Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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A “Free House” – That’s Not the Issue, Judge

Currently making the rounds among foreclosure defense attorneys is a transcript of a trial in a foreclosure case that recently took place in Miami. I did not participate, as this wasn’t one of my firm’s cases, but I encourage everyone to read the transcript, as there are significant lessons to be learned here for all involved.

Before I share my thoughts, just read. Here are some pertinent portions:

The Court: My feeling about this equitable lawsuit, foreclosure issues, and I want to get this as a jump off.

Defense Counsel: Okay.

The Court: My concern is, did you sign the Note? Did you sign the Mortgage? Did you get the loan? Did you default? Did you owe the money? Is it your signature or is it somebody else’s signature?

In response, defense counsel attempted to explain that the homeowner had an expert who would testify that the securitized trust, the plaintiff in the foreclosure case, did not actually own and hold the Mortgage because it was conveyed into the Trust after the deadline in the Pooling and Servicing Agreement. Unfortunately, the court seemed less concerned about the legitimacy of this legal argument and more concerned about whether that argument, if granted, would give the homeowner a free house:

The Court: Okay. Okay, so why do I care? Shouldn’t I just be concerned about whether or not they’re the holder of the note at the time that I try the case?

Defense Counsel: There are requirements, like any trust, basic trust law. … The trust has certain requirements that say, all the loans have to be transferred into this trust by X date. If they’re not transferred into the trust by X date the trust doesn’t own or hold anything.

The Court: So if I follow your thinking, your client should be able to live in this house forever, free and clear. Is that what you’re suggesting?

Defense counsel: That may be the ultimate outcome.

The Court: Good luck to you, sir.

Defense counsel: Thank you, Judge.

The Court: Good luck to you, sir.

Defense counsel: Thank you.

The Court: Do you think that I am going to sit here after somebody has been lent hundreds of thousands of dollars and you have the standing to complain that the trust documents were not properly obtained, so your client who got — how much was this loan?

Plaintiff’s counsel: $216,000.

The Court: $216,000, I get to live there forever. You think a court of equity which is what I am sitting as is going to allow that to occur?

Defense counsel: If there is a family trust that says, “all of Bob’s property for his family trust needs to be assigned into the trust by January 1, 2010.” If those — if that res is transferred prior to that January 1st, that’s fine. We as Bob’s family trust own that property.

The Court: Right.

Defense Counsel: But, now there’s a subsequent transfer of 2012 and the document comporting a transfer into Bob’s family trust in 2012 when the trust says, it must be transferred by 2010, and the trust is very particular about this. How can the 2012 transfer into the 2010 trust, you don’t have standing.

The Court: Right, but may — by here’s my problem. My problem is it would seem to me under your circumstances that somebody whose trust assets have been affected might have the ability to come in and say, this has effect on me. What standing does your client have to come along and say, somebody down the line got screwed over because they didn’t do what they were supposed to do? Your client received hundreds of thousands of dollars, has been in this house I assume for three or four years not paying a dime. Have you found one judge in this state that has said, ‘You know what? I buy your argument and you client can live there forever, rent free, mortgage free; because they violated the Pooling Agreement.” Have you found one judge that has –

The Court: So and so, they’ll never be able to foreclose on your client?

Defense counsel: Depending on how the case comes of issue, yes. If it’s an issue that would pertain a res judicata and/or collateral estoppel, yes.

The Court: So what you’re suggesting is that your client should be able to stay in this house forever?

Defense counse: That has been the result. And Judge, yes …

The Court: No, no, no, [defense counsel]

The Court: I think this is a very interesting issue. I think the Third District is doing to have to tell us to tell us that under these circumstances we should listen to this testimony and if the testimony proves what you’ve purported to prove that a person who borrowed hundreds of thousands of dollars should never have to repay it and should be able to live in the house for free, forever.

The Court: Because I’m not doing it.

The Court: You getting that down? All my friends in the Third District, you want to reverse this, you go right ahead and do it.

Defense Counsel: Right, but that’s also presuming that they’re able to prove their prima facie case. Judge, I just want to make the record clear.

The Court: Of course. I mean if they put on evidence of something other than this loan and they don’t convince me that they know what the documents are; they know what the loan figures are; they know that there’s been a default; they’ve complied with all conditions precedent, I can’t give them a judgment. But, I would be shocked. I’m putting that on the record. Shocked if the people of the Courts of this State, District Court of Appeal, would say that in situations like this somebody who has borrowed hundreds of thousands of dollars and has lived mortgage free for years should be able to jump in there and say ‘you guys screwed up and you can never throw me out of that house.’ If that’s what they want to write, that’s their job. They’re my judicial superiors. They can do it, but I’m not doing it. Okay.

My thoughts upon reading this exchange:

1. First off, I am very disappointed to see how the judge framed the issue before him. The issue at this foreclosure trial was not whether the homeowner was entitled to a free house. The issue was whether this plaintiff that filed this lawsuit was entitled to a final judgment of foreclosure against this homeowner. That bears repeating:

The issue was whether this plaintiff that filed this lawsuit was entitled to a final judgment of foreclosure against this homeowner.

I’m pleased to say that many of the judges before whom I appear recognize that this is the issue before them. For those who do not, I think it’s imperative that everyone (be it my my friends, colleagues, and pro se litigants), do whatever you can to force the judges before you appear to frame the issue appropriately. Here, for instance, when the judge kept asking this attorney if his client should get a free house, I think the response should have been something like:

“Respectfully, judge, whether my client winds up with a free house is not the issue before you. The issue before you is whether this plaintiff is entitled to a final judgment of foreclosure against this defendant based on the evidence the plaintiff is about to present. And candidly, judge, I’m troubled that you are not framing the issue in that manner, as it seems you have prejudged this case in a manner adverse to my client, which is causing me fear that you cannot adjudicate this case fairly and cannot be neutral and detached.

If that doesn’t make sense, put yourself in a different context – a murder trial. Suppose the state is relying exclusively on evidence that was procured through an illegal search and seizure and that the law requires the evidence be excluded. Allowing a murderer to go free would be inequitable as hell – I can hardly think of anything less equitable. However, if the law says that the evidence must be excluded, then no judge can allow that evidence to be admitted simply because he/she wouldn’t like the result.

Foreclosure cases are no different. The final outcome, no matter how unseemly it may appear to any judge, cannot justify a court to overlook the rules of evidence and rule of law. Candidly, I think most judges before whom I appear would agree with this, and for those who don’t, let’s all remind them of the issue.

Judge, the issue before you is not a “free house,” but whether this plaintiff is entitled to a foreclosure judgment against this defendant based on the evidence before you.

2. It was very apparent, certainly to me, anyway, that the judge prejudged this case. Most troubling in this regard were the judge’s repeated statements that he was not going to give the homeowner a free house, inviting the Third District to reverse if it so chose. What was so bothersome, of course, is that the judge made these comments before the trial had begun.

Respectfully, how could the judge possibly know whether evidence which he had yet to see would be sufficient to justify a foreclosure? How could he possibly know that the Third District would be in a position of reversing his ruling (adverse to the homeowner) when he hadn’t yet seen any evidence? Pretty clearly, at least in my eyes, the judge knew he was ruling against the homeowner before the trial even started.

As I read the transcript, the judge’s dislike of foreclosure defense only seemed to grow the more the concept of a “free house” was discussed. Unfortunately, this entire premise was misplaced. Hopefully, with input from all of us, everyone will realize the issue in foreclosure cases is not whether the homeowner gets a free house, but whether this plaintiff is entitled to a foreclosure judgment against that defendant based on the evidence in that case.

3. On the issue of whether the defendant has standing to complain about the plaintiff’s lack of standing, I follow the judge’s argument, but I disagree. If the plaintiff is a securitized trust, and the mortgage was not conveyed into the trust in a manner required by the Pooling and Servicing Agreement, then the trust doesn’t own the mortgage. And if the trust doesn’t own the mortgage, then it lacks standing to foreclose.

To say a defendant lacks standing to complain about a plaintiff’s lack of standing is, respectfully, silly. If the plaintiff has no legal right to bring suit, then the defendant always has standing to assert as much. To argue otherwise is to say ”the plaintiff might not be the right plaintiff, but shut up, defendant – you’re a bad actor, and it doesn’t matter if this plaintiff has standing – you’re going to pay.”

“But, judge, I don’t owe this Plaintiff any money.”

“Shut up, Defendant - you owe the money and you’re going to pay.”

I realize this seems a bit crass, and obviously the judge didn’t say “shut up,” but can you imagine that argument in other contexts? For instance, imagine a lawsuit against an insurance company where the issue is coverage for a homeowner. Can you imagine any judge saying “Shut up, insurance company. It doesn’t matter if this is a covered item, and it doesn’t matter if you issued an insurance policy to this homeowner. The house burned down, so you’re going to pay.”

Again, I realize that’s not how this judge worded it, but as I read the transcript, that’s how I interpret the position. It doesn’t matter if the plaintiff is the correct plaintiff, it doesn’t matter if the plaintiff has standing, the defendant can’t complain about it. Respectfully, does that even begin to make sense?

It’s ironic, actually. This judge was so concerned about the homeowner getting a windfall – a “free house” – that he was completely overlooking the fact that he was willing to give the plaintiff a windfall. After all, taking the judge’s position to its logical conclusion, it didn’t matter if that plaintiff actually owned the note - the homeowner was going to pay (and, hence, the plaintiff was going to collect). Maybe the judge didn’t intend to come across that way, but you read the transcript, and you tell me – isn’t that how it seems?

My point here, is this. There are laws that all of us dislike. There are outcomes that all of us find inequitable or inappropriate for one reason or another. However, the end does not justify the means. It’s not up to any of us, especially a judge, to say “this is the outcome that I think should happen, and I’m going to rule accordingly.” There are rules of evidence, procedure, and laws that must be followed. If we act otherwise, then the court system is not enforcing a system of laws, but each judge’s version of morality. And if we start going down that path, there can never be uniformity, as what one person finds inequitable, another will find perfectly appropriate.

Our judicial system functions by a uniform system of laws, which our courts must uphold and enforce. That’s why it’s so important to frame the issue appropriately. The issue isn’t whether a ruling would be fair or consistent with some nebulous standard of morality, but whether such a ruling would be fair and appropriate based on the evidence presented in that case.

Mark Stopa Esq.

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Hay Ann!!


Mr. ka he alredy explane that case from your other post even beter than Mr. Stopa!





I am utterly speechless here. For those that wonder what life trying to see what standing up for consumers and the Rule of Law is like, I want you to read the attached transcript:


Well, I have several comments about the transcript.

First, I would comment that the transcript of the
Judge's statements shows a singularly hostile judge who appears to be
injudicious and even rather rude.

But the transcript also seems to show an attorney who
aggravated the judge from the inception of the hearing by failing to
directly answer the Court's questions as the qualifications and the relevance of
the testimony of the purported expert witness.


While many in the foreclosure defense community reading
the transcript may think that the exclusion of the expert
witness is error, I am not persuaded that this is so.  The Court has wide
discretion as to whether to accept the testimony of an expert witness. 

To the extent that an appellate court finds error in the
exclusion, this error might be found within the hostile banter of the
Judge.  If the Court had instead given the defense attorney more latitude and
opportunity to set forth the qualifications of the expert and the subject matter
of the testimony before ruling, I would think that the exclusion of the witness
would have almost surely been sustained

The hostile banter from the Court and the Court's ruling
prior to the complete explanation of the qualification and subject matter of the
expert witness' testimony will make it somewhat harder for an appellate court to affirm the Court's decision to exclude this testimony.

The defendant's attorney Mr. BLEIL also did a really
poor job in presenting the expert and arguing for the witness'

Moreover, from what I saw of the description of the
expert witness' qualifications, I am doubtful that this person is
really an expert.  A former mortgage broker now an expert on securitization?
Give me a break!


The Court rather resoundingly, but
inarticulately, rejected the Adam Levitin argument about
securitization failure, post-securitization transfer and ultra vires
It is amusing that Mr. Roper, Bill, t and others here at the Forum can explain
the valid basis for the rejection of the argument better than Judge
Michael GENDEN.  The defect in the argument is that the borrower is not in
privity of contract and cannot enforce these aspects of the trust indenture.

Despite the inarticulate explanation by the Court of its
rejection of this argument, the Levitin argument seems unlikely to be a basis
for this case being overturned on appeal.  If the defense wastes more than a
page of its appellate brief on this argument, then they are really IDIOTS.

The winning argument is that set forth by Mr. Roper
which forms the foundation and the basis for various defense objections as to
the testimony of Cynthia STEVENS, the sole witness put on by the plaintiff.

Mr. BLEIL's objections to certain testimony by Ms.
STEVENS, particularly as to the admissibility of the notice of default due to
Ms. STEVENS' clear lack of personal knowledge of the activities of the prior
servicer would seem to be the winning argument.

Mr. BLEIL actually dropped the ball as to
objections to the admissibility of the loan accounting information.  He also
dropped the ball as to arguments relating to the negotiation of the
promissory note.

Mr. BLEIL expended unnecessary energy seeking to exclude
the promissory note and failed to really focus on Ms. STEVENS' lack of personal knowledge as to the facts relating to delivery of the instrument.

While Mr. WEIDNER can rightfully take indignation about
the tone of the Court, I find the transcript to hardly be a recommendation for
Mr. Joshua BLEIL and the Ticktin Law Group.  To the contrary, while Mr. BLEIL
certainly would be far better than most attorneys lacking experience in
foreclosure, the fascination with the Levitin argument and misplaced focus on
several arguments, including admissibility of exhibits, to the exclusion of so
many good and WINNING arguments relating to Objections to hearsay testimony is disturbing.

Mr. BLEIL ought to have been far more focused on Ms.
STEVENS' lack of personal knowledge as to the mailing of the notice, her lack of knowledge of accounting prior to transfer of the servicing and lack of personal knowledge of the negotiation.

A careful review of the transcript actually shows that
Judge GENDEN was at least somewhat more receptive to these arguments.  But Mr. BLEIL had been both inarticulate and argumentative earlier in the trial and by the time these matters came up, the Court had already lost patience.

I think that the decision may very well be overturned on
appeal, but it will be overturned on the evidentiary issues relating to Ms.
STEVENS' lack of personal knowledge, NOT due to the exclusion of the expert.


Someone ought to e-mail Mr. BLEIL links to some of Mr. ROPER's posts.  Maybe he can do better next time if he is more focused and
better prepared.


It is hear that post by Mr. ka:


That Mr. ka he is the pretty sharp!  May be he is smartar than Mr. Stopa, but Mr. Stopa make some good point to!  Mr. Stopa smartar than Mr. Bleil I say.


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Renuart, Elizabeth, Property Title Trouble in Non-Judicial Foreclosure States: The Ibanez Time Bomb? (December 5, 2011). Available at SSRN:

In the context of defective foreclosures, some fear that so-called ―deadbeat‖ homeowners might get a free lunch (home) due to legal technicalities. There are at least two responses to this concern.

First, wrongful foreclosures do occur to homeowners who are current on their
payments as evidenced by the fact that the OCC set up a procedure to review such cases and compensate harmed former homeowners.

The extent to which foreclosed homeowners were not in default, i.e.,―deadbeats, is not yet clear though news reports have described the havoc these homeowners are experiencing. Moreover, as one federal judge recently put it: It is clear…that [the homeowner] is substantially behind in her payments and appears unable to remediate her default.

This, however, does not render an outlaw, subject to having her home seized by whatever bank or loan servicer may first lay claim to it. She still has legal rights.

Second, actual cases where the courts voided mortgages and granted borrowers a
free house are unusual. Professor Porter argues this is an ―urban myth which serves the banks‘ political agenda in two ways: by encouraging legislators to complain about the moral hazards of holding the foreclosing party to the law and by pitting homeowners who are paying on their mortgages against those who cannot. In dissecting the ―free house claim, she notes that halting a foreclosure or reversing a defective sale does not equate to a free house for the homeowner because there is still a valid loan note and a mortgage encumbering the property.

The free house is political handwringing, not legal reality. Just because a party lacked standing or statutory authority does not mean that there is not some party out there that does have the authority to foreclose. Nor does a win on standing mean that there cannot be action taken to give the initial foreclosing party the authority they need…

Unless other problems exist, there is still a valid note that obligates the homeowner to pay money due and the there is still a mortgage encumbering the house. The homeowner does not get a free house. Rather, the homeowner just doesn‘t lose her house today to foreclosure.
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Professor Porter argues this is an ―urban myth which serves the banks‘ political agenda in two ways: by encouraging legislators to complain about the moral hazards of holding the foreclosing party to the law and by pitting homeowners who are paying on their mortgages against those who cannot.




The "free house" story is more than merely an urban myth.  Rather, it is a false inducement used to entice distressed borrowers into a variety of debt elimination scams.  This myth is purposefully propogated by swindlers as a means of swindling thousands of dollars out of the unsuspecting.


This is NOT an accident.  The perpetrators of these swindles are dishonest and disreputable persons who falsely hold themselves out to be foreclosure defense advocates.


They sell distressed borrowers useless and inadmissible "securitization audits" or "forensic loan audits".  They peddle up loan modification scams and debt elimination scams that involve a variety of inflated up front fees and which most often result in the loss of the borrower's home as well as financial ruin of the borrower.  These swindlers engage in unauthorized practice of law and offer to prepare legal pleadings for distressed borrowers for a fee.  They operate using a variety of web sites and social networking sites.  They use various aliases.  They employ various persons to identify suckers and develop new sales leads.  Quite a few of those engaged in these swindles even had prior experience defrauding borrowers by putting them into subprime loans!


Several such swindlers regularly troll this Forum and contact Forum participants to solicit new suckers and victims.  Quite a few Forum regulars have been swindled.  Nationally, these swindles have resulted in the theft of hundreds of millions of dollars.


The free house is political hand wringing, not legal reality. Just because a party lacked standing or statutory authority does not mean that there is not some party out there that does have the authority to foreclose. Nor does a win on standing mean that there cannot be action taken to give the initial foreclosing party the authority they need… 


While I would absolutely agree with your statement above, there ARE some effective defensive strategies that have been successful for several Forum participants.  To date, these have mostly been successful at delaying foreclosure.  But several Forum participants follow Mr. Roper's suggested strategies, have averted foreclosure for periods ranging up to five or more years.  Several are at or past limitations.


There is no magic or silver bullet that will always win a foreclosure case.  Each case is different.  But plaintiffs are often quite careless and a careful and well thought out defense CAN be effective when the plaintiff continues to make various mistakes!

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free-house-mortgageI agree with the author of the attached piece that the argument against the FREE HOUSE FRACAS is clouding legal analysis all across this country….from the article:

Recently, an article appeared in the Advocate, a magazine circulated to Idaho attorneys which supposedly addresses the legal concepts applicable in Idaho relating to fraudulent foreclosures. The author is described as specializing in complex financial transactions, and it is clear, her paycheck comes from representing banks.

Overall, the article is a puff piece designed to suggest that banking attorneys are correct in all of the tactics they use to attempt to defeat fraudulent foreclosure actions, and it references a case pending before the Idaho Supreme Court, Trotter v. BONY. It repeatedly uses the inflammatory mantra that homeowners who resist foreclosure just want a “free house.” To date invocation of this horridly prejudicial phrase has served the banks well around the country, even though in most cases, the attorneys for the banks have absolutely no idea what the homeowner’s true intent is.

Unfortunately, it is also an amazing feat of sloppy thinking. Mortgages and deeds of trust are security devices. In other words they are designed to secure payment of an underlying promissory note. In most instances in which homeowners resist illegal foreclosures, they are seeking to invalidate the mortgage or deed of trust on the basis of lack of standing, robo-signing, false assignments and false notarizations, which are serious defects in the documents. See U. S. Bank, NA v. Ibanez, 458 Mass. 637 (Mass. 2011). However, even if the mortgage or deed of trust is held to be invalid, the underlying promissory note is still enforceable (absent any defenses to the note), just not through foreclosure. Carpenter v. Longan, 83 US 271 (1872)

For my vote, a homeowner who still owes money on a promissory note is hardly in line for a free house. The “free house” argument is deliberately designed to obfuscate this distinction in the hopes that the district judge will be so prejudiced by it, he or she will look no further to ascertain whether the deed is valid. To date, it’s been wildly successful.


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There is no Such Thing As A FREE HOUSE and why there are no foreclosure trail appellate decisions.

I have had an extraordinary number of my foreclosure cases dismissed in the last year. The number is frankly staggering. The foreclosure mills started dismissing or dropping them in January 2011 and they just keep on dismissing them right up until today. This fact is a recognition of what I’ve been saying all along that their cases are so fatally flawed that dismissal is the only responsible and legally appropriate thing for the to do.

The foreclosure files currently pending in courtrooms all across this state are a mess of improper legal pleadings and sometimes fraudulent and misrepresented facts. The more the banksters try to cover up and avoid their lies and the problems they’ve caused themselves the worse things get. And so the only way out, the only responsible, ethical, proper thing to do is dismiss the cases. Most are doing this, but increasingly some cases are going to trial. Now I recently wrote that there are very few appellate decisions in foreclosure that come from trial and I wondered why this was the case. I recognize now a big part of the reason…..

A “win” for a defendant in a foreclosure trial is not a “win” at all.

That’s right, in yet another example of the absolute unfairness and proof that there are two sets of laws, one for those with money and power and one for all the rest of us, I have discovered that even if we have a trial in a foreclosure case and even if we “win” that foreclosure case, all the Plaintiff has to do is turn around and refile the case the very next day. It’s just maddening and entirely mind boggling and totally frustrating. We can work for months to prove up the banksters and their fraud and the lies and the incompetence and the crimes and all they’ve got to do is shrug their shoulders, dust themselves off and start all over again. I’m afraid part of this analysis will come into play in the Florida Supreme Court’s decision in the pending Pino case.

But back to the “FREE HOUSE” analysis here on the ground. Recently a transcript of a foreclosure trial hit the blogosphere. (You really must read it here.) No matter what the problems on the bank side, no matter how many errors or flaws or questionable documents or facts, the court just could not fathom finding for the Defendant in the case because the court absolutely could not stomach giving the defendant a ‘FREE HOUSE”.

Well, I have to wonder, how would that judge’s analysis have changed if the defense attorney had merely explained to the judge that there is no free house, that there is no windfall for the consumer, that the banks can get away with whatever they want and then just turn around and call ‘DO OVER’ whenever they want? I should think this would make the judge a whole lot less concerned about issuing a verdict for the defense….after all, there is no real “harm”….harm in the sense that the banks will suffer no real consequence for their improper actions.

This understanding must make it’s way all across this state’s court system. We must all understand that the only way to get chopping through this heavy thicket of a quagmire of a mess of a garbage dump that is most of the pending foreclosures is to chop through all the garbage, throw all the cases into the wood chipper and do them over, correctly.

Read the attached case carefully and think about the larger implications…..I see this as the ultimate response to the “FREE HOUSE” argument, and a very powerful tool for our judges. As much as I hate the opinion and think that it is very wrong, it allows our judges the freedom to execute good judicial discretion without the ‘NUCLEAR’ option of the dreaded, ‘FREE HOUSE’!

Now, the problem with the opinion is it tosses key legal principles of Res Judicata and Double Jeopardy completely out the window, but hey, we’re all well aware that there are a second set of rules for the banks anyway…..right?


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