5th Circuit Court Makes Mockery of Precedent

Posted on May 31, 2013 by eggsistense

IMPORTANT NOTE/DISCLAIMER:  The following article is not and should not be construed as legal advice and was not written by an attorney.  It is merely a collection of common-sense, rational observations written by a sane, rational layperson with common sense.  It is recommended that you consult with an attorney for any and all legal advice and/or action.

You know what pisses me off?  When courts don’t follow the law.  Also when they not only don’t follow the clear precedent of the United States Supreme Court, they don’t follow their own precedent!  This is exactly what has happened in the case of Martins v. Bank of America Home Loans Servicing, LP, a case recently decided by the 5th Circuit under Texas law.

In Martins, the court said that assignments of deeds of trust only are A-OK, even when done by MERS, which as we all know is merely a computer database that purports to record which entity supposedly owns which property yet which itself, by its own admission, does not hold or own promissory notes  Here’s a quote from the Martins decision:

“Martins contends that BAC also cannot foreclose because it was only assigned the mortgage, and not the note itself, by MERS.”

The court goes on to disparage this argument, but they should not have.  Why?  Because of the case of Kirby Lumber Corp. v. Williams (5th Cir., 1956).  What did Kirby say?  Well, Kirby favorably quoted from West v. First Baptist Church, a 1934 Texas case which said the following:

“The rule is fully recognized in this state that a mortgage to secure a negotiable promissory note is merely an incident to the debt, and passes by assignment or transfer of the note.”

The Kirby court then cited two other Texas cases (the first from 1896 and the second from 1939), both of which quoted the now well-known words of the U.S. Supreme Court in the 1872 decision in Carpenter v. Longan:

“The note and mortgage are inseparable; the former as essential, the latter as an incident. An assignment of the note carries the mortgage with it, while an assignment of the latter alone is a nullity.”

The Mortgage follows the note, not the other way around

Back to the Martins case–in it, the court completely reverses itself from Kirby.  That is, Kirby stands for a number of principles, most importantly: 1) an assignment or transfer of the note carries the mortgage with it and not the other way around; 2) an assignment of the mortgage alone is a nullity; and 3) these principles are well-settled in Texas law.  The Martins court completely disregards all of these principles and indeed pretends that these principles were never articulated by them!

How does the Martins court disregard these principles and ignore its own (as well as the U.S. Supreme Court’s) longstanding precedent?  Consider this quote from Martins:

“Numerous district courts have addressed this question [of the validity of a MERS assignment of only the mortgage], and each one to analyze Texas law has concluded that Texas recognizes assignment of mortgages through MERS and its equivalents as valid and enforceable. ”

Whoa!  See what just happened?  They said that assignment of just mortgages were okay and that Texas law is OK with that.  Kirby tells us the exact opposite, as we have seen above.  But the Martins court was sneaky–they said that assignments of only mortgages are OK as long as they’re done “through MERS and its equivalents.” 

There is no exception for MERS

Well, nice try geniuses, but the wording of Kirby and all the cases it cites do not have an exception for MERS.  In other words, Kirby and Carpenter do not say that mortgages can be assigned separate from the note under certain circumstances.  They say that assignments of mortgages separate from the note are a nullity, end of story.  Period.  No exceptions.

And why do they say that?  Because the note and mortgage are inseparable, but even though that is the case, the mortgage is only an afterthought to the note and the note is to be considered superior to the mortgage.  That is, the mortgage is not the issue, the note is.

And I should point out that the 5th Circuit cites to some recent Texas cases which incredibly say that the note and the mortgage are separate obligations.  However, this misguided notion obviously flies in the face of what earlier Texas courts (as discussed above) have said, and when this misguided notion is brought before the 5th Circuit, it is the duty and obligation of the 5th Circuit to refute such nonsense, particularly when the 5th Circuit itself has already ruled–i.e. established binding precedent–that the note and mortgage are inseparable.  In fact, the 5th Circuit has tied its own hands regarding matters such as these, particularly in the case of FDIC v. Abraham (5th Cir., 1998).

5th Circuit’s Schizophrenia

The 5th Circuit said the following of itself in the 1998 case of FDIC v. Abraham:

“We are of course, a strict stare decisis court. One aspect of that doctrine to which we adhere without exception is the rule that one panel of this court cannot disregard, much less overrule, the decision of a prior panel.”

If this is true, how can the 5th Circuit justify the 2013 ruling in the Martins case given the 5th Circuit’s ruling in the 1956 Kirby case?  Seems to me that the 5th Circuit is full of it–the 5th Circuit apparently is obviously not a “strict stare decisis court” and it does not adhere to the stare decisis doctrine “without exception.”

Indeed, the 5th Circuit’s statement quoted above from FDIC v. Abraham is about following precedent, and the 5th Circuit would have us believe that it follows its own precedents “without exception.”  Why in God’s name didn’t the court do that in Martins?  The Martins court was surely aware of the ruling of the Kirby court.  What changed in the 57 years between Kirby and Martins–the law or the biases of the court?  Obviously the latter.  And even though the Martins case is not to be used as precedent (except under the limited circumstances spelled out in Rule 47.5.4 in the 5th Circuit’s rules) and the Martins court didn’t overrule the Kirby court, the Martins court certainly disregarded the decision of the “prior panel,” i.e., the Kirby panel which the 5th Circuit itself said it cannot do.

Courts, not litigants, make bad law

Some have said that Ashley Martins made bad law by bringing this suit before the appeals court.  I don’t see it that way.  Martins made the right arguments, but the court ignored both Martins and itself.  Is that Martins’ fault?  Of course not.  It is now well-established that modern courts do not follow precedent or even black-letter, statutory law, as discussed above. So why don’t they?  Why the vastly different results over basically the same issues in both Kirby and Martins?

What is obviously happening is that the courts have bought into the crazy–yet mainstream–idea that all will return to normal once the “backlog” of foreclosures is “cleared.”  So their goal is to “clear” the foreclosures without bringing the banks to their knees, because they have bought into the idea that the country would fall into ruin if the big banks were held accountable.  Because, this meme goes, once the foreclosures–although unfortunate and maybe even mistaken and/or fraudulent as they may be–are all concluded and the banks are still intact, we’ll all be better off.   They think they know what’s best for us.

Another way to look at it is this: the courts are mindlessly following a trend of displacing homeowners, just you know, because it’s cool.  It’s trendy.  Kind of like the trendy clothes people wear and then are horrified 20 years later when they see pictures of themselves wearing the once-trendy outfits.  They think “How could I ever have let myself wear that?”  And so it will be in 20 years or so that the law reviews and the blogs (or whatever media outlets exist by 2033) will lament the current smackdown of homeowners–“How could the courts have ever ruled this way?  How could we have ever let the courts rule that way?  How could we let the courts justify MERS?”  As if we don’t know, right now as it’s happening, that the courts are not following the law.

5th Circuit Doesn’t Understand Basic Legal Definitions

But wait, there’s more!  It seems, given the Martins decision, that the 5th Circuit doesn’t understand basic legal terminology or have very good reading comprehension skills.  I say this because the court also justified the MERS assignment by saying that the deed of trust gave MERS the right to foreclose.  Here’s the quote:

“Where a deed of trust confers such a power, a trustee may sell a debtor’s property…Here, the mortgage was assigned by MERS, which had been given such power, including the power to foreclose, by the deed of trust.”

First things first–MERS is not the trustee.  MERS never acts as a trustee.  In the standard MERS deed of trust, MERS is listed as two things: 1) the beneficiary and 2) the “nominee” of the lender and the lender’s successors/assigns.  MERS, is of course, never the beneficiary, despite the language of the deed of trust.  So it is irrelevant to the matter of MERS what any deed of trust says about a trustee.

Secondly, the standard MERS deed of trust only gives MERS power to foreclose if such power is required by “custom.”  The custom in Texas is not for MERS to foreclose, the custom is for the trustee to foreclose.  Furthermore, in a situation like this one, MERS is not actually the foreclosing entity–the entity to whom MERS made its fraudulent, null assignment typically appoints a substitute trustee who is the official foreclosing entity.  So the 5th Circuit is incorrect–MERS is not granted the right to foreclose in the four corners of the deed of trust.

Thirdly, the deed of trust is silent on the power of MERS to assign the deed of trust.  I don’t even know where the 5th Circuit came up with that.  And the court of course doesn’t cite the provision of the deed of trust that supposedly grants MERS the right to assign the deed of trust.  And the reason that the deed of trust is silent on whether or not MERS can assign the deed of trust is because even the bastards who invented MERS and wrote the MERS deed of trust know that an assignment of mortgage/deed of trust alone is a nullity.

So there you have it

In conclusion, I would just like to reiterate that, for all the foregoing reasons, the 5th Circuit has made a mockery not only of justice, but also of itself.  Why do I care, aside from the fact that I’m an American citizen who wants to see the law followed?  Because I’ve lived in every state that the 5th Circuit oversees–Texas, Louisiana, Mississippi.  Born in Texas, lived there through the end of kindergarten.  Finished elementary school in Louisiana.  Graduated from college in Mississippi.  And because of that, all of my friends and family are directly affected by what this court does.  So they need to get it right.  And they didn’t.  That’s all.

IMPORTANT NOTE/DISCLAIMER:  The above article is not and should not be construed as legal advice and was not written by an attorney.  It is merely a collection of common-sense, rational observations written by a sane, rational layperson with common sense.  It is recommended that you consult with an attorney for any and all legal advice and/or action.

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THE FIX IS IN–NOW YOU KNOW WHY EVERYTHING COSTS SO MUCH

Posted on April 26, 2013 by eggsistense

From incredibly important Matt Taibbi story:

“Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world’s largest banks may be fixing the prices of, well, just about everything.”

And from the last page:

“After scandals involving libor and, perhaps, ISDAfix, the question that should have everyone freaked out is this: What other markets out there carry the same potential for manipulation? The answer to that question is far from reassuring, because the potential is almost everywhere. From gold to gas to swaps to interest rates, prices all over the world are dependent upon little private cabals of cigar-chomping insiders we’re forced to trust.

‘In all the over-the-counter markets, you don’t really have pricing except by a bunch of guys getting together,’ Masters notes glumly.

That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it. The problem in each of these markets is the same: We all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of things like interest rates, swaps, currencies and commodities.”

What is the most important factor in a market system?  Price.  That’s it.  Prices are the most important factor.  Sellers want the highest price, buyers want the lowest.  In a market system in which worthless currency is traded for goods and services, price is everything.

In fact, prices–i.e., how much worthless currency one must trade for goods or services–are so important that there is an entire profession devoted to setting prices: appraising.  We are taught from birth that price-fixing is not only illegal, but immoral.  We are taught that competition is the only fair way to conduct business and that monopolies are anti-competitive and therefore bad.  We are taught that price controls are bad, and that “you get what you pay for.”  We are taught that the “invisible hand of the market” will determine the correct, fairest price.

None of these concepts are controversial, or original with me, or even particularly remarkable because they’ve been drilled into our heads so much that they just seem too obvious.  But we have to face the fact that we have been duped.  Price-fixing goes on every day.

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PEOPLE SIGN PETITION TO SUPPORT POLICE STATE

Posted on April 26, 2013 by eggsistense
Shot in Oceanside–nice footage of the area. Too bad the people sign the petition even while being told they’re supporting “the Orwellian police state!”

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NEGOTIABLE INSTRUMENT VS. TRANSFERABLE RECORD

Posted on April 25, 2013 by eggsistense

Good breakdown from Joe Esquivel from MCI of MERS and negotiable instruments vs. “transferable records”, as well as real property vs. personal property.  Also he repeatedly and correctly points out that MERS doesn’t hold, record, or anything else–MERS only tracks. He touches on UCC 9 in an illuminating way, as well…

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IFR COVER-UP, PART TWO: ILLEGITIMATE FORECLOSURES

Posted on April 25, 2013 by eggsistense

Yesterday’s post questioned why mortgage servicers–and not mortgage investors–were punished by the IFR.  The reason for that question is this: servicers are supposed to be mere debt collectors.  That is, servicers are not the entities to whom a debt is owed (they can be, but generally are not) and therefore, servicers supposedly only act to collect debts or foreclose on collateral as the agent of the entities to whom debts are actually owed.   While this is more or less common knowledge and explanations of mortgage servicing can be found all over the Internet, I wanted to include one example of these myriad explanations just to illustrate that the above is not at all some misapprehension on my part of the facts.  So here is an explanation in simple, direct language from the website of the San Francisco Chronicle:

“Mortgage servicers handle all customer service beyond just collecting monthly payments. While they do not own the loans, mortgage servicers are the borrower interface, answering questions, correcting posting errors, collecting past-due payments and coordinating loan modifications. Servicers, however, cannot usually make final decisions regarding changes in loan terms or foreclosure issues since they do not own the mortgages.”

Gotta love that–“customer service.”  So the IFR punished the supposed “customer service” representatives of the mortgage business.  To carry the analogy a little further and hopefully explain the question I’m getting at, does it make sense to punish the customer service reps at a business when the manager is the one who is embezzling funds?  No, of course not.  So again, why did the OCC want to punish the servicers and not the ones who supposedly control the servicers?

The real question

And because I have a bone to pick with them–and every taxpayer should have a bone to pick with them–my question really is this: why wasn’t Fannie Mae and its ilk punished?  That is, why is there not a settlement or consent order with Fannie Mae and Freddie Mac as well as other supposed “investors” in so-called “mortgage loans?”  Because after all, the foreclosures would have to have been ordered by Fannie/Freddie/investors because they were supposedly the principals while the servicers were merely their agents.  And even if the so-called servicers screwed things up as alleged by the OCC/Fed in the settlement, the responsibility for those screw-ups ultimately lies with Fannie/Freddie/investors because the servicers supposedly work for Fannie/Freddie/investors.  Right?

To go back to the retail analogy, if I manage or own say, a retail store, and my customer service reps keep overcharging people or stealing merchandise, aren’t I as the manager ultimately responsible?  Shouldn’t I fire these bad employees of mine?  Shouldn’t I, as manager/owner, at least take some sort of disciplinary or corrective action against my employees?  Yes, of course.  But Fannie/Freddie/investors did not punish their supposed employees, i.e., the servicers.

Foreclosures by Fannie/Freddie/investors are not legitimate

The IFR carried with it the unspoken presumption that the record number of foreclosures in 2009 and 2010 were legitimate and that the problem wasn’t so much that houses shouldn’t have been taken from people, it was more that the servicers fouled up the process of taking the houses using robo-signing, false affidavits, not having proper endorsements on notes, and so on.   That’s the narrative that is being reinforced by the IFR.

But if the foreclosures were legitimate–i.e., Fannie/Freddie/investors (as opposed to the banks) actually did hold the notes–then why was all the false documentation necessary?  Are we to believe that it was the servicers’ idea to try to take houses using false documentation and that Fannie/Freddie/investors had nothing to do with that?

Because as time goes on and information leaks out in dribs and drabs, we begin to see that the foreclosures at the supposed behest of Fannie/Freddie/investors weren’t legitimate to begin with, to say nothing of the nefarious/illegal actions of the servicers.  And why weren’t the foreclosures at the behest of Fannie/Freddie/investors legitimate?  Because  Fannie/Freddie/investors did not hold the mortgage notes or the notes were not endorsed, and only holders of properly endorsed notes can enforce said notes per the UCC.  I noted the inconvenient fact that the “investors” didn’t hold the notes yesterday in a link to a Living Lies article entitled “Empty Paper Bags: Loans Never Entered Pools” which discussed HSH v. Barclays in which HSH averred that 99% of the notes never made it into the trusts.  HSH noted the ultimate problem with this scenario in its complaint, and this applies to all so called “investors,” whether it’s Fannie or Freddie or a private company like Bank of New York: 

“3. Through investigation of a large sample of publicly recorded mortgage
documents, Plaintiffs have discovered that more than 99% of the mortgages in each of the three Securitizations were improperly or never assigned. In particular, many of these mortgages remain in the name of the loan’s originator or its nominee, and have never been assigned to the Trusts. While others were purportedly assigned to the Trusts, this was long after the securities were issued, contrary to the representations in the Offering Documents. Similarly, the promissory notes were not properly assigned in approximately 81.9% of the sampled loans.

4. The failure to timely assign mortgages to a RMBS trust hinders the trust’s ability to foreclose on the collateral –i.e., the mortgaged property – in the event of a borrower default. ”

Kemp v. Countrywide illustrates this

That little inconvenient fact could be seen even as far back as 2010, again with the justly well-known and widely-discussed case of Kemp v. Countrywide.  In that case, Bank of New York was supposedly the “investor” in the Kemp loan.  That is, Bank of New York supposedly held the Kemp note and was trying to enforce the note through foreclosure.  The astute judge, however, pointed out that the note was unendorsed and therefore not payable to BONY and that the note had not been physically transferred to BONY.  Are we to believe that BONY was not aware of those two facts?  Not one person at BONY, not one database at BONY was apprised of the fact that BONY did not have a note that was not endorsed in the Kemp case?  Why didn’t BONY just check with MERS, the fraudulent mortgage-industry database that’s supposed to keep up with all of this?  The Kemp case did involve MERS, after all, as discussed in the article “Wall Street Rules Applied to REMIC Classification” by Bradley T. Borden and David Reiss, both professors at Brooklyn Law School:  “On March 14, 2007, MERS assigned Kemp’s mortgage to Bank of New York as trustee for the Certificate Holders CWABS Inc. Asset-backed Certificates, Series 2006-8.  The assignment purported to assign Kemp’s mortgage ‘[t]ogether with the Bond, Note or other obligation described in the Mortgage, and the money due and to become due thereon, with interest.’  That assignment was recorded on March 24, 2008. ”  So Kemp won this case because BONY, the supposed investor, didn’t hold a properly endorsed note.   Lest anyone think that Kemp is an isolated case, off the top of my head I can think of 3 lawsuits currently ongoing in which unendorsed notes and lack of transfer of notes–which constitute the extremely basic concept of “negotiation”–are an issue, and those are just cases in which I have personally spoken to the people fighting the banks.  Wait, just remembered another one…this is a pervasive issue, to be sure.

The real reason the IFR was halted

The banks, as well as the OCC/Fed know very well that this is a pervasive issue, and said as much in the original consent order with Bank of America:

“…[Bank of America] litigated foreclosure proceedings and initiated non-judicial foreclosure proceedings without always ensuring that either the promissory note or the mortgage document were properly endorsed or assigned and, if necessary, in the possession of the appropriate party at the appropriate time.”

But notice that the 12 categories of harm in the IFR payout PDF did not include “investor ordering foreclosure did not hold note,” or “note was not endorsed to or held by investor,” which are two of the biggest reasons why foreclosures were illegitimate (and which again, was explained in a big way in Kemp v. Countrywide).  Not that the 12 listed categories weren’t violations, but they weren’t the violations that if widely-known, would bring the mortgage industry and MBS market crumbling to the ground.

I am convinced that the reason the IFR was halted is because the reviewers–the “independent consultants” were finding that the notes were unendorsed and therefore not legally able to be held by Fannie/Freddie/investors.  After all, if you’re reviewing a loan file, what’s the first thing you look at?  The note (see for example Naked Capitalism‘s free e-book on p. 133)!   And what are you looking for? An endorsement. And if there’s no endorsement, there’s no negotiation.  And if there’s no negotiation, then Fannie/Freddie/investors do not hold the notes.  And if Fannie/Freddie/investors do not hold the notes, then the “mortgage-backed” securities they issue or hold are worthless.  And if the “mortgage-backed” securities are worthless, then that entire market is bogus.  And if that entire market is bogus, we the taxpayers did not need to fund the bailout.  And if that ever got out and became widely-known and understood, to quote Henry Ford (or at least a quote commonly attributed to him), “there would be a revolution before tomorrow morning!”

Fannie/Freddie/Investors have unclean hands

And that’s what I’m getting at: the hands of the “investors” are not clean, and I would argue based on the above, the investors’ hands are far dirtier than the servicers’ hands.  But the servicers took the fall.  Why?  I don’t know for certain, but I think it is a cover-up of investor crookedness and illegality.  So why would the OCC/Fed cover-up for the investors?  I can’t say for sure, but my feeling is that there is some reason the OCC/Fed wants to divert attention away from MBS investors’ responsibility in all this.  And that reason probably has something to do with the QE unlimited policy of the Fed, in which $40 billion/month of MBS is being bought by the Fed.

Or is it that the unlimited bailout of Fannie/Freddie has to continue in order to appease the Chinese, who are the largest holders of Fannie/Freddie MBS according to the most recent Report on Foreign Portfolio Holdings of U.S. Securities?  Because China has and/or has threatened to dump dollars, and it is only through U.S. taxpayer-financed appeasement of China via Fannie/Freddie that the U.S. dollar is not dumped by China (although it has already been dumped in trade between China and Australia)?  That the IFR and Fannie/Freddie bailouts are all a part of the larger currency war that is going on?

After all, China and the rest of the world are not stupid.  You think they don’t know that the MBS are bogus for all the reasons stated above (and surely other reasons)?  Of course they do.  The question is, when will the American public admit that fact to itself?

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IFR COVER-UP: THE PRINCIPAL/AGENT SCAM REVEALED, PART ONE

Posted on April 23, 2013 by eggsistense

So if any of us can stand yet more commentary on the So-Called Independent Foreclosure Review (SCIFR), I have a question–why were only the “servicers” punished?  Why weren’t the holders and/or owners of the notes punished?  After all, the servicers are supposedly merely agents of the holders/owners of the notes and as such, the servicers are legally unable to act without direction from the holders/owners of the notes, who are supposed to be the principals in this supposed principal/agent scenario.

Well, there are essentially two possibilities: 1) there are no principals in this scenario–or the purported “servicers” are the purported “principals” (see below) or 2) the OCC and the Federal Reserve are covering up for the GSEs (Fannie and Freddie) and the big banks that supposedly issued the so-called private-label mortgage-backed securities (MBS)–this point will be covered tomorrow in Part Two of this discussion.

The target of the SCIFR

First, let’s examine exactly who was targeted by the SCIFR.  In an OCC press release (dated February 28, 2013) announcing the settlement that ended the SCIFR, we find this sentence:

“The Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board today released amendments to their enforcement actions against 13 mortgage servicers for deficient practices in mortgage loan servicing and foreclosure processing.”

There you have it, straight from the source–the SCIFR did not go after the supposed note holders or note owners, i.e. the principals, it only went after the servicers, i.e., the agents.

Principal/Agent scam

Now, I have no desire to get too deep into the weeds on agency law here (and I am not a lawyer), so let me try to be succinct.  In every case I have ever read (including my own), the servicers claim that they are but agents of their principals and that their principals are the holders (and/or owners) of the promissory notes, and that anything the servicers do is and legally must be at the behest of and with direction from their principals (i.e., the noteholders).  Judges also acknowledge this in every case I have read.  In fact, here is a short and sweet explanation of this matter by two judges from a 2009 article entitled “Where’s the Note? Who’s the Holder?“:

“But, the servicing agent does not have standing, for only a person who is the holder of the note has standing to enforce the note. 1See, e.g., In re Hwang, 2008 WL 4899273 at 8. [NOTE: Hwang was reversed by the district court in 2010, because even though the note had supposedly been sold to Freddic Mac, IndyMac still had physical possession of the note, which actually proves the point of this article, which is further fleshed out below; the reversal of Hwang did not challenge or change the principle mentioned directly above that only a holder can enforce–it confirmed that principle.]

 The servicing agent may have standing if acting as an agent for the holder, assuming that the agent can both show agency status and that the principle [sic] is the holder. See, e.g., In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008) at 520.”

So there you go–a servicer is an agent, a holder is a principal, and the agent cannot act without the direction of the principal.  That means that the final SCIFR settlement was the equivalent of punishing the contract killer but not the person who hired him.  Or does it?  I ask that because what I believe to be happening here is that the SCIFR is actually a tacit admission of either (or both, if that’s even possible) of the following: 1) the servicers are the “principals” (while pretending to be mere agents), which lends great credence to the argument of Matt Weidner and Max Gardner that the standard Fannie/Freddie promissory notes are in fact non-negotiable and therefore no “securitization” (i.e., selling notes into the “secondary market”) ever took place, or 2) that “securitization fail” is a reality, meaning that Fannie, Freddie, and the private-label would-be securitizers never actually took the notes by transfer and/or that the pools are empty because the purported pools of promissory notes that make up the MBS actually have nothing in them.

On this last point, I want to specifically quote from Neil Garfield of Living Lies:

“…the loans were NOT pooled, bundled or put into any trust. That means the entire securitization chain is a scam, supporting a Ponzi scheme that should result in criminal prosecutions.”

And Garfield’s support for this statement is from the April 2012 complaint in HSH v. Barclays—that would be the same Barclays that in July 2012 (obviously only a couple months after being sued by HSH) admitted it participated in rigging LIBOR–in which Plaintiff HSH avers that:

“62. Both investigations have independently revealed that over 99% of the mortgages and notes were not properly and/or timely assigned to the RMBS Trusts.“

And therein lies (pun intended) the principal/agent scam, which is essentially that there are no “principals,” (i.e., “note holder”) telling the “agents,” (i.e., “servicer”) to foreclose on properties.  That is to say, if anyone holds the notes, that would be the servicer/banks themselves, not some MBS trust or MBS pool (as noted above, see the 2010 district court decision which reversed Hwang).  But the servicer/banks usually claim that they don’t hold the notes–they say that Fannie/Freddie and/or private-label MBS trusts (typically and collectively referred to as “investors”) hold the notes!

So what does all this mean?

So in this first part of this two-part argument, we can surmise that the SCIFR did punish the right culprits, i.e., the 13 banks (i.e., Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo) that claim to be mere “servicers,” or agents, of other entities, i.e., “the investors” despite the fact that these 13 bank/servicers did not transfer the notes to the trusts as discussed above.   And if these 13 banks are the right culprits (and I believe they are), then great, they at least got a slap on the wrist.

But that means that a much bigger can of worms has yet to be opened, because if the 13 banks were the right culprits in the foreclosure fraud that has been ongoing for several years, what does that mean for the status of “the investors?”  That is to say, courts have been operating under the presumption (having been led to this presumption by the 13 banks/servicers) that investors held the notes, but as discussed above, the SCIFR is a tacit admission that the 13 banks/servicers–and not the investors–held the notes and therefore necessarily acted independently of any supposed investor/principal in foreclosing on properties.  So the bigger can of worms is gigantic and means that there are no MBS, there are no trusts/pools, the bailouts of Fannie and Freddie were completely unnecessary (because there are no MBS or trusts/pools), and that the Fed’s QE unlimited program is completely unnecessary and fraudulent because there are no MBS on which to spend $40 billion per month for the foreseeable future.  This will be taken up tomorrow in Part Two of this discussion.

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MILLION HOMEOWNER MARCH–TO THE COURTHOUSE!

Posted on April 17, 2013 by eggsistense

IMPORTANT NOTE/DISCLAIMER:  The following article is not and should not be construed as legal advice and was not written by an attorney.  It is merely a collection of common-sense, rational observations written by a sane, rational layperson with common sense.  It is recommended that you consult with an attorney for any and all legal advice and/or action.

Thanks to the “botched” Independent Foreclosure Review (IFR) and recent testimony elicited by Elizabeth Warren, we now know: 1) that the banks have, by making payments to almost 4 million homeowners, essentially admitted to wrongdoing in that same number of foreclosures in 2009-2010 (12 specific categories of wrongdoing are spelled out in the PDF file of who will receive payment) and 2) that the banks have the records of and have now been made aware of this wrongdoing–we know this from Warren’s questioning on April 11, 2013:

“Sen. Warren: All right, so let me ask it from the other point of view. You now have evidence in your files of illegal activity, I take it, for some of these banks. I get that from the evidence you’ve released about the charts, who’s going to get paid what, so if someone believes that they have been illegally foreclosed against, will they still have a right under this settlement to bring a lawsuit against the bank?

Mr. Stipano, OCC: Yes.

Sen. Warren: All right. Now, if a family wants to bring a lawsuit, you’re both lawyers, would it be helpful, if you’re going against one of these big banks, would it be helpful for these families to have the information about their case that’s in your files. Mr. Ashton?

Mr. Ashton, Fed: It would be helpful, obviously, to have information related to the injury, yes it would.

Sen. Warren: Okay. So, do you plan to give the families this information? That is, those families that have been victims of illegal foreclosures, will you be giving them the information that’s in your possession about how the banks illegally foreclosed against them? Mr. Ashton?

Mr. Ashton, Fed: I think that’s a decision that we’re still considering. We haven’t made a final decision yet.

Sen. Warren: So you have made a decision to protect the banks, but not a decision to tell the families who were illegally foreclosed against?

Mr. Ashton, Fed: We haven’t made a decision about what information we would provide to individuals, that’s true, yes.

Sen. Warren: Mr. Stipano?

Mr. Stipano, OCC: Same position.

Sen. Warren: So, I just want to make sure I get this straight. Families get pennies on the dollar in this settlement for having been the victims of illegal activities or mistakes in the bank’s activities. You let the banks – and you now know individual cases where the banks violated the law, and you’re not going to tell the homeowners, or at least it’s not clear yet whether or not you’re going to do that?”

Neil Garfield over at Living Lies had a great idea in relation to this revelation: FOIA requests to get this information regarding illegal activity in the files of the OCC which Stipano admitted to having.  Here’s where to start with that process: How do I make a FOIA request?

Also, we know that the meager payouts (“The vast majority of borrowers – 3.4 million – will receive $1,000 or less“) from the January settlement that stopped the IFR essentially only add insult to injury and we need to do something about it. But what to do? Well, here’s an idea…

A Homeowner Named “Sue”

How about this: we stage a Million Homeowner March, in which all of us receiving payments from the IFR settlement sue the banks to express our discontent at the pittance we’re being given and at the fact that they are deliberately withholding actionable information from us. If you’ve already sued them, sue them again. The stupid banks and their crooked, impotent regulator just handed us our causes of action on a silver platter (i.e., the 12 categories of wrongdoing from the PDF mentioned above). Of course, they’ll scream that the IFR settlement is not an admission of wrongdoing.  And we’ll scream back, “It’s also not a denial,” and that much is covered in, for example, this statement from the amended consent order with Bank of America:

“…the amount of any payments to borrowers made pursuant to this Amendment to the Consent Order do not in any manner reflect specific financial injury or harm that may have been suffered by borrowers receiving payments, except as expressly provided for in this Amendment to the Consent Order, nor do the payments constitute either an admission or a denial by the Bank of wrongdoing or a civil money penalty under 12 U.S.C. § 1818(i)…“

And let’s face it, when you lay out 12 categories of harm–which are specific, contrary to the language above–and agree to pay money to people who fall into those categories of harm, that is, here in the real world, an admission of wrongdoing.  The quote above is merely doublespeak, because “specific financial injury or harm” has been identified by the banks themselves (and/or the OCC)!

So here’s why we do this Million Homeowner March—to cripple the banks and the courts until the banks cry uncle and the courts actually listen to the overwhelming evidence against the banks instead of just issuing knee-jerk opinions against homeowners. Make them feel our power—flex our muscles.

How will this make the banks feel our power? Well, there were 4.2 million homeowners affected by the January settlement. If just 1 million of those homeowners filed suits against the banks, the banks and the courts will be buried in litigation. The banks will be forced to defend these lawsuits, which will cost them A LOT MORE MONEY, and we all know that money is the only language these criminal banks understand. If there are 1 million simultaneous (or near-simultaneous) lawsuits all alleging essentially the same thing—i.e., that the banks fraudulently stole millions of houses—the courts cannot pretend (or will at least have a much harder time doing so) that the lawsuits represent isolated cases of fraud by banks. It’s a win-win for homeowners.

But it’ll never work?

Now this may seem like a pie-in-the-sky fantasy, but it doesn’t have to be. If the attorneys out there would step up and get in their pro bono hours or work on contingency–and why not, because as mentioned above, the banks have already essentially (and, I would argue, substantively) admitted to wrongdoing, so all the attorney has to do is make that argument halfway competently and point out that if their client received an IFR payment, the bank has already pretty much admitted to fraudulent behavior—we could get this ball rolling real quick-like. Enterprising attorneys could run ads like: “Did you receive money from the Independent Foreclosure Review settlement? This is essentially an admission that you were wronged by your bank—let me help you sue them as part of a national movement to bring the banks to their knees: call me or visit my website!”

And if the attorneys won’t make that happen, or they can’t or don’t make it happen on a large enough scale, then people could become pro se litigants and just sue the banks themselves. Don’t be frightened—it’s not as hard as attorneys make it sound. Being pro se should actually be a huge advantage because judges are required by precedent to give pro se litigants a break. At least two U.S. Supreme Court cases point this out: 1) Haines v. Kerner states that “the pro se complaint…[is held]to less stringent standards than formal pleadings drafted by lawyers,” while 2) Erickson v. Pardus says that “a document filed pro se is ‘to be liberally construed’” and that “a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers.”  Of course, the courts usually ignore these binding precedents, but what else is new?

Now, would all these people be counter-sued or be sanctioned for filing frivolous suits? That would be a downside, of course. But it could be dealt with and strikes me as unlikely in any event. After all, to file a counter-claim, the bank would have to SPEND MONEY to have someone write it up, and as we all know, the banks hate parting with their money. And it would be hard to argue, it seems to me, that a lawsuit could be characterized as frivolous when the defendant has essentially already admitted wrongdoing (i.e., when he paid the settlement funds to the homeowner).

Another downside—what if the judges rule against the million homeowners, i.e., they lose? Well, there’s always an appeal. Plus, many of us have already lost anyway—lost homes, money, self-respect, etc. What’s one more loss (as the old song says, “Freedom’s just another word for nothing left to lose”)? We can at least have the satisfaction that we tried, that we actually stood up for ourselves. Because an action like this isn’t really about winning in any conventional sense, it’s about MAKING THE BANKS PAY, literally—making them fight for their financial lives. It’s about “returning the screw” that the banks have given us—bleeding THEM dry financially, bleeding THEM dry of their energy and sustenance.

So what say you out there? Shall we sue the banks en masse?  No class actions, either—it’s got to be the most labor-intensive, billable-hours-creating monumental morass we can possibly create for these banks. Then maybe the foreclosures will stop or slow to a few isolated dribs and drabs. That’ll be our de facto moratorium.  In the comments below, indicate whether or not you’ll be a part of the Million Homeowner March!

On the other hand, a caveat…

In the past, I have advocated not attempting to use the courts to solve these problems because the courts are essentially deaf to the claims of homeowners, even if the homeowners are represented by counsel.  In the past year I have been of the belief that people should save their money and energy and fight these battles outside of the courtroom, in the media and in collective actions like Occupy Our Homes and so on.  So I’m kind of going against my own advice in this post by advocating mass lawsuits, but I’m only doing so precisely because I’m advocating mass lawsuits.  I don’t think this idea will work unless it does happen on a mass scale, because if it doesn’t, the courts will just continue to crank out anti-homeowner decisions based not on the evidence presented, but on the idea that banks are always in the right and even if they aren’t, they should be allowed to create new paperwork to try to make things right.

So, unless it becomes clear that there is a massive move to sue the banks into the ground, to bring them down with the proverbial “death by a thousand (or in this case, a million) cuts,” I would suggest not suing your bank.  Because, based on my personal experience and the experience of others I have talked to, unless there is a massive spate of suits similar to yours (and who knows, maybe even then) you will likely find the courts to be hostile to you and/or your claims, even if you have an attorney.

Having said that, post in the comments below if you think a Million Homeowner March is a good idea and if you would consider participating.  If there is enough interest–and I certainly believe there could be–we can begin to get organized via a petition/sign-up type of website.

IMPORTANT NOTE/DISCLAIMER:  The above article is not and should not be construed as legal advice and was not written by an attorney.  It is merely a collection of common-sense, rational observations written by a sane, rational layperson with common sense.  It is recommended that you consult with an attorney for any and all legal advice and/or action.

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JUDGE ORDERS GUNS TAKEN FROM WOMAN FIGHTING FORECLOSURE

Posted on April 15, 2013 by eggsistense

Judge under criminal investigation for quid pro quo sexual favors

Editor’s Comment: This story represents the frightening convergence of two unfortunate trends currently underway in the U.S.: 1) the theft—via documented, admittedly fraudulent foreclosure–of private property by the bailed-out banks, and 2) the attempts to place more restrictions on citizens’ right to own guns, which have historically been used as a last resort to protect citizens’ personal property. Karen M. Rozier, the subject of the following story, has been battling GMAC, Bank of America, and US Bank for a number of years. She is a pro se litigant—i.e., representing herself in court—and has been able to stay in her California home throughout her fight with these various banks. However, there is another foreclosure auction of her home scheduled for April 25, 2013, and this time Rozier may be successfully evicted.

As discussed in the story below, the law firm representing US Bank sought a restraining order for so-called “workplace violence” against Rozier in February 2013, and that order was granted last week, just in time for the foreclosure auction and subsequent eviction. Rozier must relinquish her guns under the restraining order.

A number of troubling things leap out at me about this situation. First of all, the main purpose of the restraining order is clearly to disarm Rozier as opposed to protecting the bank attorneys from Rozier, because (according to Rozier) the order does not require her to maintain a certain distance from the US Bank attorneys or prevent her from communicating with them, or any other similar types of things that are typically found in restraining orders. Secondly, as mentioned above, it is rather fortuitous timing for the foreclosing entity that Rozier was disarmed exactly two weeks before her home is to be sold at a foreclosure auction, after which, if standard procedure is followed, eventually Rozier and her family will be evicted. This is not at all to suggest that Rozier or anyone in her family would or should resist eviction with violence using firearms or anything else.

Rather, this suggests that the banks in general realize that lawsuits like Rozier’s represent an existential threat to their economic hegemony, which could be greatly diminished or completely destroyed if the banks were to lose even one significant foreclosure fraud case like Rozier’s. And the banks certainly realize that if homeowners continue to lose their foreclosure fraud lawsuits despite the overwhelming evidence in favor of said homeowners, the banks and/or their agents may ultimately face actual physical violence, as depicted in the upcoming movie “Assault on Wall Street.” In other words, the banks are scared, not just of Rozier in particular, but of homeowner lawsuits in general. And they should be, because as a successful pro se litigant, Rozier is threatening to the banks, not because of the obviously ridiculous idea that she or her family will resort to physical violence, but because her success is an example to others that if they will just stand up to the banks on their own, without having to hire expensive attorneys, they can and will stay in their homes for years and may even defeat the banks.

Lastly, Rozier is essentially now a sitting duck. She says she has reached out to a number of government agencies for help, including the FBI and the district attorney’s office, but so far help has not been forthcoming. With the bank breathing down her neck, where is she to turn? The courts won’t help her. The police won’t help her. The “system” is making an example of Karen Rozier, so that the message will go out far and wide—challenge us, and not only will we take your house, we’ll take any and every means of defense you have, even if you never intend to use it. And that’s the endgame—fraudulent confiscation of property from disarmed, disfranchised citizens. Which of us will be the next Karen Rozier? All of us will be if we don’t come to the aid of Rozier and others like her.

JUDGE ORDERS GUNS TAKEN FROM WOMAN FIGHTING FORECLOSURE

Judge under criminal investigation for quid pro quo sexual favors

By Clinton Kirby (Monday, April 15, 2013)

On April 10, a judge granted a 3-year restraining order—under which she is required to turn in her guns–against Karen Rozier, a California woman fighting to save her home from foreclosure by US Bank.

Severson & Werson, the law firm representing US Bank, sought the order against Rozier under the incredible accusation that Rozier had threatened the firm’s lawyers with “workplace violence.” Bizarrely however, the judge’s order does not require Rozier to keep her distance from the Severson and Werson attorneys, it only requires that she give up her guns and “not be mean to them,” Rozier said in a phone interview. “I can go walk right up to their lawyers and say nice things to them, but nothing ‘mean.’ There is no ‘stay away’ order. I can visit their offices. I can find out where they live and go visit their houses. I just can’t follow them from work to their home. And I can’t own a gun or ammunition in my own house,” said Rozier.

The judge granting the restraining order was Scott Steiner of the Orange County Superior Court, who Rozier says wouldn’t reveal his name to her throughout the course of the proceedings last week. Rozier said she only found out the judge’s name when it appeared in the ruling which granted the restraining order. Incredibly, Steiner has been under criminal investigation since early March of this year for allegedly getting a woman a job at the Orange County District Attorney’s office in exchange for sex.

Meanwhile, the foreclosure auction for Rozier’s Buena Park property is still scheduled for April 25 (despite the fact that a preliminary injunction has been granted against Bank of America by one judge and another judge issued a temporary restraining order against all banks). Now that Rozier has been disarmed by the state, she said she fears for her safety on April 26, when she knows she will be served with notice that her property has been sold: “I’m suspecting that they (US Bank) plan to have me killed,” Rozier said. Rozier’s fears are not entirely unfounded, as she said that she has been served with notices and other legal papers before by the sheriff, backed up with the SWAT team of the Buena Park Police Department, who had guns drawn.

Rozier says Severson & Werson’s attorneys said they “fear for their lives,” but Rozier points out that she is a “peace advocate,” and in the past has participated in a peace walk with Thich Nhat Hanh, the noted Vietnamese peace activist, Buddhist monk, and author. Also, she is a Fellow of the Harvard Kennedy School and has been a civilian employee of the U.S. Navy in the area of future naval capabilities, including electronic warfare, knowledge superiority, and missile defense. In her job with the Navy, she was entitled to mid-level security clearance. Further, Rozier said she is a First Class Girl Scout, her son is an Inclusive Scout, and her husband David (who also was required by Steiner to turn in his guns) is an Eagle Scout and Air Force veteran with no criminal record.

Despite all this, Rozier said Judge Steiner “still ruled against us to take my guns, put us in the system, and brand us as bad people.” Rozier plans to appeal Steiner’s ruling (the case number is 30-2013-00630629-CU-HR-NJC).

LINKS:

Sign the petitition to keep the Roziers in their home:

http://start2.occupyourhomes.org/petitions/keep-the-rozier-s-in-the-home-they-built

GIVING PEOPLE POWER

https://www.facebook.com/GivingPeoplePower

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LIBOR–ONLY GOVERNMENT HAS STANDING TO SUE…

Posted on April 1, 2013 by eggsistense

…and we all know that, thanks to the Holder Doctrine, the government isn’t going to sue!  So if you were a trader or a bondholder, a New York judge thinks you don’t have any right to relief due to admitted LIBOR rigging.  The system works!  From Huffington Post:

“In a 161-page opinion, Buchwald said she recognized her ruling might be “unexpected,” since several defendants had paid billions of dollars in penalties to government regulatory agencies.

But she said unlike government agencies, private plaintiffs needed to meet many requirements under the statutes to bring a case.

“Therefore, although we are fully cognizant of the settlements that several of the defendants here have entered into with government regulators, we find that only some of the claims that plaintiffs have asserted may properly proceed,” she wrote.”

Haven’t these poor banks suffered enough?  Wasn’t the slap on the wrist painful enough?  Ummm…I think not.

 

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SENKA LIVE TOMORROW!

Posted on March 30, 2013 by eggsistense

I will be appearing on Senka Huskic’s radio show tomorrow discussing the “Bank of America’s Magic Wand” article below and other foreclosure fraud topics.  The show begins at 1 p.m. Eastern.  Check it out: here a link to her radio show page: Foreclosure Fraud Survivors.

In the meantime, please enjoy George Babcock‘s story about a confrontation with William Hultman of MERS:

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