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RISMEDIA, March 16, 2010—Things are starting to get really ugly out here on the front lines. The banksters latest tactic has them confirming in writing that the homeowner’s eligibility for a modification is being considered while secretly continuing to foreclose.

The homeowner breathes a huge sigh of relief and waits….and waits….and waits. Then comes a knock on the door and the homeowner is out on the street. And, in more and more cases, the borrowers are not even being served with notice as required by law.

Anyone, and I mean anyone, can record a notice of default, wait the appropriate amount of time, and file a notice of sale; take these two documents to court and get an unlawful detainer.

The system is being abused by third parties who’s only interest in the property is the desire to collect on credit default swaps.

One way to advance awareness of the problem of pretender lenders would be to record these notices on the homes of all of our congressmen.

There is no judicial review, no oversight and, as a result, no due process even for those who have done nothing wrong; and nowhere is anyone considering the rights of the true beneficiary.

There is no review of the legitimacy of the foreclosure, and unless the borrower is willing to go to court and fight, there is no stopping the foreclosure.

And, with more borrowers rising up to fight their illegal foreclosure, the courts are becoming more crowded and judges are becoming impatient, often dismissing the borrower’s case without even a preliminary review of the facts.

In their view, the purpose of non-judicial foreclosure is to provide a quick and inexpensive means for the lender to remedy a default. The borrower agreed to non-judicial foreclosure when the loan documents were signed. End of challenge; end of case.

California, like 29 other states, is a non-judicial foreclosure state. Rules of individual states very widely and you should only use this as a guide for examining applicable laws and procedures in your state. I cannot over state the importance of having an experienced attorney as a resource.

In California, judges have been isolating on a small portion of the California Civil Code, 2924, to the exclusion of other applicable law, and have been dismissing “produce the note defenses” on the grounds that 2924 contains “no produce the note” requirement.

The stated intention of the code is: “(1) to provide the creditor/beneficiary with a quick, inexpensive and efficient remedy against a defaulting debtor/trustor; (2) to protect the debtor/trustor from wrongful loss of the property; and (3) to ensure that a properly conducted sale is final between the parties and conclusive as to a bona fide purchaser.”

The Courts, in their haste to apply the first purpose, are ignoring the second and third purpose of the Code. There is now a substantial body of evidence of wrongful foreclosures by entities lacking both authority and justification to do so.

Homeowners who have never been late on a payment have been evicted while others, negotiating a loan modification, have met the same fate.

Noting the opportunity created for fraud in a non-judicial foreclosure state, judges should be particularly wary of the potential for organized crime. Now comes evidence that foreclosure mills are simply manufacturing and illegally backdating documents.

Courts are making the assumption, unsupported by facts, that the allegations contained in the notice of default and notice of sale are truthful.

And, how can a properly conducted sale be final between the parties if the party of interest isn’t involved. What about that individual?

2924 isn’t intended to allow a trustee to act against the interests of the beneficiary.

The court should want to protect its own interests against a fraud upon the court by simply administering the basic judicial procedure that requires parties who come before the court to identify themselves.

Nor are foreclosure statutes intended to be exclusive. It cannot be the intention of non-judicial foreclosure procedure to deny aggrieved parties access to remedies or trump other rights intended to protect consumers.

2924 by its own terms, looks outside of the statute to the actual obligation to see if there was a breach. Being entitled to foreclose non-judicially under 2924 can only take place “after a breach of the obligation for which that mortgage or transfer is a security.”

This brings us to the Uniform Commercial Code, the essence of which is replicated in almost every state.

Under California Commercial Code 3301, a note may only be enforced if one has actual possession of the note as a holder, or has possession of the note, not as a non-holder, but with holder rights.

If there is no possession of the note or possession was not obtained until after the notice of sale was recorded, it is impossible to trigger 2924.

And, if the note is unenforceable under Article 3, there can simply be no breach.

Simply rubber stamping an illegal foreclosure is a far cry from due process, and until enough judges get it, we are going to have to show judges how financial intermediaries are gaming the system and committing fraud upon the court.

Lawyers say, “If you have the law on your side, you pound the law; if you have the facts on your side you pound the facts; and if you have neither, you pound the table.”

You have the law and the facts on your side, but if you do not present them adequately, the banksters will beat you simply by pounding the table.

And, while they are pounding the table, they will be doing so with forged documents and perjured testimony, and when they pack up and leave, no one will have any idea who they are.

While the intent is to stop the foreclosure, you need to take baby steps. You want to work your way back to the true party of interest. To do that, you are simply disputing the amount you owe. You want a full and complete accounting of all monies paid and received in connection with your loan. That means, where the money came from that funded the loan, what was the amount of the service release premium, yield spread premium, credit default swaps, and tarp funds, as well as, the late charges and fees associated with the foreclosure.

You have a legal right to that information, but you will need the power of the court to compel information as to how much you really owe. Either the pretender lender will give up or a full accounting might produce evidence of fraud, predatory lending and the possibility that the obligation was satisfied by TARP funds, credit default swaps or both.

See my blog for more:

George W. Mantor is known as “The Real Estate Professor” for his consumer education efforts including a long-running radio program, monthly workshop series, public appearances, and frequent articles.

During a career dating back to 1978, he has amassed experience in new home and resale residential real estate, resort marketing and commercial and investment property.

Prior to starting his own real estate and mortgage brokerage in 1992, he had been Director of Training and Customer Service for Great Western Real Estate. In addition, he has served on virtually every real estate committee, including a term as a Director of the California Association of Realtors.

George is a nationally respected authority on all areas of real estate and is frequently quoted in a wide range of publications. He is an oft invited guest of Fox Business Network and for many years, he was the host of “Keepin’ It Real…Real talk about the real thing, real estate” on KCEO radio.

The Real Estate Professional includes him in “a directory of the Nation’s outstanding authors, columnists, and speakers. His articles have also recently appeared in Real Estate Finance, The Real Estate Professional, National Real Estate Investor, Broker Agent News, and Realty Times. His blog is