WRONG WAY, FLORIDA — ROCKET DOCKET HELPS PRETENDER LENDERS

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The very title of the article in the Florida Bar News tells it all: “Faulty Filings Hamper Clearing Foreclosures.” by Gary Blankenship.  The state of Florida is stepping on a rake. Caving under pressure from the banking lobby, legislators are putting pressure on the Florida bar and the entire judiciary to “clear” the foreclosure docket. The presumption is that the problem is volume when in fact the issue is justice. The “rocket docket” is a vehicle by which pretender lenders can speed up the foreclosure process violating basic due process, laws of evidence, and the Rules of Civil Procedure. Retired judges with even less knowledge of securitization than the current judges sitting on the bench are rubber-stamping fraudulent foreclosures.

The issue is not whether there are faulty filings. The question, on the merits, is why there are faulty filings. If you read the concurrent articles published today on this blog it is easy to see that the reason for “faulty filings” is that they are fraudulent, fabricated documents designed to cover up fatal defects in the chain of title and the structure of what we thought was securitization of residential home loans. It is now apparent that while the securitization participants were splitting up the pie and sending money to multiple parties from multiple sources (only one of  which was the borrower), they abandoned all efforts to comply with basic black letter law on the transfer of negotiable instruments, the creation of negotiable instruments, the recording of interests in real property and the duties and obligations of entities and persons involved in the process of lending money.

The securitization parties, starting with the investment banking firm that served as the underwriter for the issuance of mortgage bonds or non-certificated mortgage bonds, failed to actually securitize anything. We are left with the same situation as the creation of a family trust wherein the trustors fail to fund the trust. The result is that the trust is useless. Any claims by the trustee that there are assets in the trust are not supported by the facts. In this context the beneficiaries of unfunded family trusts have attempted to invent a concept of “equitable assignments” which has been universally rejected in all states. The bottom line in family trusts is that if you don’t fund it you can’t fix it. The bottom line in virtually all cases in which a loan is claimed to be part of a securitization structure and thus an asset of a “trust” is that it is unfunded and cannot be fixed.

The “faulty filings” are merely evidence of fatal defects in what supposedly was intended to be a process of assignments. These assignments and endorsements never occurred in the vast majority of residential mortgage loans. The conditions under which an assignment could be accepted by a pool were never met or satisfied. Now pretender lenders are attempting to assign documents they created, fabricated and forged into a pool long after the cutoff date in the securitization documents, which merely track the requirements of the Internal Revenue Code for REMICs. They are trying to assign loans which they have already declared in default to investors who have been promised that their money would only be used to fund performing loans. There is no part of this scheme that is acceptable or legal. The faulty filings have always been vehicles by which the pretender lenders were perpetrating a fraud upon the court, upon the borrowers, and upon the investors whose money funded loans and fees that were exorbitant and unconscionable. These same parties, without having ever invested one penny in the funding of these loans or the purchase of these loans are attempting to obtain title to property that is clearly subject to the equitable and legal claims of real parties in interest.

The new rocket docket procedure attempts to sidestep these realities. By allowing the pretender lenders to proceed, the borrowers and the real lenders are prevented from even knowing the identity of the real parties in interest. This prevents any real modification or settlement of claims. Virtually all of the current “modifications” in process are a sham, involving pretender lenders who have no real interest or authority to modify anything.

I recognize the problem that exists by virtue of the volume of foreclosures. However, virtually none of these foreclosures should have ever been initiated in the first place. There are plenty of ways under current law by which the current docket could be “cleared” without stamping out the rights of the real parties in interest who were  defrauded by the participants in the alleged securitization scheme. The continuation of pretender lender foreclosures will only result in chaos. The chain of title on every property that has been the subject of a securitized loan or a foreclosure by a pretender lender is at best clouded and in my opinion fatally defective. The title companies are rapidly coming to the same conclusion. The economy of the state of Florida and every other state that is following this misguided policy will continue to worsen as victims of this fraud find it impossible to recover.

The merits of each case should be heard. It is upon those merits that the rights and obligations of the parties should be determined. No shortcuts should be allowed and no presumptions based upon relationships or name recognition should be allowed to affect the final result.

Tags: Clearing Foreclosures, Faulty Filings, Florida Bar News, Gary Blankenship
Posted in bubble, Corruption, Eviction, securities fraud |