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Editor’s Note: The REAL BOTTOM LINE POINT is not some
technicality wherein the paperwork wasn’t done right, which frankly is
reason enough to deny the foreclosure, it is that this “technical”
deficiency is “derived” from the fact that there is no note or mortgage
or deed of trust that can be enforced. There might not even be any
obligation at all if the creditor received payment in full.
LAWYERS TAKE NOTE: Go back to the law books. There are
essential differences between the obligation that arises as a matter of
law, the note that is offered as proof of the obligation, and the
mortgage or deed of trust which is incident to the note.
Don’t dispute the obligation. It DID arise by operation of
law. And by operation of law it may still exist, be partially
extinguished or entirely extinguished. The documents signed at closing
were only PART of the deal in a securitized residential loan. The
borrower signs a note and the lender (investor) gets a bond (or evidence
of a bond). [THE NOTE AND BOND HAVE DIFFERENT TERMS AND PARTIES BUT THE
BOND REFERS TO SECURITIZATION DOCUMENTS THAT IN TURN DESCRIBE LOANS OF
WHICH THE BORROWER’S LOAN IS ONE CLAIMED TO BE IN A POOL FORMING THE
SOURCE OF REVENUE].
WITHOUT REAL DOCUMENTS SIGNED BY REAL PEOPLE WITH REAL AUTHORITY WITH REAL EFFECTIVE DATES, THE CHAIN IS BROKEN.
The borrower signs the note to a party whom the investor
never heard of nor could the investor have uncovered the payee on the
note because the information was withheld. The investor receives a bond
which is an assignment of all right, title and interest to the
receivables, but the security instrument is left where it always was —
with the mortgage originator (the only one in county records with an
interest). The lender
(investor) doesn’t know the borrower and the borrower doesn’t know the
lender, while each of them receives different terms and [promises from
But by operation of law, the originator’s interest is
extinguished the moment it arises because it is in most cases a table
funded loan in which the originator acted as a broker not a lender, and
performed no underwriting tasks. So the legal obligation is extinguished
at the same time that the legal obligation arises.
BUT that is not the end of the story.
The equitable powers of the court come into play to prevent
unjust enrichment. So the next time a Judge says he doesn’t want the
borrower to get a house for free, your answer should be you don’t want
anyone to get the house for free. And if the Court wishes to exercise
its equitable powers to allocate any equity in the home, after due
consideration for the obligations of the borrowers and many others who
promised to pay the bond holder then the party seeking affirmative
relief must make a short plain statement of ultimate facts upon which
relief could be granted and then prove their case.
What these law firms and fabrication mills are doing is
fabricating and forging documents to create the illusion that those
complexities don’t exist — a conclusion that every Judge would like to
Ultimately, the die is cast — the Courts are required to
consider the complexity and force the real party in interest, the party
with standing to say they lost money on the deal and to show exactly how
they did lose money — not merely point to the borrower’s non-payment.
The non-payment by borrower ONLY comes into play if the
payment is due and the “creditor” can prove their standing and prove the
obligation, complete with an accounting from beginning to end. The fact
that the note SAYS the payment is due does not make the payment due —
not if the payment was made or the obligation has been changed or
satisfied.The note is evidence that must be proffered though the rules
of evidence with authentication from competent witnesses or admission
from the borrower. Don’t be so quick to admit that they have the note.
Even if it is right in front of you, close examination may well reveal
that it came off a color printer that morning.
The reason the die is cast is that ultimately this comes
down to property law. The breaks in the chain of title render every
title in whichever a securitized loan was involved susceptible to being
identified as unmarketable or defective title. This threatens the entire
marketplace. It is this issue that these firms and the large banks are
continuing to finesse with their freshly color-printed “original”
documents, indorsements, assignments and powers of attorney.