Why the Delays in Court: Look to the Banks!

Aug 14, 2013

The reason the cases cannot be settled or modified is that the loans no longer exist, there is no known owner (past present or future) and nobody has any real authority to settle or modify a loan when they are a complete stranger to the transaction (as stated in the recent San Francisco study). This should not be converted into a burden on the homeowner; the homeowner should be treated as the unintended beneficiary of a bank scam.

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Yesterday I made the point that the foreclosure proceedings are nearly universally defective because the party initiating the foreclosure does not allege and therefore is not required to prove any financial injury and or any other injury. This leads to countless time-consuming arguments about presumptions and assumptions that could easily be resolved by requiring the “holders” or “lenders” to produce canceled checks, wire transfer receipts etc. to show the extent of their injury, their ownership of the note and open up the issue of receipts and disbursements with third parties — ranging from inspections every other day that cost $95 each to payments received from parties to mitigate the damage of the loss in the value of the collateral, the value of the loan or the loss arising from default.

If you want to test out what I am saying, just go to court at your next hearing and ask for expedited discovery, send a preservation letter first, and then hold the opposing side strictly to the terms of the order setting expedited discovery. What you will find is that the opposing side suddenly starts back-pedaling and for the first time you will see a light in the eye of the judge that tells him that there is something wrong. Why would the defendant who stands to lose money and property at the conclusion of the proceedings and who appears likely to suffer exactly that be the one who is aggressively prosecuting the case? Why is the party seeking relief back pedaling?

The answer is obvious. They are back pedaling because they are abusing the judicial system and abusing the non-judicial system of foreclosures. The banks cannot and will not accept any “expedited” process that would require them to allege and prove the truth of the matters asserted, to wit: (1) ownership (2) principal amount due on the books of the actual creditor and (3) amount of damages due for overpayment on the account by third parties who have agreed to pay down the receivable but waived any right to recover it from the borrower

The entire foreclosure logjam could be eliminated if the foreclosing entity was required to follow the law instead of judges and legislatures making up rules and laws as they go along, violating the U.S. Constitution as well as the applicable State Constitution. The problem is well known and consistently avoided because nearly none of the foreclosures would pass the threshold test of whether they belong in the foreclosure process or not.

If we stick to first year law school concepts, the entire process becomes clear. The Constitution requires pleading injury in order to invoke the jurisdiction of the court. And without injury the party is not entitled to judgment no matter how pretty his paperwork appears to be presented.

This is no theory. See Warth v Seldin, 422 U.S. 490 (1975), Bell Atl. Corp. v Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1964-65, 167 L. Ed 2d 929 (2007). This is not up for discussion. From the U.S. Supreme Courts to the Highest courts in all states to the lower courts of appeal in all 50 states the answer is the same. If you don’t say you have been injured in some way then you cannot invoke the power of the the judicial system.”Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice…” Ashcroft v Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L. ed. 868 (2009).

“To survive a motion to dismiss, a plaintiff must allege “more than labels [e.g. ‘holder”] and conclusion, and a formulaic recitation of the elements of a cause of action will not do…” Bell Atl. Corp. v Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1964-65, 167 L. Ed 2d 929 (2007).

When I was filing foreclosures for banks and private lenders and homeowner associations, I knew that even if no answer was filed, if I didn’t allege the injury and provide admissible evidence of the loss, I would lose an uncontested Motion for Final Default Judgement. The Judge himself would spot the error and tell me to come back another day.

The simple error that has been repeatedly rubber stamped is that the note can be proffered as evidence of the debt but it is not evidence of the loss. The records from a third party bookkeeping service (i.e., the servicer) are not an acceptable substitute for testimony and foundation from the actual creditor who owns an unpaid account receivable where the defendant is the debtor. The banks have led the Federal, State and local governments into a rabbit hole. “expediting” has come to mean foreclosing as quickly as possible instead of arriving at a just conclusion as quickly as possible.

IF YOU WANT TO SEE FORECLOSURES EXPEDITED, REQUIRE THE BANKS TO PRODUCE THE REQUIRED ELEMENTS OF PLEADING AND PROVING FINANCIAL INJURY TO THE ACTUAL CREDITOR WHO OWNS AND UNPAID ACCOUNT RECEIVABLE. This cannot be done with the note or the mortgage or even the assignments which are instruments that reference the underlying transaction.

The note is evidence of the debt, not the debt. If I get you to sign a note on the promise that I will loan you money, that deal is not done until I loan you the money (not somebody else). When I sue I must say I loaned you the money and attach the canceled check or signed receipt. A third party producing an assignment from me SHOULD not be any position than I am when I don’t loan you the money. And proving that you received the money you were seeking is not the same as proving that you got it from me.

FOOLPROOF WAY OF EXPEDITING THE FORECLOSURE CALENDAR: First, for foundation make the banks prove the underlying transactions from origination through all assignments. The foreclosures will all go away with very few exceptions.

NON-JUDICIAL STATES VIOLATING DUE PROCESS IN APPLICATION OF NON-JUDICIAL STATUTES: By analogy the failure to provide the trustee on a deed of trust in a non-judicial state with a clear statement that the beneficiary is the beneficiary and that the beneficiary has been damaged by the default of the borrower — together with a statement of the balance of the receivable account ON THE CREDITOR’S BOOKS (not just the servicer, which can be certainly be used to corroborate the primary evidence proffered by the creditor), the trustee is powerless to act.

And if the borrower contests the balance due or the identity of the beneficiary, the trustee does not have any power to resolve the differences. The trustee is required to file an interpleader action stating that there is a dispute between the parties, that the trustee has no stake in the outcome, and asking for the fees and costs associated with the requirement of filing an interpleader action.

Of course no trustee is doing that because they are “substitute trustees” who achieved that status because the roulette wheel and LPS chose the beneficiary and trustee for that foreclosure — a service for which they are paid $250 (including preparation of fabricated paperwork to create the illusion of propriety. Why did you think that every non-judicial foreclosure case involves a substitute trustee? It’s obvious, the original trustee would insist on performing due diligence as required by rules and statutes. The new “substituted” trustee is actually the new party claiming (without any right, justification, or excuse) to be the beneficiary and will do everything the newly named beneficiary asks without question or due diligence. It’s like telling your right hand to do what the left hand is asking. In other words, the non-judicial system has completely broken down because judges are failing to do their job — limiting their involvement to calling balls and strikes.

ASKING FOR EXPEDITED DISCOVERY WILL SHOW THE COURT WHO IS DELAYING THE PROCESS: While it is understandable to assume on the face of things that the party who is being sued to take their home and lose money in a deficiency judgment would want to delay things as much as possible — this is not the case in reality. Even cases where there has been no answer filed have lingered on for years. Why? Because the lawyers and the parties picked by the LPS roulette wheel know they know nothing about he loan and can’t proffer any witness or other evidence of the underlying transaction.

They can only badger the courts and the borrower with arguments about presumptions and assumptions and why they shouldn’t have to prove the transaction, the balance, the ownership or the mitigating payments received from third parties. Take that cloak from them and they are naked as a jaybird, with no case, no injury, no reason to be in court except to cover up crimes committed at two closing tables: the one with the investor advancing funds and the other with the borrower buying into a fatally defective loan product that does not even state the name of the creditor nor the loan balance correctly.

It is time to expedite these cases. I agree. But that should not be a code for foreclosing despite the requirements of law and ignoring the reality of the transactions. If we are going to expedite, let’s go for it: start with the foreclosing party being required to plead and demonstrate its status as creditor who could be allowed to submit a credit bid at a foreclosure auction, and plead and prove the loss without making assumptions from a fabricated assignment, allonge or endorsement.

Special note to Law Enforcement, regulators and Judges who read this blog: This is not about getting the borrower out from under a legitimate debt. This is about the fact that the banks extinguished the debt at the same moment as creation and went on to make multiple sums of money on top of the “principal due” from the borrower as stated on the note. The failure to grasp the true nature of this transaction is dereliction of duty costing the state billions of dollars in unpaid fees, fines, taxes and damages.

Yes it is true the borrower got the benefit of the loan. But no, it is not true that they owe that money, unless the account receivable is truly unpaid. It doesn’t matter who paid it or why. It isn’t some trick played by the borrowers. It is a bank trick, identity theft, fraud and PONZI scheme that produced the anomalous result of the borrower owing nothing despite the benefits of the loan. Any other interpretation means that the debt is being paid more than once.

In the end it is all about the actual real account receivable on the records of the alleged creditor. It is either positive or negative. And the documents either match up with the transactions shown on the entries to the account receivable or they don’t match up. The account receivable under generally accepted accounting principles includes all actual depository accounts in which the money or assets are placed which would reduce the receivable. It doesn’t take an accountant to know that if the account receivable is paid, the account payable is extinguished.

The reason the cases cannot be settled or modified is that the loans no longer exist, there is no known owner (past present or future) and nobody has any real authority to settle or modify a loan when they are a complete stranger to the transaction (as stated in the recent San Francisco study). This should not be converted into a burden on the homeowner; the homeowner should be treated as the unintended beneficiary of a bank scam.

Banks Continue To Flout Foreclosure Laws In Massachusetts
http://thinkprogress.org/economy/2013/08/05/2410861/banks-flout-foreclosure-law-massachusetts/

Lawsuit Reveals Wall Street Banks Lied Because They Couldn’t Prove Ownership
http://news.firedoglake.com/2013/08/13/lawsuit-reveals-wall-street-banks-lied-because-they-couldnt-prove-ownership/

New Fraud Evidence Shows Trillions Of Dollars In Mortgages Have No Owner
http://thinkprogress.org/economy/2013/08/13/2460891/new-fraud-evidence-shows-trillions-of-dollars-in-mortgages-have-no-owner/

Posted in Corruption, evidence, Modification, Motions, Pleading, Servicer |