Violations of the PSA Won't Save your House!
The July 2013 opinion by the California 5th District in Glaski v BOA caused an uproar of hope in the foreclosure pretense defense community. Finally a California appeals panel's judges had their heads screwed on straight. They struck down Glaski's foreclosure because assignment of the note to the supposed trustee who foreclosed became void under New York law because it happened after the closing date which the Pooling and Servicing Agreement (PSA) stipulated.
But now an array of California courts have tossed the Glaski opinion in the trash, favoring instead the prior May 2013 Jenkins v JP Morgan Chase Bank contrary opinion and the more recent contrary opinions by the CSD USDC in Mottale v Kimball Tirey.
I have cited those and a number of related cases below, a treasure trove of opinions to get the point across thoroughly, and copied a related article by Locke Lord lawyers. The point is:
If you are not a party to the PSA and you did not get injured by its parties, then you have NO STANDING to enforce or dispute it in court.
Consider this a warning to foreclosure victims: don't pin your hopes on Glaski - if you do, you'll lose your house. Period.
Okay, so HOW SHALL I SAVE MY HOUSE?I put attacks against the PSA and securitization in the category of FAILING FORECLOSURE DEFENSE ARGUMENTS. You can count on foreclosure pretender defender lawyers across America to try to use them, but all they end up doing is costing foreclosure victims more money and losing the house anyway. They (and you, if you hire one of them) only waste resources to delay the inevitable foreclosure sale of the house.
I know of only one sure-fire way to WIN some form of concession or financial benefit from a mortgagee or mortgage note holder: ATTACK them or the loan originator and/or agents for injuring you at the inception of the loan (including any attempted scam loan modification where they con you into breaching the note to qualify for mod).
In order to attack them for injuring you, you must first discover HOW they injured you. That means you must examine your mortgage related documents comprehensively and thoroughly, having a good knowledge of related law, and take note of all the causes of action against them (reasons to sue them) that you can find.
If you don't have that skill and your lawyer does not have that skill, and neither of you have the willingness to do that difficult and onerous job, then you must hire a competent mortgage examiner to do it for you.
I know only ONE such competent mortgage examiner in the world with the willingness and ability to examine your mortgage and find all the underlying causes of action.
If you call me at 727 669 5511, or send me your name and contact information by email I shall explain the process in detail for you, and connect you to the mortgage examiner IF YOU QUALIFY and IF you won't just waste his time. I shall do this free of charge, and with no further obligation to you because I like helping sincere people.
But if you are just a tire-kicker or dilettante with no intention or heart for attacking your scurrilous lender, appraiser, mortgage broker, title officer, servicer, etc, don't bother contacting me because I won't be able to do anything for you, and it will just waste time for both of us.
Picture thi s - With a mortgage examination report in hand, you can negotiate a settlement with your lender, or prepare and file a lawsuit against the lender and confederates. You could win anything from a loan balance cram down (to an affordable level, refinanced) to monetary set-offs against your debt, to your house free and clear, to compensatory damages, to punitive damages, possibly in the millions.
Or, picture you and your family with the peace of mind and money to enjoy a nice hot tub experience after you win a settlement from the bank for injuring you. If you like that picture, CALL me. I'll show you the path to liberation.
727 669 5511
Mottale v Kimball Tirey & St. John, LLP, Dist. Court, SD California 10 January 2014 - The opinion in this California Federal case showed the futility of using Glaski as the basis for arguing against securitization:
Defendants move to dismiss Plaintiffs' "securitization" theory as failing to set forth a cognizable legal theory. (Dkt. No. 20-1 at 7-8) ("Plaintiff's securitization argument is simply not the law in California and thus the related claims against KTS[J] are improper and baseless as a matter of law."). In response, Plaintiffs cite the recent California Court of Appeal case Glaski v. Bank of America National Association, et al., 218 Cal. App. 4th 1079 (Aug. 8, 2013), to support the plausibility of Plaintiffs' unlawful securitization theory of liability. (Dkt. No. 22 at 3.) In Glaski, the court interpreted New York trust law to find that a borrower could have standing to challenge the assignment of the borrower's loan if the defect asserted by the borrower would void the assignment. Id. at 1095. The Court first notes that the weight of authority rejects Glaski as a minority view on the issue of a borrower's standing to challenge an assignment as a third party to that assignment. See Rivac v. Ndex West LLC, No. C 13-1417 PJH, 2013 WL 6662762 at *4 (N.D. Cal. Dec. 17, 2013) (collecting cases); Boza v. U.S. Bank Nat. Ass'n, LA CV12-06993 JAK, 2013 WL 5943160 at *10 (C.D. Cal. Oct. 28, 2013) (same); In re Sandri, 501 B.R. 369, 374-78 (Bankr. N.D. Cal. 2013) (same).
Additionally, even if the Court found the Glaski court's reasoning persuasive, the Court finds that Plaintiffs fail to plead the facts to support such a theory. For example in Glaski, the court considered many factual details regarding the loan at issue in that case, including facts regarding the payments owed and the borrower's attempts to obtain loan modifications. 218 Cal. App. 4th 1079, 1083-84 (2013). The court considered details regarding the creation of the alleged fraudulent trust and assignment of plaintiff's loan challenged by the plaintiff in that case, including: the factual allegations that assignment was attempted after the closing date; the specifics of alleged transfers of plaintiff's loan; and the alleged roles the defendants played in these actions. Id. at 1084-85. Furthermore, the court in Glaski considered facts regarding alleged misrepresentations made by defendants to plaintiff, including what the plaintiff was told, how the plaintiff interpreted the statements made, and who made the representations at issue. Id. at 1085-86. In summary, even if Glaski supports a finding that Plaintiffs' legal theory is legally cognizable, Glaski cannot relieve Plaintiffs of the burden of alleging sufficient facts to state a claim under Federal Rule of Civil Procedure 12(b)(6) or, where Plaintiffs are alleging fraud, of pleading allegations of fraud with particularity, Fed. R. Civ. P. 9(b). The Court therefore turns to addressing each of the Causes of Action challenged for factual sufficiency in Defendants' motion to dismiss.
California Court follows well-established case law in ruling - borrower cannot challenge validity of loan securitization
More Failing Securitization Arguments by Foreclosure Victims
- Rodenhurst v. Bank of Am., 773 F. Supp. 2d 886, 899 (D. Haw. 2011) ("The overwhelming authority does not support a [claim] based upon improper securitization.") "[S]ince the securitization merely creates a separate contract, distinct from plaintiffs' debt obligations under the Note and does not change the relationship of the parties in any way, plaintiffs' claims arising out of securitization fail."
- Lamb V. Mers, Inc., 2011 WL 5827813, *6 (W.D. Wash. 2011) (citing cases);
- Bhatti, 2011 WL 6300229, *5 (citing cases);
- In re Veal, 450 B.R. at 912 ("[Plaintiffs] should not care who actually owns the Note-and it is thus irrelevant whether the Note has been fractionalized or securitized-so long as they do know who they should pay.");
- Horvath v. Bank of NY, N.A., 641 F.3d 617, 626 n.4 (4th Cir. 2011) (securitization irrelevant to debt);
- Commonwealth Prop. Advocates, LLC v. MERS, 263 P.3d 397, 401-02 (Utah Ct. App. 2011) (securitization has no effect on debt);
- Henkels v. J.P. Morgan Chase, 2011 WL 2357874, at *7 (D.Ariz. June 14, 2011) (denying the plaintiff's claim for unauthorized securitization of his loan because he "cited no authority for the assertion that securitization has had any impact on [his] obligations under the loan, and district courts in Arizona have rejected similar arguments");
- Johnson v. Homecomings Financial, 2011 WL 4373975, at *7 (S.D.Cal. Sep.20, 2011) (refusing to recognize the "discredited theory" that a deed of trust " 'split' from the note through securitization, render[s] the note unenforceable");
- Frame v. Cal-W. Reconveyance Corp., 2011 WL 3876012, *10 (D. Ariz. 2011) (granting motion to dismiss: "Plaintiff's allegations of promissory note destruction and securitization are speculative and unsupported. Plaintiff has cited no authority for his assertions that securitization has any impact on his obligations under the loan")."The Court also rejects Plaintiffs' contention that securitization in general somehow gives rise to a cause of action - Plaintiffs point to no law or provision in the mortgage preventing this practice, and cite to no law indicating that securitization can be the basis of a cause of action. Indeed, courts have uniformly rejected the argument that securitization of a mortgage loan provides the mortgagor a cause of action." See
- Joyner V. Bank Of Am. Home Loans, No. 2:09-CV-2406-RCJ-RJJ, 2010 WL 2953969, at *2 (D. Nev. July 26, 2010) (rejecting breach of contract claim based on securitization of loan);
- Haskins V. Moynihan, No. CV-10-1000-PHX-GMS, 2010 WL 2691562, at *2 (D. Ariz. July 6, 2010) (rejecting claims based on securitization because plaintiffs could point to no law indicating that securitization of a mortgage is unlawful, and "[p]laintiffs fail to set forth facts suggesting that Defendants ever indicated that they would not bundle or sell the note in conjunction with the sale of mortgage-backed securities");
- Lariviere V. Bank Of N.Y. As Tr., Civ. No. 9-515-P-S, 2010 WL 2399583, at *4 (D. Me. May 7, 2010) ("Many people in this country are dissatisfied and upset by [the securitization] process, but it does not mean that the [plaintiffs] have stated legally cognizable claims against these defendants in their amended complaint.");
- Upperman V. Deutsche Bank Nat'l Trust Co., No. 01:10-cv-149, 2010 WL 1610414, at *3 (E.D. Va. Apr. 16, 2010) (rejecting claims because they are based on an "erroneous legal theory that the securitization of a mortgage loan renders a note and corresponding security interest unenforceable and unsecured");
- Silvas V. Gmac Mortg., Llc, No. CV-09-265-PHX-GMS, 2009 WL 4573234, at *5 (D. Ariz. Dec. 1, 2009) (rejecting a claim that a lending institution breached a loan agreement by securitizing and cross-collateralizing a borrower's loan). The overwhelming authority does not support a cause of action based upon improper securitization. Accordingly, the Court concludes that Plaintiffs cannot maintain a claim that "improper restrictions resulting from securitization leaves the note and mortgage unenforceable);
- Summers V. Pennymac Corp. (N.D.Tex. 11-28-2012) (any securitization of Plaintiffs' Note did not affect their obligations under the Note or PennyMac's authority as mortgagee to enforce the Note and foreclose on the property if Plaintiffs defaulted).;
- Nguyen V. Jp Morgan Chase Bank (N.D.Cal. 10-17-2012) (“Numerous courts have recognized that a defendant bank does not lose its ability to enforce the terms of its deed of trust simply because the loan is assigned to a trust pool. In fact, ‘securitization merely creates a separate contract, distinct from [p]laintiffs['] debt obligations under the note, and does not change the relationship of the parties in any way. Therefore, such an argument would fail as a matter of law”);
- Flores v. Deutsche Bank Nat'l Trust Co., 2010 WL 2719848, at *4 (D. Md. July 7, 2010), the borrower argued that his lender "already recovered for [the borrower's] default on her mortgage payments, because various 'credit enhancement policies,'" such as "a credit default swap or default insurance," "compensated the injured parties in full." The court rejected the argument, explaining that the fact that a "mortgage may have been combined with many others into a securitized pool on which a credit default swap, or some other insuring-financial product, was purchased, does not absolve [the borrower] of responsibility for the Note." Id. at *5; see also
- Fourness v. Mortg. Elec. Registration Sys., 2010 WL 5071049, at *2 (D. Nev. Dec. 6, 2010) (dismissing claim that borrowers' obligations were discharged where "the investors of the mortgage backed securities were paid as a result of . . . credit default swaps and/or federal bailout funds);
- Warren v. Sierra Pac. Mortg. Servs., 2010 WL 4716760, at *3 (D. Ariz. Nov. 15, 2010) ("Plaintiffs' claims regarding the impact of any possible credit default swap on their obligations under the loan . . . do not provide a basis for a claim for relief").
- Welk v. GMAC Mortg., LLC., 850 F. Supp. 2d 976 (D. Minn., 2012) (“At the end of the day, then, most of what Butler offers is smoke and mirrors. Butler's fundamental claim that his clients' mortgages are invalid and that the mortgagees cannot foreclose because they do not hold the notes is utterly frivolous.);
- Vanderhoof v. Deutsche Bank Nat'l Trust (E.D. Mich., 2013) (internal citations omitted) (“s]ecuritization" does not impact the foreclosure. This Court has previously rejected an attempt to assert a claim based upon the securitization of a mortgage loan. Further, MERS acts as nominee for both the originating lender and its successors and assigns. Therefore, the mortgage and note are not split when the note is sold.”);
- Chan Tang v. Bank of America, N.A. (C.D. Cal., 2012) (internal citations omitted)(“Plaintiffs' contention that the securitization of their mortgage somehow affects Defendants' rights to foreclose is likewise meritless. Plaintiffs have identified no authority supporting their position that securitization voids the power of sale contained in a deed of trust. Other courts have dismissed similar arguments. Thus, the claim that Defendants lack the authority to foreclose because the Tangs' mortgage was pooled into a security instrument is Dismissed With Prejudice.);
- Wells v. BAC Home Loans Servicing, L.P., 2011 WL 2163987, *2 (W.D. Tex. Apr. 26, 2011) (This claim—colloquially called the “show-me-the-note” theory— began circulating in courts across the country in 2009. Advocates of this theory believe that only the holder of the original wet-ink signature note has the lawful power to initiate a non-judicial foreclosure. The courts, however, have roundly rejected this theory and dismissed the claims, because foreclosure statutes simply do not require possession or production of the original note. The “show me the note” theory fares no better under Texas law.);
- Maynard v. Wells Fargo Bank, N.A. (S.D. Cal., 2013) (“Plaintiffs also allege that they conducted a Securitization Audit of Plaintiffs' chain of title and Wachovia's PSA, and as a result, determined that Plaintiffs' Note and DOT were not properly conveyed into the Wells Fargo Trust on or before July 29, 2004, the closing date listed in the Trust Agreement. (Id. at ¶ 34.)… To the extent Plaintiffs challenge the validity of the securitization of the Loan because Wells Fargo and U.S. Bank failed to comply with the terms of the PSA or the Trust Agreement, Plaintiffs are not investors of the Loan, nor are Plaintiffs parties to the PSA or Trust Agreement. Therefore, as many courts have already held, Plaintiffs lack standing to challenge the validity of the securitization of the Loan…Furthermore, although Plaintiffs contend they have standing to challenge the validity of the Assignment because they were parties to the DOT with the original lender (Wells Fargo), this argument also fails. (Doc. No. 49 at 11-12.);
- Jenkins v. JP Morgan Chase Bank, N.A., 216 Cal. App. 4th 497, 511-13, 156 Cal. Rptr. 3d 912 (Cal. Ct. App. 2013) ("[E]ven if any subsequent transfers of the promissory note were invalid, [the borrower] is not the victim of such invalid transfers because her obligations under the note remained unchanged."). As stated above, these exact arguments have been dismissed by countless other courts in this circuit. Accordingly, Plaintiffs' contentions that the Assignment is void due to a failure in the securitization process fails.”);
- Demilio v. Citizens Home Loans, Inc. (M.D. Ga., 2013) (“Frankly, the Court is astonished by Plaintiff's audacity… Plaintiff requires the Court to scour a poorly-copied, 45-page "Certified Forensic Loan Audit" in an attempt to discern the basic facts of his case. This alone would be sufficient for dismissal. However, the Court is equally concerned by Plaintiff's attempt to incorporate such an "audit," which is more than likely the product of "charlatans who prey upon people in economically dire situation,"… As one bankruptcy judge bluntly explained, "[the Court] is quite confident there is no such thing as a 'Certified Forensic Loan Audit' or a 'certified forensic auditor…. The Court will not, in good conscience, consider any facts recited by such a questionable authority.”)