Securities Fraud Part II – Nye Lavalle

by Ken Kappel on February 20, 2011

We are more than pleased to present the work of Nye Lavalle, who discovered the depth of Securities Fraud, and began publishing on the subject in the mid-nineties.  No one was listening.

We strongly suggest that you read Part I, before beginning to read this piece.

Securities Fraud Part I – Nye Lavalle

Read this as a hands-on guide to what happened in the Mortgage Securitization industry.  An off-shoot of Investment Banking financial engineering.

This is the story of what happened to multi-millions of homeowners with mortgages issued since 2000.  This is the who, what, when, why and how.

[We always say that our intent is to give you: information, thus knowledge, understanding, confidence, courage and tools to Repudiate Illegal / Fraud Based Housing Debt.  This series of articles constitutes all of those attribute.]

We drew this material from his seminal report entitled:

”Report On Fraudulent & Forged Assignments Of Mortgages & Deeds In U.S. Foreclosures [2010]”  You can find the complete report here.

We start out in full, with the understanding that you have read Part I. The link is above.

”21. The key servicing challenge for servicers is that via the process of mortgage securitization and the accounting, tax, and the remote bankruptcy protection sought by those in the secondary mortgage market, promissory notes, and their related assignments on hundreds of thousand and potentially many millions of occasions were never properly, contractually, lawfully, or equitably transferred, assigned, and/or indorsed. [Emphasis Added.]

”22. In fact, lawyers for the industry have admitted in lawsuits, pleadings, testimony, and hearing arguments that many times one cannot tell who owns the promissory note upon foreclosure; the chain of title to the note; and that notes have often been pledged to more than one or more different parties.

”23. Most recently, due to such abuses of due process in Florida foreclosure cases, the Florida Supreme Court was faced with these problematic industry-wide practices employed by the mortgage servicing, default servicing, and foreclosure bar enterprise and the resulting confusion on ownership, transfer, and proper party plaintiffs.

”24. The Florida Supreme Court created a special task force to recommend new rules of civil procedure due to the many issues they and the lower court’s were facing regarding false and sham pleadings and assignments attempting to create standing for parties with no legal right, capacity or standing to foreclose.

”25. After the task force, which included lender and borrower representatives as well as judges, issued its final report, the Florida Supreme Court promulgated new rules of civil procedures for all foreclosure actions in their state.

”26. The Court’s opinion was clear and unambiguous in its opinion filed on February 11, 2010. “First, rule 1.110(b) is amended to require verification of mortgage foreclosure complaints involving residential real property. The primary purposes of this amendment are (1) to provide incentive for the Plaintiff to appropriately investigate and verify it is ownership of the note or right to enforce the note and ensure that the allegations in the complaint are accurate; (2) to conserve judicial resources that are currently being wasted on inappropriately pleaded “lost note” counts and inconsistent allegations; (3) to prevent the wasting of judicial resources and harm to defendants resulting from suits brought by plaintiffs not entitled to enforce the note; and (4) to give trial courts greater authority to sanction plaintiffs who make false allegations.” [emphasis added]

”27. However, the foreclosure bar firms and their servicer clients could not comply with such simple requirements and they asked for a rehearing of the Court on these new rules.

”28. The Florida office of the Shapiro/LOGs Firm, Shapiro & Fishman, on behalf of itself and all of its clients and other foreclosure bar firms asked the Florida Supreme Court to reconsider its new rules that the Court promulgated mandating that Plaintiffs and their lawyers in foreclosure actions verify their pleadings as to the accuracy of their allegations, including who had lawful and proper standing to foreclose.

”29. In its opinion of February 11, 2010, the Florida Supreme Court amended rule 1.110(b) to require verification of mortgage foreclosure complaints involving residential real property. Rule 1.110(b) commands verification when filing an action for foreclosure of a mortgage on residential real property, which will be fulfilled by including in the complaint an oath, affirmation, or the following statement: “ Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.” [emphasis added]

30. On February 26, 2010, the Florida Shapiro Firm filed a Motion for Rehearing and Clarification of the Court’s Opinion. In its Motion, the Shapiro Firm states “the rule fails to specify who is responsible for verifying the mortgage foreclosure complaints. It is on this very limited issue that the Shapiro Firm seeks rehearing or clarification.

”31. Quoting the Shapiro Firm’s Motion for Rehearing, the holder of the note “may have some limited knowledge in order to verify portions of the complaint” and the “loan servicer would, presumably, have” some limited knowledge in order to verify other portions of the complaint but “likely will not have personal or direct knowledge of other factual allegations.” [emphasis added]

”32. In its motion, the Shapiro Firm virtually admitted to the Florida Supreme Court and all other courts in the nation, the one fact that I and other advocates and consumer lawyers have known for over a decade, when put to proving up the allegations of a foreclosure complaint or notice of sale or foreclosure in a nonjudicial state, the foreclosure bar and their alleged clients are unable, under penalty of perjury, to verify and attest to which party (or client) can be held accountable for bringing meritorious foreclosure actions and delineates as rationale for this legal handicap its inability to:

”a. allege the proper and lawful amounts claimed due;

”b. attest to the default status of a loan or date of default;

”c. delineate the chain of title to the promissory note;

”d. reveal the true owner of the note and holder in due course;

”e. allow parties to produce discoverable evidence and testify in support of Plaintiff’s allegations;

”f. produce the proper decision maker for appearance at mediation conferences;

”g. show who are the proper parties who can lawfully receive and approve modifications, short pays, settlements, accord and satisfaction, and other alterations of terms and conditions;

”h. steer defendants in foreclosure actions towards the proper party or nonparty from whom the defendant can seek discoverable evidence and testimony in furtherance of their defenses and counterclaims.

”33. Thus, the Shapiro Firm motion5 presented the Florida Supreme Court and all other courts in the nation with the following conundrum in their motion: “The holders of the note are often unfamiliar with the status of the loans and rely upon loan servicers to manage the loans, payments on the loans and the foreclosure proceedings.” [emphasis added].

”34. However, for purposes of this report on fraudulent, fabricated and forged assignments, the most telling argument presented by the Shapiro Firm was in paragraphs 6. of their motion wherein they stated:

”a. “Furthermore, mortgage notes are frequently assigned between lenders and other investors. Thus, subsequent holders of a note will not have personal knowledge as to the mortgagor’s execution of the original note or assignments that occurred prior to its acceptance of the current assignment and consequently will not be in a position to verify those alleged facts in a mortgage foreclosure complaint.

”35. In this bold admissions and indictment of the mortgage industry, the Shapiro firm is admitting that they don’t know the chain of title to the note and if the note was properly, lawfully, contractually, and equitably assigned to a securitized trust or other lender/investor since the same principals that apply to placing the correct facts and chain into the foreclosure complaint apply to the creation of a lawful chain of assignments of mortgages/deed, whether they were recorded or not.

”36. This admission also supports my conclusions that servicers and alleged lenders cannot prove if a promissory note was lawfully indorsed or the liens related mortgages and deeds on the property properly perfected since the mortgage/deed is assumed to have followed the note, lest it was intentionally bifurcated/separated from the note, thereby releasing ay security interest they may have claimed.

That all folks for Part II.  Soon, in order to give you more perspective regarding the dedicated and comprehensive Nye Lavalle, we’ll be presenting two parts regarding his biography, know your source.

Here is the source document.

Read the next Part here.  Securities Fraud Part III – Nye Lavalle

”Report On Fraudulent & Forged Assignments Of Mortgages & Deeds In U.S. Foreclosures [2010]”  You can find the complete report here.

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