David Krieger’s Clouded Titles Only Creates Storm Clouds For Homeowners

David Krieger’s Clouded Titles is nothing more than Rich Dad/Poor Dad for foreclosure defense. Even if you set aside the overpowering stench of David Krieger’s conviction for mortgage fraud and the controversy surrounding the meaningless and utter garbage of a report he did in Osceola County, Florida, David Krieger’s Clouded Titles is still outdated boilerplate garbage.

David Krieger’s Clouded Titles, like Neil Garfield’s Living Lies, does nothing more than peddling false hope and a false sense of empowerment to desperate homeowners. Krieger makes homeowners believe they can walk into a courthouse, file a lawsuit and walk out with a free house. It’s also one of those books ignorant foreclosure activists like to read because it makes them like feel intellectually superior to people who are as ignorant as they are about the mechanics of mortgage finance. They then pass copies of Clouded Titles around like Beatniks in the 1960s passed around dog-eared copies of The Fountainhead or Atlas Shrugged.

David Krieger’s Clouded Titles is overshadowed by Krieger’s anti-government paranoia and his tin-foil hat political beliefs coupled with his post-fraud conviction experience as a paralegal, Krieger makes his arguments sound convincing enough that it drowns out the bullshit.  

Krieger’s anti-government paranoia and history with subversive anti-government militia types are one of the reasons why Krieger is heavily promoted on Serial Conspiracy Theorist Alex Jones’ Infowars and Tea Party Patriot Wingnut Joyce Riley’s Power Hour.

David Krieger’s Clouded Titles, like the report he did for Osceola County, relies on outdated and debunked legal arguments, conspiracy theories and misrepresentations of the law. It is also obvious that Krieger is not the mortgage expert he claims to be nor does he have the foreclosure litigation experience necessary to give this book any credibility.

The problem with the theories in David Krieger’s Clouded Titles is that the majority of state courts have already ruled that MERS has authority to transfer mortgages and in some states has the authority to foreclose based on the theory they are acting as a representative of the mortgagee. As I have said on other financial columns and shows, the lawyers who put MERS together put it together so tight there is no way to legally contest its legitimacy in court. 

David Krieger’s Clouded Titles doesn’t say is that the main reason why judges rule they way have to is because they have their hands tied on MERS. In most states there are no state laws that require mortgages to be recorded unless you are attempting to foreclose. Even in most cases unless the originating lender sold their interest in the debt, they don’t need to record the mortgage to foreclose or commence with litigation.

The other reason is that the recordation of land records and enforcement of mortgages are states’ rights issue under the 10th Amendment. This is why when a foreclosure case is remanded into federal court or filed in federal court, federal judges use state law to determine their rulings not federal law. For example, the federal Truth-In-Lending Act limits a homeowner 36 months to make a claim of rescission. However, Massachusetts has a state law that allows a homeowner 48 month to make a claim of rescission. Therefore, because of the 10th Amendment, Massachusetts statute would trump federal law in Massachusetts.

So if foreclosure activists want to weaken MERS, they need to start lobbying state legislatures across all fifty states or create a competing registry system for the industry. 

Anyone who has been fighting in the trenches of foreclosure defense knows that in most states like Florida, there is more to combating a foreclosure than just simply arguing a broad term like “Robo-signing” to justify nullifying a mortgage assignment and it is actually harder to prove than simply taking one of Essex County Massachusetts Register of Deeds, John O’Brien’s affidavits into court and screaming robo-signer in hopes of getting a free house. You have to actually prove the “robo-signer” didn’t sign it. This is what David Krieger’s Clouded Titles and Neil Garfield seem to either overlook or just refuse to tell the homeowner so the homeowner will buy more of their crap.

David Krieger’s Clouded Titles is not telling people that proving document fraud means getting depositions from the alleged robo-signer and others in the company where the signing was done, handwriting experts, etc. These are things most homeowners in foreclosure can’t afford to pay for. The reality is the homeowner would be on the hook to fly his or her attorney to the location of the alleged robo-signer, the lender’s attorney and the alleged robo-signer’s time. Usual cost on a fishing expedition like this is a minimum of $15,000. 

David Krieger’s Clouded Titles is overlooking the fact that the mortgage assignment is irrelevant if the foreclosing party can show the court they have the original endorsed copy of the note in their possession at the time they initiated a foreclosure action. For example, MFI-Miami had a foreclosure case in Palm Beach County last year where the mortgage had not been assigned to the holder of the note. The lender’s foreclosing attorney attempted to foreclose only on the mortgage and not the note. Yes, this was an old David J. Stern foreclosure that was initiated in 2009.

The judge dismissed the foreclosure action because the foreclosing party was not the proper mortgagee. Six month later the lender came back and filed another action against the homeowner for breach of contract regarding the now unsecured note. The client attempted to file bankruptcy to block the lawsuit but because he now had mortgage free house as a six figure asset, he was ineligible for bankruptcy protection. Thankfully we were able to negotiate a deal to keep him in his house. 

David Krieger’s Clouded Titles also does not take into consideration the mortgage notes that are endorsed in blank in the vast majority of the mortgage loans currently outstanding. Endorsements endorsed in blank give the power of ownership to whomever holds the original note regardless if they have proof they own it or not. The only time a mortgage assignment is relevant is if there is a question of fact of who actually holds the original note and who has the authority enforce the terms of the note.

Another way to look at is like this, a corporate executive signs an employment deal with a company. The company’s board wants an undated signed letter of resignation from this executive as part of his employment package. He signs it and gives it to the company’s board of directors. Two months later, the board of directors decide they want to force him to resign effective the next day. They pull the letter out of the file and put that day’s date on it making official. Its all perfectly legal and has been done for decades.

David Krieger’s Clouded Titles also makes “Quiet Title” lawsuits sound easy. They are not.

Matter of fact, the only time I have ever heard of someone actually winning a Quiet Title lawsuit is after they have successfully beaten a foreclosure action with a dismissal with prejudice or waited out the statute of limitations that the lender would be allowed to bring another foreclosure action.

David Krieger’s Clouded Titles gives the impression that all the homeowner has to do is file a lawsuit against the lender and because the lender will not be able to show a proper chain of ownership because of improper mortgage assignments. Then, voila, the homeowner hits the jackpot of a mortgage free home.

The only problem is that it doesn’t work that way. If the homeowner brings a Quiet Title Action, they must Prove the lender doesn’t have standing to enforce the mortgage and/or the note. David Krieger’s Clouded Titles overlooks the fact that the homeowner has the Preponderance of Evidence which is the “burden of proof” in civil litigation if they file a lawsuit against their lender.

As any good trial attorney will tell any potential homeowner, their legal bill increases 500% if the the homeowner decides to be a plaintiff and file suit against a lender. The homeowner must prove that the lender is not only not the mortgagee, they also have to prove the lender is not the holder of the note and this requires four times the due diligence and research time compared to a judicial foreclosure case where the homeowner is a defendant.