Kansas S Ct Decision Annotation 2: Reversing Default

Posted on September 24, 2009 by livinglies The point must be made, and the evidence must be allowed, that the pretender lenders are gaming the system every day and literally stealing homes from both homeowners and investors who thought they had an interest in those homes when they bought mortgage backed securities. This leaves the borrower in a position of financial double jeopardy wherein the true owner of the loan can still make a claim and the investor is simply out of luck — usually have been misinformed about the payments or status of the pool of assets the investor bought into. From Landmark v Kesler — see entire decision: kansas-supreme-court-sets-precedent-keydecision-confirming-livinglies-strategies “6. It is appropriate for a trial court to consider evidence beyond the bare pleadings to determine whether it should set aside a default judgment. In a motion to set aside default, a trial court should consider a variety of factors to determine whether the defendant or would-be defendant had a meritorious defense, and the burden of establishing a meritorious defense rests with the moving party. 7. Relief under K.S.A. 60-255(b) is appropriate only upon a showing that if relief is granted the outcome of the suit may be different than if the entry of default or the default judgment is allowed to stand; the showing should underscore the potential injustice of allowing the case to be disposed of by default. In most cases the court will require the party in default to demonstrate a meritorious defense to the action as a prerequisite to vacating the default entry or judgment. The nature and extent of the showing that will be necessary lie within the trial court’s discretion.” A highly important finding in this decision and affecting those whose homes have already been subject to a foreclosure sale, judgment or eviction (unlawful detainer) proceeding. In most cases these proceedings have resulted in actions taken by the parties upon the default of the alleged borrower. The default occurs when the borrower fails to answer in a judicial state or fails to file a lawsuit in a non-judicial state. The first time the matter comes before a court is when the foreclosing party files something in court — like an eviction action or petition for writ of possession. The mistake that courts are making at the trial court level is that they are treating the matter as though it has been judicially concluded, as if there was a hearing or trial where the parties were heard on the merits. This is simply not the case. Judges must come to the realization that this is not the end of the matter — it is the beginning. And they should consider any motion directed to the merits of the would-be forecloser’s claim and the defenses of the homeowner. And unlike a motion to dismiss, where there will be plenty of time to consider factual matters later, the motion to set aside the sale, foreclosure judgment, notice of default, notice of sale, or judgment of unlawful detainer or eviction is a final determination of the merits — most often without hearing one shred of evidence offered or proffered by the homeowner. In fact, there are numerous cases where the trial judge abruptly and even rudely silenced the lawyer or pro se litigant saying that this was a simple matter of eviction (or whatever the motion was pending) and this is not an evidentiary hearing. Other Judges see the inherent unfairness and the denial of due process when the homeowner raises objections that the pretender lender had no right to foreclose, did so improperly and essentially stole

the title abusing state process and creating a fraud upon the court and everyone else. But the application of this approach has been inconsistent and uneven. While we have seen numerous cases turned on their head where a homeowner has been restored to possession of the house, and even clear title awarded to the homeowner thus blocking any future foreclosure, we have seen many other cases where Judges are still viewing these cases as dead beat borrowers trying to game the system. The point must be made, and the evidence must be allowed, that the pretender lenders are gaming the system every day and literally stealing homes from both homeowners and investors who thought they had an interest in those homes when they bought mortgage backed securities. This leaves the borrower in a position of financial double jeopardy wherein the true owner of the loan can still make a claim and the investor is simply out of luck — usually have been misinformed about the payments or status of the pool of assets the investor bought into. “How do I prove that?” is the usual question. You don’t prove it you ask it. After performing a forensic review, hopefully by an independent expert, you present allegations and evidence that upon the best information you have, you believe the loan was securitized and that the owner of the loan is not the party who brought the action. You offer further your belief that the loan might have been paid or transferred by reason of federal bailout or insurance or credit default swaps, and that this pretender lender refuses to answer the questions put to them in the qualified written request and debt validation letter. Since the QWR and DVL are statutory letters giving rise to an obligation to answer and resolve the issue, and the pretender lender is already in violation, the only answer the pretender lender could have to avoid sanction for failing to conform to statute is to say they are not a lender and therefore they don’t have any obligation to answer. This of course knocks them out of the position of would-be forecloser. If the pretender lender simply fails to comply, then your position is that no creditor can seek to collect on a debt without proving the debt is due. Since you have asked for a full accounting of the chain of title on the loan and the money received from all parties, not just the borrower, it is impossible to state how much of the obligation is due and to whom it is owed. Thus the answer is that you allege the facts, you present probable cause (forensic review) for your allegations and then enter the discovery phase in which you press the pretender lender into eventually taking the position that they don’t need care, custody or control over the note or loan. They will take the position that they have the bare right to enforce the note and mortgage with or without the proper documentation. Most judges won’t buy that. By the way, a simple and deadly question to ask the pretender lender in litigation is whether they have complete decision-making authority to modify the loan. You’ll be killing several birds with one stone when answer or refuse to answer that question — especially in California where there is an obligation on the part of the lender to have a modification program in place. The current programs in place are from servicers, not lenders.

Modification Fraud — the latest game in town Posted on September 4, 2009 by livinglies Here is a good article from NYT but once again they are describing the news instead of reporting it. No investigation. Why do you think that servicers et al are not REALLY interested in modifying your mortgage? Why do you think they want you to believe that you are “in process” for mortgage modification when your request was denied months before? The answer is simple: if the obligation is modified then it isn’t in default. If it is not modified then it IS in default. And the pretender lender intermediary players NEED your loan to be in default. The actions of the servicers and other intermediaries are designed to achieve two results: (1) to make you think that you are negotiations to modify your mortgage and (2) to deny your request for modification. As this New York Times article points out, the decision not to modify comes within days of receiving your request but they NEVER tell you that. Why? Because they are running the clock in order to have you in an incurable position of default. Why? Because ONLY a default will trigger the credit default swaps that “insure” your obligation along with hundreds or thousands of others. And they have “insured” your loan as much as thirty times over. So if your loan is $300,000 it is possible that they get as much as $15 million — but only if you are in default (or at least only if the pool defaults on the obligation owed to the investors). They can’t get that money if your loan is modified. And even if your particular loan is not delinquent or in default, as long as the pool defaults, they still get paid. So adding to the misrepresentations to borrowers and investors in the creation of these securitized “loans” (which are in reality “securities”) is the misrepresentation to borrowers and their lawyers that they are in good faith negotiations to modify the loan because (a) the servicer has been promised the house as part of the scheme (even though they never put up a dime for the loan) and (2) the Wall Street players are getting a pornographic amount of money based on the premise that your loan is in default whether it is or it isn’t, and whether it was paid by third parties or not. And NOBODY wants to bring this to the attention of the “investors” who purchased bonds that were mortgage backed securities because some people might do a little arithmetic and quickly come to the realization that they paid as much as 3 or four times the amount actually funded in the loan and are now sitting on an unenforceable promise of security that at best is worth a tiny fraction of what they paid. So who do you think paid for all this? YOU did along with all the taxpayers of this great nation. Do you really think that the Wall Street players like AIG who made a living assessing risk, never peeked under the hood to see what was going on? In a real deal, they inspect deals the way my grandmother inspected chickens before she made the purchase. No, they had to know that the ultimate payment on these “bad bets” (which incidentally were guaranteed to be triggered to the advantage of anyone holding a credit default swap), they must have known that the ONLY source of payment would be the Federal Government with taxpayer money and newly printed money. The TARP money went not to holders of “troubled assets” but to holders of these bets and we paid them off for a horse race that was rigged from the start.

There are several types of rescission and this list is by no means exhaustive: 1. 2. 3. 4. 5. 6. Truth in Lending Usury — see appraisal fraud Common law fraud Securities law violations Statutory rescission based upon deceptive lending practices Statutory Rescission based upon deceptive business practices

Rescission, Rescission and Rescission
Posted on August 26, 2009 by livinglies Amongst the various emails, requests for assistance and comments on the blog there are some threads. Most people, even lawyers, mistake the remedy of rescission for something else. The first thing you need to know is that, no, you don’t give your house “back” to the lender because you never got your house from the lender (pretender lender) in the first place. You received money and you didn’t receive it from the “lender” if your loan was securitized. There are several types of rescission and this list is by no means exhaustive: 1. 2. 3. 4. 5. 6. Truth in Lending Usury — see appraisal fraud Common law fraud Securities law violations Statutory rescission based upon deceptive lending practices Statutory Rescission based upon deceptive business practices

Each one carries its own unique set of characteristics. TILA rescission is interesting but is not being used successfully because people don’t understand it and then there is the problem of who you send the notice of rescission to if you already know you are not dealing with the “lender.” You can look up the details of TILA rescission in the search engine for this site. The important thing to remember is that in a TILA rescission the lender is required to either take it to court in a petition for declaratory action or comply and give you a satisfaction of mortgage, a canceled note and release. And the “lender” has a time limit to contest your notice of rescission. If they exceed the time limit you would argue that they have waived their right to refute it. And if they change position on you and claim they are not the lender and therefore your rescission notice is void, then they cannot foreclose. A midway position would be to allow them extra time to file the declaratory action, but that would violate the express words of the Federal Statute.

In TILA your “tender” is not due until AFTER the lender has either complied with the statute or complied with the court order when they lose the petition for declaratory relief. But you might find that the Judge agrees with you that they have no right to foreclose and that for the same reason you sent the notice to the wrong party. That would require you to file also a Petition to Quiet Title naming John Does 1-1000 among others, and anyone else you know that is involved on the creditor side. The point is that by filing the notice of rescission you immediately create a powerful argument for saying the obligation was converted from a secured obligation to an unsecured obligation. And you have a strong argument to say that the note is no longer evidence of the obligation because it is BY OPERATION OF LAW extinguished along with the mortgage or deed of trust. So if you ever get up to the point where you must tender money or payment to the real lender, whoever that might be, you will tender only so much as the obligation, less the value of your claims, defenses, counterclaims etc. for all the causes of action discussed on this blog. It probably will turn out that your “tender” will be a demand letter that says to the “lender” now you owe me damages on top of releasing the house from the encumbrance. If the case proves out under usury because of predatory loan tactics, usury, securities violation or any combination, you could be entitled to treble damages (read that as three times the stated principal of your note). If you expand the claim to include a claim for all undisclosed profits and fees and all money paid at closing and purportedly under the loan, you probably have a claim that totals around twice the amount of your mortgage note. If you further expand your claim for undisclosed profits in the form of payoff from credit default swaps, your claim could be up to thirty times the amount of the note — right that is “thirty” because that is the amount they got when your loan “defaulted”. Note that in order to score this windfall they had to do everything in their power to make sure the loan goes into default thus triggering the CDS insurance. So when they take money from you, and they are supposedly negotiating with you for modification, what they are REALLY doing is getting you past the point of no return so they can collect on the insurance and take your house too. Many people are getting letters back from the pretender lender saying they have no right to rescind. Very interesting, but wrong. That statue says that if they think they have a legitimate claim to defer or eliminate your claim for rescission that must do it in the form of a declaratory action. They don’t want to do that because they would be required to reveal many details of the transaction that they never want the Judge to see. The statute does not say the lender can simply send a letter. If they have failed to comply and they go forward with foreclosure then one strategy would be to bring an emergency action for permanent injunction plus attorney fees and costs, stating that there is no encumbrance BY OPERATION OF LAW (see exhibit “A” Notice of Rescission) plus the allegation that they neither complied nor filed the declaratory action.

And don’t take the narrow response that your loan is a purchase money first mortgage and is therefore excluded from TILA. That probably isn’t true even if it looks otherwise. There was nothing simple about this transaction. And even a cursory look at the snaked path of the transaction from the homeowner up to the investor who bought bonds (mortgage backed securities and was therefore the ultimate source of the funds) will show that if this was a purchase money first mortgage it did not resemble any other purchase money first mortgage before securitization. And then of course there are all those other grounds for rescission and damages. Why do “lenders’ and “pretender lenders” say “no” and pull all these other tricks amounting to theft, trickery and deceit? Because they can if you let them. It works for them in 99% of the cases and they get the house and the insurance too. Nice deal for them, don’t you think?

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