Foreclosure Offense: Quiet Title and Rescission (TILA

and otherwise)
June 2, 2008

HERE IS AN OUT-OF-THE BOX OFFENSIVE PROCEDURE WE PROPOSE.

YOUR COMMENTS APPRECIATED. IT IS BASED UPON THE ASSUMPTION
THAT THE LENDER ASSIGNED OR TRANSFERRED OR SOLD THE
MORTGAGE AND NOTE RIGHT AFTER THE CLOSING ON YOUR
TRANSACTION. LOGICALLY THEN THE PERSON TO WHOM YOU WOULD
ADDRESS YOUR TILA, FRAUD, AND DECEPTIVE AND UNFAIR PRACTICES
CLAIMS WOULD BE ADDRESSED TO THE NEW OWNER OF THE
MORTGAGE AND NOTE. BUT YOU DON’T KNOW WHO THAT IS. AND IN
THE TILA AUDIT, IF IT IS DOEN PROPERLY, THE DOCUMENTS ARE
REQUESTED AND USUALLY IGNORED. SOOOOOO……

QUIET TITLE:

In essence the reverse of a traditional foreclosure where the owner of the property
forecloses the claim of the people against whom he he has filed suit claiming the property
free and clear of all encumbrances.

The significance in foreclosure OFFENSE is that the loan has been assigned, sold and
transferred multiple times and broken up into thousands of pieces along with many others
that were intermingled in portfolios, sometimes with cross guarantees from one portfolio
to another.

This process started before the first payment was due on the mortgage loan and before the
victim/borrower came to know the real facts of the loan withheld from him in an
asymmetric information environment (see asymmetric information) in an inter-temporal
transaction (see inter-temporal transaction).

Thus the true owner, against whom rescission could be claimed became unknown to
the victim/borrower. The quiet title action sues “John Doe” identified as all persons
having an ownership interest in the mortgage lien on the subject property. The
allegation is made that while the victim/borrower has been notified of a transaction,
the victim/borrower, petitioner has not been advised of who the entities or people
are who own this interest. And since there are TILA and other fraudulent violations,
the victim/ borrower/petitioner wishes to rescind. Efforts to determine the true
owners have led the Petitioner to determine that there may be thousands of entities
or owners, none of whom have been disclosed to Petitioner despite attempts to
secure said information (contained in the TILA report and demand).

SERVICE OF PROCESS IS BY PUBLICATION.

If the court demands that the mortgage servicing company be named as nominal
Defendant or Respondent, the mortgage servicing company has only one job: to produce
information and proof of ownership of the loan. It is doubtful that anyone, least of all the
mortgage servicing entity will be able to fulfill this condition.

Thus the default judgment will be entered, the victim stops paying the mortgage,
and has a recorded judgment relieving his property of any mortgage lien and
offsetting the note with the refunds and damages payable to the victim, thus
satisfying the entire principal of the note and awarding attorney fees to the
victim/petitioner.

RESCISSION:

The right to reverse the transaction. Ordinarily rescission involves giving back everything
you received in exchange for getting back everything you gave. In this setting it means
the right to get back ALL the interest, points, closing costs and attorney fees and other
costs at or after closing that you incurred as a result of the transaction. Rescission rights
exist under Federal Statutory Law (Truth in Lending Act - TILA, State Deceptive
Business practice Acts, and at common law. Remember that rescission doesn’t mean you
give back the house. It doesn’t even mean you have to give back the money to the lender
against whom you are rescinding — THAT obligation commences AFTER the lender
admits to the rescission or it is otherwise decreed and then it is reduced by the refunds of
points, interest, closing costs you paid plus damages and attorney fees you suffered as a
result of the issues raised in this post. Rescission might not even mean you owe any
money at all to the lender. It could mean that the mortgage lien is extingunished and so
is the note. It could convert a secured debt, non-dischargeable in bankruptcy to an
unsecured debt wholly dischargeable in bankruptcy. And unless the party coming into
court or the auction as a “representative” of the lender can prove that they have received
their instructions and authorization from a party who is authorized to give those
instructions, then they lack authorization, they lack legal standing and they are probably
committing a fraud on you, the court and everyone else.

companion tranche

A specific tier or segment of REMIC security. A REMIC tranche that is structured to

absorb a disproportionate amount of the volatility caused by variations in the
prepayments of the underlying collateral. Companion tranches are created to be more
volatile so that other tranches in the same REMIC, called PAC or TAC tranches, may
have more stable cash flows. Hence the name companion. Also called support tranches.
The significance in Foreclosure defense is that this is one of the devices used in the
covenants or indentures of ASBs that assures payment to the holder of the security.
Since the holder of the security is the “owner” of the mortgage and note, it is
reasonable to assume that either the holder of the mortgage has been paid by a third
party or that a third party assumed the liability.

compliance risk
One of nine risks defined by the Office of the Comptroller of the Currency (OCC). The
risk to earnings or capital arising from violations of or nonconformance with laws, rules,
regulations, prescribed practices, or ethical standards. This risk is incorporated in the
Federal Reserve definition of legal risk. Participants in the Mortgage Meltdown of 2001-
2008 were virtually all out of compliance and upon filing of an administrative complaint
to the OCC, could be prosecuted for violations.

conventional mortgage

A mortgage loan based solely upon the value of the mortgaged real estate and the
creditworthiness of the borrower. A mortgage loan without insurance or guarantees from
a government agency. The significance is that with securitization of the loans there is (a)
insurance to the holder of the CLO (b) guarantees of payment from third parties and (c) in
practice, guarantees from the Federal Government (witness the Federal Reserve bailout of
Bear Stearns and the Federal Reserve policy of allowing investment bankers who are
holding CLOs to use those CLOs for loans at the Fed window). The securitized
transactions thus converted the original transaction from a conventional loan to a
complex consumer credit, insured, guaranteed, pooled security transaction falling far
outside of the TILA exemption regarding residential home mortgages eligibility for
rescission.

INTER-TEMPORAL TRANSACTIONS:

Transactions in which the commencement of the terms at the execution of the deal
contains terms, risks or provisions that differ from a later time. The significance of this
insider term in the MORTGAGE MELTDOWN is a classic real story: the victim is a
black man with a perfect (800) FICO score has lived in his house many years and has
only 5% left to pay off on his mortgage. He is approached by carefully trained predatory
salesman for subprime lender — a lender that the victim had no need for because his
credit, finances and personal reputation were excellent. Victim could therefore have
qualified for any conventional loan on conventional terms. Victim does not know because
it is not disclosed to him that he is being approached with a subprime lending program
and that he qualifies for much better terms that are being offered to him — nor that he
would be better off NOT refinancing since he is so close to paying off his house. He is
convinced to get a new mortgage for interest only payments set at 1% while another 9%
accrues. $20,000 in mortgage broker and yield spread premium rebates (kickbacks) are
paid up front along with the mortgage proceeds. Within a few months he starts getting
notices of increases in his payments which eventually are larger than his entire income.
Qualification of the loan by the “lender” was at the payment rate at 1% interest, not at the
future rates that would be applied, for which his income would NOT qualify. Victim ends
up with risk of foreclosure and blemished credit score. Happy ending. Legal aid stepped
in and unwrapped the deal. Many borrowers are seduced into accepting these deals
believing that the extra money they are getting out of the mortgage proceeds will help
them indefinitely to make future payments. It is the lender’s obligation to disclose that
this is not the case, that the borrower’s income does not cover the amount of future
payments which the lender understands and the borrower does not (see asymmetric
information).

MORTGAGE MELTDOWN:

An series of events (stemming from the 1983 introduction of derivative securities)

created by a tacit cartel of investment bankers and other financial institutions in which
borrowers were (approved) “loaned” money on purchase money mortgages based upon
false appraisals in the context of contemporaneous securitized transactions where the
investment capital was procured by fraud in unregulated security offerings to “qualified”
investors, based upon false assurance, false ratings, false insurance backing, and false
appraisals of underlying property, income of borrowers and many other factors. The
logistics of this scam were revealed in pieces and have threatened the very existence of
many financial institutions and the financial markets themselves. Indexes, such as
LIBOR, were indirectly manipulated by U.S. financial institutions to hide the true facts.
Despite a brief period in which certain arcane “auction markets” froze up (in places and
events unknown to the public, business has resumed as usual. The lack of regulation from
a responsible, accountable agency or group of agencies has spawned hundreds of lawsuits
and millions of foreclosures, many producing counterclaims for far more than the original
mortgage and note. No immediate fundamental change is in process in the regulatory
scheme, hence it may be expected that the mortgage meltdown will replay in one form or
another shortly.

NINJA LOAN

NO INCOME, NO JOB, NO ASSETS: NO DOCUMENTS, NO VERIFICATION, NO

REVIEW BY RISK ANALYSIS COMMITTEE.

LL