Where Legal Fiction Triumphs Over Fact and Money

see Legal Standing established Only in Reference to Delivery of Note or Rights to Note

This is perfect example of what I have been talking about. The article raises legal points that are entirely correct. But it begs the question — who actually owned the debt by virtue of having paid money for it? The authors ignore that point entirely just as the memorandums of law and motions to strike do when they are filed by attorneys for parties claiming the right to foreclose.

The point of the article is that the courts are using presumptions that do actually apply to infer that legal standing is present. And those presumptions are almost always sufficient to deny a motion to dismiss a foreclosure complaint or a motion for summary judgment filed by the borrower.

True legal standing requires that the claimant is suffering actual economic loss as a consequence of the borrower’s action or inaction. That loss is not real if they don’t own the debt by reason of having paid value for it. If they have not paid value for it, then they obviously suffer no financial loss resulting from nonpayment. Therefore there is no default that can be legally declared by the claimant or on behalf the claimant.

This requirement has been codified for hundreds of years and is now found in the statutes of all fifty states who have adopted the exact wording of Article 9 §203 of the Uniform Commercial Code (UCC). It is a condition precedent to filing a foreclosure that the claimant has acquired title to the debt by virtue of having paid value for it. It is also common law in every state that a transfer of the mortgage without an effective transfer of the debt is a legal nullity. You can’t own a mortgage if you don’t own the debt.

The borrowers lose cases because in the absence of rebutting the legal presumptions, the borrower has not met its burden of proof and the party claiming the right to foreclose has met its burden of proof through the use of legal presumptions which if unrebutted are as good as real facts. On the issue of standing that is the entire story.

Borrowers can meet their burden of proof contrary to the belief of many judges and lawyers. And meeting that burden means that they destroy the presumption of standing and thus require the party claiming the right to foreclose to actually prove their legal standing, instead of just relying on paperwork. In other words by forcing the issue of facts over legal fictions like legal presumptions.

Lawyers and pro se litigants often make a procedural mistake which dooms them to failure at this point. They mistakenly believe that by raising the issue of whether the party actually has legal standing that the burden shifts to the party claiming the right to foreclose. It doesn’t. The burden shifts when you have established that the presumption is rebutted.

The way you establish that the presumption is rebutted is by revealing that either (a) the party claiming foreclosure does not own the debt and never paid value for it or (b) raising an inference that the party claiming foreclosure does not own the debt pursuant to Article 9 §203 UCC as adopted as state law in all 50 states.

The way you reveal that the party claiming foreclosure does not presently own the debt by reason of having paid for it is by asking them about the transaction in which they paid value for the debt. If they reply that there was no such transaction then you have satisfied your burden, assuming you bring this to the attention of the court in the proper manner. At that point the case is over. Payment of value for the debt is a condition precedent to initiating foreclosure. Thus the borrower wins in that scenario but the problem of course is that scenario never plays out that way.

The way you raise the inference that the party claiming foreclosure does not own the debt and never paid for it is by conducting aggressive discovery in which the claimant will always dodge the question and return fire with some legal memorandum about presumptions. The court will often need to be reminded that the gravamen of the case is whether the claimant is actually the owner of the debt and not just the presumed owner of the debt.

By serving properly worded discovery demands and then following it up with well drafted and legally supported motions to compel, followed by motions for sanctions you can raise the inference that the claimant has not paid value for the debt, defeat the presumption to the contrary, and force the claimant to prove that it is the current owner of the debt by reason of having paid for it. And you might also get an order from the court granting your motion in limine that essentially says that since they refuse to give an answer as to payment for the debt or ownership of the debt, they will not be able to produce any evidence to the contrary at trial. If granted the case is over.

The banks want you to go down a rabbit hole looking for kinks in the documents. While I won’t say that challenging obvious defects in the documents is pointless, the case will only be won when you have established that the proper party with a real claim is not before the court.

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