money for down payment and improvements and monthly payments and who were ensnared in multiple ways including most notably a spike in housing prices that was unprecedented and obviously not caused by increased demand for housing resulting from increasing population.

The banks made up stories about how people were selling their homes in California where prices were even more absurdly high and then buying equivalent homes elsewhere for the half the price at which they had sold their California home. All kinds of stories were circulated by the banks to justify the total disruption of 120 years worth of housing data as recorded by the Case-Schiller Index.

Let’s get it straight. The run up in prices was the direct result of the banks flooding the marketplace with ill-gotten money and selling short-term payments to borrowers making the price of the house and the principal of the loan seem irrelevant. While most closings had a Good Faith Estimate, the disclosures failed to show that many loans would shortly reset to payments that were simply and obviously out of reach, often going above the entire household income of the borrower.

Teaser payments and pick-a-payment loans were sold as if they were the best thing since sliced bread. But the disclosures failed to reveal the peril in those loans for both the investors who put up the cash and the borrowers who signed up for a loan.

Those deals were guaranteed to fail and inadequate disclosure obscured the fact that the loan, the deal, and the ownership and possession of the house would be over in a few short years or even months. A reset to a monthly payment that was known to be more than the entire household income was guaranteed to bring an end to a fraudulent deal.

In other words, the banks knew the loan would fail shortly and the borrower didn’t. The banks wanted the loan to fail and the borrower didn’t. The banks were protected in this epic fraudulent scheme and the borrower and the investors were left out in the cold. And now to add insult to injury they are lobbying on my website for a continuation of fraudulent schemes and behavior. The banks stole the money from investors and they stole the identity of the borrower using the borrower’s signature in ways they could not imagine — on documents that later turn out to be fabricated, when put to the test.

These commentators point to the failure of a recent case in which I was the attorney of record and dozens of other cases where the courts have uniformly rejected pre-emptive lawsuits demanding the identity of the creditor (the bedrock of lending laws). From the beginning I have taken a long view of this entire process and what will be a decades long process of unwinding the great recession that continues to afflict most ordinary citizens.

I was dead right about the construction of the TILA rescission statute as enunciated by the unanimous Supreme Court in Jesinoski. Up to that point in time (January, 2015) virtually every trial court, state and federal and every appellate court, state and federal expressly stated that my “interpretation” was wrong. You can’t have rescission without a lawsuit. You can’t rescind without tender or at least proof of tender. My reply was simply that wasn’t what the statute said and that a specific statutory remedy doesn’t remove common law rescission but that the two cannot be combined.

It took ten years for the Jesinoski decision to settle that issue and yet we continue to have courts rebelling against the procedure of TILA rescission which again I say is wrong. But the commentators continue to say that the incorrect judicial decisions are proof that those decisions were right — just like before the Jesinoski decision. It may take many years again for the issue to get slapped down again by the Supreme court who was already dripping with sarcasm in its Jesinoski decision, wondering how or why any Judge could think it could rewrite the statute that was perfectly clear on its face.

The biggest recent attack is meant to undermine confidence in the Yvanova decision. The banks are scared of rescission because they are on the losing side of the battle, as it will turn out in the long run, and they are on the losing side of using void, forged and fabricated paperwork as that will turn out in the short-run. Judges are becoming more wary of signing an order based upon an obviously false premise than they are about rebelling against the TILA rescission statute. It is plain as day to me that the judiciary is slowly turning over a new leaf.

And while preemptive lawsuits are being struck down, despite clear statutory rights to the information demanded, eventually that will also come into line. How do I know that? It’s simple: it has never been the law that a borrower could not learn the identity of the creditor. The fact that the banks cannot identify such a creditor without going to jail  should never have been a burden placed upon homeowners and consumers.

Lastly, there is the “argument” about the UCC. What these commentators deftly avoid is that the ONLY way a possessor can enforce those actual or fabricated documents is by virtue of legal presumptions without being required to prove facts that simply do not exist. Those legal presumptions are rebuttable. And they don’t even apply if there are indications that the document lacks trustworthiness or credibility. They argue that it doesn’t matter if the document is based upon a nonexistent transaction so long as the possessor has “rights to enforce.” And rounding out their circular argument they say that the mere assertion of rights to enforce is sufficient to presume that those rights exist — and that is the end of the matter. Thus they are arguing through legal presumptions that they should be treated as holders in due course even though they never asserted that status.
What has been incorrectly but nonetheless successfully argued before courts across the country is that the self-serving document presented is evidence enough of its trustworthiness. It doesn’t work that way in virtually all other areas of law. It is simple logic: contemporaneously with a real transaction in which consideration is exchanged reciprocally the transaction is memorialized in a written instrument — that is then used as evidence of the transaction. But if there was no transaction, then the instrument is worthless in most instances.

And that is why the banks never argue they are holders in due course which requires proof of purchase. And that is why discovery is so important to test whether the transaction exists or, as is usually the case, the document was prepared and filed as though the transaction existed. “PETE” is not the legal equivalent of holder in due course and it never was.

In a nation of laws, it is not the law and has never been the law that the banks could foreclose on any note and mortgage regardless of whether or not they had any actual right to do so. This is not radical thinking. It is common sense.

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