Overcoming Foreclosure

Overcoming Foreclosure

~

Norman L. Sirak

Attorney at Law

Published by Wilcox Publishing

Cover Design: Kathy Sirak

Smashwords Edition, Copyright © Norman L. Sirak, 2013

ISBN 978-1-301-58974-6

Printed Version: ISBN 978-0-615-68984-5, Copyright © Norman L. Sirak, 2012

U.S. Copyright Registration No. TXu 1-816-534

All rights reserved. No part of the contents of this book may be reproduced or transmitted, except for personal use, in any form or by any means without the written permission of the author.

Contents

Prologue

Chapter 1 The Ultimate Con Artist Fairy Tale

No Prior Exploitation and Defenseless

Inventing Exotic Mortgages

Circumventing the Statute of Frauds and Recorder Filing Fees

Mental Illness Afflicts Crown Jewel

A Functioning Lender’s Indispensable Role

False Pretenses Afflicts Crown Jewel

Strategy for Protecting Crown Jewel

MERS and Partners Take Control of Mortgages

A Pathway out of this Despairing Cave for Homeowners

Footnotes, Chapter 1

Chapter 2 An Action to Quiet Title

Introducing MERS

Acting as Nominee Term in Mortgage

Challenging a Lien’s Validity with Extrinsic Evidence

Challenging the Beneficial Interest of MERS

Violating the Venerable Statue of Frauds

Chicanery [also known as Legal Trickery]

Footnotes, Chapter 2

Chapter 3 Cherish Your Note

Uniform Commercial Code

Grantor Trusts and IRS Pass-Through Entities

The Persons Deemed Owners Clause

The Real Party in Interest Problem – For Them

Footnotes, Chapter 3

Chapter 4 Creating a Plausible but False Track of Beneficial Ownership

The Founding of MERS and the MERS Registry

Footnotes, Chapter 4

Chapter 5 The MERS Shell

Footnotes, Chapter 5

Chapter 6 The County Recorder’s Office

The Initial Mortgage Recording

Second Trip to County Recorder Office

Introducing Depository Trust Corporation

Third Trip to Ventura County Recorder’s Office

Chapter 7 The MERS Registry

Visiting the MERS Registry

Penetrating the MERS Registry without Passwords

The True Legacy of MERS

Chapter 8 The Ibanez Cloud and the Statute of Frauds

The Ibanez Cloud

Diagram of an Unmasked Securitized Mortgage Transaction

The Ibanez Litigation File and Decision

The EDGAR File Never Revealed in Ibanez

Introducing the 17th Century Statute of Frauds

Super Heroes Needed for Overcoming Foreclosure

MERS and Statute of Frauds are Hopelessly Conflicted

Where You Can Find 30 Million Unenforceable Mortgages

Footnotes, Chapter 8

Chapter 9 MERS Assignments

Introducing the MERS Certifying Officer

The True Master of the MERS Certifying Officer

Preventing Hippos from Imitating Giraffes

Nebraska’s 2002 Investigation of MERS

Missing Person Bulletin – Lender last seen …

Functions Performed by MERS Certifying Officers

MERS Certifying Officers Appear to Satisfy the Statute of Frauds

Footnotes, Chapter 9

Chapter 10 Getting to Know EDGAR

Introducing the Video Game EDGAR

Understanding and Finding your Securitization Platform

Searching and Validating a Match on EDGAR

American Home Mortgage Assets Trust 2005-1

American Home Mortgage Assets Trust 2005-2

American Home Mortgage Investment Trust 2005-2

American Home Mortgage Investment Trust 2005-3

Picking the Wrong Securitization

Footnotes, Chapter 10

Chapter 11 Violating Mandatory Recording Statutes

Checkmate Strategy as Applied to Foreclosure

Introducing Mandatory Recording Statutes

Lehman Brothers Deposits Unsecured Mortgages in Trust

Searching Technique for Scanning Voluminous EDGAR Files

Inconsequential Relationships with MERS

Creating an EDGAR Exhibit

Footnotes, Chapter 11

Chapter 12 Countering Attacks against your Complaint

Demagoguery and the most Pathetic Collection of case law

17th Century Legal Trickery Lacking Authenticity

Pasteurizing and Sanitizing Unlawful Acts

Action Plan for Conquering Fear Right Now

Deciding Cases from Bottom Up and not from Top Down

Confusing Conjectural Authority with Functional Authority

Trustee Bank Has Standing as Holder of Note and Mortgage

Failure to First Make a Tender Offer of Unpaid Loan Proceeds

Bogus Objections

Personal Knowledge Assertions in Affidavits

Techniques for Preparing and Participating in a Court Hearing

Footnotes, Chapter 12

Acknowledgments

Appendix 1 Worksheet for Quiet Title Complaint

Appendix 2 Quiet Title Complaint

Footnotes, Appendix 2

Appendix 3 Navigating EDGAR

Footnotes, Appendix 3

Appendix 4 Visual Aid for use at Hearing

About the Author

In Memoriam

Prologue

My first encounter with foreclosure was not recorded. This event was certainly not scheduled. It took place in 2009 as fall was losing its grip to winter. There were no leaves on trees but it was not cold enough for snow.

A young man earning his livelihood as an electrician made his first visit to our home. As he worked, my wife could see his hands shaking and he seemed to be fighting to hold back tears. A deep seated source of anxiety was apparent. It had nothing to do with our job. Out of concern, my wife asked if she could help. He began describing his foreclosure nightmare. My wife stopped him and told him that I was an attorney. When his work was done, she brought him to my office.

I vividly recall that first meeting. He told me that his mortgage lender lost one of his payments; they billed him for late fees when his payments were not late and they placed his mortgage payments in suspense. I thought he was crazy.

But I listened. The job that brought him to our home was half finished. When he returned, he brought records. In the course of studying them, a horrific portrait of home financing began to emerge. He was not crazy. His mortgage lender did lose one payment. He was billed for late fees when he was not late. Payments were placed in suspense. The toll taken on his credit score was huge. If anything, he was abused even more than he appreciated.

This electrician became my first client. Home financing was an unknown area of law for me, but my background in civil rights and securities law proved to be surprisingly pertinent. These disciplines influenced my approach to home financing and framed the problem in a unique manner. This might explain how I was able to absorb this complex frontier of law as quickly as I did. I traveled with my sole client down the same legal dead-ends that anyone new to this undertaking would travel. A loan modification agreement was requested. I already sensed an extremely calloused adversary with a bill collector’s mentality.

Like any experienced attorney, I had a plan to conquer this intransigence. After studying the Fraud Enforcement and Recovery Act of 2009 and the U.S. Unfair Acts or Practices statute, I wrote a letter to the mortgage servicer citing these laws and the apparent violations. Copies were sent to the Mortgage Fraud Task Force of the Federal Bureau of Investigation, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Housing Finance Agency and the Financial Crisis Inquiry Commission. I naively believed that sending copies to these government agencies would break through this bill collector mentality and find higher intelligence.

I was wrong. In terms of moving my client closer to a loan-modification agreement, the copy in my office that became a cushion for my cat had the same propelling force as far I could tell, as copies mailed through the U.S. Post Office.

A long time ago, I learned that chasing parked cars was a waste of time. Companies servicing subprime home loans were like parked cars. Much greater forces would have to be harnessed to get their attention. Media coverage commented upon the securitization of mortgage loans. Through most of the 1990’s, I practiced securities law. The Securities and Exchange Commission’s EDGAR search engine was no stranger to me. I am the anonymous author of about a dozen such text files.

The title of my client’s securitization transaction was disclosed on a recorded document. I decided to read the entire file. It took a week and a half. I almost gave up twice. When I was finished, I knew that I had found their Achilles heel. My Quiet Title lawsuit was born at that moment.

Evidence comes in many strengths and varieties. There is anemic evidence and then there is industrial strength, compelling evidence. An example of weak evidence is the self-serving statement. If this evidence cannot be confirmed by a trustworthy source, it is useless. On the opposite end of the scale, the most persuasive kind of evidence is a statement running against a party’s interest, made by the party themselves. This is the proverbial guilty plea. These securitization files were loaded with evidence of the second kind, statements running against the interest of the lender, made by the lender in these securitization agreements.

My first Quiet Title lawsuit was filed on August 27, 2010.

Today, I have filed dozens of Quiet Title lawsuits. Each new case has been a learning experience. As my knowledge evolved, so has my awareness of the audacity and the excess of ambition demonstrated by the architects of this legal quagmire. I have also been surprised by the number of new weaknesses that I have been able to discover.

The ordeal suffered by my clients has also affected me profoundly. I routinely receive emails from clients sent between the hours of 1 a.m. to 5 a.m. For my electrician client, anxiety resonated through his entire family, including his teenage daughters. One child had to be treated for depression because of concern that they would lose their home and she would be separated from all of her friends. This damage is not confined to young people looking to purchase their first home. Most of my clients already purchased one or two homes and were nearing retirement age. The thought of worrying about keeping a roof over your head when your prime working years are behind you struck me as nothing less than terrifying.

Before taking on foreclosure, I handled class action lawsuits for inmates eligible for parole. As part of those lawsuits, I studied the sentencing for property crimes, sex crimes and homicides. Crime victims were contacted by the hundreds. Because of these lawsuits, I could be qualified as an expert on the subject of how much pain has been inflicted by criminals on crime victims for the varying classes of crimes. Seven years were devoted to these cases.

After working intensively on foreclosure for three years, I have concluded that the small group of greedy people that engineered and profited from mortgage-backed securities inflicted more severe depression on children, more sleepless evenings on adults and in general, a greater diminishment in the qualify of life than the pain inflicted by all of our incarcerated criminals upon crime victims. Any lender with even a grain of good conscious should recognize that it is immoral, unethical and unscrupulous to issue a home loan with reckless disregard for the unique and debilitating species of anxiety caused by foreclosure.

This book represents my attempt to bring relief to tormented borrowers and, hopefully, a few sleepless nights for predatory lenders.

I know that people burdened with this problem are spending hours on websites such as Foreclosure Hamlet and Living Lies, trying to find a legal avenue that will level this playing field and give them leverage in dealings with lenders. My hope is that this book will be the answer to that prayer. It has been written for a broad audience, and its purpose is to provide the reader with a step-by-step approach for asserting your rights and backing it up with evidence and law.

I also hope that this book launches a movement and becomes a wake-up call for judges that are calloused and close-minded on these cases. Perpetrators of this mortgage fiasco made a mockery out of property concepts which served us well for hundreds of years. As this book illustrates, simply following the law can become the beacon that leads millions out of this cave of despair. I have never encountered a homeowner seeking a free home. All they truly want is a sustainable mortgage. If judges would simply recognize homeowners’ rights and follow the law, sustainable loan modification agreements could settle lawsuits and quickly alleviate this stress, allowing the home market to rebound and help fuel this country’s economic recovery. It will also allow millions of homeowners to sleep peacefully at night.

Norman L. Sirak

January 23, 2012

Chapter 1

The Ultimate Con Artist Fairy Tale

Let’s play make believe. Hollywood is looking for a larger than life sting operation. They want a complicated confidence game planned and executed with such great skill, mesmerized victims will not know what hit them. We are going to fulfill this wish. Our plot must be colossal. It will also be preposterous. Train wrecks this size are ridiculous. We will create the ultimate con artist fairy tale.

Where do we begin? A few parameters have to be established. How much money will be involved? Since we are thinking big, millions and even billions is not enough. We need to be dealing with a trillion dollars. How about victims? This factor has to be compatible with a trillion dollar plot line. Victims must run into the millions, annihilating the middle class. All age groups will be devastated.

No sting operation of this magnitude can ride piggy-back on air. Something tangible must shoulder this con artistry. Our chosen vehicle must be an unregulated virgin. Free enterprise tentacles must move unimpaired and vigorously with no fear of criminal culpability. Ideally, this candidate dwells in the shadows of life, never drawing attention to itself. Nothing ominous can be attached to its past. Rocking the world’s largest economy with this vehicle must be unthinkable. Nobody will see this coming. Our centerpiece must be defenseless. It has never experienced exploitation. Manipulating its actors and landscape will be mandatory. Discovering a tangible item with all of these traits is not easy. In addition to these virtues, add the capacity to snowball into a trillion dollars while simultaneously pressing a high anxiety nerve among millions of people. How about mortgages and deeds of trust? The middle class’s biggest investment is their home. Nobody reads mortgages. Nobody really understands them. Homeowners are trusting and easily influenced. Can this fill the center of our storm? Mortgages and deeds of trust may be perfect.

No Prior Exploitation and Defenseless

How do you destroy millions of lives without committing crimes? You start with a subject that is seldom if ever connected to crime. How many people are in prison for abusing a mortgage? Not too many. Outlaws, even really smart ones, do not understand them. Before Wall Street taught us otherwise, it would be hard to believe that a mortgage could be abused. Like the hard shell of a turtle, mortgages come into this world with their own unique self defense mechanism. Twelve or more pages of non-stop lawyer-speak will repel anything. If a skunk releases its spray, you can run away. How do you deal with a mortgage? Running is freaking out. Your only dignified avenue for escape is a signature, which is then followed by a headlong plunge into a mortgage black hole. Name another document capable of seducing and then snaring its victim so effortlessly. This all embellishes a mortgage’s allure, facilitating this sting operation.

What government actors are in close contact with mortgages, and just how vigilant is this supervision? Only one hand can go up. County recorder offices provide a home for mortgages and deeds of trust. With these records, they provide an authoritative register for land ownership. Shunning notoriety, county employees quietly go about their recording duties. How much fact checking and auditing for authenticity can be done by their clerks? One recorder’s office in New York tried to conduct this review. New York’s highest court ruled that a recorder’s office lacked authority to look beyond the minimum requirements imposed by statute, such as a borrower’s signature and a notary’s affidavit. ¹ True to its record keeping roots, a county recorder serves as a compliant filer with no authority to challenge content. Checks can be placed next to no prior exploitation and defenseless. For our purposes, the County Recorder’s Office will be just peachy.

What about federal and state authorities? Can they come to anyone’s rescue? In this country, the first person to commit an ingenious crime gets a pass. The Ex Post Facto clause in the U.S. Constitution limits prosecutions to laws already enacted and in force. When it comes to mortgages, there should be nothing to fear from federal or state authorities until the dust settles. Then it will be too late.

Inventing Exotic Mortgages

In their present form, mortgages and deeds of trust are not peachy. They need lots of help. To hook investors, we need excitement. Inventing the Negative Amortization Mortgage will certainly add something. The first day of each month becomes a Change Date. Interest rates can rise. If the monthly payment does not cover this rising interest rate, unpaid interest is added to principal. If you borrowed $500,000, principal can grow by 25% to $625,000 and the interest rate can rise to 12%. A homeowner pays interest on money they never receive and spend. This unmitigated disaster of a mortgage was never outlawed, because nobody could fathom a mind perverted enough to offer something this despicable.

Wall Street has no problem with this mentality. More exotic mortgages are created. The Interest Only Mortgage, Variable Rate Mortgage and Balloon Mortgage invade the market place. Interest rates on these exotic mortgages typically start at 7% and rise to 13%. Investors will love this; homeowners, not so much. But this is a fairy tale. Nothing this outrageous could ever really happen.

One cloud hovers above mortgages. An archaic statute of frauds imported from 17th century England still burdens every change in ownership. ² Before an ownership interest in land can transfer, the prior owner must personally sign a writing surrendering their interest to their successor. An interest in land remains parked with the earlier owner of record, if this statute of frauds is ignored. More timid souls would view this barrier as insurmountable. That might explain why mortgages have never been exploited.

When sums of money exceeding a trillion dollars are at stake, this is not a problem; it is just a challenge. In this Information Age, everything moves at the speed of light. Wheeling and dealing in today’s business world cannot tolerate a horse and buggy formality. Luckily, after minimum formalities are satisfied, the myopic review of a recorder’s office stops. With a little bit of legal trickery, this 17th century anachronism can be rendered impotent. As an added bonus, maybe a recorder’s fee can also be evaded.

Circumventing the Statute of Frauds and Recorder Filing Fees

Dealing with this 17th century statute of frauds only applies if there is a disclosed change of ownership. What if changes of ownership are not disclosed as a mortgage moves through several transfers to a trust, prior to being transformed into a debt commodity? If changes of ownership are not disclosed, the statute of frauds does not apply. Problem almost solved. How do we avoid these disclosures, but still preserve our right to pursue foreclosure when a loan goes into default? If a recorder’s ownership trail goes completely cold, our right to foreclose will be lost.

Overcoming this hurdle requires thinking outside of the box. Way outside of the box. So far removed from reality, this lands us inside Alice in Wonderland. A shell company will be invented and then added as a party to every mortgage and deed of trust. Shell companies serve as a vehicle for conducting business without any significant assets or operations of its own.³ Just like Planet Mars, no real life dwells inside a shell company. Terms in the mortgage will call this shell company the permanent beneficiary.

Calling this shell company anything but a hollow vessel is a fantasy. Calling it a permanent beneficiary is a monumental corruption of the truth. Here is where legal trickery enters and saves the day. This deceptive label will be camouflaged by a plausible but false fiction. Our shell company only acts as the nominee for the lender and every successor and assignee of the lender.

How do we tell a borrower that their lender will be gone after a few short weeks or months? Standing in the lender’s place is a shell company. Maybe we should say nothing. A powerful 21st century name is needed for this shell company, so its hollow existence is not suspected. Mortgage Electronic Registration Systems sounds good. MERS, its initials, rolls easily off the tongue. This name will work.

Since we are bringing new corporations into the world, our shell company deserves a functioning companion. The MERS Registry will be created. Publicity people will label this a national registry, bringing mortgages and deeds of trust screaming and kicking into the 21st century. Changes of ownership concealed from county recorders will appear on the MERS Registry. Everyone should thank us for providing a long overdue successor to the antiquated recording system. Our MERS Registry is