Response to My Inquiry About Homeowner Right of Action for Damages or Offset Against Foreclosure Action

In response to my blog post last week about whether there might be causes of action for royalty or other damages or offset arising from the fact that the loan is actually a small part of a much larger group of transactions in which the borrower is a party but not a participant in profits, I received the following from “Summer Chic” which I found interesting, even if I don’t completely agree with all of her points.

I would remind readers again that pleading such claims including violations of statutes like FDCPA, RESPA and TILA (and state lending or servicing statutes) are subject to various statutes of limitation.

BUT if they are pled not as claims  but as affirmative defenses entitling the homeowner to offset up to the amount claimed by the foreclosing party such allegations are generally not deemed to be subject to any statute of limitations because they are not technically claims, to wit: they seek no damages to be paid by the opposing party.

BUT it may well be that such claims might need to include the investment bank as a necessary party who was controlling all the other parties and who received the bulk of the profits that would be the source of the offset or claim.

Hence a deep understanding of legal procedure is required to even achieve the objective of pleading these allegations. It won’t be easy but the reward could be substantial.  And by including Federal and State statutes the recovery of attorney fees is considerably enhanced.

I noted you post with Questions re Mortgages as Intent to Issue securities and below some answers I invite you to consider and discuss on your blog. QUESTIONS: ARE HOMEOWNERS IN SIMILAR POSITIONS ENTITLED TO RECOVER A ROYALTY FOR UNAUTHORIZED USE OF THEIR NAME UNDER THEORIES OF UNJUST ENRICHMENT? Answer: Mortgages and Notes are initiated as Contractual Obligations which require FULL disclosures under SEC, RESPA TILA, and UCC. Pursuant to Section 401(a) of the Sarbanes-Oxley Act directed the SEC to issue rules requiring public companies to disclose in their annual and quarterly financial reports all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships with unconsolidated entities or other persons that may have a material current or future effect on one or more of the companies’ financial measures. The final rule defines the term “off-balance sheet arrangement” to mean any transaction, agreement or other contractual arrangement to which an entity that is not consolidated with the company (borrower and their original  lenders is a party, under which the company has: any obligation under a guarantee contract (ala mortgage) that has any of the characteristics identified in paragraph 3 of FASB Interpretation No. 45,Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (November 2002) (“FIN 45”),[1] and that is not excluded from the initial recognition and measurement provisions of FIN 45 pursuant to paragraph 6 or 7 of that Interpretation;  The same apply to mortgages. Lender is  ALWAYS in the position of the higher bargaining power. While Lender conducts a full review of borrowers’ ability to perform under the Contract, Borrower usually has no idea about that will be going on with his/her mortgage behind their backs. Basically, Borrower, who thinks that he/she is signing a UCC document in fact is getting involved  into numerous transactions under myriad of SEC laws when they becoming an Issuer and  DIRECT Guarantor to the Originator; and indirect Guarantor to those who purchased hundreds of pieces of his once Mortgage as a Securities, which constitute indebtness by both, the borrower, and the Company who issued and holds securities – aka Investment banks (they do not lend us  their money, they lend us OUR money which they get from FedRes under minimal percent (today is 2.5%, lending  it  for $5.00 to a million borrowers  makes double profit right away; plus numerous sales of securities; plus tax breaks for profitability ; plus evasion of taxes via empty Trusts- name it. Zero disclosures to borrowers whose name they trade.  Current Mortgages provide very broad and evasive disclosures about the real nature of the Contract, which constitutes a breach ab initio. For example, mortgages usually state that this LOAN can be resold more than once. In fact, the essential part is missing. It should read as “this loan will be CONVERTED  (for example) into  20 various trading products and SOLD more than 10 times a day to more than 100 parties,  at the same time,  for $15.00 per piece for $1 million per each combined transaction. I am wondering how many borrowers they will see again. According to the Contract law, borrower is entitles to receive a benefit from his bargaining Agreement, which now is merely an opportunity to RENT a house (under glimpse of ownership), take maintenance, pay all expenses, conduct improvements – while undisclosed party whom Lender sold this Rental Agreement – collects ALL profits times more than the price of the loan For example, a simple $150,000 loan generates about $100,000 in interest over 30 years, plus $3-4K closing costs; plus costs of improvements; plus taxes and insurance which their “landlord” – investment banker – does not pay – all while the landlord makes $10-15 million on top of the interest rate, and does not disclose it to other party of  the Contract. Of course borrower has all rights to collect a part of profits from trades; and HAS standing in securities trades because – well, the borrower actually CREATED, ISSUED, GUARANTEE at all times – thus OWNS these securities more than anybody else.  Even when borrower stops to make payments and default, the investment bank still makes profits by re-packaging and reselling defaulted mortgages as bonds. Clearly, it creates  a huge disproportionate level of freedom between parties CAN THIS BE PLED IN RECOUPMENT IN JUDICIAL FORECLOSURES? YES, because it was a breach of Contract ab initio by the Party with higher bargaining power. Lender breached their obligations first – thus borrower is not obligated to comply with his/her part of the bargain either. The Lender from who borrower purchased the loan already received full satisfaction of their bargain. The party who purchased this loan also received a full satisfaction for their price; investors who buy a part of the HOUSE for $15.00 as  for a worthless piece of paper, thus, assumed all risk from puch purchases. For example, somebody offered you ROLEX watch for $10.00. This is unreasonable price which constitutes that this watch was probably stolen. If you purchase it anyway and police later discover who is a real owner and come to you to return the watch – you will be criminally liable for   possession of stolen goods. WOULD SUCH PLEADING OPEN DISCOVERY TO FACTS THAT WOULD OTHERWISE NOT BE ALLOWED? YSE, the first thing lawyer should ask – was the Borrower fully informed about their REAL role under contractual obligation as an Issuer/Guarantor for the Securities; did the Borrower gave his/her consent/ did the Lender disclosed how much profits expected be be received on the top of the bargaining price – interest on the loan, payment of taxes, insurances; and expenses associated with property maintenance during therm Term of the Contract. DOES THE TRUE NATURE OF THE MORTGAGE TRANSACTION NEGATE THE FORMAL MORTGAGE STRUCTURE OF THE DOCUMENTS IN A COURT OF EQUITY OR LAW? Yes, the Lender has obligation to inform Borrower and failure to disclose constitutes a breach of contract, identity theft and unjust enrichment. Since Lender failed their obligations under the Contract, Borrower does not have to comply with their part either. ARE THERE NEW CAUSES OF ACTION FOR INVASION OF PRIVACY ARISING FROM CONTINUED TRADING OF SECURITIES THAT USE THE HOMEOWNER’S NAME AND FINANCIAL DATA AS FOUNDATION FOR THE VALUE OF THE TRADE? Yes, and it can even include Human Trafficking Cause since borrower and their family are transferred to hundreds of “owners” of their home to provide them FREE labor – without any compensation. To the contrary, homeowners PAY  to provide free labor to those who make millions on $150K loans without moving a finger, merely by trafficking Borrowers and their families from one company to another, DO HOMEOWNERS HAVE ANY STANDING TO BRING CLAIMS FOR SECURITIES VIOLATIONS? YES, because the Borrower is the issuer and Guarantor.

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