Balancing the Scales of Justice for Pro Se Homeowners

The Trustee, Trustee and Trustee…huh?

Posted by on Jan 29, 2012

The Trustee, Trustee and Trustee…huh?


In a typical non judicial foreclosure there are THREE different Trustees:

1) The original Trustee listed on the Deed of Trust when the loan is originated and the Deed of Trust is signed

 2) The substituted Trustee that is substituted during the foreclosure process to conduct the Trustee Sale

 3) For millions of homeowners there is a 3rd Trustee that is named as the Trustee of the REMIC trust in the assignment of Deed of Trust , Notice of Default and is typically the entity doing the substitution of Trustee on the Deed of Trust.

To first understand who these entities are we need to have a basic understanding of what a “trust” is. 

The Trust

There may be many different types of trusts but ultimately they all have one basic fundamental concept, which is an arrangement for a 3rd party to hold assets of one person on behalf of another.  We create trusts all the time.  For example, your five year old child is going on a school field trip; you give the teacher $20.00 dollars to hold in trust for your child in case your kid needs anything while on the trip.  The expectation is the teacher will spend the money only for your child and whatever money is left over will be returned to you.

  •                 Your child is the “beneficiary” of the Trust
  •                 The Teacher is the “trustee”
  •                 The $20 dollars are the “assets” or “principal” of the Trust
  •                 You are the “Trustor”[1] whose asset (the 20 bucks) has been put into Trust for your child, the beneficiary.

This is a very simple trust.  We have the basic 4 components of every Trust – the Trustor (You as the parent) who created the Trust by asking an independent 3rd party – the Trustee (the Teacher) to manage the Trust asset (the $20 dollars) on behalf of the beneficiary (your child).  There are all types of trusts and the manner in which in which they are created and their purpose defines what type of Trust they are.

In the creation of a Trust there is usually a set of documents that “create” the Trust and in which the duties and responsibilities of the Trustee are outlined.  The Trustee is bound by those duties, so much so that the Trustee’s violation of those responsibilities can void the Trust and/or create liabilities for the Trustee.  In the above scenario if the teacher spent the money on another kid, the teacher’s action is voidable and you are legally entitled to get your money back.  As you can see, the more money involved the more you want to trust the Trustee and ensure you have ways in which to recover from the improper actions of the Trustee.  Every state has a set of laws governing Trusts and Trustees.

So now keeping the above scenario in mind, when it comes to a Deed of Trust on your property:

  •                  YOU are the Trustor.  It is your asset going into the Trust.
  •                 YOUR property is the “asset” going into the Trust.
  •                 The Trustee is the entity named as the Trustee (Typically the
  •                 title company like Chicago Title, Fidelity National, etc.)
  •                 The Beneficiary is the entity who loaned you the money.
  •                 The Deed of Trust that was filed in the land records are the “trust documents”.

The purpose of the Trust is to hold the title until the loan is paid back.  The instructions in the Deed of Trust is that if you breach your loan agreement, you agree that the Trustee may hold a non judicial sale of your property when the proper, legal beneficiary provides a written declaration to the Trustee that you have breached your agreement to repay the loan and the Trustee must now liquidate (sell) the property to pay back the loan.

The Trustee also has a responsibility to YOU.   That responsibility is to ensure that your title is protected from any 3rd party seeking to have your property sold for whatever reason.  The Trustee is legally obligated to ensure that any party requesting a foreclosure be done on your property has the legal right to do so!  The Trustee also has the responsibility of conveying the Title back to you when the loan is paid in full.

The Trustees

Just as a panda is not a true bear, a trustee of a deed of trust is not a true trustee.” (Stephens, Partain & Cunningham v. Hollis (1987) 196 Cal. App.3d 948, 955 [242 Cal. Rptr. 251].)  “A trustee under a deed of trust has neither the powers nor the obligations of a strict trustee; he serves as a kind of common agent for the parties. [Citations.]” (3 Witkin, Summary of Cal. Law (8th ed. 1973) Security Transactions in Real Property, § 9, p. 1497; see 7 Witkin, op. cit. supra, Trusts, § 3, pp. 5368-5369.) (4b)  

The Trustee of the Deed of Trust is slightly different from a typical Trustee of  Trust because the Deed of Trust Trustee has only one set of responsibilities – those are specific to protecting your title from an illegal 3rd party claiming rights to foreclose on it and conveying title back to you when the loan is paid in full; and ensuring that the legal, proper beneficiary can foreclose to recover the money loaned to you to purchase your home, if you do not pay it back.  The Trustee of the Deed of Trustee DOES have a responsibility to NOT initiate the foreclosure for a 3rd party if that 3rd party has not provided evidence of their right to the payments AND a written declaration of default with the specific amount and date of default.

Typically the party claiming to have incurred a breach upon which the “power of sale” clause in your Deed of Trust may be exercised must provide to the Trustee of the Deed of Trust the following documents:

    1. A copy of the Note they hold (that is evidence of the loan they are claiming rights to payment on).
    2. Any Assignments of the Deed of Trust.  (For example, in my case the lender NAMED on the Note is New Century Mortgage; but the company claiming the Default is the Morgan Stanley Loan Trust – so they had an obligation to show the Trustee how they had a right to claim a default!)
    3. Payment history with evidence of the claimed default through a written declaration of default with a very specific amount of the default (no “if any” is allowed!  See Anderson v. Heart Federal Sav. & Loan Assn. (1989) 208 Cal.App.3d 202, 256 Cal.Rptr. 180) and the date the amount of default was due.

In the typical California foreclosure process we are introduced to two new Trustees.  We are introduced to a “substituted” Trustee of the Deed of Trust and a Trustee named as the “beneficiary”.  This is where things get very interesting.

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[/nonmember][ismember]Substituted Trustee

California Civil Code § 2934a allows the beneficiary of the Deed of Trust the legal authority to substitute the Trustee of Deed of Trust.  Returning to our above Trust scenario, the Teacher (Trustee) may be replaced by the child (beneficiary) as the Trustee of the $20 dollar.  Now we may not want a child doing this but your lender is quite capable of selecting an appropriate Trustee and by law, is entitled to do so.  But in the majority of Substitutions of Trustee’s occurring in foreclosure cases, the beneficiary is an UNKNOWN 3rd party.  So instead of your child replacing the teacher – some other kid you never heard of is replacing the teacher as Trustee with another person!!??  Getting a little freaked?

Unfortunately for many Americans the County Recorders and/or Register of Deeds are asleep at the wheel and not paying attention – apparently when the Substitution is filed no one at the land records office is verifying that the Substitution is being done by the beneficiary of record! Property owners have to verify the substitution themselves. 

To correct this bizarre situation of an unknown 3rd party being the beneficiary, many servicers, foreclosing trustees or other law firms, are manufacturing Assignments of Deeds of Trusts and filing them in the land records.   Can you spell  F-R-A-U-D? 

Trustee of REMIC

When the Notice of Default or Substitutions of Trustee are filed homeowners are typically introduced to a THIRD Trustee – this is the Trustee of the REMIC[2] Trust .  You will recognize this 3rd Trustee in the beneficiary line of the document.  The name typically is “Bank X as Trustee for Asset –Back Certificates, Series xxxx” – more specifically:

  •                 Example:  Deutsche Bank National Trust Company as Trustee for the Morgan Stanley Capital 1 Inc. Trust 2006-NC2
  •                 Example:  Wells Fargo N.A. as Trustee as Mertigage Mortgage Loan Trust 2005-2, Asset-Backed Certificates, Series Flow 2005-2

There are literally 1,000’s of different naming conventions; typically a bank is named as the Trustee before the name of the REMIC Trust.  In the above examples, the banks acting as Trustees are Deutsche and Wells Fargo.  The Trustee of a REMIC has all the fiduciary responsibilities of a typical Trustee but they have NOTHING to do with the Deed of Trust other than being named as the beneficiary.  And the Bank DOES NOT OWN THE NOTE and is NOT the beneficiary; the certificate holders of the REMIC Trust are the owners/beneficiary.  (If you are scratching your head, please go to our Must Reads for Anyone Fighting Foreclosure and read about the securitization process and WHY these Trusts are NOT the actual legal, proper beneficiary of your Note or Deed of Trust).

Unfortunately for many homeowners, not only does the homeowner not understand this Trustee and who they are, the Courts (i.e. Judge) and attorneys typically do not understand.  Most Courts see the name of the Bank and automatically assume that the Bank named as the Trustee is the owner of the Note and is the legal, proper beneficiary of the Deed of Trust.  But that assumption is very, very wrong.

So applying our parent, teacher, child, $20 dollars scenario –

  •                 You are the Parent (Trustor of the Deed of Trust)
  •                 $20 dollars is the asset (your property)
  •                 Teacher is the Trustee
  •                 Child is the beneficiary (Your original lender/creditor)

Now let us turn this on its head with the 2nd Child – ready?  The 2nd child is acting on behalf of a group of kids that you don’t know as THEIR Trustee (Deutsche Bank National Trust as Trustee; Wells Fargo N.A. as Trustee, JP Morgan as Trustee, etc.)

Here, the 2nd kid tells your kid’s teacher (the Trustee)  to give the money (the asset, title to your property) to another teacher (substitute Trustee) , and the 2nd kid represents a group of kids you don’t know/ Some bank representing a REMIC Trust as it’s Trustee, substitutes your Deed of Trust Trustee with another Trustee – and you have no relationship with the bank doing the substitution or any of the people who own the REMIC trust!  (This is an over simplification of the situation but hopefully you are getting the picture.)

If you find this confusing realize it IS confusing.  Especially when national banks that we have all trusted unconditionally are doing this funny business! They like your confusion and rely on it when they are doing the foreclosure.

Below is my scenario and what violations of the law occurred in the parties involved with the foreclosure I am fighting.  [/ismember]


[private Monthly|annual|advocate]

In my case, my loan was originated by New Century Mortgage; New Century is the lender/creditor named on the Promissory Note (evidence of the loan) and is the named beneficiary of my Deed of Trust; Fidelity National Title is named as the Trustee of the Deed of Trust.  In relation to the above scenario – I am the Trustor (the Parent); title to my property is the asset being put into the trust (the $20 dollars), New Century is the beneficiary (the child), Fidelity is the Trustee (the Teacher) and the Deed of Trust is the written Trust Document (the written trust documents).

Again, in my case, Ndex West acting as an “agent” for the beneficiary – Deutsche Bank National Trust Company as Trustee for the Morgan Stanley Loan Trust – filed an alleged default.  That was in January 2008; then in February 2008, Deutsche Bank National Trust as the Trustee of the Morgan Stanley Trust substituted Ndex West as the Trustee of the Deed of Trust, then in March 2008 New Century (who had long ago supposedly sold my Note to NC Capital and was in bankruptcy) through Wells Fargo, assigned my Deed of Trust from New Century Mortgage to Deutsche Bank National Trust as the Trustee for the Morgan Stanley Loan Trust (which by the way, violates Internal Revenue Codes and the Trust documents of the Morgan Stanley Loan Trust – see our Must Reads for Adam Levitin’s Article)

 What is wrong with this scenario? 

  • The Required Documents to start the Foreclosure:  If you look back at which documents are required of the party asking the Trustee to exercise the power of sale it is clear that the party must deliver any assignments of the Deed of Trust proving they now are the beneficiary of the Deed of the Deed of Trust.  Yet no assignment of Deed of Trust was done until three (3) months later in March 2008.  
  • An Agent did the NOD not a Trustee: Ndex West did the Notice of Default as a paid agent of the Deutsche Bank National Trust Company as the Trustee of the Morgan Stanley Loan Trust  who claimed to be the beneficiary.  California Civil Code § 2924 allows an agent to file the Notice of Default for the beneficiary.  IMHO, Deutsche paid an Agent because they knew the original Trustee would question Deutsche’s right to have a Notice of Default filed.
  • Was Deutsche Bank National Trust Company as Trustee for the Morgan Stanley Loan Trust the beneficiary of the Deed of Trust? According to the land records…NO.  In my case I filed a Quiet Title action against them – and that issue is now in front of the Court of Appeals.  
  • Did Ndex West act as a common agent of all parties?  No, they were not the Trustee at the time, so they had no responsibility to me, the property owner.  In February 2008 Deutsche Bank National Trust Company as the Trustee of the Morgan Stanley Loan Trust, did a Substitution of Trustee , replacing Fidelity National – the Trustee that New Century and I had agreed to appoint as the Trustee of the Deed of Trust.    I believe Fidelity would recognized their responsibility to act as a common agent and would have sought to protect my rights; so Deutsche Bank and Ndex West removed that little obstacle by substituting Fidelity out as the Trustee of the Deed of Trust.   
  • Did Deutsche Bank have a right to substitute the Trustee of the Deed of Trust?  No! According to California Civil Code § 2934a only the beneficiary of record may record the Substitution of Trustee.   According to California Civil Code § 2932.5 an Assignment of Deed of Trust must be duly acknowledged and recorded for an entity to be recognized as the beneficiary.  A Civil Code is a statute; a statute is a law.  Deutsche Bank violated the law.
  • The Assignment of Deed of Trust was done by a defunct company who had allegedly sold it to a different company.  The Assignment of Deed of Trust was done by Wells Fargo as an attorney in fact for New Century and assigned the beneficial rights of the Deed of Trust from New Century to the REMIC Trust.  What we learned through discovery when I filed my lawsuit was that New Century actually claimed to have sold my Note to a DIFFERENT 3rd party; New Century was in bankruptcy, the Wells Fargo employee signing the Assignment signs for a bunch of different companies transfer assets typically to her employer,   it violated California Civil Code § 1095 which is a LAW and transfer directly from an originator who is not a party to the REMIC trust is in violation of Internal Revenue Codes and New York Trust law. [/private]

These are not mere technicalities – they are very serious infractions and violations of the law.   Non judicial foreclosure allows the foreclosing entities to foreclose based on their strict adherence to following the law.  As you can see in my case the bank violated California Civil Code §§ 1095, 2924, 2932a, and 2932.5!! The foreclosing trustee will say that the order in which these are done is no big deal, “no foul, no harm” – and in some cases the Court may agree.  But if you are able to prove the Notice of Default and Assignment of Deed of Trust violate the law, then the Substitution of Trustee is automatically invalid – if that Trustee is doing the foreclosure then there IS foul and there IS harm.  Fight the foreclosure!


 Keep Up the Fight!



[1] Trustor is also known as Grantor, donor, or settlor depending on the type of Trust.

[2] REMIC:  Real Estate Mortgage Investment Conduit governed by Internal Revenue Codes and typically created by Trust Documents called “Pooling & Servicing Agreement” that usually are governed by New York Trust law.


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