MAY COST YOU $337,603.08


The Butler Liberty Law firm has commenced over 40 lawsuits involving over 200 plaintiffs challenging the mortgage foreclosure rights of the October 2008 Bailout Banks holding “securitized” mortgages.   The plaintiffs’ claims in all of these cases is based on a “quiet title” cause of action.

Quiet title law allows a person in possession of real property (or a person asserting a title interest in vacant property) to bring suit against someone claiming a lien or other interest in real property.  A successful quiet title action results in a court “quieting” the defendant bank’s claim to title to the real property; that is, after hearing all the evidence, the court determines whether the defendant’s mortgage is valid or not.  In Minnesota, the quiet title statute is found in Chapter 559.

In 1995 I tried and won the only case I am aware of that resulted in the voiding of two securitized mortgages.  In that case, First National Bank of Elk River v. Independent Mortgage Services, 1996 WL 229236 (Minn. Ct. App. No. DX-95-1919 (FNBER v. IMS), I represented a bank against a mortgage loan securitizer who was claiming rights in a mortgage without having possession of the homeowner’s promissory note and without having ever advanced any funds to the homeowner.   As indicated in the decision above, my bank client won the battle of the putative mortgagees because my client was able to produce the original promissory notes with endorsements that clearly indicated that the defendant securitizer and pretender mortgagee had no right, title or interest in the notes.

A note is a promise to pay.  A mortgage is security for that promise to pay.  No note = no mortgage.  The rubber meets the road reality of FNBER v. IMS clearly illustrates this ancient legal principle.


After October 2008 many potential clients contacted me attempting to modify or negotiate their “mortgages” (really their notes) with the Bailout Bank now holding their loan.  The Bailout Banks refused to negotiate, lied about losing modification applications, foreclosed without identifying the note owner, falsified foreclosure documents, failed to record essential foreclosure documents, recorded false documents, hired robo-signing companies to paper over their mistakes, lied to their own lawyers, etc.  This is undisputed.  Every Bailout Bank has acknowledged these fraudulent acts and further admitted to engaging in “unsafe and unsound” banking practices in “Order and Consent Decrees.”  The Bailout Banks entered into these Decrees with and the Office of the Comptroller of the Currency (OCC) or the Office of Thrift Supervision (OTS) and, in the Decrees, promised to develop “Action Plans” to fix these problems.

You can find each Bailout Banks’ woodshed whippings by the OCC and OTS here: Bank of America, Citibank, JP Morgan Chase, US Bank, Wells Fargo, HSBC Bank, Aurora Bank, Everbank and Everbank Financial Corp., PNC Bank, MetLife Bank, One West Bank, IMB HoldCo. LLC, and Sovereign Bank.  The OCC also sanctioned the Banks’ fraudulent foreclosure abettors:  Mortgage Electronic Registration Systems, Inc., MERSCORP, LPS, DOCX, LLC and LPD Default Solutions.

The Bailout Banks’ post-2008 fraud and unwillingness to negotiate was baked in the economic cake that Congress cooked up in October 2008. The bailouts gave the Bailout Banks trillions in newly printed trillions dollars and powerful financial incentives (TARP-created subsidies and FDIC insurance) for taking Average Joe’s home rather than negotiating with Joe.  This was a bipartisan crime.  Senators Obama and McCain voted for it and President George W. Bush signed it into law.


As a result of my experience in FNBER v. IMS and with the help of some very smart and very accomplished lawyers, including securitization lawyers, I began studying the mechanics of securitized mortgages and researching legal ways to compel the Bailout Banks to negotiate with rather than steal from innocents.  I discovered what I already knew from FNBER v. IMS–a quiet title claim gives a plaintiff a very serious advantage.  It places the burden of proof on the bank/mortgagee claiming the rights of a mortgagee:

[Minnesota’s quiet title statute] was enacted in 1858 and the mechanics of quieting adverse title interests has remained virtually unchanged in Minnesota since that time.  To state a claim to quiet title, a plaintiff alleges (i) possession (ii) of real property and (iii) that the defendant claims some adverse interest therein.  Barber v. Evans, 27 Minn. 92, 93, 6 N.W. 445, 446 (1880). Once a claim is stated, the burden of proof shifts to the defendant.  Id.

The object of this statute is to force one claiming an adverse claim or lien to establish or abandon his claim; that with respect to the claim of the defendant the position of the parties is the reverse of that occupied by the parties to an ordinary action; that the defendant becomes practically plaintiff; and takes the affirmative in pleading and proof, while the plaintiff becomes practically the defendant, and defends against the claim.  Alt v. Groff, 65 Minn. 191, 192, 68 N.W. 9, 10 (1896) (emphasis added).

The elements of the claim and the shifting of the burden of proof have remained unchanged since the Minnesota quiet title statute was enacted.  A quiet title action under the statute is specifically reserved for those situations where the invalidity of the interest is NOT APPARENT on its face.  New England Mut. Life Ins. v. Capehart, 65 N.W. 258, 259 (1895) (emphasis added).

The current version of the Minnesota Practice Manual perfectly accords with this long established State Supreme Court precedent:

The essential allegations of the complaint include only the fact of possession, or that the land is vacant, and that the defendant is claiming some adverse estate or interest in or lien upon it. It is not necessary for the plaintiff to allege his title in detail, nor to state or exhibit the nature of the defendant’s adverse claim.  6A Minn. Prac. § 54.15 (3d ed.). Again, the effect of a properly pled quiet title claim is to shift the burden of proof to the defendant. It is not necessary for the plaintiff to allege his title in detail, nor to state or exhibit the nature of the defendant’s adverse claim.” (Id.).   It is for an answering defendant to disclose the nature of his adverse claim in his answer.  6A Minn. Prac. § 54.12 (3d ed.) (internal cites omitted).

Any litigator knows that the burden of proof in a lawsuit is a powerful and important thing.  The party with the burden of proof must withstand the refiner’s fire of cross-examination in court.  Cross-examination is the most powerful intellectual tool we have to separate truth from baloney.  The fundamental right of cross-examination unfortunately barely exists in today’s administrative law state.

Fair cross-examination means a JP Morgan witness taking the stand and explaining how JP is entitled to take Average Joe’s home by enforcing Joe’s note payable to the order of Mike’s Bait & Mortgage Broker Shack when there are three missing endorsements on Joe’s note (all absolutely required by the securitization documents) and JP acquired the note only because Washington Mutual serviced the note, the FDIC shut down WaMu and sold all of its assets to JP (including Joe’s flawed note) in a crony capitalist/fascist deal for 3 cents on the dollar.  The JPMorgan witness would also have to explain why, if its claim to the right to payment is true, public records show that it assigned its interest to Fannie Mae for $10.   If quiet title was fairly applied, JP would have a very tough day in court trying to prove its right to take Joe’s home.

In my humble and perhaps flawed opinion (but an opinion based on the real world experience of FNBER v. IMS), no Bailout Bank holding a securitized mortgage originated from 2001 to 2008 could ever prove that they had the right to exercise the “power of sale” in the mortgage.  This is because proving securitized note ownership (or even proving that you are the lawful agent of the note owner) is very difficult when most notes are flawed and/or were not timely placed into a securitization “trust.”  At the moment, there is at least one federal judge who agrees with me completely.   There will be many more.  This is because the truth is a hard thing to resist and the truth is that current “owner” of 62 million 2001-08 securitized mortgages received billions of dollars in bailouts, did not contribute anything to the original loan and lost nothing and was not harmed in any way when Average Joe stopped making payments.  If the Bailout Bank cannot prove that it is entitled to enforce the note it cannot exercise rights in the mortgage that secures the note and therefore cannot take Average Joe’s home.  2 + 2 = 4.


According the clear terms of every form note, only the “Lender” or “Note Holder” can declare a default on the note.  A “mortgagee” can be different that the note owner, but cannot lawfully exercise the power of sale clause in the mortgage without some connection to the note. To exercise a power of sale clause at a Sheriff’s Sale, the mortgagee “bids” debt, not cash.  Debt is due on the note, not the mortgage. Payments due on mortgages are due to third parties, like property insurers and counties for property takes.  The mortgage, a security instrument, gives the lender a privilege no one else has at the Sheriff’s sale.  That privilege is to bid “debt” due on a “note” rather than paying cash.

If a Bailout Bank cannot prove its entitlement to enforce (receive payments on) the note, it cannot legally declare a default on the note (only the note holder can do this) and cannot acquire possession of Average Joe’s home by exercising the “power of sale” right contained in the mortgage.  A stranger to the note cannot factually or legally bid “debt” due on the note at a foreclosure sale.  The bidder of debt at a foreclosure sale exercises the power of sale clause in the mortgage and takes the property pledged as security for payment on the note and therefore extinguishes (partially or fully depending on whether it is a judicial or non-judicial foreclosure) the debt due on the note.  If someone other than the note holder or his duly authorized agent could take Average Joe’s home (the security for payment on Joe’s note) without having any connection to the note, then notes would be meaningless and Joe would be exposed to potential double liability.  Of this were the case, Bank A with no connection to the note could take Joe’s house and later Bank B, the real holder of the note, could sue Joe on the note.

This is foreclosure law 101 and legal gospel. The lender takes property pledged by the borrower as satisfaction for debt due on a note.  By reprimanding the Bailout Banks, the OCC and OTS recognized that only real creditors may foreclose.  Further, as result of the OCC action MERs amended its Rules in 2011 to require securitized loan servicers to identify “note owners” prior to commencing foreclosures.   MERs stopped foreclosing in its name after July 22, 2011, making decisions like Jackson v. MERS, 770 N.W.2d 489 (Minn. 2009) (holding that MERs had a right to foreclose in its name without first recording transfers of the note) a dead letter.

Based on what we have seen at Butler Liberty Law, EVERY securitization performed in the 2001 to 2008 is fatally flawed.  No securitized note was properly and timely endorsed by every party required to endorse the note.  Fatally flawed securitizations is perhaps why:  (1) the Federal Reserve is printing $40 billion a month to purchase worthless mortgage-backed securities (MBS) and (2) the only source for MBS securitization information, the Bloomberg Terminal database, no longer provides MBS information.


So, if it is all this simple then Butler Liberty Law must be winning a lot of cases then, huh?

Ah, no.

All eight U.S. federal district judges for the State of Minnesota have dismissed virtually all quiet title cases involving all but perhaps 10 plaintiffs.  The judges dismissed these cases on what is called a “Rule 12” motion to dismiss on the pleadings.  This means that the court dismisses the plaintiffs’ cases by looking at the quiet title Complaint alone. No federal district court judge has required any Bailout Bank to answer our quiet title complaints and no plaintiff has had an opportunity to obtain any discovery (to determine who is actually the legal owner/holder of the note).

Every Minnesota federal district had an opportunity to decide one of these cases.  Every district court judge has dismissed every quiet title case presented to him or her.  No district court judge acknowledged the “quiet title” nature of the action or the fact that the burden of proof is on the bank defendant in such an action.  No Minnesota federal judge has acknowledged or cited any of the burden of proof cases cited above, chapter 559 of the Minnesota Statutes, or even referenced the current version of Minnesota Practice.  Instead, very federal district court judge labeled the cases “show me the note” cases (a begging the question fallacy tactic) and called them “frivolous” rather than attempt to address the burden of proof authority cited above.

What is frivolous is dismissing over 91 percent of cases that Average Joe’s across the country have brought against the Bailout Banks.   In March of 2011 the Federal Judicial Center conducted a study comparing pre-bailout “financial instrument” claims with post-bailout “financial instrument” claims.  At page 14 of the study, the Center’s statistics show that in 2006 47 percent of a plaintiff’s claims were dismissed for failure to state a claim.  In 2010, notwithstanding the Bailout Banks’ admissions in OCC Orders above, federal courts dismissed an astonishing 91.9 percent of plaintiff’s financial instrument claims for “failure to state a claim.”   The reason for this change is a case called Ashcroft v. Iqbal.   Federal judges appear to believe that this case empowers them to clear their docket with impunity and without regard to the due process rights of the litigants.


In the course of this battle, Minnesota federal district court judge Patrick Schiltz, sua sponte (on his own with no motion before him), sanctioned yours truly $50,000 for continuing to assert a quiet title claims when 2 or 3 omniscient and sage Minnesota judges had already decreed by fallacy that such a claim is really a frivolous “show me the note” claim.  Judge Schiltz’s angry decision clearly intended to put this disobedient lawyer in his place and put him out of business.  He even reported me to the Minnesota Professional Responsibility Board.

If you would like a peak into Judge Schiltz’ psyche, his ethics lesson on impossibility of holding onto your soul while working in working in a big firm like Faegre & Benson is in this Vanderbilt Law Review article:  On Being a Happy, Healthy, and Ethical Member of an Unhappy, Unhealthy, and Unethical Profession.  N.B., the law firm opposing me in the case where The Honorable Schiltz sanctioned me $50,000 was none other than the law firm of….drum roll….Faegre & Benson (now Faegre Baker Daniels).  Jeepers.

After this decision, the Bailout Banks saw their opportunity and took it by bringing serial sanctions motions and offering Judge Schiltz’s decision as proof of my bad faith and obdurate ignorance.

It worked.

The current total of sanctions and attorneys fees awarded by the Minnesota federal district court for asserting burden-shifting quiet title claims against the OCC- and OTS-punished Bailout Banks holding securitized mortgages is now $337,603.08.

The Minnesota federal district court judges who have issued these sanctions are:  The Honorable Patrick Schiltz ($79,766 total, he tacked on $29,766 in Faegre attorneys fees, sheesh); the Honorable Ann Montgomery ($154,569.80 in four separate cases); the Honorable Donovan Frank ($45,451.97) (actually not a bad guy but probably felt he had to go with the flow); the Honorable Paul Magnuson ($10,000); the Honorable David Doty ($11,437.65); federal Magistrate Leo Brisbois ($36,376.96), Judges Michael Davis and Judge Jon Tunheim affirmed Magistrate Brisbois’ sanctions.

There are two federal district judges whose hands are clean on sanctions; that is, Bailout Bank asked for sanctions and these judges denied the motion:  the Honorable Susan Nelson and Magistrate Tony Leung.

Not one of the quick-to-sanction federal judges has yet acknowledged that the burden of proof in a quiet title action is the lienholder/mortgagee.  In the hearings on the Bailout Banks’s motions to dismiss, when we mention the burden of proof, the judges’ response is……crickets.


What the federal judges in Minnesota are doing is employing Iqbal and Rule 12 to summarily dismiss Minnesota plaintiffs’ quiet title claims without any due process and without applying 150 years of Minnesota law squarely placing the burden of proof on the Bailout Banks.   It is a violation of the Erie Doctrine for federal courts to apply federal procedural rules in a manner that denies state substantive law rights.  Rule 12 is a federal procedural rule.  The burden of proof is a state substantive law right.  Butler Liberty Law has petitioned the United States Supreme Court for review of the 8th Circuit’s decision in Karnatcheva v. JPMorgan Chase.

ISAIAH 1:22-25

The real problem of course is not fearful and angry federal judges or even securitized mortgages.  The real and ageless problem is funny money and corrupt leaders who lay down with thieves:

22 Thy silver is become dross, thy wine mixed with water:

23 Thy princes are rebellious, and companions of thieves: every one loveth gifts, and followeth after rewards: they judge not the fatherless, neither doth the cause of the widow come unto them.

24 Therefore saith the Lord, the LORD of hosts, the mighty One of Israel, Ah, I will ease me of mine adversaries, and avenge me of mine enemies:

25 And I will turn my hand upon thee, and purely purge away thy dross, and take away all thy tin:


Below is a video explaining securitized mortgages in more detail, the coming dollar tsunami and why, if the rules are fairly applied, securitized mortgages are impossible to prove in court:

Bill Describes to Overall Process in Detail