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Securitization Chain-of-Title: The US Bank v. Congress Ruling

posted by Adam Levitin

Over on Housing Wire, Paul Jackson is crowing that chain-of-title issues in mortgage securitization are overblown because an Alabama state trial court rejected such arguments in a case ironically captioned U.S. Bank v. Congress.

But let’s actually consider whether the opinion matters, what the court actually did and did not say, and whether it was right.

Jackson and Yves Smith at Naked Capitalism have a running feud over the seriousness of chain-of-title problems, and I think that explains why Jackson is so worked up over this decision. My own take is that it is much ado about nothing. Before anyone gets too excited one way or the other about this case, let’s remember that this is a ruling by one judge in an Alabama state trial court decision. It was unlikely to get much notice anywhere else in the country, but for the securitization industry grasping for a legal victory to parade around. This court ruling doesn’t have precedential value anywhere, including in Alabama, and its persuasive value is very low too, both on account of it being an Alabama state trial court and because of the quality of its analysis. Put differently, this ain’t an Ibanez type ruling, where a leading state supreme court issues a very thoughtful unanimous opinion.

Perhaps the most important thing to note about the opinion is what isn't there. There was no consideration of the chain-of-title issue in the opinion. Let me repeat, the court said nothing about whether there was proper chain-of-title in the securitization. Instead, the court avoided dealing with it. That means that this ruling isn't grounds for sounding the "all clear" on chain-of-title. At best, it is grounds for arguing that homeowners won't be able to raise chain-of-title problems. As we've seen with Ibanez, that's clearly incorrect, and a closer look at the Congress ruling shows that it might be an Alabama special, not applicable elsewhere. 

Alabama is a “non-judicial” foreclosure state. That means foreclosures are done by private sale. In Congress the securitization trustee held a sale and received a quitclaim deed from the mortgagee MERS. The securitization trustee then brought an ejectment action against the homeowner. The decision was in the ejectment action, not the foreclosure.

The court used this procedural posture to wiggle around having to address the chain-of-title issues. The homeowner’s argument was that the note and mortgage had never been properly and timely transferred to the securitization trust per the method required by the pooling and servicing agreement (PSA) and were, therefore, not trust property, so the trust had no interest in the mortgage and therefore lacked standing to bring a foreclosure: “without proof that U.S. bank was the owner of the Note, it has no standing and therefore the trial court has no subject matter jurisdiction over the case.”

The court played on the procedural posture of the case to reject this argument. First, the court explained that because this was an ejectment action, not a foreclosure, the question of ownership of the note was not an issue of standing, but an affirmative defense for which the homeowner had the burden of proof. The trial court here was citing to a recent Alabama appellate court decision (reversing a previous Alabama appellate decision) that concluded that standing is satisfied by virtue of the bank being named party on the foreclosure deed. That’s just crazy given that the foreclosure deed is a nonjudicial sale. [G.S.—maybe this explains why your shop saw your notaries' seal forged on those foreclosure deeds.]

Crazy or not, however, this meant that the homeowner wasn’t actually challenging the trust's standing. From there it was a small step for the court to say that the homeowner couldn’t invoke the terms of the PSA because she wasn’t a party to it.

If the homeowner were able to bring a standing challenge, there’d really be no way to avoid addressing the PSA on its own terms because that is what determines whether the securitization trust has an interest in the mortgage in the first place. This procedural move of saying that the homeowner wasn’t challenging standing was what decided the case. It certainly made it possible for the court to decide everything under Alabama law, rather than address the New York law that governs the PSA: “This is an action for ejection from Alabama real property, brought against an Alabama resident in an Alabama court.” [Translation: boy, don’t you bring down any of that fancy New York lawyering to Alabama.]

It’s worth noting that this is not the only decision to say that the homeowner has no ability to invoke the PSA. There’s an unpublished Sixth Circuit ruling in a case called Livoniainvolving a commercial mortgage.  In that case, the court said that a litigant who is not party to an assignment cannot challenge the assignment, unless there's a concern about double enforcement (i.e., that someone else might claim to be the note holder). If one traces back the caselaw cited as precedent in Livonia, one will see that it is fairly inapposite--my take is that this is a decision where the law clerks cited some 19th century caselaw language without fully understanding the particular context of those cases. But even if the precedent is well-founded, given the prevelance of warehouse fraud, the double enforcement problem is real, and more importantly, there’s another critical borrower interest in ensuring that litigation is against the proper party. Securitization trusts have very different ability and incentives to settle a foreclosure case by modifying a loan than a portfolio lender. That means borrowers do have an interest in the validity of the assignment and thus standing to litigate over it.  

More generally, I find the argument that there's no standing to argue over chain of title misplaced. Perhaps the most fundamental defense to a foreclosure is to argue that the party bringing the action isn’t the creditor. That’s a standing question, and there’s simply no way to examine it without getting into the PSA.

There’s also a secondary issue in Congress that is also worthy of comment (I could go on and on about the rubberbanded allonge issue as well, but gosh that'd be dry and technical): The court wrote that “U.S. bank was the ‘holder’ of the Congress note and therefore had the legal right to foreclose on the Congress property.” The concept of “holder” is a UCC Article 3 concept. It goes to the ability to enforce the note.  UCC 3-301. A holder is simply a party in possession of a note made out to that party or to bearer.  UCC 1-201(b)(20).  Thus, a thief of a bearer note is a “holder” of the note for UCC purposes, and therefore entitled to enforce the note.

But recall that the note is separate from the security instrument, and the securitization trustee isn’t trying to enforce just the note. It is trying to enforce the security instrument that accompanies the mortgage, and the enforceability of security interests in real property isn’t governed by UCC Article 3 and with good reason—mortgages aren’t negotiable, even if the notes themselves are. The commercial benefits from enhanced liquidity of debt do not trump concerns about protecting homeowners’ rights to occupancy.

Unlike an action on a note, which is an action at law, mortgage foreclosure is an equitable action—it is the cutting off the borrower’s equity of redemption. Most states have abandoned the formal law/equity division, but the principles still stand, even if the court structure does not. While a thief can enforce bearer paper, the idea that a thief could enforce a mortgage is laughable. If you don’t have clean hands, don’t expect relief in equity.

The Alabama court just seemed to assume that if a party is a UCC Article 3 holder of a note, it can enforce an associated mortgage. My own take is that enforcement of the mortgage—that is foreclosure—is a separate issue that requires a separate analysis. The court couldn’t have gone down this path, however, because clean hands leads right back to the chain-of-title question.

So to recap, I don’t think there’s much to get excited about with Congress. If the homeowner had prevailed, the banks would have been saying “it’s just an Alabama state trial court,” and it might well have been overturned on appeal. But that doesn’t mean that the chain-of-title issue isn’t real. It just means that there’s still a search for the proper channel on which to advance the argument.

In the end, I see Paul Jackson as toeing the "nothing to see here folks" line that's coming out of thesell-side banks and American Securitization Forum, but numerous buy-side people (read MBS investors) have told me that they think there’s a serious problem with the securitization documentation. The problem that they have is that they don’t know what to do about it—they are trying to figure out a way that this can be used to put the mortgages back to the banks without it tanking the entire financial system. In other words, the banks are being protected by the too-big-to-fail problem. That’s letting them externalize their violations of their securitization contracts on MBS investors.


This was the first 424b5 that I've read whereby it specifically stated that the TRUSTEE was the owner of the "mortgage loans" (an interesting choice of words in and of itself) on behalf of the issuing entity. Anyone feel free to tell me if I've gone totally over the cliff anywhere....

p. 9 of the RASC Series 2007-EMX1 Trust prospectus:


The diagram below illustrates the sequence of transfers of the mortgage loans that are included in the mortgage pool. The seller sold the mortgage loans to Residential Funding Company, LLC, as sponsor.

Residential Funding Company, LLC will, simultaneously with the closing of the transaction described herein, sell the mortgage loans to Residential Asset Securities Corporation, as the depositor. The depositor will then transfer the mortgage loans to the trustee, on behalf of the trust that is the issuing entity. The trustee will accordingly own the mortgage loans for the benefit of the holders of the certificates. See "Pooling and Servicing Agreement--The Trustee and Supplemental Interest Trust Trustee" in this prospectus supplement. For a description of the affiliations among various transaction parties, see "Affiliations Among Transaction Parties" in this prospectus supplement.

Emax Financial Group, LLC
(Seller of mortgage loans)
| sale of mortgage loans
Residential Funding Company, LLC
(Master Servicer and Sponsor)
| sale of mortgage loans
Residential Asset Securities Corporation
| sale of mortgage loans
U.S. Bank National Association
(owner of mortgage loans on behalf of issuing entity
for the benefit of holders of certificates)

The only argument that needs to be made is whether U.S. Bank NA is the OWNER or merely the Trustee of the RASC 2007-EMX1 trust. Maybe I'm absolutely wrong but US Bank does not, in fact, own the notes. Emax Financial (A) to Residential Funding LLC (B) to Residential Asset Securities Corp (C) to RASC 2007-EMX1 (D). A lesser issue may be whether or not US Bank NA was the *original* trustee here or if it took over for LaSalle at some point. Since the SEC filings state US Bank originally, I'm inclined to go with them originally but you never can tell with bees...

Now, I started vomiting a little at p. 10 of the Congress Order so I didn't make it all the way through. And I obviously haven't digested enough of the Prospectus or PSA, but in general, everything (original notes identified as of the cut-off date, substitutions, etc,) has to pass through the Depositor (Residential Asset Securities Corp) before they're sold into the RASC 2007-EMX1 trust. If that didn't happen then not only is the Congress COT broken but there may be bad news for the trust in the form of tax exempt forfeiture, and securities and insurance ramifications as well especially if there are any Title I claims or other "credit enhancements"...

A borrower may not have the explicit right to invoke a PSA. However, the borrower acknowledges that their "loan" may be sold at any time. Given the fact that securitization directly affects the individual chain of title, it makes perfect sense to me, anyway, that there is no avoiding a Trust PSA and/or prospectus in order to establish standing. And if there was no standing to foreclose, there obviously was no standing to evict.


Externalization of not just the violations, but the costs/losses as well. As the public and investors awareness continues to expand I don't think this will stand for too much longer.

Jackson is a long way from an objective observer. In law practice, he represented banks and servicing shops. He thinks that second mortgages are the chief problem with short sales, not the endless feedback loops within the first position lender and its servicers. He's a leading proponent of the theory that strategic defaulters are going off on shopping sprees (No comment on whether such opinions are why he remains ABD in the consumer behavior doctoral program at USC.). If you have Yves Smith and everybody else, including Janet Tavakoli on one side and Paul Jackson on the other, I'm backing Yves.

On the substantive side. I think you're exactly right. I practice in two non-judicial foreclosure states, and once that sale closes, you don't get it unwound. The debtor came to the game too late. In the cases where the debtor gets to court before the sale, the banks are losing.

Sorry for the multiple postings. I can't seem to find the magic words to make my links show up. So I'll just post with the links at my blog.

1. Is there any credibility to the argument that the securitized loans have been paid off by investors and therefore the Trusts, Banks etc. have no pecuniary interest? Only the actual individual investors could be a Plaintiff and only for the amount he invested? 2-300 plaintiffs?

2. What about the fact that most of the Trusts are receiving loans after default and therefore only a "debt collectors" under FDCPA?

3. I have been trying to get the ball rolling on a RICO (Racketeering) action started against the Banks, Trusts, Mers, Attorneys and possibly some of the lagging rubber stamp courts.

Some unnecessary bashing of what you imply is a backwoods Alabama court because it's not New York. The theories are sound - generally the right to enforce the deed of trust follows the note, and the fact that the bank was the holder is in fact significant. Also, we're discussing an ejectment action following a non-judicial foreclosure. In TN, we have a statute saying that the merits of title are not to be considered in an ejectment action. There may well have been no proper defense based on standing. Finally, some of your criticisms seem to ignore that you're not discussing a judicial foreclosure. Just pointing out that some of the negative attitude may not have been justified.

What the judge failed to mention, because it was not raised, is that MERS transfers are not legal electronic transfers in accordance with the E-Sign Act. An "in blank" transfer is not legal. The Act clearly states, "An electronic signature is only valid under the Act if the signatory intends to sign the contract." An "in blank" assignment does not attest to this fact. Once the trustee "signs" the contract, they are no longer a "trustee" under IRS guidelines. Also, if your state requires transfers and assignments to be recorded with the local jurisdiction, the electronic assignment is not valid until it complies with the law. "The Act permits notaries public and other authorized officers to perform their functions electronically, provided that all other requirements of applicable statute, regulation or rule of law are satisfied." As the final blow to the judges reasoning, Electronic Signatures are specifically exempted from the E-sign Act,
"Other Exceptions
Court orders or notices, or official court documents (including briefs, pleadings, and other writings) required to be executed in connection with court proceedings;
Any notice of—
The cancellation or termination of utility service (including water, heat, and power);
Default, acceleration, repossession, foreclosure, or eviction, or the right to cure, under a credit agreement secured by, or a rental agreement for, a primary residence of an individual" An assignment to foreclose and repossess must be in writing !!! It would be nice if the judges learned the law!!!

The fact is the property was already foreclosed on . Res judica. He needs to go to a different court to vacate the foreclosure first. The court handling the ejectment can't simply ignore the presumptively legal foreclosure.

Jason--Naw, I'm really not bashing the Alabama court because it's backwoods. If I had wanted to, there was plenty of stuff to run with. I was actually trying to avoid that issue. The quality of state trial court judges ranges considerably across the country and within states. The point was simply that _any_ state trial court ruling doesn't mean a heckuva lot by itself because it's not binding precedent for anyone.

The right to enforce the mortgage might follow the note (although not necessarily--see Ibanez), but that doesn't mean that a party that is able to enforce the note can necessarily enforce the mortgage. The law governing the security instrument's enforceability is just separate from that governing the note.

I simply cannot fathom why a state legislature or appellate court would say that merits of title don't matter in an ejectment action, especially when there is nonjudicial foreclosure. That would mean that I could eject you from your house based on a forged deed and/or a rigged foreclosure sale. That's just nuts. Maybe someone can explain the logic to me.

I thought my whole point was that this was not a foreclosure action in Congress, but an ejectment action, which was why the judge was able to avoid addressing standing.

Indio007--presumptively legal? res judicata? It was a nonjudicial foreclosure sale. If I have a foreclosure sale for the Brooklyn Bridge, that doesn't make it presumptively legal, does it?

Professor, in reading this case a little closer and seeing where you were going with it, I am aware of several cases in NH that pretty much parallel Congress - with the exception that, in one, the eviction was successfully fought at the District Court level post non-judicial foreclosure. District court recognized the lack of standing for the entity to FC, threw the brakes on the eviction, and bumped the entire case up to Superior Court where it now resides.

To Indio-

It would in California. Recent Appeal case Gomes v. Country Wide.

“Nowhere does the statute provide for a judicial action to determine whether the person initiating the foreclosure process is indeed authorized, and we see no ground for implying such an action,” wrote Irion, who was joined in her decision by the two other judges on the panel.

Asking MERS to demonstrate it has the right to foreclose “would be inconsistent with the policy behind nonjudicial foreclosure of providing a quick, inexpensive and efficient remedy” and would allow lawsuits to delay foreclosures, the judge wrote.

Non-judicial foreclosure is the administrative justice equivalent of judicial foreclosure. This is an ejectment. Just like an unlawful detainer that won't let you try title. You would have to do that collaterally.

The court is accepting the non-judicial administrative process as conclusive asi if it where a true judgment or decree.

The judge is plain wrong about the allonge thing though. i would appeal that. I doubt the UCC was modified to make uttering and counterfeiting quite bit easier by allowing any ol' stray piece of paper name a payee on a different piece of paper.
It defies common sense.

I think the argument behind "the mortgage follows the note" fails where MERS is involved.

Our mortgage names MERS as nominee and so did our title policy, but the NOTE went to Suntrust at closing. In 2006 Suntrust issued securities with Bear Stearns with a whole host of players involved.

Subsequent to Suntrust/Bear, Chase makes an assignment of mortgage "to themselves" (employees of Chase assigning the mortgage to Chase) & they claim lost note and then file foreclosure papers.

In short, the chain of title is A to B and then A to D, A only had one interest to grant not two.

Not to mention the fact that all of the requirements for transferring mortgages in the PSA were ignored in the Bear and JPM securities issuances.

The only "assignment" comes years after the cutoff dates on both trusts. MERS serves one purpose, to hide the number of times the mortgage "should have been" assigned per the Fannie/Freddie standard mortgage contract which says that the note can be sold... as long as the security instrument (mortgage or deed of trust) goes with it.

Yet through all of this... I had money ready to go and the loan servicer refused to take it. Told me the investor would not allow it.

They want to sell homes for pennies on the dollar at the courthouse steps in order to "wash titles" as quickly and expeditiously as possible.

I think the purpose of MERS was to hide the negotiations of the notes themselves. I don't think it had very much to do with the Deed of Trust registration fees. The are a pittance compared to the multi trillion market. Not to mention banks didn't pay the fees anyway. Recording fees where in the closing costs. The have blatantly lied about MERS purpose. I'll say it again. BANKS DIDN'T PAY THE RECORDING FEE BEFORE MERS!

Back to the note hypothesis. First the notes are valuable assets. Isn't every time one of these assets are "sold" a taxable event occurs? It would be real easy to figure out who bought and sold a particular note by simply looking at the endorsements. Tax liability is a lot harder to figure with MERS in the picture. In a typical securitzation a note is transferred at least 3 times that could be taxable.
Originator -> depositor in exchange for cash presumptively
Depositor --> PSA Trustee in exchange for valuable certificates
Certificates of Depositor for Cash.

A single instrument facilitated all this commerce. There is no way for the IRS to see all the buying ,selling and profits from outside of MERS.


Judge Vowell is not fit enough to judge a dog show. His legal reasoning makes absolutely no sense. Not only has he shown the E-Sign Act was not abided by, he uses the PSA in his decision when it is convenient for him. He claims that Ms. Congress was not a party to the PSA, therefore cannot invoke NY law. He then justifies the the claims of US Bank by invoking the very same PSA. By this reasoning alone, only the seller of the debt is liable to US Bank. Judge (by me a) Vowell is using judicial activism, and not legal soundness. How can there be privity of contract (the PSA) on one-end, but not on the other? This clearly was a pro forma decision, based not on the law, but for the efficiency of the courts.

His only “proof” of ownership is a reliance on the statements contained in the PSA. Outside of the PSA, the chain of title was clearly broke. Further, Attorney McCollough’s assignment in MERS is an invalid electronic transfer. MERS cannot grant her authority to transfer an assignment, neither can GMAC, if US Bank actually was the true person in control of the note. Also, if all the statements in the PSA were accurate, as the judge claimed, then why was an assignment made just before foreclosure. He makes absolutely no sense.

Judge Vowell, do everyone a favor, go back to night school, and how about taking some law classes while you are there !

I believe that one of these cases really needs to go to the US Supreme Court. The states are making decisions that scale a plethora of reasonings in regards to MERS. I would argue that MERS transactions are controlled by federal law, the E-Sign Act, which states have no authority to change it's provisions (as stated in the Act).

In every action involving a MERS transaction, the burden is on MERS to show they have met all the electronic signature requirements of transferable electronic records. MERS would fail in every case.

By the very nature of the Act, MERS cannot maintain its "assignee ad infinitum" status. MERS can never meet the status of custodian, since the PSAs state that the Trustees hold the authoritative copies of the mortgage instruments. All "MERS" (the software), and MERS, Inc. (the business entity) holds is the electronic record through it's software. This would deem it as an "electronic agent" only, with no E-Sign authority. One may even argue that their own rules, strip them of even this status, since these transactions require in their entirety, MERS, Inc. (the business entity) approval.

You could also surmise that they are neither a "person" under the act. No MERS employee performs any transaction, recording, or monitoring of such. The "members", whom are not employees, perform all these functions, all in the name of MERS, Inc.

MERS, inc. as a business entity is a legal fiction. It was created by the mortgage industry to facilitate the selling and securitization of loans. EVERY MERS contract is a fraud in the inducement. MERS representation as to it's true intent of security instruments, is a fraudulent conveyance of the obligation, with the intent to deprive the debtor of the rights secured by the note.

I find it funny that people only bring up these chain of title problems after years of making on-time payments to the big-bad evil bank that has no right to foreclose, has no title to their mortgage and has "misrepresented the true intent of its security interest" as Mr. Bryant puts it. How about someone puts there money there mouth is and brings a declaratory action to void their mortgage before economic circumstances force them to default? Does it just so happen that every vocal critic of securitization either owns there home free and clear or is dealing with a portfolio lender?

Adam et. al., a nonjudicial foreclosure sale is not res judicata of anything, obviously. The grantee of a recorded trustee's deed, like any grantee, can bring an ejectment action. The defendant can always assert that the plaintiff does not have superior title. The assertion of a title defect by the defendant is an affirmative defense, but that just means that the defendant has a burden of production of some evidence of a title defect. After that, the title issue is properly before the court. Perhaps the defendant has the ultimate burden of persuasion as well, but the court cannot evade deciding the chain of title issues that led to the (usually substitute) trustee's deed. In my view decisions in nonjudicial foreclosure states that prohibit title issues from being raised in ejectment cases are completely contrary to the theory of a deed of trust.

Given that this case largely deals with assigning the burden of proof, much of the discussion of this case has been ironic (and a bit distasteful).

What is the point of saying this case has no precential value? It certainly has some, and I would say more than most district court decisions. That said, it's not a mandatory and binding precedent. (It does seem set up for an appeal).

Just a little digging shows:

"Judge Vowell has been a circuit judge since January, 1995 and is currently the presiding judge in Jefferson County. Prior to his service on the Court, Judge Vowell practiced law with Beddow, Embry, & Beddow (1961 - 1987) and Vowell & Meelheim (1987 - 1994). Judge Vowell, a graduate of Auburn University (B.A. - 1959) and the University of Virginia (J.D. - 1961), is active in the American Bar Association, the American Bar Institute, the Alabama Law Institute, the American Judicature Society, and the Birmingham Inn of Court."

It is ironic that there is the implication that he's some hayseed. I'm not attesting to his "brilliance," but I doubt he's a dummy, either, and his CV creates a presumption in my mind that he's probably a pretty competent and well-regarded judge, elected by peers to be the presiding judge in a large circuit, at least without further evidence to the contrary. Yes, obviously some are arguing the evidence is contained in the opinion itself, with which I non-concur. As I said above, an appeals court will probably ultimately decide whether this template is good law.

One reference to "My Cousin Vinnie" being set in Alabama was uncalled for, IMO. First, Vinnie, the New Yorker, was not a gifted lawyer, yet even he could attain competence with some help from the local judge. Second, the system worked for Vinnie's cousin. Throwing this out offhand as a slur was really just ham-handed redneck-baiting, and not really apropos anyway. The merits of the opinion should stand or fall on their own.

Judge Vowell's opinion is not binding, but it probably does represent the template for these cases for the circuit around Birmingham and carries some weight about how the top judge thinks a likely commonly-asserted argument ought to be treated in an eviction proceeding. The opinion addresses what, IMO, is the weakness of the "securitization-as-fraud" constellation of claims. It's the kind of strategy where everything (or almost everything) has to go right for it to work at all. Lost in the big picture is the court differentiating ownership of the note from ability to enforce the note, and once it finds enforceability in USBank, the rest is mostly wind-up. Focusing on ownership to the exclsuion of enforcement rights was a pretty big hole in the argument. There's only one way to win, and a lot of ways to lose for Ms. Congress.

Eviction hearings/trials rarely afford a defendant a chance to make claims denying claims of title in the plaintiff. The two jurisdiction I've defended in do not allow broad affirmative defenses. They are enumerated and/or statutorily authorized. Going outside of those is very difficult. So, at the very least, the Birmingham circuit is more open than others.

The Brooklyn Bridge analogy does not work, or maybe it does, but in the opposite way you intend. Apply it and you will see what I mean. Sheriff's Deed holder of Brooklyn Bridge seeks to evict ... whom exactly? That's just the first problem.

Although the argument was treated as an affirmative defense, I think the case would surely apply to quiet title cases brought by a homeowner. In either situation, the homeowner has the burden of proof of proving something. First, because USBank has a record interest in the Sheriff's deed, it has to be made a party. This is what gives it standing. This is why the arguments denying standing to trustees ring hollow to me. You can't make a claim against someone and then argue that they don't have standing. This is not to say that a party claiming enforecment rights ought to automatically have standing in a Motion for Relief from Stay, however.

The nature of a typical quiet title case is to prove that a specific interest is invalid, void, discharged, or otherwise defeased (as in a lost deed case where a completed conveyance to the Plaintiff is requested for relief). cf. Torrens Registration, where the goal is to affirmatively vest title in someone or something, free of broad spectrums of adverse claims, specifically preserving other claims supported by record interests that have not been adequately noticed and proven void, invalid, discharged or otherwise defeased.

To get behind the Sheriff's deed, Ms. Congress needed to prove that USBank didn't have the right to enforce the note, and thus foreclose. While there was lot of smoke here, where exactly is any evidence cited that USBank's claim that it was so entitled actually contradicted? The best and possibly only ways to do this are 1) to allege and prove an alternative interest - that someone else has enforcement power, or 2) that nobody has enforcement power. IMO, the court properly called BS on a party claiming enforcement rights having to prove perfect documentation. At the very least, the party alleging the defect needs to prove that those defects are so significant that enforcement rights don't exist in the party claiming them, and lie elsewhere, or not at all, all the while not getting an unjust enrichment from that claim. Nonetheless, the court still reviewed the evidence and found, essentially, that USBank had enforcement rights, and more importantly, by implication, that it was less likely that USBank didn't have the rights. I just don't see that as that as "clearly erroneous."

As for Paul Jackson, I'm pretty sure that I have read articles where he claims not to be a lawyer. I don't think he is. I read him, but I don't put much stock in what he says about a case like this. But it's also difficult to find timely analysis from anybody without an ax to grind who also knows what they're talking about.

Amazing it is taking so long to play out in horrible slow motion. The higher the level of judicial review the better the chance that the actual rules of law will be ethically and fairly applied. Justice will prevail only if we as an industry and concerned nation continue to investigate each individual issue and keep doing the due diligence required to help the American home owner at risk.

Until it is mandated or legislated for me the most fundamentally troubling issue is that Due Process, as it relates to taking away an American Family's Home, in most cases, is still largely being ignored…

“Access to justice - A fundamental due process protection is the “opportunity to present objections” to an impartial decision-maker before an individual’s property can be taken away. Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306 (1950)”

Those who are able to highlight this to policy makers must stay constant in defense of the rights of American Homeowners at risk… http://diligencegroupllc.net/

The problem is that foreclosures by advertisement have been held to have adequate due process protection. Due process does not require full-blown civil court process. I, for one, would not object to that not being the case, but there is a lot of precedent that needs to be overruled to get there.

As for Spence's comment, I have proposed to clients to just that. At this point, I think I could make a good faith case that a quiet title is necessary to ensure an effective reconveyance, that enough doubt has been sewn into the records that a borrower could ask for a declaratory judgment setting the standard for reconveyance. Taking the loan default facts off the table could change the dynamic. Hard sell, though. In addition, the defendant would have a chance to cure.

I think the Gomes v. Countrywide decision makes it more incumbent on the CA homeowner who believes that there is a question as to who is the proper foreclosing party if his or her loan goes into default to make sure the foreclosure action does not go forward without judicial scrutiny. In that regard, it would seem that the homeowner would be justified in recording a Notice of Intent to Preserve Interest pursuant to Civil Code section 880.330. That way, the lender would be forced to quiet title first, and the burden would shift to it.

That said, it may still be possible for the homeowner to prevail in an Unlawful Detainer action: the banks are rather sloppy in their paperwork, and discovery moves at a very fast pace (5 day time limits for production). If the homeowner can catch the bank off guard, he or she may be able to prove a lack of title.

In any case, the struggles are being waged by the people who are ... in most cases - informed and not apt to just accept the unbelievable miasmic conditions brought to them. To try to understand.
Its live or die for some - with the crimes being won on a case by case basis at considerable expense and

with excess casualties. Professor Adam - do you see change or more of this.

*indio007 (7:51 am)

you said;


*Yes they did, they paid a fee to the Clerk of Court upon recording a proper Assignment of Mortgage when the Mortgage changed hands.

Of course they made trillions of dollars in the derivatives market and that is way much more money than recording fees. But if two trusts were involved it is quite possible there are 6 to 9 missing assignments.

Remember when they brought in those swinging d***s from Goldman to speak to members of Congress, Fabrice Tourre said these trusts held "nothing but air."

Fact is the trust likely held "no" mortgages if it even existed at all. Google Rule 10b-5.

Of course what we're talking about here (dollar wise) is less than the MBS scam. But the idea that a FAKE can step in with FAKE PAPERS, claim lost note, file an assignment of mortgage to themselves and then make a 'credit bid' at a foreclosure sale and not even be entitled to collect on the note or mortgage is ridiculous.

That is the greater issue at hand. Nobody should get anything for free, even if they are TBTF. The PSA says The Bank of New York is the owner of the note and mortgage and that in no way shape or form should the servicer claim ownership in the note or mortgage (second loan pool).

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