Within I cite Law and precedent... should an expert care to vet it I would welcome their response. The EPTL defense. If there is no trust that the note and mortgage was ever in then this defense probablly wont be of much value. If the trust was created outside of NY, then this defense probably wont work. Probably means probably... not absolutely, not positively. Each foreclosure is unique and up to each Defendant to research. This was originally written in regards to a line in one of Neil Garfields posts titled... and is intended to address the issue of Assignments of Mortgage created POST the foreclosing trusts Closing date. A Foreclosure Judgment and Sale is a Forced Assignment Against the Interests of Investors and For the Interests of the Bank Intermediaries” Hi Neil, JohnR here… long time no reply but I’m still out here. Read your articel above and would like to interject a point if I may. In paragraph 9 of your article you wrote… “The final judgment of foreclosure forces the “assignment” into a “trust” that was unfunded” and it is this point that I would like to refer too. And here is where I interject because... As the trusts indenture states, all of the participants in the securitization schema, as per contractual obligation, have no right, no ability, they cannot perform any action that would jeopardize the REMIC status of the trust. The trust’s indenture even specifically states that any action taken by any of the participants to the schema in contravention to the trust are VOID. It does not say… “oh… maybe sometimes they’re OK” it says “They are VOID”. The trust CANNOT be forced to take the note at all! It cannot be “forced” to do anything. It is a contractual agreement, not a human being with a gun to its head. It cannot accept the note & mortgage AT ALL! NY EPTL & IRS laws make this impossible as is explained in detail below. Both the trust’s Cut-Off date & the default status of the assignment and delivery and acceptance of the note cannot be ignored. It is not a matter of “forces the “assignment” into a “trust””, this action is specifically VOID due to the terms of the controlling indenture (PSA) the participants of the schema have agreed to be governed by, and by NY trust law. Therefore, the “trust”, unless the note & mortgage are properly delivered into it, the trust can NEVER own that note & mortgage nor can the trustee because the trustee is merely an incident of the trust, and therefore held within the same boundaries of the trust. In essence, the trust is created just like a vehicle. Like a car, it was specifically designed to perform a very certain duty and that duty alone. You can drive it down a road. It’s not a boat, its not an airplane. That is not the purpose for which it was designed and therefore it has not that capability nor the capacity within it to allow it under ANY given circumstances. Like the example above, the trust was created to be a vehicle. A vehicle with very specific capabilities and with very specific limits all of which are memorialized within the contractual agreement, the PSA. Even the mere hint that the trusts accepted a late note & mortgage is akin to saying “this car can fly”… it was not only never designed with that purpose in mind, within its own controlling document (PSA) and the controlling laws governing it (NY EPTL & IRS)(which the Parties to the schema all actually signed in agreement to), the right and ability to accept post cut-off notes and/or defaulted notes is specifically forbidden and any action by any participant to the securitization schema attempting to do so is VOID at its inception. Forbidden means forbidden… it does not mean “well, let’s just do it anyway”. It was specifically forbidden for a reason. That reason lies within the law under which the trust was created and is governed and is essential to the construction of the trust because without it, there is no trust (and I am referring to ‘trust” as in “we trust him” or “I trust you”). Any act of the trustee contrary to the trust agreement (PSA) is void ( NY EPTL § 7-2.4). In New York, the mere intention to create a trust without delivery of the trust assets to the trustee has not legal consequences; it does not create a trust, if the Settler is the sale trustee, the transfer of Title assets is completed by recording the DEED or registering the securities or accounts in the name of the trust. If the trust names a third party as a trustee, the property, titled assets, documents evidencing ownership of the property must be formally transferred to the trustee. A transfer is not effected by mere recital of assignment, but the written assignment and all documents of property must be actually delivered to the trustee ( EPTL §7-1.8). As stated above the property is passed to the trustee with the intention to pass legal title thereto to it as trustee. Brown v. Spehr, 180 N.Y. 201 (N.Y. 1904). There is no valid trust until actual delivery of the assets to the trust. Riezel v. Central Hanover Bank and Trust Co..,_266 App. Div. 586. There is no trust if the trust fails to acquire the property. Kermani v. Liberty Mut. Ins. Co., 4 A.D. 2d 603 (N.Y. App. Div. sa Depart. 1957). The delivery of the property must be done to the trust as designated in the instrument creating the Trust ( EPTL §7.2.1(c)). The PSA prescribes the specific method of transfer. This is not subject to variation because it is set in the instrument. No court can ignore and create contractual remedies that were omitted in the PSA. Schmid v. Magnetic Head Corp., 468 NYS 2d 649 (NY App. Div. 1983). However, the court can enforce the prescription of the PSA. Morlee Corp. v. Manufacturer Trust Co., 172 N.E. 2d 280 ( N.Y. l96l). But no court can on the basis of contract law change a trust which is specifically governed by its business indenture. What is valid delivery to the trustee is governed by the corporate business indenture, because the Trustee in the present case is a corporate trustee. Under a corporate indenture the right of the trustee are not governed by fiduciary relationship but by the term(s) of the agreement (the PSA). The cases that do not see that it is not simply a matter of privity fail to see that if the property is not received in the manner prescribed by the indenture, then the property is not property of the trust, and if not delivered as prescribed and delivered in violation of it, there is not trust because there has not been complete and perfected delivery of the property to the trust. AG Capital Funding Partners, L.P. v. State St. Bank & Trust Co., 2008 N.Y. Slip Op. 5766; Hazard v. Chase National Bank, 159 Misc. 57, 287 N.Y.S. 541 (Sup Ct 1936) aff’d 257 A.D. 950 14 N.Y.S. 147 (1st Dept.) aff’d 282 N.Y. 652 cert. de. 311 U.S. 708 (1940). The duties and power of the trustee are set by the agreement (PSA). In RE IBJ Schroeder Bank and Trust Co., 271 A.D. 2d 322 (N.Y. App. Div. 1st Dept. 2000). The PSA is also the agreement that creates the trust, it is a mistake to think that under New York Law you can create a trust without complete delivery of the designated property of the trust and in the manner specified by the document that creates it. Without the delivery of the property designated to it, there is not trust. The delivery under the PSA requires, under the corporate indenture, strict compliance with the mandatory terms of the trust indenture, because the property has to be delivered as prescribed and the securities ascertained if not, no right to beneficiaries arise. Wells Fargo Bank, N.A. v. Farmer, 2008 N.Y. Slip OP. 51133 U 6 ( N.Y. Sup. Ct 2008) and no right in the trust arises without consideration paid (in this case the depositor to the sponsor). The delivery necessary to consummate a gift must be perfected as to the nature of the property. There must be actual surrender and control and authority over the things surrendered must be intended. It is the consummation that completes the transaction, intention alone is not sufficient. Vincent v. Putnam, 248 N.Y. 76 (N.Y. 1928). The Consummation Act of the delivery of all the property and documents is necessary. Phillipsen v. Emigrant Inds. Saving Bank, 86 N.Y.S. 2nd 133 ( N.Y. Sup. Ct. 1948). Therefore, if the note and the mortgage and the interim assignment were not delivered by the closing date (of the trust) they are not property of the trust. The delivery rule requires that the delivery necessary to consummate a gift must be perfected as to the nature of the property and the circumstances permit. Vincent v. Rix, 248 N.Y. 76 as cited in Gruen v. Gruen, 68 N.Y. 2d 48 ( N.Y. 1986). See also Sussman v. Sussman, 61 A.D, 2d 838 ( N.Y. App. Div. 2d Dept, 1978); Riegel v. Hanover Bank TrustCo., 266 App. Div. 586 there must be a change of dominion over the thing intended to be given. Vincent v. Putnam, 248 N.Y. 76, 82-84 ( N.Y. 1928).Undelivered note and assignments after the closing date if not contemplated in the PSA are not property of the trust. Any act, sale, and conveyance by the trustee in violation of the PSA is void under NY EPTL law § 7-2.4. Simply put, when an unallowed action has been committed by a representative of a “Trust” then trust is lost. When a post dated (to closing date) assignment of mortgage is created and especially if it is “allowed” by the trust to represent an unallowed action of the trust, at that very moment not only does the trust lose it’s REMIC status… it also loses its status as a trust for, without trust there can be no “Trust”. EPTL §7-1.8 John
Posted on: Thu, 02 Oct 2014 20:10:43 +0000
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