BANKS DUG THEIR OWN GRAVE ON QUIET TITLE ACTION

Whatever they say will be suspect from now on

see ibanez-huge-win-for-borrowers-in-massachusetts-non-judicial-state-high-court

They never did the assignment and later when they tried to correct that problem they found they were in the position of violating the terms spelled out in the PSA wherein the assignment could be accepted by the pool — as to time, content (non-performing loans) etc. As of this point in time, there are approximately 50 million transactions over the past ten years that fit this fact pattern. All of them have fatal defects in title.— Neil Garfield

“In September and October of 2008, U.S. Bank and Wells Fargo brought separate actions in the Land Court under G.L. c. 240, § 6, which authorizes actions “to quiet or establish the title to land situated in the commonwealth or to remove a cloud from the title thereto.” The two complaints sought identical relief: (1) a judgment that the right, title, and interest of the mortgagor (Ibanez or the LaRaces) in the property was extinguished by the foreclosure; (2) a declaration that there was no cloud on title arising from publication of the notice of sale in the Boston Globe; and (3) a declaration that title was vested in the plaintiff trustee in fee simple. U.S. Bank and Wells Fargo each asserted in its complaint that it had become the holder of the respective mortgage through an assignment made after the foreclosure sale.”

EDITOR’S NOTE: The Banks themselves thought they had it made and filed what we have suggesting to borrowers — a lawsuit to quiet title, claiming the foreclosure was valid and that Ibanez was divested from title as a result of the foreclosure. The Supreme Court in Massachusetts said there is nothing wrong with an action to quiet title — it’s just that the banks lose and Ibanez wins. The Banks failed to establish a clear chain showing that they actually and legally had the right to foreclose — meaning that the mortgage was properly assigned to them. Upon failure to do that, the Banks were found to have violated Massachusetts law by foreclosing on property that was not subject to any legal claim by them. They had no right to title and therefore they had no right to quiet title.

In the end this was simple application of age-old title examination. As Max Gardner points out in his ABCDE approach, you either have it or you don’t. The Banks don’t and in my opinion they can’t fix it because factually they did everything wrong, they have already been compensated, and they have cheated not only the borrowers, but the investors who put up the money. Thus this decision helps both investors who filed damage suits against the investment bankers and borrowers who filed slander of title and other tort and statutory claims. This ruling by the Supreme Court corroborates the finding on these pages that the pools are and always were EMPTY.

The big point to take away from this decision is that the Banks must prove they have the right — it will no longer be presumed just because they have some paperwork of dubious authenticity and give an order to foreclose. Trustees around the country better take notice that if they receive an instruction on a Deed of Trust that they should foreclose they may be a tool in a fraudulent scheme.

“The Ibanez mortgage. On December 1, 2005, Antonio Ibanez took out a $103,500 loan for the purchase of property at 20 Crosby Street in Springfield, secured by a mortgage to the lender, Rose Mortgage, Inc. (Rose Mortgage). The mortgage was recorded the following day. Several days later, Rose Mortgage executed an assignment of this mortgage in blank, that is, an assignment that did not specify the name of the assignee. [FN11] The blank space in the assignment was at some point stamped with the name of Option One Mortgage Corporation (Option One) as the assignee, and that assignment was recorded on June 7, 2006. Before the recording, on January 23, 2006, Option One executed an assignment of the Ibanez mortgage in blank.”

EDITOR’S NOTE: This is a classic case of a sham transaction where Rose mortgage was not the source of funds, was not the lender, and never handled the money except for receiving a fee for pretending to be the lender. The Mass. Court decision goes to the heart of how securitization was practiced where the money moved and the documents didn’t and there was no disclosure or proper notice. The effect of naming nobody or a nominee with no interest or power to do anything (which is the same as identifying nobody) is to invalidate the transfer ab initio. There is no transfer and there is nothing that anybody can do to make it a transfer and there is nothing anyone needs to do to void the “transfer” because it did not occur.

What you have left is a homeowner whose title record is clouded (Cleared up mostly by this court decision) where the only record lender was not the factual lender. The note therefore does not describe the transaction and the mortgage, seeking to provide security for the note, is securing an obligation that does not exist. The obligation, if one exists, arises by virtue of the receipt of money by the borrower or the payment on his behalf from a source of funds that is the lender. That actual lender is not described in the closing documents and the identity of the true lender was intentionally withheld from the buyer, depriving him of the right to choose whom he does business with.

Thus the REAL obligation has NO DOCUMENTATION. And under this decision pretender lenders can no longer substitute fabricated documentation for real proof. The fact that this decision took place in a state where court action is not required to commence foreclosure means that the decision is applicable to ALL states. In plain language, the banks are screwed.

“ According to U.S. Bank, the assignment of the Ibanez mortgage to U.S. Bank occurred pursuant to a December 1, 2006, trust agreement, which is not in the record. What is in the record is the private placement memorandum (PPM), dated December 26, 2006, a 273-page, unsigned offer of mortgage-backed securities to potential investors. The PPM describes the mortgage pools and the entities involved, and summarizes the provisions of the trust agreement, including the representation that mortgages “will be” assigned into the trust.”

EDITOR’S NOTE: The Massachusetts Court adeptly picked up on the practice of “selling forward,” a concept that I have been spouting about for over three years. It makes all the difference in the world. The fact is that in most cases when the investors advanced funds, there were no mortgages, there was not even any applications for mortgages that were applicable to that money. The investors were sold shares in empty pools that were going to be filled later by “mortgages that will be assigned.” The terms of the assignment were set forth usually in the PSA. They never did the assignment and later when they tried to correct that problem they found they were in the position of violating the terms spelled out in the PSA wherein the assignment could be accepted by the pool — as to time, content (non-performing loans) etc. As of this point in time, there are approximately 50 million transactions over the past ten years that fit this fact pattern. All of them have fatal defects in title.

“At the foreclosure sale on July 5, 2007, the Ibanez property was purchased by U.S. Bank, as trustee for the securitization trust, for $94,350, a value significantly less than the outstanding debt and the estimated market value of the property. The foreclosure deed (from U.S. Bank, trustee, as the purported holder of the mortgage, to U.S. Bank, trustee, as the purchaser) and the statutory foreclosure affidavit were recorded on May 23, 2008. On September 2, 2008, more than one year after the sale, and more than five months after recording of the sale, American Home Mortgage Servicing, Inc., “as successor-in-interest” to Option One, which was until then the record holder of the Ibanez mortgage, executed a written assignment of that mortgage to U.S. Bank, as trustee for the securitization trust. [FN14] This assignment was recorded on September 11, 2008.”

EDITOR’S NOTE: See how the credit bid was misused. US bank was not a creditor but was allowed by the trustee/auctioneer to accept a dirt low bid from itself to “transfer” title — a transfer that the Massachusetts Supreme Court said never happened because they didn’t own the property. See also how the Court picked up on the issues that lawyers all over the country have been pounding on to the deaf ears of trial judges — that an assignment AFTER the fact is not a way to cure the defect in title. This decision upholds the stability of state laws in all 50 states wherein buyers and mortgage companies may rely on the record at the county recorder’s office and are not subject to claims from third parties who claim to have an interest through an unrecorded instrument that was fabricated at a later time.

“ Like a sale of land itself, the assignment of a mortgage is a conveyance of an interest in land that requires a writing signed by the grantor. See G.L. c. 183, § 3; Saint Patrick’s Religious, Educ. & Charitable Ass’n v. Hale, 227 Mass. 175, 177 (1917). In a “title theory state” like Massachusetts, a mortgage is a transfer of legal title in a property to secure a debt. See Faneuil Investors Group, Ltd. Partnership v. Selectmen of Dennis, 458 Mass. 1, 6 (2010). Therefore, when a person borrows money to purchase a home and gives the lender a mortgage, the homeowner-mortgagor retains only equitable title in the home; the legal title is held by the mortgagee. See Vee Jay Realty Trust Co. v. DiCroce, 360 Mass. 751, 753 (1972), quoting Dolliver v. St. Joseph Fire & Marine Ins. Co., 128 Mass. 315, 316 (1880) (although “as to all the world except the mortgagee, a mortgagor is the owner of the mortgaged lands,” mortgagee has legal title to property); Maglione v. BancBoston Mtge. Corp., 29 Mass.App.Ct. 88, 90 (1990). Where, as here, mortgage loans are pooled together in a trust and converted into mortgage-backed securities, the underlying promissory notes serve as financial instruments generating a potential income stream for investors, but the mortgages securing these notes are still legal title to someone’s home or farm and must be treated as such.

“ The PPM, however, described the trust agreement as an agreement to be executed in the future, so it only furnished evidence of an intent to assign mortgages to U.S. Bank, not proof of their actual assignment. Even if there were an executed trust agreement with language of present assignment, U.S. Bank did not produce the schedule of loans and mortgages that was an exhibit to that agreement, so it failed to show that the Ibanez mortgage was among the mortgages to be assigned by that agreement. Finally, even if there were an executed trust agreement with the required schedule, U.S. Bank failed to furnish any evidence that the entity assigning the mortgage–Structured Asset Securities Corporation–ever held the mortgage to be assigned.”

“ Second, the plaintiffs contend that, because they held the mortgage note, they had a sufficient financial interest in the mortgage to allow them to foreclose. In Massachusetts, where a note has been assigned but there is no written assignment of the mortgage underlying the note, the assignment of the note does not carry with it the assignment of the mortgage. Barnes v. Boardman, 149 Mass. 106, 114 (1889). Rather, the holder of the mortgage holds the mortgage in trust for the purchaser of the note, who has an equitable right to obtain an assignment of the mortgage, which may be accomplished by filing an action in court and obtaining an equitable order of assignment. Id. (“In some jurisdictions it is held that the mere transfer of the debt, without any assignment or even mention of the mortgage, carries the mortgage with it, so as to enable the assignee to assert his title in an action at law…. This doctrine has not prevailed in Massachusetts, and the tendency of the decisions here has been, that in such cases the mortgagee would hold the legal title in trust for the purchaser of the debt, and that the latter might obtain a conveyance by a bill in equity”). See Young v. Miller, 6 Gray 152, 154 (1856).”