Intricate Cloaks for Securitized Transaction – Wells Fargo and Thornburg

Editor’s Note: Here is where the foreclosure or mortgage analysts get separated — the ones who understand the process of securitization and the ones who don’t. I received this from a pro se litigant in a case where Wells Fargo identified itself as the creditor/lender (as usual, not true). In fact Wells denied that the loan was securitized. In some corner of a document the homeowner noticed a reference that looked like it had something to do with securitization. It did. And after some research on the internet came up with a little known entity (Thornburg) that served in multiple capacities, possibly even as unregistered and unlicensed underwriter of securities, although it is impossible to know for sure.

The recitals in this document, the date of it, and the order in which it was signed relative to other events and other documents is what makes this document important. It is doubtful that any of the parties were properly identified or even had any authroity to execute the document and even if it was executed with the proper “formalities” it the document actually changed anything.

What it reveals is another desperate attempt to cover tracks in the sand.

RECONSTITUTED SERVICING AGREEMENT see Thornburg-Wells fargo Reconstituted Service Agreement

into as of the 1st day of August, 2006, by and among THORNBURG MORTGAGE HOME LOANS, INC., a Delaware corporation (“Thornburg” or the “Seller”), WELLS FARGO BANK, N.A., as servicer (the “Servicer”) and THORNBURG MORTGAGE SECURITIES TRUST 2006-5 (the “Trust”), and acknowledged by WELLS FARGO BANK, N.A., as master servicer (the “Master Servicer”), recites and provides as follows:

31 Responses

  1. to KM:

    Remember that you CAN NOT be sued in a “trade name” capacity by the plaintiff. You can only be sued by the actual business entity. A “trade name” is not a real party in interest.

    If the real entity is W.F. Home Mtge, and that entity is using ASC as a dba, and now they are trying to play that they are WF NA., then once again you have grounds to ask for a Motion to Dismiss With prejudice.

    You may not get it (the relief asked), but then that gives rise to the possibility of reserving the Decision for Appeal. And either way, it gives you grounds to go sue them in another venue.

  2. to KM:

    Just guessing here, but I bet you a cheeseburger that “America’s Servicing Company” is actually a separate entity. If it is, then the named plaintiff is exposed under the Keystone Driller Co. rule (see: 290 U.S. 240) of having committed some iniquity bin the proximate act of coming to the Court. This would open the door to a Court Sanction by Motion to Dismiss With Prejudice, arguing that the Court House Doors shall be shut “in limine.” The Supreme Court case (Keystone Driller) sets forth the criteria.

    You are going to have to do a little snooping around to find out the actual trail. See if you can find “ASCo” as a California Corporation, and then see if it might be either a Delaware, New York or Nevada Corp. Just snoop around on the web and see if they have an 800 number; call them up and ask them! Sometimes the disembodied voice on the other end will just tell you.

    And if they have sued you improperly, then – do the American thing, file a big lawsuit and sock it to them. While you are at it, be sure to add Wells Fargo as a co-defendant.

  3. Any knowledge on Wells Fargo NA d/b/a America’s Servicing Company? The above is how it is listed on the complaint as Plaintiff. When actually America’s Servicing Company is a d/b/a of Wells Fargo Home Mortgage. I am sure this is some type of trick to be able to use the NA designation. Any comments?

  4. to Sally:

    Do a little hunting on the Web, find out where “Specialized Loan” sits, physical address, if they are near you go photo the place or look on Google Earth or both. Don’t be shy about marching in there with a camera and snapping a roll of film; it unnerves them . be sure to photo the tenant board at the elevator, and the door with the names, and other data.

    After you do your detective work, then just go sue them. Ask the Court for a ton of money damages, and outline all their evil deeds. Their evil deeds are endless, of course; all these outfits are pond scum.

    When enough enraged people file enough lawsuits, then finally the Judges will sit up and take notice. If you can band together with other plaintiffs and file your suits with multiple aggrieved persons, then that works even better.

    Nothing like a great fat lawsuit. Hey, it’s the American way. Ya gotta love it.

  5. Specialized Loan Servicing LLC. have anybody had a loan with this company. This company need to be closed down. They are a servicer with no regards for the law, or authority. They will ensure Foreclosure by any means neccesary.

  6. to “Anonymous” and anybody with the irrepressable urge to speak with me directly: send an email with your email address or phone number to the email address:; I will get it from there in a day or two.

  7. to PJ:

    The reason they do so with impunity is because the typical defendant/respondent simply gives up and walks away. Only perhaps one in ten thousand “fights back.” So it is a mass mill deal. They have no worries about being sued down the line as the new buyer obtains title insurance. If there is a problem later, then the parties file their claims against the title insurance companies. Also, there are statutes of limitations that stop suits after a definite time – in contract, typically three to six years, depending on State Law.

    Finally, remember that these outfits that do this are typically special-purpose vehicles incorporated in Delaware for three hundred bucks, with only the “incorporator” on record, no officers, no directors, no office, no desk, no chair, no filing cabinet, no phone. The Delaware “sham corporation” is designed to be folded up after all the properties are milled and milked. In other words: when the cops come calling,there’s nobody home.

    I got my hands on one of these bottom-feeder security documents (that was so shaky that the SEC would not allow it to be sold with an 8-K to public investors; had to be strictly private to hedge funds and the like) where the prospectus candidly admitted that “many of the properties have missing Notes and other legal problems that will impair foreclosure.” But the math still allows for the “investment” [read: buying the shark bite] because the profits are like peddling drugs: they are stupendous.

    The cash is long since gone, offshore, laundered, and then back into Greenwich Connecticut sitting in the form of back-country mansions and huge yachts, and big tabs at the Country Club. Meanwhile you are living in a tent at the park. Get the picture?

  8. OK, Jan & Anonymous, I get it, however really did not know that so many people were “bull dozing” their houses.

    In any case just a thought, here, so why are the debt buyer’s, despite bottom feeding on the cheap so confident that the notes/properties they are buying have a clear chain of ownership. Why is this not an issue for them?

    Don’t they open themselves up for legal action if after flipping a property some unknown claimant files suit against the new homeowner? Shouldn’t there be some sort of “Public Service” announcement to prospective home buyers that may fall victim to this problem.

    That deservers some good PR, start educating the unsuspecting “first time” home buyer and even the flipper about these perils and see what happens to the debt buyers.

  9. HI everyone

    To Angry & Not – not sure what you mean but I think the answer to you is that “potential” foreclosures – in other words – the delinquent loans. Remind you – only receivables are sold to the trusts. This is what securitization is about. – the sale of on balance sheet receivables to an off-balance sheet conduit. For those that do not know financial accounting – receivables are current assets – only “current payments” are accounted for as receivables. So the delinquent loans are held until they are bundled with others for removal from SPV.

    To PJ – if acquired while not in default – then not subject to the FDCPA. But if the servicer is servicing for loan and it was removed from the secondary market (securitization) due to default then the servicer is now servicing for a debt buyer – who aquired loan in default – then the servicer is now a debt collector. (Of course, the debt buyer has to be disclosed). Still want to look at this case — but was out all day and up all night.

    To PJ and all – please take it from me that I am correct – I know this – and Hedge funds make a bundle in the process. I still cannot discuss here but may soon be able to do that.

    Jan van Eck – may soon want to get in touch with you personally. I cannot post my email here. And I still have to wait and see. But, hope, at that time, there is a way to contact you.

  10. to PJ:

    What you are missing is that they paid very little for these Notes on properties. The amount they paid is less than the value of the underlying land, less the disposal costs of rubble and site remediation. Here’s why: all these players fully expect that a certain number of aggrieved will simply demolish or bulldoze their houses in revenge against the bankers. So you end up with a pile of rubble that has to be trucked away. that cost is deducted from the bare land value to establish the recovery figure.

    The reason people do not burn their houses is, aside from the criminal charges aspect, because the pretender lenders maintain fire insurance on a forced-placed basis on that house. So if you burn it, then they collect full value. But if it is bulldozed, or chain-sawed, or crowbarred, then they do not collect on the property/casualty insurance. And that is why you are seeing angry owners bulldozing their houses.

    So if your land value is say 100K, and the remediation costs are estimated at 30K, then the top transaction price will be well below 70K – on your 500K house. It is more likely to be about 20K if the Note is less than 2 yrs in default, and probably about 4K if the Note is over 6 yrs in default. So these guys really clean up – if they can get the foreclosure past the Judge, of course.

    trust this clarifies the economic incentives.

    Incidentally, this is why the Obama Admin proposals for banks to sell off defaulted Notes for discounts works against recovery – the new buyers are all bottom-feeders who only make their dough on the actual foreclosure – they have no interest in sitting on the Note to collect a future revenue stream.

  11. Another question/observation to put out there in the universe relating to below…

    “Hedge funds/private equity continue to hire servicer and default processing centers to service and even litigate. Most likely attorneys represent the default processing center hired by the current creditor – Cannot prove this – and judges never question”

    It seems counter intuitive that a hedge fund/ PE firm would want to amass and hang on to a ballooning log of collateral such as housing stock, without a motive other then buying low selling high; servicing, litigating and maintaining properties is costly and with unemployment at officially 10% and when all is taken into account most likely closer to 21%, there is a VERY soft market now and for a VERY long time in real estate sales.

    So to me there seems to be something more to this observation, are they hoarding/hiding fraudulent real estate/MBS transactions to protect themselves from “investor” /”trust” litigation while they try to unwind the “missing” chain of ownership. Or is there something bigger afoot here.

    This is why Help for Homeowner’s, HAMP, what ever you want to call the wolf in sheep clothing, along with “Deed in Lieu” seems to me is the latest fraud devised over the last year and a half now being perpetrated against the “unsuspecting” American people.

    Just my thought on this.

    you post here, on March 16, 2010 at 11:48 am Said: to PJ ;

    ” Another reason that foreclosures are removed from trusts is because if they remained, ”
    and my question is ;
    “foreclosure” used in this context refers to what;
    1- foreclosure as the state of “home loan “as if in the present action?
    2- the result thru foreclosure of the collateral = now as reo ?
    tia for clarifying !

    this really is death by obfuscation …sheesh!

  13. Anonymus, Thanks

    “According to FDCPA – a servicer is only a debt collector if the debt was acquired while the debt was in default.”

    What if they acquired a loan in good standing from a local lender , sold into the secondary market but maintained servicing rights, do they still have the capacity to foreclose.

    If I am not mistaken this was PHH’s partial problem in the 10/2009 White Plains case.

    Everyday brings a new question!!!

  14. Hi PJ

    Servicers continue to “service” even if creditor has changed. Familiar with PHH case – but have to reread it later. According to FDCPA – a servicer is only a debt collector if the debt was acquired while the debt was in default. Many mortgage servicers are licensed debt collectors. In fact, you will see this on statements.

    When all was going well, banks would charge off the loan and sell collections rights for a certain percentage of par – which was low. You are right, at the crisis, many buyers could not even pay these “low” prices because everything came so fast – too many at once. Since that time, large hedge funds and private equity buyers are stepping in. And, they are making a bundle – they are profiting. In your home is worth 300 – and you owe 400 – and they purchase the rights at 200 (probably can purchase for less) – they make a windfall at foreclosure. Another reason that foreclosures are removed from trusts is because if they remained, the servicer would have to advance all payments not paid – not feasible on a wide scale – simply do not have that kind of money. People should also question whether tax liens are involved.

    Hedge funds/private equity continue to hire servicers and default processing centers to service and even litigate. Most likely attorneys represent the default processing center hired by the current creditor – Cannot prove this – and judges never question.

    Not a lawyer and this is not meant to be construed as legal advise – only for educational purposes only.

  15. A-Man, turn off the cap key, from what is offered here most everyone “gets it”.

    Posted something from a topic last year, “Quite Title”. Is it advisable to do this even if you are not in foreclosure, as a preemptive defense.













  19. Anonymous,
    Thanks for your response and last post. It should be noted that Thornberg Mortgage is bankrupt, for anyone dealing with them.

    Also in regard to your last post and debt/right to collect. Where does that leave GES servicer’s and or Fannie Mae, since they are not considered “debt collectors”, I may be wrong, but this is what happened with the October 09 White Plains NY ruling where PHH a servicing entity, could not only not produce the note, but the judge stated that they did not have the right to collect a debt, as they are not a debt collector.

    It would also appear that an entity (debt buyer) would require a tremendous amount of cash/liquidity to take on all of this default collateral, since as you point out a house is not a liquid asset, and taxes, insurance and maintanance is required to keep at least the minimum value until sold.

    So the question is who in essence has this type of cash on hand, the entities bank’s with the ability to collect debt the taxpayers bailed out such as GS, WF, JPMC etc?

  20. Hi Jan van Eck

    I have been researching these issues for quite some time, which includes extensive conversations with the SEC. .What you explain is correct but, in my opinion, not complete. It is true that with Credit Default Swaps, notes and securities themselves do not change hands. However, securitization must involve the pass through of CURRENT receivables, once a loan (note) is in default, it ceases to be current, and the loan is charged off by the bank. Via the swaps, the security holders are compensated (returned principal investment). With the execution of the swap, therefore, the right to collect is “swapped” out of the trust. The SEC made it clear to me that the note (loans) are NOT sold. In the case of default, instead, the right to collect is “swapped” out of the trust. The notes cannot be sold because, in effect, the loan has been charged off and extinguished – it cannot be sold. The SEC and OCC (Office of the Comptroller of the Currency) have made it clear to me that in securitization, and with subsequent default, the ACCOUNT is not sold (it cannot be sold because it is extinguished as an asset), and that only the “debt” (collection rights) can be sold – and they like to use the term “swapped out”. Again, securitization is only for Current pass-through – a security cannot be supported by default loans. Although a REMIC may technically hold foreclosures – it usually does not. Instead, the REMIC waits until it can bundle defaults together – and sell “collection rights” as a portfolio to a buyer. Holding defaults would dramatically and quickly reduce its rating.

    During the crisis, many banks were not even able to sell collection rights to debt buyers because they could not get a high enough price. However, this has improved has banks have been able to slowly sell rights to debt buyers, hedge funds, private equity for, in some cases, pennies on the dollar. Therefore, right to collect either remains with the bank -or has been sold to a buyer.

    Elsewhere on this blog, I posted a case regarding Credit Suisse and Indymac (investor case regarding inflated appraisals and liability). I researched the named trust (Residential Asset Securitization Trust 2006 A8) and came across an interesting diagram on page S-20 of the prospectus (424b5). The original trust is separated from the Supplemental interest trust arranged by an ISDA (International Swap and Derivative Association) agreement. Certificate Holders are not part of the Supplemental Trust. However, Deutsche Bank is the Trustee for both the original trust and for the Supplemental Trust.

    I became involved with this many years ago for a situation I cannot discuss here. Research has been extensive. You will never find a Note indorsed over for collection rights – this is how the true Current creditor is concealed. It cannot be indorsed because the loan, in accounting, is written-off. This does not mean that the debt owed is eliminated – it just means it that the current creditor continues to hide behind the rights of the original trust – which is impossible because the note is no longer supports any valid pass-through security. The collateral (home) is not a current pass-through (easily converted to cash – i.e. liquid).

    Although I am not in foreclosure, i, unfortunately, learned of all of this the hard way – when it was too late.

    This is why I emphasize that the assignment produced in courts may not be the LAST assignment.

    All of what you say is accurate – it is just not, in my opinion, the whole story.

    Disclaimer – I am not an attorney, and this not intended as legal advise, but only for educational purpose.

  21. So re quiet title then what

  22. You know I can’t get over the contractual breach the unconditional promise became conditional the moment we signed. So why is the blame not placed on the table lender where it starts they took my signature my good credit score and ran amock with it

  23. I have a confusing situation I signed with table lender feb 14 2007 I never realised until I started looking that I signed for the exact same amounts onnthat day for comerica ( warehouse) and indymac comerica appears to send an offer to indymac a week later who end up servicing the loan so what eventually transpired was it turns out the loan is securitized ( well ofcourse) but after applying much pressure citing fdcp and numerous cease n desist letters and threatening criminal I am finally told wells fargo are master servicer and investor of escuritization trust which seems contradictory in terms wouldn’t you say the date they became this was april 17 th 2007 2 months after signing so still no evidence of real party in interest. Hmmm


    The FTC’s “Holder” rule, or the FTC Rule on Preservation of Consumers’ Claims
    and Defenses, allows a consumer to make a claim against a subsequent holder of a loan for the acts of the original lender. The original lender may be judgment proof, and it is unlikely that a consumer would effectively be able to defend against a collection action and bring an affirmative suit against the original lender.
    The rule creates an incentive for the lending industry to police itself and
    subsequent holders of a debt are in a better position to sue the original lender than the borrower.

    i have to ask “anyone know “…
    “is there a known loophole in this rule ; thru “subject to” or “non-recouse”
    terms in the sale & assumption agreement ? or ?

  25. Read this deposition of the person who signs fraud foreclosure documents for Foreclosure Mills, A look at the inside offices of Foreclosure Mill where fraudulent document is fabricated.

  26. to “Anonymous;”

    Perhaps you could comment further on your Note [to PJ] where you mention that the note may have “collection rights sold via an executed credit default swap.” That is an interesting concept.

    The right to collect on a Note flows from the status of the person in possession of the Note; that person has to possess the Note (in hand) and also have the authority to enforce the Note. To do so, it would seem that the Note would have to bear an Indorsement.

    I was under the impression that a credit default swap was little more than an insurance against default, default being defined typically as a downgrade of the Real Estate Asset trust from AAA to B status by the credit rating agency [e.g. Fitch’s, Standard & Poors]. This is NOT the “default” of Obligors on the individual Notes in the Pool. Once the downgrade takes place, then the insured, in this case the “trustee” of the real estate asset trust (in theory on behalf of the share purchasers, although usually they get stiffed) “calls” the credit default swap to pay up, and the issuer of the CDS (probably AIG or Lehman Bros) then pays the trustee as their counter-party. However, since the Note itself is not Indorsed over to the issuer of the CDS [the “insurer”] then the Note does not, by itself under this payment of insurance, transfer to the CDS institution. So, the “collection rights” are not “sold,” as the Note bears no Indorsement.

    You end up with a Note that is paid off, albeit not by the Obligor (and that is where all the problems begin…).

    Am I missing something? Is there an alternative scenario here? Perhaps you could comment further. Thanks.

    Where the Notes in the Pool are Indorsed to blank, or alternatively to Bearer, then the analysis gets more convoluted.

  27. I know this is a different subject but can’t find anything addressing this issue. First in the Note — there is no reference to a third party known as a loan servicer that would be authorized to collect payments on behalf of the note holder/owner. Second in the mortgage, Loan Servicer is not listed in the definations, so what gives ANY servicer legality in reference to the note and mortgage? How would a borrower know who or what a loan serivcer actually is and what rights they have in regards to the note and mortgage.

  28. Lawyers often “get it” – but are afraid of compromising their status in courts with the judge. That is why we need Mr. Garfield. Hope he has a lawyer in Wisconsin for you.

  29. Sir
    The first thing I look at is where the Company is registered. There are alot of fraudelant companies LLCs from Deleware, especially Nevada. The officers in Nevada can be another Nevada Corp. One will never find who the real owners are?
    Is there a Lawyer that “gets it” in Wisconsin???
    Stanley Putra

  30. Hi PJ.
    “Cede Inc.” is simply a firm that holds securities in it’s “street name” – “Cede & Co”. It does not tell you anything as to who really holds your mortgage loan. Also, the “flow charts” do not tell you whether or not your loan was “repurchased” or collection rights sold via an executed credit default swap. Only discovery will accomplish this.

  31. I see this in every SEC filing researched, in fact have one that actually provides a “flow” chart, but can not be sure if our loan is in that “pool” offering. Here are a few more strange entities, found in filings

    Cede. Inc
    William J. Meyer

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