“How the Federal Reserve, Treasury, Supreme Court, and Other Government Actors Enabled the Money Changers to Steal Homes — The Vallejo Case in the Ninth Circuit”
Published on August 8, 2025, by Scott Erik Stafne and Todd AI on the Duties of Citizenship
Substack, this article argues that key U.S. government institutions have systematically protected the financial industry’s securitization model—despite its reliance on lost or destroyed promissory notes—allowing widespread unlawful foreclosures. It frames this as “treason to the Constitution,” where courts and regulators prioritize market stability over homeowners’ due process rights.
The piece uses the ongoing case of Eduardo “Ed” Vallejo v. Fannie Mae as a microcosm of the crisis, tying it to the 2008 financial meltdown and ongoing “zombie mortgage” revivals.
It draws on historical regulatory warnings, court precedents, and constitutional principles to substantiate claims of fraud enabled by MERS (Mortgage Electronic Registration Systems) and government inaction.
The narrative portrays the Federal Reserve, Treasury, and Supreme Court as “enablers” who legitimized a debt-enforcement system built on “legal quicksand,” where lenders like Fannie Mae seize homes without proving ownership of the underlying promissory note. This echoes broader advocacy from groups like Americans Against Foreclosures (AAF), with which Vallejo is affiliated.
Key Roles of Government Actors in Enabling Home “Theft”The article details how these entities ignored early warnings about unenforceable debt, bailed out the system post-2008, and shielded fraudulent practices. Below is a table summarizing their alleged complicity, based on the article’s evidence:
| Government Actor | Role in Enabling Fraud | Key Evidence/Examples from Article |
|---|---|---|
| Federal Reserve | Acted as the “largest single holder of agency MBS” by purchasing trillions in mortgage-backed securities (MBS) post-2008, injecting liquidity into a market of “unenforceable debt” (e.g., loans with missing notes). This propped up securitization despite knowing notes were routinely destroyed during electronic conversion. | Fed’s MBS holdings peaked in 2014; ignored 2003 NTIA warning on note destruction compromising enforceability. dutiesofcitizenship.substack.com |
| Treasury Department | Issued the 2008 “Blueprint for a Modernized Financial Regulatory Structure” under Secretary Henry Paulson, expanding the Fed’s role to prioritize market stability over consumer protections. Streamlined oversight to “protect markets rather than homeowners,” embedding the flawed securitization model. | March 31, 2008 Blueprint; post-crisis TARP funds funneled to banks without addressing note issues. dutiesofcitizenship.substack.com |
| Supreme Court | Complicit through rulings that abandon Article III (judicial power) and Seventh Amendment (jury trial) requirements, allowing foreclosures without jury findings on note/deed ownership. Cites Kousisis v. United States (2025) as affirming fraud but notes broader judicial deference to financial interests. | Carpenter v. Longan (1872): Note and deed are inseparable—transfer of one without the other is invalid; yet courts ignore this in modern cases. dutiesofcitizenship.substack.com |
| Other Actors (e.g., NTIA, OCC, Congress) | Issued ignored warnings on note destruction; OCC’s 2004 advisory urged safeguards but enabled “destruction without affecting enforceability.” Congress failed to enforce UCC (Uniform Commercial Code) rules requiring note possession for enforcement. | NTIA 2003 report: “Many mortgage lenders destroy the original promissory note… However, doing so may compromise the lender’s ability to enforce the note.” dutiesofcitizenship.substack.com OCC 2004-9 Letter: Institutions must “ensure… destruction… would not affect the enforceability.” dutiesofcitizenship.substack.com |
These actions, per the article, created a system where MERS acts as a “nominee” for deeds but facilitates note-less transfers in securitization pools, rendering millions of foreclosures void under UCC § 3-301 (only the “holder” of the note can enforce it).
The Vallejo Case in the Ninth Circuit:
A Case Study in Systemic Failure
Eduardo Vallejo, an elderly California homeowner and AAF advocate, exemplifies how government-enabled fraud plays out.
His 2005 mortgage was acquired by Fannie Mae on January 1, 2005 (per a January 3, 2019, letter from Severson & Werson), with the deed of trust assigned to Fannie on June 20, 2016 (recorded from Ditech Financial LLC). However, no promissory note assignment ever occurred, making enforcement invalid (In re Veal, B.A.P. 9th Cir. 2011).
- Key Proceedings:
- Originated in U.S. Bankruptcy Court (C.D. Cal., Case 2:19-bk-21271-SK) and Los Angeles Superior Court (20STCV45290), alleging wrongful foreclosure, TILA violations, and fraud.
- Appealed to the Ninth Circuit (e.g., No. 18-60060 and related), where it has “stalled for over a year” as of August 2025. Vallejo seeks jury trial on ownership; courts have dismissed or equivocated, citing no “live controversy” despite Fannie Mae’s records.
- Allegations of Bias/Corruption: Ninth Circuit judges allegedly avoid fact-finding, enabling seizures without due process. The article claims this is “treason to the Constitution: knowingly acting outside lawful authority, to the benefit of financial and governmental allies.” duties of citizenship.substack.com Ties to broader AAF efforts, including recusal motions for judges with bank investments.
- Outcomes/Ongoing Issues: As of August 2025, the appeal is unresolved, allowing potential home seizure. Vallejo’s case highlights “judicial complicity” in ignoring Yvanova v. New Century Mortgage (Cal. Sup. Ct. 2016) on void assignments.
Broader Connections to the 2008 Crisis and Zombie Mortgages
The article links Vallejo’s plight to the securitization boom (2005–2007), where 60 million+ notes were digitized and destroyed, fueling subprime defaults by 2007. Post-crisis, the Fed/Treasury’s interventions revived “zombie” debts—charged-off seconds sold cheaply but now pursued with accrued interest. MERS fraud exacerbates this by enabling untracked transfers, creating “securities built on nothing.” An estimated 20+ million homes lost unlawfully since 2008, per AAF data.
Calls to Action and Evidence
- Calls: Urges amicus briefs (e.g., from Church of the Gardens), public resistance to “mammon worship,” and congressional probes. Join AAF for templates to challenge foreclosures.
- Evidence: Cites documents like the Severson letter, recorded assignments, NTIA/OCC reports, and precedents. Emphasizes: “Without proof that the foreclosing party owns both the note and the deed, the court has no jurisdiction to take the home.” dutiesofcitizenship.substack.com
This piece builds on prior discussions of Vallejo’s multi-court saga, reinforcing MERS as a fraudulent nominee (not note-holder) and Fannie Mae’s role in zombie revivals. For full text or updates, visit the Substack link. If you’re facing similar issues, AAF resources (aafmembers.net) offer free legal aids. www.axj.news
https://dutiesofcitizenship.substack.com/p/how-the-federal-reserve-treasury
VALLEJO VS. TRUMP
Incident Overview
On October 22, 2025, a viral video captured a disturbing ICE (U.S. Immigration and Customs Enforcement) arrest in Portland, Oregon, near the intersection of Clackamas Street and Martin Luther King Jr. Boulevard. The footage shows an ICE agent pinning Víctor José Brito Vallejo face-down on the ground with full body weight for over two minutes, despite him not appearing to resist. Brito Vallejo repeatedly pleaded “I can’t breathe” in Spanish (at least five times), while his wife cried out for help. The video was recorded by a bystander named Elizabeth Cox, who stopped her car to document the encounter as potential evidence of excessive force.This incident has sparked outrage online, highlighting concerns over ICE tactics under the Trump administration’s intensified immigration enforcement policies. The arrest is part of a broader pattern of reported aggressive detentions targeting perceived Latino individuals, as alleged in multiple ongoing lawsuits against the administration.Potential Lawsuit and Claims
The AXJ Global News Network ( AXJNEWS ), covering the news suggests calls for Brito Vallejo to sue President Trump, ICE leadership, and associated officials for $1 billion in damages, while also suggesting liens on Trump’s property and income. This echoes real legal actions against the Trump administration for ICE misconduct:
- Class-Action Lawsuits on Unlawful Arrests: In September 2025, four D.C. residents and the immigrant rights group CASA filed a class-action suit alleging ICE systematically arrests Latinos without warrants or probable cause. The Department of Homeland Security (DHS) denied the claims as “categorically false.” washingtonpost.com Similar complaints have arisen in other cities, including Portland, amid Trump’s mass deportation push.
- Excessive Force and First Amendment Violations: In October 2025, Chicago journalists and protesters sued Trump officials over “extreme brutality” at an ICE facility, including attacks on media covering protests. axios.com A related suit in Broadview, Illinois, accuses ICE agents of violating First Amendment rights through unwarranted arrests and force. yahoo.com Brito Vallejo’s case could align with these, potentially seeking damages under Bivens claims (for constitutional violations by federal officers), though recent Supreme Court rulings have limited victims’ ability to sue individual ICE agents directly. vox.com
- Oversight and Access Barriers: Democratic lawmakers have sued DHS for blocking unannounced visits to ICE facilities, arguing it enables unchecked abuses. democracyforward.org +2 These suits underscore systemic issues that could bolster Brito Vallejo’s case.
Public records will soon confirm a specific 42 USC 1983 $1 billion lawsuit from Brito Vallejo and his family along with that of immigrant rights groups like CASA or ACLU which often support such claims.
The mention of liens on Trump’s assets will not protects presidential property and will lead to asset freezes. Broader ContextThis arrest fits into Trump’s 2025 deportation surge, which has led to:
- Detentions of legal immigrants, including spouses of Trump voters. jsonline.com +1
- Protests and counter-suits, with calls from figures like Rep. Alexandria Ocasio-Cortez to resist ICE actions. foxnews.com
The hashtags #Spain and #España may reference Brito Vallejo’s possible heritage or calls for international attention, given Spain’s vocal stance on U.S. immigration policies. AXJ News (axj.news) positions itself as a global network covering this horrendous human rights violation presently before U.S. Congress and the Senate. If you’re Brito Vallejo, family members, witnesses such as Elizabeth Cox, or involved, organizations like the ACLU, NILC, AXJ you can be provided free legal aid for joing and filing a complaint against Trump in the Hague. For updates, please monitor AXJPortland-area news on ICE oversight reports. This case is gaining traction quickly as all Immigrants are asking that Trump be arrested immediately!