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Alabama Court of Civil Appeals 6-8-12 NY Trust Law PSA Violatio is !

!ATAL Co "ress #$es t%at is reall$ %er ame& versus '(S( )a * 21++,-.
/0itor1s Comme t2 Yves Smith from Naked Capitalism has it right in the article below and you should not only read it but study it. The following are my comments in addition to the well written analysis on Naked Capitalism. Alabama is a very conservative state that has consistently disregarded issues regarding the rules of evidence and civil procedure until this decision from the Alabama Court of Civil Appeals was handed down on une !" #$1#. %appy &irthday" &rother' This court has finally recognized (a) that documents are fabricated shortly before hearings and (b) that it matters. They even understand WHY it matters. udges talk to teach other both directly and indirectly. Sometimes it almost amounts to ex parte contact because they are actually discussing the merits of certain arguments as it would effect cases that are currently pending in front of them. ( know of reports where udges have stated in open Court in Ari)ona that they have spoken with other udges and *+C(*+* that they are not going to give relief to deadbeat borrowers. So this decision in favor of the borrower" where a fabricated ,Allonge- was used only a couple of days before the hearing is indicative that they are starting to change their thinking and that the deadbeats might .ust be the pretender lenders. But they missed the fact that an allonge is not an instrument that transfers anything. It is not a bill of sale assignment or anything else li!e that. It is and al"ays has been something added to a #reviously drafted instrument that adds subtracts or changes terms. $ee my #revious article last "ee! on %llonges %ssignments and &ndorsements. 0hat they *(* get is that under New York law" the manager or trustee of a so1called 2+3(C" S45 or ,Trust- cannot do anything contrary to the instrument that appointed the manager or trustee to that position. This is of enormous importance. 0e have been saying on these pages and in my books that it is not possible for the trustee or manager of the ,pool- to accept a loan into the pool if it violates the terms e6pressly stated in the 4ooling and Servicing Agreement. (f the cut1off date was three years ago then it can7t be accepted. (f the loan is in default already then it cannot be accepted. So not only is this allonge being re.ected" but any actual attempt to assign the instrument into the ,pool- is also re.ected. 0hat that means is that like any contract there are three basic elements 9 offer" consideration and acceptance. The offer is clear enough" even if it is from a party who doesn7t own the loan. The consideration is at best muddy because there are no records to show that the 2+3(C or the parties to the 2+3(C :investors; ever funded the loan through the 2+3(C. And the acceptance is absolutely fatal because no investor would agree or did agree to accept loans that were already in default. The other thing ( agree with and would e6pand is the whole notion of the burden of proof. (n this case we are still dealing with a burden of proof on the homeowner instead of the pretender lender. &ut the door is open now to start talking about the burden of proof. %ere" the Court simply stated that the burden of proof imposed by the trial .udge should have been by a preponderance :over 8$=; of the evidence instead of clear and convincing :somewhere around !$=; of the evidence. So if it is more likely than not that the instrument was fabricated" the document will N>T be accepted into evidence. The ne6t thing to work on is putting the burden of proof on the party seeking affirmative relief 9 i.e." the one seeking to take the home through foreclosure. (f you align the parties properly" all of the other procedural problems disappear. That will leave ?uestions regarding admissible evidence :another time;. Aeep in mind that this decision will have rumbling effects throughout Alabama and other states but it is only persuasive" not authoritative. So the fact that this appellate court made this decision does not mean you win in your case in Ari)ona. &ut it can be used to say Judge, I know how the bench views these defenses and claims. But it is becoming increasingly apparent that the party seeking to foreclose is now and always was a pretender. And further, it is e ually apparent that they are submitting fabricated and forged documents.

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"#ore importantly, they are trying to get you to participate in a fraudulent scheme they pursued against the investors who advanced money without any proper documentation. $his Alabama Appellate %ourt understands, now that they have read the &ooling and 'ervicing Agreement, that it simply is not #ossible for the investors to be forced into acce#ting a defaulted loan long after the cut'off date established in the &'A. (). "If you rule for the pretender creditor here you are doing two things* +(, you are providing these pretenders with the argument that there is a -udicial ruling re uiring the innocent investors to take the defaulted loan and suffer the losses when they never had any interest in the loan before and +., you are allowing and encouraging a party who is not a creditor and never was a creditor to submit a credit bid at auction in lieu of cash thus stealing the property from both the homeowner and in violation of their agency or duty to the investors. ((. "$his %ourt and hundreds of others across the country are reading these documents now. And what they are finding is that pension funds and other regulated managed funds were tricked into buying non/existent assets through a bogus mortgage bond. $he offer and promise made to these investors, upon whom millions of pensioners depend to make ends meet, was that these were industry standard loans in good standing. 0one of that was true and it certainly isn1t true now. 2et they want you to rule that you can force investors from another state or country to accept these loans even though they are either worthless or worth substantially less than the amount represented at the time of the transaction where the investment banker took the money from the investor and put it into a giant escrow fund without regard to the 34#I%1s existence. We don(t deny the e)istence of an obligation but "e do deny that this tric!ster should be given the #roceeds of ill'gotten gains. The actual creditors should be given an o##ortunity to re*ect non'conforming loans that are submitted after the cut'off date and are therefore indis#ensable #arties to this transaction.+