Even so, the costs could be significant.

If a homeowner sues and wins,

claiming lenders violated ability-to-pay rules, lenders might have to pay
three years of finance changes, legal costs and actual damages, which could
include down payments and myriad other costs, according to Jeffrey Naimon,
a partner at BuckleySandler LLP.
As in the past, some borrowers might claim -- rightly or not -- that they
misunderstood documents or were hoodwinked by mortgage brokers or
lenders.
The consumer could argue, They told me I had to mark that box or I wouldnt
get that loan, said Scott McNulla, a vice president at Clayton, a unit of
Radian Group Inc. that does diligence work for lenders.

Living With the Lies

Posted on September 9, 2015 by Neil Garfield

People ask me constantly why I named this blog livinglies. There are lots of reasons. Below is a list of 25 lies we live
with. The first sentence is the lie and what follows is a short statement that shows it to be a lie.
1.

Certificates issued by REMIC Trusts are mortgage backed securities.// If the Trust was never funded and
never operated and never paid for the loans, there are no loans in the trust and there is no pool of mortgage
loans. Hence the certificates are neither securities nor mortgage-backed.

2.

Servicers named in the Pooling and Servicing Agreement (PSA) for a REMIC Trust have authority to collect
payments from borrowers.// If the trust does not include the loan, the company has no legal authority to
collect or enforce on behalf of the Trust.

3.

Trustees named in the PSA own the mortgage loans on behalf of the Trust. //If the Trust never purchased
the loans, then the Trustee owns nothing.

4.

Certificate holders in a REMIC Trust have a beneficial interest in the mortgage loans, as stated in the PSA.//
If the Trust never purchased the loans, the certificate holders are holding worthless paper.

5.

The cutoff period in the PSA and the REMIC statute doesnt matter. //If the PSA and the statute, which is
incorporated into the PSA, both specify that the Trust is open for business for only 90 days in order to qualify
as a pass-through entity, and state law provides that any action contrary to the provisions of the Trust

instrument are void (not voidable) then the cutoff period ends the period in which loans can be added to the
trust. If no loans made it in, the trust never became active.
6.

Funding the the original loan doesnt matter.// If a company lends no money, it cant be considered a lender
and it isnt the owner of the loan.

7.

Assignments from the originator, even if the originator loaned no money, cures the defect of no
consideration, even if the assignment is not supported by payment or consideration.// Nothing plus nothing
equals nothing.

8.

Endorsement of defective notes cures the defect.// If the note is not enforceable then endorsing it does
nothing more than convey the rights of the the endorser. There is no cure.

9.

Withholding the identity of the creditor is legal. //See Truth in Lending Act and state laws governing
deceptive lending practices.

10. Modification with a company falsely claiming it has servicing authority creates a valid contract curing all
defects before the modification. //If the company is not a servicer because the loan never made it into the
trust, then it has no more authority to modify than to collect or enforce.
11. The Truth in Lending Act is irrelevant.// It is the law of the land. Judges who ignore it are not following the
law.
12. Disclosures are a technicality. //Congress passed TILA to assure that borrowers know the identity of their
creditor and the terms of the deal in plain language. If borrowers knew all about the undisclosed
compensation and profits arising from their signature on the loan documents they would have had an
opportunity to realize or investigate other options without intermediaries who were collecting fees and profits
sometimes in excess of the principal amount of the loan.
13. Rescission requires a court order to make it final. //Rescission is effective upon mailing. There is no
distinction in the statute between disputed and undisputed rescissions according to Justice Scalia in
Jesinoski v Countrywide. Rescission is as effective as a court order. Rescission is the equivalent of a court
order. Both are effective by operation of law. Both require legal action for the order or rescission to be
vacated or reversed.
14. Rescission requires a good reason. //There is no restriction upon the mailing of a rescission; mailing of a
rescission cancels the loan contract and voids the note and mortgage by operation of law. If the rescission is
wrongful, the actual creditor must establish standing (without the void note and mortgage) and then allege
facts that, if proven, would justify the court entering an order to vacate the rescission.
15. A wrongful rescission is void even though it was mailed. //Justice Scalia says there is no distinction between
disputed and undisputed rescissions they are all effective when mailed. See Jesinoski
16. Rescission requires tender of property or money. //Under TILA no claim for money or property can be made
by the creditor until AFTER the creditor/lender has complied with ALL three duties required under TILA: (1)
return of the canceled note (2) release and termination of encumbrance (mortgage or deed of trust) and (3)
payment of all money paid by borrower all the way back to inception of the loan PLUS any money paid as

compensation for the origination of the loan to any party, whether disclosed or not. Then the creditor could
demand payment, less any finance charges.
17. Holders of a promissory note do not need to prove or answer questions about the underlying transactions
upon which they rely to enforce the alleged debt. //Only holders in due course who have purchased a loan
for value, in good faith and without knowledge of borrowers defenses can enforce the paper even though
the underlying transactions were fraudulently represented. Regardless of whether the party is a holder or
holder in due course, both are subject to discovery tot est the sufficiency of their assertion of holder or HDC
status.
18. Borrowers are all looking for a free house. //Borrowers are looking for a fair deal with their actual creditor.
They are looking for clear title. It is the intermediaries who are bringing false claims for foreclosure that are
seeking and getting free houses.
19. The boarding process is adequate assurance that the information obtained from prior servicers is
accurate.// Experience shows that the new servicer knows nothing and does nothing about errors in the
records kept by prior servicers.
20. Robo-witnesses know what they are talking about.// Upon cross examination it is obvious that in nearly all
cases the witness has merely memorized a script and neither knows nor cares about the accuracy of the
information on the report he is testifying are business records.
21. Business records come from the business of the servicer. //In actuality the records referred to as business
records come off of an independent IT system maintained by an outside company like Black Knight,f/k/a
LPS f/k/a Lender Processing Services ONLY in cases where the loan is subject to false claims of
securitization (see above).
22. Mortgage Electronic Registration Systems (MERS) maintains accurate records of transactions involving
each mortgage.// MERS is an IT platform with thousands of different companies having access to make
changes int eh system, get themselves appointed as officers of companies for the purpose of fabricating
assignments without any underlying transactions. MERS expressly waives any claim for the debt, note or
mortgage on its website. It is a sham nominee.
23. A MERS assignment is valid.// Since MERS never handles money in the transactions involving any loan, it
impossible for it to be the owner of anything. It disclaims such ownership publicly on its website. An
assignment from such an entity is the same as an assignment from a cartoon character a fictitious entity.
MERS does not meet the elements of a beneficiary on a deed of trust or a mortgagee under a mortgage. It is
never the holder of note, much less a holder in due course, and is never the owner of the debt.
24. Lawyers representing the alleged servicers, trustees, and trusts are suborning perjury when they put on a
witness that in actuality is a trained robo-witness. //Unless the lawyer actually knows something as a
confirmed fact, he or she is merely doing their job when they put on witness who might be lying. Better to
concentrate on the witness rather than the lawyer. EXCEPTION: Where fabrication of documents took place
within the lawyers offices or at their direction, then preferring such documents as evidence would be
suborning perjury in my opinion.

25. The Judges are biased and corrupt. //Everyone possesses biases. That doesnt mean they cant judge fairly.
It has taken a long time to educate judges about the truth of lending in the mortgage crisis. How long did it
take you to understand some of the important fine points of finance as applied to residential mortgage
loans?