Allocating Bailout to YOUR LOAN

Editor’s Note: Here is the problem. As I explained to a Judge last week, if Aunt Alice pays off my obligation then the fact that someone still has the note is irrelevant. The note is unenforceable and should be returned as paid. That is because the note is EVIDENCE of the obligation, it isn’t THE obligation. And by the way the note is only one portion of the evidence of the obligation in a securitized loan. Using the note as the only evidence in a securitized loan is like paying for groceries with sea shells. They were once currency in some places, but they don’t go very far anymore.

The obligation rises when the money is funded to the borrower and extinguished when the creditor receives payment — regardless of who they receive the payment from (pardon the grammar).

The Judge agreed. (He had no choice, it is basic black letter law that is irrefutable). But his answer was that Aunt Alice wasn’t in the room saying she had paid the obligation. Yes, I said, that is right. And the reason is that we don’t know the name of Aunt Alice, but only that she exists and that she paid. And the reason that we don’t know is that the opposing side who DOES know Aunt Alice, won’t give us the information, even though the attorney for the borrower has been asking for it formally and informally through discovery for 9 months.

I should mention here that it was a motion for lift stay which is the equivalent of a motion for summary judgment. While Judges have discretion about evidence, they can’t make it up. And while legal presumptions apply the burden on the moving party in a motion to lift stay is to remove any conceivable doubt that they are the creditor, that the obligation is correctly stated and to do so through competent witnesses and authenticated business records, documents, recorded and otherwise. All motions for lift stay should be denied frankly because of thee existence of multiple stakeholders and the existence of multiple claims. Unless the motion for lift stay is predicated on proceeding with a judicial foreclosure, the motion for lift stay is the equivalent of circumventing due process and the right to be heard on the merits.

But I was able to say that the the PSA called for credit default swaps to be completed by the cutoff date and that obviously they have been paid in whole or in part. And I was able to say that AMBAC definitely made payments on this pool, but that the opposing side refused to allocate them to this loan. Now we have the FED hiding the payments it made on these pools enabling the opposing side (pretender lenders) to claim that they would like to give us the information but the Federal reserve won’t let them because there is an agreement not to disclose for 10 years notwithstanding the freedom of information act.

So we have Aunt Alice, Uncle Fred, Mom and Dad all paying the creditor thus reducing the obligation to nothing but the servicer, who has no knowledge of those payments, won’t credit them against the obligation because the servicer is only counting the payments from the debtor. And so the pretender lenders come in and foreclose on properties where they know third party payments have been made but not allocated and claim the loan is in default when some or all of the loan has been repaid.

Thus the loan is not in default, but borrowers and their lawyers are conceding the default. DON’T CONCEDE ANYTHING. ALLEGE PAYMENT EVEN THOUGH IT DIDN’T COME FROM THE DEBTOR.

This is why you need to demand an accounting and perhaps the appointment of a receiver. Because if the servicer says they can’t get the information then the servicer is admitting they can’t do the job. So appoint an accountant or some other receiver to do the job with subpoena power from the court.

Practice Hint: If you let them take control of the narrative and talk about the note, you have already lost. The note is not the obligation. Your position is that part or all of the obligation has been paid, that you have an expert declaration computing those payments as close as  possible using what information has been released, published or otherwise available, and that the pretender lenders either refuse or failed to credit the debtor with payments from third party sources —- credit default swaps, insurance and other guarantees paid for out of the proceeds of the loan transaction, PLUS the federal bailout from TARP, TALF, Maiden Lane deals, and the Federal reserve.

The Judge may get stuck on the idea of giving a free house, but how many times is he going to require the obligation to be paid off before the homeowner gets credit for the issuance that was was paid for out of the proceeds of the borrowers transaction with the creditor?

Fed Shouldn’t Reveal Crisis Loans, Banks Vow to Tell High Court

By Bob Ivry

April 14 (Bloomberg) — The biggest U.S. commercial banks will take their fight against disclosure of Federal Reserve lending in 2008 to the Supreme Court if necessary, the top lawyer for an industry-owned group said.

Continued legal appeals will delay or block the first public look at details of the central bank’s $2 trillion in emergency lending during the 2008 financial crisis. The Clearing House Association LLC, a group that includes Bank of America Corp. and JPMorgan Chase & Co., joined the Fed in defense of a lawsuit brought by Bloomberg LP, the parent company of Bloomberg News, seeking release of records related to four Fed lending programs.

The U.S. Court of Appeals in Manhattan ruled March 19 that the central bank must release the documents. A three-judge panel of the appellate court rejected the Fed’s argument that disclosure would stigmatize borrowers and discourage banks from seeking emergency help.

“Our member banks are very concerned about real-time disclosure of information that could cause a run on the banks,” said Paul Saltzman, the group’s general counsel, in an interview yesterday. “We’re not going to let the Second Circuit opinion stand without seeking a review.”

Regardless of whether the Fed appeals, the Clearing House will take the next legal step by asking for a review by the full appellate court, Saltzman, 49, said at his office in New York. If the ruling is unfavorable, the bank group will petition the Supreme Court, he said.

Joined Lawsuit

The 157-year-old, New York-based Clearing House Payments Co., which processes transactions among banks, is owned by its 20 members. They include Citigroup Inc., Bank of New York Mellon Corp., Deutsche Bank AG, HSBC Holdings Plc, PNC Financial Services Group Inc., UBS AG, U.S. Bancorp and Wells Fargo & Co.

The Clearing House Association, a lobbying group with the same members, joined the lawsuit in September 2009, after an initial ruling against the central bank in federal court in Manhattan.

The Fed is “reviewing the decision and considering our options,” said Fed spokesman David Skidmore in Washington. He had no comment on Saltzman’s plans.

Attorneys face a May 3 deadline to file their appeals.

“We’ll wait to see the motion papers,” said Thomas Golden, attorney for Bloomberg who is a partner at New York- based Willkie Farr & Gallagher LLP. “The judges’ decision was well-reasoned, and we doubt further appeals will yield a different result.”

Bloomberg sued in November 2008 under the U.S. Freedom of Information Act, after the Fed denied access to records of four Fed lending programs and a loan the central bank made in connection with New York-based JPMorgan Chase’s acquisition of Bear Stearns Cos. in March 2008.

231 Pages

The central bank contends that 231 pages of daily reports summarizing lending activity, which were prepared by the Federal Reserve Bank of New York for the Fed Board of Governors in Washington, aren’t covered by the FOIA. The statute obliges federal agencies to make government documents available to the press and the public. The suit doesn’t seek money damages.

The Fed released lists on March 31 of assets it acquired in the 2008 bailout of Bear Stearns.

The New York Times Co., the Associated Press and Dow Jones & Co., publisher of the Wall Street Journal, are among media companies that have signed up as friends of the court in support of Bloomberg.

The Fed Board of Governors’ “refusal to disclose the names of borrowers renders public oversight of its actions impossible — it prevents any assessment of the effectiveness of the Board’s actions and conceals any collusion, corruption, fraud or abuse that might have occurred,” the news organizations said in a letter to the appeals panel.

The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 09-04083, U.S. Court of Appeals for the Second Circuit (New York).

To contact the reporter on this story: Bob Ivry in New York at

Last Updated: April 14, 2010 00:01 EDT

11 Responses

  1. Hi, does anyone here know a good expert witness who could explain how banks have monetized and securitized mortgage notes and tie in the whole fractional reserve system and how that translates to economic treason. Seems like it should be a growing field…:)

  2. Over time, the clarity of your narrative has varied. From an outside observer, there are times when the postings look like black-and-white common sense, and there are times when I come to the page and it looks like a collection of lunatics.

    This posting (in spite of the multicolor splash) is one of the best examples of a ground level narrative that helps normal people understand what really happened, and what should happen next as a result. Please save it, keep it for reference, and please try not to let your righteous indignation raise your writing to the clouds where mundane bee-workers like myself get lost in the diaspora of fine misty theory all about.

    I’m grateful for all your work, I achieved a 34% writedown for me (no it’s not a mod). I’ll be signing off here, tired from all this fighting with the bank. Perhaps I should have gotten more, and perhaps I’ll come back for damages if it makes sense later. But I count myself fortunate to be out, and to keep my house. But I will keep referring people here to learn the truth. I can send them here easily, but you’ll help them learn by keeping a welcoming page that is … how shall I say it? … easiy to digest. Thanks again, and keep up the good fight!

  3. The amounts of money being banded about is unprecedented. When will it all end? Our ancesters will be repaying money in the next millenia!

  4. zurenarrh

    a purchase & the bailout funds neil refs are not the same, at least not on the surface their not the same.

  5. Great post!

    My deed of trust expressly states that it exists only to secure repayment AND DOES NOT SPECIFY A SOURCE FROM WHENCE THAT REPAYMENT MUST COME. Therefore, as Neil says, if the “lender” is repaid, it doesn’t matter at all that it wasn’t me who repaid the “lender…”

    Wouldn’t “Aunt Alice” be Fannie or Freddie, or whatever entity bought the note from the originating “lender” for the purposes of securitizing the note? It seems that’s what Neil’s basically saying, and if so, in my case “Aunt Alice” would be Fannie Mae.

    Or maybe that’s not what Neil’s saying…I guess a note purchase by Fannie or Freddie wouldn’t be considered “repayment”–although it effectively is–it would be considered a transaction involving a negotiable instrument.

  6. “The 157-year-old, New York-based Clearing House Payments Co.,” all more the reason proving why the Bill of Rights doesn’t apply and SOULD NEVER apply to companies corps etc. The people controlling them not only are masking their true identity thus insulating themselves from liability but the actual Companies do not suffer any of the human weaknesses, fallbacks etc.. and the people running them begin to grow an alter ego sense of immortality or higher power like Goldman Sachs slogan “Doing God’s Work” and then they(usually thousands of people’s and attorney’s combined efforts) go gang up on helpless families(usually 8 max), and the people illegally occupying our Government just like they(israel) does in Palestine, let it all happen because they have the same mentality. THAT’S NOT BUSINESS OR JUSTICE THAT’S TYRANNY!!!!

  7. Anonymous- you are right about the lenders’ title insurance- ultimately, they are the beneficiary, the insured, but how and why, are they what they are? This is an exhaustive search to connect the dots. It was an ill-conceived yet well-planned fraud by Wall Street, when an intelligent person can search for months and months and not find the links from entity to entity.

  8. There are many entities that had their hand in the pot during the mortgage “mardi gras”. New cases are demonstrating that the title company – to whom you paid money for Lenders Title Insurance – at closing, may also have had a bigger hand in the pot.

    Again, judge are subject to media and Congressional malarky. Quiet title is why to go – and trace from original signing of document – all PSA agreements, table funders, trustee, and prior mortgage connections. Look at prior mortgage – and trace payoff.

    In addition, file complaint with your DOJ- guaranteed they will never answer – but it will be on file.

  9. If it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!

    BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled “Piggies” I invite you to listen to this song on youtube and see if it appropriately fits.

    Have you seen the little piggies
    Crawling in the dirt
    And for all the little piggies
    Life is getting worse
    Always having dirt to play around in.

    Have you seen the bigger piggies
    In their starched white shirts
    You will find the bigger piggies
    Stirring up the dirt
    Always have clean shirts to play around in.

    In their ties with all their backing
    They don’t care what goes on around
    In their eyes there’s something lacking
    What they need’s a damn good whacking.

    Everywhere there’s lots of piggies
    Living piggy lives
    You can see them out for dinner
    With their piggy wives
    Clutching forks and knives to eat their bacon.

    Wright vs. Bank of America Lawsuit at:

    When I filed my lawsuit against Bank of America, myself and United Law Group thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath.

    Please stand with me and United Law Group and send an email to Bank of America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods.

    Divided we might have fell America, but united we must stand!

    Please send your email directly to Bank of America and include the following:

    1. Your name
    2. Your complaint concerning your experience with Bank of America.
    3. Please end your email “I support John Wright vs. BofA Lawsuit!”
    4. Please send a copy of your email to
    5. Please send your email to both BofA link below and the CEO email

    BofA Linked Email:

    CEO Brian Moynihan:

  10. Neil, have said the same thing over and over again… many many Americans have already paid off their obligations via the bailouts…This is the real story and the SEC probe into GS is just a diversion from the facts. Not that in anyway I agree with what GS & Paulson did, but it is the exact entities, the SEC, FED and the scabs in DC that created the environment that allowed this to happen.

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