Tips & Tactics
Video | Learn More | American Justice Foundation
Stopping Lawyer Tricks ...
Please read the testimonials at right! →Just a quick tip today.
Lawyers cannot "testify".
They do it anyway.
Because people allow it!
The rules forbid it.
You can stop it, if you do what I teach!
You must stop it, if you want to win!
This mid-week Tips & Tactics can only touch on this very important point of lawsuit warfare, but do what I say here (and learn the rest in my leading, affordable, case-winning, official Jurisdictionary step-by-step 24-hour course that everyone is talking about) and you can stop the lawyer on the other side from cheating!
It's cheating for lawyers to testify.
They lack "legal competence" to act as witnesses!
Lawyers lack personal, first-hand knowledge of the facts of their client's cases. In legal terms, we say they lack the requisite "competence" to testify. The only people who can testify to facts are people who have "personal, first-hand knowledge" of the facts. (More about this in my course.)
YOU MUST STOP LAWYERS FROM TESTIFYING!
They will sneak it in whenever they can. They will do all they can to get into the record facts for which they have no witnesses, documents, or things to prove those facts.
Not only that, but they will "testify to facts" for which they have witnesses just to emphasize the facts, and this too is against the rules.
The rules forbid lawyer testimony!
Learn from me and increase your odds of winning!
Lawyers will sneakily talk about facts that they have no witness to talk about, no documents or other things to use to prove the facts they talk about. They will "tell" the court the facts they cannot prove ... against the rules!
It is cheating of the highest order!
But, they will do it ... if you allow it!
It is against the rules ... rules that are your friend!
If you allow it, you weaken your case.
If you allow enough of it, you will lose!
Not enough time today to go into detail about this, but the next time the lawyer on the other side starts leading his own witness or telling the court what the facts are, you jump to your feet and say, "Objection, your Honor. Counsel is testifying. Counsel lacks personal first-hand knowledge of the facts to which he (or she) is testifying. Move to strike."
If the judge allows the cheating to continue, object again!
Many lawyers are afraid of the judges, so if you hire a lawyer and pay the lawyer good money, don't be surprised when your lawyer (who is taking your good money) fails to object when his friend the lawyer on the other side begins to testify! If you have a lawyer, insist that your lawyer objects to any introduction of facts by lawyers on the other side!
People pay lawyers to fight for them, but many lawyers refuse to fight the judge!
But, fighting judges is part of what it takes to win!
And, objecting forcibly is part of the tactic of winners!
If you don't have a lawyer, YOU MUST OBJECT!
Now is the time to order my affordable, case-winning Jurisdictionary step-by-step 24-hour course and study it carefully so you don't find yourself behind the 8-ball when it comes time to argue in court ... at hearings or at trial.
Winning is easy if you learn what I teach in my course!
I know what it takes to win. I practiced law nearly 25 years. I can help you, if you're willing to learn from me!
Pro se people often do not get justice.
Let's examine a few facts:
- Most pro se people don't know the rules.
- Most pro se people don't know how to prevent the lawyer on the other side from playing tricks with the rules.
- Most pro se people make assumptions about what is "admissible evidence" and stuff that isn't.
- Most pro se people don't know how to draft their pleadings or motions properly.
- Most pro se people don't know why it's important to write proposed orders for the judge to sign.
- Most pro se people don't know why, when, or how to make effective objections in court.
- Most pro se people don't understand what facts are critical to winning a case and what facts are of no consequence but only muddy the waters with court-confusing insignificance.
- Most pro se people don't know why it's so vitally important to cite controlling appellate cases in support of their pre-trial and trial motions.
- Most pro se people don't know how to arrange for a written transcript to be made of all proceedings before the court, so they can control the judge.
- Most pro se people waste valuable court time with non-essentials, fail to appreciate the needs of others who have their own problems to bring before the court and, as a consequence, tend to make judges dread pro se cases.
Pro se people who know what I explain so simply in the official Jurisdictionary step-by-step 24-hour course are winning and even getting compliments from judges and even opposing lawyers ... because they do it right!
Read the testimonials at right! ⇒
Not all judges are "against" pro se people "just because they are pro se". Most of the judges I knew in my 25 years were good people who cared about other people and did their best to guarantee justice according to the rules.
But! You must know how to protect yourself!
Pro se parties who know the rules and how to use them to protect themselves from courroom corruption the way my Jurisdictionary step-by-step 24-hour course makes so easy-to-understand don't let crooked lawyers get away with their smoke-and-mirrors tricks!
Read the testimonials at right! ⇒
It does no good to complain after losing.
The difference between winners and losers is the fact that winners learn how to win!
If you want to make it complicated and muddy the pond with all kinds of nutty arguments, you can do so, make the judge angry, and lose when your "evidence" isn't admitted because it isn't "admissible evidence", etcetera.
You can demand your Constitutional Rights, instead of learning about causes of action and their elements that win lawsuits, and you will lose.
You can refuse to learn the rules of evidence, the rules of procedure, and the tactics and strategies my course is so popular for making easy to learn, and you will lose!
If you want to win, get my affordable Jurisdictionary step-by-step 24-hour course now and master the case-winning strategies and tactics I used for 25 years as a case-winning lawyer in state and federal courts.
If you're paying a lawyer, know what your lawyer should be doing to earn his fee and win your case.
If you don't have a lawyer, know what you must do to force the judge do what's right and prevent the lawyer on the other side from cheating.
It's that simple.
My affordable, popular, official Jurisdictionary 24-hour step-by-step lawsuit course will show you how to prepare orders, write powerful pleadings, draft and argue motions, object in court, get admissible evidence into the record, prevent the other side from getting lies into the record, do legal research, compose your legal arguments, and much, much more.
Read the testimonials at right! ⇒
You'll learn how to avoid filing an answer by moving the court to dismiss or strike the complaint or require a confusing or poorly-worded complaint to be re-written.
You'll learn how to use effective discovery tools to force the other side to produce facts that may lead to admissible evidence.
You'll discover how to move the court and demand that the judge enforce your legal rights.
In short, you'll learn how to save money, maximize your winning power, and resolve conflicts peacefully and profitably ... according to the rules!
Once you master the simple concepts I teach, you'll be more powerful than most lawyers I met in 25 years as a licensed lawyer in state and federal courts as a licensed bar attorney!
Of course you cannot learn all you need to know about what it takes to win by waiting for my Tips & Tactics each week. You need to learn the case-winning tactics in my affordable Jurisdictionary course that will show you what it takes to win, step-by-step in just 24-hours.
Whether plaintiff or defendant, you cannot hope to win if you don't know what my course teaches.
These tips should convince you to order my complete course ... whether you're a plaintiff or defendant.
If you don't know what opportunities you have in court, you don't have much of a chance of winning!
Let me urge you to order my course today (if you don't already have it) so you won't make the common mistake of assuming you already know everything you need to win!
Remember: Winners are people who know how the game is played to win -- whether plaintiff or defendant.
- - - - - - -
The essential tools and elements are explained in the video you can watch right now by clicking the judge.
You won't believe me, but most lawyers (and nearly all law school professors) don't have a clue what it takes to win. Many law schools don't teach "causes of action" or the elements necessary to prevail. It's true!
Many law schools don't teach how to use your five (5) discovery tools or why you must be courageous and fight the judge and demand your right to get evidence in the record using your discovery tools.
Many lawyers are afraid to upset judges, so they let things slide. They don't object. They don't "instruct" the judge on the law. They just lay back, take their hourly fee, and let their clients lose ... and those who pay lawyers yet don't know what Jurisdictionary teaches about winning are led to the slaughter by their own lawyer.
Sad, but true!
I know what it takes to win. I did this 25 years!
My Jurisdictionary will show you how in just 24-hours, step-by-step!
The Jurisdictionary Method wins lawsuits!
Watch my video and see for yourself how easy it is to use knowledge, stealth, and wisdom to win in court!
See what's important, what's not, and how to focus all your energy where it belongs: getting court orders!
If you gain from watching my video, please forward this newsletter to ALL YOUR FRIENDS by hitting "Forward" on your email program now.
Or use this link to send an email to all your friends. You probably know people who need to knock down judges and overcome crooked lawyers and their dishonest tricks. They will thank you for turning them on to this!
Or, do both! Forward this newsletter AND send emails to friends fighting in court who desperately need to know how to win!
Most lawyers never learn what Jurisdictionary makes so easy-to-learn. People have been telling me since I started Jurisdictionary in 1997 that, "Your course should be required in first year law school." But, of course, that's not likely to happen, because what Jurisdictionary shows you isn't politically correct! I teach you how to control judges, instead of bowing to them, I I teach you how to overcome crooked lawyers and their all-too-common sneaky tricks!
Political correctness prevents justice too often!
Winning lawsuits is a brutal axe fight!
Read the testimonials in the right column ⇒
Thousands of people just like you are winning with my easy-to-learn 24-hour step-by-step course. Ask anyone who has my course. Everyone loves it!
If you don't know what my course teaches, you lose!
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Winners do what Jurisdictionary makes easy-to-learn and don't wait until trial to get justice!
Those who learn my affordable 24-hour step-by-step Jurisdictionary self-help course win ... no matter how high the odds are stacked against them!
Yes! Read the testimonials in the right column ⇒
Winners know how to fight to win!
Losers believe internet fables. Losers get their legal education at the barbershop or on websites or expensive weekend seminars run by people who never practiced law, never went to law school, and don't know mud from sand about rules or how to use them to control judges.
Too many good folks believe mythological silver-bullet easy solutions to their legal problems and, as a result, are losing when they would be winning if they knew what I make so easy-to-learn in my Jurisdictionary course!
The internet is infested with hare-brained schemes that sound too good to be true ... and, like the old adage says, "If it sounds to good to be true, it probably isn't."
Remember: The most dangerous falsehoods are ones we most want to believe!
Why not learn from a real lawyer with nearly 25 years of case-winning experience?
My course is not expensive!
People who finish my course say an average 8th grader can learn it all in a single weekend.
Please read the testimonials in the right column ⇒
If you have a lawyer, you will save thousands in legal fees by knowing what your lawyer should be doing, and at the same time you will maximize your chances for success by making certain your lawyer does what should be done, instead of taking you for a ride to the poorhouse - as happens to too many good people these days.
If you don't have a lawyer, you'll know how to stop the opponent's crooked tricks and control the judge!
To learn more, go to: www.Jurisdictionary.com========================
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Force judges to enforce the rules, instead of allowing the lawyer on the other side twist the law against you!
You cannot win if you don't know how to control the judge and all the lawyers (including your own lawyer, if you can afford to pay one to go to court for you)!
You've heard the horror stories from others.
Don't let it happen to you!
Know the rules and how to force everyone to obey!
Know how to draft proper pleadings, how to get your own evidence in the court's record, how to keep the other side from getting their evidence in, how to move the court to enter orders favorable to your cause, and how to use your Jurisdictionary legal know-how and case-winning strategies to control the judge and win your case!
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Know what you must know to win!
Stop courtroom corruption!
I'll show you how in just 24-hours ... step-by-step!
Control judges and lawyers - or lose!
My "Tips & Tactics" newsletters are only introductions to the complete course you need to win. If you don't already have my 24-hour step-by-step self-help course, go to my website and order now!
Read the testimonials in the right column ⇒
As Woody Guthrie used to sing, "This Land is our Land," and that includes every courtroom and every courthouse from San Diego to Bangor, Maine. Why let lawyers control our lives with trickery? Why let judges destroy our lives by letting lawyers get away with their trickery?
YOU CAN WIN!
Forward this newsletter to ALL YOUR FRIENDS!
If you aren't involved in a lawsuit or threatened with one today, learn what my course teaches and help others who will be destroyed by all-too-common courtroom corruption if YOU don't help them learn what it takes to win!
There are more than 150 lawsuits filed every minute in the United States - nearly 100 million each year. Try to imagine how many thousands of good, honest people will be destroyed in the next 7 days just because they have no idea how to protect themselves and have nobody they can trust (or afford) to help them win!
Urge everyone to get my affordable 24-hour course!
Do it for your nation ... and for your children!
Dr. Frederick David Graves, JD
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Excerpt from the "Master Key System"
This is the process by which failure is changed to success. Thoughts of courage, power, inspiration, harmony, are substituted for thoughts of failure, despair, lack, limitation and discord, and as these thoughts take root, the physical tissue is changed and the individual sees life in a new light, old things have actually passed away, all things have become new, he is born again, this time born of the spirit, life has a new meaning for him, he is reconstructed and is filled with joy, confidence, hope, energy. He sees opportunities for success to which he was heretofore blind. He recognizes possibilities which before had no meaning for him. The thoughts of success with which he has been impregnated are radiated to those around him, and they in turn help him onward and upward; he attracts to him new and successful associates, and this in turn changes his environment; so that by this simple exercise of thought, a man changes not only himself, but his environment,
circumstances and conditions.
Charles F. Haanel
Published on May 27, 2014
By Tex Mason
The Mortgage Deed in itself does not attach to, nor does it create an enforceable right for the BANK (and their Attorney) to enforce an action (foreclosure) against your property. This is according to the Uniform Commercial Code (UCC) article 9-203(b).
Why is this an important find?
Before an Attorney can initiate an action to foreclose, the LAW requires that he produce a statute or a contract from which he derives his authority to take such action. Without such authority written in a Law or a Contract, the Bank (or Attorney) has no legal authority to take such action.
Typically, during the initiating of a foreclosure proceeding, the attorney will file a copy of the Mortgage Deed into the court docket. You may not understand what he is doing. He is essentially trying to create the presumption in the court, that the Security Deed conveys or grants the Bank the right to attach to and foreclose against your property.
It is important that you research UCC article 9-210 so you can understand how to apply it in court, in such a way to disprove and diffuse the presumption made by the Attorney.
You may be wondering how is all of this allowed to happen if the Mortgage Deed doesn't authorize such a right. Well ignorance of the law is no excuse. The Attorney is banking on the fact that you are ignorant to the law, and that you will not challenge his authority in the matter.
Now that you know the law, you actually may have a valid counter-claim for "Fraud on the Court"
The attorney knows that the Mortgage Deed doesn't convey a right to foreclose, but he introduced the document to intentional mislead the court and/or to make a false representation.
This is not legal advice and I do not practice law. For more lectures like this and other information visit www.thctrust.org
When financial crimes go unpunished, the root problem of fraud never gets fixed -- and these are the consequences
Article from Salon.com
Joseph and Mary Romero of Chimayo, N.M., found that their mortgage note was assigned to the Bank of New York three months after the same bank filed a foreclosure complaint against them; in other words, Bank of New York didn’t own the loan when they tried to foreclose on it.
Glenn and Ann Holden of Akron, Ohio, faced foreclosure from Deutsche Bank, but the company filed two different versions of the note at court, each bearing a stamp affirming it as the “true and accurate copy.”
Mary McCulley of Bozeman, Mont., had her loan changed by U.S. Bank without her knowledge, from a $300,000 30-year loan to a $200,000 loan due in 18 months, and in documents submitted to the court, U.S. Bank included four separate loan applications with different terms.
All of these examples, from actual court cases resolved over the last two months, rendered rare judgments in favor of homeowners over banks and mortgage lenders. But despite the fact that the nation’s courtrooms remain active crime scenes, with backdated, forged and fabricated documents still sloshing around them, state and federal regulators have not filed new charges of misconduct against Bank of New York, Deutsche Bank, U.S. Bank or any other mortgage industry participant, since the round of national settlements over foreclosure fraud effectively closed the issue.
Many focus on how the failure to prosecute financial crimes, by Attorney General Eric Holder and colleagues, create a lack of deterrent for the perpetrators, who will surely sin again. But there’s something else that happens when these crimes go unpunished; the root problem, the legacy of fraud, never gets fixed. In this instance, the underlying ownership on potentially millions of loans has been permanently confused, and the resulting disarray will cause chaos for decades into the future, harming homeowners, investors and the broader economy. Holder’s corrupt bargain, to let Wall Street walk, comes at the cost of permanent damage to the largest market in the world, the U.S. residential housing market.
By now we know the details: During the run-up to the housing bubble, banks bought up millions of mortgages, packaged them into securities and sold them around the world. Amid the frenzy, lenders failed to follow basic property laws, which ensure legitimate transfers of mortgages from one legal owner to another. When mass foreclosures resulted from the bubble’s collapse, banks who could not demonstrate they owned the loans got caught trying to cover up the irregularities with false documents. Federal authorities made the offenders pay fines, much of which banks paid with other people’s money. But the settlements put a Band-Aid over the misconduct. Nobody went in, loan by loan, to try to equitably confirm who owns what.
Now, the lid banks and the government tried to place on the situation has begun to boil over. For example, Bank of America really wants to exit the mortgage servicing business, because it now finds it unprofitable. The bank entered into a deal to sell off all the servicing for loans backed by the Government National Mortgage Association (often known as Ginnie Mae). But Ginnie Mae refused the sale, because the loans Bank of America serviced are missing critical documents, including the recorded mortgages themselves.
If you’re a mortgage servicer, and you don’t possess the recorded mortgage, you probably aren’t able to foreclose on that loan without fabricating the document. And Ginnie Mae made it clear that the problem could go beyond Bank of America. “I don’t mean to sound like we’re picking on BofA,” Ginnie Mae president Ted Tozer told trade publicationNational Mortgage News. “I can’t say if it’s just BofA or not.” Incredibly, this would represent the first time a government agency has actually examined loan files under its control to search for missing documents, seven years after the collapse of the housing bubble and four years after the recognition of mass document fabrication.
Any effort to fix the system would start by reforming MERS, the electronic database banks use to track mortgage trades (and avoid fees they would incur from county clerks with every transfer). MERS was part of a broad settlement in 2011 with federal regulators, and they promised to improve the quality control over their database to avoid errors and fraudulent assignments. Three years later, the fixes haven’t happened, and four senior officers brought in to comply with the settlement have left. MERS then tried to hire a consultant to manage the settlement terms whom U.S. regulators found unqualified for the job.
The database still tracks roughly half of all U.S. home loans, and banks fear that without changes, they might have to – horrors – actually go back to recording mortgages individually with the county clerks! You know, the property law system that the nation somehow survived under for more than 200 years.
The court cases in Ohio, Montana and New Mexico illustrate that the condition of mortgage documentation remains completely broken. Consistent records from the housing bubble era do not exist, and because the settlements merely tried to make the problem go away, we don’t know precisely how bad a situation we’re dealing with. We do know it will crop up over and over again, with costs for the whole society.
The case of the Holdens in Ohio is a good example. They took out their mortgage in 2005, and it went into the MERS database, with Deutsche Bank eventually buying the loan for a mortgage-backed security. Deutsche Bank attempted a foreclosure on the Holdens in 2011, filing what they called the original promissory note from the mortgage lender, and the various assignments that transferred the loan into their possession. But separately, Deutsche Bank submitted an affidavit with a second promissory note, which had different qualities than the one in the initial filing. Both notes had stamps indicating they were the “true and accurate copy.” This is obviously impossible. The 9th Judicial Court of Appeals in Ohio not only said this discrepancy raised the question of whether Deutsche Bank had possession of the note when they filed foreclosure, but cited numerous other examples of the same issue in separate court cases throughout Ohio. The court overturned the summary judgment for foreclosure on the Holdens’ home.
The Holdens were lucky; they found a clear case of fabricated documents, and a sympathetic court to hear them out. More commonly, homeowners in trouble on their mortgages don’t have the money to pursue justice against large financial institutions with limitless funds. If the banks lose a few cases, that’s an acceptable loss compared to the thousands they win uncontested. Moreover, many homeowners I talked to don’t want to go public, even when they win cases in court, because ultimately, they still have to negotiate with their servicers for an affordable resolution.
“Who cares, these people didn’t pay their mortgages,” respond many – even judges – to this chaos. But anyone with an interest in these loans can be affected by a flawed paper trail without clear chains of ownership. Investors in mortgage-backed securities, including public pension funds, get cheated on loans in their portfolios where nobody can establish ownership. Taxpayers bear the expense of dragged-out foreclosure cases with false documents clogging state courts; efforts to speed up foreclosures in states like Florida have not succeeded, precisely because the raw materials – the documents – are faulty. Homeowners who never missed a payment could run into trouble when title issues prohibit them from selling the house. And I can give you a giant stack of cases of servicer-driven defaults, where false documents merely added another layer of illegality.
Simply put, if you have a mortgage, you are in jeopardy. And with mortgage lending standards loosening, and the government trying to kick-start the same private securitization market for mortgages we saw during the bubble, we could easily see the same shoddiness return on new loans.
There was another solution available here, if Holder’s Justice Department didn’t throw up its hands and settle. Judges could have disassembled the broken mortgage system, and appointed a special master to handle all loans in question. It may have taken years, but the preservation of the public property system makes the time and expense worth it. Unless you would rather kneel to the wishes of the financial industry to keep everything rolling, and let the wound fester.
If you or I pick the lock on a house and try to steal everything in it, we’d probably go to jail. But if I were a bank, and I wrote down on a piece of paper that I simply owned that house, I’d get away with it. That’s the sad legacy of trying to cover up massive fraud instead of dealing with it.
MERS Gets It's ASS Handed To It!
On January 11, 2012, Defendants filed a civil action in the
Los Angeles County Superior Court to quiet title to the Property
and expunge the Deed of Trust.
On January 11,2012, Defendants filed a civil action in the Los Angeles County Superior Court to quiet title to the Property and expunge the Deed of Trust. See Compl. 130. Defendants named United Pacific Mortgage – the original Lender under the Deed of Trust, as a defendant in the quiet title action; however, Defendants did not name MERS – the nominee of United Pacific Mortgage, as a party or provide any notice of the lawsuit to MERS. Id. ,33. Because United Pacific Mortgage did not appear in the action, Defendants secured a default judgment, thereby expunging the Deed of Trust on the Property. Id. , 35, Ex. 4. On April 25, 2013, Defendants recorded the judgment expunging the Deed of Trust on the Property in the Official Records of the Recorder’s Office of Los Angeles County as instrument number 20130621913. Id.
. . .
A. Plaintiffs Fail to State a Claim under Cal. Code Civ. Proc. § 762.010
The gravamen of the parties’ dispute raises a single, all-important question: Were Plaintiffs entitled to notice of Defendants , quiet title action before Defendants brought that action in Califomia state court? Defendants unsurprisingly answer this question in the negative, reasoning that Plaintiffs were not entitled to notice of the quiet title action because Plaintiffs are merely the nominee or agent of the Lender under the Deed of Trust and therefore have no
independent interest in the Property. See Mot. 14:19-26; see also Mot. 18:19-12 (“Plaintiffs’ claim of ownership, and of the rights of a beneficiary with status as a party in interest, is strictly a fiction. “). Plaintiffs, on the other hand, answer in the affirmative, declaring that as the identified “beneficiary of record” under the Deed of Trust, they have an interest in the Property sufficient to entitle them to notice of Defendants’ quiet title action. See Opp. 2:14-16 (“As the plainly identified beneficiary of record under a deed of trust, MERS claimed an interest that entitled it to so notice.”). For the reasons explained infra, the Court must side with Defendants. Plaintiffs were not entitled to notice of the quiet title action.
The Court therefore DISMISSES Plaintiffs’ section 762.010 claim to set aside the judgment in the quiet title action WITH LEAVE TO AMEND.
. . .
The Court thus DISMISSES Plaintiffs’ slander of title claim WITH LEAVE TO AMEND.
. . .
Because Plaintiffs here present no other viable state law claims for relief, they necessarily fail to assert a claim for cancellation of instruments as well. See Reade, 2013 U.S.Dist. LEXIS 160681, at *26. Accordingly, the Court DISMISSES the claim WITH LEAVE TO AMEND.
. . .
The Court thus DISMISSES Plaintiffs’ claim for declaratory relief WITH LEAVE TO AMEND.
Thus, for the foregoing reasons, the Court GRANTS Defendants’ Motion to Dismiss. If Plaintiffs wish to file an amended complaint, they must do so by March 3, 2014. Failure to file an amended complaint by this date will result in the dismissal with prejudice of the action.
THOMAS A. GLASKI, v. BANK OF AMERICA N.A OPINION ORDERED PUBLISHED on 8/8/13 Author: Franson, Jr., Donald R.
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIFTH APPELLATE DISTRICT OPINION ORDERED PUBLISHED ON 8/8/13
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA FIFTH APPELLATE DISTRICT OPINION ORDERED PUBLISHED ON 8/8/13
Re: Borrower May Challenge The Securitized Trust’s Chain of Ownership
Glaski v. Bank of America, N.A.
Case Number F064556
The judgment of dismissal is reversed. The trial court is directed to vacate its order sustaining the general demurrer and to enter a new order overruling that demurrer as to the third, fourth, fifth, eighth, and ninth causes of action. Glaski's request for judicial notice filed on September 25, 2012, is denied. Glaski shall recover his costs on appeal; Franson, Wiseman, Kane; 29 pages.
Opinion ordered published on 8/8/13
Publication Status: Signed Published
Author: Franson, Jr., Donald R.
Participants: Wiseman, Rebecca A. (Concur)
Kane, Stephen J. (Concur)
The allegations that the instant case shares with some of the other lawsuits are that (1) documents related to the foreclosure contained forged signatures of Deborah Brignac and (2) the foreclosing entity was not the true owner of the loan because its chain of ownership had been broken by a defective transfer of the loan to the securitized trust established for the mortgage-backed securities. Here, the specific defect alleged is that the attempted transfers were made after the closing date of the securitized trust holding the pooled mortgages and therefore the transfers were ineffective.
In this appeal, the borrower contends the trial court erred by sustaining
defendants’ demurrer as to all of his causes of action attacking the nonjudicial
Glaski argued that the investment trust that supposedly held his loan did not have the power to foreclose because his loan had never been properly transferred to the trust. The court of appeal held that this allegation was enough to state causes of action for wrongful foreclosure, declaratory relief, violation of the UCL, cancellation of instruments, and quiet title.
In particular, the court held: "We conclude that a borrower may challenge the securitized trust's claim to ownership by alleging the attempts to transfer the deed of trust to the securitized trust (which was formed under New York law) occurred after the trust's closing date. Transfers that violate the terms of the trust instrument are void under New York law, and borrowers have standing to challenge void assignments of their loans even though they are not a party to, or a third party beneficiary of, the assignment agreement." (Glaski v. Bank of America, slip opinion at page 3.)
The court then stated: "In Barrionuevo v. Chase Bank, N.A. (N.D. Cal. 2012) 885 F.Supp. 964, the district court stated: 'Several courts have recognized the existence of a valid cause of action for wrongful foreclosure where a party alleged not to be the true beneficiary instructs the trustee to file a Notice of Default and initiate nonjudicial foreclosure.' (Id., at p. 973). We agree with this statement of law, but believe that properly alleging a cause of action under this theory requires more than simply stating that the defendant who invoked the power of sale was not the true beneficiary under the deed of trust. Rather, a plaintiff asserting this theory must allege facts that show the defendant who invoked the power of sale was not the true beneficiary." (Glaski v. Bank of America, slip opinion at page 17; italics added.)
The court added: "We reject the view that a borrower's challenge to an assignment must fail once it is determined that the borrower was not a party to, or a third party beneficiary of, the assignment agreement." (Glaski v. Bank of America, slip opinion at page 19.)
Next, the court distinguished Gomes v. Countrywide Home Loans, 192 Cal.App.4th 1149 (2011): "In light of the limiting statements included in the Gomes opinion, we do not interpret it as barring claims that challenge a foreclosure based on specific allegations that an attempt to transfer the deed of trust was void. Our interpretation, which allows borrowers to pursue questions regarding the chain of ownership, is compatible with Herrera v. Deutsche Bank National Trust Co. . . ." (Glaski v. Bank of America, slip opinion at pages 24-25; italics added.)
Finally, the court disposed of the tender argument: "Tender is not required where the foreclosure sale is void, rather than voidable, such as when a plaintiff proves that the entity lacked the authority to foreclose on the property." (Glaski v. Bank of America, slip opinion at page 25.)
We therefore reverse the judgment of dismissal and remand for further proceedings... DOWNLOAD THE COMPLETE DOCUMENT HERE (30 pages, PDF).
Deutsche Bank National Trust Company v. Herbert N. Elesh (Illinois 2013)
Plaintiff, Deutsche Bank National Trust Company, as trustee of Morgan Stanley ABS Capital I Inc. Trust 2005 HE-3, has filed this suit to foreclose defendant’s mortgage. Defendant contends that plaintiff lacks standing to pursue this suit and asks the Court to dismiss it. Because defendant attacks the factual basis of plaintiff’s standing, rather than the sufficiency of its jurisdictional allegations, the Court can consider matters outside of the pleadings in deciding this motion. See Apex Digital, Inc. v. Sears Roebuck & Co., 572 F.3d 440, 444 (7th Cir. 2009). Plaintiff, which has the burden of proof on this issue, has constitutional standing to pursue this suit only if it suffered a “concrete and particularized” injury that is traceable to defendant’s conduct and is likely to be redressed by a decision in its favor in this case. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
With respect to that issue, plaintiff alleges that it owns the promissory note defendant gave to his lender, Decision One Mortgage Co., and thus has been injured by defendant’s failure to make the payments due under it. As proof of this contention, plaintiff attached to its complaint what it claims is a true copy of the promissory note bearing an indorsement in blank. However, the note attached to the complaint bears no indorsement whatsoever as the purported indorsement language is not signed by the original owner or anyone else. In response to defendant’s motion to dismiss, plaintiff submitted what it represents is a better copy of the original note. However, the “better Deutsche Bank National Trust Company v. Elesh Doc. 65 Dockets.Justia.com
The only evidence plaintiff offered at the hearing was the testimony of one witness from the servicer of the note, Ocwen Loan Servicing. The witness had no personal knowledge of whether, when or by whom the contested note was indorsed or any other aspect of the transactions underlying this suit. Moreover, her testimony that Ocwen has a practice of seeking indorsements for notes without them is vitiated by her belief that an indorsement is a rubber stamp of the phrase “pay to the order of” rather than a signature by the obligee of the note.
For these reasons and those stated in open court, the Court finds that plaintiff has failed to establish that: (1) the purported original promissory note is authentic; (2) the note was properly indorsed by an agent of the obligee; or (3) that, when plaintiff filed this suit, it possessed or owned the original promissory note. Because plaintiff has failed to establish that it was injured by defendant’s default on the note, it does not have standing to pursue this suit. Accordingly, the Court grants defendant’s motion to dismiss  and dismisses this suit for lack of subject matte jurisdiction. The Court strikes as moot defendant’s motion to strike  and plaintiff’s motions for summary judgment, to appoint a special commissioner and to reassign [51, 54 & 60]. SO ORDERED ENTER: May 21, 2013
HERBERT ELESH vs. MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC…..
This leaves Count 5, in which Elesh challenges the assignment of the mortgage to Deutsche Bank. Defendants argue that Elesh is not a party to the assignment and thus lacks standing to challenge it. Only one of the cases upon which defendants rely, however, is an Illinois case, and that case makes it clear that this supposed “rule” has exceptions. See Bank of America Nat’l Ass’n v. Bassman FBT, LLC, No. 2-11-0729, 2012 IL App (2d) 110729, 981 N.E.2d 1, 6-11 (2012). The basic requirements of standing are that the plaintiff suffered an injury to a legally cognizable interest and is asserting his own legal rights rather than those of a third party. See id. at 6. Elesh unquestionably meets the first requirement; the recorded assignment constitutes a cloud on his title, and Deutsche Bank recently relied on the assignment to prosecute a foreclosure action against him. Elesh also has a viable argument that in challenging the validity of the assignment, he is asserting his own rights and not someone else’s rights. For example, given Deutsche Bank’s apparent lack of possession of the original note, Elesh is put at risk of multiple liability as long as Deutsche Bank claims to hold the mortgage. See id. at 7-8 (citing cases indicating that an obligor has an interest in ensuring that he will not have to pay the same claim twice). In any event, Illinois law, to the extent there is much of it on this point, appears to recognize an obligor’s right to attack an assignment as void or invalid under certain circumstances. See id. The Court is also inclined to believe that the right to bring a quiet title action – a right that Elesh, as title holder to the property, clearly enjoys – implies the ability to challenge the validity of instruments that constitute clouds on title.
An action to quiet title in property is an equitable proceeding in which a party seeks to remove a cloud on his title to the property. A cloud on title is the semblance of title, either legal or equitable, appearing in some legal form but which is, in fact, unfounded or which it would be inequitable to enforce. Various forms of documents which appeared valid on their face have been held to constitute clouds on title [including subsequent deeds, recorded mortgages, and forged deeds].
Gambino v. Boulevard Mortg. Corp., 398 Ill. App. 3d 21, 52, 922 N.E.2d 380, 410 (2009) (internal quotation marks and citations omitted). Deutsche Bank’s assignment, which it has recorded, arguably constitutes a cloud on Elesh’s title, thus enabling him to challenge it or at least seek its removal via a quiet title action. For these reasons, the Court declines to dismiss Count 5.
DEUTSCHE BANK NATIONAL TRUST v. JAMES L. GILBERT (IL 2nd Appellate 2012)
The plaintiff, Deutsche Bank National Trust Company, filed a foreclosure suit against the defendant, James L. Gilbert. Gilbert raised the affirmative defense that Deutsche Bank lacked standing at the time it filed the suit. Gilbert also filed a counterclaim alleging violations of the federal Truth in Lending Act (TILA) (15 U.S.C. § 1601 (2006)) and seeking damages. The parties filed cross-motions for summary judgment. The trial court initially found in favor of Gilbert on the issue of standing and dismissed the foreclosure. However, following Deutsche Bank’s filing of a motion for reconsideration, the trial court reversed itself and granted summary judgment in favor of Deutsche Bank on all claims. Gilbert appeals, arguing that the trial court’s initial decision was correct, and that he is also entitled to summary judgment in his favor on the counterclaim. For the following reasons, we reverse the judgment of foreclosure and dismiss the cause, and affirm the dismissal of the counterclaim…
On March 10, 2008, Deutsche Bank filed a foreclosure action against Gilbert. In its complaint, it alleged that it was the current holder of the indebtedness. Copies of the note and the mortgage were attached to the complaint as exhibits.
On August 25, 2008, MERS (as nominee for WMC Mortgage) executed a document titled “Assignment of Mortgage” (Assignment). The Assignment stated that MERS, for certain consideration “the receipt of which is hereby acknowledged,” “assigned and transferred” to Deutsche Bank, “as Trustee under the Pooling and Servicing Agreement dated as of November 1, 2005, GSAMP Trust 2005-WMC2,” all interests in Gilbert’s mortgage. On September 12, 2008, Deutsche Bank filed an amended complaint, attaching the Assignment as an exhibit. Gilbert filed an answer, raising the affirmative defense of lack of standing on the ground that the Assignment showed that Deutsche Bank did not own the indebtedness when it originally filed the foreclosure. Gilbert also filed a counterclaim…
…Deutsche Bank contended that it did have standing at the time it filed suit, because the Assignment simply memorialized an earlier transfer of interest. In support, it submitted an affidavit from William F. Loch, an employee of a company that serviced loans for Deutsche Bank, in which Loch averred that, based on his review of “the documents contained in the Gilbert loan file,” MERS assigned its interest to Deutsche Bank on November 1, 2005. Loch did not state how he knew that this was when the assignment occurred, and he did not attach any documentary evidence that the assignment had occurred on this date…
…As to the standing issue, it granted Gilbert’s motion for summary judgment and dismissed the foreclosure, finding that Deutsche Bank was not the holder of the indebtedness at the time it filed the suit. The trial court noted Loch’s averment that Deutsche Bank was the holder on the date of filing, but found it “to be a legal conclusion and just because he says it does not make it so.” The trial court further noted that there was no document showing when the assignment took place….
Deutsche Bank filed a motion for reconsideration, arguing that the Assignment “clearly stated” that MERS assigned its interest to Deutsche Bank on November 1, 2005.
Standing to Bring the Foreclosure
The validity of Deutsche Bank’s foreclosure action against Gilbert rests on one issue: whether Deutsche Bank had standing—that is, whether it owned the mortgage—on the date that it filed the foreclosure action. There are no disputes about the relevant facts, and the issue is thus a purely legal one that was appropriate for disposition by summary judgment. 735 ILCS 5/2-1005(c) (West 2008). We review the grant of summary judgment de novo. Ioerger v. Halverson Construction Co., 232 Ill. 2d 196, 201 (2008).
“The doctrine of standing is designed to preclude persons who have no interest in a controversy from bringing suit.” Raintree Homes, Inc. v. Village of Long Grove, 209 Ill. 2d 248, 262 (2004). A party’s standing to sue must be determined as of the time the suit is filed. Village of Kildeer v. Village of Lake Zurich, 167 Ill. App. 3d 783, 786 (1988). “[A] party either has standing at the time the suit is brought or it does not.” Id. An action to foreclose upon a mortgage may be filed by a mortgagee, i.e., the holder of an indebtedness secured by a mortgage, or by an agent or successor of a mortgagee. See Mortgage Electronic Registration Systems, Inc. v. Barnes, 406 Ill. App. 3d 1, 7 (2010); see also 735 ILCS 5/15-1208, 15-1504(a)(3)(N) (West 2008). Lack of standing to bring an action is an affirmative defense, and the burden of proving the defense is on the party asserting it. Lebron v. Gottlieb Memorial Hospital, 237 Ill. 2d 217, 252 (2010).
Here, Gilbert raised the affirmative defense of lack of standing both in his answer and in his motion for summary judgment. To support his argument that on the date the foreclosure action was filed Deutsche Bank had no standing to sue him, Gilbert pointed to the note and the mortgage attached to the complaint, both of which identify the mortgagee as MERS—not Deutsche Bank. Moreover, the Assignment attached to the amended complaint was dated August 25, 2008, and Gilbert argued that this showed that MERS did not assign its interest in the mortgage until several months after the foreclosure action was filed. We find that this evidence met Gilbert’s burden to show that Deutsche Bank lacked standing when the suit was filed, because the note and the mortgage identified the lender as WMC Mortgage and the holder of the mortgage as MERS. Deutsche Bank’s name does not appear on either of these documents. Thus, so far as the documents attached to the complaint establish, Gilbert was correct that Deutsche Bank did not own the indebtedness. As he made out a prima facie showing that Deutsche Bank lacked standing, the burden shifted to Deutsche Bank to refute this evidence or demonstrate a question of fact. Triple R Development, LLC v. Golfview Apartments I, L.P., 2012 IL App (4th) 100956, ¶ 12.
Deutsche Bank attempted to rebut this apparent lack of standing by pointing to the Assignment and the Loch affidavit. However, these items lack evidentiary value. Before the trial court, Deutsche Bank argued that the language of the Assignment established that the transfer of the mortgage had occurred years earlier, on November 1, 2005. On appeal, however, Deutsche Bank wisely abandons that argument (which finds no support in the actual language of the Assignment), and now concedes that the Assignment “does not establish anything about when Plaintiff [Deutsche Bank] obtained its interest in the subject loan.” We agree with this statement. Although the Assignment contains two dates—the date of the trust for which Deutsche Bank is a trustee, and the date on which the Assignment was executed and notarized—it does not explicitly state when the mortgage was assigned to Deutsche Bank. All that can be known about when the assignment took place is that it was no later than the date on which the Assignment was executed.
18 Instead, Deutsche Bank now relies solely on the Loch affidavit to refute the lack of standing shown by the note and the mortgage. Deutsche Bank points to Loch’s statement that the assignment occurred on November 1, 2005, and contends that his statement must be taken as true in the absence of contrary evidence. This legal principle applies only to admissible evidence, however. Complete Conference Coordinators, Inc. v. Kumon North America, Inc., 394 Ill. App. 3d 105, 108 (2009) (only admissible evidence may be considered in support of or opposition to summary judgment). Loch’s statement about the date of the assignment was not admissible, because it was unsupported by any foundation.
The use of affidavits on motions for summary judgment is governed by Illinois Supreme Court Rule 191(a) (eff. July 1, 2002). Under that rule, affidavits must set out the facts on which the affiant’s claims are based, and attach all documents upon which the affiant relies. Loch, however, did not state how he knew that the assignment took place on November 1, 2005, and he failed to attach any documents supporting his assertion. (As we noted, the Assignment itself provides no support for Loch’s assertion.) Accordingly, Loch’s statement about the date of the assignment does not comply with Rule 191(a) and may be disregarded. Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 132 (1992) (unsupported conclusions and opinions were insufficient to raise an issue of fact); Madden v. Paschen/S.N. Nielson, Inc., 395 Ill. App. 3d 362, 388 (2009) (legal conclusions and unsupported statements were properly stricken). Disregarding Loch’s unsupported statement, the sole evidence that Deutsche Bank ever became the holder of the indebtedness was the Assignment and, as Deutsche Bank concedes, that document does not establish when Deutsche Bank became the holder.
Deutsche Bank argues that, because lack of standing is an affirmative defense, Gilbert bears the burden of proving that it did not own the loan on the date that Deutsche Bank filed the foreclosure. This, of course, is true. U.S. Bank National Ass’n v. Sauer, 392 Ill. App. 3d 942, 946 (2009). However, Gilbert’s documentary evidence that Deutsche Bank did not own the loan (the mortgage and the note, and an assignment executed after the date of filing) constituted prima facie evidence of lack of standing. “ ‘A “prima facie” defense is sufficient at law unless and until rebutted by other evidence.’ ” Cordeck Sales, Inc. v. Construction Systems, Inc., 382 Ill. App. 3d 334, 366 (2008) (quoting Darling & Co. v. Pollution Control Board, 28 Ill. App. 3d 258, 264 (1975)). Deutsche Bank also argues that its standing to bring the action was established by its complaint, which alleged that it was the holder of the indebtedness and attached copies of the note and the mortgage. See Barnes, 406 Ill. App. 3d at 6 (a plaintiff sufficiently pleads a cause of action for foreclosure if it alleges that it holds the mortgage and attaches a copy of the note and the mortgage). However, the attached note and mortgage did not show that Deutsche Bank owned the loan, and thus they contradicted Deutsche Bank’s allegation that it did own the loan when it filed the suit. Burton v. Airborne Express, Inc., 367 Ill. App. 3d 1026, 1034 (2006) (“Exhibits are a part of the complaint to which they are attached,” and facts contained within an exhibit serve to negate inconsistent allegations contained within the body of the complaint). Moreover, it is well established that a party may not rely on the allegations of its pleadings to contradict evidence produced by the movant that would entitle it to judgment. Triple R Development, 2012 IL App (4th) 100956, ¶ 12. As Deutsche Bank produced no competent evidence rebutting Gilbert’s prima facie showing that the bank lacked standing at the time of filing, Gilbert was entitled to summary judgment in his favor on this issue.
In a last-ditch effort to avoid this result, Deutsche Bank argues that section 2-407 of the Code of Civil Procedure (Code) (735 ILCS 5/2-407 (West 2008)), which allows the joinder of necessary parties after the commencement of a suit, protects against the dismissal of its complaint for lack of standing. Deutsche Bank argues that its amendment of the complaint, which attached the recently executed Assignment, acted as a “joinder” of itself in a new capacity—as the now-undisputed owner of the loan. Not surprisingly, Deutsche Bank is unable to point to any case law supporting such a novel application of section 2-407 to cure a plaintiff’s lack of standing. To the contrary, standing must exist when the suit is filed. Village of Kildeer, 167 Ill. App. 3d at 786. As Deutsche Bank lacked standing at the time of filing, the foreclosure action was defective ab initio and Deutsche Bank could not cure this defect by “joining” the suit as a proper party at a later date.
In summary, Gilbert was entitled to judgment in his favor on the foreclosure, because Deutsche Bank lacked standing to bring that foreclosure. Bayview Loan Servicing, L.L.C. v. Nelson, 382 Ill. App. 2d 1184, 1186 (2008). We note that, although there is little case law on this specific issue in Illinois, our sister courts in New York have held repeatedly that, unless an assignment of a mortgage is executed prior to the date on which the foreclosure action is filed, the assignee lacks standing to bring the foreclosure and the action should be dismissed, even where the assignment was executed only a few months after the complaint was filed. See Wells Fargo Bank, N.A. v. Marchione, 887 N.Y.S.2d 615, 619 (N.Y. App. Div. 2009); LaSalle Bank National Ass’n v. Ahearn, 875 N.Y.S.2d 595, 597 (N.Y. App. Div. 2009). Other states have taken a similar approach. “It is a fundamental precept of the law to expect a foreclosing party to actually be in possession of its claimed interest in the note, and to have the proper supporting documentation on hand when filing suit, *** so that the defendant is duly apprised of the rights of the plaintiff.” U.S. Bank National Ass’n v. Baber, 2012 OK 55, ¶ 6, 280 P.2d 956; see also Wells Fargo Bank Minnesota, N.A. v. Rouleau, 2012 VT 19, ¶ 16, 46 A.3d 905; Davenport v. HSBC Bank USA, 739 N.W.2d 383, 385 (Mich. Ct. App. 2007) (foreclosure must be vacated where bank “did not yet own the indebtedness that it sought to foreclose"). We see no flaws in this reasoning. Accordingly, the order granting Deutsche Bank’s motion for reconsideration and entering judgment in favor of Deutsche Bank must be reversed, the judgment of foreclosure and the order confirming the sale must be vacated, and the foreclosure must be dismissed.
NOTE: Affidavits of corporate officers do not hold the same authority as those of private parties. An affidavit of a corporate officer must be supported with supporting documents. At the time of their filing, they must be in possession of all pertinent documents or they do not have standing. Assignment = legal process in which beneficial interest is transferred from one party to another
Creating a Verified Record as Admissible Evidence!
If you are going to file a civil claim or suit against the the bank, in a pending or pre-foreclosure process, you better have proof in the form of verified evidence that your claim is valid. If the bank is filing the claim (as the plaintiff), they have the burden of proof.
You can ensure that the burden of proof remains with the bank, regardless of who files the initial claim! This is done by creating a Record that is admissible as evidence.
The Administrative Processes are being completed right now. You can register now at this time.
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This goes back a while, but you may want to read through this again. It is so relevant to getting your remedy
STATE OF MICHIGAN
IN THE CIRCUIT COURT FOR THE COUNTY OF OAKLAND
BANK ONE, N.A., Case No. 03-047448-CZ
Plaintiff, Hon. E.. Sosnick
v. AFFIDAVIT OF WALKER F. TODD,
EXPERT WITNESS FOR DEFENDANTS
HARSHAVARDHAN DAVE and
PRATIMA DAVE, jointly and severally,
Harshavardhan Dave and Pratima H. Dave Michael C. Hammer (P41705)
C/o 5128 Echo Road Ryan O. Lawlor (P64693)
Bloomfield Hills, MI 48302 Dickinson Wright PLLC
Defendants, in propria persona Attorneys for Bank One, N.A.
500 Woodward Avenue, Suite 4000
Detroit, Michigan 48226
Now comes the Affiant, Walker F. Todd, a citizen of the United States and the State of Ohio
over the age of 21 years, and declares as follows, under penalty of perjury:
1. That I am familiar with the Promissory Note and Disbursement Request and
Authorization, dated November 23, 1999, together sometimes referred to in other
documents filed by Defendants in this case as the “alleged agreement” between
Defendants and Plaintiff but called the “Note” in this Affidavit. If called as a witness,
I would testify as stated herein. I make this Affidavit based on my own personal
knowledge of the legal, economic, and historical principles stated herein, except that I
have relied entirely on documents provided to me, including the Note, regarding
certain facts at issue in this case of which I previously had no direct and personal
knowledge. I am making this affidavit based on my experience and expertise as an
attorney, economist, research writer, and teacher. I am competent to make the
PROFESSIONAL BACKGROUND QUALIFICATIONS
2. My qualifications as an expert witness in monetary and banking instruments are as
follows. For 20 years, I worked as an attorney and legal officer for the legal
departments of the Federal Reserve Banks of New York and Cleveland. Among other
things, I was assigned responsibility for questions involving both novel and routine
notes, bonds, bankers’ acceptances, securities, and other financial instruments in
connection with my work for the Reserve Banks’ discount windows and parts of the
open market trading desk function in New York. In addition, for nine years, I worked
as an economic research officer at the Federal Reserve Bank of Cleveland. I became
one of the Federal Reserve System’s recognized experts on the legal history of central
banking and the pledging of notes, bonds, and other financial instruments at the
discount window to enable the Federal Reserve to make advances of credit that
became or could become money. I also have read extensively treatises on the legal
and financial history of money and banking and have published several articles
covering all of the subjects just mentioned. I have served as an expert witness in
several trials involving banking practices and monetary instruments. A summary
biographical sketch and resume including further details of my work experience,
readings, publications, and education will be tendered to Defendants and may be
made available to the Court and to Plaintiff’s counsel upon request.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
3. Banks are required to adhere to Generally Accepted Accounting Principles (GAAP).
GAAP follows an accounting convention that lies at the heart of the double-entry
bookkeeping system called the Matching Principle. This principle works as follows:
When a bank accepts bullion, coin, currency, checks, drafts, promissory notes, or any
other similar instruments (hereinafter “instruments”) from customers and deposits or
records the instruments as assets, it must record offsetting liabilities that match the
assets that it accepted from customers. The liabilities represent the amounts that the
bank owes the customers, funds accepted from customers. In a fractional reserve
banking system like the United States banking system, most of the funds advanced to
borrowers (assets of the banks) are created by the banks themselves and are not
merely transferred from one set of depositors to another set of borrowers.
RELEVANCE OF SUBTLE DISTINCTIONS ABOUT TYPES OF MONEY
4. From my study of historical and economic writings on the subject, I conclude that a
common misconception about the nature of money unfortunately has been
perpetuated in the U.S. monetary and banking systems, especially since the 1930s. In
classical economic theory, once economic exchange has moved beyond the barter
stage, there are two types of money: money of exchange and money of account.. For
nearly 300 years in both Europe and the United States, confusion about the
distinctiveness of these two concepts has led to persistent attempts to treat money of
account as the equivalent of money of exchange. In reality, especially in a fractional
reserve banking system, a comparatively small amount of money of exchange (e.g.,
gold, silver, and official currency notes) may support a vastly larger quantity of
business transactions denominated in money of account. The sum of these
transactions is the sum of credit extensions in the economy. With the exception of
customary stores of value like gold and silver, the monetary base of the economy
largely consists of credit instruments. Against this background, I conclude that the
Note, despite some language about “lawful money” explained below, clearly
contemplates both disbursement of funds and eventual repayment or settlement
in money of account (that is, money of exchange would be welcome but is not
required to repay or settle the Note). The factual basis of this conclusion is the
reference in the Disbursement Request and Authorization to repayment of $95,905.16
to Michigan National Bank from the proceeds of the Note. That was an exchange of
the credit of Bank One (Plaintiff) for credit apparently and previously extended to
Defendants by Michigan National Bank. Also, there is no reason to believe that
Plaintiff would refuse a substitution of the credit of another bank or banker as
complete payment of the Defendants’ repayment obligation under the Note. This is a
case about exchanges of money of account (credit), not about exchanges of money of
exchange (lawful money or even legal tender).
5. Ironically, the Note explicitly refers to repayment in “lawful money of the United
States of America” (see “Promise to Pay” clause). Traditionally and legally, Congress
defines the phrase “lawful money” for the United States. Lawful money was the form
of money of exchange that the federal government (or any state) could be required by
statute to receive in payment of taxes or other debts. Traditionally, as defined by
Congress, lawful money only included gold, silver, and currency notes redeemable
for gold or silver on demand. In a banking law context, lawful money was only those
forms of money of exchange (the forms just mentioned, plus U.S. bonds and notes
redeemable for gold) that constituted the reserves of a national bank prior to 1913
(date of creation of the Federal Reserve Banks). See, Lawful Money, Webster’s New
International Dictionary (2d ed. 1950). In light of these facts, I conclude that
Plaintiff and Defendants exchanged reciprocal credits involving money of
account and not money of exchange; no lawful money was or probably ever
would be disbursed by either side in the covered transactions. This conclusion
also is consistent with the bookkeeping entries that underlie the loan account in
dispute in the present case. Moreover, it is puzzling why Plaintiff would retain the
archaic language, “lawful money of the United States of America,” in its otherwise
modern-seeming Note. It is possible that this language is merely a legacy from the
pre-1933 era. Modern credit agreements might include repayment language such as,
“The repayment obligation under this agreement shall continue until payment is
received in fully and finally collected funds,” which avoids the entire question of “In
what form of money or credit is the repayment obligation due?”
6. Legal tender, a related concept but one that is economically inferior to lawful money
because it allows payment in instruments that cannot be redeemed for gold or silver
on demand, has been the form of money of exchange commonly used in the United
States since 1933, when domestic private gold transactions were suspended (until
1974).. Basically, legal tender is whatever the government says that it is. The most
common form of legal tender today is Federal Reserve notes, which by law cannot be
redeemed for gold since 1934 or, since 1964, for silver. See, 31 U.S.C. Sections 5103,
5118 (b), and 5119 (a).
Note: I question the statement that fed reserve notes cannot be redeemed for silver since
1964. It was Johnson who declared on 15 March 1967 that after 15 June 1967 that
Fed Res Notes would not be exchanged for silver and the practice did stop on 15 June
1967 – not 1964. I believe this to be error in the text of the author’s affidavit.
7. Legal tender under the Uniform Commercial Code (U.C.C.), Section 1-201 (24)
(Official Comment), is a concept that sometimes surfaces in cases of this nature. The
referenced Official Comment notes that the definition of money is not limited to legal
tender under the U.C.C. Money is defined in Section 1-201 (24) as “a medium of
exchange authorized or adopted by a domestic or foreign government and includes a
monetary unit of account established by an intergovernmental organization or by
agreement between two or more nations.” The relevant Official Comment states that
“The test adopted is that of sanction of government, whether by authorization before
issue or adoption afterward, which recognizes the circulating medium as a part of the
official currency of that government. The narrow view that money is limited to legal
tender is rejected.” Thus, I conclude that the U.C.C. tends to validate the classical
theoretical view of money.
HOW BANKS BEGAN TO LEND THEIR OWN CREDIT INSTEAD OF REAL MONEY
8. In my opinion, the best sources of information on the origins and use of credit as
money are in Alfred Marshall, MONEY, CREDIT & COMMERCE 249-251 (1929)
and Charles P. Kindleberger, A FINANCIAL HISTORY OF WESTERN EUROPE
50-53 (1984). A synthesis of these sources, as applied to the facts of the present case,
is as follows: As commercial banks and discount houses (private bankers) became
established in parts of Europe (especially Great Britain) and North America, by the
mid-nineteenth century they commonly made loans to borrowers by extending their
own credit to the borrowers or, at the borrowers’ direction, to third parties. The
typical form of such extensions of credit was drafts or bills of exchange drawn upon
themselves (claims on the credit of the drawees) instead of disbursements of bullion,
coin, or other forms of money. In transactions with third parties, these drafts and bills
came to serve most of the ordinary functions of money. The third parties had to
determine for themselves whether such “credit money” had value and, if so, how
much. The Federal Reserve Act of 1913 was drafted with this model of the
commercial economy in mind and provided at least two mechanisms (the discount
window and the open-market trading desk) by which certain types of bankers’ credits
could be exchanged for Federal Reserve credits, which in turn could be withdrawn in
lawful money. Credit at the Federal Reserve eventually became the principal form of
monetary reserves of the commercial banking system, especially after the suspension
of domestic transactions in gold in 1933. Thus, credit money is not alien to the
current official monetary system; it is just rarely used as a device for the creation of
Federal Reserve credit that, in turn, in the form of either Federal Reserve notes or
banks’ deposits at Federal Reserve Banks, functions as money in the current
monetary system. In fact, a means by which the Federal Reserve expands the money
supply, loosely defined, is to set banks’ reserve requirements (currently, usually ten
percent of demand liabilities) at levels that would encourage banks to extend new
credit to borrowers on their own books that third parties would have to present to the
same banks for redemption, thus leading to an expansion of bank-created credit
money. In the modern economy, many non-bank providers of credit also extend book
credit to their customers without previously setting aside an equivalent amount of
monetary reserves (credit card line of credit access checks issued by non-banks are a
good example of this type of credit), which also causes an expansion of the aggregate
quantity of credit money. The discussion of money taken from Federal Reserve and
other modern sources in paragraphs 11 et seq. is consistent with the account of the
origins of the use of bank credit as money in this paragraph.
ADVANCES OF BANK CREDIT AS THE EQUIVALENT OF MONEY
9. Plaintiff apparently asserts that the Defendants signed a promise to pay, such as a
note(s) or credit application (collectively, the “Note”), in exchange for the Plaintiff’s
advance of funds, credit, or some type of money to or on behalf of Defendant.
However, the bookkeeping entries required by application of GAAP and the Federal
Reserve’s own writings should trigger close scrutiny of Plaintiff’s apparent assertions
that it lent its funds, credit, or money to or on behalf of Defendants, thereby causing
them to owe the Plaintiff $400,000. According to the bookkeeping entries shown or
otherwise described to me and application of GAAP, the Defendants allegedly were
to tender some form of money (“lawful money of the United States of America” is the
type of money explicitly called for in the Note), securities or other capital equivalent
to money, funds, credit, or something else of value in exchange (money of exchange,
loosely defined), collectively referred to herein as “money,” to repay what the
Plaintiff claims was the money lent to the Defendants. It is not an unreasonable
argument to state that Plaintiff apparently changed the economic substance of
the transaction from that contemplated in the credit application form,
agreement, note(s), or other similar instrument(s) that the Defendants executed,
thereby changing the costs and risks to the Defendants. At most, the Plaintiff
extended its own credit (money of account), but the Defendants were required to
repay in money (money of exchange, and lawful money at that), which creates at
least the inference of inequality of obligations on the two sides of the transaction
(money, including lawful money, is to be exchanged for bank credit).
MODERN AUTHORITIES ON MONEY
11. To understand what occurred between Plaintiff and Defendants concerning the
alleged loan of money or, more accurately, credit, it is helpful to review a modern
Federal Reserve description of a bank’s lending process. See, David H. Friedman,
MONEY AND BANKING (4th ed. 1984)(apparently already introduced into this
case): “The commercial bank lending process is similar to that of a thrift in that the
receipt of cash from depositors increases both its assets and its deposit liabilities,
which enables it to make additional loans and investments. . . . When a commercial
bank makes a business loan, it accepts as an asset the borrower’s debt obligation (the
promise to repay) and creates a liability on its books in the form of a demand deposit
in the amount of the loan.” (Consumer loans are funded similarly.) Therefore, the
bank’s original bookkeeping entry should show an increase in the amount of the asset
credited on the asset side of its books and a corresponding increase equal to the value
of the asset on the liability side of its books. This would show that the bank
received the customer’s signed promise to repay as an asset, thus monetizing the
customer’s signature and creating on its books a liability in the form of a
demand deposit or other demand liability of the bank. The bank then usually
would hold this demand deposit in a transaction account on behalf of the customer.
Instead of the bank lending its money or other assets to the customer, as the customer
reasonably might believe from the face of the Note, the bank created funds for the
customer’s transaction account without the customer’s permission, authorization, or
knowledge and delivered the credit on its own books representing those funds to the
customer, meanwhile alleging that the bank lent the customer money. If Plaintiff’s
response to this line of argument is to the effect that it acknowledges that it lent credit
or issued credit instead of money, one might refer to Thomas P. Fitch, BARRON’S
BUSINESS GUIDE DICTIONARY OF BANKING TERMS, “Credit banking,”
3. “Bookkeeping entry representing a deposit of funds into an account.” But Plaintiff’s
loan agreement apparently avoids claiming that the bank actually lent the Defendants
money. They apparently state in the agreement that the Defendants are obligated to
repay Plaintiff principal and interest for the “Valuable consideration (money) the
bank gave the customer (borrower).” The loan agreement and Note apparently still
delete any reference to the bank’s receipt of actual cash value from the Defendants
and exchange of that receipt for actual cash value that the Plaintiff banker returned.
12. According to the Federal Reserve Bank of New York, money is anything that has
value that banks and people accept as money; money does not have to be issued
by the government. For example, David H. Friedman, I BET YOU THOUGHT. . . .
9, Federal Reserve Bank of New York (4th ed. 1984)(apparently already introduced
into this case), explains that banks create new money by depositing IOUs, promissory
notes, offset by bank liabilities called checking account balances. Page 5 says,
“Money doesn’t have to be intrinsically valuable, be issued by government, or be in
any special form. . . .”
13. The publication, Anne Marie L. Gonczy, MODERN MONEY MECHANICS 7-33,
Federal Reserve Bank of Chicago (rev. ed. June 1992)(apparently already introduced
into this case), contains standard bookkeeping entries demonstrating that money
ordinarily is recorded as a bank asset, while a bank liability is evidence of money that
a bank owes. The bookkeeping entries tend to prove that banks accept cash, checks,
drafts, and promissory notes/credit agreements (assets) as money deposited to create
credit or checkbook money that are bank liabilities, which shows that, absent any
right of setoff, banks owe money to persons who deposit money.. Cash (money of
exchange) is money, and credit or promissory notes (money of account) become
money when banks deposit promissory notes with the intent of treating them
like deposits of cash. See, 12 U.S.C. Section 1813 (l)(1) (definition of “deposit”
under Federal Deposit Insurance Act). The Plaintiff acts in the capacity of a lending
or banking institution, and the newly issued credit or money is similar or equivalent
to a promissory note, which may be treated as a deposit of money when received by
the lending bank.. Federal Reserve Bank of Dallas publication MONEY AND
BANKING, page 11, explains that when banks grant loans, they create new money.
The new money is created because a new “loan becomes a deposit, just like a
paycheck does.” MODERN MONEY MECHANICS, page 6, says, “What they
[banks] do when they make loans is to accept promissory notes in exchange for
credits to the borrowers’ transaction accounts.” The next sentence on the same page
explains that the banks’ assets and liabilities increase by the amount of the loans.
COMMENTARY AND SUMMARY OF ARGUMENT
14. Plaintiff apparently accepted the Defendants’ Note and credit application (money of
account) in exchange for its own credit (also money of account) and deposited that
credit into an account with the Defendants’ names on the account, as well as
apparently issuing its own credit for $95,905.16 to Michigan National Bank for the
account of the Defendants. One reasonably might argue that the Plaintiff recorded the
Note or credit application as a loan (money of account) from the Defendants to the
Plaintiff and that the Plaintiff then became the borrower of an equivalent amount of
money of account from the Defendants.
15. The Plaintiff in fact never lent any of its own pre-existing money,
credit, or assets as consideration to purchase the Note or credit
agreement from the Defendants. (Robertson Notes: I add that when the bank
does the forgoing, then in that event, there is an utter failure of consideration for the
“loan contract”.) When the Plaintiff deposited the Defendants’ $400,000 of newly
issued credit into an account, the Plaintiff created from $360,000 to $400,000 of new
money (the nominal principal amount less up to ten percent or $40,000 of reserves
that the Federal Reserve would require against a demand deposit of this size). The
Plaintiff received $400,000 of credit or money of account from the Defendants as an
asset. GAAP ordinarily would require that the Plaintiff record a liability account,
crediting the Defendants’ deposit account, showing that the Plaintiff owes $400,000
of money to the Defendants, just as if the Defendants were to deposit cash or a
payroll check into their account.
16. The following appears to be a disputed fact in this case about which I have
insufficient information on which to form a conclusion: I infer that it is alleged that
Plaintiff refused to lend the Defendants Plaintiff’s own money or assets and recorded
a $400,000 loan from the Defendants to the Plaintiff, which arguably was a $400,000
deposit of money of account by the Defendants, and then when the Plaintiff repaid
the Defendants by paying its own credit (money of account) in the amount of
$400,000 to third-party sellers of goods and services for the account of Defendants,
the Defendants were repaid their loan to Plaintiff, and the transaction was complete.
17. I do not have sufficient knowledge of the facts in this case to form a conclusion on
the following disputed points: None of the following material facts are disclosed in
the credit application or Note or were advertised by Plaintiff to prove that the
Defendants are the true lenders and the Plaintiff is the true borrower. The Plaintiff
is trying to use the credit application form or the Note to persuade
and deceive the Defendants into believing that the opposite occurred
and that the Defendants were the borrower and not the lender. The
following point is undisputed: The Defendants’ loan of their credit to Plaintiff, when
issued and paid from their deposit or credit account at Plaintiff, became money in the
Federal Reserve System (subject to a reduction of up to ten percent for reserve
requirements) as the newly issued credit was paid pursuant to written orders,
including checks and wire transfers, to sellers of goods and services for the account of
18. Based on the foregoing, Plaintiff is using the Defendant’s Note for its own purposes,
and it remains to be proven whether Plaintiff has incurred any financial loss or actual
damages (I do not have sufficient information to form a conclusion on this point). In
any case, the inclusion of the “lawful money” language in the repayment clause of the
Note is confusing at best and in fact may be misleading in the context described
19. I hereby affirm that I prepared and have read this Affidavit and that I believe the
foregoing statements in this Affidavit to be true. I hereby further affirm that the basis
of these beliefs is either my own direct knowledge of the legal principles and
historical facts involved and with respect to which I hold myself out as an expert or
statements made or documents provided to me by third parties whose veracity I
Further the Affiant sayeth naught.
At Chagrin Falls, Ohio
December 5, 2003 _____________________________________
WALKER F. TODD (Ohio bar no. 0064539)
Expert witness for the Defendants
Walker F. Todd, Attorney at Law
1164 Sheerbrook Drive
Chagrin Falls, Ohio 44022
(440) 338-1169, fax (440) 338-1537
At Chagrin Falls, Ohio
December 5, 2003
On this day personally came before me the above-named Affiant, who proved his identity
to me to my satisfaction, and he acknowledged his signature on this Affidavit in my presence and
stated that he did so with full understanding that he was subject to the penalties of perjury.
Notary Public of the State of Ohio
Note: Emphasis added.
State Rep. Andy Schor introduces legislation that would put some foreclosures in court when banks have behaved badly
by Sam Inglot
Thursday, June 6 — State Rep. Andy Schor, D-Lansing, introduced legislation today that would allow people who are facing mortgage foreclosure to take their case before a judge if their lender has been shady with its practices.
“This is exactly the direction we need to go in,” said Ingham County Register of Deeds Curtis Hertel Jr., who has been actively fighting mortgage foreclosure fraud over the past two years. “Holding the banks responsible for their illegal actions is a good thing and due process for citizens facing foreclosure is a good thing. I look forward to working with him to get bills passed.”
Michigan is a foreclosure by advertisement state, which means banks and lenders don’t need to take homeowners to court to evict them if they are behind on their mortgage payments; the bank/lender simply has to post a notice on the homeowner’s door. Because of this, Hertel said there is no due process for people facing foreclosure,unless they decide to sue.
House Bill 4800 would amend the Revised Judicature Act to allow for judicial foreclosure hearings before a judge if the lender purposely fails to record mortgages or assignments on mortgages, advises borrowers to not make payments on mortgages or places false signatures on mortgage foreclosure documents.
“If a lender is engaging in these practices, a person can take a judicial action and get the court to intervene in, delay or stop the foreclosure,” Schor said. “And we’ve seen plenty of cases like these before.”
There are situations where lenders will advise borrowers to go into default so they can qualify for a mortgage modification, Hertel said. But when the borrower goes into default, the lender could then refuse to negotiate, putting the borrower in a precarious position.
There is legislation awaiting a vote in the Senate that would shorten the foreclosure redemption period — when people can challenge the legality of a foreclosure, negotiate with their bank, or sell their home in a short sale — from six months to 60 days. The legislation comes as federal regulations starting next year will extend the negotiation period between banks and property owners before foreclosure from 90 to 120 days.
Banks support the legislation, saying that the longer redemption period leads to abandoned properties, which contribute to blight, and that new federal regulations would help people avoid foreclosure. But Hertel, who has proved foreclosure fraud in court, says the shortened redemption period gives citizens less of a chance to keep their home. Schor said he introduced the legislation because of other foreclosure bills floating around the Capitol.
“For me, as we’re talking about foreclosure and how long the process should be, I wanted to get this into the conversation,” Schor said. “This will take care of bad actors without affecting the good ones.”