RePOST: Open Letter to all attorneys who aren't PSA literate by April Charney


RePOST: Open Letter to all attorneys who aren’t PSA literate by April Charney

RePOST: Open Letter to all attorneys who aren’t PSA literate by April Charney

Via: Max Gardner

Are You PSA Literate?


We are pleased to present this guest post by April Charney.

If you are an attorney trying to help people save their homes, you had better be PSA literate or you won’t even begin to scratch the surface of all you can do to save their homes. This is an open letter to all attorneys who aren’t PSA literate but show up in court to protect their client’s homes.

First off, what is a PSA? After the original loans are pooled and sold, a trust hires a servicer to service the loans and make distributions to investors. The agreement between depositor and the trust and the truste and the servicer is called the Pooling and Servicing Agreement (PSA).

According to UCC § 3-301 a “person entitled to enforce” the promissory note, if negotiable, is limited to:

(1) The holder of the instrument;

(2) A nonholder in possession of the instrument who has the rights of a holder; or

(3) A person not in possession of the instrument who is entitled to enforce the instrument pursuant to section 3-309 or section 3-418(d).

A person may be a person entitled to enforce the instrument even though the person is not the owner of the instrument or is in wrongful possession of the instrument.

Although “holder” is not defined in UCC § 3-301, it is defined in § 1-201 for our purposes to mean a person in possession of a negotiable note payable to bearer or to the person in possession of the note.

So we now know who can enforce the obligation to pay a debt evidenced by a negotiable note. We can debate whether a note is negotiable or not, but I won’t make that debate here.

Under § 1-302 persons can agree “otherwise” that where an instrument is transferred for value and the transferee does not become a holder because of lack of indorsement by the transferor, that the transferee is granted a special right to enforce an “unqualified” indorsement by the transferor, but the code does not “create” negotiation until the indorsement is actually made.

So, that section allows a transferee to enforce a note without a qualifying endorsement only when the note is transferred for value.? Then, under § 1-302 (a) the effect of provisions of the UCC may be varied by agreement. This provision includes the right and ability of persons to vary everything described above by agreement.

This is where you MUST get into the PSA. You cannot avoid it. You can get the judges to this point. I did it in an email. Show your judge this post.

If you can’t find the PSA for your case, use the PSA next door that you can find on at The provisions of the PSA that concern transfer of loans (and servicing, good faith and almost everything else) are fairly boilerplate and so PSAs are fairly interchangeable for many purposes. You have to get the PSA and the mortgage loan purchase agreement and the hearsay bogus electronic list of loans before the court. You have to educate your judge about the lack of credibility or effect of the lifeless list of loans as the Uniform Electronic Transactions Act specifically exempts Residential Mortgage-Backed Securities from its application. Also, you have to get your judge to understand that the plaintiff has given up the power to accept the transfer of a note in default and under the conditions presented to the court (out of time, no delivery receipts, etc). Without the PSA you cannot do this.

Additionally the PSA becomes rich when you look at § 1-302 (b) which says that the obligations of good faith, diligence, reasonableness and care prescribed by the code may not be disclaimed by agreement, but may be enhanced or modified by an agreement which determine the standards by which the performance of the obligations of good faith, diligence reasonableness and care are to be measured. These agreed to standards of good faith, etc. are enforceable under the UCC if the standards are “not manifestly unreasonable.”

The PSA also has impact on when or what acts have to occur under the UCC because § 1-302 (c) allows parties to vary the “effect of other provisions” of the UCC by agreement.

Through the PSA, it is clear that the plaintiff cannot take an interest of any kind in the loan by way of an A to D” assignment of a mortgage and certainly cannot take an interest in the note in this fashion.

Without the PSA and the limitations set up in it “by agreement of the parties”, there is no avoiding the mortgage following the note and where the UCC gives over the power to enforce the note, so goes the power to foreclose on the mortgage.

So, arguing that the Trustee could only sue on the note and not foreclose is not correct analysis without the PSA.? Likewise, you will not defeat the equitable interest “effective as of” assignment arguments without the PSA and the layering of the laws that control these securities (true sales required) and REMIC (no defaulted or nonconforming loans and must be timely bankruptcy remote transfers) and NY trust law and UCC law (as to no ultra vires acts allowed by trustee and no unaffixed allonges, etc.).

The PSA is part of the admissible evidence that the court MUST have under the exacting provisions of the summary judgment rule if the court is to accept any plaintiff affidavit or assignment.

If you have been successful in your cases thus far without the PSA, then you have far to go with your litigation model. It is not just you that has “the more considerable task of proving that New York law applies to this trust and that the PSA does not allow the plaintiff to be a “nonholder in possession with the rights of a holder.”

And I am not impressed by the argument “This is clearly something that most foreclosure defense lawyers are not prepared to do.”?Get over that quick or get out of this work! Ask yourself, are you PSA adverse? If your answer is yes, please get out of this line of work. Please.

I am not worried about the minds of the Circuit Court Judges unless and until we provide them with the education they deserve and which is necessary to result in good decisions in these cases.

It is correct that the PSA does not allow the Trustee to foreclose on the Note. But you only get there after looking at the PSA in the context of who has the power to foreclose under applicable law.

It is not correct that the Trustee has the power or right to sue on the note and PSA literacy makes this abundantly clear.

Are you PSA literate? If not, don’t expect your judge to be. But if you want to become literate, a good place to start is by attending Max Gardner’s Mortgage Servicing and Securitization Seminar.

April Carrie Charney

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6 Responses to “RePOST: Open Letter to all attorneys who aren’t PSA literate by April Charney”

  1. papergate says:

    You know what this is great knowledge but cut the bit about having the attorney attend . . . you/we need to arm the homeowners in this war as well – this whole boot camp thing should be opened as knowledge for homeowner’s as well – these boot camp attorneys are nowhere to be found so I suggest the boot camp open up and educate the homeowners as well since obviously there isn’t enough attorneys with or without the boot camp stripes that is helping – homeowners are fighting this fight mostly on their own – so educate them as well – the attorneys should know this – educate the homeowners – that is where the heart of these matters lay – open up boot camp or quit pushing it – it doesn’t do a single homeowner that I’m aware of anyhow a bit of good – this knowledge should be available to all – not just attorneys at this time of war – it’s like not allowing a willing soldier who is 17-3/4 ready and willing to not be allowed because he has to be 3 months older . . . what the . . . impart this knowledge to those of us who are willing and apparently the only ones with the cajones to do battle since the attorneys aren’t doing it – open up the knowledge to all of us; otherwise I’m personally sick of hearing about the boot camp – so what – it doesn’t mean a thing if these so-called attorneys are not out there representing homeowners – and 1 or 3 is not enough.

  2. papergate says:

    While bent on a message griping about boot camp – I forgot to mention how grateful we have all been to April – she is certainly not the target and has been one of the few inspirational attorneys who seem to realize the blatant naked legal representation issues plaguing homeowners and attorney failures to seem to grasp what is going on – April’s regards are spot on and despite no help from boot camp – knowledge can be gleamed from April’s great insight and willingness to share with us non-legal homeowner’s fighting without leaders.

    I wish April were getting more attention and spot light for her efforts which so far have been way beyond those making a profitable market out of this dilemma – without help to the homeowners – sort of like churches collecting to save children but the money goes to fund pastoral wardrobes – thanks April!

  3. Joe Schmoe says:

    Does anyone know a good St. Louis area attorney who knows this stuff? I have a late 2000’s countrywide mortgage, so I should be in decent shape as far as this stuff goes. Am about to go into foreclosure.

  4. V says:

    This all said and good, but the plaintiff’s atty’s and the judge will state that you are not a party to the trust agreements and therefore the PSA is irreavant!

  5. jylly jakes says:

    @ V: there is conflicting case law about third party beneficieries to the PSA. Or HAMP for that matter.

  6. Elaine Williams says:

    @Joe Schmoe – GET A FORENSIC AUDIT NOW – but be careful – there are a lot of scammers out there. Make sure they are credentialed – do it now. A BK will arrest a foreclosure only for about 30 days – foreclosers are intent on taking your house, don’t let them – stand up and give them everything you have – don’t be afraid – I was in your shoes at one time. EDUCATE YOURSELF.


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