BOMBSHELL - Massachusetts Supreme Court Rules That Most Foreclosure Sales From Previous 5 Years Are VOID
From Cheyenne:
The only thing surprising about this ruling is that it took so long to be made. This is black letter law, folks, the logical extension of the Court's Ibanez decision.
Without a promissory note, a foreclosing plaintiff cannot show a legal injury, i.e., does not have standing to sue. Without standing, the action before the court does not qualify as a "case or controversy" under Article III of the constitution. Courts can only make rulings on "cases or controversies;" advisory opinions are a legal nullity. Consequently, a court that purports to enter a "judgment" where it has no subject matter jurisdiction has in fact entered a legal nullity on its docket; that "judgment" is void as a matter of law.
As such, any such "judgment" entered where the plaintiff had no standing is open to collateral attack in any subsequent proceeding. What is more, subject matter jurisdiction cannot be waived; were that the case, parties could falsely induce courts to make binding rulings--obviously non-sensical.
The procedural posture of this particular case is unusually serpentine, no doubt. In any event, there is nothing controversial--as a legal proposition--about this case. I'm sure the banks, who are now shitting their pants over the implications of this case, see it differently, but they're just wrong.
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On Oct. 18th, 2011 the Massachusetts Supreme Judicial Court handed down their decision in the FRANCIS J. BEVILACQUA, THIRD vs. PABLO RODRIGUEZ – and in a moment, essentially made foreclosure sales in the commonwealth over the last five years wholly void. However, some of the more polite headlines, undoubtedly in the interest of not causing wide spread panic simply put it "SJC puts foreclosure sales in doubt" or "Buyer Can't Sue After Bad Foreclosure Sale."
In essence, the ruling upheld that those who had purchased foreclosure properties that had been illegally foreclosed upon (which is virtually all foreclosure sales in the last five years), did not in fact have title to those properties. Given the fact that more than two-thirds of all real estate transactions in the last five years have also been foreclosed properties, this creates a small problem.
The Massachusetts SJC is one of the most respected high courts in the country, other supreme courts look to these decisions for guidance, and would find it difficult to rule any other way in their own states. It is a precedent. It's an important precedent.
Here are the key components of the Bevilacqua case:
1. In holding that Bevilacqua could not make "something from nothing" (bring an action or even have standing to bring an action, when he had a title worth nothing) the lower land court applied and upheld long-standing principles of conveyance.
2. A foreclosure conducted by a non-mortgagee (which includes basically all of them over the last five years, including the landmark Ibanez case) is wholly void and passes no title to a subsequent transferee (purchasers of foreclosures will be especially pleased to learn of this)
3. Where (as in Bevilacqua) a non-mortgagee records a post-foreclosure assignment, any subsequent transferee has record notice that the foreclosure is simply void.
4. A wholly void foreclosure deed passes no title even to a supposed "bona fide purchaser"
5. The Grantee of an invalid (wholly void) foreclosure deed does not have record title, nor does any person claiming under a wholly void deed, and the decision of the lower land court properly dismissed Bevilacqua's petition.
6. The land court correctly reasoned that the remedy available to Bevilacqua was not against the wrongly foreclosed homeowner but rather against the wrongly foreclosing bank and/or perhaps the servicer (depending on who actually conducted the foreclosure)
When thinking about the implications of Bevilacqua – the importance of point six cannot be overstated.
The re-foreclosure suggestion is not valid
Re-foreclosing on these properties in not likely as has been suggested by bank layers in light of the Bevilacqua ruling. We aren't talking about Donald Trump here and we have a funny feeling he won't be affected either. Mostly it's guys like Bevilacqua who bought single or multi units, in the "hundreds of thousands" range. It seem unlikely that the majority of these folks would have the capital to eat their existing loses, re-foreclose at great expense, and on top of all of that come out as the highest bidder on the very property they formerly thought was their own. In many cases, as was the case in Bevilacqua, the original purchaser of the foreclosure may have already resold the property and moved on, thus leaving in their wake an even more serious problem; the likelihood of a property owner, who had nothing directly to do with a foreclosure, but is left with all the fallout of a post-Bevilacqua world.
Re-bidding on these properties in a re-foreclosure scenario would be done in what is soon to be a new inflationary environment (most originally bid in a deflationary environment for housing), thus making the "re-foreclosure" blank threat all the more unconvincing and unlikely.
However, it should be easy enough for investors similarly situated to Bevilacqua to simply hire fee contingent attorneys who can sue the banks and servicers for conveying fraudulent deeds – that seems like a much easier and logical proposition. When the potentially millions of lawsuits are added to the complaints filed by investors in MBS, we think the banks will finally be revealed as wholly insolvent. The only other way it could happen faster, is if the average American home owner, realizing he may never obtain clear title to his home (short of an indemnity from his bank), finally stops making his monthly payments on his invalid note (which completely lacks a valid security instrument). In this way, the existing insolvency of banks would be recognized in a matter of days rather than months or years.
The act of denial does not actually alter reality
Ostriches are said to have discovered this the hard way. On November 12th, 2010 in our article "Tattoos, Pyramid Schemes and Social Justice" we advocated that home owners, with securitized mortgages, regardless of their ability to pay, consider suspending their mortgage payments, and place those funds into a private escrow account instead. We wrote:
"Radical though it may seem, we believe the only way to stop the chaos of fraud and the breakdown of the rule of law in our courts, and most importantly to ensure that we ourselves are not participants in the fraud, is for homeowners who can afford their mortgage to stop paying it..."
The article goes on to say:
"For example, what is easier; to scorn those who are being foreclosed on because they can no longer afford their mortgage or to accept the possibility that our entire financial, and maybe justice system might be badly corrupted? Across all spectrums of crime, victims are often blamed, just ask attorneys who represent rape victims. This phenomenon is by no means unique to mortgage fraud, or those who have been raped by the institutions who carry out this trade. It has been made to appear as if those who have fallen on hard times are a matter of "incidental" inequalities in an otherwise procedurally just system. However, it is precisely the opposite which is true. Our financial institutions have created deliberate inequalities, through the use of procedurally unjust systems."
We pointed out that suspending such payment might be done for the following reasons, which in light of the recent Bevilacqua decision, and the pending Eaton Decision, are increasingly being proven correct:
"1. They are not sure where or if their payments are going to the true note holder.
2. They no longer know who the true note holder is.
3. They have a legitimate concern that they may not be able to ever obtain clear title and/or title insurance (in the event of a sale) given what we now know about improperly conveyed titles and the illegitimacy of "MERS".
4. They do not want to be an unwitting or passive participant in fraud.
5. They care about America, want our culture to be healed and recognize the dignity of every human being."
Long before the Ibanez decision was handed down we wrote the following (taken from the same article):
"If these legitimate reasons are the cause to suspend mortgage payments, then what attack on these "non-co-operators" character can be levelled? In these cases, Judge's will have to allow for proper civil procedure to take place in order for the legitimate inquiries of concerned Americans to come to light. Since banks virtually never produce adequate documentation (which appears to be by design), chances are things will escalate."
We went on to discuss the unique risks of apathy and denial in the following:
"...Americans have a duty to ask critical questions about the operations of their financial institutions, and if evidence has been presented that a deal was made, but not everyone was playing by the rules, than those deals need to be looked at again. It is not good enough any longer to say, if it doesn't affect "me" than, I'm not getting involved. We have a duty to one another as Americans, and more importantly as human beings, to care about truth and justice. What's more, apathy, so long as we are not affected, is a short lived consolation. Ultimately, this crisis will affect everyone sooner or later."
Certainly when the SJC handed down their opinion affirming Bevilacqua, perhaps hundreds of thousands, and ultimately millions of people who previously thought they were not affected, were suddenly well, affected. That is because there has been about six million foreclosures since the current economic crisis began, and those foreclosures may have resulted in many more interested parties, as was the case in Bevilacqua, who sold the subject property to four new owners, thus multiplying the number of parties involved, and ultimately the number of legal actions which could be brought. It is not hard to see where six million voided foreclosures might well result in new lawsuits in excess of that number – and if the courts advice is taken, these complaints would be directed, and properly so, at banks and servicers.
We expanded greatly on the themes of fraud, denial, and the likely economic consequences in our articles "Ibanez – Denying the Antecedent, Suppressing the Evidence and one big fat Red Herring" and "Eaton – Dividing the Mortgage Loan and Affirming the Consequent" which covered the other two recent landmark SJC cases - these may be worth reading in tandem with the present article in order to understand the full breadth of the problem.
In the Ibanez article, which was written in January of this year we wrote the following:
"If you live in Massachusetts and your mortgage has been securitized, or if you have purchased a foreclosure property, we think it would be wise to consider suspending your mortgage payments if you haven't already."
We believe these particular words have become incredibly relevant given the implications of Bevilacqua.
Finally, In our article "On the ethics of mortgage loan default" we tried to cover any outstanding inhibitions homeowners might have about the advice we were giving.
A few phone calls opens a whole new world
We decided to call a few title insurance companies to get their "take" on it all. We made the mistake of identifying ourselves as "bloggers" in the first phone call – that call may well have set a new land speed record for the fastest time from answering to hanging up. Thinking there might be a smarter approach, we decided to identify ourselves as homeowners (equally true) on the next call – the results were a little better, but only slightly.
The underwriters and title examiners we spoke to kept asking if we were attorneys, or if we represented the home owner as "council". We thought this was curious because we kept pointing out that we were ourselves just homeowners. Then it hit us, they have never actually spoken to a real, live, breathing customer on the policy origination side, they had only ever spoken to lawyer-brokers. We thought; what an interesting confluence of incentives this must create, and why is the buyer of the policy necessarily so far removed from the seller?
Continue reading (there's much more)...
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Background reading on the Ibanez Case:
- Josh Rosner: 'Landmark Foreclosure Ruling' In Massachusetts Ibanez Case
- Mass. court ruling has potential to void thousands of foreclosures
- Catastrophic Implications For Banks Of The Ibanez Case Ruling
Oct 20, 2011 at 4:58 PM
Reader Comments (45)
Without a promissory note, a foreclosing plaintiff cannot show a legal injury, i.e., does not have standing to sue. Without standing, the action before the court does not qualify as a "case or controversy" under Article III of the constitution. Courts can only make rulings on "cases or controversies;" advisory opinions are a legal nullity. Consequently, a court that purports to enter a "judgment" where it has no subject matter jurisdiction has in fact entered a legal nullity on its docket; that "judgment" is void as a matter of law.
As such, any such "judgment" entered where the plaintiff had no standing is open to collateral attack in any subsequent proceeding. What is more, subject matter jurisdiction cannot be waived; were that the case, parties could falsely induce courts to make binding rulings--obviously non-sensical.
The procedural posture of this particular case is unusually serpentine, no doubt. In any event, there is nothing controversial--as a legal proposition--about this case. I'm sure the banks, who are now shitting their pants over the implications of this case, see it differently, but they're just wrong.
There's only one place for a state supreme court ruling to go, and that's to the U.S. Supreme Court. And that's going to take a real long time--a lot longer than it'll take an army of attorneys to rain down hellfire on banks that have engaged in massive fraudclosures as a business practice.
http://thehill.com/homenews/senate/188901-bernanke-to-dems-dont-expect-more-stimulus
[snip]
Sens. Dianne Feinstein (D-Calif.) and Barbara Boxer (D-Calif.) quizzed the Fed chief on how to reduce foreclosures, which have left many homeowners under water.
“We also talked with him about how to get more renegotiation of home loans,” said Feinstein, noting that in some California counties as many as 55 percent of homes are worth less than the value of their mortgages.
Bernanke said he would submit to Congress next week a list of legislative recommendations to reverse the tide of foreclosures.
Note: I wonder how many foreclosed properties Dianne's husband is involved with (CBRE) has purchased/re-sold over the last 5 years?
http://hotair.com/archives/2009/04/22/cb-richard-ellis-internal-denial-on-feinstein-allegations-to-employees/
[snip]
Earlier today, an employee of CB Richard Ellis forwarded me an internal memo distributed to all employees after the Washington Times exclusive on alleged abuse of power and conflict of interest by Senator Dianne Feinstein. The senior Senator from California allegedly pushed $25 billion to the FDIC in unusual federal funding at the same time the agency was granting a bid by CBRE to manage its residential-foreclosure properties and sell them at higher-than market commissions. CBRE’s board chairman is Richard Blum, Feinstein’s husband.
We're sloshing at Bukowski's Tavern right now on Dalton. Soon we'll head for hotel. You around?
are invalid. the buyer puts up real property , the bank puts up an accounting ledger.
the bank has no consideration other than this ledger, the money is then printed up at fed reserve
out of thin air.
I'm not gonna stop
http://stopforeclosurefraud.com/2011/10/20/breaking-news-john-obrien-puts-his-foot-down-on-fraudulent-assignments/
Hey if you guys get into trouble with the gals tell the you're from Maine....
“This is a very detailed, very specific indictment of an entire industry’s practices and procedures, and it’s an indictment that is going to send shockwaves throughout the entire mortgage, foreclosure, real-estate servicing industry,” he said.
“In Massachusetts, where a note has been assigned but there is no written assignment of the mortgage underlying the note, the assignment of the note does not carry with it the assignment of the mortgage,” Gants wrote.
The court rejected the banks’ request to apply the decision only to future foreclosures if they lost. In a concurring opinion, Justice Robert J. Cordy said he was struck by “the utter carelessness with which the plaintiff banks documented the titles to their assets.”
http://dailybail.com/home/josh-rosner-on-massachusetts-foreclosure-ruling-opens-the-fl.html
http://www.bizjournals.com/boston/print-edition/2011/04/15/john-obrien-taking-on-bank-of-america.html?page=all
As far as his weight with judges and the attorney general I cannot say, but things do move slowly but surely. Cheyenne might be more knowledgeable about the legal end of it. There is no question that this adds fuel to the fire and John Obrien is technically correct in his argument.
I believe several other registrars are pursuing the same goals and of course Mr. Obrien also did this:
O’Brien, the pride of Lynn, came out slugging recently when he asked and received permission from State Treasurer Steve Grossman to yank about $25 million in deposits from Bank of America. He’s is moving that money to Medford’s Century Bank and Trust, a non-MERS bank. Many community banks in Massachusetts belong to MERS, whose largest shareholders include Fannie Mae , Freddie Mac and JPMorgan Chase . Bank of America owns a small stake in MERS.
It is very ironic that those who have been wagging the "deadbeat" finger will suffer at the hands of TBTF. They are about to find out how much their "moral contract" is worth.
Nothing. Nothing at all.
http://dailybail.com/home/jack-daniels-explains-the-deficit.html
Criminal proceeding for income tax cases have relied upon citation of 26 USC #7201 - 7215 for the identification of income tax violations for decades. Those statutes merely identify the penalties for crimes; they have been applied to cigarette taxes, admission taxes, marijuana taxes, etc. They therefore cannot identify a "required statute responsibility" for an income tax. Ref. http://www.usa-the-republic.com/revenue/liberty/index.html part 4 and 5.
Almost all income tax prosecutions for the past 50 years have relied upon void legal process.
Do not ever, EVER assume that law is self-effectuating. That assumption is the road to destruction. When litigation is decided consistent with the law, it is because one team of lawyers and the judge(s) held the line, not because everybody sat around going, "Oh, here, it's right here in the law. Guess that decides it."
In this country, we are not accustomed to submitting and not making a fuss when our homes are wrongly seized. I understand that people who are not in the front lines (maybe you) think things would be simpler and less annoying if we were, but the first time we don't stand up is the end of what's left of our rights.
By the way, how would you have felt if you were (as happened) someone who bought a house for CASH, a expensive house, and the Bank of America swore in court they had paperwork "somewhere" and the court gave the bank the house? Is THAT the country you want to live in, where being expeditious is more important than being correct in depriving people of their homes?
If someone doesn't take the necessary time to conduct their due diligence, that only falls on them. Granted a lot of the banks did not do everything perfect, but prior to you purchasing you can ensure it is all done correctly th ere are no hiccups in foreclosure.
At the end of the day, to try and save a house that one has not made a payment on in years due to a technicality is just bad and i disagree about wrongly seized. The borrower is in default. Pay the loan or lose the house. But it's the servicers own fault for not doing things correctly and opening up the exposure.
("But it's the servicers own fault for not doing things correctly and opening up the exposure.")
Defrauding investors and committing fraud on the court is far beyond not doing everything perfect or correctly. The organizations and people involved in these crimes need to be investigated and prosecuted, if a consumer gets a freebe because of their criminal activity, thats just too bad for the crooked bankers and servicers, and let the buyer beware if your buying a foreclosed home.
My blood is boiling right now. This WILL be vigorously opposed.
It is this paragraph in Judge McConnell's Order they are afraid of most:
"Order the appearance of any persons necessary to settle any claims completely and/or order the appearance of any non-parties, including but not limited to municipal and other governmental officials and lien holders, that may be essential for a total resolution of the claims;"
No "Motions for Protective Order" allowed!
Foreclosure Happy Bankers Change Venue For Their Benefit. Federal Judge McConnell Orders Stay On All Foreclosures. Bankers Join Forces. File Appeal.
http://www.foreclosurehamlet.org/profiles/blogs/foreclosuring-bankers-change-venue-for-their-benefit-federal-judg
BTW:
Cheyenne will be on Ratigan's show on the 10th, mark you calendars. He has put a couple of new stories up at his site as well.
http://usabailout.com/
Anyway take care and thanks again.
This was filed Pro Se in re: Eaton vs. FNMA, et al...by a very smart carpenter.
Who Is Bob Marley?
http://www.foreclosurehamlet.org/profiles/blogs/who-is-bob-marley
Nail...meet hammer.
Borrowers are NOT Parties to Asset Backed Securities. WRONG. Bob the Builder explains why.
http://www.foreclosurehamlet.org/profiles/blogs/borrowers-are-not-parties-to-asset-backed-securities-wrong-bob-th
(Amicus Curaie in re: HSBC, et al vs Jodi Matt)
Mass. Senate OKs bill to overhaul foreclosure laws
http://hosted2.ap.org/MANOR/4e06196a1f11442a96197ec8174afd24/Article_2014-01-24-Preventing%20Foreclosures/id-06ff383c864f448881566fa859c5352b
BOSTON (AP) — The Massachusetts Senate has unanimously approved a bill that would restore the titles of foreclosed properties to homeowners.
Senate leaders said the measure was approved Thursday after thousands of foreclosure sales in Massachusetts were determined to be void as the result of recent state Supreme Judicial Court decisions.
Senate President Therese Murray said some residents are without a clear title to their home because of potential procedural errors that took place years ago.
The Plymouth Democrat said restoring the titles will help support a healthy real estate market.
Attorney General Martha Coakley said the bill is intended to provide predictability for property owners and additional consumer protections to those whose property may have been wrongfully foreclosed on.
The bill now heads to the House.