BORROWER(S) POTENTIAL CAUSES OF ACTION AGAINST LENDER’S
FAIR DEBT COLLECTIONS ACT (USC TITLE 15 1692)
(CONSUMER CREDIT PROTECTION ACT)
Outlines Creditor Actions – Homeowners Rights & Causes of Action
---Dispute, Challenge and Stop Creditors---
*Relates to - False Lenders, Servicers, and Bank Identification – masquerading as debt holder attempting to collect the debt. (Pretender Lender)
*Servicers cannot: change terms or conditions (modification) something they never created or have possession of-(Pretender Lender) this is why only 6% of homeowners actually receive a modification.
*Loan Modification is a scam because it reaffirms the debt, binds you to a new contract, so they now can foreclose legally once you breach the new contract terms and conditions of the new agreement.
*Most loans were securitized. Securitized means sold to Wall Street. Once loan is sold it becomes unsecured debt because of IRS tax deductions see below.
*Once written off, discharged, IRS benefits granted and accepted by original Lender, Lender disappears forever and debt does not exist and becomes an unsecured debt. Securitization process.
*Now the Debt Collector must follow FDCA-Consumer Protections Act for unsecured debt now.
*Can no longer validate the debt once securitized- all documents are destroyed and becomes a stock. The put into REMIC Trust (Real Estate Mortgage Investment Conduit)
*Cannot have a Note and a Stock at the same time – Illegal under SEC Regulation called Double Dipping.
*Use SEC website to see if loan securitized. Need information from Deed of Trust- Name of Trust, Series, Lender’s Name, Loan Amount, Closing Date, City, State, & Zip Code.
*Foreclosing Party must prove they are the “holder of the Debt” and how they acquired the debt through bona-fide documentation (Assignments)
*In Securitization the Investor(s) are the beneficiaries and are the only ones that can legally foreclose. Multiple investors or pools of owners/beneficiaries make it impossible to foreclose.
*Current Mortgage note holder must have been recorded in title with successor & assigns relating to discharge of mortgage.
*Most original Lenders are out of business and no longer have interest in the note anyhow – so if they perform a Foreclosure it is illegal/unlawful because of break in chain of title.
*Robo-signers were created to rubber stamp and re-create Notes w/o verification and authority for bank execs to advance the fraud of foreclosure.
*When PSA rules are broken, trust & chain of title are invalid. (Pooling & Servicing Agreement)
*Many times loans were securitized and the mortgage documents were not delivered to the Trust – This makes it unlawful for that Pretender Lender to foreclose.
*Foreclosing party must prove they are the “holder of the debt”.
*Servicer has no right to collect funds
UCC – Involving Mortgage Debt
Sections 1-302, 1-201, 3-201
PSA (Pooling & Servicing Agreement)
*UCC is the Benchmark for Business & Commercial Transactions including Mortgages (Negotiable Instruments-Uniform Commercial Code)
*Adopted by each State
*1-301 variation by agreement, 1-201 definitions, 3-201 Negotiations
*Violations of UCC & PSA - cancels the agreement – no power over mortgage security instrument, therefore cannot lawfully foreclose.
*PSA 2.01 – must be an unbroken assignment of mortgage & note.
*PSA-Pooling and Servicing Agreement – is the bible of securitization roadmap.
*PSA-contractual document-names all parties-outlines their duties and requirements for transfer into trust-credit information & insurance.
*Party must prove they are holder of the mortgage loan instrument and how they received it, w/o proof they cannot foreclose – w/o proper possession and transfer not able to Foreclose.
*UCC makes it clear that instrument must be indorsed to bearer or in blank – possession through any other transfer invalidates the foreclosure.
*Covenant 24 in Deed of Trust-states that lender may appoint substitute of trustee from time to time as it sees fit-no one else mentioned who may do this.
*Check County Records for any appointment/assignment of a Substitute Trustee, if MERS assigned it, they have no authority to transfer/assign or appoint one.
*Pool creates income stream to investors and does not by the promissory note, it (note) no longer exists and is serviced by servicer who is a unsecured debt collector, collection agency, pretender lender, and collects monthly payments.
*If PSA rules are broken, trust & chain of title are invalid, trust jeopardizes special IRS tax status and becomes subject to double taxation.
*Many times loans were securitized but mortgage documents were not delivered to the trust therefore it would be an unlawful for the Pretender Lender to proceed to a foreclosure.
*Closing Date-Trust has 90 days from opening date to acquire mortgage loan documents. If not trust must close w/o it.
*Tax penalties if REMIC Trust receives loan outside 90 days-jeopardizes special tax status, because 100% taxation of prohibited transaction (loan) IRC 860(f) exception a qualified substitute mortgage requirements-high credit grade rating (almost impossible to do).
*Mortgage in default or foreseeable default does not qualify – must meet requirement at time of assignment/transfer to another party, late assignment occur after mortgage is in default does not qualify. When was the last mortgage assignment of deed of trust? Check mortgage history, was it in default at the time of assignment – if so REMIC could not accept loan assignment!!! Many transfers happen after default and become unlawful for both of these reasons stated.
*Their illegal business practices – assigning faulty mortgages to 3rd parties-3rd party foreclosure-resell Foreclosure home to another family and start scheme over again!
*PSA section 2.01-Depositor transfer the original mortgage note bearing a complete chain of endorsements from the originator to last endorsee. Trust requires complete chain of endorsement (cannot be a break in chain of title). Rarely if ever have the complete chain of title endorsements.
*UCC section 1-302 – variation by agreement – parties must adhere to otherwise agreed to provisions. PSA is an otherwise agreed provision, so all parties must abide by it.
*PSA rules & guidelines – originator to Sponsor to Depositor to Trustee to Trust. Each transfer MUST be officially recorded – invalidates the note becomes stock cannot be both violates SEC- Double Dipping is SEC Fraud.
*Lender can sue in court to get a lien to place upon the property-you can still live their w/o payments – BK chapter 7 could be used to discharge the debt.
*PSA- defines what kind of loan level data must be included in the loans-loan types, loan amount, term, interest rate, & closing date.
MERS (Mortgage Electronic Registration Service)
*MERS has admitted publicly it has no rights-unless of course you don’t object.
*The idea they can transfer, make docs, sign docs, foreclose is fraud & deception.
*They count on the 95% of the people being defensive not offensive. They steal homes through fraud, deception, forgery, and wrongful assignments.
*Check to see if original lender went out of business – if so it becomes an illegal transfer by MERS (this is another reason MERS is a fraud).
*Before MERS lawyers did the work. MERS eliminated lawyers from the process and proper transfer of title chain. If missed any transfers there is a break in the chain of title so no one can foreclose.
*Transferring of bankrupt assets must be recorded in court.
*Most original lenders are out of business. No longer have interest in the note anyhow –break in chain of title – illegal foreclose.
*50% of all Banks have direct ownership through MERS-create in 1993 to help destroy docs.
*MERS is a nominee-to act in place of another in a limited way.
MERS- agent relationship never outlined in corporate terms & conditions. No agency relationship in documents, does not give power or authority to act for and/or foreclose.
*99.9% of MERS makes assignment in their name.
*99.9% of the time they did not follow their own laws.
*MERS has no authority to act in its own name-cannot be a dual agent-nominee and/or note holder. Acts outside of its granted powers.
*Split between Deed of Trust & Note occurs when MERS assigns/transfers the Mortgage.
*Unsecured vs Secured – note is usually split and held by different party-clear break in chain of title-Mortgage is not securing anything-Mortgage is unenforceable-any assignment/transfer after the break is void and no one can foreclose-again unless nobody objects.
Other related reasons
*IRS 1099 for foreclosure-how the Banks try to write off losses? After the foreclosure sale, it’s a better return to Banks than collection efforts on any deficiency judgment.
*In a Bankruptcy-order for relief – automatic stay-creditors must stop collection efforts-only real note holder can enforce foreclosure-Holder of the note must have Constitutional standing to seek lift of stay in BK-must be “real party of interest” in securitization only the single investor/beneficiary is or can be the real party of interest.
*Quiet Title – pursue when there is a cloud on title/property. Suit/action to QT removes any property owner disputes (cloud). Results – get free & clear property avoid foreclosure-grounds for QT-adverse possession, fraudulent conveyance, competing claims like pretender lender, missing assignments, forgeries, robo-signers, & fraud.
*QT Suit/action addresses overall property ownership issues-clears cloud on the title -addresses specific issues.
*Military foreclosure-SCRA-Service members Civil Relief Act. Puts civil actions on hold-must be judicial foreclosure regardless of State-automatic stay.
*Important to note-Original lender & original trustee – unless transfer (recorded assignment) is from original lender a – b – c – d and not just from a – d, otherwise it is invalid transfer because there were skipped parties and a break in the chain of title.
*For Holder to enforce note, must have; endorsed mortgage note in their name or note written in blank to “bearer”. If party claiming to be to be holder & enforces note cannot prove the above, they are not the true holder and cannot foreclose.
*FAS 140 (Financial Accounting Standard) Governs transfer of financial assets including securities- Translation: Transferor party (Lender A) must give up all rights & control of an asset (mortgage) which allows receiving party (new lender/Investor) act freely with asset (mortgage) and w/o any interference from transferring party, no interference anymore No written clause/contract allowing original transferor to repurchase loans, unless financial disaster (clean up call). When a mortgage transfer takes place, true sale when original party has no claim in the mortgage afterwards PSA also describes transfer of assets (mortgage control) – original lender cannot claim later on, that they have control over asset(mortgage) if true transfer took place.
*Res Judicata - (matter already decided) Must make sure to raise all issues in the first cause of action, since you may not have chance to re-litigate. Exceptions-invalid notaries, dates that do not match up, post or pre-dated docs, all factors of fraud, jurisdictional, procedural, due process 14th amendment can invalidate Res Judicata. (Does not stop appeal process though)
*Collateral Estoppel – similar to Res Judicata – unlike RJ-CE does not bar future litigation over issues not actually raised in the original judicial proceeding, even if the issues could have been raised.
*Double Dipping (IRS IRC 860, FAS 140, Securitization) Negotiable Instruments-Checks, Mortgages, Bills of Exchange. Investment Bank (generally offshore) buys mortgages sets up SPE (special purpose entity) makes stock shares in different amounts out of the SPE. Sells to investors as MBS (mortgage backed securities). Investors buy shares which is a registered security. They are buying rights to cash flow out of the Pools not specific mortgage notes. Bond traders would sell the MBS (mortgage backed security) to investors & get paid by investor for selling the security. Then the same trader would sell back the bad loan with the alleged payment defaults to the original wholesale Bank at a discount. Only the investor can force a put back on the originator after the security was sold. The traders were at fault for what is known as double dipping because of being paid twice for the same transaction.
*Mortgage secures payment of note-they are split at securitization (break in chain of title) and become unsecured. This makes the SPE orphan Corporation or trust invalid. A promissory note is only enforceable in its whole state not parts.
*Lender servicer cannot just purchase a loan back once it has been sold to a REMIC.
*Federal Rule of Civil Procedure 17: Alleged lender loses ability to enforce or foreclose on an alleged property because they are not a party of real interest. Servicer or pretender lender is double dipping.
*Violation of Truth-in-Lending Act (15 USC – 1632 ETC)
*Violation of Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub. L 111-203)
*Improper Securitization and Transfer of Loan
*Fraudulent concealment and violation of Lenders own underwriting guidelines.
*Violations of the Real Estate Settlement Procedures Act (RESPA)
*Systematic creation of false and inflated appraisals encouraging borrower(s) to commit to the loan under false pretenses.
*Fraudulent endorsement and falsified disclosures prior to commitment.
*Fraudulent enforcement and/or transfer by MERS.
*Beneficiary process, rights to foreclose, robo-signing documents.
*Phantom investors and signing beneficiaries.
*Failure to modify loan terms under Federal qualifying guidelines.