Real Estate Foreclosure and a Ground Breaking Court Decision


Readers of this blog fully understand foreclosures are on the uptick and will likely to stay that way for the remainder of the year. However, some people may not fully realize the challenges being mounted against foreclosures from all fronts.

It seems the lenders/banks have it had too easy for too long and have become complacent in their obligations to prove their standing, i.e. right to foreclose. To compound the problem, some note owners aren’t even aware foreclosure is being carried out in their name.

The Decision
Probably the most publicity generated in this arena is the Boyko decision in Ohio. It seems fed up, is a mild way to describe the feelings of the property owners in this case.

This link is a 6 page pdf download of Judge Boyko’s opinion. It has far reaching possibilities and isn’t being taken lightly by people and organizations fighting against foreclosure as is practiced today.

An article in Cleveland’s newspaper, The Plain Dealer, explains the case and some of the rational in the judge’s opinion.

You don’t have to be a rocket scientist to determine this case just may become the precedent in fighting foreclosures and winning. Since loans are usually bundled and sold off to investors as far off as China, it becomes almost impossible to sleuth out who really owns the loan.

The Implications
If the judge is correct and only the owner of the note and not the note’s servicer, originator or original lender can foreclose, the implications are huge. To bolster the argument of the fight foreclosure advocates, The Home Equity Theft Reporter has several interesting articles here and here.

To Challenge or Not to Challenge
I’m not sure who the person doing the narrative in a video titled: Make Em Produce the Note is, but his message is clear. He is telling everyone who listens to challenge their foreclosure notice by making the foreclosing party produce the note.

What is especially interesting in this arena is the homeowner isn’t restricted to only federal court. The homeowner can start at the lowest rung of the state court system and file suit against the foreclosing party.

As a side bar, it appears this is true in trust deed states as well because once the foreclosure action is started in court, the foreclosing party is stayed from proceeding any further in the foreclosure process. I am not a lawyer and I am not giving legal advice. I am a foreclosure consultant who likes to be as knowledgeable as possible.

I present the above information and sites as references and suggest to anyone in this arena to perform their own due diligence. Above all, if these court cases and theories are on the mark, the whole foreclosure landscape in this country will dramatically change.

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  1. rob powell on

    Great post. I remember that Edward Griffin talked about this loophole a few years back but no one took him seriously…mostly because he is a known as a conspiracy theorist guy. At least I think is was Edward Griffin.


  2. I don’t recognize the name Edward Griffin but I do remember this loophole from several years back but didn’t pay close enough attention as I wasn’t an active foreclosure participant. Today, my ears and eyes are wide open to any and all ancillary activities and court cases in the field.

    Luckily for us, we have the Internet today and news spreads faster than wildfire across the airwaves. If anybody has any additional info, I certainly welcome knowing it.

  3. It’s only a delaying tactic folks. In all of these cases there is an instrument that has been recorded that demonstrates someone has a lien on the property. The fact that the paperwork hasn’t caught up with the foreclosure proceedings doesn’t mean that there is any defect. Just another example of activist judges and the tort bar milking the system for some money. These folks will still lose their houses.

  4. Tom Lindmark may be correct in that in the end this will be viewed only as a delaying tactic. However, if I correctly read the outcome of all the cases I referenced, none of the people bringing the suits lost their homes to foreclosure.

    This tells me this is more than a delaying tactic that will disappear. Again, I am not an attorney and I am not in a defensive posture on this information. I am trying to learn as much as possible.

    From my legal research days, I seem to remember standing as a very integral part of bringing a lawsuit. If one does not have standing, one can not bring a suit.

    Applying standing to foreclosure, if the servicer or original lender is foreclosing but no longer owns the loan, it would appear they don’t have standing. This is, in part, what Boyko said in his decision.

    I must lead a dull life since I find this kind of drama exciting .

  5. Well sir, I’m glad you are at least in from the cold . Regardless of how the current actors on the stage are playing the unwritten script it would appear this matter will continue. Being a “for the little guy” type, I’m rooting for the homeowner.

    I guess that last statement brings me in from the cold as well. I feel certain both of us will be watching this issue unfold. At the tender age of 63, I hope I get to see the final curtain.

  6. I saw this post over on RE Voices, and followed the link. This is pretty interesting information, and the comments are as well. I’ll be re-reading this and the links included to make sure I’ve got all my facts on this. I’m sure that judge’s finding will be a wake-up call to all those involved in foreclosure proceedings!

    Thanks for the research and all these details.

  7. Las Vegas Real Estate Guy on

    You know what they say, just when you think you’ve seen it all…put up a post with a trackback to this story. Unbelievable. I thought the foreclosure mess couldn’t get more complicated.

  8. what i’m surprised in is how much $300,000 can get you throughout different locations. In one lacation it could get you a mantion, and in another location it can only get you something very small. I’ve never been able to figure that out.

  9. Pingback: Just when you thought it was safe to go back in the water « The Real Estate blog

  10. Hello Las Vegas Real Estate Guy,

    Thanks for the post. Yeah, IMHO, this is just the beginning. Social policy being what it is never lets the pot stay unstirred. BTW, I hope you are doing well in Las Vegas given the number of foreclosures and transient population.

    Good luck!

  11. Zach,

    Thanks for the post. BTW, I looked at your link and liked what I saw. The exhaust jack is one fantastic idea. When I had to travel between here and California I could have used it. I had a flat and was stuck on the rising side of the mountain highway.

    Regardless, what makes the American dream the American dream is the pricing. Everyone has a shot because of the different pricing levels. The beauty, to boot, is each region knows its inherent value.

  12. James – Thanks for the case cite. Great reading. I would believe most of these loans could fall into the predatory category given the lender made them to people who couldn’t afford them. But, we’ll have to wait and see how others will attack their foreclosures.

  13. James,

    Thank you for the compliment on my May 4th post. I share your opinion of us being in Part ONE of this thing called foreclosure. When I was a front line lender, the guy doing the paperwork, it amazed me that so many lenders seem to only care about the fee amount they could generate. I also was amazed at the number of people who looked at the lending arena like they look at the insurance arena.

    It seemed to be OK to rip off a lender in the same manner you would rip off an insurance company. Ethics was lacking on both sides. As the front line guy, I wasn’t allowed to question anything. One episode stands out clearly.

    I had a non citizen from south of the border apply for a loan. When his credit came back, he had 3 SSANs. My processor called social security and was told we couldn’t discriminate and to use the SS# he was using currently.

    Mind you, we weren’t discriminating at all. We simply wanted to comply with the law as we were told it existed. All I’m saying with this example is the blame is far wider than one would expect.

    So, knowing all that, one still asks, how is all this gonna shake out? My answer is, I don’t honestly know but I do know we have to have a set of WORKABLE laws and procedures that apply across the board that can’t be bent or broken.

    Also, being on the profit side of foreclosure is the best all around remedy at this time because the profit siders are the ones keeping the houses occupied and the money circulating. I am proud to be on that side of the fence given it helps even those who call us names.

    As for Monopoly read Modern Money Mechanics by the Chicago Fed and you will see that it is the only kind of money we’ve had in existence for almost 100 years. If you know anything at all about full faith and credit, you’ll know why gas is $4 a gallon and butter is $2+ a pound.

    By the way, if you aren’t doing anything, include 12USC95(a) and (b) in your reading and you will see why your opinion doesn’t matter. Unless they’ve changed 28USC535 it should still tell you the authority of the federal police. However that’s been stretched out of shape. Waco is probably the best example of its skewered application.

    Most people don’t understand the intertwineability of these events. They all leave their fingerprints on future acts and generations. The foreclosure suits and pending lawsuits are reactionary to the sores created by unlawful acts of public servants.

    The real answer, in my opinion, lies in two documents. One is our Declaration of Independence. It outlines a way of life we are living today and two is the Communist Manifesto. It outlines how we are living that life.

    We are the only “free” Communist government in the world. Mr. Bush has pushed us closer to reflect a Soviet style but it hasn’t been fully implemented as of yet. The groundwork is in place through Executive Orders and government agency creations.

    I will stop here as this is more than you may have wished to hear on my thoughts. Having been actively involved in what was called a protest movement, I was forced to study the conditions, laws and procedures as they existed and not as we wished them to be. It is amazing what one learns when one reads the law as written and witness its application. Read footnote 14 in Brown vs. Chrysler for a mind blower.

    Anyway, private property ownership is still with us for a limited time so we should enjoy it while we can. If you aren’t doing anything, research the Al Gore BS machine and you’ll see how private property rights will be usurped, at least according to me.

    As always, thanks for your participation as you bring some good stuff to the table. It is refreshing to speak with someone who can think and express himself at the same time.

  14. James – I will look at Mr. Mortgage later today and for the answer to the 50% question it goes lilke this: They have a better way out. I don’t know what it is at the moment but I guarantee it exists. My guess is it is in the legislation Bush is circulating in Congress. It contains a bail out for all of the big boys.

    Bear Stearns was the trial balloon and it passed with flying colors. Everyone else is next. As for the so called borrowers not qualifying for a refi, well, that just isn’t so. The qualifications are determined by the lender according to the loan applied for.

    On a refi of the current loans, it would be easy to refi the person in trouble because the loans can be reworked in a number of ways. The easiest being to refi the balance over 40 years w/o a prepayment penalty.

    The refi could even be in parts with the payments geared to the borrower’s current income. With no prepayment, the borrower could sell the house and get out from under the loan.

    It would also (probably) entail forgiving some of the penalties and maybe all of the accrued intererst that was generated during the default. As I look at different loans and attendant charges of the people who call me, the lender wouldn’t really be eating a lot of money. In actuality, they would be getting more if they reworked the loan.

    But, as I stated above, they aren’t doing it because there is a plan B. We don’t know what it is, but it is alive and well. There is no other explanation given the current foreclosure spree.

  15. James – Yep, your scenario – Sac-Stockton, Modesto, Tracy – sounds like one that happens in every boom/bust cycle. John Templeton seems to have hit the nail on the head. You my friend are to be congratulated for your superbly lucky timing. I say lucky in the good sense because you could have held on for a few bucks more and lost the whole enchilada. I know people here in Reno who wanted that extra 10 or so K and now are upside down.

    A fix for the people you mention is simple and it is the one that has always been available for them. It is called an apartment.

    They too had the same opportunity as you did but chose to go head over heels into debt. Their reason makes no difference as they are the only ones responsible for their decisions.

    I would like to help everyone but not everyone is helpable. I can say that with confidence. When I was a stock broker I interviewed about 2000 people eyeball to eyeball. That’s all I’ll say in the way of proof.

    My wife and I sold our home in Vacaville in ’04 and made a buck or two. Some of our neighbors were laughing at us for selling low. They all knew for dead certain the market would never stop going up.

    Today, they all say they wished they had followed our lead. Amazing how we advanced from fool to brain surgeon…

    I could lament about some of the deals I missed but why, there will be more and that’s a God given given. All we can do is all we can do and take care of ourselves. If more of us would concentrate on only us, we’d have far fewer national messes to clean up.

    You are a perfect example of what I just said. You took care of you and didn’t create any mess for anyone else to cure. That kind of action will always be wise.

    Now, I want to annoint you as the messiah of “no more messes” so people won’t repeat their foolish behavior. I hope you accept I say tongue in cheek.

    Your capital gains taxes were not only an important lesson but a clear cut indicator you made money. Making money is always a good thing. I bet if you repeat the process in Pleasanton, you’ll do it smarter and pocket even more money. If you want to invest some of your capital in Reno, let me know.

    Good luck to you.

  16. Jmaes – The legislation I am talking about is the one that is putting all of the investment houses under the federal reserve. Since the banks are already in place, all that remains is the investment houses. That’s how it’ll go down. Everything will be truly federalized.

    Avoid Foreclosure – yes, those items mentioned on the referenced site certainly are methods. Unfortunately they are the man’s way of keeping his boot on your neck. He gets everyone running with the same procedures and pretty soon he closes the gate and they are no longer wild, just captive.

    In other words, the pablum is simply published and republished and really doesn’t work. Once people see it doesn’t work they look at the savior who happens to be the same wizard who created the problem.

    His answer is federalization. And, scary, it seems to be working. After all, there oughta be a law…

    Just my 2¢.

  17. Oh, here is another thought on what happens, or will happen to those vacant houses. We have an unprecedented number of illegals in this country. Eisenhower and Hoover each had a program that removed them because of threats to American jobs. This administration hinders their removal and doesn’t give a tinker’s damn about Americans having jobs.

    These illegals have to live somewhere. Guess what just became available? Over 2 million homes. If the guvmint takes over the investment houses it takes over their bad loans (read foreclosed and empty properties). The new occupant gets to buy it at a bargain price and with a bargain interest rate.

    I would bet if one toured the CA Central Valley and/or the San Diego Valley one would see this program already in place. I have no intention of driving about 6 hours one way to research my opinion so anyone still living there who reads this post please comment.

    BTW, I make no apologies at the tender age of 63 for my feeling of Americans first. My ancestors came through Ellis Island and didn’t demand those living here at that time change their customs and laws. They didn’t demand they be given free medical, free schools and free housing. But that’s another story.

    James – Self Directed IRA, brilliant as the Guiness boys say in their commercial.

  18. James – I first read about the proposal in the news pages of yahoo or msn. The proposal is to align the investment houses under the fed reserve system. As for the gov being able to take over the bad loans, that would be easy to do. They simply tell the investors to “redeem” their loans through the fed. What investor w/a bad loan would say no?

    The investment banks already fall under the SEC so they have been “taken over” so to speak. The proposal I mention will either abolish the SEC or move it under the fed as well.

    I will have to google Henry Paulsen as he supports this idea. He has made a speech or two about this plan so the proposal should be easy to find.

    Here is a point many people don’t understand – if the government created it, they can abolish and/or alter it. All agencies fall under this rule. End of story. I live w/a real life example. My wife is a disabled veteran who uses the VA. I won’t go into specifics but take my word for it, the workings of this agency are a perfect example.

    BTW, martial law exists and is codified in 12 USC 95(a) and (b). I believe a simple executive order is all that is needed to bring it to life. The patriot act is another example. Only it is martial law in parts.

  19. BTW, our Homeland Secuirty Dept was patterned after the Third Reich Homeland Security Dept. Prescott Bush was a trading partner of their commander in chief. That too is a whole nuther story.

    Here are 2 sites with info about Henry Paulson’s speech in which he talks about the new face of regulation in the investment/bank arena:

    As a secretary he is responsible for floating the trial balloons to see what will and what won’t be acceptable in the legislation that will make it through Congress. Pay attention to the reorganization of the investment sector. Also, don’t be afraid to read between the lines because that is exactly where the real scoop lies.

    Just my 2¢. Oh, before I forget, practice saying Comrade in Spanish.

  20. Robert N. Weaver on

    What is it with the word “loophole?” Having “proof” of a legitimate claim of entitlement is NOT a loophole. It’s a “requirement.” And if everyone were more commercially savvy than we are then maybe we could should down this false “lending” system.

    Has anyone read the Mortgage Bankers Association of America’s Mortgage Banking Terms? Check out the definition of “borrower”:

    Borrower: One who receives funds in the form of a loan with the obligation of repaying the loan in full with interest. MBA. Mortgage Banking Terms: A Working Glossary (8th Edition, 1997) p. 19

    Hmmm…let’s analyze that:

    Form: In contradistinction to “substance,” “form” means the legal or technical manner or order to be observed in legal instruments or juridical proceedings, or in the construction of legal documents or processes. Antithesis of “substance.” Black’s Law Dictionary (6th Edition, 1990) p. 651, col. 2

    Substance: Essence; the material or essential part of a thing, as distinguished from “form.” That which is essential. Black’s Law Dictionary (6th Edition, 1990) p. 1428, col. 1

    Now lets couple that with the FACT that there is NO “MONEY” in circulation, only “credit” instruments, and the FACT that “credit instruments” are ALL (and all means all all the time) “promises to pay” and what do we have? NO LOANS. But the banks get your labor, and property if you don’t labor for a one-sided debt.

    I find it amusing how this guy says “[t]his process is not intended to help you get your house for free,” and “[i]t’s about fairness.” Is it fair that the bankers risk nothing and you risk being homeless and your life turned upside for at the least 7 years?

    Is it fair that you are not taught the laws of contract and commerce in elementary school and have to “hire” someone to “read” for you? How do you know if the one doing the reading for you is not in league with the one he’s supposed to be assisting you with? You wouldn’t know. Which although it seems like help from this guy, (an attorney) who seems to be forgetting or ignoring the “law of contract” not to mention the statutory requirements for real property. I.e. (i) under the law of contract it’s a “BREACH OF CONTRACT” and this kind of breach ENDS any obligation and no one should have to continue paying (sic), and (ii) doesn’t statutory law “require” that ALL real property agreements be in “writing?” When you make a “new” agreement regarding the real property, isn’t it “required” by statutory law to be “in writing?”

    Is it fair that children are given as part of their curricula assignments to “sign” papers (with their parents no less) student contracts without being taught the weight of their “signatures” and potential consequences, and then be expected to instantly know when they graduate this “learning” institutions and seek out jobs that require “signatures” on their employment “contracts?” I find it strange that ANYONE would think this is harmless just because its not enforceable in a court of equity or law due the children being minors. It is conditioning that results in the problems that are present today with this foreclosure fiasco and will only compound.

    Is it fair that after all this we have some smart a$$’s denigrating homeowners because they got in over their heads. Or making asinine comments about if they can’t afford to hire somebody they don’t deserve a house, or did they “read” what they “signed” or comments of similar idiocy. These people (bankers and lawyers) go to SEMINARS and HOLD CONVENTIONS to write MANUALS on how to structure these contracts. And then the lowly consumer is expected to read and KNOW this. GET REAL!

    We won’t even discuss the illegalities and bogus “lending” of securitization. I.e. the so-called lender being in actuality a “originator/servicer” Neither of which involve the actual “lending” of money.

    I could go on and on. But bottom line is why are the banks so protected from the laws of commercial nature? Why does it not make sense that everybody with an account and funds in their account can’t all at one time go and demand their balances without financially ruining the bank. Wasn’t the “agreement/contract” that account holders be provided “their” funds back “on demand?” This is more of ignorance of the laws of contract and commerce.

    This tirade can be summed up by the quote of former president John Adams: “All the perplexities, confusion, and distress in America arise, not from defects in the Constitution or Confederation, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit and circulation.”

    Their has been no truer statement. As THAT would put an end to all this financial carnage going on.

    Just my .02

  21. Robert,

    Thanks for the comments. Your remarks are neatly reenforced in Modern Money Mechanics pages 1-6. The rest of the book is immaterial. The fed quit publishing this book years ago but if you do a search using those three words you will find it verbatim.

    Here’s the real problem – How many people will understand it? I can tell you first hand what happens to a person who preaches exactly what this book says. Big brother can say it, but you better not is all I’ll say.

  22. I read recently the government is working to pass a bill to help home owners that have defaulted on their home loan. I forgot the name of the bill but hopefully it passes.

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