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john gault's Blog

The Deed of Trust Trustee, Laws, and the Constitution
by john gault | 2015/02/08 |

Are the current actions by those named as substitute trustees or acting as agents for the

beneficiary in our deeds of trust unconstitutional?

My support of an answer in the affirmative. 

john gault's Blog ::

"The general misconception is that any statute passed by legislators bearing the appearance of law constitutes the law of the land. The U.S. Constitution is the supreme law of the land, and any statute, to be valid, must be in agreement. It is impossible for both the Constitution and a law violating it to be valid; one must prevail. This is succinctly stated as follows:

The general rule is that an unconstitutional statute, though having the form and name of law, is in reality no law, but is wholly void, and ineffective for any purpose; since unconstitutionality dates from the time of its enactment, and not merely from the date of the decision so branding it. An unconstitutional law, in legal contemplation, is as inoperative as if it had never been passed. Such a statute leaves the question that it purports to settle just as it would be had the statute not been enacted.

Since an unconstitutional law is void, the general principles follow that it imposes no duties, confers no rights, creates no office, bestows no power or authority on anyone, affords no protection, and justifies no acts performed under it. . .

A void act cannot be legally consistent with a valid one. An unconstitutional law cannot operate to supersede any existing valid law. Indeed, insofar as a statute runs counter to the fundamental law of the land, it is superseded thereby.

No one is bound to obey an unconstitutional law and no courts are bound to enforce it."

Sixteenth American Jurisprudence
Second Edition, 1998 version, Section 203 (formerly Section 256)

jg: If any state law denies one party the benefit of due process before being relieved of his property, a right guaranteed by our constitution, then that law, according to this tenet, is to be given no consideration. I think it's been argued that the constitution literally speaks to only separation from one's property BY THE GOV'T, but I don't believe (but can't 'prove') that they meant to limit the application of due process to attempts by only the government to take our property.

 There's no due process when on the word of one of the parties' representative, without consideration of the rights and arguments of the other party to the agreement, the latter may be separated from his property. These particular trustees, those in our deeds of trust, owe their fiduciary to both parties, not just one, just as courts owe their objectivity to both parties before them. The evidentiary standard may be less for dot trustees than one for courts, but it still has to be met, and that includes ascertaining that an alleged assignee had something to assign. Significantly, the person making the determination that the evidentiary standard is met must be qualified to know if it is or isn't, and that itself is woefully missing in today's activities.

If states adopt laws which allow for the creation of a trust into which
a homeowner sends his land title as security for a loan (which adoption was done years ago by many states to 86 lender' problems with mortgages, briefly) and yet subsequently enact other laws which allow for the separation of the landowner from his estate, by way of that trust created, with reference only to the interests of one party to the trust, one of those laws is unconstitutional. When a dot trustee, or someone designated an "agent" for the beneficiary or otherwise acting for the beneficiary only, may take the thing put in trust by the other party for the party for whom he acts exclusively,  there is either no deed of trust - or - a law which says an entirely unilateral act, that is, one without due process, separating one from his property is at odds with the earlier law providing for deeds of trust as security instruments. I dare say any such contravening state law is void.    



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1050 words | 4535 views | 5 comments | log in or register to post a comment


what

John Gault, seriously?  I can't tell if you messed up trying to be "John Galt" or if you thought there was some significance to throwing in the "U."

What are these blogs, open registration? Does anyone at all even talk to these people before they start posting?

 
by Michael Madden | 2015/02/10 | log in or register to post a reply

But there is due process...

Interesting post, but I believe due process is still there.  I'm not a lawyer or any great legal mind, but this is my two cents: 

I remember something my old real estate professor said: Real estate law is largely based on the concept that there "is always a remedy", meaning that unlike personal property no one can pick real estate up and take it away.  So if there was an unlawful taking by a party, it could be reversed.

Then, look at what the trustee can do with their interest.  Only one of three things:

  1.  Release the deed of trust 
    • This benefits the trustor at the beneficiaries request, so no unlawful taking issue here.
  2.   Foreclose on the deed of trust
    • Statutory foreclosures take several months and (I believe) provides adequate due process.  If there were a lack of due process issue here, the parties then have an opportunity to convert to a judicial foreclosure.
    • The trustee is a neutral party - why is there a lack of due process when one party is entitled to pick a neutral party that conducts the foreclosure?  Won't the property be taken either way?
  3.  Do nothing
    • Maybe if a substituted trustee does not release a deed of trust, thereby diminishing the value of the property by clouding title?  Wow, that's a stretch.
Anyway, your post made me think - thanks! 


 
by Daniel Silverburg | 2015/02/15 | log in or register to post a reply

My Dear Mr. Madden

My goodness! I seem to have upset some sensibility of yours, but before any act of contrition

on my part, perhaps you'll enlighten me. 

 
by john gault | 2015/03/02 | log in or register to post a reply

Yes, there was supposed to be neutrality

My objection is that there isn't. Some if not many of today's substitute trustees are

owned by the law firms hired by loan services (generally) and this fact goes undisclosed. That's at least an appearance of non-objectivity if not conflict of interest. In my opinion the appearance alone is enough to deny the owned company the status of substitute trustee.

The reality of any prejudice in favor of one party shouldn't be, but is, tolerated. The purpose of the deed of trust act was to provide relief for lenders when borrowers didn't pay, succinctly.  The intent was indeed that the trustee would be a neutral party, but today, that party likely isn't..

Yes, a borrower faced with a foreclosure may go to court when he feels he's on an uneven playing field, but doesn't that undermine the salient purpose of the act - to avoid the time and expense of a court proceeding to resolve an issue?  I guess in judicial foreclosures, he's there, anyway, but any prejudice for the other party certainly adds to his efforts. 

I also object to facts being determined by those with no credentials to determine them. A trustee should be one with the requisite knowledge for the job.  The borrower signs an instrument which appoints a title company the trustee. He relies on that appointment. Even as / if he's aware there may be substitution, little does the hapless homeowner know that trustee will be replaced by 'anyone with a pulse' and often replaced by one owned and controlled by the law firm representing the other party to the deal.

 And there are other problems. The Nevada SC, for instance,  in my opinion has further hacked away at the obligations of a trustee and the deed of trust as a collateral instrument by decreeing that default figures may be provided to the borrower other than in the notice of default. Those figures are not provided solely for the borrower. They're provided in public record, long and short, to give notice to anyone and everyone, and an obvious reason is so that anyone and everyone may ultimately make a competitive bid at the trustee's sale.  This isn't a state law per se, but it's nonetheless going to be controlling precedent until appropriately overturned.

Nevada legislators, again for instance, enacted a law stating that an agent of the beneficiary may call a default, and execute, deliver, and record the Notice of Default.  In other words, the beneficiary itself may do this act. The deed of trust act requires both the determination of the default and the act be done by a properly designated (credentialed) neutral party.     

 
by john gault | 2015/03/02 | log in or register to post a reply

Yes, Mr. Madden - seriously
"Pursuant to the Supremacy Clause of the United States Constitution, “state laws that conflict with federal law are without effect.” Altria Grp., Inc. v. Good, 555 U.S. 70, 76, 129 S.Ct. 538, 172 L.Ed.2d 398 (2008) (internal quotations omitted) 
by john gault | 2015/06/01 | log in or register to post a reply
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