"AMERIQUEST MORT SEC INC ASS BK PAS THR CERTS SER 2002 2." The

Demand Letters Claiming Damages for Errors and Omissions, Negligence and Malpractice

DISCLAIMER:  The following information on the entirety of this website and blog is to be used for informational purposes and should not be construed as legal advice.  Please consult with an attorney. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure that this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area. This information is not intended as legal advice and may not be used as legal advice. It should not be used to replace the advice of your own legal counsel.

Demand letters are one of your opening tools in putting the parties on notice that you have a claim and you intend to pursue it. AN ATTORNEY'S DEMAND LETTER CARRIES FAR MORE WEIGHT THAN ONE FROM A HOMEOWNER.

Most of the participants in your loan closing have malpractice or errors and omissions insurance policies. You must couch your claim as negligence or malpractice, an error or omission and not as a crime or intentional tort if you want to invoke insurance coverage.

You should also include a provision that they should forward a copy of the letter to their insurance carrier. Most carriers say that if you don't notify them within thirty (30) days they won't defend or cover the claim. So you put the receiver of the letter in a bind of either settling with you without insurance (so his premiums won't go up or his coverage dropped) or letting the insurance company know there is a problem.

The carrier will instantly understand that this is one of thousands of claims that they are going to be hit with, so they will likely try to either intimidate you out of the claim or offer minimal settlements. Depending upon what you have decided as your goal (getting money or getting rid of your mortgage) you might accept the offer or negotiate something higher.

This adds to the war chest you can mount up to pay for more expensive litigation. It also increases the likelihood that an attorney will take your case since there are so many insurance companies involved (including the insurance purchased from AMBAC, AIG, or credit default swaps, over collateralization and cross collateralization).

BEWARE OF THE RELEASE HOWEVER, SINCE THEY WILL TRY TO GET YOU TO RELEASE EVERY CLAIM OR DEFENSE YOU HAVE IN SETTLEMENT. DO NOT SIGN SUCH A DOCUMENT UNLESS YOU INTEND TO STOP THERE. INSIST ON CHANGES TO THE RELEASE DOCUMENT SUCH THAT YOU WILL STILL BE ABLE TO CLAIM THAT THE NOTE AND MORTGAGE ARE VOID, INVALID, NON-NEGOTIABLE, FRAUDULENTLY OBTAINED, ETC. GET COMPETENT LEGAL ADVICE BEFORE YOU SIGN ANYTHING.

PARTIES TO SEND DEMAND LETTERS TO FOR ERRORS AND OMISSIONS AND MALPRACTICE:

1. Appraiser and Appraisal Company

2. Mortgage Broker and Mortgage Brokerage Company

3. Escrow Agent and Escrow Company

4. Title Agent, Title Agency and Title Insurance Company claiming cloud on title

5. Lender who appears on paper as payee on note and as mortgagee on mortgage or beneficiary under Deed of Trust

6. Trustee under deed of trust and add challenge to authority because of successive Trustees named in pooling and services agreement and in the issuance of the mortgage backed securities.

7. Mortgage Servicers ? each of them that you know of for misapplication of funds and demand that they show a full accounting for all funds received and all funds disbursed. How do you know the holder of the note received the payment? Who is the holder of the note?

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Disclaimer:  The following is for informational purposes and should not be construed or used or interpreted as legal advise.  Seek the advise from an experienced attorney. 

1. Identify in the law where securitization or collateralization in the law is legal without knowledge, consent or authorization of signor or promissory note without Disclosure. Main issue here if the note is void then there is no debt!
2. Identify law that shows that an original (note) cannot be replaced with a copy under any circumstance to prove holder in due course at least as holder with authority to foreclose.
3. Laws that challenge nominee or trustee as a party in interest with authority to foreclose.
4. Law that reveals that in contract law a contract without proper consideration is void. If the originator of the loan also is listed as the lender and the lender has table funded by using borrowers signed note as collateral to obtain wholesale loan in it's name then sells off instrument as a security. The lender lent credit secured by the borrowers asset (note) not money or any thing of value that was actually owned by the lender, Broker- originator) . Credit is the opposite of money.
5. Assignments and the legal authority to foreclose with no date certain assignments, new trend is to place assignments after foreclosure that indicate prior assignment before foreclosure filing.
6. Laws that show a lost note affidavit is no good as the person attesting is filing out affidavit in bad faith as affiant is attesting to hearsay and is not a party with personal first hand knowledge. This eliminated the holder in due course doctrine and other bogus claims that would indicate some control and or ownership over the original note.
7. Laws that allow defendant to ask for sanctions against attorney for filing a suit without reasonable inquiry as an attorney has an obligation to investigate a potential cause of action before filing a complaint. Or filing affidavits that hide the fact that the evidence is truly not on the record but implied, this is fraud on the court and defendant.
8. Law of voids that would void all court orders due to falsified or bad faith evidence that cannot be used as best evidence or lacks in proving a claim defects included like no notary and or proper signatures or signatures from unauthorized personnel.
9. UCC codes that cover negotiable instruments as applied to security instruments and or notes. What distinguishes them from each other and who has the authority to convert such instruments and the lawful process.
   
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REQUEST FOR APPLICABLE DOCUMENTS

Disclaimer:  Not Legal Advice.  For informational purposes only

Your request MUST include a demand for copies of any applicable documents including Pooling and Service Agreement, Assignment and Assumption Agreement, the location of the actual original note, any allonge, and any assignment together with any documents specifying the duties of any Trustee or successor Trustee, including substitution of Trustee on Deed of Trust, appointment of Trustee for Pooled Assets, appointment of Trustee for any Structured Investment Vehicle, appointment of Trustee for owners of certificates of asset backed securities, and whether there is any record of transfer, sale, bailout, insurance payment etc to the investor.

DISCLAIMER:  The following is for informational purposes only and is not legal advise.  Please seek the advise from an attorney.

To recover on a promissory note, the plaintiff (the Lender in the case of foreclosure) must prove:(1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note in due course; and (4) that a certain balance is due and owing on the note.

Trial court erred when it did not proceed to take testimony before it entered default judgment (see definition below) for the plaintiff; the unsworn statement of plaintiff's (plaintiff is the lender) attorney could not support default judgment rendered." 

It is also true, in mortgage foreclosures, prove up of the claim requires presentment of the "original" promissory note and general account and ledger statement. Claim of damages, to be admissible as evidence, must incorporate records such as a general ledger and accounting of an alleged unpaid promissory note, the person responsible for preparing and maintaining the account general ledger must provide a complete accounting which must be sworn to and dated by the person who maintained the ledger. 

To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note in due course; and (4) that a certain balance is due and owing on the note.

1) the existence of the note in question

2) If the "ORIGINAL" note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then your defense is as follows:

3) the "named" Plaintiff is not the 'holder in due course" of the note and only an agent or nominee for the true beneficial owners and holders in due course;

4) there may be fraud upon the court in that the named Plaintiff may not have ANY interest to the note and that the supposedly lost note is not lost, but may have been intentionally destroyed due to missing assignments on the note which may have made it void and a legal nullity, thus they have exploited key and vital evidence;

5) there is no proof that the named Plaintiff ever held the note or took possession of the note and thus has no claim or right to bringing about the foreclosure;

6) there is no proof, without the note, that a proper chain of assignments took place and that the lien positions were properly perfected;

7) other unnamed and disclosed real parties in interest may have a claim to the note and be the rightful beneficial owners to the note and must be identified and brought before the court;

8) there may be several unnamed and disclosed real parties in interest may have a claim to the note and be the rightful beneficial owners of the note;

9) that the party sued signed the note

10) If the "ORIGINAL" note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then you need to notify me and also put on affirmative defenses that:

11) the note in question is not the note you signed and executed in ink and only the one you signed in ink that presumably contains your fingerprints can be relied upon by your handwriting analysis expert;

12) in an electronic age, it is a simple matter to place someone's signature or image upon a document and that it is very difficult to imagine such a valuable negotiable instrument being lost or missing without a nefarious motive.

13) that the plaintiff is the owner or holder of the note in due course;

14) If the "ORIGINAL" note you signed in ink that contains your signature is claimed to be lost, stolen, missing and/or destroyed, then you need put on affirmative defenses that:

a) the mortgage industry, investors, and GSE's such as Fannie Mae, Freddie Mac, and FHLBs etc. have a requirement that the last endorsement to them be undated and "blank" leaving the payee line blank and making the negotiable instrument a sort of "bearer bond" and instrument. as such, any party finding or stealing the note can place their name on the payee line, claim ownership of the note, and sell the note to others who may make a demand upon you in the future. as such, you require money to be deposited in an escrow account or with the court in an amount equal to the amount claimed owed on the note, until such missing note is found or upon your death. notes have a life of their own...

b) if the note was destroyed or lost intentionally (the industry maintains this practice) then they may be trying to hide the beneficial owners and shield them from any assignee liability arising from the actions of the servicer who they hire, supervise and most importantly authorize to foreclose upon you. without the note, since subsequent endorsements are not recorded to avoid payment of taxes and t hide true and real beneficial interests, there is no possible way to determine who ever held a rightful interest in the note and who you may have claims or counter claims against and who should be presently before the court as a real party in interest.

c) Furthermore, if there are missing assignments of the original note and the assignment went from Lender A to Lender B to Lender D without an intervening assignment from Lender B to Lender C and From Lender C to Lender D, then the note may be void and a legal nullity in your state.

d) It is industry practice to not name the GSE, investor, or real party in interest in foreclosure and to use as a front for the Plaintiff:

i) The very original lender who may or may not even be in business any more or sold their interest in the note long ago, only to have a claim made upon them for repurchase;

ii) A Servicer of even "special servicer" who is acting as an agent for the investors, GSE's or real party in interest, but has no beneficial ownership in the note since they are only being paid to collect and foreclosure by the real parties in interest

iii) A "nominee" such as MERS who has no legal authority to foreclose upon you and do business in your state and who according to their own written documents and verbal assurances never hold the note or own "any" beneficial interest in the note!!!!!

e) Notes are pledged, sold, bifurcated, and traded in various derivative transactions like bubblegum baseball cards and their transfers, sales, pledges etc. Are not publicly recorded. As such, only possession of the actual original note can prove the actual owner and holder in due course of the note and who you can make an offer of payment to for purchase of the note by yourself, another family member or partner. You have a right to know the rightful owner of the note so an offer for payment of the note at a discount and at fair market value can be made. If the note has been pledged and encumbered, then that party must be made aware of the foreclosure and your right to negotiate with them a payment and release of the note by you, other lien holders or private parties;

f) Notes are traded often and you need to inspect the physical note to see who the real prior parties were that held and endorsed your note since you may have counter and cross claims against them and need to bring them before the court for the action, since they may have improperly inflated your principal balance, amount owed or escrow account by not applying your payments correctly; adding fees not legally owed by you to the principal balance; miscalculating the interest and not properly amortizing your loan; fraudulent selling your loan or misreporting you on your credit report.

g) Federal Circuit Courts have ruled that the only way to prove the perfection of any security [including promissory note] is by actual possession of the security. Current or prior possession must be proved up.

(h) that a certain balance is due and owing on the note.

15) You must have the master transaction histories and general ledgers for the account since a "dump," "summary," or redacted record cannot be relied upon to determine the rightful amounts owed by having a complete audit of your account. In order to conduct a proper audit, master records and all prior records must be compiled, reviewed, analyzed, and reconciled. In is not you responsibility to prove each payment was made. It is your responsibility to say a payment was made and provide evidence, including your word that it was made. It is the note holder's duty and responsibility to validate the claims being made on the note and the amount owed. If they have the master records or claim that the records of prior servicers are missing, then there is no rightful way for anyone to prove up the balances and amounts they claim are owed!!!! Furthermore, you must claim:

a) That the principal balance claimed owed, is not owed, and is the wrong amount.

b) That the loan has not been properly credited and amortized;

c) That the current servicer cannot be relied upon to testify and certify that prior amounts, transactions, credits, debits, charges and fees added by prior servicers were indeed proper and correct and that the account they were transferred was properly amortized and credited. As such, the person holding the ledgers at the prior servicer must come and testify as to the amounts owed on the note.

d) dumps and summaries of amounts owed cannot be relied upon and only original ledgers and master records and the keeper of those records cant testify as to the amounts claimed owed and due.
 

Supporting Case Law

Where the complaining party cannot prove the existence of the note, then there is no note.

See  Pacific Concrete F.C.U. V. Kauanoe,  62 Haw. 334, 614 P.2d 936 (1980), GE Capital Hawaii, Inc. v. Yonenaka  25 P.3d 807, 96 Hawaii 32, (Hawaii App 2001).

Siwooganock Bank in Lancaster NH, in alleged foreclosure suit, failed or refused to produce the actual note which Siwooganock alleges Eva J. Lovejoy owed.  

To recover on a promissory note, the plaintiff must prove: (1) the existence of the note in question; (2) that the party sued signed the note; (3) that the plaintiff is the owner or holder of the note; and (4) that a certain balance is due and owing on the note.  See In Re: SMS Financial LLC. v. Abco Homes, Inc. No.98-50117 February 18, 1999 (5th Circuit Court of Appeals.)

Volume 29 of the New Jersey Practice Series, Chapter 10 Section 123, page 566, emphatically states, "...; and no part payments should be made on the bond or note unless the person to whom payment is made is able to produce the bond or note and the part payments are endorsed thereon. It would seem that the mortgagor would normally have a Common law right to demand production or surrender of the bond or note and mortgage, as the case may be. See Restatement, Contracts S 170(3), (4) (1932); C.J.S. Mortgages S 469,  in Carnegie Bank v, Shalleck 256 N.J. Super 23 (App. Div  1992), the Appellate Division held, "When the underlying mortgage is evidenced by an instrument meeting the criteria for negotiability set forth in N.J.S. 12A:3-104, the holder of the instrument shall be afforded all the rights and protections provided a holder in due course pursuant to N.J.S. 12A:3-302"

Since no one is able to produce the "instrument" there is no competent evidence before the Court that any party is the holder of the alleged note or the true holder in due course. New Jersey common law dictates that the plaintiff prove the existence of the alleged note in question, prove that the party sued signed the alleged note, prove that the plaintiff is the owner and holder of the alleged note, and prove that certain balance is due and owing on any alleged note.  Federal Circuit Courts have ruled that the only way to prove the perfection of any security is by actual possession of the security.

Supporting Case Law

Unequivocally the Court's rule is that in order to prove the "instrument", possession is mandatory.

See Matter of Staff Mortg. & Inv. Corp., 550 F.2d 1228 (9^th Cir 1977).  "Under the Uniform Commercial Code, the only notice sufficient to inform all interested parties that a security interest in instruments has been perfected is actual possession by the secured party, his agent or bailee." Bankruptcy Courts have followed the Uniform Commercial Code. In Re Investors & Lenders, Ltd. 165 B.R. 389 (Bankruptcy.D.N.J.1994), "Under the New Jersey Uniform Commercial Code (NJUCC), promissory note is "instrument," security interest in which must be perfected by possession.

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Disclaimer:  The following is for informational purposes and not intended to be construed as legal advice.  Please seek the advise of an attorney.

If you are in Florida, please see Fl statute 90.953

In Re: b) The Fourth District Court of Appeals in the state of Florida decided an issue quite pertinent to todays foreclosures; in the case of StateStreetBank and Trust Co., Trustee for Holders of Bear Stearns Mortgage Securities, Inc. Mortgage Pass-Through Certificates, Series 1993-12 v. Harley Lord, et al., 851 So.2d 790 (Fla. 4th DCA 2003). The Court held that StateStreetBank could not maintain a cause of action to enforce a missing promissory note or to foreclose on the related mortgage in the absence of proof that it or its assignor ever held possession of the promissory note. Section 673.3091, Florida Statutes (2002).

c) The Court explained that pursuant to section 90.953, Florida Statutes, (2002), Florida's code of evidence, the plaintiff in a mortgage foreclosure must present the ORIGINAL PROMISSORY NOTE as a duplicate of a note is not admissible. Otherwise, the plaintiff must meet the requirements of section 673.3091, Florida Statutes to pursue enforcement. W.H. Dwoning v. First Na'tl Bank of Lake City, 81 So.2d 486 (Fla.1955), Nat'l Loan Investors, L.P. v. Joymar Assocs., 767 So.2d 549, 551 (Fla. 3d DCA 2000).

d) StateStreetBank was later cited with approval by Dasma Investments, LLC v. Realty Associates Fund III, L.P., 459 F.Supp.2d 1294(S.D.Fla.2006) where the court held that if a party is not in possession of the original note and cannot reestablish it, the party cannot prevail in an action on the note. In Dasma, the court explained that in Florida a promissory note is a negotiable instrument and that a party suing on a promissory note, whether just on the note itself or together with a foreclose on a mortgage securing the note, must be in possession of the ORIGINAL NOTE or reestablish the note pursuant to Fla. Stat. § 673.3091. See, Shelter Dev. Group, Inc. v. Mma of Georgia, Inc., 50 B.R. 588, 590 (Bkrtcy.S.D.Fla.1985).

e) 90.953 Admissibility of duplicates.-A duplicate is admissible to the same extent as an original, unless:
(1) The document or writing is a negotiable instrument as defined in s. 673.1041, a security as defined in s. 678.1021, or any other writing that evidences a right to the payment of money, is not itself a security agreement or lease, and is of a type that is transferred by delivery in the ordinary course of business with any necessary endorsement or assignment.
(2) A genuine question is raised about the authenticity of the original or any other document or writing.
(3) It is unfair, under the circumstance, to admit the duplicate in lieu of the original.
(4) A promissory note is clearly a negotiable instrument within the definition of section § 673.1041 (1) FS and either the ORIGINAL must be produced, or in the event of a lost note, the document must be re-established under section § 673.3091 (2) FS. In this case, the Plaintiff clearly FAILED to attempt to move Court to re-establish the necessary PROMISSORY NOTE under § 673.3091 (2) FS or any other Florida statute upon filing and initiating frivolous complaint.

5th DCA in Florida.

In Re: 4. That the Plaintiff pursuant to section 90.952 FS failed to attach the ORIGINAL PROMISSORY NOTE. 90.952 FS Requirement of originals.-Except as otherwise provided by statute, an original writing, recording, or photograph is required in order to prove the contents of the writing, recording, or photograph. Additionally, as the Fifth District Court of Appeals in the state of Florida noted, The original document that is generally required to be filed with the court in a mortgage proceeding is the ORIGINAL PROMISSORY NOTE (NOT a copy, a faxed copy, a lost note affidavit etc,) and NOT the mortgage. The ORIGINAL PROMISSORY NOTE must be surrendered in a foreclosure proceeding so that it DOES NOT remain in the stream of commerce. Booker T. Perry and Betty J. Perry v. Fairbanks Capital Corp., Et Al.

In this case the Perry's lost the case in a technicality. Please google case and study it. Do Not make the same mistake. The Perry's failed to OBJECT to a note provided to them by the attorneys and the court admitted it.

5. Plaintiff and their attorneys knowingly proceeded to use Dade County Public Records in an attempt and with intent to commit fraud upon the Defendant(s) and the Court. 817.034 Florida Communications Fraud Act.?(3). Services. (d) "Scheme to defraud" means a systematic, ongoing course of conduct with intent to defraud one or more persons, or with intent to obtain property from one or more persons by false or fraudulent pretenses, representations, or promises or willful misrepresentations of a future act.

1. In the event that law permits the enforcement of a lost negotiable instrument section § 673.3091 (2), F.S. applies. Section § 673.3091 (2) F.S., requires a person seeking to enforce a lost negotiable instrument to:

1) Prove the terms of the instrument;

2) Prove the right to enforce the instrument; and

3) Protect the person who has to make payment from other claims to pay the instrument.

4) Plaintiff failed to prove ALL conditions above. (1) (2) and (3).

f) Plaintiff failed to prove "Chain of Title" with their respective assignments assigning the rights to enforce

g) Information obtained from bill SB 282, sponsored by Senator Posey on February 2, 2004

h) Why would one lose or destroy a valuable negotiable instrument? Defendants only guess would be to hide fraud.

i) "Actual Fraud. Deceit. Concealing something or making a false representation with an evil intent [scienter] when it causes injury to another. [see: e.g.,Steven H. Gifis, ?Law Dictionary', 5th Edition, Happauge: Barron's Educational Series, Inc., 2003, s.v. "Fraud.

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This is it! WHERE'S THE NOTE, WHO'S THE HOLDER: ENFORCEMENT OF PROMISSORY NOTE SECURED BY REAL ESTATE

ubmitted by NY

Interestingly, with the exception of Judge Bufford and a few other judges, there has been less than adequate focus upon the UCC title issues. The next round of cases may and should focus upon the title to debt instrument. The person seeking to enforce the note must show that:

(1) It is the holder of t his note original by transfer, with all necessary rounds;
(2) It had possession of the note before it was lost;
(3) If it can show that title to the note runs to it, but the original is lost or destroyed, the holder must be prepared to post a bond;
(4) If the person seeking to enforce is an agent, it must show its agency status and that its principal is the holder of the note (and meets the above requirements).

Then, and only then, do the issues of evidence of debt and default and assignment of mortgage rights become relevant.

WHERE'S THE NOTE, WHO'S THE HOLDER: ENFORCEMENT OF PROMISSORY NOTE SECURED BY REAL ESTATE

HON. SAMUEL L. BUFFORD
UNITED STATES BANKRUPTCY JUDGE
CENTRAL DISTRICT OF CALIFORNIA
LOS ANGELES, CALIFORNIA

(FORMERLY HON.) R. GLEN AYERS
LANGLEY & BANACK
SAN ANTONIO, TEXAS

AMERICAN BANKRUPTCY INSTUTUTE
APRIL 3, 2009
WASHINGTON, D.C.

WHERE'S THE NOTE, WHO'S THE HOLDER

INTRODUCTION

In an era where a very large portion of mortgage obligations have been securitized, by assignment to a trust indenture trustee, with the resulting pool of assets being then sold as mortgage backed securities, foreclosure becomes an interesting exercise, particularly where judicial process is involved. We are all familiar with the securitization process. The steps, if not the process, is simple. A borrower goes to a mortgage lender. The lender finances the purchase of real estate. The borrower signs a note and mortgage or deed of trust. The original lender sells the note and assigns the mortgage to an entity that securitizes the note by combining the note with hundreds or thousands of similar obligation to create a package of mortgage backed securities, which are then sold to investors.

Unfortunately, unless you represent borrowers, the vast flow of notes into the maw of the securitization industry meant that a lot of mistakes were made. When the borrower defaults, the party seeking to enforce the obligation and foreclose on the underlying collateral sometimes cannot find the note. A lawyer sophisticated in this area has speculated to one of the authors that perhaps a third of the notes "securitized" have been lost or destroyed. The cases we are going to look at reflect the stark fact that the unnamed source's speculation may be well-founded.

UCC SECTION 3-309

If the issue were as simple as a missing note, UCC §3-309 would provide a simple solution. A person entitled to enforce an instrument which has been lost, destroyed or stolen may enforce the instrument. If the court is concerned that some third party may show up and attempt to enforce the instrument against the payee, it may order adequate protection. But, and however, a person seeking to enforce a missing instrument must be a person entitled to enforce the instrument, and that person must prove the instrument's terms and that person's right to enforce the instrument. §3-309 (a)(1) & (b).

WHO'S THE HOLDER

Enforcement of a note always requires that the person seeking to collect show that it is the holder. A holder is an entity that has acquired the note either as the original payor or transfer by endorsement of order paper or physical possession of bearer paper. These requirements are set out in Article 3 of the Uniform Commercial Code, which has been adopted in every state, including Louisiana, and in the District of Columbia. Even in bankruptcy proceedings, State substantive law controls the rights of note and lien holders, as the Supreme Court pointed out almost forty (40) years ago in United States v. Butner, 440 U.S. 48, 54-55 (1979).

However, as Judge Bufford has recently illustrated, in one of the cases discussed below, in the bankruptcy and other federal courts, procedure is governed by the Federal Rules of Bankruptcy and Civil Procedure. And, procedure may just have an impact on the issue of "who," because, if the holder is unknown, pleading and standing issues arise.

BRIEF REVIEW OF UCC PROVISIONS

Article 3 governs negotiable instruments - it defines what a negotiable instrument is and defines how ownership of those pieces of paper is transferred. For the precise definition, see § 3-104(a) ("an unconditional promise or order to pay a fixed amount of money, with or without interest . . . .") The instrument may be either payable to order or bearer and payable on demand or at a definite time, with or without interest.

Ordinary negotiable instruments include notes and drafts (a check is a draft drawn on a bank). See § 3-104(e).

Negotiable paper is transferred from the original payor by negotiation. §3-301. "Order paper" must be endorsed; bearer paper need only be delivered. §3-305. However, in either case, for the note to be enforced, the person who asserts the status of the holder must be in possession of the instrument. See UCC § 1-201 (20) and comments.

The original and subsequent transferees are referred to as holders. Holders who take with no notice of defect or default are called "holders in due course," and take free of many defenses. See §§ 3-305(b).

The UCC says that a payment to a party "entitled to enforce the instrument" is sufficient to extinguish the obligation of the person obligated on the instrument. Clearly, then, only a holder - a person in possession of a note endorsed to it or a holder of bearer paper - may seek satisfaction or enforce rights in collateral such as real estate.

NOTE: Those of us who went through the bank and savings and loan collapse of the 1980's are familiar with these problems. The FDIC/FSLIC/RTC sold millions of notes secured and unsecured, in bulk transactions. Some notes could not be found and enforcement sometimes became a problem. Of course, sometimes we are forced to repeat history. For a recent FDIC case, see Liberty Savings Bank v. Redus, 2009 WL 41857 (Ohio App. 8 Dist.), January 8, 2009.

THE RULES

Judge Bufford addressed the rules issue this past year. See In re Hwang, 396 B.R. 757 (Bankr. C. D. Cal. 2008). First, there are the pleading problems that arise when the holder of the note is unknown. Typically, the issue will arise in a motion for relief from stay in a bankruptcy proceeding.

According F.R.Civ. Pro. 17, "[a]n action must be prosecuted in the name of the real party in interest." This rule is incorporated into the rules governing bankruptcy procedure in several ways. As Judge Bufford has pointed out, for example, in a motion for relief from stay, filed under F.R.Bankr.Pro. 4001 is a contested matter, governed by F. R. Bankr. P. 9014, which makes F.R. Bankr. Pro. 7017 applicable to such motions. F.R. Bankr. P. 7017 is, of course, a restatement of F. R. Civ. P. 17. In re Hwang, 396 B.R. at 766. The real party in interest in a federal action to enforce a note, whether in bankruptcy court or federal district court, is the owner of a note. (In securitization transactions, this would be the trustee for the "certificate holders.") When the actual holder of the note is unknown, it is impossible - not difficult but impossible - to plead a cause of action in a federal court (unless the movant simply lies about the ownership of the note). Unless the name of the actual note holder can be stated, the very pleadings are defective.

STANDING

Often, the servicing agent for the loan will appear to enforce the note. Assume that the servicing agent states that it is the authorized agent of the note holder, which is "Trust Number 99." The servicing agent is certainly a party in interest, since a party in interest in a bankruptcy court is a very broad term or concept. See, e.g., Greer v. O'Dell, 305 F.3d 1297, 1302-03 (11th Cir. 2002). However, the servicing agent may not have standing: "Federal Courts have only the power authorized by Article III of the Constitutions and the statutes enacted by Congress pursuant thereto. . [A] plaintiff must have Constitutional standing in order for a federal court to have jurisdiction." In re Foreclosure Cases, 521 F.Supp. 3d 650, 653 (S.D. Ohio, 2007) (citations omitted).

But, the servicing agent does not have standing, for only a person who is the holder of the note has standing to enforce the note. See, e.g., In re Hwang, 2008 WL 4899273 at 8.

The servicing agent may have standing if acting as an agent for the holder, assuming that the agent can both show agency status and that the principle is the holder. See, e.g., In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008) at 520.

A BRIEF ASIDE: WHO IS MERS?

For those of you who are not familiar with the entity known as MERS, a frequent participant in these foreclosure proceedings:

MERS is the "Mortgage Electronic Registration System, Inc. "MERS is a mortgage banking ?utility' that registers mortgage loans in a book entry system so that . real estate loans can be bought, sold and securitized, just like Wall Street's book entry utility for stocks and bonds is the Depository Trust and Clearinghouse." Bastian, "Foreclosure Forms", State. Bar of Texas 17th Annual Advanced Real Estate Drafting Course, March 9-10, 2007, Dallas, Texas. MERS is enormous. It originates thousands of loans daily and is the mortgagee of record for at least 40 million mortgages and other security documents. Id.

MERS acts as agent for the owner of the note. Its authority to act should be shown by an agency agreement. Of course, if the owner is unknown, MERS cannot show that it is an authorized agent of the owner.

RULES OF EVIDENCE - A PRACTICAL PROBLEM

This structure also possesses practical evidentiary problems where the party asserting a right to foreclose must be able to show a default. Once again, Judge Bufford has addressed this issue. At In re Vargas, 396 B.R. at 517-19. Judge Bufford made a finding that the witness called to testify as to debt and default was incompetent. All the witness could testify was that he had looked at the MERS computerized records. The witness was unable to satisfy the requirements of the Federal Rules of Evidence, particularly Rule 803, as applied to computerized records in the Ninth Circuit. See id. at 517-20. The low level employee could really only testify that the MERS screen shot he reviewed reflected a default. That really is not much in the way of evidence, and not nearly enough to get around the hearsay rule.

FORECLOSURE OR RELIEF FROM STAY

In a foreclosure proceeding in a judicial foreclosure state, or a request for injunctive relief in a non-judicial foreclosure state, or in a motion for relief proceeding in a bankruptcy court, the courts are dealing with and writing about the problems very frequently.

In many if not almost all cases, the party seeking to exercise the rights of the creditor will be a servicing company. Servicing companies will be asserting the rights of their alleged principal, the note holder, which is, again, often going to be a trustee for a securitization package. The mortgage holder or beneficiary under the deed of trust will, again, very often be MERS.

Even before reaching the practical problem of debt and default, mentioned above, the moving party must show that it holds the note or (1) that it is an agent of the holder and that (2) the holder remains the holder. In addition, the owner of the note, if different from the holder, must join in the motion.

Some states, like Texas, have passed statutes that allow servicing companies to act in foreclosure proceedings as a statutorily recognized agent of the noteholder. See, e.g., Tex. Prop. Code §51.0001. However, that statute refers to the servicer as the last entity to whom the debtor has been instructed to make payments. This status is certainly open to challenge. The statute certainly provides nothing more than prima facie evidence of the ability of the servicer to act. If challenged, the servicing agent must show that the last entity to communicate instructions to the debtor is still the holder of the note. See, e.g., HSBC Bank, N.A. v. Valentin, 2l N.Y. Misc. 3d 1123(A), 2008 WL 4764816 (Table) (N.Y. Sup.), Nov. 3, 2008. In addition, such a statute does not control in federal court where Fed. R. Civ. P. 17 and 19 (and Fed. R. Bankr. P. 7017 and 7019) apply.

SOME RECENT CASE LAW

These cases are arranged by state, for no particular reason.

Massachusetts

In re Schwartz, 366 B.R.265 (Bankr. D. Mass. 2007)

Schwartz concerns a Motion for Relief to pursue an eviction. Movant asserted that the property had been foreclosed upon prior to the date of the bankruptcy petition. The pro se debtor asserted that the Movant was required to show that it had authority to conduct the sale. Movant, and "the party which appears to be the current mortgagee." provided documents for the court to review, but did not ask for an evidentiary hearing. Judge Rosenthal sifted through the documents and found that the Movant and the current mortgagee had failed to prove that the foreclosure was properly conducted.

Specifically, Judge Rosenthal found that there was no evidence of a proper assignment of the mortgage prior to foreclosure. However, at footnote 5, Id. at 268, the Court also finds that there is no evidence that the note itself was assigned and no evidence as to who the current holder might be.

Nosek v. Ameriquest Mortgage Company (In re Nosek), 286 Br. 374 (Bankr D Mass. 2008).

Almost a year to the day after Schwartz was signed, Judge Rosenthal issued a second opinion. This is an opinion on an order to show cause. Judge Rosenthal specifically found that, although the note and mortgage involved in the case had been transferred from the originator to another party within five days of closing, during the five years in which the chapter 13 proceeding was pending, the note and mortgage and associated claims had been prosecuted by Ameriquest which has represented itself to be the holder of the note and the mortgage. Not until September of 2007 did Ameriquest notify the Court that it was merely the servicer. In fact, only after the chapter 13 bankruptcy had been pending for about three years was there even an assignment of the servicing rights. Id. at 378.

Because these misrepresentations were not simple mistakes: as the Court has noted on more than one occasion, those parties who do not hold the note of mortgage do not service the mortgage do not have standing to pursue motions for leave or other actions arising form the mortgage obligation. Id at 380.

As a result, the Court sanctioned the local law firm that had been prosecuting the claim $25,000. It sanctioned a partner at that firm an additional $25,000. Then the Court sanctioned the national law firm involved $100,000 and ultimately sanctioned Wells Fargo $250,000. Id. at 382-386.

In re Hayes, 393 B.R. 259 (Bankr. D. Mass. 2008).

Like Judge Rosenthal, Judge Feeney has attacked the problem of standing and authority head on. She has also held that standing must be established before either a claim can be allowed or a motion for relief be granted.

Ohio

In re Foreclosure Cases, 521 F.Supp. 2d (S.D. Ohio 2007).

Perhaps the District Court's orders in the foreclosure cases in Ohio have received the most press of any of these opinions. Relying almost exclusively on standing, the Judge Rose has determined that a foreclosing party must show standing. "[I]n a foreclosure action, the plaintiff must show that it is the holder of the note and the mortgage at the time that the complaint was filed." Id. at 653.

Judge Rose instructed the parties involved that the willful failure of the movants to comply with the general orders of the Court would in the future result in immediate dismissal of foreclosure actions.

Deutsche Bank Nat'l Trust Co. v. Steele, 2008 WL 111227 (S.D. Ohio) January 8, 2008.

In Steele, Judge Abel followed the lead of Judge Rose and found that Deutsche Bank had filed evidence in support of its motion for default judgment indicating that MERS was the mortgage holder. There was not sufficient evidence to support the claim that Deutsche Bank was the owner and holder of the note as of that date. Following In re Foreclosure Cases, 2007 WL 456586, the Court held that summary judgment would be denied "until such time as Deutsche Bank was able to offer evidence showing, by a preponderance of evidence, that it owned the note and mortgage when the complaint was filed." 2008 WL 111227 at 2. Deutsche Bank was given twenty-one days to comply. Id.

Illinois

U.S. Bank, N.A. v. Cook, 2009 WL 35286 (N.D. Ill. January 6, 2009).

Not all federal district judges are as concerned with the issues surrounding the transfer of notes and mortgages. Cook is a very pro lender case and, in an order granting a motion for summary judgment, the Court found that Cook had shown no "countervailing evidence to create a genuine issue of facts." Id. at 3. In fact, a review of the evidence submitted by U.S. Bank showed only that it was the alleged trustee of the securitization pool. U.S. Bank relied exclusively on the "pooling and serving agreement" to show that it was the holder of the note. Id.

Under UCC Article 3, the evidence presented in Cook was clearly insufficient.

New York

HSBC Bank USA, N.A. v. Valentin, 21 Misc. 3D 1124(A), 2008 WL 4764816 (Table) (N.Y. Sup.) November 3, 2008. In Valentin, the New York court found that, even though given an opportunity to, HSBC did not show the ownership of debt and mortgage. The complaint was dismissed with prejudice and the "notice of pendency" against the property was canceled.

Note that the Valentin case does not involve some sort of ambush. The Court gave every HSBC every opportunity to cure the defects the Court perceived in the pleadings.

California

In re Vargas, 396 B.R. 511 (Bankr. C.D. Cal. 2008)

and

In re Hwang, 396 B.R. 757 (Bankr. C.D. Cal. 2008)

These two opinions by Judge Bufford have been discussed above. Judge Bufford carefully explores the related issues of standing and ownership under both federal and California law.

Texas

In re Parsley, 384 B.R. 138 (Bankr. S.D. Tex. 2008)

and

In re Gilbreath, 395 B.R. 356 (Bankr. S.D. Tex. 2008)

These two recent opinions by Judge Jeff Bohm are not really on point, but illustrate another thread of cases running through the issues of motions for relief from stay in bankruptcy court and the sloppiness of loan servicing agencies. Both of these cases involve motions for relief that were not based upon fact but upon mistakes by servicing agencies. Both opinions deal with the issue of sanctions and, put simply, both cases illustrate that Judge Bohm (and perhaps other members of the bankruptcy bench in the Southern District of Texas) are going to be very strict about motions for relief in consumer cases.

SUMMARY

The cases cited illustrate enormous problems in the loan servicing industry. These problems arise in the context of securitization and illustrate the difficulty of determining the name of the holder, the assignee of the mortgage, and the parties with both the legal right under Article 3 and the standing under the Constitution to enforce notes, whether in state court or federal court.

Interestingly, with the exception of Judge Bufford and a few other judges, there has been less than adequate focus upon the UCC title issues. The next round of cases may and should focus upon the title to debt instrument. The person seeking to enforce the note must show that:

(1) It is the holder of t his note original by transfer, with all necessary rounds;
(2) It had possession of the note before it was lost;
(3) If it can show that title to the note runs to it, but the original is lost or destroyed, the holder must be prepared to post a bond;
(4) If the person seeking to enforce is an agent, it must show its agency status and that its principal is the holder of the note (and meets the above requirements).

Then, and only then, do the issues of evidence of debt and default and assignment of mortgage rights become relevant.

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DISCLAIMER:  THE FOLLOWING IS FOR INFORMATIONAL PURPOSES AND NOT INTENDED TO BE USED AS A LEGAL REMEDY OR DOES IT SERVE AS LEGAL ADVISE.  PLEASE SEEK AN ATTORNEY WHO CAN PROVIDE PROPER DUE DILIGENCE.

FORMAL STATUTORY

DEMAND TO DISMISS FORECLOSURE ACTION WITH PREJUDICE, CLEAR

TITLE TO REAL PROPERTY, REFUND MONIES PAID, AND FOR PAYMENT

OF ATTORNEYS?f FEES AND COSTS PURSUANT TO FLA.STAT. SEC. 57.105

Dear (Plaintiff Attorney):

This letter is being provided to you, the Law Offices of _________________., and your client ____________________________ Bank, N.A. (Plaintiff in the Action identified herein) as formal notice, pursuant to the matters herein and Fla.Stat. sec. 57.105, of this Firm?fs client Defendant demand that you immediately and forthwith dismiss, with prejudice, that certain civil action styled ________________________ Bank, N.A. v. Defendant et al., 16^th Judicial Circuit Court Case No. _____________________________ (CITY NAME, Florida, hereafter referred to as the ?gAction?h); to provide clear title to the real property the subject of the Action; for refund of all monies paid by Defendant incident to the alleged ?gloan?h the subject of the Action; and for payment of attorneys?f fees and costs which are awardable under various Federal and state statutes violated by your filing of the Action. This letter is also being sent as formal notice of Defendant?fs Motion for Sanctions (copy attached hereto) which will be filed and set for hearing unless, pursuant to Fla.Stat. sec. 57.105(4), within twenty-one (21) days of today, Defendant?fs demands as set forth herein are not complied with in writing confirmed by fax receipt, by this Firm, of the _____________, 2008 57.105 demand and notice to _________________, Esq. re: ________________ Bank, N.A. v. Defendant et al.,

necessary documents to legally effect the demands made herein. The facts supporting this demand and the attached Motion are as follows, which are admissions by you, as an agent of the Law Offices of _________________ P.A., in the Complaint which you filed:

(a) On or about August 22, 2007, you, as an agent and attorney of the Law Offices of _____________________., caused a civil action for foreclosure and to ?genforce loan documents?h to be filed in the 16^th Judicial Circuit in and for Monroe County, Florida, which has been assigned case number 2007-CA-1120-K;

(b) In paragraph ?g5.?h of Count I of the Complaint, you affirmatively represent to the Court that ?gThe Plaintiff owns and holds the Note and Mortgage?h;

(c) In paragraph ?g4?? of Count I, you affirmatively represent to the Court that the mortgage was ?gsubsequently?h assigned to the Plaintiff ?gby virtue of an assignment to be recorded?h (that being some time in the future);

(d) In paragraph ?g20?? of Count II, you affirmatively represent to the Court that ?gThe Plaintiff is not presently in possession of the Note and Mortgage?h and ?gthe Plaintiff cannot reasonably obtain possession of the Note and Mortgage because THEIR whereabouts cannot be determined (original emphasis):

(e) In paragraph ?g22?? of Count II, you affirmatively represent to the Court that ?gThe Plaintiff will agree to the entry of a Final Judgment of Foreclosure wherein it will be required to indemnify and hold harmless the Defendant(s) [sic] Defendant, from any loss they [sic] may occur by reason of a claim by another person to enforce the lost Note and Mortgage.?h;

(f) The Action thus inconsistently but affirmatively alleges, in Count I, that ?gPlaintiff owns and holds the Note and Mortgage?h when in fact the admissions in Count II demonstrate, by the allegations of paragraphs ?g20?? and ?g22?? of the Complaint, that the Plaintiff DOES NOT and CANNOT legally establish possession or ownership of the Note or the Mortgage and that same is/are in the possession of an unknown party or parties;

(g) A copy of the Note is not even attached to the Complaint (only an alleged ?gledger of loan?h);

(h) By virtue of the admissions of the Plaintiff in paragraphs ?g20??, ?g21??, and ?g22?? of the Complaint, the Plaintiff has actual knowledge that it never, at any time material, had possession of either the mortgage or the note as same were sold, assigned, or transferred as part of the single-transaction securitization process which resulted in the subject mortgage and/or note being sold as

July 2, 2008 57.105 demand and notice to _________________, Esq. re: ____________ Bank, N.A. v. Defendant et al.,

parceled obligations and becoming part of one or more tranches within a special investment vehicle;

(i) that the Plaintiff cannot establish that the subject note or mortgage is owned or controlled by the Plaintiff ?gindenture trustee?h for unnamed holders of a series of asset-backed bonds (a copy of which are not even attached to the Complaint);

(j) As a direct and proximate result of the transaction referred to in paragraph ?gh?h above, the Plaintiff does not and cannot establish legal standing to even institute a foreclosure action;

(k) As such, the allegation by the Plaintiff in paragraph ?g5?? of the Complaint constitutes matters which are completely devoid of factual or legal support and are thus ?gfrivilous?h within the meaning of Fla.Stat. sec. 57.105;

(l) As the primary and threshold issue of legal standing to institute the Action cannot be satisfied (which was known to you, the Law Offices of ___________________ and the Plaintiff at the time that the Action was instituted), the Action is a patently frivilous claim within the meaning of Fla.Stat. sec 57.105 and the filing and prosecution thereof constitutes a fraud upon the Court.

Your client and your Firm are thus charged with actual notice of the filing of an frivilous claim, as you, your client, and the Law Offices of _________________________, knew or should have known that the Action was both not supported by the material (and record) facts necessary to establish the claim for foreclosure and would not (and could not) be supported by the application of then-existing law to the material (and record) facts.

As such, this Firm has been directed to file and set for hearing, after the expiration of twenty-one (21) days from today (that being _______________, _______, 2008), the attached Motion for Sanctions and to seek attorneys?f fees from both your client and your Firm if the demands set forth herein for immediate dismissal of the Action with Prejudice, providing of clear title to the property the subject of the action, refund of all monies paid by Defendant in connection with the original ?gloan?h the subject of the Action, and payment of all attorneys?f fees and costs associated with this demand are not complied with in writing by the close of business (5:00 p.m.) Wednesday, July 23, 2008.

Sincerely,

_______________________, Esq.

____/_____

attachment (enclosed with mailed original)

copy to: Defendant (w/attachment)

DISCLAIMER:  THE FOLLOWING IS FOR INFORMATION PURPOSES ONLY AND SHOULD BE REVIEWED BY AN ATTORNEY FOR PROPER DUE DILIGENCE, APPLICATION, AND CORRECT LANGUAGE.  IT IS NOT TO BE INTENDED AS LEGAL ADVISE AND PROVIDED AS A VIEWING SAMPLE

DEFENDANT'S EMERGENCY MOTION TO VACATE JUDGMENT
Comes now the defendant, xxxxxxxxxxxxxxx, PRO SE DEFENDENT, and hereby files their motion to vacate foreclosure judgment, pursuant to Rules 1.540(b) Fla. R. Civ. P., states:
Florida Rule of Civil Procedure 1.540(b) provides in pertinent part:
On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, decree, order, or proceeding for the following reasons:. (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) that the judgment or decree is void; This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, decree, order, or proceeding or to set aside a judgment or decree for fraud upon the court.

The Plaintiff has committed a fraud upon this court which has only become apparent to the Defendant within the last day, upon discovery that the "lender" bank and others have engaged in a pattern of fraud and deception across the country and the state of ????- in attempting to foreclose residential properties AFTER it has already been paid in full PLUS a fee for standing for an undisclosed lender.
Plaintiff's allegations that the Plaintiff has not been paid are false is easily ascertainable by the 10k and 8k filings with Plaintiff's sworn filings with the SEC, wherein the description of the instant loan transaction fits exactly with ALL loans that were securitized and eventually sold in shares to investors around the world. It was not until the last day that Defendant consulted with a knowledgeable consultant and attorney who informed him and demonstrated the fraud. Defendant assumed that because the Plaintiff refused to accept payment that the allegation they were making was that they had not received any payment on the note, when in fact, they had already been paid in full long before this action was commenced and contemporaneously with the loan closing. Plaintiff did not disclose that the loan had been paid, and did not disclose that the true holder in due course and the parties in possession of indorsement or the note itself have long since been owners of these mortgage documents, and in fact mislead this Defendant and the Court to believe the contrary. Defendant was only able to discover this fact upon consulting with an expert who advised me that the pattern and policy of Plaintiff was to treat ALL loans in this manner and that by granting Plaintiff the right to foreclose the court was essentially giving Plaintiff the money AND the property.
In fact, based upon the sworn filings of the Plaintiff with a Federal Agency under the Securities and Exchange Act of 1933, Plaintiff admits payment and it is clear that Payment occurred either PRIOR to the loan closing or within days after the loan closing took place. According to those filings full payment PLUS a fee of 2.5% was paid to Plaintiff by a mortgage aggregator, the "lender" never entered the loan on its balance sheet or in its filings with the FDIC, or any regulatory agency or even to its shareholders, because the transaction was classified as a service transaction represented solely on Plaintiff's income statement.
In plain language, Plaintiff has been paid in full and wants the real property too and is about to get it unless this court allows the case to be tried on its merits.
In plain language, the Plaintiff's own confusion as to what role they play is apparent in the names of entities used in the complaint, only one of which received judgment. This confusion is easily understood.
Plaintiff filed the foreclosure action and now is intent on taking title to the property in addition to having been paid in full PLUS a fee for standing in for the mortgage aggregator, who was the real lender, unregistered in the State of Florida to do business as an investment  bank.
The aggregator took title as Trustee of a mortgage pool to which many loans were assigned, not necessarily all real estate.
The aggregator purportedly assigned but did not record some interest in the note and mortgage in the instant action to a Special Purpose Vehicle which was owned and operated by an investment bank.
The SPV was established by a CDO (collateralized debt obligation) manager employed by the investment bank.
The CDO manager established what are known as tranches within the SPV and assigned parts of each pool to each tranche within the SPV.
The hierarchy of tranches guarantees and requires a misapplication of funds out of and contrary to compliance with the terms of the subject mortgage security instrument and note.
The subject pieces of the pool, that includes pieces of the subject mortgage and note, were then pledged to the buyers of certificates of debt instruments that were backed by and in substance convertible into equity shares of ownership of the subject mortgage and note.
Each buyer received a share of the subject mortgage and note along with a share of thousands of other mortgages and notes.
Each buyer was shown a AAA securities rating, insurance from AMBAC or similar entity and a credit default swap that guaranteed payment of the revenue flow.
Thus co-obligors were created, which Plaintiff failed to disclose at any time to this Defendant or this Court and failed to plead that the holder of the note had not been paid despite overcollateralization of the negotiable instruments and the creation of a reserve pool to make payment, insurance, guarantees, and credit default swaps.
This motion is filed because Defendant verily believes he will and should prevail on the merits, that the Plaintiff has been paid, that the holder in due course has been paid, and that the affidavits and representations of counsel were false, known to be false when made, and have been found to be false repeatedly in other cases around the country.
Defendant intends to file affirmative defenses for set off violations to the Truth in Lending Act, and a counterclaim for damages for RICO, TILA violations, usury, fraud in the inducement and fraud in the execution, damages for appraisal fraud, quiet title, and malicious abuse of process among other causes of action.
The failure to disclose the real parties, and all the fees paid to the undisclosed parties is a violation on the face of TILA, the contract between the parties, the Good Faith Estimate provided to Defendant, and fair dealing, in addition to a breach and in fact  total abdication of the fiduciary duty owed by a lender to its borrower in which underwriting standards were reduced to zero because the nominal lender did not perceive itself to be at risk.
This includes the undisclosed purchase of insurance that qualifies as mortgage insurance, credit default swaps that qualify as mortgage insurance, and guarantees from third parties, including but not limited to the mortgagors whose negotiable instruments were also assigned to tranches that had lower priority than that which the subject loan transaction was assigned, and the payments made by Defendant were in fact allocated and given not to the holder in due course of the subject mortgage and note, but to the CDO manager for allocation to tranches and securities which held a higher place in the hierarchy of the tranches within the SPV.
The entire scheme was intended to trick investors into investing their capital into securities that were unregistered and unregulated, using the Defendant's signature as the issuer of the negotiable instrument which was perceived to give an inflated value to the derivative security purchased by those victimized investors.
This inflation of value was an exact reflection of the inflation of value that Plaintiff and its co-conspirators paid for when they hired an appraiser for the loan closing. Thus the borrower and the investor, the only real parties in interest to the transaction were both tricked, cheated and now, to add insult to injury, are being sued as the villains in someone else's scheme.
The plaintiff 's complaint fails to contain sufficient facts to establish who the plaintiff is and its relationship to the defendant and to the claim for foreclosure of a promissory note, including the date of the alleged assignment of the mortgage and note, and the identity of the owner of the subject promissory note. The complaint fails to sufficiently identify who the plaintiff is and fails to allege facts sufficient to determine the standing of the plaintiff.
Florida Rule of Civil Procedure 1.130(a) provides in pertinent part:
"All bonds, notes, bills of exchange, contracts, accounts, or documents upon which action may be brought or defense made, or a copy thereof or a copy of the portions thereof material to the pleadings, shall be incorporated in or attached to the pleading."
Plaintiff attaches documents to its complaint that conflict with the allegations of material facts in the complaint in which the plaintiff claims that it "owns the Note" and
Mortgage by virtue of an unrecorded assignment that does not allege when the assignment occurred. These allegations conflict with the mortgage attached to the complaint that identifies MERITAGE MORTGAGE CORPORATION, as the lender with the security interest. These allegations therefore constitute serious misrepresentations and could be construed as a fraud upon the court.
Additionally plaintiff makes allegations in its complaint that conflict with the documents attached thereto as to who owned the subject note at the time the note was allegedly lost.
When exhibits are inconsistent with the plaintiff 's allegations of material fact as to whom the real party in interest is, such allegations cancel each other out. Fladell v. Palm Beach County Canvassing Board, 772 So.2d 1240 (Fla. 2000); Greenwald v. Triple D Properties, Inc., 424 So. 2d 185, 187 (Fla. 4th DCA 1983); Costa Bella Development Corp. v. Costa Development Corp., 441 So. 2d 1114 (Fla. 3rd DCA 1983).
Florida Rule of Civil Procedure 1.130(b) provides in pertinent part: "Any exhibit attached to a pleading shall be considered a part thereof for all purposes."
Because the facts revealed by Plaintiff 's exhibit are inconsistent with Plaintiff 's allegations as to its ownership of the subject note and mortgage, those allegations are neutralized and Plaintiff 's complaint is rendered objectionable. Greenwald v. Triple D Properties, Inc., 424 So. 2d 185, 187 (Fla. 4th DCA 1983).
Florida Rule of Civil Procedure 1.210(a) provides in pertinent part:
"Every action may be prosecuted in the name of the real party in
interest, but a personal representative, administrator, guardian, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party expressly
authorized by statute may sue in that person's own name without
joining the party for whose benefit the action is brought."
The Plaintiff in this action meets none of those criteria. Because the exhibit attached to Plaintiff 's complaint is inconsistent with Plaintiff 's allegations as to ownership of the subject promissory note and mortgage, and because the allegations and exhibits are inconsistent with sworn filings with a Federal Agency (SEC), Plaintiff has failed to establish itself as the real party in interest and has failed to state a cause of action.
In Florida, the prosecution of a foreclosure action is by the owner and holder of
the mortgage and the note. Your Construction Center, Inc. v. Gross, 316 So. 2d 596 (Fl. 4th DCA 1975)
The Defendants recognize the precedent set in WM Specialty Mortgage, LLC v.
Salmon, 874 So.2d 680 (Fla 4th DCA 2004) regarding the assignment of a mortgage. However as the Second District Court of Appeals noted, standing requires that the party prosecuting the action have a sufficient stake in the outcome and that the party bringing the claim be recognized in the law as being a real party in interest entitled to bring the claim as of the date of the commencement of the action.
The plaintiff 's failure to meet the standing requirements as of the commencement of this foreclosure action renders the complaint fatally defective and, therefore constitutes misrepresentation as to who the Plaintiff really is.
Further, the failure to join indispensable and necessary parties, those being the real holders in due course of the subject loan documents, Citi wishes to place the borrower and innocent third parties in untenable situations:
The borrower can AGAIN be sued on the same note by a third party who has not been given notice of this lawsuit (john Does 1-1000)
The borrower has no proper entity against which he can assert affirmative defenses and claims regarding predatory loan practices, fraud and other causes of action.
If the note was separated from the mortgage then the mortgage is unenforceable by definition. If the mortgage is unenforceable by definition then any "foreclosure sale" is either void or voidable. Thus a cloud on title exists even in the presence of the Court's Judgment to the contrary.
Bidders and third parties without notice could easily be sued in foreclosure by the real holders in due course thus either encumbering their property with the mortgage which the Court had intended to extinguish through the foreclosure sale, or losing the property for which they paid out of their own funds or through the lending and mortgage of yet another financial institution who will also be subject to losing its security and suffer a partial or complete loss on a loan where the risks were not apparent because of the fraud of Citi.
The assignment cannot post date the filing of this action if assignment does not relate back to the commencement of the litigation. Progressive Express Insurance Company v. McGrath Community Chiropractic, 913 So.2d 1281 (Fla. 2nd DCA 2005). where there is no assignment document presented and the indorsement is suddenly produced during litigation without a date, it must be presumed that the indorsement was made after the attempt to enforce the instruments in the subject loan transaction, or at the very least that the burden falls on the Defendants to allege and prove that the indorsement was timely made with proper authorization, that the assignor had title to the instruments, and that the assignee retained title to the instruments.
In short, Citi must allege that it is a holder in due course, an allegation which Plaintiff already knows to be untrue and inconsistent with Citi's sworn filings with the Securities and Exchange Commission in its 10K and 8K filings.
The Plaintiff, in its complaint alleges that it "owns the Note and Mortgage" however it has failed to produce any material evidence to support its claim. In the absence of this evidence the Plaintiff is clearly misrepresenting themselves as the real party in interest and the holder in due course with legal standing to bring this cause of action against the defendant.
The Plaintiff alleges that it is the holder in due course on the subject mortgage and note Defendant has learned, as aforesaid, that this is inconsistent with Citi's sworn disclosures tot he contrary with the SEC, to wit: that the note was part of larger securitization process and sold to several 6-named parties and beneficial owners and any claims by Plaintiff, in the absence of the original note endorsed to Plaintiff, are a clear misrepresentation of the actual facts.
If the courts were to allow a Plaintiff to bring a cause of action in a scenario where the Plaintiff alleges that it owns a certain note and mortgage but fails to provide any evidence to the courts that this, in fact true, the courts would open the door to incredible harm to any homeowner whose home is secured by a mortgage.
If the court were to allow the Plaintiff in this case to prevail in light of serious misrepresentation and fraud upon the court, it would result in a major injustice to the Defendant.

WHEREFORE, Defendant requests this court grant Defendant's motion for
vacating judgment and for all other relief to which these defendants prove themselves
entitled.

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SEC Rule 17f-1 ? Requirements for Reporting and Inquiry with Respect to Missing, Lost, Counterfeit or Stolen Securities

Rule 17f-1 ? Requirements for Reporting and Inquiry with Respect to Missing, Lost, Counterfeit or Stolen Securities

Definitions. For purposes of this section:

1. The term reporting institution shall include every national securities exchange, member thereof, registered securities association, broker, dealer, municipal securities dealer, government securities broker, government securities dealer, registered transfer agent, registered clearing agency, participant therein, member of the Federal Reserve System and bank whose deposits are insured by the Federal Deposit Insurance Corporation;
2. The term uncertificated security shall mean a security not represented by an instrument and the transfer of which is registered upon books maintained for that purpose by or on behalf of the issuer;
3. The term global certificate securities issue shall mean a securities issue for which a single master certificate representing the entire issue is registered in the nominee name of a registered clearing agency and for which beneficial owners cannot receive negotiable securities certificates;
4. The term customer shall mean any person with whom the reporting institution has entered into at least one prior securities-related transaction; and
5. The term Securities-related transaction shall mean a purpose, sale or pledge of investment securities, or a custodial arrangement for investment securities.
6. The term securities certificate means any physical instrument that represents or purports to represent ownership in a security that was printed by or on behalf of the issuer thereof and shall include any such instrument that is or was:
1. Printed but not issued;
2. Issued and outstanding, including treasury securities;
3. Canceled, which for this purpose means either or both of the procedures set forth in Rule 17Ad-19(a)(1); or
4. Counterfeit or reasonably believed to be counterfeit.
7. The term issuer shall include an issuer's:
1. Transfer agent(s), paying agent(s), tender agent(s), and person(s) providing similar services; and
2. Corporate predecessor(s) and successor(s).
8. The term missing shall include any securities certificate that:
1. Cannot be located or accounted for, but is not believed to be lost or stolen; or
2. A transfer agent claims or believes was destroyed in any manner other than by the transfer agent's own certificate destruction procedures as provided in Rule 17Ad-19.
2. Every reporting institution shall register with the Commission or its designee in accordance with instructions issued by the Commission except:
1. A member of a national securities exchange who effects securities transactions through the trading facilities of the exchange and has not received or held customer securities within the last six months;
2. A reporting institution that, within the last six months, limited its securities activities exclusively to uncertificated securities, global securities issues or any securities issue for which neither record nor beneficial owners can obtain a negotiable securities certificate; or
3. A reporting institution whose business activities, within the last six months, did not involve the handling of securities certificates.
3. Reporting Requirements?
1. Stolen Securities.
1. Every reporting institution shall report to the Commission or its designee, and to a registered transfer agent for the issue, the discovery of the theft or loss of any securities certificates where there is substantial basis for believing that criminal activity was involved. Such report shall be made within one business day of the discovery and, if the certificate numbers of the securities cannot be ascertained at that time, they shall be reported as soon thereafter as possible.
2. Every reporting institution shall promptly report to the Federal Bureau of Investigation upon the discovery of the theft or loss of any securities certificate where there is substantial basis for believing that criminal activity was involved.
2. Missing or Lost Securities. Every reporting institution shall report to the Commission or its designee, and to a registered transfer agent for the issue, the discovery of the loss of any securities certificate where criminal actions are not suspected when the securities certificate has been missing or lost for a period of two business days. Such report shall be made within one business day of the end of such period except that:
1. Securities certificates lost, missing or stolen while in transit to customers, transfer agents, banks, brokers or dealers shall be reported by the delivering institution by the later of two business days after notice of non-receipt or as soon after such notice as the certificate numbers of the securities can be ascertained.
2. Where a shipment of retired securities certificates is in transit between any transfer agents, banks, brokers, dealers, or other reporting institutions, with no affiliation existing between such entities, and the delivering institution fails to receive notice of receipt or non-receipt of the certificates, the delivering institution shall act to determine the facts. In the event of non-delivery where the certificates are not recovered by the delivering institution, the delivering institution shall report the certificates as lost, stolen, or missing to the Commission or its designee within a reasonable time under the circumstances but in any event within twenty business days from the date of shipment.
3. Securities certificates considered lost or missing as a result of securities counts or verifications required by rule, regulation or otherwise (e.g., dividend record date verification made as a result of firm policy or internal audit function report) shall be reported by the later of ten business days after completion of such securities count or verification or as soon after such count or verification as the certificate numbers of the securities can be ascertained.
4. Securities certificates not received during the completion of delivery, deposit or withdrawal shall be reported in the following manner:
1. Where delivery of the securities certificates is through a clearing agency, the delivering institution shall supply to the receiving institution the certificate number of the security within two business days from the date of request from the receiving institution. The receiving institution shall report within one business day of notification of the certificate number;
2. Where the delivery of securities certificates is in person and where the delivering institution has a receipt, the delivering institution shall supply the receiving institution the certificate numbers of the securities within two business days from the date of request from the receiving institution. The receiving institution shall report within one business day of notification of the certificate number;
3. Where the delivery of securities certificates is in person and where the delivering institution has no receipt, the delivering institution shall report within two business days of notification of non-receipt by the receiving institution; or
4. Where delivery of securities certificates is made by mail or via draft, if payment is not received within ten business days, the delivering institution shall confirm with the receiving institution the failure to receive such delivery; if confirmation shows non-receipt, the delivering institution shall report within two business days of such confirmation.
3. Counterfeit Securities. Every reporting institution shall report the discovery of any counterfeit securities certificate to the Commission or its designee, to a registered transfer agent for the issue, and to the Federal Bureau of Investigation within one business day of such discovery.
4. Transfer Agent Reporting Obligations. Every transfer agent shall make the reports required above only if it receives notification of the loss, theft or counterfeiting from a non-reporting institution or if it receives notification other than on a Form X-17F-1A or if the certificate was in its possession at the time of the loss.
5. Recovery. Every reporting institution that originally reported a lost, missing or stolen securities certificate pursuant to this Section shall report recovery of that securities certificate to the Commission or its designee and to a registered transfer agent for the issue within one business day of such recovery or finding. Every reporting institution that originally made a report in which criminality was indicated also shall notify the Federal Bureau of Investigation that the securities certificate has been recovered.
6. Information to be Reported. All reports made pursuant to this Section shall include, if applicable or available, the following information with respect to each securities certificate:
1. Issuer;
2. Type of security and series;
3. Date of issue;
4. Maturity date;
5. Denomination;
6. Interest rate;
7. Certificate number, including alphabetical prefix or suffix;
8. Name in which registered;
9. Distinguishing characteristics, if counterfeit;
10. Date of discovery of loss or recovery;
11. CUSIP number;
12. Financial Industry Numbering System ("FINS") Number; and
13. Type of loss.
7. Forms. Reporting institutions shall make all reports to the Commission or its designee and to a registered transfer agent for the issue pursuant to this section on Form X-17F-1A. Reporting institutions shall make reports to the Federal Bureau of Investigation pursuant to this Section on Form X-17F-1A, unless the reporting institution is a member of the Federal Reserve System or a bank whose deposits are insured by the Federal Deposit Insurance Corporation, in which case reports may be made on the form required by the institution's appropriate regulatory agency for reports to the Federal Bureau of Investigation.
4. Required inquiries.
1. Every reporting institution (except a reporting institution that, acting in its capacity as transfer agent, paying agent, exchange agent or tender agent for an equity issue, or registrar for a bond or other debt issue, compares all transactions against a shareholder or bondholder list and a current list of stop transfers) shall inquire of the Commission or its designee with respect to every securities certificate which comes into its possession or keeping, whether by pledge, transfer or otherwise, to ascertain whether such securities certificate has been reported as missing, lost, counterfeit or stolen, unless:
1. The securities certificate is received directly from the issuer or issuing agent at issuance;
2. The securities certificate is received from another reporting institution or from a Federal Reserve Bank or Branch;
3. The securities certificate is received from a customer of the reporting institution; and
1. Is registered in the name of such customer or its nominee; or
2. Was previously sold to such customer, as verified by the internal records of the reporting institution;
4. The securities certificate is received as part of a transaction which has an aggregate face value of $10,000 or less in the case of bonds, or market value of $10,000 or less in the case of stocks; or
5. The securities certificate is received directly from a drop which is affiliated with a reporting institution for the purposes of receiving or delivering certificates on behalf of the reporting institution.
2. Form of Inquiry. Inquiries shall be made in such manner as prescribed by the Commission or its designee.
3. A reporting institution shall make required inquiries by the end of the fifth business day after a securities certificate comes into its possession or keeping, provided that such inquiries shall be made before the certificate is sold, used as collateral, or sent to another reporting institution.
5. Permissive Reports and Inquiries. Every reporting institution may report to or inquire of the Commission or its designee with respect to any securities certificate not otherwise required by this section to be the subject of a report or inquiry. The Commission on written request or upon its own motion may permit reports to and inquiries of the system by any other person or entity upon such terms and conditions as it deems appropriate and necessary in the public interest and for the protection of investors.
6. Exemptions. The following types of securities are not subject to paragraphs (c) and (d) of this section:
1. Security issues not assigned CUSIP numbers;
2. Bond coupons;
3. Uncertificated securities;
4. Global securities issues; and
5. Any securities issue for which neither record nor beneficial owners can obtain a negotiable securities certificates.
7. Recordkeeping. Every reporting institution shall maintain and preserve in an easily accessible place for three years copies of all Forms X-17F-1A filed pursuant to this section, all agreements between reporting institutions regarding registration or other aspects of this section, and all confirmations or other information received from the Commission or its designee as a result of inquiry.
   
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CONFLICT OF LAWS:

NOT LEGAL ADVICE:  FOR INFORMATIONAL PURPOSES ONLY.

Most states have adopted the Uniform Commercial Code without making any revisions. The UCC is an outgrowth of the Uniform Code arising from the Hague conventions. Thus the laws concerning indorsement, transfer, accommodation and assignment date back hundreds of years from common law from over 30 countries. Variance in application of these laws carries with it the probability of undermining the confidence that people will have in knowing that contractual obligations will be enforced and that they are protected by legal conventions that are accepted all over the world. In the context of the mortgage meltdown, the ONLY defensive positions that can be taken by those who would enforce securitized notes and mortgages, given the predatory practices employed and the failure to disclose the inflated pricing and valuation on both sides of the transaction ? the investor who put up the money for the loan, and the borrower who signed the papers ? is to run contrary to established law. An indorsement in blank generally means nothing without more. It does not convert the instrument to a bearer instrument. An accommodation indorsement fails to provide "cover" which is necessary for one to claim being a holder in due course. The following is an old treatise comparing laws from various jurisdictions. The inescapable conclusions are that the laws that were taught in law schools 100 years ago, 50 years ago and even 25 years ago are all the same. The only party capable of claiming the status of holder in due course is the investor who purchased certificates that gave him/her/it a share of a pool of assets which consisted of, in its purest form, a pool of notes and mortgages that were corrupted by the promise (unknown to the borrower or the investor) to apply payments to parties OTHER THAN the holder in due course. This has the obvious effect of separating the stream of revenue from the original obligor (and co-obligors acquired along the way) from the security instrument (the mortgage) which is a recorded document, as should be any assignment thereof. The parties holding the mortgage and the parties to whom the revenue stream is pledged are different, diverse, and in most cases unknown as they are dependent upon conditions subsequent that were undisclosed to either the borrower or the investor (overcollateralization of the asset backed securities, cross guarantees between tranches, insurance against loss, credit default swaps etc.). Hence the obligation was converted from a secured credit transaction to an unsecured unliquidated contingent contract obligation, subject to affirmative defenses and counterclaims, including the quieting of title, from the borrower.

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