Adam Levitin | Standing to Invoke PSAs as a Foreclosure Defense

Standing to Invoke PSAs as a Foreclosure Defense

A major issue arising in foreclosure defense cases is the homeowner’s ability to challenge the foreclosing party’s standing based on noncompliance with securitization documentation. Several courts have held that there is no standing to challenge standing on this basis, most recently the 1st Circuit BAP in Correia v. Deutsche Bank Nat’l Trust Company. (See Abigail Caplovitz Field’s cogent critique of that ruling here.) The basis for these courts’ rulings is that the homeowner isn’t a party to the PSA, so the homeowner has no standing to raise noncompliance with the PSA.

I think that view is plain wrong.  It fails to understand what PSA-based foreclosure defenses are about and to recognize a pair of real and cognizable Article III interests of homeowners:  the right to be protected against duplicative claims and the right to litigate against the real party in interest because of settlement incentives and abilities.

The homeowner is obviously not party to the securitization contracts like the PSA (query, though whether securitization gives rises to a tortious interference with the mortgage contract claim because of PSA modification limitations…). This means that the homeowner can’t enforce the terms of the PSA.  The homeowner can’t prosecute putbacks and the like.  But there’s a major difference between claiming that sort of right under a PSA and pointing to noncompliance with the PSA as evidence that the foreclosing party doesn’t have standing (and after Ibanez, it’s just incomprehensible to me how this sort of decision could be coming out of the 1st Circuit BAP with a MA mortgage).

Let me put it another way.  Homeowners are not complaining about breaches of the PSA for the purposes of enforcing the PSA contract.  They are pointing to breaches of the PSA as evidence that the loan was not transferred to the securitization trust.

Check out the rest here…


8 Responses to “Adam Levitin | Standing to Invoke PSAs as a Foreclosure Defense”
  1. izraul says:

    God knows there is still plenty of time to hold these criminals accountable.. Their little attempt to run out the statue of limitations was a nice try. What they failed to realize was these crimes were committed directly in the middle of the Iraq and Afghanistan war.. and wartime tolls the statue of limitations on all frauds against the US for up to 15 years. Tax evasion is indeed a criminal fraud committed against the US and therefor I would say fully qualifies.

    18 U.S. Code § 3287 – Wartime suspension of limitations

    When the United States is at war or Congress has enacted a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544 (b)), the running of any statute of limitations applicable to any offense

    (1) involving fraud or attempted fraud against the United States or any agency thereof in any manner, whether by conspiracy or not, or

    (2) committed in connection with the acquisition, care, handling, custody, control or disposition of any real or personal property of the United States, or

    (3) committed in connection with the negotiation, procurement, award, performance, payment for, interim financing, cancelation, or other termination or settlement, of any contract, subcontract, or purchase order which is connected with or related to the prosecution of the war or directly connected with or related to the authorized use of the Armed Forces, or with any disposition of termination inventory by any war contractor or Government agency, shall be suspended until 5 years after the termination of hostilities as proclaimed by a Presidential proclamation, with notice to Congress, or by a concurrent resolution of Congress.

    Definitions of terms in section 103 [1] of title 41 shall apply to similar terms used in this section. For purposes of applying such definitions in this section, the term “war” includes a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544 (b))

    Any “pitbull” attorneys left in america?

  2. izraul says:

    So in other words…. Everyone such as homeowners who do not comply with an agreement should be held accountable and suffer. Everyone except for us… you know! the ones who actually committed multiple frauds from beginning to end. The ones who violate every aspect of our own agreements..

    “These people can’t challenge the PSA because it has nothing to do with them… therefore your honor we ask that you allow us… i mean the trust … to foreclose on these people because the PSA says we can.. You know… the PSA were using against them that they are not a party to and has nothing to do with them..

    The one they knew nothing about …was never disclosed.. made behind their backs involving their property, loans, mortgages, and identities which we also used without their knowledge to generate ourselves absurd amounts of money without consideration of the people who made all of this possible… for our benefit only… yeah.. the stuff that has nothing to do with them..

    They should not have a right to challenge as a 3rd party.. But we want the right to enforce.. as a 3rd party!

    lol. This has to be one of the most idiotic legal absurdities I have ever heard. It defies all logic and common sense and is nothing more than attempt by criminals to achieve more crime without interference and scrutinize.. Why not just tell the truth and say what it really is instead of trying to hide like cowards behind corrupt judges and moronic legal theories.. “Yeah your honor, we want them held accountable. just don’t apply the same because our hands are filthy beyond a doubt and there’s no way in hell we can get away this fraud otherwise.

    not to mention the sanctions and penalties for fraud upon the court, the awards and damages levied, and that’s not including the fines and criminal charges for insurance fraud and tax evasion through REMIC schemes… counterfeiting securities.. illegal conversion.. etc..etc..

    None of that should matter … right? Lets just focus on the deadbeat homeowners.. they’re the real problem here lol

    Just wait till the judges and regulators come across a real attorney with balls, pride and honor for his profession and a strong sense of duty. The liabilities for failure to protect and uphold the true essence of the oaths they took and violated. Eric holder’s failure to act and preform at his duties is a disgrace, but to end up with a nice cushy job that pays ridiculous amounts of money with JP Morgan Chase! Who I might add were found guilty of aiding and supporting terrorism above everything! That in and of itself speaks volumes.

  3. Stupendous Man - Defender of Liberty, Foe of Tyranny says:

    Almost all trusts ceded jurisdiction to New York law, and including New York trust law. That happens to say that assets of a static trust must deposited into the trust by the closing date of the trust.

    Look around on scribd for the affidavits of Tom Adams and Ira Bloom.

  4. chunga says:

    Seems to me the borrower is an essential party in a securitized loan transaction.

    Veal opinion by Judge Haines seemed to affirm it to me. Magistrate Martin came along with the opposite conclusion in his opinion on Fryzel v. MERS, et al.

    It’s on The Hamlet now. Martin needs a hug. His opinion was knocked out the park by two Federal Judges.

    A Tale of Two Cases (Veal vs. Fryzel Opinions) Update II

  5. Professor Levitin is wrong. PSA’s normally sepcifically state that the mortgage debtors are not theird party beneficiaries of the mortgage trust created by the PSA. Mortgage debtors lack standing precisely because they are not a party to the securitization.

    ‘The repeated, unsuccessful effort to enable debtors to enforce the provisions of the PSA subvert the strongest argument that can be made regarding the PSA. The PSA works a breach of contract upon the mortgage itself. The PSA creates rules which change the terms and conditions of the mortgage without amending the mortgage and without the consent of the mortgage debtor.

    For a further discusion and legal analysis regarding this argument, please go to documentaryclearinghouse. com or read my articles on SCRIBD.

  6. David Robert says:

    you cannot have it both ways Mr Bankster, Litigant is spot on, if the Note was turned into a Certificate once it was in the hands of the depositor then its pretty clear that the only ink signature on the Note is that of the alleged borrower and once the Bonds were purchased by the investors the Note became the SPV for that transaction which means the Bank was paid in full and the alleged borrower was a party to the contract for the mere fact that without the signature of the alleged borrower the sponsor could not have handed the Note over to the depositor and without the signature of the borrower the depositor cannot create a certificates. So this BS argument that the borrower is not a party to the PSA is false. Also, this “Lost Note Affidavit” (LNA) BS that the Banks are using will prove that whoever signed that LNA has committed fraud. This is where having a Securitization audit and certified copies of the PSA, Prospectus and the 8-K can come in real handy as it will show the bifurcation of the Note and Deed or Mortgage and it will show the Bank is not the holder of the note nor the holder in due course which is the Banks whole argument. If you add a Bloomberg audit to this which will show how many times the Bank has been paid and it reinforces the Securitization audit which is admissible evidence that the Bank has been PAID and they are no longer a party to the property and have NO standing in court. Go to they provide both Bloomberg and Securitization audits. To my knowledge they are the only auditors in the country who provide both which will work in connection with one another. Having (2) auditors who provide affidavits to the facts is VERY powerful. They are also willing and able to testify.

  7. Litgant says:

    The PSA is important to the defendants in a foreclosure for many reasons. The firs and most important is that all notes held by the trust must be properly endorsed in BLANK WITH NO RECOURSE by the original lender. This of course means the original lender has been paid in full and has transferred the note to a second holder in due course. The second holder must also sign on the note and place both the name of the holder and the date it was transferred. Usually the third party here as the holder is the trust. The PSA sets forth both the legality of all notes to be in the trust as well as a cut-off date when the trust must have transfer and assignment. The cut-off date is important in the securtization because it sets the time when securities can be sold to investors against the portfolio of notes held in the trust. If the trust does not have the notes and mortgages as contained in the PSA, then it is fraud to sell securities to investors. The PSA is a document used to intice and induce investors to buy the securities. The cut-off date here is vital to a defendant(s). Here is the reason why. If the trust has in its possession the note properly indorsed by all the holders and is in possession of the trust, WHY DO THEY NEED AN ASSIGNMENT FROM MERS AFTER THE TRUST IS CLOSED? The PSA sets forth the conditions on which a note can be removed from the trust. And it sets forth the conditions of when a note can be transferred into the trust. What many of these plaintiff trusts have done is get MERS to make robo-affidavits of assignment of mortgage and include a small clause that the assignment of the mortgage includes the note. But MERS cannot assign the note into a trust. Once the trust is closed there can be no assignment into the trust. Therefore, all these assignments are fraud by MERS and anyone who uses them against a defendant is committing fraud. Any court that rules the defendant’s are not a party to the PSA is an idiot. The note and the mortgage signed by the defendant is forever, until satisfied, a party. Only a brain dead judge could make a ruling the maker of the note and mortgage has no standing. That ruling should be challenged. I am sure it would be overturned on appeal.

    Other issues are here involved with MERS. If you will check the assignments made by this rouge outfit, it will say it assigns ALL ITS RIGHTS to the named assignee. According to MERS own rules, once a note and mortgage are assigned out by MERS it no longer has any connection to the note and mortgage and all reference to such note and mortgage is removed from the MERS system. What do we have here? It means MERS cannot make any additional assignments in regard to this note and mortgage. The ONLY person who has the right of assignment is now the holder named in the assignment by MERS. But here is where MERS committs fraud. They keep making assignments after they made an assignment. They act as nominee for the original lender and just as when the original lender assigns the note and mortgage and is no more in the picture: the first time MERS assigns the note and mortgage as the nominee they are no more in the picture. But plaintiff trusts have several assignments of the SAME NOTE AND MORTGAGE by MERS. When for instance MERS gave an assignment of mortgage and note to LaSalle Bank National in January 2009, the cut off date for all notes in the trust was in April 2007. So the assignment is way past the cut-off date. But then what happened. LaSalle was bought by Bank of America in late 2007. Here is where it gets good. MERS signed an assignment in January 2009 to LaSalle. LaSalle was purchased by BOA in 2007. The assignment in January 2009 was used to initiate foreclosure. But in the complaint Lasalle/BOA claimed the note and mortgage were lost and ask for reinstatement. How can it be lost if the trust has possession? The reason for the lost note reinstatement request is because they no longer have to prove the chain of holders in due course. There is no proof the note was ever assigned to the trust or even in the trust. Then here is where it gets really good. BOA is the real plaintiff behind all LaSalle foreclosures after the purchase in October 2007. They are just foreclosing in the name of the trust which is legal. But what do we have now from MERS? MERS issues ANOTHER assignment to Bank of America National Association as successor to LaSalle Bank National Association. Wait a minute. MERS already transfered out the note and mortgage to LaSalle in January 2009. They are supposed to be out of the picture. If BOA wants an assignment it should be from the LaSalle trust not from MERS. What MERS is doing is fraud and it is in violation of the PSA as well as its own status as nominee of the original lender.

    When challenged on the lost note claim, most plaintiffs eventually come up with it. This is why the defendants must file a motion to produce the note. And it is why a defendant must get an order from the court to produce the note. And make them file it in the court. You want this filed for many reasons. First it stops the note from being passed on to some other bloke. Second, you can go there and examine it for authenticity. Many times the signatures are forged. And you want to check the back of all the pages to copy the assignment from the original lender and all other assignments to additional holders in due course. And you will want to check carefully for staple holes. Like was there ever another page stapled to ANY PAGE of the original note? You want to check for staple holes because any later claimed allonge, which you must also demand to be produced and files in the court, will also be checked for staple holes. We will want to know if it was ever ATTACHED TO THE ORIGINAL NOTE. And how do they attach them. With staples of course. And if there are staple holes in the allonge and none in the note, we know it was NEVER attached to the note. We now know the allonge was fabricated. A good lawyer can take it from here.

    Another important item here is to check the original endorsement from the original lender in blank. If it was not in blank and made payable to say EMC Mortgage, then EMC Mortgage must assign the note on the same page to the trust to whom they sell it. In many cases, the endorsement on the back of the note is not even from the original lender. It is in the name of someone else. This means if the original lender did not endorse the note in blank or even to another party, it has not been legally transferred no matter how many people claim they own it. And since many of these original lenders are no longer in business, who will have authority to correct this? Well here is where MERS comes in. They claim as nominee they can perform acts as the agent of the original note holder. I personally do not believe MERS has any right as nominee to go back and correct an endorsement with an assignment. Especially when the PSA says such improperly assigned notes must be removed from the trust and purchased back by the holder who sold it to the trust.

    Well, there are many reasons why the PSA is important. And all PSAs I have read say they are controlled by the laws of the state of New York. If a judge is not up on the laws of the State of New York, he has no business making rulings that are stupid. At least he should consult with a professional witness who does know the laws of New York and ask if the the terms of the PSA were met. And if they were not, the judge should go get a sledge hammer, crash it down on the fingers of the plaintiff’s lawyers, and issue a ruling of CASE DISMISSED WITH PREJUDICE, AND PLAINTIFF SHALL AS SANCTION PAY THE DEFENDANTS AN AMOUNT EQUAL TO THE CLAIMED NOTE VALE — USED IN THE PROCEEDINGS. OR THE PLAINTIFF CAN ELECT TO RETIRE THE NOTE AS PAID IN FULL.

  8. lies is all they tell says:

    the problem there was no securitization because the mortgage and note are null and void from origination. the true lender of the money needed to be on the notes and mortgages. the TBTF decided to leave that out , we would ask to many questions. instead they chose to us a obscure word “this is a money security instrument” they felt that phrase states we did not fund the money, investors did, this mortgage is part of a trust that will be combined with other mortgages in a pool and sold as bonds or stock. unfortunately for us no one asked what a money security instrument is and the foreclosures continue. but NO just putting a small phrase like that does not tell any one anything and it is fraud and misleading and the truth remains. the TBTF banks did not fund this money. the investor/lender is not on our notes and mortgages therefore the notes and mortgages are null and void. we need to be fighting for promissory estoppel, fraud in origination, fraud in the factum. PSA’s, wheres the note, robosigning are diversions of the real fraud please everyone wake up.

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