Livinglies's Weblog

The claim of securitization is present in virtually every case of a loan account receivable. It is a false claim. All  subsquent claims to administer, collect or enforce the alleged loaon account receivable are therefore also false.

But the false claim becomes the law of the case unless the consumer — with no help from government agencies that are tasked with protecting consumers — contests every single piece of correspondence, exhibit, document, notice or pleading starting with “Greetings we are your new servicer.”

One of my favorite contributors asked a question about how to find the fact that there is no loan account. This question comes from uncertainty about whether there is a loan account after all or not. It also raises the wrong question because it addresses substance rather than procedure. Procedure is what wins and loses cases.

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The specific question is whether the recitation of “valuable consideration” or $1, $10, etc. is enough to show that the loan account receivable was not actually sold in a commercial transaction. the precise answer is no it isn’t enough on its own.

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You don’t need to find the loan account or to get an admission that it doesn’t exist. In fact, the fewer the answers to the actual legal demands the better for you if you know how to enforce them.

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If you want to accomplish anything you need to assume that the loan account receivable does not exist. And you must challenge every claim of any right, title or interest in the administration, collection or enforcement of any alleged unpaid debt.

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You have to realize that you are never going to get the answer you were looking for. And you have to accept the fact that the only effective way of pushing back is by legally contesting every piece of correspondence, notice, recording, pleading, or exhibit.

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I have long argued that any correspondence or agreements executed by homeowners as “borrowers” presented a danger of waiving all of their home equity. This is true as to the fundamental equation and to the statute of limitations.

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The fundamental equation is that when the homeowner is contacted there is no loan account receivable and therefore no creditor. BUT if the homeowner subsequently signs correspondence or an agreement that among other things acknowledges the existence of the loan account receivable, that is unpaid, that there is a default, and that it is still due, it will work against the homeowner in litigation. That is the classic “Yes, but” defense which almost never works. Hence an illusory (virtual debt) becomes real in the eyes of the court.

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Deutsche Bank established its prima facie entitlement to judgment as a matter of law dismissing the first cause of action, which sought to cancel and discharge of record its mortgage on the subject property. Even assuming that the statute of limitations to foreclose on Deutsche Bank’s mortgage would have expired sometime in 2014, Deutsche Bank demonstrated that the borrowers subsequently executed the lien modification agreement. That agreement provides, among other things, that “[e]ven though the [borrowers’] personal liability on the note is discharged, the terms of the [original] Lien Documents remain in effect,” and the “Lien Holder continues to have an enforceable lien on the Property.” [e.s.]In addition, the lien modification agreement provides that “[t]he Lien Documents, as modified by this Agreement, are duly valid, binding agreements, enforceable in accordance with their terms and are hereby reaffirmed.” Thus, the borrowers explicitly acknowledged their obligation to pay the existing debt to Deutsche Bank, and the language of the lien modification agreement was sufficient to revive the statute of limitations period (seeGeneral Obligations Law § 17–101 ; Jeffrey L. Rosenberg & Assoc., LLC v. Lajaunie,54 A.D.3d 813, 815, 864 N.Y.S.2d 471 ; cf.Yadegar v. Deutsche Bank Natl. Trust Co.,164 A.D.3d at 947, 83 N.Y.S.3d 173 ; Karpa Realty Group, LLC v. Deutsche Bank Natl. Trust Co.,164 A.D.3d at 888, 84 N.Y.S.3d 174 ). [e.s.]

Commodore Factors Corp. v. Deutsche Bank, 189 A.D.3d 766, 768 (N.Y. App. Div. 2020)

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See

(1) Failure to accept a payment that conforms to the servicer’s written requirements for the borrower to follow in making payments.

(2) Failure to apply an accepted payment to principal, interest, escrow, or other charges under the terms of the mortgage loan and applicable law.

(3) Failure to credit a payment to a borrower’s mortgage loan account as of the date of receipt in violation of 12 CFR 1026.36(c)(1).

(4) Failure to pay taxes, insurance premiums, or other charges, including charges that the borrower and servicer have voluntarily agreed that the servicer should collect and pay, in a timely manner as required by § 1024.34(a), or to refund an escrow account balance as required by § 1024.34(b).

(5) Imposition of a fee or charge that the servicer lacks a reasonable basis to impose upon the borrower.

(6) Failure to provide an accurate payoff balance amount upon a borrower’s request in violation of section 12 CFR 1026.36(c)(3).

(7) Failure to provide accu\rate information to a borrower regarding loss mitigation options and foreclosure, as required by § 1024.39.

(8) Failure to transfer accurately and timely information relating to the servicing of a borrower’s mortgage loan account to a transferee servicer.

(9) Making the first notice or filing required by applicable law for any judicial or non-judicial foreclosure process in violation of § 1024.41(f) or (j).

(10) Moving for foreclosure judgment or order of sale, or conducting a foreclosure sale in violation of § 1024.41(g) or (j).

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You can have this done for you by a competent forensic investigator or you can do it yourself using  FOIA (Freedom of Information Act) requests and other means. What is clear is that the procedures for QWR and DVL do not produce answers, although they do provide the foundation for lawsuits for statutory violations.

Here is an example of a homeowner who is relentless and aggressive in pursuing state and federal agencies to do their job — i.e., stopping foreclosures for profit. If a foreclosure is not intended to pay a creditor with an unpaid loan account receivable, it isn’t a foreclosure and the lawyers and their various clients and participants in foreclosure schemes have no right to the remedy.

The biggest problem I have is not just convincing government agencies but rather convincing homeowners that their homes are subject to a lien that is either partially or entirely invalid and that there is no legal creditor authorized to collect any money from them. In turn, homeowners regularly walk away from their homes leaving hundreds of thousands of dollars in nest-egg capital behind.

Here is only one example of how Wall Street is pulling the wool over the eyes of homeowners, lawyers, judges, and agencies of  Federal and state governments:

Covius is a branch  of Covius Holding who owns Covius Solutions who owns  Nationwide Title Clearing Corporation (NTC) who massively forge and falsify documents used by Wall Street Banks and their Servicer William P. Foley Black Knight, Inc (former Lender Processing Services) who give  instructions to Covius cartel via secured messages from secured message centers (similar to MI DIFS Zix Message Center owned by Zix Corporation, UK controlled by Goldman Sachs via chain of sham conduits who send me absurd runarounds on behalf of DIFS) .

This is  a typical mafia-styled structure based on a chain of nest-doll entities to make investigation more complex and almost impossible for common homeowners.Authorities and Courts are apparently instructed to refrain from any  investigation and ignore customers’ complaints even though it violates Agencies own settlements with criminals who promised to stop their crimes after returning  a fraction of stolen money. An example is FL AG settlement with  NTC which NTC has no intention to adhere.

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On May 30, 2020 Covius Solution via NTC  forged and recorded in Barry County MI fraudulent Assignment of my alleged “Mortgage”  purportedly prepared by Dave LaRose (who did not prepared or reviewed it) where Intercontinental Exchanges, Inc acting as MERS hired  robo-signer Justin Borkowski (NTC employee) who [never] appeared before robo-signer Notary  Vicky McCoy who executed and notarized assignment of Mortgage (without Note) from Perl Mortgage, Inc (dissolved since 2019) to PennyMac Loan Services, LLC (fake Servicer without servicing functions) by attaching electronic stamp with “Vicky McCoy” signature prepared by someone else.

Covius Document Services, LLC, is a registered in Florida, California and Michigan Corporation, who repeatedly send me unsigned Notices with demand for money for unknown to me parties from P.O. Box 9109 Temecula CA rented by Covius.

The P.O. Box 9109 in Temecula CA was registered in the name of PennyMaC, but Covius is  the company using it on behalf of Franklin Credit Management Corporation  — all concealed by use of the name PennyMac who did nothing and probably was contractually barred from receiving or directing mail that was sent to that box address.

There was most likely a standing forwarding order to yet another PO Box, but I can’t know that without asking.

As its name implies Franklin Credit Management Corporation acts as a credit processor and director of assignments of credit collection functions on behalf of an undisclosed entity that is a sham conduit for an investment bank. 

All correspondence under name “Penny Mac” is coming from at least 15 (fifteen)  different companies, none of whom have any relationship with PennyMac. One company prepare billing statements mailed to me by another company instructing me to send my payments to PO Boxes in Dallas TX or Los Angeles LA rented by unknown to me parties. My checks are collected by three different companies – Exela, Regulus and Transcentra hired by unknown to me parties. [e.s.] My money are processed by unknown to me company whose employees receive secured instructions via secured website operated by unknown to me parties to deposit them to shady credit union in California for unknown by me beneficiaries. Notices are coming from two Servicers: Covius Document Services LLC  and Franklin Credit Management. Escrow reviews conducted by another unknown by me Company. Taxes are paid from my escrow by CoreLogic, Inc who cannot identify who hired and authorized them to pay my taxes. Home Insurance is paid from my escrow by Third Party Payment Processing company whose identity everybody refuse to disclose. Tax Forms for IRS are prepared by another Company and mailed to me by another company. Correspondence is coming from an array of companies  from across the Country. Employees with whom I speak on the phone work for various call centers or companies which I don’t know. [e.s.]

This means that (a) PennyMac was never performing any functions relating to administration, collection or enforcement of any alleged loan account and (b) the representation that PennyMac was working for a creditor who had the right, title and interest to administer, collect and enforce a loan account due from me  was a false representation. 

 This is a standard practice for organized crime and a standard legal practice developed by Goldman Sachs under the label of “laddering.”

Covius is hired by unknown to me authority to demand from me payments for unknown to me parties.

My attempts to obtain validation for this “debt” always failed, in the most hostile manner. When I asked local Title Company Bell Title to provide me a copy of wire transfer receipt from my alleged “Lender” Perl Mortgage, Bell Title  employees said that they are prohibited to talk to me about it and called police to escort me from their office. Thus, I conclude that here was no “debt” to begin with.

All my payments are diverted to unknown to me beneficiary by unknown to me employee George Fazio who receives secured instructions from someone’s  secured message center  where someone instruct Fazio to divert my payments to someone’s account enduing 6811 at Financial Partners Credit Union without reducing any principal or interest on my alleged “loan” and without any credits to my escrow account. See work log attached.

 

No money paid by me is going to any creditor who maintains a loan account receivable owed by me and which remains unpaid. This information is required to be disclosed under both TILA and RESPA. I have asked for that information in accordance with both statutes. The recipients of my requests have failed or refused to respond. This gives rise to an inference that they are not “servicer” and they are not “creditors.” [e.s.]

Accordingly the duty to investigate and prosecute if necessary arises for any government agency receiving this information. 

George Fazio is unknown to me and there is no record of his employment with any of the parties who have been named as servicers or creditors. Forensic examination suggests that Financial Partner Credit Union is a sham conduit for money laundering. The significance of these issues is as follows: experts in the securitization of debt have suggested that (a) no loan account receivable currently exists and (b) all claims based on the existence of the loan account are false — including but not limited to the right to administer, collect or enforce any alleged obligation owed by me. The payments I have made are not being processed by the apparent “servicer” and instead are being processed by unknown parties with whom I have no contractual or other relationship. This means that despite implied representations to the contrary, there is no way of knowing — despite my continued inquiries — who is disbursing money (if anyone) to an alleged creditor. And that means I have no way of knowing if my loan account is being reduced by my payments. 

All efforts to identify the owner of account 6811 have failed. This corroborates the conclusion by experts in the securitization of debt that the money is being laundered and diverted to investment banks that have no interest or risk of loss associated with any alleged underlying obligation, legal debt, or promise that I had issued to a third party.

I have concluded that the investment banks entered the lending marketplace without any intent to lend money and without any risk of loss on transactions with consumers who were falsely identified as borrowers. Investment banks were successful at creating an infrastructure in which they retained control without ownership or any legal responsibility to comply with law and in so doing were able to convert standard underwriting fees of 15% to profits of at least 1200% without ever crediting any loan account.

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Some of the facts recited here are taken from the true story of one entrepreneur who turned $25,000 into $300 Million.

Has anyone ever asked how entrepreneurs with only $25,000 to their name in 2001 now have a net worth of $300,000,000?  Has anyone done the math? That money could not possibly have come from making loans using $25,000. That money could not have come from obtaining “warehouse” loans and then making loans. It all started with transactions with homeowners and investors. But where did the revenue come from?

Starting with $25,000 in 2001 and having a net worth of $300 million in 2021, the entrepreneur would have averaged a net income of $15 million per year (over 20 years). And since all that money supposedly arose from transactions with homeowners, we know the range of interest rates charged to homeowners contained in the disclosure statements made to homeowners. That would be an average of around 7-8%. Let’s give our entrepreneur the benefit of the doubt and go with 8% on the alleged “loans” that were “given” to homeowners supposedly by our entrepreneur.

On the back of a napkin, you can estimate the amount of such “loan” transactions with homeowners to produce $300 million over 20 years. If you are getting 8% it would require making almost $4 billion in “loans.”

But wait! The loans are not 20 years in duration. They are 30 years. So that raises the total to around $6 billion in “loans” that were made by a $25,000 company. I know and you know that is impossible but on paper that is what happened. The math is correct. It would require $6 Billion in loans to have generated $300 million over 20 years.

But wait, there is more! Since you only have a $25,000 company it must get money from someone else to make all those loans, right? It’s not a licensed or chartered financial institution so it is impossible for it to increase the money supply with the stroke of a key or a pen. Third-party warehouse lenders would have charged at least 3% to lend the money to the entrepreneur who in turn would lend the money to the homeowners.  So revenue of the entrepreneur in this example is reduced from 8% to 5%.

And that increases the dollar amount of loans made by the entrepreneur from $6 billion to over $10 billion. Big volume for a $25,000 company.

But wait, there is more! The entrepreneur had to pay really good salespeople to steer people toward his loans and away from competitors with established brand names. And extensive expensive TV, radio, and media advertising would have been required. That cost is around 4% per loan. which reduces net revenue from 5% to 1%. And oops we forgot administrative expenses of rent, utilities, communications, etc which is around 1%. That reduces total net revenue from 5% to 1% and then from 1% to zero.

And one last thing. Some portion of the “loans” would default. Those high-interest rates that were charged in the “subprime” market were in fact ratings on the likelihood of default. The higher the rate, the more likely the default based upon prior credit history and also because the rates were not viable — i.e., many people would be unable to sustain payments that were inflated by rates that were at or near the old limits for usury. That is why usury laws were first passed centuries ago.

So the bottom line is that making bad loans at relatively high-interest rates does not make any money and in most cases will produce losses —- the amount of which grows in volume proportional to the total amount of such “loans” that were  “given.” So that begs the question of why a securities broker would see such transactions as a gold mine.

And it begs the question of how our entrepreneur could amass a $300 million fortune or a pizza delivery guy could end up getting paid hundreds of thousands of dollars per year selling such “loans” to unsuspecting consumers. So if lending always means losses and the entire industry plowed into the lending marketplace, what were they really doing? What were they really selling? Because we know that our entrepreneur grew a $300 million fortune from an investment of just $25,000.

Nobody goes into business to lose money. You can do better than that by doing nothing. If they were not losing money, what was the other part of the deal — i.e., the part that WAS making money? And did that part interfere with the presentation of the apparent loan transaction and documents that memorialized the loan transaction?

“Bad” loans were apparently good for the players even though there was no possibility of ever recovering the entire amount paid to homeowners. So why was anyone paying or giving money to homeowners?

Is anyone curious?

After all, we all know by now that had it not been for sellers, appraisers, and brokers whose income soared far beyond what they were making the year before, the entire scenario described above would never have occurred. Where did their income come from? All based on making “loans” that in many cases were forced to fail, based on “collateral” that was valued at a fraction of the “loan” principal but based upon prices that were inflated by the flood of money from Wall Street onto Main Street on terms that were deceptively presented as affordable.

No reasonable person would knowingly accept a deal in which they purchased a vastly overvalued asset and borrowed the money to do it. And we know that homeowners did stop paying in large numbers and that someone “declared” a default based upon the data: a scheduled payment was not made or received by anyone.

So I have three questions for you.

Why would the entrepreneur take his last $25,000 and invest it into a business that will give him nothing in net revenue? If the net result was going to be losses that would leave the entrepreneur owing money not making it.

How did the entrepreneur make $300 million despite those circumstances?

Why would a “warehouse lender” lend money to an entrepreneur who only had $25,000 and wanted to enter a business where there was no hope of net revenue and no hope of profit?

The answer is that given the facts that can easily be confirmed, neither the entrepreneur nor the “warehouse lender” would ever be part of a lending business as described above; but they were very interested in and did participate in the Wall Street “innovation” designed to allow securities brokerage firms to create, issue and sell securities and keep most of the money.

But the securities business contained well-known risks. So the securities sales program was designed to lure all participants to ignore the legal and financial risks by rewarding them with more money than they had ever seen in their lives. Everyone has been making money hand over fist. Everyone except homeowners.

The “innovation” consisted of creating the illusion of a business entity that appeared to be raising money as an issuer of securities for the purpose of purchasing loans that were never purchased. No loan, debt, note or mortgage was ever purchased. But enforcement of the “loans” required a lawyer who was willing to represent that he or she represented a valid claimant to also produce documents that appeared to be facially valid. From such documents, a legal presumption could arise for the judge to conclude the documents contained true information about actual transactions in the real world that the loans were purchased. They were all fabricated, forged, backdated and robosigned — But most of all, they are false.

The apparent issuers were, in reality, the same securities brokerage firms — thus extending their role from the underwriter, broker, and seller to the principal issuer. The illusion was accomplished by naming a trust that was entrusted with nothing and a trustee empowered to do nothing. This was partially enabled by 1998-1999 legislation in which such securities were redefined to be private contracts that were not subject to SEC regulation.

Regulators completely missed the fact that these were not “asset-backed securities” (ABS) as labeled by securities brokers. They missed the opportunity to shut down a plainly illegal unregulated securities scheme that depended entirely upon deceiving homeowners about the nature of the transaction that they were sold — and which also depended upon deceiving fund managers and other people who thought they were sophisticated in matters of finance.

Securities brokers covered their tracks by creating more fictitious entities or entities that were mere placeholders, like “warehouse lenders.” No warehouse lender would ever trust an entrepreneur with only $25,000 and no hope of positive revenue or profit. And no source of funds managed by people of at least ordinary intelligence that in fact stood behind the warehouse lender would have invested one cent in such a scheme. But they did. And they did it because they knew the real plan. Anyone who is a paid a fee to do nothing would be attracted to that plan.

The sources of real funds would never give access to the funds being paid to homeowners and they would never allow access to money paid by homeowners who reasonably believed they owed the money because the transaction they sought was a loan and that appeared to be what they received. In the only case I know of where that mistake was made, the entrepreneurs stole the money and went to prison. See Taylor Bean and Whitaker. And the answer is that such sources of money never did give up access or control over any money or documents created to the transactions with homeowners.

The sources of real funds were people who actually paid money for the enterprise — without ever knowing the true nature of the venture. These are not people who were merely making promises, commitments, or pledges. In the financial market, and frankly all the markets, people who pay money expect to receive something back, usually in the form of a financial (monetary) return on investment. But so far we have seen that there is no viable investment. The prospect of the return on investment is less than zero, since at least some portion of the “Loans” would “default” if it really was a loan that created a loan account, or at least a transaction that served as the foundation for declaring a legal “default.”

So where did all those trillions of dollars in revenue and profit come from?

See my next post.

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Thursdays LIVE! Click into the LendingEyes Radio Show

LIVE with Neil Garfield, Charles Marshall, and Bill Paatalo

Or call in at (347) 850-1260, 6 pm EST, 3 pm PST Thursdays

FIRST MOCK TRIAL:

THURSDAY JANUARY 6, 2022 AT 6 PM EST 3 PM PST

• WE ARE TRYING A NEW FORMAT TO BE MORE INFORMATIVE AND TO DO A BETTER JOB AT EDUCATING HOMEOWNERS AND FORECLOSURE DEFENSE ATTORNEYS.
• CASE BY CASE ANALYSIS EACH 45 MINUTE SHOW PICKED FROM REAL CASES THAT ARE TRIED, DISCUSSED, AND DECIDED BY OUR PANEL. 

If you wish to submit your case for review please submit the case review form. If your case is selected, you will be notified ahead of time, so you can ask questions.

CLICK ON THIS LINK TO SUBMIT YOUR CASE REVIEW (REGISTRATION) FORM.

The information will not be used for any purpose other than evaluation for program purposes and all information will be kept private as to the identification of the homeowner. Don’t use your last name if you are selected and on the air. We will contact you to upload documents if you are selected. You will be allowed to ask questions on the air.

Every homeowner who has signed a note and mortgage (or deed of trust) should know what we know and how they can use that knowledge to their benefit. You have more leverage than you think!

Lawyers take note! The flood is starting. If you have not learned the basics of securitization, then you don’t have the information necessary to properly advise your clients or prospective clients. Once you have learned the facts about securitization in practice, it will open a very lucrative practice for you with a high likelihood of obtaining satisfying results for you and your client — if you know trial practice.

This show is for general information purposes only and should not be used as a substitute for advice from a local licensed trial practitioner. The absence of knowledge of court procedure (motions, objections) will most likely lead to failure for homeowners. Foreclosure defense is an uphill battle that is generally only successful if the homeowner has the will and the financial resources to pursue it to the end. There are no guarantees when you go to court.

The earlier you start preparing yourself for confrontation with the company that is named as “servicer” and the names that are used as “trustee” and “trust,” the more likely it is that you will achieve good results. That means hiring forensic experts as far before the battle as possible.

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From “Summer Chic” with some edits

The investment banker was acting as the agent or conduit for both the actual creditor (“investor) who was lending the money to an investment bank and the homeowner “debtor” (borrower) was “borrowing” the money.  Credit Default Swaps realte not to thye “laons” but rather tot he securities. The payment of proceeds in a CDS (especially “total return” CDS) accomplished one or more of the following:

1. Cure of any virtual or actual “default” by the “debtor” as far as the virtual “creditor” was concerned, since all securitization players received the money that was payment in full for any money they were promised.
2. Satisfaction through payment of all or part of the borrower’s obligation.
3. Obfuscation of the real accounting for the money that exchanged hands
4. Payment of an excess amount above the amount owed by the debtor which might be a liability to the debtor under TILA, a liability to the investor, or both, plus treble damages, rescission rights, and attorney’s fees.
5. Opening the door for non-creditors to step into the shoes of a virtual creditor who has been paid, and claim that the debtor’s non-payment created a “default” — even though the creditor or his agents is holding money paid on the “obligation” that either cures the default, satisfies the obligation in full, or creates excess proceeds which under the note and applicable law should be returned to the debtor.
6. Creates an opportunity for some party to get free money as revenue. In the current environment nearly all of the collection money obtained without investment or funding of one dime is going to these intermediaries who have been dubbed by many experts and legal scholars as pretender lenders.

 

Wall Street is not stupid. They have always understood that they could increase the pressure for a bubble and make money trading securities based upon rising prices. And they have always known that they could bet against the market, knowing it would crash.

Editor’s Note: Homeowners are not seeking a windfall but they are entitled to it. In all events they should not be requried to pay off a virtual debt without first receiving the benefit of the actual bargain into which they were lured by deception.

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SECURITIZATION CHANGED THE BARGAIN.

ONLY THE FINANCE SIDE GOT WHAT THEY WANTED.

People often criticize the points I make an appearance, articles, and pleadings because they think I am raising technical objections that won’t change anything. “You got the loan, didn’t you?” Actually no — virtually none of the transactions with homeowners resulted in anything resembling a loan agreement arising from a legally recognized loan transaction. But all of the participants from the world of finance used paperwork that was designed for loan transactions.

The balance of the bargain shifted completely with the advent of securitization.

In law school, we learn in the first few days of the first semester of the first class on contract law, each party to a contract must receive the benefit of the bargain. The essence of every loan agreement, and every contract in general, is that both sides have a reciprocal stake in the outcome of the performance of the agreement. Every contract requires a meeting of the minds, which means that both parties are in agreement as to the subject matter of the contract.

The fundamental shift that occurred when investment banks entered the lending marketplace under false pretenses was that securities brokerage firms were entering that marketplace without any risk of loss and with every intent of making immediate “trading” profits that in many cases exceeded any amount paid to or on behalf of any homeowner.

This complete absence of risk is what accounts for the inflated appraisals and underwriting of transactions based upon the ability to sell securities instead of the ability to profit from the interest on loaning money.

This changed the transaction without any notice or even any access to information for the average person. The average person was lured by deceit and misinformation into an application for a loan; and when the money appeared, they assumed they received a loan. Therefore, in good faith, they executed a promissory note for the return of the money, and a mortgage or deed of trust to secure the promise to return the money.

But what did they owe the thinly capitalized company or a name that allowed its name to be used as the “lender” and a transaction over which it had absolutely no control and in which it handled no money? Why did they owe money to anyone if the prime movers were participating without any risk of loss on the promise to pay elicited from the homeowner?

Who had a risk of loss?

Any investigation or research into securitization as it is currently practiced invariably and universally comes to the same conclusions every time. The only parties at risk are the homeowners and investors who loaned money to the investment banks under the false pretense of the sale of unregulated securities. Everyone else in the middle got paid in full. Most of the people and especially the investment banks got paid money that in some cases was hundreds of times the amount that they had previously been paid for introducing, brokering and underwriting transactions between the only two parties that had any financial stake.

None of the intermediaries had any risk of loss despite the use of more paperwork that pretended to create liability for bad underwriting or buybacks. All of the payment from homeowners has gone to those intermediaries. That includes the proceeds from foreclosed homes. And those intermediaries are under no obligation to use those proceeds to make payments to the investors who loaned money to the investment banks.

But the paperwork used to cover up this game create the illusion of just such an obligation, despite the vigorous defense of the intermediaries when sued by the investors. So far, the intermediary investment banks and related companies have won every case. In fact, the investors had not received a mortgage back security or anything resembling that type of instrument. They had received a discretionary, unsecured IOU that did not even qualify to be called a note much less a negotiable instrument.

What was the subject matter of the loan agreement?

The goal of the homeowner is simple: get a loan of money from a responsible lender that was based on a fair appraisal, on economically viable terms.

• A responsible lender would have an equal stake in making certain that the appraisal was reliable and would have long-term staying power because they are relying on the ability to sell the collateral in the event the homeowner stops paying.
• A responsible lender would have an equal stake in making certain that the terms of the payment schedule were economically viable because they are relying on the probability that the homeowner will continue paying the scheduled payments in order to make a profit.
• In fact, a responsible lender is legally responsible to make a fair assessment of the appraisal as presented and in making a fair and honest independent judgment on the viability of the loan — for purposes of the alleged loan contract. That is expressly and explicitly set forth in the Federal Truth in lending Act and in many state statutes that are equal or greater than the duties and responsibilities of a lender in a loan transaction.
• Instead, the abundantly obvious goal was to “underwrite loans” for the sole purpose of “selling” certificates (IOUs) to investors under false pretenses about the promises being definite, about the promises being backed by collateral and the promise that the subject matter of THAT contract (with investors) was to allow the investors to enter the consumer lending market with virtually no risk, insured certificates.
• With that purpose in mind, as also became obvious in 2008, any hiccup in the continued sale of new certificates interfered with the plan and the ability (i.e., willingness) of the investment banks to make the payments that were promised to investors.

BASIC CONTRACT ELEMENTS WERE ABSENT

AND REMAIN BOTH ABSENT AND EXPLOITED

Pursuant to common law and statutory law in virtually all countries for more than 4 centuries, possibly back to the year 1215 (Magna Carta) all contacts require the following basic elements to be enforceable:

• Meeting of the minds as to the subject matter
• Reciprocal value paid by each in money or action
• No violation of any other laws prohibiting either the contract or the promises
• Execution of the contract by words and behavior.
• Incorporation of restrictions. duties and obligations contained in other statutes or authority.
• If in writing, a  memorialization of all of the above.

Those elements, each of them, have not been present in any transaction with any homeowner or consumer since the late 1990s. It isn’t a loan just because someone labels it as a loan. It must be a loan and there must be both a borrower AND a lender.

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Here is a line from another lawyer that I spoke with:

“The investment banks were not selling securities and they can’t say that they were because if they did say that then they would be saying that they were subject to registration requirements for initial public offerings. Their entire position is based on the assertion that compliance with SEC rules is barred by legislation in 1998-1999.

The investment banks were borrowing money under the false label of “certificate” that was nothing more than a nonconforming non negotiable unsecured discretionary promissory note — i.e., the common moniker of “IOU.” So it was a loan and not the sale of any security. Hence, no securitization. The use of SEC.gov is a ploy.

Similarly, homeowners were not borrowing money; they were getting paid for their appointment as issuers of base instruments used for the “sale” of “Certificates” and other derivative products by the investment banks. So no loan and no loan account despite the issuance of the promissory note and mortgage.”

STRATEGIES AND TACTICS

There are several stages or phases of confronting the banks:

• Start the confrontation early — creating tracks in the sand:
  • Correspondence
  • QWR
  • DVL
  • Complaint to CFPB
  • Complaint to State AG
• Challenging Notices in Court:
  • Notice of Substitution of Trustee
  • Notice of Delinquency
  • Notice of Default
• Defending Foreclosure Process:
  • Defensive pleadings
    • Petition for TRO (nonjudicial)
    • Judicial Foreclosures
      • Answer
      • Affirmative defenses
      • Counterclaims
  • Post Judgment and Post Sale Motions and Actions 
    • Change of parties
    • Notice of payment to a third party
  • Proactive and Offensive Strategies and Tactics
    • Collateral lawsuit for Declaratory, Injunctive and Supplemental Relief
    • Bad faith claims against title insurers
    • Actions to reform original transaction
    • Offers of Judgment and Offers to Pay
    • Quiet title

Each one of the above is an expenditure of time, money, and effort. Each step up the ladder increases the total amount spent in fees on each step. Each step requires investigation, research, and consultation with a qualified, licensed forensic expert. Depending upon the resources of the homeowner, the goal can be set higher and higher up to and including the probability (no guarantee) that the homeowner will win and may even have grounds to file a quiet title action after defeating the foreclosure claims. Each step requires greater and greater time consumption for the lawyer.

Lawyers who assert representation of the opposition have received instructions to litigate far beyond the point when it is obvious they’re likely to lose. This tactic has been sued for centuries basically relying on the premise that the weaker opponent is not the one who lacks facts or law, but rather the one who lacks financial resources or will to continue.

Each of the above steps represents an opportunity to obtain at least a somewhat favorable settlement result. But none of them presents a guarantee nor will any favorable result, settlement, modification, or conclusion unless the homeowner persistently and aggressively litigated each issue and is able to withstand the initial losses with judges who don’t believe that homeowners have any meritorious defenses.

THE NEW DESCRIPTION FOR BACKGROUND OF TRANSACTIONS WITH HOMEOWNERS THAT ARE LABELED AS MORTGAGES

From the inception of the mortgage meltdown individual judges across the country have found that the evidence to support foreclosure claims — or any claims relating to an unpaid loan account — are absent or insufficient.

LABELS

The clear conclusion is that most if not all of the labels used by the financial industry are and have always been meant to deceive, mislead and confuse people who are not versed in current investment banking practices. These labels include but are not limited to the following:

• Loan
• Loan account number
• Loan account
• Interest
• Principal
• Servicer
• Trustee
• Trust
• Claim
• Payment History
• Attorney
• Attorney in fact
• Power of Attorney
• Assignment
• Allonge
• Endorsement
• Depositor
• Securities administrator
• Mortgage acquisition trust or company
• Securities Administrator
• Risk manager
• Title Insurer
• Title insurance
• Credit default swap
• Portfolio
• Pool
• Mortgage loan schedule
• Underwriter
• Issuer
• Mortgage-backed security
• Certificates
• Secured and unsecured

All of the above are valid legal terms. But in the securitization and foreclosure infrastructures that are fabricated, they don’t mean what most people think they mean. As a result, most homeowners end up expressly or tacitly admitting facts and laws about which they know nothing. By denying both the express allegations and the implied assertions, the homeowner vastly increases his or her chances of success.

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May everyone welcome the New Year with a sense of “relief in sight.”

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OK. This is subject to rehearing, reconsideration and appeal. But in Delaware where the financial industry is coddled to the point of absurdity (statutory trusts are not trusts), this ruling is highly significant. Allow me to say “I told you so.”

Here is the decision: REMIC Trust MTD-AC-decision-2021.12.13

Here is an article about the decision written by Ori Lev on December 16, 2021. Ori Lev is an attorney who works for and writes for the law firm of Mayer Brown. which represents the largest players in the financial industry. The article is sent out as a warning to all investment banks doing business under the name of some name claimed to be a REMIC trust.

CFPB Wins Reversal of Dismissal – And Key Ruling on Securitization Trusts

Key quotes from the article are as follows:

• • the district court ruled that, at least at the motion to dismiss stage, the CFPB had properly asserted claims against the Trusts. It is this aspect of the court’s ruling that may have broad ramifications for securitization trusts. Various Trust parties that moved to dismiss the case had argued that the CFPB could not properly assert claims against pass-through securitization trusts because such trusts are not “covered persons” under the CFPB’s authorizing statute. That statute provides that the CFPB can only seek to enforce prohibitions against unfair, deceptive and abusive acts and practices against “covered persons,” a term defined as anyone who “engages in offering or providing a consumer financial product or service” (emphasis added).
  • The Trust parties argued that as pass-through entities with no employees the Trusts could not “engage” in providing a consumer financial product or service and the only proper defendants are the entities that do so directly (in this case, the servicers and sub-servicers). [Editor’s note: As with all schemes based upon plausible deniability, lawsuits against U.S. Bank, Deutsch Bank National Trust Company, Bank of New York Mellon, various Willmington entities and others have completely failed because the “trust” (frequently nonexistent and always empty), acting through lawyers who claimed to be representing the trustee basically convinced every judge that the trust could not possibly have done anything wrong because all duties and obligations of the trust and the trustee were delegated to companies that were claimed to be “servicers” and “subservicers.” Consumers, homeowners, attorneys, judges and regulators all got confused by this labyrinth, but this case takes a large piece out of that argument.]
  • Relying on dictionary definitions of the term “engage,” the district court held that by contracting with others to service and collect student loans, which the court described as “core aspects of the Trusts’ business model,” the Trusts had “engaged” in those acts and were thus covered persons. Whether this holding withstands the scrutiny of further litigation, and whether other courts adopt its reasoning, will have important implications for both the CFPB and for the securitization industry more generally.

  Significant quotes from the case decision:

  • Since the Trusts have no employees, they collect debt and service the loans through third parties. First Am. Compl. ¶ 29.
  • in 2009 the Trusts contracted with a special servicer to collect “pastdue and defaulted student loans” and to do “collections litigation.” D.I. 54, at 5. The special servicer, in turn, entered into agreements with “subservicers,” who would “conduct[] collections” and “oversee[] various law firms that [would] file collection lawsuits against borrowers in the name of the Trusts.” Id.; see First Am. Compl. ¶¶ 38–44.
  • But the subservicers soon attracted the attention of the CFPB. After a lengthy investigation, it found that the subservicers had “executed and notarized deceptive affidavits” and “filed … collections lawsuits lacking” key evidence. First Am. Compl. ¶¶ 49–50. The CFPB concluded that they engaged in unfair and deceptive debt-collection practices. D.I. 54, at 1–2. (e.s.)
  • The Trusts do not deny that their subservicers collected debt or serviced loans. Instead, they contend that the CFPB cannot hold them liable for those actions. D.I. 367, at 13. The Trusts characterize themselves as “passive securitization vehicles … [that] take no action related to the servicing of student loans or collecting debt.” Id. at 12.
  • the CFPB alleges that the unfair and deceptive debt-collection practices happened in lawsuits brought on behalf of the Trusts, with the “relevant Trust … named [as the] plaintiff in the action.” First Am. Compl. ¶ 37. Those suits could have proceeded only with the Trusts’ involvement: with narrow exceptions, “a party … must assert his own legal rights and interests.” Kowalski v. Tesmer, 543 U.S. 125, 129 (2004) (internal quotation marks omitted). The subservicers could not have collected any debt without the Trusts’ say-so. (e.s.)
  • The Trusts cannot claim that they were not “engaged in” a key part of their business just because they contracted it out. Cf. Barbato v. Greystone All., LLC, 916 F.3d 260, 266−68 (3d Cir. 2019) (finding that a “passive debt owner” counted as a “debt collector” under the Fair Debt Collection Practices Act when it contracted with a third party to collect debt on its behalf).
  • if Congress wanted to allow enforcement against only those who directly engage in offering or providing consumer financial services, it could have said so. See, e.g., 12 U.S.C. § 5481(15)(A)(vii)(I) (exempting some merchants from “covered person” status where they deal in “nonfinancial good[s] or service[s] sold directly … to the consumer”).
  • because the Trusts themselves count as covered persons, I need not decide whether a non-covered-person principal can ever be held vicariously liable for the acts of his covered-person agent. (e.s.)

  Bottom Line: This case is NOT an authoritative precedent that is binding on other judges even within the same district. But it is very persuasive authority supporting lawsuits that name the “trust”, the “trustee” and quite probably the investment bank that used the name of the trust to do business and borrow money from investors under the guise of selling them “mortgage-backed securities.”

  In plain language, this opens the door to suing the trustees and the trusts in addition to the companies that are claimed to be servicers and sub-servicers.

  I would add that either vicarious liability or liability established through piercing the veil of the empty REMIC trust could now be attached to the investment banks that initiated each securitization scheme and especially all those who participated in the foreclosure game in which a remedy is sought for a trust that will never see the remedy (foreclosure) applied to any entity bearing the name of the trust, the trustee or any investor. If I am right, this decision could be the start of the end of securitization as now practiced.

  Just ask them — U.S. Bank, Deutsch Bank National Trust Company, Bank of New York Mellon, various Willmington entities — have you ever been paid one cent from the sale of a foreclosed home on behalf of a REMIC Trust?

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Out of sign, out of mind. This report correctly describes the total in “bailouts” that went not to depository institutions but to risk-takers and frankly law violators on Wall Street. And part of the “bailout” was that those same businesses were suddenly chartered overnight to be licensed as commercial banking institutions — so that the “bailouts” could be received by them.

Analogy: that single change in chartering competent financial institutions was like taking a murderer and then licensing him to perform surgery thus allowing the defense that the victim died from negligence instead of first-degree murder.

But something is missed by nearly everyone because they all subscribe to the false national narrative under which the weapons of mass financial destruction were created that destroyed the economy in 2008 and might still again.

There was no bailout. No money was lost resulting from either loan defaults or a decline in value of certificates that were falsely labeled as Mortgage-Backed Securities (MBS) or Collateral Backed Securities (CBS).

The money given to the six major banks was the result of what I believe to be deceit and extortion. President George W Bush had it right initially when he refused to do the “bailout.” He caved because eventually believed that the stories coming out of Wall Street were true and that therefore the economy would collapse if the investment banks were not given what they wanted.

In contrast to the policies that led to printing money on a grand scale, the opposite policy of providing relief under existing laws, rules, and regulations was ignored. The $8 trillion given to the investment banks and $27 trillion in total could have been better spent or not spent at all.

The evolution of the TARP plan shows that policymakers became deeply aware of the law. they understood that the investment banks had no losses — not from so-called loan defaults and not from so-called losses incurred by the investment banks on the certificates they were selling. The latter was true because the investment banks were selling and not buying and therefore the only “loss” they incurred consisted of profits they ould have generated had the selling of fake certificates been continued (which eventually occurred anyway).

Appraisals were known to be hyper-inflated — something that was known by the Federal and state governments since the inception of the securitization era. This enabled the investment banks to pick up a handy bloated yield spread premium immediately upon the consumers’ execution of loan documents. The viability of many loans was virtually nonexistent. Iceland simply cut household debt and jailed the bankers who committed the various acts of fraud and deception.

Iceland’s recession was over in 3 months. 12 years later we are still recovering. Had we simply done what was required, the fiscal stimulus to the main street economy would have been in the trillions of dollars without taking one dime from taxpayers. The dollar would not have been diluted and American power would have maintained its peak.

By reducing household debt that was created by false appraisals and failure to comply with generally accepted and statutory rules governing the viability of loans, the economy would have received a stimulus far in excess of anything that was distributed or even proposed.

Eventually, this inequity might be resolved. But as Winston Churchill said, “You can always count on the Americans to do the right thing — after they have exhausted all other options.” Once again we have politicians who remain and even insist on being out of touch with the people who vote in elections, most of whom understand full well that they should not have been required to pay for Wall Street misbehavior.

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