Don’t Admit the Default

Amen Neil! You are so right. These trusts are winding down and they are (in many cases) being paid.

Livinglies's Weblog

Kudos again to Jim Macklin for sitting in for me last night. Excellent job — but don’t get too comfortable in my chair🙂. Lots of stuff in another mini-seminar packed into 28 minutes of talk.

A big point made by the attorney guest Charles Marshall, with which I obviously agree, is don’t admit the default in a foreclosure unless that is really what you mean to do. I have been saying for 8 years that lawyers and pro se litigants and Petitioners in bankruptcy proceedings have been cutting their own throats by stating outright or implying that the default exists. It probably doesn’t exist, even though it SEEMS like it MUST exist since the borrower stopped paying.

There is not a default just because a borrower stops paying. The default occurs when the CREDITOR DOESN’T GET PAID. Until the false game of “securitization started” there was no difference between…

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6 thoughts on “Don’t Admit the Default

  1. There’s a BIG problem with the argument in many if not most States because you’re dealing with contract law. At closing you signed / entered into a contract to pay a certain amount per month for a certain number of months, REGARDLESS of who else is paying the “Lender” on the same mortgage. The Lender may indeed get paid twice, 3 times, or even more for the same mortgage & if you never make a payment the Lender still gets paid, but that does NOT satisfy the contract you entered into.

    • Having read numerous patents it appears to me that the loan applications were sold before the borrowers signed any documents (in many cases not even the application was signed). The transactions were not traditional mortgages contracts. They were quasi-securities. The homeowner’s collateral and credit were sold by the originator to the investment banks without disclosure. The homeowner was an unwitting participant in a securities transaction and others may have also contracted to pay.

      The note was designed as an Article 8. Also note the paragraph regarding other obligors, endorsers, sureties, etc. The note was crafted and intended to be used in a securities scheme.

      Just because you don’t make the payments does not preclude your grandmother or your Uncle Sam from making payments for you. The only objection the IRS would have is if either of you claimed a mortgage deduction.

    • “ArtNJr”: you are mistaken.
      First, there are obvious cases where your theory demonstrably fails: where an insurance claim (be it homeowners, life, or disability) being paid extinguishes the borrowers obligation or the borrowers parents pay the the the debt etc.
      Second, constitution and equity trumps contract law. E.g. Gelfert v. National City Bank of NY, 313 U.S. 221, 233, 61 S. Ct. 898, 85 L. Ed. 1299 (1941). (“Mortgagees are constitutionally entitled to no more than payment in full…equity will intervene in individual cases where it is palpably apparent that gross unfairness is imminent.” )

      • Make those arguments in a North Carolina court & see how far you get. The issue of a Lender getting paid more than once on the same mortgage when the borrower hasn’t been paying but the Note was “securitized” has already been raised & all that mattered to the court was the borrower being in “default”.

        Now I’ll grant you that the courts do not understand “securitization”, the same loan being in 23 “tranches”, 11 of which had been paid in full & so on, but I don’t deal with legal theory, all I care about is what works, what doesn’t & why.

      • So, how do the financial disclosure statements of those judges in North Carolina (home of the bankster king BofA) look? Might check their last refinance dates too…

    • Read “Joint & Several Liability” in the note.

      Also, a note can only be worth the amount stated on it’s face. That is what was negotiated between the borrower and lender. If the lender is making more than that amount through side deals, than “negotiation” fails, and there is a want of consideration on the borrower’s behalf.

      Parties, even under contract law, must have equal bargaining power, and full disclosure of the “entire” transaction.

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