Regulation “Z” – DTC Systems Inc

Legal Standing At Inception

By Daniel Edstrom
DTC Systems, Inc.

No I am not an attorney and no I am not providing legal advice. This is the name of an article I just read posted on Neil Garfield’s LivingLies blog. The article is from Mark Stopa, an attorney in Florida. Read this article first and then come back and read my comments below: http://livinglies.wordpress.com/2011/12/19/legal-standing-at-inception/

When I saw the title, I thought awesome, they will go back to the origination of the loan. But they went back to the time the judicial foreclosure case was filed. This is a good argument and it should be fairly straight forward, or at least as straight forward as anything can be in a legal proceeding. What I was looking for was what I heard this last week from somebody. They went to bankruptcy court and told the judge that they had evidence that their loan was table funded, which means the named lender did not provide the money to fund the loan. The money to fund the loan came from an unknown and undisclosed third party. The bankruptcy judge made a simple statement. The judge said that if the named originator did not fund the loan, then they have nothing to transfer, and the movant in the motion for relief from stay (the bank) would therefore have nothing. This judge understands that the note is only evidence of the obligation, it is not the actual obligation. Transfer of the note or the security instrument (Mortgage, Deed of Trust, Security Deed or Mortgage Deed) without an interest in the obligation itself, is meaningless. That is the type of standing issue that I would like to see attorneys make in all states.

Is this why under Regulation “Z” table funded loans have the presumption of being predatory?

The Wrong Remedy at the Wrong Time, Part 2

By Daniel Edstrom
DTC Systems, Inc.

New Note added on 1/22/2012 thanks to Simonee. California Probate Code does not seem to apply based on this California Supreme Court decision: Monterey S.P. Partnership v. W. L. Bangham, Inc. (1989) 49 Cal.3d 454 , 261 Cal.Rptr. 587; 777 P.2d 623 (download here: http://dtc-systems.net/wp-content/uploads/2012/01/Monterey_SP_Partnership_vs_WL_Bangham.pdf)

This is a continuation from The Wrong Remedy at the Wrong Time, Part 1 (http://dtc-systems.net/2011/01/wrong-remedy-wrong-time-part-1/).

It turns out that if you want to modify the Trust created by your Deed of Trust, or if you want to determine if the trust exists, you need to petition the court under California Probate Code 17200. If you are not in California, but are in a Deed of Trust state, your state probably has similar probate laws.

In order to petition the court, California Probate Code 17200 has the following provision:

“(a) Except as provided in Section 15800, a trustee or beneficiary of a trust may petition the court under this chapter concerning the internal affairs of the trust or to determine the existence of the trust.”

Right off the bat we find that only a trustee or a beneficiary has the ability to petition the court under 17200. If no trustee is specified, the default trustee is the trustor (the parties that executed the note – i.e. the homeowners). The beneficiaries can easily substitute in a new trustee if that occurs. But what if Mortgage Electronic Registration Systems (MERS) is named as the beneficiary? Consider California Mortgage and Deed of Trust Practice § 1.39 (3d ed Cal CEB 2008) § 1.39 (1) the Beneficiary Must Be Obligee: The beneficiary must be an obligee of the secured obligation (usually the payee of a note), because otherwise the deed of trust in its favor is meaningless. Watkins v Bryant (1891) 91 C 492, 27 P 775; Nagle v Macy (1858) 9 C 426. See §§ 1.8-1.19 on the need for an obligation. The deed of trust is merely an incident of the obligation and has no existence apart from it. Goodfellow v Goodfellow (1933) 219 C 548, 27 P2d 898; Adler v Sargent (1895) 109 C 42, 41 P 799; Turner v Gosden (1932) 121 CA 20, 8 P2d 505. The holder of the note, however, can enforce the deed of trust whether or not named as beneficiary or mortgagee. CC § 2936; see § 1.23.

Continue reading “The Wrong Remedy at the Wrong Time, Part 2”