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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William A. Roper, Jr.
The North Carolina Court of Appeals handed down a breakthrough evidentiary decision yesterday in the case In re Foreclosure by David A. Simpson:
In re Foreclosure by David A. Simpson, P.C., Substitute Trustee, No. COA10-361, 2011 N.C. App. LEXIS 836 (NC App. 2011).
http://appellate.nccourts.org/opinions/?c=2&pdf=MjAxMS8xMC0zNjEtMS5wZGY=
I think that this is probably the single most significant decision I have seen come out of North Carolina!
 
It turns primarily on evidentiary issues, but there are several other nuggets in the decision that should warm the hearts of those elsewhere.
 
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Bear in mind that North Carolina has a somewhat hybrid system of quasi-non-judicial foreclosure in which the trustee under a deed of trust has to file certain documents with the Clerk rather than in a Court.  The Clerk makes a determination on the narrrow issues prescribed by statute.
 
This differentiates North Carolina from other non-judicial foreclosure states where no court intervention is necessary to effect foreclosure, as well as the judicial foreclosure states where a foreclosure is based upon judicial action.
 
Here are a few excerpts from the decision (Forum participants will no doubt identify other nuggets):
"Respondents note the third and final assignment on the Allonge was made to "Deutsche Bank Trust Company Americas as Trustee," which is not the party asserting a security interest in Respondents' property; this action was brought by Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6, the entity the trial court found to be the owner and holder of the Note.
 
. . .
 
Whether Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 is the owner and holder of the Note and Deed of Trust is a legal conclusion that is to be determined by a court of law on the basis of factual allegations.  As such, we disregard Stephan's conclusion as to the identity of the "owner and holder" of the instruments.  See Lemon v. Combs, 164 N.C. App. 615, 622, 596 S.E.2d 344, 349 (2004) ("'Statements in affidavits as to opinion, belief, or conclusions of law are of no effect.'" (quoting 3 Am. Jur. 2d, Affidavits § 13 (2002))); see also Speedway Motorsports Int'l Ltd. v. Bronwen Energy Trading, Ltd.,     N.C. App.    ,     n.2,     S.E.2d    ,     n.2, slip op. at 12 n.2, No. 09-1451 (Feb. 15, 2011) (rejecting a party's contention that this Court must accept as true all statements found in the affidavits in the record, stating, "our standard of review does not require that we accept a witness' characterization of what 'the facts' mean").  While Stephan referred to a Pooling and Servicing Agreement ("PSA") that allegedly governs the securitization of the Note to Deutsche Bank Trust Company Americas as Trustee, the PSA was not included in the record and will not be considered by this Court. See N.C. R. App. P. 9(a) (2011) ("In appeals from the trial division of the General Court of Justice, review is solely upon the record on appeal, the verbatim transcript of proceedings, if one is designated, and any other items filed pursuant to this Rule 9.")  The record is void of any evidence the Note was assigned and securitized to a trust.
 
We also note that Stephan alleged no facts as to who possesses Mr. Gilbert's note, other than his averment that the Note was "delivered" to the original lender, First National Bank of Arizona.  Stephan referred to a statement made by counsel for GMAC Mortgage that the original Note "would be brought to the foreclosure hearing," but he did not provide any facts from which the trial court could determine who has possession of the Note.  As demonstrated by Connolly, discussed above, production of a note at trial is not conclusive evidence of possession.  63 N.C. App. at 551, 306 S.E.2d at 125.  Thus, we conclude Stephan's affidavit is not competent evidence to support the trial court's conclusion that Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 is the owner and holder of Mr. Gilbert's note.
 
Residential Funding Corporation sold, assigned and transferred all of its right, title and interest in and to the Note and Deed of Trust to Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6.  This is reflected on the Allonge to the Note, a true and accurate copy of which is attached and incorporated hereto as EXHIBIT 5.  (Emphasis added.)  This statement is factually incorrect; the Allonge in the record contains no indorsement to Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6.  Zeitz further stated that "Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 is the current owner and holder of the Note and Deed of Trust."  This statement is a legal conclusion postured as an allegation of fact and as such will not be considered by this Court.  See Lemon, 164 N.C. App. at 622, 596 S.E.2d at 349.
 
Unlike Jeffrey Stephan, Zeitz stated that Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 "has possession of the original Note and Deed of Trust."  We note, however, that "[w]hen an affiant makes a conclusion of fact, it must appear that the affiant had an opportunity to observe and did observe matters about which he or she testifies."  Lemon, 164 N.C. App. at 622, 596 S.E.2d at 348-49 (quoting 3 Am. Jur. 2d Affidavits § 13) (internal quotation marks omitted).  Moreover,[t]he personal knowledge of facts asserted in an affidavit is not presumed from a mere positive averment of facts but rather the court should be shown how the affiant knew or could have known such facts and if there is no evidence from which an inference of personal knowledge can be drawn, then it is presumed that such does not exist.  Id. at 622-23, 596 S.E.2d at 349 (quoting 3 Am. Jur. 2d Affidavits § 14, cited with approval in Currituck Associates Residential P'ship v. Hollowell, 170 N.C. App. 399, 403-04, 612 S.E.2d 386, 389 (2005)).  Thus, while Zeitz concluded as fact that Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 has possession of the Note, his affidavit provides no basis upon which we can conclude he had personal knowledge of this alleged fact.  Because of these deficiencies, we conclude that neither the affidavit of Jeffrey Stephan nor the affidavit of Scott Zeitz is competent evidence to support the trial court's finding that Deutsche Bank Trust Company Americas as Trustee for Residential Accredit Loans, Inc. Series 2006-QA6 is the owner and holder of Mr. Gilbert's note."
 
In re Foreclosure by David A. Simpson, P.C., Substitute Trustee, No. COA10-361, 2011 N.C. App. LEXIS 836 (NC App. 2011).

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It should probably be noted that indorsement or assignment in favor of the trustee WITHOUT SPECIFYING THE FULL NAME OF THE TRUST HAS BEEN A COMMON GAMBIT TO CONCEAL THE IDENTITY OF THE TRUST!

 

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William A. Roper, Jr.

Keeping the PSA OUT of Evidence

It is also worthy of note that this is yet another case where the borrower defendant WON, in part, by NOTING that the PSA was NOT in evidence:

"While Stephan referred to a Pooling and Servicing Agreement ("PSA") that allegedly governs the securitization of the Note to Deutsche Bank Trust Company Americas as Trustee, the PSA was not included in the record and will not be considered by this Court. See N.C. R. App. P. 9(a) (2011) ("In appeals from the trial division of the General Court of Justice, review is solely upon the record on appeal, the verbatim transcript of proceedings, if one is designated, and any other items filed pursuant to this Rule 9.")  The record is void of any evidence the Note was assigned and securitized to a trust."

Those at the MS Fraud site and elsewhere that are encouraging borrowers to PUT THE PSA INTO EVIDENCE are encouraging the defendants to employ a strategy that, IF FOLLOWED, will almost certainly result in DEFEAT and LOSS OF THE SUBJECT PROPERTY.

Why would a defendant want to put the PSA into evidence to HELP the plaintiff PROVE ITS CASE??

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Texas
Why would a defendant want to put the PSA into evidence to HELP the plaintiff PROVE ITS CASE??

Typically there are multiple true sales of the Note proceeding up to the Trustee for the Trust.

Would have to consider that in most cases in this new day of securitzation the Notes were required to be negotiated multiple times and with not being indorsed and delivered to all the subsequent purchasers it would reflect that lien perfection was not perfected of record in each subsequent purchasers name.

All the PSA does is show how many true sales of the notes were required and not complied with. Now compare that with purported perfection filed of record!
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William A. Roper, Jr.
Texas:

Right.  We get your usual ill-informed and incoherent banter.

We have several appellate cases where the defendant WINS because the Plaintiff was UNABLE to get the PSA considered as evidence.  And then we have your giberish, encouraging unrepresented pro se litigants to commit legal suicide by following your ill-conceived advice for which there are ZERO appellate cases showing any success!

I am aware of one borrower in Florida who thought it would be a great idea to put the PSA into evidence.  Now he is spending a LOT of time trying to conceive of effective appellate strategies!

Putting the PSA in is the FASTEST single way to resurrect a plaintiff's LOSING CASE.
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Bill

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 Would have to consider that in most cases in this new day of securitzation the Notes were required to be negotiated multiple times and with not being indorsed and delivered to all the subsequent purchasers it would reflect that lien perfection was not perfected of record in each subsequent purchasers name.

All the PSA does is show how many true sales of the notes were required and not complied with.
Now compare that with purported perfection filed of record!



This is a very common misconception with Pro Se ligitants.  That recording assignments "perfects" the lien interests of each subsequent purchaser.  I think if you researched this in most jurisdictions (as well as my own) the execution and delivery of the note and security instruments to the original lender "perfects" the lien once recorded

Failure to record a lien (mortgage) could cause you to lose priority over a subsequent lien-holder, this in no way affects the validity of the note or security instrument. 

I think upon a little research you will find once a mortgage is initially recorded, this is all the "perfection" that is required and there is a lien on your property until it is released and no additional assignment of mortgage is required because of the equitable theory "the mortgage follows the note" (see Carpenter v. Logan).  This is why you are not seeing MERS cases where they are losing because the note is separated from the mortgage. 





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Texas
Roper, will not play a battle of wits as most of the time you do offer valid comments.

One reason for public records was to eliminate secrets contracts.
Would the MERS registry system of tracking ownership be a mechanism for invoking the Statutes of Fraud? When MERS is tracking the Intangible security interest it is in compliance, tracking of the real properties lien, that's another issue!

You once made mention I should shut up let the academics speak, who do you think I speak too? As most all people, including you, can not comprehend the total scope of the crime.

I never said introduce the PSA into court, just use the information contained within the PSA, and if you go into the Commercial arena it is the "TSA" (Trust Servicing Agreement), which is where I normally operate, the residential market value, excluding secondary derivative's might reach a Trillion or Two, commercial real property issue reaches into the Multi Trillions,excluding secondary derivative's.

If I was you, I would keep a close eye on bankruptcy rulings that are forth coming.

Let me know the day Professor Levitin recommends your service to a law firm.

Good Luck and God Speed





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William A. Roper, Jr.
Quote:
Texas said:
I never said introduce the PSA into court, just use the information contained within the PSA, and if you go into the Commercial arena it is the "TSA" (Trust Servicing Agreement), which is where I normally operate, the residential market value, excluding secondary derivative's might reach a Trillion or Two, commercial real property issue reaches into the Multi Trillions,excluding secondary derivative's.


Texas:

I am absolutely IN FAVOR of the defendant obtaining an understanding of the precise mechanics of securitization and the express covenants appearing within the PSA and other materials filed with the SEC within registration statements and otherwise.

This can be done through both independent research as well as discovery.

In many jurisdictions, production obtained through discovery is admissible against teh producing party, but that party must still authenticate such items IF presented as evidence by the producing party UNLESS (a) the other party doesn't object OR the other party is foolhardy enough to introduce the material instead.

By contrast, one can sometimes obtain valuable evidence through interrogatory responses and responses to requests for admissions.  Usually, whether to introduce a particular interrogatory response or admission is elective to the party propounding the discovery.  So if one can obtain several selective discovery responses that get critical details of the securitization INTO evidence while leaving out others, it is possible to make alternative arguments WITHOUT putting the most damaging elements of the PSA into evidence.

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But defendants need to read the leading appellate cases to see precisely HOW the PSA CAN and MAY be used to bail out the plaintiff and defeat the defendant.  Typical are situations where the defendant has successfully assailed the plaintiff's affirmative evidence associated with timely holdership of the note.

And timeliness is very often the critical fact.  That is, since indorsements are typically UNDATED, the indorsed note or allonge is NO EVIDENCE as to WHEN the indorsement is made.  This comes most critically into play when the plaintiff has initially pled an unindorsed copy of the note with its complaint and then later appears with an indorsed original.  This situation creates a presumption (and even through judicial admission an irrebuttable fact) that the note was unindorsed at the commencement of the suit.

Similarly this situatioin arises when the plaintiff pleads into evidence a forged assignment fabricated after comencement which purports to convey both the note and mortgage AFTER the commencement of the suit.

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When a defendant has successfully shown that the plaintiff could NOT have been the holder, the plaintiff typically SHIFTS its argument and tells the court that holdership doesn't matter

The plaintiff then relies upon provisions of the UCC giving a right of enforcement to a transferee.  But this presents new challenges for the plaintiff because the transferee must show that it obtained the note by transfer from a party which had a right of enforcement.  The easiest way to do this is through the PSA and securitization documents.

Those who advocate putting the PSA into evidence are almost always assuring that the plaintiff will WIN. 

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Texas you can beat your breast and sound your horn as much as you like trumpeting what you seem to perceive as some expertise and credentials.  I am sure that you probably accompanied the SEAL team to Abbababad, as well and instructed them on precisely HOW to fire the deadly round.  I am mostly content letting the strength of winning arguments prevail in battle within the marketplace of ideas.

Those who are perceptive already know that I keep rather keenly and acutely attentive to new cases in both the state and federal courts and, very often, my posting of new decisions is the FIRST mention of these cases ANYWHERE in the blogoshere. 

So if there is some particular case that you want to call to our attention so that we can go and read the pleadings before the decision, let us know.  But if we are to be impressed by your pronouncement that there might be some important decisions in the future, such a pronouncement is about as useful as a solemn prediction that the stock market is likely to go up and down.
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William A. Roper, Jr.
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Texas said:
 if you go into the Commercial arena it is the "TSA" (Trust Servicing Agreement), which is where I normally operate, the residential market value, excluding secondary derivative's might reach a Trillion or Two, commercial real property issue reaches into the Multi Trillions,excluding secondary derivative's.


Texas:

By the way, your ignorance is particular laughable in your rather idiotic misconceptions about the size of the residential and commerical mortgage markets.  The residiential mortgage market in the U.S. is about $11 trillion and dwarfs the size of the commerical mortgage market. 

See:

http://www.federalreserve.gov/econresdata/releases/mortoutstand/current.htm


The total amount of commercial and industrial loans held by U.S. banks is about $1.2 trillion.  The total amount or real estate loans (including residential) held by U.S. banks is about $3.6 trillion.

See:

http://www.federalreserve.gov/releases/h8/current/default.htm


Only a very small fraction of commerical mortgage loans are securitized.  The estimated size of U.S. market for new commerical mortgage backed securities issuance in 2011 is variously estimated at $30 to 40 BILLION.  The figure for 2010 was $9.8 BILLION. 

In short, where residential mortgage market aggregates are typically measured in TRILLIONS, commerical mortgage market aggregates are typically measured in tens of BILLIONS.

This is a matter of common sense.  Drive around the country and look at the stock of residential real estate.  Then look at the stock of commercial real estate, primarily office buildings and shopping centers.  (Apartment buildings are considered residential real estate.)  Add up the value.

Anyone who would credit you with being an expert is an idiot.
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Texas
The total amount of commercial and industrial loans held by U.S. banks is about $1.2 trillion.  The total amount or real estate loans (including residential) held by U.S. banks is about $3.6 trillion.

Tell Fannie Mae they don't hold nearly 6 Trillion, what is held by others is not on the banks books.
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Texas
The Case Against Allowing Mortgage Electronic Registration Systems, Inc. (MERS) to Initiate Foreclosure Proceedings
Nolan Robinson
Benjamin N. Cardozo School of Law
March 21, 2011
Cardozo Law Review, Vol. 32, No. 4, p. 101, 2011

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1791896
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William A. Roper, Jr.
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Texas said:
The total amount of commercial and industrial loans held by U.S. banks is about $1.2 trillion. The total amount or real estate loans (including residential) held by U.S. banks is about $3.6 trillion.

Tell Fannie Mae they don't hold nearly 6 Trillion, what is held by others is not on the banks books.

Texas:
 
Well, Duh!
 
Once again, you demonstrate that you are unable to read and interpret rather clear data.

My statement above was:
"The residiential mortgage market in the U.S. is about $11 trillion and dwarfs the size of the commerical mortgage market."
The cited data was the household survey, which includes ALL mortgages whether held for portfolio by banks, thrift institutions or other investors, held in trust in prive mortgage trusts, as well as the FNMA, FHLMC and GNMA mortgages held for portfolio OR guaranteed.  That is $11 trillion TOTAL.

The market for residential mortgage backed securities, including Fannie Mae and Freddie Mac, is a large portion of that $11 trillion total.

No comparable figure is available from the Fed for the commercial mortgages outstanding.

The figures for commercial and industrial loans held by banks was furnished for comparative purposes as to magnitudes.  Most of that figure is commercial loans unrelated to real estate.

The real estate loans figure for banks includes some commercial real estate loans.  It also includes construction lending.  Most commerical mortgages are held directly by other institutional investors, including insurance companies, pension funds and hedge funds.

The market size for commerical mortgages is a very small fraction of the residential mortgage marketplace.  And the portion of commerical mortgages which are securitized are a small portion of the commerical mortgages outstanding.

As pointed out total commercial mortgage backed securities issuance for 2011 is estimated at $30 to $40 BILLION.  The total figure for 2010 was $9.8 BILLION.

The figures for Fannie Mae are a PORTION of the $11 trillion figure I cited.  They have NOTHING TO DO WITH the volume of new commercial mortgage backed securities issued nor anything to do with the amount of commercial mortgage backed securities outstanding.

Once again, by citing statistics that you seem unable to actually understand, you undermine rather than augment your argument.

Your initial statement seemed to impart that you were an expert because you had been consulted by holders of commerical mortgage backed securities and then you sought to aggrandize the market size for commercial mortgage backed securities.

I would suggest that you stick to creating Power Point slides for the naive and ill informed rather than trying to engage in an actual thoughtful informed conversation with people who have a far greater understanding than you.  ANY JUDGE WHO RECOGNIZED YOU AS AN EXPERT IN ANYTHING OTHER THAN B.S OUGHT TO BE REMOVED FROM THE BENCH!
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Texas
No comparable figure is available from the Fed for the commercial mortgages outstanding.

Roper you said, commercial mortgages, that is not what I wrote, what I wrote is "
commercial real property".
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William A. Roper, Jr.
Quote:
Texas said:
I never said introduce the PSA into court, just use the information contained within the PSA, and if you go into the Commercial arena it is the "TSA" (Trust Servicing Agreement), which is where I normally operate, the residential market value, excluding secondary derivative's might reach a Trillion or Two, commercial real property issue reaches into the Multi Trillions,excluding secondary derivative's.


Yes, what you said was not only ill informed and erroneous, but also largely incoherent.

What precisely did you mean by "secondary derivatives" if you meant commercial property rather than commercial mortgage backed securities?  And what is the relevance of the "Trust Servicing Agreement" in the "Commercial arena" if you are talking about commercial property ownership rather than securities.  You seem to believe that you can impress other people by throwing out some big words that you think they wont understand and that everyone's eyes will glaze over in admiration.

And if you are now trying to explain away your ignorance by asserting that commerical real estate is worth more than residential real estate, you are going from one absurdity to another.

Where you "normally operate" seems to be a word of fantasy where facts have little meaning. 

Sometimes, one enhances one's credibility by simply acknowledging mistakes and admitting the limits of one's knowledge.  When you find yourself in quicksand, you struggle, blame others and sink in deeper.

All HAIL "Texas", our resident expert in commerical real estate!
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Texas
William Roper Jr. said:

"I think upon a little research you will find once a mortgage is initially recorded, this is all the "perfection" that is required and there is a lien on your property until it is released and no additional assignment of mortgage is required because of the equitable theory "the mortgage follows the note" (see Carpenter v. Logan)."

Texas Local Government Code
§ 192.001. GENERAL ITEMS.  The county clerk shall record each deed, mortgage, or other instrument that is required or permitted by law to be recorded.

Acts 1987, 70th Leg., ch. 149, § 1, eff. Sept. 1, 1987.

§ 192.007. RECORDS OF RELEASES AND OTHER ACTIONS.
(a) To release, transfer, assign, or take another action relating to an
instrument that is filed, registered, or recorded in the office of the county clerk, a person must file, register, or record another instrument relating to the action in the same manner as the original instrument was required to be filed, registered, or recorded.
(b)  An entry, including a marginal entry, may not be made on a previously made record or index to indicate the new action.

Added by Acts 1989, 71st Leg., ch. 1248, § 53, eff. Sept. 1, 1989.

Maybe you should tell the State of Texas their statutes are in error.      

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William A. Roper, Jr.
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Texas said:
Maybe you should tell the State of Texas their statutes are in error.

 
Texas: 
 
There is no error in the Texas statute.  The error is in your muddled thinking and analysis, which becomes more painfully obvious with each desperate post.

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