Failure to Allege Lack of Default

Edstrom_MortgageSecuritization_POSTER_17_x_22_v4_1Failure to Allege Lack of Default

By Daniel Edstrom
DTC Systems, Inc.

One of the main reasons many cases do not make it to daylight is because of the failure to allege lack of default.  Despite many lawyers knowing that this is the case, and that there is no default, many still fail to make the allegation.  On what basis can a lawyer allege lack of default for a homeowner facing foreclosure?

The Note and Security Instrument

The note is not the obligation but evidence of the obligation (for proof of this, in many cases the security instrument refers to the note as the evidence of the obligation).  Lawyers usually describe the obligation arising when one party accepts money from another party.  The note usually describes who the parties are that are obligated in the section titled OBLIGATIONS OF PERSONS UNDER THIS NOTE.  This section of the note states:

If more than one person signs this Note, each person is fully and personally obligated to keep all of the promises made in this Note, including the promise to pay the full amount owed.  Any person who is a guarantor, surety or endorser of this Note is also obligated to do these things.  Any person who takes over these obligations, including the obligations of a guarantor, surety or endorser of this note, is also obligated to keep all of the promises made in this Note.  The Note Holder may enforce its rights under this Note against each person individually or against all of us together.  This means that any one of us may be required to pay all of the amounts owed under this Note.

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Oregon Does it to MERS Again

Oregon Does it to MERS Again

By Daniel Edstrom
DTC Systems, Inc.

Once again MERS is hammered, this time in Federal District Court by the Honorable Owen M. Panner.  This judge understands clearly what is going on and has some serious questions.  Read this case to understand securitization and foreclosures.  Here are some highlights (there are many others):

Should the beneficiary choose to initiate non-judicial foreclosure proceedings, the Act’s recording requirements mandate the recording of any assignments of the beneficial interest in the trust deed.

Nobody held a gun to the head of the servicers and required them to use non-judicial foreclosure.  They have the right to choose which action they wish to use – non-judicial or judicial.  The problem in this case (and almost all other cases), is that the servicers are making the wrong choices.  Why?  Money, what else?.  It is not their concern that they don’t qualify to use non-judicial foreclosures.  It is not their concern that they have to strictly comply with statutes.  In 90% or more of all cases the homeowners are walking away so nobody will know anyway right?  Oops, now the titles have to be cleaned up because of the mess left behind by the servicers, which have all but destroyed the title records for foreclosed properties.  This means that in the future, somebody else will have to file a judicial lawsuit to clean up the title for a property because the servicer made the wrong choice and failed to strictly comply with non-judicial statutes.  By the way this problem is understated and far worse than anyone actually imagines or understands at this point.

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