A florida mortgage examiner second opinion- By Bob Hurt

10 Sep

Glaski v BOA – Glaski’s phyrric and short-lived foreclosure defense victory – revised

Glaski v BOA

See the excerpts from unpublished Glaski v BOA opinion by the California 5th District Appellate Court below. Pursuant to borrower Glaski’s complaint of robo-signing and wrongful trustee’s foreclosure and sale, and demand for quiet title and cancellation of the foreclosure and sale, the trial court dismissed the Glaski’s complaint that the assignment of the note to the securitization trust had no validity because it occurred after the closing date of the trust, and so BOA had no standing to foreclose.  The appeals court overturned and remanded it because the assignment had no validity under New York law and the assignment occurred after the closing date.

MY OPINION

The appeals court ruling is an anomaly, and it will not stand if BOA pursues it to the Supreme Court.

As I see it, transfer of beneficial interest in a mortgage note never goes to a trust.  It only goes to a trustee.  The holder in due course can transfer it by indorsing it in blank or by assignment.

The borrower never became a party to the PSA, and nothing in the securitization injures the borrower.  The mortgage mandates that the borrower must forfeit the house for defaulting on the loan, and the public trustee and courts constitutionally must enforce that provision.

Since the trustee personally owns beneficial interest in the note, any PSA or REMIC violation may affect the validity of the trust or prevent entry of the note into the trust’s asset base, but it does not undo the assignment to the trustee or indorsement in blank.

The Supreme Court will uphold the Glaski trial court judgment if it hears the case..  Whining about assignment after the closing date is a bogus argument because the TRUSTEE OWNS BENEFICIAL INTEREST IN THE NOTE, regardless of whether or not the trust operates as planned by the PSA.

New York law can declare the assignment to the Trustee invalid for the purposes and use of the trust, but not for the purposes of mere assignment of beneficial interest to some lawful entity.  Normally a bank has become the “trustee” under the PSA, so the note’s beneficial interest becomes the property of the bank in its personal capacity, even though, owing to tardiness, not in the trustee capacity.  And that gives the bank the right to enforce the note regardless of whether it received the note in violation of the PSA or past the trust’s closing date.

To grasp the issue in the light of common sense, imagine an indorsement in blank.  Physical possession of such an indorsed note constitutes ownership of beneficial interest and the power to enforce the instrument.This remains true whether or not the possessor has trustee status, functions as a bank which enjoys other rights to buy and sell beneficial interest in notes in its personal capacity, functions as a lawful man or woman, functions as a thief, functions as someone who won the note in a bet, or functions as someone who found in lying in a ditch.  Article III of the UCC covers all those types of lawful enforcers of the note, and no court has authority to undermine it.

The Glaski trial court rightly dismissed the nonsensical complaint from the borrower.  The appeals court opined erroneously AND controversially (a good reason for not publishing its opinion).  If the Supreme Court gets the case, the Supreme Court will validate the trial court’s ruling.  Meanwhile, no telling what surprises the trial court will come up with in remand.

I predict a short life for Glaski’s phyrric victory.  I consider the proceedings in trial and Appeal court a farce in contrast to what it could become.  First of all, BOA can correct the paperwork deficiencies and re-foreclose and take the house as it should have to begin with.  Second, the borrower, Glaski, probably did not get his mortgage comprehensively examined for torts, breaches, and errors that would have given him causes of action in breach of contract or tort claims against the lender WAMU (and the banks that inherited its liabilities and assets).  Glaski might actually negotiate a favorable settlement by grieving to the servicer about those causes of action and demanding correction.  In that way he could have avoided the expense in time and money of the litigation he will ultimately lose along with his house.

Sure, he might outlast the bank in his present contest, but I doubt it.

To grasp the concept of properly beating foreclosure, realize that statistically the foreclosing bank ALWAYS gets the house, with good reason:  the mortgagor BREACHED the mortgage note, and must forfeit the collateral.  State constitutions mandate that no law shall impair the obligations of contract.  For example:

http://www.leginfo.ca.gov/.const/.article_1 CALIFORNIA CONSTITUTION ARTICLE 1 DECLARATION OF RIGHTS SEC. 9. A bill of attainder, ex post facto law, or law impairing the obligation of contracts may not be passed.

Therefore, one best beats foreclosure by NOT FIGHTING THE FORECLOSURE BATTLE.

Instead, one should get the mortgage examined, and FIGHT THE MORTGAGE BATTLE instead, based on the causes of action found, or walk from the house with knowledge the the foreclosure is righteous, regardless of robosigning, improper assignment, etc, WILL ALWAYS PREVAIL, and the foreclosure sale will go through to completion.

See the above Section 9 in the proper light.  “obligation of contracts” refers only to VALID contracts.  That means the parties must have the capacity to contract, the contract must have a conscionable, it must include offer, acceptance, and consideration, it must not operate as a function or consequence of fraud or fraudulent inducement, the parties must have the ability to perform the contractual obligations, the contract must not require illegal acts or operate in violation of law.  As to enforcement, the enforcer must have the right and power to enforce it under applicable laws and terms of the agreement.  If the contract is a negotiable instrument, the UCC Article III and possibly VIII control enforcement and other features of the instrument.

Other Opinions

Don’t just take my word for it.  Other opinions in California and elsewhere fly in the face of the Glaski reversal, and that leaves other courts free to take either position.  Some examples follow:

  1. Ca: Almutarreb v. Bank of New York Trust Co., N.A., 2012 WL 4371410, *2 (N.D. Cal. Sept. 24, 2012) (“holding that “because Plaintiffs were not parties to the PSA, they lack standing to challenge the validity of the securitization process, including whether the loan transfer occurred outside of the temporal bounds prescribed by the PSA.”);
  2. Lane v. Vitek Real Estate Industries Group, 713 F.Supp.2d 1092, (E.D.Cal. 2010) (“The argument that parties lose interest in a loan when it is assigned to a trust pool has also been rejected by numerous district courts.”);
  3. Sami v. Wells Fargo Bank, 2012 WL 967051, at *5-6 (N.D. Cal. 2012) (rejecting claim “that Wells Fargo failed to transfer or assign the note or Deed of Trust to the Securitized Trust by the ‘closing date,’ and that therefore, ‘under the PSA, any alleged assignment beyond the specified closing date’ is void” because the plaintiff lacked standing)
  4. Fourth District Court of Appeal in Jenkins v. JP Morgan Chase Bank, 216 Cal.App.4th 497 (2013), reached opined opposite to Glaski: “As an unrelated third party to the alleged securitization, and any other subsequent transfers of the beneficial interest under the promissory note, Jenkins lacks standing to enforce any agreements, including the investment trust’s pooling and servicing agreement, relating to such transactions.”

Furthermore, well-settled California law generally precludes a non-party to a contract from challenging its validity or the validity of actions pursuant to it.  This and the unpublished nature of the opinion (as ordered by the 5th District) means one should interpret the Glaski opinion as anomalous, rather than relying on it as precedent.

 

See the Light of a Comprehensive Mortgage Examination

So the proper strategy for a mortgagor to beat foreclosure lies in proving that some combination of torts, breaches, and errors underlie the contract, making it either void or voidable.  Then the borrower needn’t worry about enforcement, for government must NOT enforce a void, invalid, or voidable contract.

So, we have two possible battles in the mortgage world:

  1. Mortgagor (borrower) Always Wins:
  • Battle the Mortgage based on torts, breaches, errors by the lender or lender’s agents
  1. Mortgagee (lender/bank) Always Wins
  • Battle the Foreclosure based on breach by borrower.

By “always wins” I mean “statistically always,” meaning exceptions, as in Glaski, have almost the rarity of chicken teeth or frog hair.

Furthermore, when a mortgagor or mortgagor’s attorney writes a grievance letter to the servicer detailing torts, breaches, and errors revealed in the mortgage examination report, they usually reach a settlement accord fairly quickly. That reduces the stress on and expense to the borrower dramatically, and often results in a cram-down of the loan balance to the present value of the house and refinance at favorable fixed interest for 30 years.  Mortgagors can often afford such payments.

And if the mortgagor must sue to get satisfaction from the lender for injuries and damages, the mortgagor will usually win compensatory damages and legal costs and fees from the bank.  Sometimes the mortgagor will win punitive damages, occasionally in the millions of dollars.

Seen in this light, Glaski’s 4-year foreclosure battle against BOA becomes utterly stupid, for any student of foreclosure battles knows that Glaski will ultimate lose unless the bank just gives up.  His victory will probably have a short life.  And it is at this point only hopeful, and Phyrric, at that, becuase of the cost to Glaski and family in terms of stress, worry, money, time, and other resources.

Statistically, the ONLY way to prevent foreclosure lies in procuring a comprehensive, professional mortgage examination

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2 Responses to “A florida mortgage examiner second opinion- By Bob Hurt”

  1. Ed Griffin September 11, 2013 at 11:33 am #

    Around 2010, a Countrywide employee testified by deposition here in Florida that the original mortgage and note documents were always retained “in house,” even though assignments were made to the REMIC trusts. Attorneys like to declare and testify to the truth of a matter, but the fact is, original documents never were possessed by the REMICs. So no matter what Mr. Bob Hurt thinks about the California decision about the right of a third party to complain about standing, the standing of REMICs in 99% of the post-closing date assignment cases is still impossible because none of them were ever in possession of the documents that said they were the new owners. It was a massive hoax. It was all a landslide of paper shuffling and deception as a way to remove the originating mortgage company from direct attack within the foreclosure actions. That’s why the IRS never did anything to enforce the ominous 100% tax penalty on the REMIC banks. Actual post-closing date acquisitions of all of those mortgages never occurred!

    The ultimate remedy that the mortgage companies are counting on not happening is for individual foreclosure victims to file Wrongful Foreclosure actions to regain possession of their homes or the cash equivalent, PLUS punitive damages for fraud in the amount of 3 TIMES the amounts the original foreclosure actions attempted to collect. If individuals and attorneys have the strength and fortitude to move in this direction, the tsunami of foreclosures will come back to haunt the mortgage companies and drive every one of them into bankruptcy. But the early worms will at least get satisfaction. As the trend develops, they will have to run up the white flag of surrender and go out of business.

  2. Rey Marques September 11, 2013 at 11:37 am #

    The appeals court ruling is an anomaly, and it will not stand if BOA pursues it to the Supreme Court. As I see it, transfer of beneficial interest in a mortgage note never goes to a trust.[If this were true, then the entire basis of “mortgage backed securities” would be void and a scam: they cannot sell an interest in a bundle of mortgages if the trust does not own the mortgages!] It only goes to a trustee. The holder in due course can transfer it by indorsing it in blank or by assignment. The borrower never became a party to the PSA, and nothing in the securitization injures the borrower. [it is absolutely wrong! Theft of the securitized note is theft of funds!] The mortgage mandates that the borrower must forfeit the house for defaulting on the loan, and the public trustee and courts constitutionally must enforce that provision. [WHAT LOAN?! There was no loan!] Since the trustee personally owns beneficial interest in the note, any PSA or REMIC violation may affect the validity of the trust or prevent entry of the note into the trust’s asset base, [Yes! Exactly!] but it does not undo the assignment to the trustee or indorsement in blank. [The assignment is not a valid one due to the fraud/theft by the bank.] The Supreme Court will uphold the Glaski trial court judgment if it hears!] the case.. Whining about assignment after the closing date is a bogus argument because the TRUSTEE OWNS BENEFICIAL INTEREST IN THE NOTE, regardless of whether or not the trust operates as planned by the PSA. Not True! Is the trustee not bound by the terms of the trust?! Of course he is! He cannot do whatever he wants regardless of the terms outlined in the PSA!

    On Tue, Sep 10, 2013 at 1:19 PM, North Cal. 925-957-9797 So.Cal.

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