Posts Tagged ‘lost note’

Foreclosure Fraud Fighter, Founder of JEDTI (Jurists Engaged in the Defense of Title Integrity) and Friend Greg Clark, a Clearwater attorney has been ranting away like a madman about “MERS Splitting” and “Produce the Original Note”….here’s the thing about madmen…..

When they’re brilliant, hard working and careful with their facts, sometimes they need to be listened to.

One of Clark’s main issues has to do with the fact that on the one hand Plaintiffs toss promissory notes into the court file then ask that they be treated with such dignity and respect that nothing else be questioned.  On the other hand, we find that Courts around the state are routinely handing promissory notes back to Plaintiffs and law firms.

The Fourth Circuit Appeals Court opinion, Elliott v. Aurora first published here describes how courts in Broward County, routinely hand the promissory note back over to Plaintiffs right after Summary Judgment is granted…that’s obscenely improper and is a violation of a litigant’s fundamental procedural rights…if the Defendant appeals, the evidence used to convict him is back in the hands of the Plaintiff.

You see in one case, my Motion to Dismiss was granted because the endorsements on the face of the note are questionable.  The thing is, according to the legal reasoning advanced by the Plaintiffs, and routinely accepted by courts is that promissory notes are negotiable instruments….that means they are to be treated like $100,000 or $500,000 bills…

You’re now starting to see title insurance commitments requiring…as a condition of issuing new title insurance..to have the original note in possession or proof that it was destroyed as a condition of issuing the title insurance…such requirements are becoming increasingly common….and they’re based in part on the following Florida Supreme Court case….which is still good law:

SCOTT т. TAYLOR.

(Supreme Court of Florida. Feb. 6, 1912.)

A mortgage executed as security for the payment of a negotiable promissory note is a mere incident of and ancillary to such note. When it comes to the payment thereof, the rights of the parties thereto, as well as of third persons, are governed by the rules relating to negotiable paper; in other words, payment to any one other than the holder of the negotiable instrument is at the risk of the payer, and is binding upon the holder of the paper only where express or implied authority to receive such payment is established by the person making the same. Hence payment of a negotiable note secured by mortgage by the mortgagor or his grantee, where made to the original mortgagee who is not in possession of the note and mortgage, is not binding upon an assignee thereof before maturity who was in possession of the papers at the time of such payment, unless he had expressly or impliedly authorized such payment.

The duty of a maker of a negotiable note to see that the person to whom he pays it has it in his possession before making the payment is not affected by the fact that the note was on its face payable at the office of the person to whom he makes the payment.

The maker of a negotiable promissory note can satisfy it only by payment to the owner at the time of such payment, or to such owner’s authorized agent. If the recipient of the money is not actually authorized, the payment is ineffectual, unless induced by unambiguous direction from the owner, or justified by actual possession of the note. This rule applies generally to all negotiable paper, independently of the existence of any mortgage or other security.

TAYLOR, J. The appellee Emma H. Tay: lor filed her bill In equity in the circuit court of Escambla county for foreclosure of mortgage against the appellant J. Conrad Scott and his wife, Alice K. Scott, and the Pensacola Home & Savings Association, a corporation.

The bill alleged, In substance: That the said J. Conrad Scott, being Indebted to D. Hale Wilson In the sum of $400, executed and delivered to the said D. Hale Wilson his promissory note, whereby he did promise to pay to the order of the said D. Hale Wilson •?400, with Interest at the rate of 8 per cent, per annum from date until paid, interest payable quarter annually, said principal sum to be paid two years after the date of said note. By the terms of said note it was provided that It should be payable at the office of said D. Hale Wilson & Co., Pensacola, Fla., and that after default In payment, and the note should have been placed In the hands of an attorney for collection, the maker would pay an attorney’s fee of 5 per cent. If paid before suit, and 10 per cent, if paid after suit and all costs of collection. That said note is long since past due aud Is unpaid, and before its maturity for a valuable consideration the same was Indorsed and transferred to your oratrlx, Emma H. Taylor, by the said D. Hale Wilson, aud she Is now the owner and holder of same. That to secure the payment of the said note the said J. Conrad Scott and his wife, Alice K. Scott, on the same day, March 24, 1906, did execute and deliver to the said D. Hale Wilson their certain mortgage deed as security for the payment of the said note, thereby conveying to the said D. Hale Wilson, his heirs and assigns, the following real estate situated in the city of Pensacola, Escambla county, Fla., to wit: Lots 3, 4, and 5, in. block 170, New City tract, according to шар published by Thos. C. Watson in 1SS4.

By the terms of said mortgage it was provided: That it was Intended to secure the payment of the promissory note above mentioned, and that the mortgagors would keep perfect and unimpaired the security thereby given, and that the said Indebtedness covered by said mortgage should become immediately due and said mortgage foreclosable for all sums secured thereby, if the said Indebtedness or any part thereof or the interest or any Installment thereof should not be paid according to the terms of the said note, and that, if foreclosure of said mortgage should be had or a suit to foreclose same be rightfully begun, the mortgagors would pay all costs and expenses of said suit, including an attorney’s fee to the attorney of the complainant foreclosing of $15, and 10 per cent, upon the amount decreed to the complainant, which costs and fees should be included in the lien of said mortgage and In the sum decreed upon foreclosure. That said mortgage was duly recorded on the 20th day of March, 1906, in the clerk’s office of Escambia county. That at the time of the Indorsement, transfer, and assignment of snld nromfsporv note to your oratrlx, Emma H. Taylor, the said D. Hale Wilson transferred and assigned me said mortgage to your oratrix and delivered to her said note and mortgage, and said note and mortgage have been In her possession ever since. That subsequent to the making and recording of said note and mortgage, to wit, on or about March 3, 1909. and long subsequent to the time when вяГЯ note and mortgage had been assigned and Indorsed to your oratrix by the said D. Hale Wilson, and at a time when the said note and mortgage were not in possession of said D. Hale Wilson, but were in possession of your oratrix, the said D. Hale Wilson executed what purported to be a cancellation of said mortgage, and procured same to be entered upon the mortgage cancellation records of Escambia county, Fia., but at the time of the execution of said cancellation the said D. Hale Wilson vras not the agent of your oratrix or authorized to act for her. That the amount due upon the said note and mortgage was reduced by a payment made on July 24, 1908, of $200, but that the balance with interest and attorney’s fees is still due and unpaid. That said cancellation was executed and placed upon record without the knowledge or consent of your oratrix, and without the payment to her of any sum whatever, and she never knew the same until during the summer of the year 1910, when her attention was called to the fact by some person who had examined the records, and found such cancellation apparently of record. The bill expressly waives oath to the answer of the defendant.

The defendants J. Conrad Scott and his wife answered the bill, In which they admit the execution and delivery of the note and mortgage as alleged, but deny that the same is long past due and unpaid, and disclaim any knowledge of the indorsement and transfer of the same to the complainant, or that she is now the owner and holder of said note. The answer further alleges that the defendants on or about March 3, 1909, without any knowledge that the said note and mortgage had been assigned and indorsed to complainant by the said D. Hale Wilson, and without any knowledge that the said note and mortgage was not in the possession of said D. Hale Wilson, and without any knowledge that the said note and mortgage was in the possession of complainant as alleged, paid to said D. Hale Wilson the amount of the said mortgage, and secured a cancellation from the said D. Hale Wilson which was duly recorded upon the mortgage cancellation records of Escambia county. The answer disclaims any knowledge as to whether the said D. Hale Wilson was or not the agent of the complainant And the answer further alleges that the whole of said Indebtedness has been paid, and denies that any part of the original due as alleged. The answer further alleges that until about the time of the filing of complainant’s bill and long after same had been paid they had no knowledge whatever that the said note and mortgage had been sold and transferred by the said D. Hale Wilson to complainant as alleged in her bill, and that such knowledge was acquired after the said note and mortgage had been fully paid and satisfied as hereinbefore alleged.

The answer further asserts that, by reason of complainant’s failure to notify defeudants of said acquisition and ownership of the said note and mortgage as alleged, complainant constituted said D. Hale Wilson as her agent, and the payments so made by defendant on account of the said note and mortgage to the said D. Hale Wilson ae aforesaid were made to complainant’s agent for the use and benefit of complainant. The answer further asserts that the said note contained the statement that “this note secured by mortgage,” and that the note and the mortgage were part and parcel of but one and the same transaction, and that by reason of the conditions contained in the mortgage as to the mortgagor keeping the premises insured for the benefit of the mortgagee, and keeping the taxes on the property paid up, and that, In default In the mortgagor in these respects, the mortgagee might pay the same upon which the mortgage Hen should extend to and cover all such payments for insurance and taxes, and that the said mortgage and all sums secured to be paid thereby should at once become due and foreclosable in the event of default in the payment of any sum due thereon or in the payment of any Installment of interest when due, and the covenant in said mortgage to pay attorney’s fees of $15 and 10 per cent, of the amount duo for principal and interest, all rendered and made the said note nonnegotiable, and that the same was merely assigned by said D. Hale Wilson to complainant, who took the same subject to all equities existing between the said Wilson and defendants, and, because of the assignment of said nonnegotiable note and mortgage to complainant by said Wilson, it became and was the duty of complainant to give the defendants due notice of such assignment, that defendants might make their future payments to complainant. The cause was heard before the chancellor on the bill, and exhibits of the original mortgage and note, and the answer of the defendants, and a final decree rendered in favor of the complainant and against the defendants foreclosing the said mortgage for the total sum of $390.06, inclusive of interest and attorney’s fees, and adjudging the mortgaged property to be sold to pay the same. From this final decree, the defendant J. Conrad Scott took his appeal* to this court, and assigns the said decree to be error.

the payment of a negotiable promissory note Is a mere incident of and ancillary to such note. When it conies to the payment thereof, the rights of the parties thereto, as well as of third persons, are governed by the rules relating to negotiable paper; in other words, payment to any one other than the holder of the negotiable instrument is at the risk of the payer, and is binding upon the holder of the paper only where express or implied authority to receive such payment is established by the person making the same. Payment of a negotiable note secured by mortgage by the mortgagor or his grantee, where made to the original mortgagee who is not In possession of the note and mortgage, is not binding upon an assignee thereof before maturity who was In possession of the papers at the time of payment, unless he had expressly or impliedly authorized such payment. Smith v. First Nat. Bank of Cadiz, Ohio, 23 Okl. 411, 104 Рас. 1080, 29 L. R. Л. (N. S.) 676, and authorities cited in notes, 138 Am. St. Rep. 850.

The duty of a maker of a negotiable note to see that the person to whom he pays it has It In his possession before making the payment is not affected by the fact that the note was on its face made payable at the office of the person to whom he makes the payment Powers v. Woolfolk, 132 Mo. App. 354, 111 S. W. 1187; Hoffmaster v. Black, 78 Ohio St. 1, 84 N. E. 423, 21 L. R. A. (N. S.) 62, 125 Am. St. Rep. 679, 14 Ann. Cas. 877; Baxter v. Little, 6 Mete. (Mass.) 7, 39 Am. Dee. 707.

The maker of a negotiable promissory note can satisfy it only by payment to the owner at the time of such payment, or to such owner’s authorized agent If the recipient of the money is not actually authorized, the payment is ineffectual, unless Induced by unambiguous direction from the owner or justified by actual possession of the note. This rule applies generally to all negotiable paper, Independently of the existence of any mortgage or other security. Marling v. Nonimensen, 127 Wis. 363, 106 N. W. 844, 5 L. R. A. (N. S.) 412, 115 Am. St. Rep. 1017, 7 Ann. Oas. 364 ; Baumgartner v. Peterson. 93 Iowa, 572, 62 N. W. 27 ; Burhans v. Ilutcheson, 25 Kan. 625, 37 Am. Rep. 274; Birket v. El ward, €8 Kan. 295, 74 Рас. 1100, 64 L. R. A. 568, 104 Am. St. Rep. 405, 1 Ann. Cas. 272; Smith v. Lawson, 18 \V. Va. 212, 41 Am. Rep. 688 ; Carpenter v. Longan, 16 Wall. 271, 21 L. Ed. 313; Swift v. Bank of Washington, 114 Fed. 643, 52 C. O. A. 339.

Under the rules of law governing negotiable Instruments as announced In the foregoing authorities, we think the decree of the court below appealed from in this case was proper.

• The defendant knew that he had made and delivered to D. Hale Wilson a negotiable promissory note that was transferable by indorsement to another, and yet, without Inquiring as to such transfer and without production of the note and mortgage, he pays the amount due upon such note to Wilson, the original payee, when such note had been transferred to the complainant and was then held and owned by her, and without any delegation of authority from her to said Wilson either express or implied to receive such payment Under these circumstances, such payment to Wilson was unauthorized, and the complainant Is not affected thereby. There is no merit in the contention that the conditions expressed in the mortgage rendered the note nonnegotiable. Neither Is there anything disclosed by the circumstances set forth in the pleadings from which It can legally be Implied that Wilson was authorized to act as agent for the complainant in receiving payment of this note from the defendant

Finding no error, the decree appealed from Is hereby affirmed at the costs of appellant

WHITFIEbD, C. J., and SHACKLEFORD, COCKRELL, and HOCKER, JJ., concur.

One thing we’re all just beginning to understand is just how deep this foreclosure problem is.  Much is uncertain, but this much is clear…the banks, lenders and mortgage companies, in their rush to make obscene profits, engaged in an international orgy of reckless conduct.  They were all so busy pushing consumers, closing loans and selling them up the river and shoving money in their pockets that they ignored “minor” details like keeping a proper paper trail or developing business infrastructure to manage the multi bajillon dollar glass houses of lending and trading they created.

Now that this has all surfaced, their response to the problem is to cut even more corners and engage in even more reckless and risky conduct as they push through foreclosures. The manifestation of all this are document mills, foreclosure mills and “robo signers” who are all working day and night to create the paper trails that should have existed long ago.  Defense attorneys caught onto this, circuit court and bankruptcy court judges are now learning about it and finally, so are federal investigators.

All of this reminds of why we need judges supervising the conduct of the lenders and bad actors that caused all these problems…..click on the link below for more information on how just one player in the fraud is part of the problem.

For months now, blogs like my Foreclosure Fraud Fighters blog, Foreclosure Hamlet, 4ClosureFraud, Max Garndners Livinglies, DinSFLA and other consumer advocacy blogs have been SCREAMING about systemic fraud in the foreclosure process.  We’ve speculated that it wouldn’t be long before news of serious investigations of the players in foreclosure fraud would break.

Some reasonable people, including judges, legislators and other advocates have questioned our claims of rampant foreclosure fraud.  Now, straight from the front page of the Money section of today’s Wall Street Journal comes this headline:

U.S. Probes Foreclosure-Data Provider

Lender Processing Services Unit Draws Inquiry Over the Steps That Led to Faulty Bank Paperwork

The full article can be found here. and the full text of the article is found below.  The most interesting thing from my perspective and for readers of this blog to note is that I have been reporting on the allegations reported in the Wall Street Journal article for months.  Note also that the Sylvia Nuer case that I reported on last week is cited in the article.

WITH ALL THE CREDIBLE INFORMATION AVAILABLE ABOUT FORECLOSURE FRAUD, HOW CAN ANY JUDGE GRANT FORECLOSURE AND HAVE ANYCONFIDENCE IN THE VERACITY OF THAT JUDGMENT?

BASED ON THE THE WELL-DOCUMENTED EVIDENCE OF FORECLOSURE FRAUD AND THE VERY REAL POTENTIAL THAT FORECLOSURE JUDGMENTS GRANTED BASED ON FRAUD ARE SUBJECT TO CHALLENGE…

ISN’T IT TIME FOR A MORATORIUM ON FORECLOSURES?

WHILE LENDERS AND THEIR AGENTS OF FRAUD ARE LOSING IN COURT,

ISN’T IT TIME THAT LEGISLATORS NOT CONSIDER ANY LEGISLATION THAT WOULD TAKE FORECLOSURE OUTSIDE THE SUPERVISION OF JUDGES AND THE COURTS?

By AMIR EFRATI and CARRICK MOLLENKAMP

A subsidiary of a company that is a top provider of the documentation used by banks in the foreclosure process is under investigation by federal prosecutors.

The prosecutors are “reviewing the business processes” of the subsidiary of Lender Processing Services Inc., based in Jacksonville, Fla., according to the company’s annual securities filing released in February. People familiar with the matter say the probe is criminal in nature.

Michelle Kersch, an LPS spokeswoman, said the subsidiary being investigated is Docx LLC. Docx processes and sometimes produces documents needed by banks to prove they own the mortgages. LPS’s annual report said that the processes under review have been “terminated,” and that the company has expressed its willingness to cooperate. Ms. Kersch declined to comment further on the probe.

A spokesman for the U.S. attorney’s office for the middle district of Florida, which the annual report says is handling the matter, declined to comment.

The case follows on the dismissal of numerous foreclosure cases in which judges across the U.S. have found that the materials banks had submitted to support their claims were wrong. Faulty bank paperwork has been an issue in foreclosure proceedings since the housing crisis took hold a few years ago. It is often difficult to pin down who the real owner of a mortgage is, thanks to the complexity of the mortgage market.

During the housing boom, mortgages were originated by lenders, quickly sold to Wall Street firms that bundled them into debt pools and then sold to investors as securities. The loans were supposed to change hands but the documents and contracts between borrowers and lenders often weren’t altered to show changes in ownership, judges have ruled.

That has made it hard for banks, which act on behalf of mortgage-securities investors in most foreclosure cases, to prove they own the loans in some instances.

LPS has said its software is used by banks to track the majority of U.S. residential mortgages from the time they are originated until the debt is satisfied or a borrower defaults. When a borrower defaults and a bank needs to foreclose, LPS helps process paperwork the bank uses in court.

LPS was recently referenced in a bankruptcy case involving Sylvia Nuer, a Bronx, N.Y., homeowner who had filed for protection from creditors in 2008.

Diana Adams, a U.S. government lawyer who monitors bankruptcy courts, argued in a brief filed earlier this year in the Nuer case that an LPS employee signed a document that wrongly said J.P. Morgan Chase & Co. had owned Ms. Nuer’s loan.

Documents related to the loan were “patently false or misleading,” according to Ms. Adams’s court papers. J.P. Morgan Chase, which has withdrawn its request to foreclose, declined to comment.

Linda Tirelli, a lawyer for Ms. Nuer, declined to comment directly on the case.

Ms. Kersch said LPS didn’t actually create the document and that the company’s “sole connection to this case is that our technology and services were utilized by J.P. Morgan Chase and its counsel.”

While the majority of foreclosures go unchallenged, some homeowners have won the right to keep their homes by proving the bank couldn’t show, on paper, that it owned the mortgage.

Some lawyers representing homeowners have claimed that banks routinely file erroneous paperwork showing they have a right to foreclose when they don’t.

Firms that process the paperwork are either “producing so many documents per day that nobody is reviewing anything, even to make sure they have the names right, or you’ve got some massive software problem,” said O. Max Gardner, a consumer-bankruptcy attorney in Shelby N.C., who has defended clients against foreclosure actions.

The wave of foreclosures and housing crisis appears to have helped LPS. According to the annual securities filing, foreclosure-related revenue was $1.1 billion last year compared with $473 million in 2007.

LPS has acknowledged problems in its paperwork. In its annual securities filing, in which it disclosed the federal probe, the company said it had found “an error” in how Docx handled notarization of some documents. Docx also has processed documents used in courts that incorrectly claimed an entity called “Bogus Assignee” was the owner of the loan, according to documents reviewed by The Wall Street Journal.

Ms. Kersch said the “bogus” phrase was used as a placeholder. “Unfortunately, on a few occasions, the document was inadvertently recorded before the field was updated,” she said.

The Foreclosure Fraud Fighters are out there strong and the network is growing.

Attached below are Powerpoint Presentations and PDF documents from conferences held by the lenders.  Great bankruptcy court opinions and general concerns and commentary by foreclosure mill attorneys.  The national scope of these “insider” presentations shows just how broadly the tide is turning against the lenders and their goons across the country.

afn5

afn6

afn7

afn8

afn9

afn10

The wave of foreclosures breaking across this country represents, both in scope and in dollar value, the largest and most blatant con in the history of the world.  Never before has so much wealth been transferred with so little evidence to support the transfer….and due to more abuses of the court process, the faulty “evidence” being admitted to support the transfer is disappearing.

We all know that alleged evidences of ownership of notes and mortgages is being fabricated in law firms and document mills across the country. (Search my blog for depositions of Angela Nolan, Erika Johnson Seck, Jeffrey Stephan) The one piece of evidence that is the flimsiest is the endorsement or allonge on the original note that a Plaintiff would submit to the court in support of Final Judgment of Foreclosure.  There is so little information on the standard endorsement that everyone is suspect…no date, can’t read signature, signature from bankrupt corporation, no corporate authority to transfer.

After a judgment is rendered based on the flawed promissory note, the court is supposed to retain the original promissory note….

it is in violation of Rule of Judicial Administration 2.430(f)(2) which requires that the clerk retain all exhibits until 90 days after the judgment becomes final, which means after a final judgment is entered and the time for appeal has expired or an appeal has been taken and disposed of. The clerk has no authority to release exhibits to the parties prior to that time. Otherwise, should an appeal be filed the appellate court would not have access to exhibits.

Moreover, in the case of original mortgages and promissory notes, they are not merely exhibits but instruments which must be surrendered prior to the issuance of a judgment. The judgment takes the place of the promissory note. Surrendering the note is essential so that it cannot thereafter be negotiated. See Perry v. Fairbanks Capital Corp., 888 So. 2d 725, 726 (Fla. 5th DCA 2004). The judgment cancels the note. The clerk cannot return these instruments to the parties.

JOHNSTON, v. HUDLETT, No. 4D08-4636 [March 31, 2010]

Unfortunately, this important part of the law is not being followed in courtrooms across the state. Clerks and judges are returning the evidence to the bad actors who are committing the fraud.  It’s just another example of the breakdown that is occurring and it will make it very difficult to undo or document the fraud in the years to come. The case attached here was an appeal from a foreclosure in Broward County, Florida and was just released yesterday.  The case reminds us all to make proper objections to every piece of evidence and to make sure a court reporter is present for all summary judgment hearings….I think the presence of a court reporter makes it far less likely that a summary judgment will be granted in most cases.

Thanks to the superstars at Icelaw…Florida’s Superstar Foreclosure Fraud Fighters!