Round Four

The Banks refuse to provide basic discovery in their purview and control, rendering it difficult to identify necessary parties (the true lender, or owner of the obligation in its current form), the amounts owed on the obligation, and what defenses apply.  The public records show the following evidence, much of it incomplete, unsupported and contradicted by the Banks’ agreements:

A.         The Deeds of Trust

May 25, 2006: original Deeds of Trust signed, recorded with Lender disclosed as “First Franklin, a Division of National City” and confusingly, with “MERS, Inc.” disclosed as both a “beneficiary” and a “nominee.”

Any subsequent transfers are transfers of a real property interest and must be in writing and conform to all requirements for real property interests. No other recordings of transfers of the Deeds of Trust appear in the land records.

MERS’ database is only available to Member Banks.  Homeowners can only identify their servicer by the MIN number.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..

B.         The Promissory Notes

May 25, 2006:  executed by  REDACT and claimed Lender “First Franklin, a Division of National City.”   

The securitization documents, filed with the SEC, contemplate another series of transactions, beginning well prior to the origination of this “loan.”   As a Massachusetts judge recently discussed with disfavor,[1] the securitizing parties do not always follow their own documents’ guidelines but they present a framework of what was contemplated for the First Note and known to the Defendants:

2006:  Possible notes pooled for placing in second designated pool; Certificates sold to investors providing capital to purchase

May 25, 2006: Loan originated with REDACT with pass-through money from investors, to underwriters to depositor to originator to mortgagor

Sept. Oct. 2006 cutoff dates:  Sales of notes must be completed from Originator to Seller, Seller to Depositor, Depositor to SPV.[2]

Two Sales and an Assignment took place, or the REMIC Trust faces derecognition by the IRS.[3]

Plaintiff blueprinted the facts that support his claim for wrongful foreclosure:

MERS is the claimed “beneficiary” and it cannot declare a default of the Note because as it has testified, it does not accept payments on Notes or account for Notes at all (Complaint ¶75).

The Note is not in default to these Defendants and they have failed identify the true party, and that the payments are going to the true party.  The Defendants must identify a valid agency relationship to a valid principal and demonstrate a default through competent evidence (Complaint ¶80)

The sale violated ARS §33-807 because there is no competent valid proof that there was a “breach or default in performance of the contract or contracts, for which the trust property is conveyed as security, or a breach or default of the trust deed.” (Complaint ¶80)

The Notice of Trustee’s Sale wrongly represented that MERS was the proper beneficiary under the Deed of Trust. (Complaint ¶¶77, 82, 83).

I am puzzled . . the [banks’] own securitization documents required mortgage assignments to be made to the plaintiffs in recordable form for each and every loan at the time the plaintiffs acquired them.  Surely, compliance with this requirement would (and certainly should) have been a priority for an entity issuing securities dependent on recoveries from loans, such as these, known from the start to have a higher than normal risk of delinquency and default.

US Bank, NA v. Ibanez, Wells Fargo Bank, NA v. Larace, 08 MISC 384283, 08 MISC 386755 (Mass. Land Ct. Oct. 14, 2009)(non-judicial foreclosures were invalid when notes were securitized and no valid assignments were  made at the time of the exercise of the power of sale).

[2] See demonstrative chart attached as Exhibit B.

[3] REMICS are tax favored pass-through trusts with strict rules. A qualified mortgage must be purchased by the REMIC within three months of the startup date. IRC § 860G(a)(3)(A)(i)-(ii)(2006).   If it is contributed after the three month window, it must qualify as a “qualified replacement mortgage.”  IRC § 860G(a)(4)(A)-(B)(2006).    A “qualified replacement” must be traded for a defective obligation and may not be conducted more than two years after the startup date. 26 U.S.C. 860G (a)(4)(B)(ii)(2006).  The IRS imposes a 100% tax on net income derived from prohibited transactions.  26 U.S.C. 860(F)(a)(1).


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