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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Angelo Show full post »
William A. Roper, Jr.
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Mario Kenny said:
The PSA trumps the UCC.

 
Uh, NO!
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This theory that had its origins with an article that April Charney wrote on April 16, 2010 (Are You PSA Literate?) for Max Gardner's site.  Here is a link to the article: http://www.maxbankruptcybootcamp.com/psa-literate

Ms. Charney basically argues that the UCC gives parties the right to contract outside of the UCC.  In the case of securitization, the parties have agreed to abide by the PSA.  Therefore, the PSA is the controlling document.  If I remember correctly, I believe that Adam Levitin has made a similar argument in a couple of his posts as well as in some articles.  Unfortunately, I don't have those at hand and cannot give you the links.  

Here's are a couple of quotes from April Charney's post: 

Quote:

Under § 1-302 persons can agree “otherwise” that where an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, that the transferee is granted a special right to enforce an “unqualified” indorsement by the transferor, but the code does not “create” negotiation until the indorsement is actually made.

So, that section allows a transferee to enforce a note without a qualifying endorsement only when the note is transferred for value.
 Then, under § 1-302 (a) the effect of provisions of the UCC may be varied by agreement. This provision includes the right and ability of persons to vary everything described above by agreement.

This is where you MUST get into the PSA. You cannot avoid it. You can get the judges to this point. I did it in an email. Show your judge this post.


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Additionally the PSA becomes rich when you look at § 1-302 (b) which says that the obligations of good faith, diligence, reasonableness and care prescribed by the code may not be disclaimed by agreement, but may be enhanced or modified by an agreement which determine the standards by which the performance of the obligations of good faith, diligence reasonableness and care are to be measured. These agreed to standards of good faith, etc. are enforceable under the UCC if the standards are “not manifestly unreasonable.”

The PSA also has impact on when or what acts have to occur under the UCC because § 1-302 (c) allows parties to vary the “effect of other provisions” of the UCC by agreement.

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William A. Roper, Jr.

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Alina said:

This theory that had its origins with an article that April Charney wrote on April 16, 2010 (Are You PSA Literate?) for Max Gardner's site. Here is a link to the article: http://www.maxbankruptcybootcamp.com/psa-literate

Ms. Charney basically argues that the UCC gives parties the right to contract outside of the UCC. In the case of securitization, the parties have agreed to abide by the PSA. Therefore, the PSA is the controlling document. If I remember correctly, I believe that Adam Levitin has made a similar argument in a couple of his posts as well as in some articles. Unfortunately, I don't have those at hand and cannot give you the links.

Alina:

The argument simply doesn't hold ANY WATER whatsoever.

The execution of the note by the grantor-borrower is one UCC transaction.  Each negotiation of the negotiable instrument is another UCC transaction.

Both the original exectution of the instrument and each negotiation is subject to the UCC.

The PSA is a tripartite contract that falls outside of the UCC ENTIRELY.  It contemplates actions by teh parties which ARE subject to the UCC, but the PSA is NOT BOUND by the UCC.

*

LEVITIN's core argument has more potency, but it is NOT based upon the UCC.  Instead it is based upon New York Trust law.  And the argument is, in essence, that where a New York trust is subject to express provisions about the property to which it is to take and under which circumstances, that conveyances OUTSIDE of the express written authorization are ultra vires.

This is an argument which could have some power and potency for the trust certificate holders, but is probably unavailing when presented by the borrowers, who are NOT PARTIES TO THE PSA OR TRUST INDENTURE.

Success in the Horace case will prove to be an anomaly.

*

Leaving aside the legal validity of LEVITIN's argument as it pertains to ultra vires and the validity of belated transfers on borrowers, there is one rather serious FACTUAL FLAW to the argument.  That is, it is wholly dependent upon the inference and the paradigm that post closing conveyances are actually TAKING PLACE.

And it is here that LEVITIN's argument is wholly bankrupt.  The assignments do NOT REFLECT a belated attempt to CURE a securitization defect.  The assignments are bald forgeries which have no economic significance whatsoever.  These are fabricated solely for use as false evidence in foreclosure cases, NOT to correct a prior defect in conveyance. 

Mr. LEVETIN's argument is based upon a false paradigm. 

*

The assertion that the PSA trumps the UCC is simply NONSENSE.  There is no authority for this proposition and it serves only to indicate that April Charney is more than a little muddle headed in her understanding of the problems!

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George Burns
This is getting more and more interesting.

About a month ago, one of the leading foreclosure defense lawyers told me, in very cautious language, that I should pay close attention to the details of each new court opinion, because the true explanations of the issues would be slowly emerging. He was expounding on the belief that many of the "theories" being expounded were based on misconceptions, misreading and conflating.

I have always tried to understand some of the positions, including hers, but could never get an answer to some questions. Such, how can parties agree to disregard a law, for example, as per April Charney "Then, under § 1-302 (a) the effect of provisions of the UCC may be varied by agreement. This provision includes the right and ability of persons to vary everything described above by agreement."

The allegation of the ability to vary the provisions of the UCC, NY Trust law or any other law, has never been explained.
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I understand the argument that the assignments are forgeries in order to give the foreclosing entity the veneer of legitimacy in a foreclosure action.  I posted that as a reference as to where that particular theory originated.  From the post, it appears that this argument is supported by Max Gardner.  

As far as the paradigm that post closing conveyances are taking place, I want to direct you to this Max Gardner post:
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The Alphabet Problem and the Pooling and Servicing Agreement

The Pooling and Servicing Agreement (PSA) is the document that actually creates a residential mortgage backed securitized trust and establishes the obligations and authority of the Master Servicer and the Primary Servicer. The PSA also establishes that mandatory rules and procedures for the sales and transfers of the mortgages and mortgage notes from the originators to the Trust. It is this unbroken chain of assignments and negotiations that creates what I have called “The Alphabet Problem.”

In order to understand the “Alphabet Problem,” you must keep in mind that the primary purpose of securitization is to make sure the assets (e.g., mortgage notes) are both FDIC and Bankruptcy “remote” from the originator. As a result, the common structures seek to create at least two “true sales” between the originator and the Trust.

You therefore have in the most basic securitized structure the originator, the sponsor, the depositor and the Trust. I refer to these parties as the A (originator), B (sponsor), C (depositor) and D (Trust) alphabet players. The other primary but non-designated player in my alphabet game is the Master Document Custodian for the Trust. The MDC is entrusted with the physical custody of all of the “original” notes and mortgages and the assignment, sales and purchase agreements. The MDC must also execute representations and attestations that all of the transfers really and truly occurred “on time” and in the required “order” and that “true sales” occurred at each link in the chain.
Section 2.01 of most PSAs includes the mandatory conveyancing rules for the Trust and the representations and warranties. The basic terms of this Section of the standard PSA is set-forth below:

2.01 Conveyance of Mortgage Loans. (a) The Depositor, concurrently with the execution and delivery hereof, hereby sells, transfers, assigns, sets over and otherwise conveys to the Trustee for the benefit of the Certificateholders, without recourse, all the right, title and interest of the Depositor in and to the Trust Fund, and the Trustee, on behalf of the Trust, hereby accepts the Trust Fund.

(b) In connection with the transfer and assignment of each Mortgage Loan, the Depositor has delivered or caused to be delivered to the Trustee for the benefit of the Certificateholders the following documents or instruments with respect to each Mortgage Loan so assigned:

(i) the original Mortgage Note (except for no more than up to 0.02% of the mortgage Notes for which there is a lost note affidavit and the copy of the Mortgage Note) bearing all intervening endorsements showing a complete chain of endorsement from the originator to the last endorsee, endorsed “Pay to the order of _____________, without recourse” and signed in the name of the last endorsee. To the extent that there is no room on the face of any Mortgage Note for an endorsement, the endorsement may be contained on an allonge, unless state law does not so allow and the Trustee is advised by the Responsible Party that state law does not so allow. If the Mortgage Loan was acquired by the Responsible Party in a merger, the endorsement must be by “[last endorsee], successor by merger to [name of predecessor]“. If the Mortgage Loan was acquired or originated by the last endorsee while doing business under another name, the endorsement must be
by “[last endorsee], formerly known as [previous name]“;


A review of all of the recent “standing” and “real party in interest” cases decided by the bankruptcy courts and the state courts in judicial foreclosure states all arise out of the inability of the mortgage servicer or the Trust to “prove up” an unbroken chain of “assignments and transfers” of the mortgage notes and the mortgages from the originators to the sponsors to the depositors to the trust and to the master document custodian for the trust. As stated in the referenced PSA, the parties have represented and warranted that there is “a complete chain of endorsements from the originator to the last endorsee” for the note. And, the Master Document Custodian must file verified reports that it in fact holds such documents with all “intervening” documents that confirm true sales at each link in the chain.

The complete inability of the mortgage servicers and the Trusts to produce such unbroken chains of proof along with the original documents is the genesis for all of the recent court rulings. One would think that a simple request to the Master Document Custodian would solve these problems. However, a review of the cases reveals a massive volume of transfers and assignments executed long after the “closing date” for the Trust from the “originator” directly to the “trust.” I refer to these documents as “A to D” transfers and assignments.
There are some serious problems with the A to D documents. First, at the time these documents are executed the A party has nothing to sell or transfer since the PSA provides such a sale and transfer occurred years ago. Second, the documents completely circumvent the primary objective of securitization by ignoring the “true sales” to the Sponsor (the B party) and the Depositor (the C party). In a true securitization, you would never have any direct transfers (A to D) from the originator to the trust. Third, these A to D transfers are totally inconsistent with the representations and warranties made in the PSA to the Securities and Exchange Commission and to the holders of the bonds (the “Certificateholders”) issued by the Trust. Fourth, in many cases the A to D documents are executed by parties who are not employed by the originator but who claim to have “signing authority” or some type of “agency authority” from the originator. Finally, in many of these A to D document cases the originator is legally defunct at the time the document is in fact signed or the document is signed with a current date but then states that it has an “effective date” that was one or two years earlier.
Hence, we have what I call the Alphabet Problem. Now, I want to admit that I have never been strong in math or in spelling. But, the way I see all of this spells out the word FRAUD.

O. Max Gardner III

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William A. Roper, Jr.
George:

How about this proposition?  YOU enter into a UCC transaction with ME.  You are the MAKER of a negotiable instrument made out in favor or ME.

(Recall that the negotiable instrument is actually a unilateral undertaking executed ONLY by YOU.)

Afterwards, Alina and I enter into a NEW CONTRACT, whereby we mutually AGREE to ALTER the provisions of the UCC AS THEY APPLY TO YOUR INSTRUMENT!  Then I negotiate the instrument to Alina, who seeks to enforce the terms of our mutual agreement and to enforce it against YOU.

That is a pretty good trick, isn't it!
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Pretty good trick, Mr. Roper. 

I wanted to add something into this mix that may or may not be pertinent to this thread.  I have been researching Levitin's arguments since I never take anything at face value even if presented by a law professor. 

Quote:
"validity and effect of a transfer of a negotiable instrument are determined by the law of the place where the negotiable instrument is at the time of its transfer." Restatement, Conflict of Laws, 349.
 
I have been able to find only one case that addresses this on point -Citizens Bank v. National Bank of Commerce, 334 F.2d 257 (10th Cir. 1964) - http://law.justia.com/cases/federal/appellate-courts/F2/334/257/108962/  In the Citizens case, Citizens Bank (an Arkansas bank) sued National Bank of Commerce (an Oklahoma bank) on a dishonored cashier's check.  The court opined that since the check was made in Arkansas but presented to the Oklahoma bank for payment, the transfer occurred in Oklahoma and therefore Oklahoma's UCC statute was controlling. 
 
In the case of the securitized trusts, the majority of the trusts are governed by New York law per the PSA.  Also, per the PSA, the notes are to be transferred to the trust.  Assuming that a transfer/negotiation did occur (this is a hotly contested issue given some recent cases involving Countrywide), then New York UCC would also be controlling.  New York has not adopted the revised UCC.  Under New York UCC, allonges are only permitted if there is no additional room on the note itself.  Additionally, allonges are to be "firmly affixed" to the note.   
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This was enlightening to me.  PSA is governed by New York Trust Law which states must be in Trust name and not Trustee.  Also PSA is the set of rules stipulated and agreed to by all parties to govern all UCC issues therein covered.  Hence, PSA trumps UCC.
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Perhaps Horace was not an anomaly??
http://foreclosuredefensenationwide.com/?p=359

MICHIGAN COURT GRANTS SUMMARY JUDGMENT IN FAVOR OF BORROWERS AGAINST US BANK NATIONAL ASSOCIATION AS SUCCESSOR TRUSTEE TO BANK OF AMERICA AS SUCCESSOR BY MERGER TO LASALLE BANK AS TRUSTEE OF A SECURITIZED FIRST FRANKLIN MORTGAGE LOAN TRUST AND MERS

JUNE 6, 2011

June 6, 2011

FDN attorneys Jeff Barnes, Esq. and James Fraser, Esq. have scored what appears to be the first decision in Michigan granting summary judgment to borrowers against a securitized mortgage loan trust and MERS based on the failure of the Defendants to comply with the terms and conditions of the Pooling and Servicing Agreement and New York Trust law as to the purported conveyance of the borrowers’ loan to the trust. The decision also appears to be only the second in the entire United States on this specific legal issue, the other being the recent Horace decision from Alabama.

The borrowers sued US Bank National Association as Successor Trustee to Bank of America as successor by merger to LaSalle Bank as Trustee for a First Franklin Mortgage Loan Trust, MERS, and First Franklin for Declaratory and Injunctive Relief to declare that a nonjudicial foreclosure was void. The Court, after full briefing, granted the Plaintiff borrowers’ Motion for Summary Judgment in a 7-page written opinion. The Court cited to the recent Residential Funding v. Sauerman decision from the Michigan Court of Appeals and detailed the history of MERS, rejecting the Defendants’ contention that the Defendants could grant MERS authority to take action where Michigan statute prohibits it.

Most important, however, is the Court’s holding that the securitized trustee bank (US Bank) never actually received ownership of the Plaintiffs’ loan because the loan was not ever properly transferred to US Bank according to the terms of the PSA, and that the assignments did not follow the law of trusts in the State of New York. The Court found that the MERS assignment to US Bank did not comply with the chain of intervening assignments required by the PSA:

    “Defendants’ failure to strictly comply with the terms of the PSA means that the loan at issue was never properly transferred to the trust. Any transfer of mortgage loans, such as Plaintiffs, was mandated to comply with New York Trust law and the terms and conditions of the PSA governing conveyance of mortgage loans into the Trust. This the Defendants did not do. The Court finds that the [MERS] “Assignment” recorded on December 30, 2009 in the Washtenaw County Register of Deeds serves to transfer nothing. The alleged conveyance failed to comply with the terms and conditions of the PSA and New York Trust law which governs the PSA. The alleged conveyance stated that MERS assigned the Mortgage and Promissory Note to USB, however, there has been no evidence presented to support the chain of the required assignments and endorsements of the mortgage and note as required by the terms and conditions of the PSA….Therefore, the purported transfers, endorsements or assignments are void ab initio or never properly transferred to the Trust.” (emphasis added)

The Court granted summary judgment to the borrowers and declared that the nonjudicial foreclosure sale was void ab initio.

This extremely well-written decision demonstrates that the Horace decision was not isolated, and also demonstrates that millions of MERS “assignments” which did not comply with the strict requirements of a PSA governing a securitized mortgage loan trust are worthless and of no legal effect.

The drafting of the pleadings, Plaintiffs’ Motion for Summary Disposition, and briefing was a joint effort of Mr. Barnes and Mr. Fraser.

Jeff Barnes, Esq., http://www.ForeclosureDefenseNationwide.com

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Another anamoly??


Michigan Judge Rules MERS Assignment Invalid | MFI-Miami

Steve Dibert, MFI-Miami

In an interesting ruling that came down yesterday in Washtenaw County, a judge ruled a mortgage assignment from MERS to an Asset Backed Security invalid because the originating lender, First Franklin and US Bank as the Trustee for Mortgage Loan Asset Backed Certificate 2006 FF18 violated the terms of the Pooling and Servicing Agreements and New York law.  Judge Archie C. Brown wrote that because they did not record the mortgage assignment with the Washtenaw County Register of Deeds prior to the cutoff date that would invalidate the mortgage assignment.   Judge Archie C.  Brown then said because of this First Franklin which at the time was a whole owned subsidiary of National City would be the only one with legal standing to execute the foreclosure.

Hendricks vs US Bank

via Michigan Judge Rules MERS Assignment Invalid | MFI-Miami.

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Bill

Mario Kenny wrote:
The PSA trumps the UCC.


I think some people are missing the point.  You are able to make a contract with "extra" provisions more stringent than the UCC that will be binding (the PSA), but A DEFENDANT IS NOT PRIVY TO THE CONTRACT.
 
As stated by the United States Supreme Court over a century ago,
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"The parties to a contract are the ones to complain of a breach, and if they are satisfied with the disposition which has been made of it and of all claims under it, a third party has no right to insist that it has been broken.
" Williams v. Eggleston
, 170 U.S. 304, 309, 18 S. Ct. 617, 42 L. Ed. 1047 (1898).
 
This principal is embedded in the local laws of most jurisdictions.  A defendant is going to have a very difficult time arguing the PSA was not followed so the defendant was harmed. 
 
A more interesting application of this ruling is that the SERVICER is a third party to the contract (mortgage and note) and by themselves CANNOT come forward to foreclose because they did not get their payments.  If the borrower and lender (originator) are happy with the disposition of the contract, a third party (the servicer) has no right to come forward and say the contract was breeched.  This HAS to be done by some entity that has the right to enforce the note.  Many of the depositions posted by Doom show the Servicer often has NO CONTACT at all with the trust or trustee. 
 
This also is interesting when the records show only the originator as the owner of the mortgage and an entity that is unknown to the borrower is trying to foreclose with a complaint that has an unendorsed note and no assignment of the mortgage. 
 
 
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William A. Roper, Jr.

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syl said:

This was enlightening to me. PSA is governed by New York Trust Law which states must be in Trust name and not Trustee. Also PSA is the set of rules stipulated and agreed to by all parties to govern all UCC issues therein covered. Hence, PSA trumps UCC.

 
Syl:
 
You need to re-examine your arguments very carefully!  Bill is on the right track with his previous post.
 
There is a choice of law provision in both the note and the mortgage signed by the borrower.  The choice of law provision in the note -- the negotiable instrument -- is going to be controlling as to the interpretation of the negotiable instrument.
 
This CANNOT possibly be ALTERED by the unilateral actions of subsequent holders.
 
The PSA and/or trust indenture has a separate choice of law provision which governs the PSA and the securitization.
 
But even such a provision probably does NOT trump the commercial law in respect of negotiation.
 
Negotiation is by indorsement and delivery and completed by delivery.  Negotiation is going to be controlled by the law of the place of delivery.  I have discussed this in prior threads.
 
The choice of law provision in an instrument is something that can be looked to by the courts and is often enforced as written.  But such a provision is NOT absolute as to resolution of conflict of law principles.
 
For example, suppose that Alina and I decide to draw up a contract.  Alina is in Florida and I am in Pennsylvania.  Further suppose that I fly to Atlanta and meet Alina there.  We both sign the contract in Atlanta.  Further suppose that Alina has a widget factory in South Carolina that she owns outright in her own name.  And the contract is for the purchase of widgets which she will deliver for my business use at my widget finishing and polishing plant in Delaware.
 
If we specified a choice of law provision in our contract executed in Georgia, we could probably arguably state that Georgia law might apply.  We could arguably agree that the law of my place of residence (PA) or that Alina's place of residence (FL) might apply.  Or we might specify the law of the place of the manufacture of the widgets (SC) or their place of delivery (DE).  If there was another specification in the contract that I was to pay for the widgets at Alina's Maryland bank or that the widgets would be inspected during transit in North Carolina, any of these might give rise to some arguable claim that a choice of law provision specifying that place might be binding.
 
But suppose that I suggest to Alina that we specify the laws of Utah within the choice of law provision.    And further suppose that nothing about the contract or parties touches Utaah in any way, would this choice of law provision be binding on the Florida Courts if I sued Alina there for breach of contract in respect of manufacture and delivery of defective widgets?
 
*
 
The idea that any subsequent non-UCC contract (the PSA) might somehow alter the choice of law provisions actually written into the notes is absolutely absurd and will NOT prevail ANYWHERE.
 
Writing a choice of law provision into the PSA also might NOT alter the law of negotiation IF the instruments were actually negotiated in ANOTHER PLACE (for example delivered to NJ rather than NY).
 
I think that ABSENT any evidence as to the place of negotiation, that there is at least a very plausible argument that the choice of law provision appearing within the PSA MIGHT apply.  And the good news is that if a really first rate lawyer makes the defensive argument against a second string incompetent from a foreclosure mill who FAILS to either get evidence as to the place of delivery into the record OR to argue that the law of the place of negotiation should apply, then this could be pretty potent stuff.
 
*
 
But IF you can bring the negotiation under NEW YORK LAW, the allonge space test arguement is actually MUCH MORE ROBUST than the ultra vires argument as to the PSA.
 
But the ultra vires argument does NOT depend upon the place of negotiation.  I have NO PROBLEM with someone making this argument, too, but NOT by putting the PSA into evidence which is almost always DISASTEROUS.  This same argument can be made in other ways, including by obtaining admissions and stipulations as to the NY choice of law provision in the governing documents.
 
And the argument can be made in the alternative, while making and preserving the far stronger and better arguments.
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Bill states:
A defendant is going to have a very difficult time arguing the PSA was not followed so the defendant was harmed. 

Bill, you are correct in saying that the borrower is not in privity with the parties signing the PSA. 

I do not think that the New York Trust law argument and the PSA Alphabet Soup arguments are used to show a breach of contract or to show that the borrower has been harmed, but rather to show that the foreclosing entity does have standing to foreclose.  The Hendricks v. U.S. Bank case cited above and the Horace case are not the only cases where the court has ruled that Section 2.01 of the PSA was not followed and therefore the foreclosing interest does not have standing to foreclose.  
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I stated:
In the case of the securitized trusts, the majority of the trusts are governed by New York law per the PSA.  Also, per the PSA, the notes are to be transferred to the trust.  

I need to revise this statement.  Based on the case law I cited as well as what Mr. Roper wrote regarding the choice of law with regard to the negotiation of the note, if we assume that the notes are negotiated in New York, then and only then would New York UCC be controlling.  Before making this argument, you need to do some discovery.  The PSA is a distinct and separate agreement - one in which the borrower is not in privity.  My impression is that attorneys representing borrowers use the PSA simply to show that the foreclosing entity does not have standing.  
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Bill
Alina Virani wrote:
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Bill states:
A defendant is going to have a very difficult time arguing the PSA was not followed so the defendant was harmed. 

Bill, you are correct in saying that the borrower is not in privity with the parties signing the PSA. 

I do not think that the New York Trust law argument and the PSA Alphabet Soup arguments are used to show a breach of contract or to show that the borrower has been harmed, but rather to show that the foreclosing entity does have standing to foreclose.  The Hendricks v. U.S. Bank case cited above and the Horace case are not the only cases where the court has ruled that Section 2.01 of the PSA was not followed and therefore the foreclosing interest does not have standing to foreclose.  

Alina,

Horace from my understanding has not been through the court of appeals so it isn't currently a good case to base any argument upon at the moment.  Hopefully this will be appealed and upheld, but we've discussed a few times it could be more beneficial to the banking industry to NOT appeal and set new case law.  All these posts that are arguing the failure of the PSA requirements are a solid defense is madness.  The current case law from the Supreme Court of the U.S. and down REJECT this defense.  You cannot claim the PSA was breached.  The only loop hole I've seen was the Judge in Horace v. Lasalle felt the homeowner would not have received the loan WITHOUT the PSA therefore was a beneficiary of the PSA.  I personally have not seen this as a PREVAILING position with the courts in other cases. 

To even make this argument you would have to enter the PSA into evidence.  The negative effects of proving the intent of all the parties involved and acknowledging and accepting an unauthenticated, unexecuted, copy of a PSA will do far more harm than any potential good.  If you fail to win over the judge with your argument that is going to be contrary to the case law, you pretty much sunk your own ship.

To make the suggestion that there is ANY NEED to introduce the PSA to attack standing may be misplaced. 

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but rather to show that the foreclosing entity does have standing to foreclose


Lets first note, THE DEFENDANT DOES NOT NEED TO SHOW THE FORECLOSING ENTITY DOES NOT HAVE STANDING.  To the contrary, once the question is raised the PLAINTIFF MUST SHOW IT DOES HAVE STANDING TO FORECLOSE.  You should NEVER take the Plaintiff's burden.  I personally feel the LACK of the PSA in evidence attacks the capacity and standing of any trustee by itself.  You are attempting to prove and argue the Plaintiff's case.  You are also trying to enter the Plaintiff's evidence into the case for them.  Neither of these will work out well for the defendants. 

It would be common for the offical records to show the original lender still owns the mortgage. 

If you kept out any fradulent MERS assignments, the PSA, any other trust documents, what evidence does the Plaintiff have to show they are the owner and have standing?

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Bill

I'm not an attorney and this is not legal advice

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Angelo
Bill

I have 2 main questions about your post:

1) You said "The negative effects of proving the intent of all the parties involved and acknowledging and accepting..."  How can a trust prove intent of a note that is endorsed in blank and that is not specifically endorsed to that trust?  I have never seen a PSA that actually had the mortgage loan schedules attatched to it.  Is it your contention that if they do produce it, and your account number/address is on it, GAME OVER?

2) If you kept out any fradulent MERS assignments, the PSA, any other trust documents, what evidence does the Plaintiff have to show they are the owner and have standing?
 
All they do is produce a purported "true copy" of the note and mortgage, an affidavit from the servicer stating that you are in default and the plaintiff has made a prima facie entitlement to judgement.  Doesn't there have to be some affirmative defenses by the defendant to show that there is a triable issue of fact?
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Bill,

I think you may be misinterpreting what I wrote.  I am not supporting these arguments but merely pointing out that these arguments exist.  The Alphabet Soup argument and the PSA argument are arguments being used successfully in federal courts and in bankruptcy courts by Max Gardner and other bankruptcy attorneys.  Mr. Gardner has written extensively about these arguments.  As anyone in this forum knows, Mr. Gardner is a very well respected bankruptcy attorney.  

One thing I would like to point out from my experience is that in many cases, the PSA is not executed and the exhibits are not filed with the SEC.  In my case, there was no mortgage loan schedule attached to the PSA that was ever produced.  I had requested a certified copy of the PSA and all filings for the trust claiming that it owned my mortgage from the SEC.  I also did a document production requesting the same documents.  I received unexecuted copies with no exhibits from the SEC.  I called the SEC and was told that was what was filed.  The servicer/trustee refused my document request on the grounds that documents sought were immaterial.  

Maybe my case is unique, but I have spoken to others who have also received unexecuted copies with no exhibits.  This is the reason I stated that IMHO, the reason some attorneys use the PSA is to attack the foreclosing entity's standing.  
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One last thought - 

It is the Plaintiff's duty to prove it has standing.  However, it is the duty of the defendant to challenge that standing if there is any question that Plaintiff lacks standing.  If the Plaintiff's standing is not challenged, the court will not rule on it and lack of standing cannot be raised on appeal in many jurisdictions.  
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Angelo
2nd. case to attack the PSA, guess its picking up steam......

JAMES HENDRICKS, et al.,
Plaintiffs,

v

US BANK NATIONAL ASSOCIATION -
AS SUCCESSOR TRUSTEE TO BANK
OF AMERICA, et al.,
Defendants.

"Defendants’ failure to strictly comply with the terms of the PSA means that the loan at issue was never properly transferred to the trust. Any transfer of mortgage loans, such as Plaintiffs, was mandated to comply with New York Trust law and the terms and conditions of the PSA governing conveyance of mortgage loans into the Trust. PSA pp 155 and 36. This the Defendants did not do.

The Court finds that the “Assignment”, recorded on December 30, 2009 in the Washtenaw County Register of Deeds, serves to transfer nothing. The alleged conveyance failed to comply with the terms and conditions of the PSA and New York Trust law which governs the PSA. The alleged conveyance stated that MERS assigned the Mortgage and Promissory Note to USB, however, there has been no evidence presented to support the chain of the required assignments and endorsements of the mortgage and note as required by the terms and conditions of the PSA."
 
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Adam
Why would you hang your hat on any one singular defense (attack if your like me and the plaintiff)? Why wouldnt you shine the light at all the holes in the other sides case?

In my state, if the foreclosing party is not the original lender then there has to be a chain of title between original lender and the foreclosing entity... 

There are so many holes in the assignment that attempts to meet the above critera.
- The orignal lender has been defunct for 3 years - 
- The cutoff date is 5 years passed
- The signor signs as the VP of OL but is the VP of the servicer
- The assignment fails to assign the note.... thus is a nullity

So in combating this, why would I limit myself to just one argument?



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FnDoomed
Its not so much that the PSA trumps (replaces?) the UCC, but that you can contract around certain provisions of the UCC.  

All contract laws apply - for example, nobody can't contract away your rights under the UCC.  Only you can do that...

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The Hendricks v. US. Bank is not a victory for the borrower.  While the court ruled that U.S. Bank was not entitled to foreclose based on the failure to follow the strict conveyance terms in the PSA, it ruled that First Franklin can foreclose.  As a matter of fact, the court granted First Franklin's motion for a judgment of foreclosure.
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Bill
Adam wrote:
Why would you hang your hat on any one singular defense (attack if your like me and the plaintiff)? Why wouldnt you shine the light at all the holes in the other sides case?

In my state, if the foreclosing party is not the original lender then there has to be a chain of title between original lender and the foreclosing entity... 

There are so many holes in the assignment that attempts to meet the above critera.
- The orignal lender has been defunct for 3 years - 
- The cutoff date is 5 years passed
- The signor signs as the VP of OL but is the VP of the servicer
- The assignment fails to assign the note.... thus is a nullity

So in combating this, why would I limit myself to just one argument?

 
There are a few nuances between states, but these general responses will apply to most of your arguments in most jurisdictions:
 
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There are so many holes in the assignment that attempts to meet the above critera.
- The original lender has been defunct for 3 years -


In general, it does not matter if the originator is defunct if they negotiated the note earlier to a different party or if someone is their successor.  There is usually not a way to check this outside of discovery because things like QWR requests are often abused.

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- The cutoff date is 5 years passed
 
Most of the notes were transferred to the trusts at the cutoff.  You are assuming that there was no transfer because there was no assignment recorded reflecting this.  The transfer of the NOTE (the only one that really matters) does not need to be recorded, and you have no way to personally check on this transfer outside of discovery.
 
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- The signor signs as the VP of OL but is the VP of the servicer
 
It is not uncommon to have officers/employees of a different company to have signing authority or power of attorney.
 
 
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- The assignment fails to assign the note.... thus is a nullity
 
You have this totally backwards.  The assignment NEVER assigns the note.  The note is NEGOTIATED.  Per the UCC, the note is negotiated by endorsement and delivery.  If the note is endorsed in blank, it is negotiated by delivery.  The recorded assignment ONLY transfers the mortgage.  Once the note is negotiated to a new entity, they USUALLY have some kind of DUTY to record an assignment of mortgage to protect their interests but this is not REQUIRED to make the transfer VALID.  The mortgage follows the note. 
 
You have posted many things to INVESTIGATE, but have failed to actually post an ARGUMENT.  Please make sure you do INVESTIGATE these potential problems and research the CASE LAW for your jurisdiction before trying to roll these things out to a judge. 
 
I'm not an attorney and this is not legal advice
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Adam
Bill wrote:

In general, it does not matter if the originator is defunct if they negotiated the note earlier to a different party or if someone is their successor.  There is usually not a way to check this outside of discovery because things like QWR requests are often abused.

There is a successor entity, however the successor entity is not mentioned in the assignment.  I have seen dozens of examples of how assignments are done when exercising, or attempting to exercise, the authority of an successor and in this case they did not.

 
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Most of the notes were transferred to the trusts at the cutoff.  You are assuming that there was no transfer because there was no assignment recorded reflecting this.  The transfer of the NOTE (the only one that really matters) does not need to be recorded, and you have no way to personally check on this transfer outside of discovery.

Nope, I am stating that this document could not be used to transfer the mortgage into the trust, as it specifically states it does...  

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It is not uncommon to have officers/employees of a different company to have signing authority or power of attorney.

If they had signing authority, then why not state it? If they were signing as an attorney in fact through a power of attorney why sign as the VP of a defunct company? 

 
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You have this totally backwards.  The assignment NEVER assigns the note.  The note is NEGOTIATED.  Per the UCC, the note is negotiated by endorsement and delivery.  If the note is endorsed in blank, it is negotiated by delivery.  The recorded assignment ONLY transfers the mortgage.  Once the note is negotiated to a new entity, they USUALLY have some kind of DUTY to record an assignment of mortgage to protect their interests but this is not REQUIRED to make the transfer VALID.  The mortgage follows the note. 

No I dont have anything backwards... An assignment of mortgage without the note is legally a nullity..  The assignment of mortgage is being used to make the foreclosure VALID. 

You are correct that the long standing legal principle is the mortgage follows the note.. If the note was truly transfered from original lender, to the seller (as noted in the PSA), to the depositor of the trust, to the trust itself all in accordance with the PSA... Then by the time the Assignment of Mortgage was signed, the original mortgage company was not the holder of either the note or the mortgage... 

So how can you assign something that you no longer own?

And how do you defend a document that can not stand up to any level of scrutiny? 

And if you try to remedy this situation with another document, Do you first have to state that the first one is a fraud?
 

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Bill
Adam,

I personally am a little concerned with your responses.  They all seem to be revolving around the assignment of the mortgage.  THE PLAINTIFF DOESN'T NEED AN ASSIGNMENT OF THE MORTGAGE.  You are very focused on the assignment and it's deficiencies.  It is no secret that, I would dare say, MOST of the assignments from MERS are fraudulent documents.  The problem is that the LAW says that an assignment is not necessary to have an equitable right to enforce the mortgage.  Unless the Plaintiff embraces this assignment and is boxed in with good discovery, it is very easy to explain away the assignment as a mistake.  Most judges are going to give the attorney (an officer of the court) the benefit of a doubt in regards to a mistake.  This is the difficulty in proving the fraud.  If the Plaintiff embraces the assignment and further supports it's validity in discovery, then is confronted with the fraud and deficiencies in the assignment, a judge will be less likely to dismiss the assignment as a simple mistake.

While the assignment of the mortgage without the note is a nullity, there really is no assignment needed.  You can argue that the person signing the assignment had no authority, it was executed by an entity without authority, or show any other deficiencies in the assignment.  The Plaintiff's counsel can easily just tell the judge that the assignment was a mistake and unimportant.  The Plaintiff has the original note endorsed in blank and has an equitable right to enforce the mortgage without the assignment. 

I'm not an attorney, this isn't legal advice.


 

 
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Adam
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ML 600.3204 1(d)(3) If the party foreclosing a mortgage by advertisement is not the original mortgagee, a record chain of title shall exist prior to the date of sale under section 3216 evidencing the assignment of the mortgage to the party foreclosing the mortgage.

As I stated, in my state, since the foreclosing party is neither the Original Lender nor the servicer, they must show the chain of title from original mortgagee to the foreclosing party in order to foreclose via advertisement

The assignment is what was used to record the chain of title, thus per the law giving the trust the "right" to foreclose via advertisement.

Therefore, if the assignment is deemed to transfer nothing; whether as a matter of law ie a nullity, or through some other manner ie fraud, then the law says they didnt have the right to foreclose via advertisement.

Am I wrong?


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Adam
 To further clarify... the foreclosure by ad has already taken place.. and in the current case we are the plaintiffs.
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William A. Roper, Jr.
Bill:

In non-judicial foreclosure states, the validity of the private sale by substitute trustee is wholly dependent upon (a) the conformity of the sale to the express requirements of that state's non-judicial sale statutes (which VARY considerably from state to state), (b) the conformity of the sale to the express requirements set forth within the instruments and (c) the verity and regularity of the processes used.

The possible outcomes of identifiable defects in the processes are really starkly different in differing places.  Massachusetts is a non-judicial foreclosure state and the Masschusetts Supreme Court has set a rather stark bright line in its Ibanez holding that where the documents memorializing the private sale show clear defects and sale by a stranger to the title, that the trustees deed is VOID, a nullity conveying nothing.

Some of the decisions coming out of California appellate courts are reaching different holdings contrary, though often on less persuasive evidence of mischief.  Many of these are cases where the borrower has made a less than articulate presentation of the arguments and failed to get critical evidence into the record.  For example, we continue to see Courts holding that MERS is an owner or a holder based upon false evidence.  Borrowers continue to fail to get the MERS Appellant's Brief into evidence, which would eviscerate these false arguments.

Michigan has begun to swing more towards the Massachusetts position, at least in respect of Saurman.

The real action in the non-judicial foreclosure states has been in the Bankruptcy Courts where the purported creditors continue to come into court with forged, perjured and otherwise fabricated evidence when they have a burden of proof.

*

Adam is in Michigan.  The private sale has taken place.  The next step in this process is that Adam will face an ejectment action.

But Adam has brought a suit as a plaintiff, which is the kind of nonsense that is advocated by the likes of Charlatans such as Mike H. 

Instead of coming into court and pleading the note, mortgage and assignment(s) into evidence in respect of a judicial foreclosure, the purported creditor (or perhaps I should say the buyer at the non-judicial foreclosure sale) would be presenting the substitute trustee's deed as evidence of its ownership and entitlement to possession of the property in the ejectment action.

So Adam would be on the defensive.  And the question would NOT be the purported creditor's entitlement to foreclose, but rather whether the foreclosure by non-judicial sale was actually properly conducted in accordance with the law vesting in the buyer a valid title.

Adam has chosen another path.  He seems to be a masochist with a desire to accelerate the total loss of the property.  He is the plaintiff in an action where HE will bear the burden of proof and will therefore almost certainly LOSE.

Bill, you are certainly correct to point out the defects in Adam's understanding of the UCC and the law.  I think he has a winning defensive case.  But he has chugged the Koolaid, and like Mike H., will be a LOSER.

*

I CANNOT EMPHASIZE ENOUGH THE EXTENT TO WHICH FORECLOSURE DEFENSE AND ALTERNATIVES AVAILABLE IS DEPENDANT UPON JURISDICTION.

I do NOT pretend to know a great deal about the process in Michigan.  But I think that we need to take caution in suggesting traditional judicial foreclosure defense strategies to a litigant bringing an action as a plaintiff (when he ought to be defending) in a non-judicial state such as Michigan.

P.S. -- I looked up Mike H.'s cases.  And he is a TOTAL LOSER selling people a pig in a poke.  Mike H. also has a longstanding criminal record with mulitple convictions (which is probably WHY he disappeared so quickly when I suggested reporting him to the AG and UPL authorities).

And yes, steve, I DO have his ten digit grid coordinates and will publish them next time he makes an appearance and begins to sell people foolishness such as that bought by Adam.
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William A. Roper, Jr.
In regard to Mike H., please see the new thread:

"About Mike H."

http://ssgoldstar.websitetoolbox.com/post?id=5358980

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Bank of America Corp. decided Wednesday to repay out $8.5 billion to investors who sacrificed on mortgage-backed investments bought from the loan provider. The securities were of poor quality, claim the blue chip investors. The investments dropped when the bottom fell out of the housing industry. The payout could pave the way for some mortgage-related investors to bring action against other banking institutions.To date, various investors, including certain members of the Investor Group, are pursuing securities law or fraud claims related to one or more of the Covered Trusts.does not release investors’ securities law or fraud claims based upon disclosures made.This is in connection with their decision to sell, purchase or hold securities issued by the trusts. Banks may end up needing payday loanspayday loans to pay out if this happens. 
 
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Mr. Roper,

In reading your post to Bill discussing Adam's situation, would you please comment on mine.

I am at the same juncture as Adam.  House foreclosed by MERS, sold at Michigan Sheriff sale to a 3rd party, am currently in the redemption period.

I am going to speak with an attorney tomorrow at the Daily Law Firm, but now I have a few concerns. I know the atty will want to file an action of quiet title, among other things, which would make me the plaintiff.

It seems you suggest that in my position, it may be wiser to let the redemtion period expire, wait for the 3rd party buyer to begin eviction proceedings, then appear in court as a defendant.

Please expound on this.....I am a laymen with a good but basic understanding of the issues, and I thank you in advance.
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William A. Roper, Jr.

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ken67 said:

Please expound on this.....I am a laymen with a good but basic understanding of the issues, and I thank you in advance. 


UNLESS you have already fallen prey to a law firm which is within the orbit of some of the debt modification scam or debt elimination scam operators, I think that you would be best counselled to follow the guidance of a qualified and experienced Michigan attorney specializing in foreclosure defense.

But it is important to bear in mind that some of these may have been influenced by some very dishonest and disreputable people who have bought into the aforementioned scams.

*

I do NOT purport to KNOW about the nuances of Michigan foreclosure law.

But I would suggest that there are some really basic matters to bear in mind.

First, IF I was a mortgage servicer and investor and I had already foreclosed on your property using an MERS foreclosure, I would be very concerned about the validity of any title that I might be able to give to a purchaser of the foreclosed property.

That is, there is some indication that the MERS foreclosure deed might be a nullity.  And there are some indications that title insurers will no longer insure the title of such a property in Michigan.  Without a marketable and insurable title who would buy your property?

For this reason, I would EXPECT that where the foreclosure was previously accomplished using an MERS foreclosure process, that the servicer is more likely to assign the property out of MERS and to simply conduct another foreclosure.

Why would they want to take possession of a property for which they would incur further expenses as to taxes, upkeep and insurance, but which they CANNOT SELL.  For that matter, they are often better off leaving the borrower in the property rather than having the property stand vacant for long periods of time.

*

So my intuition, not based upon a reading of Michigan law, is that without filing ANY action and even without first facing an ejectment action that what is MOST LIKELY to happen is that the servicer and mortgage investor will simply treat this as a defective foreclosure and will take steps to repeat the procedure avoiding similar mistakes.

If I am correct about this, you should carefully watch the land records to see whether the servicer arranges for the recording of an assignment of the mortgage out of MERS.

*

Bear in mind that IF the servicer views the foreclosure as defective, then spending ANY money to undertake a quiet title action is a waste of time and expense.  That is, you could quiet title in respect of the MERS foreclosure deed, but this will NOT immunize you against another foreclosure action subsequently brought in respect of an assignment out of MERS.

Whatever you paid an attorney in such an action would just be so much money out of your pocket.

IF AN ATTORNEY ENCOURAGES YOU TO FILE A QUIET TITLE ACTION, ASK HIM TO EXPLAIN PRECISELY WHAT HE BELIEVES THAT THIS MIGHT ACCOMPLISH AND AT WHAT COST.

*

Now if the MERS foreclosure deed is void, then filing an ejectment action against you to take possession is useless from the servicer's perspective.  You could raise the defect in the deed in the ejectment proceeding and could probably counterclaim for your costs.

I am doubtful that the servicer and foreclosure mill law firm will proceed to an ejectment AT ALL.  To the contrary, it makes more sense for them to clean things up and simply bring a new foreclosure action after the assignment.

So I do NOT see you defending against an ejectment in respect of the MERS foreclosure deed.

*

Now let me distinguish your circumstances from some others who have already lost possession of their properties.

Where MERS conducted a wrongful foreclosure sale and then obtained possession through a successful ejectment action prior to the Saurman decision, there are some other interesting questions which are well beyond the scope of your question.

One such question is the validity of the deed out of MERS.  Where a borrower was the victim of such a wrongful foreclosure and then also defended in an ejectment case, the borrower might have been required to plead the defect in the deed in the ejectment action.  And in failing to do so, the borrower might have lost their right to contest the validity of the deed!

By contrast, another borrower who was subject of a wrongful MERS foreclosure who abandoned and relinquished the property without an ejectment action might have never had their day in court.  Such a borrower might still have the right to bring an action to recover the property.

That is, the borrower who surrendered the property without court action may still have remedies which might have been waived by the borrower who had his day in court but failed to contest the deed.

The borrower who lost the property to a wrongful MERS foreclosure and also lost an ejectment might still have a remedy in tort for wrongful foreclosure.  But this borrower might have some difficulty recovering the property.

By contrast, the borrower who abandoned the property might still bring an action for recovery of the property.

Even so, bear in mind that this latter borrower is NOT really "home free" in respect of this error.  The borrower might succeed in upsetting the sale and recovering the property.  And the borrower might be entitled to some damages in respect of the wrongful foreclosure.  But this does NOT mean that the mortgage investor couldn't possibly assign the mortgage out of MERS and conduct a new foreclosure.

So this borrower faces some different crosscurrents.

Depending upon precisely WHEN the wringful foreclosure took place, I have suggested that borrowers consult with an attorney to explore whether they might be better off simply waiting out the limitations period.  That is, the lender typically accelerates the balance of the mortgage loan prior to foreclosure.  And under the UCC, the limitations period is typically six years.

So, IF I had been the victim of an MERS foreclosure in 2006 AND had voluntarily given up possession of the property without an ejectment proceeding, I might carefully consider whether to file some suit right away, OR whether it might be better to wait out the limitations period.

Also, one would need to carefully explore the form of action to bring.  While quiet title is often a correct form of action to bring in respect of clouds on a title, in some jurisdictions there is another different form of action, such as trespass to try title, which is more appropropriate to determine competing claims to the property.

*

At the other extreme, IF I had just lost possession of my property through an ejectment action for which the order was entered in the days before or after Saurman, I would be seeking to have such judgment set aside.

*

Here is the bottom line:  Michigan borrowers are in uncharted waters!

Talk to more than one lawyer.  Initial consultations are generally FREE.  Get some basic recommendations about the approach, that is what the lawyer suggests you do.  And get the lawyer to justify and explain WHY he advocates that particular course of action.

Be sure to ask WHAT IT WILL COST to pursue different remedies.

IF I am correct about the servicer's approach to the problem, your lowest cost course of action may be to WAIT OUT the servicer's next move, keeping your costs down.  You have the advantage that the servicers have created some chaos!  And in their next foreclosure action, they will be creating new and different records which contradict the records which were created in the wrongful MERS foreclosure!  This may give you some new traction.

Finally, discuss with attorneys those alternatives which include a bankruptcy filing.  In U.S. Bankruptcy Court, you would still be litigating from a defensive position.  I am NOT advocating that you file bankruptcy.  Rather, I am simply encouraging you to explore it.

I hope this helps!

NOTE:  I AM NOT AN ATTORNEY AND THIS IS NOT LEGAL ADVICE!
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