MORE AND MORE LIABILITY LIES FROM THE BAD BOY BANKS

Eckley & Associates Video Article MORE AND MORE "LIABILITY LIES" FROM THE BAD BOY BANKS!

BY: J. ROBERT ECKLEY
Real Estate and Construction Attorney
November 1, 2011
©2011 ECKLEY & ASSOCIATES, P.C.

REPRINTED FROM "COUNSELOR'S CORNER", Ed. 55
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The Banks are Pulling those Deal-Killing "Loan Modification Rules and the Deficiency Liability Laws" They are Quoting You and Your Clients From Two Primary Sources: A Vivid Imagination and Their Rears!
IT'S TIME AGAIN FOR THE TRUTH!

THE NATIONAL "FINANCIAL CRIME SCENE":

   The U.S. is mired with defaults on residential and commercial real estate mortgages and having to dredge through that economic mess is bad enough for those of us—brokers, owners, investors, lawyers, accountants and, well I suppose, psychiatrists—who, against all the opposing forces to the contrary--are still diligently trying to pull the rabbit of Financial Hope from the Hat of Unrelenting Financial Doom that the Banks, Regulators and the politicians who kow-tow to them have made of things. On that point: It’s clear after years of struggle that no savvy help is coming from the government and that’s going to have to be a “given” for any future we try to fashion. In fact, if the government itself is not going to make a major paradigm change in who it sees as its constituency and what it sees as its public objectives, the best development to yearn for in government might be for it to get the blazes out of the way so it will stop making the problems worse by the endless, clueless bumble-headed “patches” it has cobbled together for the last six years, all of which have to date been universal failures. Ask yourself. “Is it REALLY better today than it was when this country collapsed a half decade ago?”

  Hell no! It’s worse. And the “thumb-in-your-eye” chutzpah of a government feeling there is no outrage it cannot perpetrate against us without fear of a political explosion is getting bolder as each new fiscal idiocy simply sinks without so much as a public ripple into the abyss of budget deficits now so staggering that no one who truly understands the enormity and the century-long wreckage it is doing to us can decide whether to laugh or cry. Example: During the last six months, the U.S. government has even printed U.S. money to secretly “swap” at pre-Portugal par to big European Banks for the wobbling, collapsing Euro. $4.1 trillion of it! Increasing the national deficit by 33% in a pen stroke and not a dime of it for us and none of it ever run up even for our vote! It’s as if making our own currency worth something at home is no longer of first importance or that repeatedly handing money to the failed finances of Big Business, Big U.S. Banks, Big Vested Money and now even Big foreign Banks and governments is somehow sounder policy than coming to the rescue of the common U.S. citizenry from whom all of this kleptocratic giveaway has come from--the devastated U.S. taxpayers!

  By this unrelenting government overshooting or undershooting at the real target, it seems more clear now that, after waiting all these years in vain for the cavalry to come over the hill from Washington DC or the statehouse…that it’s not going to happen. In fact, it looks like the U.S. cavalry joined The Enemy in the attack on us! But painfully and obviously, we have come to realize after all of the propaganda that it is only “Us” creatively working here and the rest of the traditional sources of leadership have abdicated, “gone dark with hidden agendas”…or worse. Like it or not, “Us” is now the “99-Percenters” who are demanding and willing to work towards solutions if only every Regulator and Banker in the country wasn’t trying to ambush Us over and over again for its own ulterior motives. And, make no mistake, those shadowy backroom people and entities to whom these historic billions of dollars are flowing from Us are clearly “Them”...and they DO exist. After the lessons learned by the repeated financial blistering, we have now wised up by coming to understand that there is a motive behind the seeming “bumbling ” of our “Keystone Kop protectors” and that the naked truth is that it is not “bumbling” at all but a carefully orchestrated strategic plan to massively and permanently shift most of the northern hemisphere’s wealth to the those stony-eyed “1-Percenters” hiding in the shadows of our own halls of leadership and influence.

  The dirty little secret now revealed is that the mounting losses to Us are all piles of pure profits to Them; our losses are engineered to befall Us by Them since They profit from the pain of the masses. And we can wait fruitlessly until the Last Trumpet sounds for our relief to come from Them and it will not for the simple reason that our “problems” are in fact Their “solutions”. It’s not going to change until there is a sea-change U-turn in political direction and in those holding the responsible public offices. Is there anything like that on any horizon?

  There might be. The Giant Pushback may very well have started, though it is in its infancy. One has to look closer right now to see, but there is, indeed, a growing “I’m madder than hell, and I’m not going to take it anymore” sentiment growing in this country. The unvarnished truth is, after years of this, with only more years in prospect, most of Us are out of patience with Them and pretty pissed off that there even is a “Them” that has somehow been permitted to infiltrate and control this country. This is no longer the Americas of our fathers and we have come deeper and deeper to yearn for those better times. The majority is, as it has always been, quieter in sounding out their sense of rage, but some are not so shy and they do speak for the many.

  Those “99-Percenters” squatting on Wall Street are not just tramps, communists and nuts. A lot of them are our brothers, colleagues and neighbors and some are our kids. They are peacefully waving U.S. flags there—not hammers and sickles--as police brandishing batons ram them out of the parks where they “sit in” and speak about our national anguish. So is this a meaningless media event, full of “sound and fury and signifying nothing?” Or more? With the widespread sympathy they got among millions of every day Americans, we have to suspect it is a lot more. It could be the “first tremors” of a completely worn-out public patience. Sort of like the frogs found in that back estuary in Michigan which had developed a fifth leg a few years back as a result of slow but long-term releases of toxic industrial chemical into the rivers. It took time and a build-up to finally show, but when it did it was unsettling. In biology, such aberrations are considered “biomarkers” --a red flag that livable status quos in a given ecosystem are getting contorted by some something destructive and that worse is inevitably to come unless emergency investigation, interventions and ultimate eradication is soon implemented.

  These “99-Percenter” protesters are the same kind of “biomarker” in our cultural ecosystem. I am sure they had better things to do in life than stand in the cold and rain to make their socio-political points (and ours), but the mounting distress they felt obviously boiled over to the point that it overcame their natural reluctance. They are an “aberration” evidencing a greater underlying toxin and a far greater underlying consensus of outrage. They brought to the forefront the demand that someone in power for-the-love-of-God finally DO SOMETHING to abate the massive and potentially permanent social and economic disenfranchisement suffered now by the majority of Americans. We see part of it every day when we drive past our neighbors homes in our once-vibrant communities—homes now empty, dark, dead and repossessed…and growing in numbers. Not shrinking. The Dark Forces are progressively poisoning Us all.

  There is no sign whatsoever that this movement is over just because a few of the protest camps were finally busted by the police. The “99-Percenters” are actually a tip of the iceberg. The visible top of a nonetheless wide-based subsurface sense of political disenchantment not seen since the Vietnam era. History should have taught us that, unheeded and even suppressed, these tiny “social whimpers” turn soon enough into epochal “socio-political bang” and so they are discounted at the peril of those against whom they protest.

  They just might be the “first strong wave” of that political tsunami that needs to grow to the point that it forces our leaders and Wanna-Bes into a serious and, hopefully, emergency re-evaluation of current means and ends. One that brings Us back to a stable economy and the traditional economic and political democracy we once had. One in which every citizen was recognized as a legitimate stakeholder entitled to have his voice heard and always entitled to expect that his financial stake will be legally protected. Back to one where “Us” systemically counted and honest government watchdogs, without any prompting needed from Us, sniffed out, raided, fined, sued, shut down, bankrupted and jailed “Them” until They were afraid to stick their corrupt heads from the political shadows or to plunge their hands into our policies and pockets. One where the crooks were afraid of Us and cowered when Regulators showed up with the handcuffs, a fear and a resultant deterrence that absolutely MUST be the case where any society hopes to be well-run and dreams of any egalitarian future at all.

STRUGGLING THROUGH OUR LOCAL ARMEGEDDONS

  In the meantime, those of us on the front economic lines—real estate owners, investors, brokers, attorneys, and the rest of the recovery team--dig for interim answers in fields where few are buried. The digging is made even more complicated by having also to fight through the amazingly prodigious mounds of raw B.S. strewn about by the Banks, the citadel of “Them”. Yes, for the most part, the Banks have deposited so much guano between the mother lode of economic recovery in real estate and the tunnels of legal and financial truth that will burrow to it that the chore for those in these mines is more than just the labor of digging for a debt restructuring or a sale—it is having to simultaneously do it while wading through the pits of “heads-we-win-tails-you-lose” Poo cooked up by the “Banking Them” to ambush us, loot us or stop us until ransom is paid.

  A “workable deal” now days and in most states and markets has come to mean one done in spite of the routine, gratuitous ambush by the Banks to suck everything good out of it like a vampire, destroying it and the people with it And the best way to make a better deal like that happen is to know when the Bank is lying about the policy and the law which it routinely tells you and your clients “allows” it to attack, injure and take all of the marbles with utter legal impunity. In many cases, almost 100% of that is pure Poo. But you will surely step in it almost every time unless to learn to smell it early on.

LIES AND DAMNED LIES

  This article seeks to keep your heels cleaner by giving you some advance samples of that smell. It actually picks that up by going back to an article the author wrote several years back and which, by the initial circulation and then being hyper-linked by recipients to others all over the country, helped in part to start a revolution in lender liability claims against Banks. When I wrote it, there were fewer than 5 major U.S. class actions against Banks, a smattering of local lawsuits by damaged borrowers against Banks and virtually no government prosecutions. Now there are hundreds of class actions, 40 or so (admittedly reluctant) government actions and tens of thousands of consumer-initiated lender liability claims against Banks in the state trial courts--in which the Banks lose far more times than they win. The Banks admit their routinely satanic bad faith against the citizenry is costing Them a pile to defend (and lose), but to date they are unrepentant and as they lose the cases against them on the law, instead of coming to the light, they decamp immediately to the legislature and Congress they often own at least part of to change the laws in their favor.

  Every state has its own type of Bank Poo and no article this short—even one as widely circulated throughout the states as these usually are-- can, well, provide a whiff of it all. One thing I can universally suggest in application to all jurisdictions, though, is that most Bank Poo can be disinfected with a liberal spraying of education, law and truth…and the right lawyer (they are NOT generic and 75% of the smarter ones are working for Them). So since I cannot get it all in to apply everywhere, I will settle for giving an example of Bank Poo in one jurisdiction, Arizona, where a current pro-Them administration has let the Bad Boy Banks pillage Us citizenry regularly and savagely at will for the last five years—but where Us, the citizenry, the consumer lawyers and the Courts have also started in reaction to stop the carnage and take up the defense by blocking it. As for the other states, there are different laws, but equal and sometimes greater defenses. For them this article is demonstrative only and they need always to consult counsel on their specific laws to reach the gold of their objectives. Bank Poo does, however, tend to mound in every state, not just Arizona.See laws for some other selected states under “FAQS” at eckleylaw.com.

COMMON BANK B.S. IN EVERY LOCAL MARKET

  Bank Poo is encountered deepest in workouts in this is the case in all 50 states. There are several types: (1) a “modification” in which the loan is changed in terms (principal, interest, payments) to try to be more affordable to the borrower. Under “modification” the borrower keeps the property and remains liable on the modified debt. Rarely will permanent principal reductions be granted by the Bank, but not because the Bank cannot do so by law or federal policy. It is because the Bank wants the bigger money given it through “behind the scenes” indemnities and bailouts it can only reach if it goes through a period of phony “mitigation attempts” before a declaring them a “failure” and getting then to the short sale or a repossession which pays it the big bucks—often more than the Bank’s actual loan basis. But you are not supposed to know that as you religiously work for a modification that was doomed by greed and a backroom deal with the government and others from the start. This Bank Poo in every state, not just Arizona; or (2) the “short sale” which is a process in which the property is offered for sale to another (the borrower will not remain in the property) for less than what is owed on the debts against it and any resulting offer must be approved by the Bank. This is where the Bank, as noted, makes the big bucks you don’t know about. That “write down” in the short sale does not mention that the Bank is getting compensated in the back room for the balance and then some. In most cases, the Bank even tries to get more money over the sale or a note in the closing as a “condition” (which is authorized in no federal Guidelines) of approving the sale, suggesting they have rights to demand that (when they do not) to cover the “losses” (which they do not have—and they get to keep that money on top, too). Bank Poo. All states; then (3) the “deed in lieu of foreclosure” in which the borrower simply deeds the property to the lender and moves out. Same Bank-side success story as the short sale. Former borrowers and their brokers step in the Poo and the Bank cleans up.

A STUDY: ARIZONA

LIMITED LIABILITIES FOR THE RESIDENTIAL DEBT:

Arizona law has two "anti-deficiency" statutes that will often apply to loans secured by single residential real estate and will apply whether or not the home is occupied by the borrower or at all. Where these statutes apply, a lender's remedy will ONLY be a foreclosure, with NO RIGHT TO DEMAND OR SUE FOR MONEY OR INSIST ON A NEW LOAN COMMITMENT beyond the amount received from the foreclosure sale. These two "safe harbors" are as follows:

One applies to mortgages, which must be foreclosed judicially, or deeds of trust if foreclosed judicially (that means by the creditor suing the debtor in a court) which are “qualifying residential purchase money loans” (see below). It is A.R.S. ' 33-729(A). It limits the claim to the proceeds of a sale of the property; that is to say, the lender is limited in remedy to only what it gets from auctioning the property at a trustee’s or sheriff’s public sale and if the lender gets more than what is due the lender, the debtor gets the balance. If the lender gets less than what is due, the lender still has no other recourse against the debtor.

The other "antideficiency" statute applies again only to “qualifying residential purchase money” deeds of trust or mortgages when foreclosed via a trustee sale (sold at a private auction and not through a suit in the court). It is A.R.S. ' 33-814(G). Same rule: The creditor only gets the amount from the sale of the property and no more.

THE TEST FOR WHETHER THESE EXCEPTIONS APPLY TO THE PROPERTY:

For either of the anti-deficiency statutes to apply, the mortgage or deed of trust must be a “qualifying residential purchase money loan” which means on that is secured by real property that: (1) consists of 2 1/2 acres or less; (2) and is restricted to and utilized for a single-family or dual-family dwelling; and, (3) the proceeds of the loan had to be used to pay all or part of the purchase price of the property (better that all of it was). If all three of the foregoing apply, there is no deficiency due in a modification, a short-sale, a foreclosure or otherwise and the Bank cannot ask for further compensation either throu0gh the courts, collection, or by making the borrower sign some kind of new obligation or by simply telling the borrower that the Bank “reserves the right” to pursue the borrower or that the right is “waived”. It’s all Poo. The Bank has no such rights, flatly and simply. And to threaten otherwise is a fraud, a false and extortionate threat and certainly a wrongful debt collection practice and possibly even a separate crime (see below)! Moreover, the people who help the Bank do this, from agents to title and escrow companies to attorneys for those entities, have some exposure here, as they are supposed to know better.

BANK BIG LIE NO. 1: THE BANK ASSERTS THAT A REFINANCED PURCHASE MONEY RESIDENTIAL LOAN, A RESIDENTIAL HELOC OR A SECOND-POSITION RESIDENTIAL LOAN IS EXCLUDED FROM THE BAN AGAINST PERSONAL LIABILITY. THAT’S BANK POO!!

If the current loan is not the original one that purchased the house, but a refinance of one that purchased the house, or is a second loan such as one called a “Home Equity Line of Credit,” but was, in fact, used to purchase the home or refinance the purchase of the home (those 80/20 and 70/30 loans that were essentially 100% purchase money loans), this is still a non-deficiency purchase money loan in the eyes of the law. See the above definition of a purchase money loan; see also Bank One v. Beauvais, 188 Ariz. 245, 937 P.2d 809 (App. 1997) and Mid-Kansas Federal Savings and Loan Ass'n v. Dynamic Development Corp., 167 Ariz. 122, 804 P.2d 1310 (1991). Loan funds used solely to reinvest in the home such as to upgrade it or put in a pool after the original purchase, are not purchase money debts and would likewise give the creditor in most cases the right to sue directly on the debt or foreclose and take a deficiency. In fact, most of these “split” 100% loans still violate the lender’s own underwriting standards, were designed in two parts instead of one to qualify the unqualified buyers with no down payment as though they had “equity” for the first loan to close the 80% or 70% loan and were thereafter, a fictional second later, then fictionally deemed to be “borrowing on the equity” of the remaining 20% or 30% for the second loan as though the 80% or 70% loan was “pre-existing”. A complete “bootstrapping” to violate underwriting standards and pump up CMO ratings and all invented by lenders and their brokers. In this way lenders also defeated the rules requiring the transaction to pay mortgage insurance to Fannie Mae, Freddy Mac, FHA and others and could book and sell the 80% and 70% loans as separate high equity-based loans into the secondary markets, fooling the Raters such as Standard & Poor’s and Moodys.. In all of this scheming, it appears that the lenders were equal and consistent in at least one trait: They know how to lie to and cheat virtually everyone in the financial chain.

BANK BIG LIE NO. 2: THE “TRIAL MODIFICATION” THAT NEVER BECOMES PERMANENT. THE LENDER KNEW THAT WAS GOING TO BE THE RESULT ALL ALONG AND JUST DIDN’T TELL UNTIL IT WAS READY TO PUT THE BORROWER IN THE PIPELINE TO SHORT SALE OR FORECLOSE! IT WAS BANK POO FROM THE BEGINNING AS THERE WAS NEVER ANY INTENTION TO WORK THE DEBT OUT AND KEEP IT. IN THE BANK’S STRATEGY THE BORROWER WAS JUST A “FREE CARETAKER” ON HIS WAY OUT OF THE PROPERTY FROM “DAY ONE”. MORE BANK POO!

Some lenders, either through disorganization or planning, have twisted some of the workout rules and laws to give themselves an advantage at the cost of the consumer. Here is another lender scam:

LOAN MODIFICATIONS: Under the HOPE for Homeowners, HAMP, 2MP, HAFA and some other programs, the lender grants a “trial period” loan modification in which monthly payments are significantly reduced with the inference given by the Bank that a permanent reduction will likely come about after the “trial period.” In fact, no long-term reduction is ultimately granted. On a national basis as of August 1, 2011, fewer than 10% of all trial loan modifications end up with a permanent reduction and those which were “reduced” still had a “re-delinquency rate” of better than 65%, meaning that the frustrated borrower finally “took for the time being what the Bank offered,” but in the end what was offered was still too much to fit what resources the borrower had. Thus, at the end of the trial period, the loan goes back to its original amount automatically and along with that the lender sends a bill for all of the payment shortfalls during the trial period, along with interest and penalties on the reduced payments, a huge total, and demands payment within 30 days. WARNING: If a consumer goes on one of these trial modification programs, the consumer is advised to save the money that would otherwise be payable plus interest and penalties, for the 90% national statistical likelihood that no affordable permanent program will be offered. In less than 2% of all loan modification applications nationally is a permanent principal reduction (reducing it to at least not exceed fair market value) granted, and therein is the ultimate doom of the work-out: A “modification” that still ends up with a loan that is beyond any present or any foreseeable home value, thus requiring the borrower to engage in the economic waste of throwing what is left of his already-impaired recourses into a financial black hole is not a “recovery” or even a prescription for one. If anything, it is an economic absurdity. As it routinely works out, this is all a well-vetted Bank scam to keep the borrower (whom the Bank has already determined is statistically unlikely to make it) into continuing to make at least some kind of payments on the debt, to continue residing in the home (protects it from vandalism) and to continue to pay the power and water on the false hope of rescue until the Bank can simply get around to the foreclosure it always knew was statistically inevitable. All the Bank did was have the borrower pay the Bank to watch over and maintain what it knew was soon to be its property! And as was noted, above, the only reason the Bank even started the “modification” illusion was to qualify for the bigger indemnity money downstream when the property finally rolls into a short sale or a foreclosure.

BIG BANK LIE NO. 3: TRICKING OR EXTORTING THE BORROWER INTO AGREEING TO PAY SOME OR THE REST OF THE LOAN SHORTFALL BY MORE CASH OR A NOTE AS A CONDITION OF APPROVING A SHORT-SALE. THE BANK TELLS YOU THAT’S “THE LAW.” THAT’S BANK POO OF THE 10-FEET-DEEP VARIETY. AND IT ‘S NOT “THE LAW.” IT’S ACTUALLY AGAINST THE LAW.

This lie is particularly odious and evident in more and more SHORT SALES. Under any of the short sale programs, the lenders will often direct that the consumer pay or “sign a new note” for any balance remaining after application of the short sale proceeds (usually on the second loan, but is also being tried on first-position loans, too). In the rare cases where the second loan is a true deficiency instrument (see true “HELOCS” above), this is a lawful practice at this time. BUT IT IS NOT A LAWFUL LENDER PRACTICE WHEN THE LOAN ON WHICH EXTRA MONEY OR A NEW NOTE is asked is itself a NON-DEFICIENCY LOAN! See the definitions of what is and what is not a deficiency loan, above. This rule applies in all states where the loan being short-saled is not legally capable of producing a deficiency. There is no consumer duty to pay all or part of a non-deficiency loan as a precondition to doing a short sale, nor is there a duty to sign another loan promising to pay some or all of it, nor can the lender lawfully make such an extortionate demand as a condition of otherwise approving a complying short sale ! In Arizona this has been established by decision of the Supreme Court in Baker v. Gardner, 160 Ariz. 98, 770 P.2d 766 (1988) which held that a lender cannot bypass the anti-deficiency statutes by waiving a foreclosure (pretending that the anti-deficiency statutes are a foreclosure remedy only) and instead suing the debtor directly on the promissory note (bypassing a true foreclosure). The Arizona Supreme Court stated clearly that it is not how a debt is enforced that triggers the anti-deficiency rules, it is rather the legislature's all-encompassing intent to solely limit any and all remedies for a default of a qualifying residential purchase money loan to a return of the property, no matter HOW it is enforced. If the loan itself is a non-deficiency type, then no other method of collection is permissible other than a forfeiture of the property, as all remedies are limited to that, only, and the creditor may not seek a direct collection of money from the borrower at any time and under any guise. Since the borrower is absolutely protected by the Supreme Court and law from personal liability for the debt, demands against the debtor to pay it or to sign new documents to "remain liable" for it or contrived penalties for not paying it (such as intimating that some kind and debt action will ensue or by aborting an otherwise Guideline-comporting short sale) are unlawful. Aside from being a fairly obvious violation of the federal Unlawful Debt Collection Practices Act, 15 USC 1692 (the lender, servicer or attorney for the creditor threatens a collection right or remedy - such as personal judgment--it does not legally have), which applies in all states, it is a felony in Arizona for a lender to demand money for a non-deficiency loan or to insist or imply that it has the legal right to do so under ARS 13-2320 (barring Bank misrepresentation in consumer lending) as a precondition to approving a short sale. There are a host of other criminal statutes that likely apply to this kind of Bank misrepresentation, intimidation and extortion. See for example, log to the Arizona Revised Statutes at http://www.azleg.gov/ArizonaRevisedStatutes.asp and note ARS 13-2320; 13-1802 A. 3.; 13-1801 A.4., 8, 12, 13; 13-2206 A.2.; 13-2310; 13-2311; 13-2002 A.1.; 13-2005; 13-2701 through 13-2704, 13-2310, 13-2311, 13-2921, 13-2303 A B (1) 2301 A, 5, 6, 13-2304, 13-2005, 13-2106, 13-1804, all of which apply to ANY loans or wrongful Bank acts or omissions.

BIG BANK LIE NO. 4: TRICKING OR EXTORTING THE BORROWER INTO PAYING MORE CASH OR SIGNING A NOTE TO COVER LOAN PAYMENT SHORT FALLS IN A SHORT-SALE BY SUGGESTING THAT THE “SHORT-SALE APPROVAL LETTER” SOMEHOW “BY-PASSES” THE ABOVE ANTI-COPLLECTION LAWS. THE BANK TELLS YOU THAT’S “THE LAW.” THIS TIME THE BANK POO IS COMING BY TRUCKLOADS. IT ISN’T THE LAW; IT IS IN FACT AGAINST THE LAW!

The Bank will contend as a “condition” of short sale on a non-deficiency debt—a contention usually found in the short sale “approval” letter which sometimes asks the borower to sign it and sometiems not—that the “deficiency right” of the Bank is “preserved” even after the short sale or that the borrower “waives” that protecttion or right by the short sale approval terms. There is no such laibility that can be wavied (see Baker v. Garnder above) and there is no such waiver and any such waiver is void as a matter of public policy. In Tanque Verde Anesthesiologists, LTD v. Proffer Group, Inc., 172 Ariz. 311, 836i P.2d 1021 (1992), the borrower defaulted on a loan used to purchase property that qualified for anti-deficiency protection. The lender released its lien on the property to permit a short sale and provided a Release and Reconveyance as part of this process which provided in writing: “The execution of this Release and Reconveyance does not constitution [sic] evidence of full satisfaction of the Promissory note for which the Deed of Trust referenced herein provides security.” Id. The lender promptly instituted a collection action for the shortfall, arguing that the lender “preserved” or the “borrower waived” the statutory protection by that condition, term or document. The Court held that this language did not amount to a new agreement to pay, writing that in any event that the reservation of rights clause does not alter the applicability of the anti-deficiency statutes, which bar a deficiency even after what is or amount to a short sale.

BIG BANK LIE NO. 5: TRICKING OR EXTORTING THE BORROWER INTO PAYING A NON-DEFICIENCY LOAN SHORT FALL AFTER A SHORT-SALE BY STATING THAT THE “PMI INSURER OR THE UNDERLYING LOAN BUYER OR INDEMNITORS TO THE BANK HAVE A RIGHT OTHERWISE TO PURSUE THE BOROWER DIRECTLY FOR INDEMNITY OR SUBROGATION OF THE SHORTFALL ON THE LOAN” AND THAT PAYING THEM BACK WILL STAVE THAT OFF. AGAIN, THE BANK TELLS YOU THAT’S “THE LAW.” THEY ARE FLYING IN BANK POO AND DROPPING IT IN THOUSAND-POUNDERS FROM BOMBERS, NOW! BUT IT STILL ISN’T THE LAW. THERE ARE NO SUCH LIABILITIES!

As has been seen above, there is no right under any argument to make the debtor liable for a loan, note or deficiency which the governing statutes say he is not and that immunity extends also to any investor holding the loan in whole or part, including people, companies, countries, MERS, mortgage insurers, any indemnitor insuring the Bank for it, even Fanny, Freddy, Ginny and the FDIC if it was assigned to them! Under the Uniform Commercial Code, all take consumer loans as they are written and that includes collection limitations by law. As if that could not be any clearer by simply reading the law, itself, when called upon to make the signal and bellwether interpretation of the anti-deficiency law, the Arizona Supreme Court held:

“We conclude that the legislature's objective in enacting § 33-814(E) was to abolish the personal liability of those who give trust deeds encumbering properties of two and one-half acres or less and used for single-family or two-family dwellings.” Baker, 160 Ariz. 98, 104, 770 P.2d 766, 772 (1989) (Emphasis added.)

End of quote and, man, it just does not get any clearer than that. What part is it of “Hell No” the Banks don’t get? All personal liability of primary borrowers for complying properties—howsoever couched, howsoever asserted directly or indirectly--is abolished.

THERE IS A LOT MORE:

Above are but “five whiffs of Bank Poo” but there is a boatload more. Not just for the sample state of Arizona juts reviewed, but for all states. California has some great and similar defenses about non-waiver of statutory consumer protections and Bank harassment, intimidation and outright fraud. So does Texas. And all have a host of other laws, both federal and local, for consumer protection

WHAT TO DO WHEN THE POO IS ON YOU:

The protections above are not just for residential deals and workouts. They are for all loans and all issues, though each has its own body of law so the owner or professional must assess each case on its facts and jurisdiction. If the Bank won’t fix its mess after being shown that by law it has made one and continues to pursue a course of lies, wrongful demands, extortion and deceits and general Poo-Plastering, then the Motto for 2012 has to be “when the Bank Poo is put on You despite what You Do… SUE” . And right now a lot of that is happening all around the country and after years of sputtering in the courts, most lender liability claims are now seeing success…and juries know very well what to do with Bank Poo. Boomerang it. It’s a great turn of the tables and high past time. Instead of you paying them, they pay you! Doesn’t that have a nice ring to it? But the big message here is this: Don’t wait for government—we already covered the “waiting for the cavalry” option and saw only Custer’s Last Stand as the likely outcome. Now it’s self-help , “NO MORE MR. NICE GUY” and powering out of this on the propellant of truth…and action.

If the borrower or his professional team (brokers, accountants, management) are in any of the above positions, they legal counsel, immediately, and SHOULD NOT AGREE TO THESE UNLAWFUL DEALS OR SIGN THESE UNLAWFUL AGREEMENTS. MOREOVER, IF THE BORROWER HAS ALREADY SIGNED A BAD ONE AND ANY COLLECTION ON IT IS EVER INITIATED, THE BORROWER STILL HAS CLAIMS. THE BORROWER, NOW THE VICTIM OF A CRIME, MAY HAVE A VERY SUBSTANTIAL LAWSUIT AGAINST THE LENDER AND ITS COLLECTION COMPANY AND LAWYERS (AND OTHERS WHO AIDED AND ABETTED) FOR THIS PRACTICE-EVEN IF THE LENDER ENFORCING IT IS NOT THE ORIGINAL ONE MAKING THE LOAN, SINCE THE LIABILITY FOR CONSUMER LAW VIOLATIONS FOLLOWS THE TRANSFEREES OF CONSUMER LOANS. (On that note, if you have been a victim of these practices, let us know, as we are trying to get an accurate tally for legislative action, call 1-800-999-4LAW or e-mail us at curbbadbanks@eckleylaw.com. Also, again as noted above, agents, title companies and escrows who put these deals together and close them without advising the borrowers of the civil or criminal rights and implications risk aider and abettor liabilities in this activity. Good warning to them: DON'T DO THESE DEALS! Or at least give them a “head’s up” with a disclosure like a copy of this article and surely get them to counsel.

IT’S ABOUT HELEN WAITE:

How do the Banks get away with these predations and, in some cases, outright felonies? It might be because no one knows, BUT LET’S BE MORE FRANK, HERE. IS MORE LIKELY BECAUSE NO ONE CARES OR TELLS AMONG THOSE WHO ARE HIRED OR ELECTED BY US TO GO ON REGULATORY “SEEK AND DESTROY” MISSIONS AGAINST THESE PREDATORS! EVERYONE IS MAKING MONEY PICKING OVER THE BLEACHED BONES OF THE BORROWERS! FINANCIAL AND POLITICAL PAYOFFS TO AID AND ABET DOING SO ARE RIFE. THE ”THEM” SIDE OF THINGS HAS BEEN DEFINING “JUSTICE” AS “JUST US” FOR A HALF DECADE AND ITS HARD TO PRY TICKS BURROWED INTO A GOOD VEIN! And before one laments the Banks’ positions in the financial shambles our economy has become, note that the Banks are currently declaring record profits. FOR A SHOCKING AND ENTIRELY UNSETTLING BUT TRUE STORY ABOUT WHAT THE BANKS ARE UP TO (“GREED IS GOOD”) GO TO: http://www.youtube.com/watch?v=ssl5yb7FewA.Gordon Gecko lives.

  The fact is that Banks are not losing a dime in any of this and are actually making a pile. What they are not getting from you on the modification, short sale or deed back deals, they are getting in cash “in the dark and on the backside” directly or indirectly from the government! The only one getting “done in” in this Crash is………YOU!

  In conclusion, we have made our tremendous sorrows and plights in this epoch-changing Crash known to the government, the Regulators and the Banks and begged for an answer and some reasonable relief. They have universally responded in essence that “all complaints are handled by Helen Waite.” After five years, we are finally starting to get it. Indeed, it means we did “all go to Helen Waite” for the systemic solution. It did not come and it was not going to. As “outsiders”, the “Us” of the system, it took some time before we finally got what was until now the Inside Political Joke of the Century, laughingly concocted by none other than Them. Legitimate, comprehensive, equal rescue was never in the cards because they were all marked against Us right out of the pack. So we damned well ought not stay in “Hell” and “Waite” anymore. It’s time for legal and political action and the new National Movement for Us—the current and future “99-Percenters”--starts with knowing the Poo with which our route has been paved when we smell it without having to roll our legal and financial carts through it any more. I hope this article has helped in doing that.

‘Nuff said!