TAPE Recording Shows “Trustee” is NOT the party with Fiduciary Powers or Obligations

One of the interesting things about Arizona Law is that it is perfectly legal to tape record a telephone conversation without the knowledge or consent of the parties to that call.

I have a tape recording of a conversation between a borrower up in Scottsdale and an officer of Deutsch bank who is in charge of “Asset Acquisition.” His name might well be on the documents in your case. In that conversation he says that Deutsch is the “beneficiary”.. “for the “benefit of the investors”. He says that the whole arrangement is “counter-intuitive” (used that word more than once). Although the beneficiaries are the investors and Deutsch is named as Trustee, the Trustee has nothing to do. That is because the servicer (One West in the conversation) actually has complete discretion on all issues including modification. As to whether the loan was modifiable he explicitly deferred to the servicer.

Thus he is saying that notwithstanding appearances and what would be logical the ACTUAL arrangement is that the servicer has all power over the assets that have been conveyed to investors. He never mentioned the “Trust” (remember my contention is that there is no trust, that the SPV is merely a conduit vehicle for aggregating the assets and revenue streams from borrowers, insurers, counterparties on CDS etc.) He even refers to the servicer as having “fiduciary” obligations but shies away from any reference to Deutsch having fiduciary duties.

In my opinion, this tape both confirms my opinion and supplements it with a surprising detail, to wit: the servicer is the one with the power of a “Trustee” and not the named “Trustee” (in this case Deutsch). But the power of the real trustee (servicer) is limited to the provisions of the note, excludes third party payments from insurers, counterparties and federal bailouts, and is without reference to the encumbrance allegedly created by the Deed of Trust (Mortgage).

Boiling this down to its essential elements, the owner of the “asset” (the loan) is a group of investors who accepted certificated or non-certificated interests conveying to them a percentage interest in the flow of funds (principal and interest) and ownership of the note. The reference to a “Trust” is nominal (in name only) and the reference to a “Trustee” is both nominal and misleading. The beneficiary under the Deed of Trust, as seen by this representative of Deutsch is also the investor in that Deutsch is only named as a straw man for the investors as a convenience and with the result that the true beneficiaries are not disclosed.

Therefore, on its face, the beneficiary on the original Deed of Trust, the beneficiary named in the instruments used to securitize the loan, and the beneficiary in fact are all different. The original note also names a payee that is different from the payee under the assignments, which is different from the payee under the instruments of securitization and different from the actual party (the servicer) who receives those payments. In practice, according to this officer, the actual payee under the securitization documents (the investors) is different than the parties receiving payment and enforcing payment.

The effect of this “counterintuitive” arrangement is that the beneficiary and the party who represents themselves as the proper holder in due course or owner of the loan are different. All of this presumes that the loan was in fact properly, legally and successfully assigned and securitized — a question of fact since there are multiple conditions to acceptance of the assignment and multiple conditions subsequent (replacement of loan with another, buy back of the loan etc.), which are also questions of fact as to whether those conditions subsequent did or did not occur. In addition there are subsequent events (third party payments in accordance with insurance contracts, credit default swaps and other credit enhancements written into the securitization documents) that are also questions of fact.  And in either related or non-related context, there is the fact that many of these special purpose vehicles (“Trusts”) have been dissolved with the “assets” resecuritized into brand new securities sold to new investors.

35 Responses

  1. The loan pool my ex’s bogus loan is in stopped reporting to the SEC in 2006. The SEC told me it either went belly up or was sold to a private party. BAC is playing all the games. How do I trace the loan now? I tried calling the newly assigned trustee; BNY Mellon and they claim they are the trustee, but that the servicer has all the power. Anyone know where I can go from here?

    I would love to be a part of the team that brings the truth to light. I have already contacted the media (no luck there). The FBI(no luck) the SEC(they said the debts probably don”t exist) my lawmakers and attorney general. I am going to keep on until someone listens here in the SF Bay Area – there are no lawyers up here that get it or even care to. They want $50,000 retainers and don’t have a single success against these pretender lenders 🙁

  2. Yes agree

    But we need more that just access to information – they will just find another way to control in court. Need to pressure SOMEONE (DOJ or other) to recognize the fraud in foreclosures. We have no voice to Congress – no voice anywhere. Foreclosure victims are, sadly, like the “old folks” which this youth oriented country as no use for. It is because of that sentiment that we have been shut down – they just want to let all foreclosures go through so that we will go away.

    No one is standing up for us – as a whole – anywhere.

  3. 2 Anonymous,

    No not a “leader” just a few thousand or perhaps million people that will pool their money , a dollar here and a dollar there, that will provide the Average American with the same access to the same information that the “FAB” @ GS and all others have… they seemed to know and had the where withall as to what was toxic and what was not… correct?

    Why should the Average American be denied that information? Humm, those data bases cost money… but since 95.5% of loans are now backed by Fannie & Feddie…. and the American taxpayer has paid the tab for bailing the GSE’s out … looks like we have a right under our constitution to have all information made available to us…

  4. Yes, PJ – and we need an organization to be set up by a leader who will promote our cause to Congress and the media.

    All may continue their individual suits, but without power to confront the “system” – success in court is hit or miss – and the misses far out weigh the hits.

    We need exposure. And, a party willing to stand up and fight for the people as a whole. Only then will the courts recognize their error.

    Is there anyone strong enough?

  5. 2 Anonymous…. Exactly.. so when, where and how do the people begin this fight that will win this war.

    “All of taxpayer “investor” stuff is just a diversion. We are taxpayers too – and taxpayers are paying the government to bail out the banks that fraudulently obtained our loans – and fraudulently foreclose on our homes!!!!”

    There needs to be an independent “Public Clearinghouse” set up by the people that would allow them the same access to all the mortgage information that the “banksters” have…. understand that these data subscriptions are costly but a funded data base would save many time and grief.

  6. GREAT DISCUSSION! Just thinking if all these people were in the same room for about 24 hours, we will have the answer we all seek.

    Save Our Homes!

    Judy, I am “feeling it” only because I have been studying it for a year. I will make it my bizness to understand it bcz my home, re investments and retirement are at stake. The Judges have an obligation to understand or follow the money/assignment trail or the pretender lender must be denied foreclosure for failure to establish clear standing. What they are hiding is the evidence aganist them.
    Thanks for the information and discussion and sharing all. I am always lurking and sharing information with other via email and fb.
    Thanks Niel.

  7. Ian,

    here is a link to the 2007 story regarding the spinoff of LPS from Fidelity. Fidelity has gone global so if Blackstone acquires it, Blackstone may well become a leader with regard to foreclosures. They will certainly give David J. Stern a run for his money.

    We are beginning to see the consolidation of foreclosure specific companies (law firms+documents prep services+document tracking services, etc) into megalith foreclosure companies.

    How scary is that!!!!!

  8. Lisa D

    Since deals are private – only through discovery. Many courts cut you off at pass before you can even get to discovery. We need strategies to guarantee that we will get to discovery. All that is posted on this blog is good regarding fraud etc. But we need more – and I emphasize that focus has to be on what happens after charge-off when default loans (as non-performing receivable) are removed from the Trust.

    I am not a lawyer and this is not meant to be construed as legal advise but only for educational purposes.

    You said “need to find out if parent has sold collection rights to your loan to hedge fund/debt buyer.” THAT is the missing piece! How does one research that OR is that only something that you MIGHT accomplish through discovery?

  10. BSE and Brian Davies

    Once the trust had a “default event” on pass-through securities, it dissolved. Although pools of loans may still exist (to be sold by security underwriter parent corp.) the trust and job of the trustee and custodian is finished. In addition, any security investor in your loan was only a “beneficiary” of pass-through and no longer collects any pass-through receivables – because the receivables are gone (charged-off). Trustees will have no record of your loan and would not be able to discharge for satisfaction if suddenly borrower was able to pay in full. And yet, it is the Trustee that is falsely named as the “mortgagee” on behalf of ABCD Trust.

    If you were able to pay in full, someone has to account for this payment – and it is not the Trustee and not beneficiary investors on the now extinct “security” pass-through. Investors never own your mortgage loan – only own a right to collect current receivable payments.


    Yes – these monthly reports are just for tracking status of the loans. Does not mean your loan is part of the trust because the trust is gone – only the portfolio “pool” of defaults remains which gets sold off to some hedge fund/debt buyer – unless the bank (security underwriter parent cannot sell it). Notice on any of this tracking sites that the A tranches and some B tranches are paid off. That means a default event occurred and swaps were paid on the trust. Trust cannot security pass-through when the pass-through tranches are dissolved – gone. The bottom default tranche rights are under “owned” by the servicer – but they do not own your loan. If servicer is subsidiary of the parent – need to find out if parent has sold collection rights to your loan to hedge fund/debt buyer.


    During securitization whole loans are converted into “securities” by accounting process. Receivables are removed from balance sheet to off-balance sheet conduit – but the note remains with the security underwriter parent. The government purchased the toxic asset “securities” – which are backed by charged-off mortgage loans!!!!! Government hoped distressed debt buyers/hedge funds would purchase the “collection rights” and, in process modify the charged-off loans. Of course modifications remained in hand of the servicer (subsidiary to parent) who did very little to modify.

    Courts are wrongly treating loans (foreclosure) as if they are still a current loan by granting foreclosure to Trustee on behalf of ABCD trust!!!

    And, if your mortgage loan has been charged-off – the original contract (account #) is gone. Loan is no longer a mortgage – it is a default debt!!! I am not attorney but if a default debt and mortgage charged off – then is this not an unsecured loan???

    Banks fought hard against revision of bankruptcy law – Perhaps bankruptcy courts are much better at flushing out the real and current creditor. Since many homes are under-water, could not the entire “debt” be discharged since the mortgage loan no longer exists?? Bankruptcy attorneys??

    All of taxpayer “investor” stuff is just a diversion. We are taxpayers too – and taxpayers are paying the government to bail out the banks that fraudulently obtained our loans – and fraudulently foreclose on our homes!!!!

    Judy is right. It is very difficult for average borrower to understand and then present to a court!! Securitization complicates the process. Have to try and remain focused that securitization is for current loans pass-through only.
    By focusing on accounting and charge-offs – and the process – the complexities are removed – and focus is on now – which is all the way it used to be. Remember – that the (Cayman) QSPEs must be dissolved this year (for accounting purposes since they are already dissolved) and brought back onto security underwriters parent corp. balance sheet. So if your loan has not yet been sold – the parent corp owns it.

    Securitization and documents help trace the path of the loan when it was current. By focusing on securitization and original “investors” – we fall into the trap they want us to fall into. We are led down the wrong path – exactly what they want.

    I am not attorney and this is not meant to be construed as legal advise but only for educational purposes.

  11. Alina- thanks for setting the record straight for me. I was hesitating as I typed out my info, as my memory was foggy on the details. So now I know who owns what. But keep your eye on any mention of the Blackstone Group. They are in the middle of everything.

  12. Ian,

    LPS is a spinoff of Fidelity which was created as a separate company from Fidelity National. At the time, Fidelity was under investigation so it created LPS.

    DocX is subsidiary of LPS. However, LPS is independent of Fidelity even though it is a spin off.

    So basically, Blackstone is purchasing Fidelity not LPS. btw, Fidelity has several subsidiaries including a subsidiary whose express purpose is the assignment of foreclosure actions to its member law firms.

  13. By William E. Lewis Jr. | Highlands Today
    http://www2.highlandstoday.com/content/2010/may/09/100904/new-state-law-protects-co… 5/13/2010

    A bill that would give state agencies more control over abusive debt collection practices has been
    approved by the Florida Legislature.
    Appropriately termed “The Debt Collection Bill” (SB 2086/HB 7233), the measure provides greater
    authority to the state attorney general and the Office of Financial Regulation in punishing abusive
    debt collectors and bringing charges against them.
    The bill comes after an investigation described the abusive practices of some debt collectors and the
    state’s failure to stop them. Also revealed was that fact that the Office of Financial Regulation, has
    not fined a single debt collector or suspended a single license in more than two years, despite
    receiving more than 1,400 formal complaints.
    Consumers told horror stories of debt collectors threatening violence, spewing obscenities and
    claiming they were investigators prepared to serve arrest warrants. In a few cases, collectors reached
    the young children of debtors claiming their parents would be hauled off to jail unless they paid
    immediately. In other instances, collectors called people about old debts that were no longer owed or
    contacted the wrong person simply because they had a name similar to the alleged debtor.
    The bill received broad support from lawmakers and passed on a final vote of 114-0. Applauding
    passage of “The Debt Collection Bill,” Attorney General Bill McCollum stated: “As our economy
    continues to decline, more and more Floridians are faced with unpaid bills and mounting debt. I
    appreciate the efforts of Sen. Richter, Rep. Patterson and Rep. Grady to ensure that proper safeguards
    are in place to protect Florida consumers from abusive debt practices.”
    The new bill strengthens consumer protection laws by granting the state attorney general authority to
    pursue violations of the debt collection statute.
    According to the Federal Trade Commission (FTC), debt collectors that lie, harass and intimidate
    their targets account for approximately one-quarter of the consumer complaints received each year. In
    the wake of the worst recession since the Great Depression, the FTC is cracking down on abusive
    debt collection practices. As part of that effort, the agency is educating consumers about what
    practices are illegal and what can be done to stop them.
    Common complaints include:
    Calling before 8 a.m. or after 9 p.m. unless expressly given permission. A total of 46.5 percent said
    debt collectors called continuously in an effort to harass them, including calling late at night or early
    in the morning.
    Attempting to collect excessive amounts or debts discharged in bankruptcy. A total of 31.1 percent
    said debt collectors attempted to collect on debts that had been discharged in bankruptcy, had never
    been owed, or had fees and charges not allowed by law.

    Consumers are entitled to receive a notice that stipulates how much is owed; who the debt is owed to;
    and what fees and charges were added to the debt in the collection process. 25.7 percent said debt
    collectors refused or failed to provide this notice.
    Threaten an action they have no authority or intention in taking. 20.9 percent said debt collectors
    threatened dire consequences, including garnishing wages or having the debtor thrown in jail if they
    did not pay up.
    Calling a debtor at work when an employer prohibits said calls. 13.6 percent said debt collectors
    called them at work after being told to stop.
    Providing information to third-party. 12.2 percent said debt collectors impermissibly revealed
    information about the consumer’s debt to another party. Providing information about a consumer’s
    debt to an employer, co-worker or even a relative is strictly forbidden.
    Failed to investigate a disputed debt as required by law. 11.5 percent said debt collectors refused to
    investigate a claim notwithstanding a valid dispute.
    Failure to cease and desist all communication. 8.4 percent said debt collectors ignored their demand
    to cease all contact with them.
    “Debtors have a whole host of rights under state and federal law that they are unaware of,” said Paul
    Herman, an attorney with the Fair Credit Law Group. “One phone call to a consumer protection
    advocate can often solve the problem, but they are afraid to take the first step.”
    If you are being harassed by a debt collector, file a complaint with the Florida Attorney General at
    http://www.myfloridalegal.com and the Office of Financial Regulation at http://www.flofr.com. The FTC also
    offers a consumer collection guide detailing your rights at http://www.ftc.gov.
    William E. Lewis Jr., is a credit repair expert with Credit Restoration Consultants and host of “The
    Credit Report with Bill Lewis” on AM 1470 WWNN, a daily forum for business and financial news,
    politics, economic trends, and cutting edge issues.

  14. PS: Anonymous, just one more question can a tax payer bailed out entity set up an LLC with taxpayer funds without a majority vote by “taxpayer” investors?

  15. 2 Anonymous….

    Where and how will that focus come about… had it for the last 3 years… When, how and by whom did this shadow shifting occur?

    “The question must follow – who charged-off the mortgage loan and who is the servicer now collecting for??? Very basic – but needs to be addressed. This is the part of the “puzzle” that is undisclosed – both in public documents – and in courts across the country. This needs to be the focus.”

    Your statement as quoted might then suggest the following,

    That all the LLC’s and BK remote entities in Delaware ( got to love that Biden Family) and the Cayman Islands systematically set up by the bailed out banks & GSE’s by the American Taxpayer are priming themselves for the next wave of confiscation on behalf of who?

  16. So the monthly reports that are sent to the investors, showing the statuses of all the mortgages in a pool, that detail certain mortgages as being very delinquent and others in foreclosure, occurs at the same time that the loan may have already been shifted to that bottom tranche? The mortgage can still be reflected as being in the ‘pool’?

    Mine is shown as delinquent on the statement. NOD occurred last year. When do they move the loan to that tranche? Are the investor statements independent of the manipulations that are occurring with the note?

  17. Bryan Davies im dealing with saME BANDITS JUST HAD DEUTCH INTRODUCED ? Where they fit in Indymac/Onewest are in default the clerk entered default however they send an REO guy around to post a note stating that they foreclosed anyway i asked the REO guy who he got his orders from the word was deuche bank, onewest/Indymac.THEY HAVE BEEN SERVED care to compare notes?

  18. Fidelity National (LPS, DOCX) is apparently being purchased by Blackstone Group. This is ominous, as the Blackstone Group is running most of the Fed’s and Treasury’s bailout programs, mortgage purchases, etc.
    So now they will control all the documentation and ramp up the mortgage laundering(money laundering) by taking millions of loans, and homes, by the way, out of circulation. But in the WSJ article which discussed the deal, there was no mention of the federal and state criminal investigations into the firm and its subsidiaries, LPS and DOCX. The investigation was started on 4/3/2010 and DOCX closed its doors on 4/13. No mention of it again. Anyone know anything about it? I even searched news in and around Alpharetta Ga. for info, when 147 people are let go with no warning, it is usually news. Not a word that I could find.


    Good post…I submitted a QWR, then 6 months later submitted another QWR and then I filed suit. Ask the attorney to file lis pendens then one month later stopped payment. No point in making a payment if you are under water $ 300K. I wonder where the Trust and Trustees have gone ?

  20. Question:
    I found out that the Pimco High Yield fund is an investor in my trust by tracking the Cusip number.

    Is it appropriate to name them in the lawsuit?

    Responses welcome.


  21. anonymous

    EXhibit N is the release of loan file from the PSA, this must be signed by the Master Servicer, Onewest (Indymac) to get the loan file. If default means it is release then this is discoverable.

  22. anonymous,
    My RAST 2007-A5, had DBNTC as Trustee and is the Custodian of the loan file.

    EXhibit N is the release of loan file from the PSA, this must be signed by the Master Servicer, Onewest (Indymac) to get the loan file. If default means it is release then this is discoverable.


    That is part of my discovery link.

  23. Trustees and custodians for SPVs are gone. This post is absolutely correct, the servicer is control of all. However, you must realize that the process of securitization, in which servicers, trustees. and custodians, were originally designated, is done. And, once a loan is in default, the loan was removed from the trust – and investors in pass-through were finished.

    The bottom tranche of the set-up SPVs is where all “bad” loans go. This tranche is not securitized (cannot be since payments are not current) – rights are held by the servicer for an unidentified party. Bottom line – the question remains – what debt buyer/hedge fund is the servicer now servicing for since the securities – that backed the SPV current receivable pass-through – is dead????

    All unanswered questions remain with the servicer – and who they are acting on behalf of (remember the “investors” are finished since security investors are only for current pass-throughs).

    I do not dispute the process of securitization (and investors) for current receivable pass-through. The process is finished when loans are deemed in default. The question must follow – who charged-off the mortgage loan and who is the servicer now collecting for??? Very basic – but needs to be addressed. This is the part of the “puzzle” that is undisclosed – both in public documents – and in courts across the country. This needs to be the focus.

  24. Amen Judy!

  25. May not be the right place to post this… but over at propublica.org they have some pretty good coverage…


    I read your complaint. I am facing the same thieves(Indy Mac, One West and Deutsche Bank et al) since 2007. Please send me some stuff and can you explain this PIMCO FUNDS.


    Brian – anyway you could shoot me a savable copy of this portfolio, in text and pdf?



  28. This is the dance that plays out when you go to court with your counterclaims and Wells Fargo puts HSBC up front as the trustee to be held harmless against the borrowers claims of fraud and deceit.

  29. In disclosure documents I recently received, I have a letter from the Recontrust, the trustee on my deed of trust, telling the servicer’s (BAC) title insurance company (First American) that they are the servicer of the loan for MERS. Recontrust also represents to First American that MERS is the “current holder and owner” of my deed of trust. This letter is dated the same date that BAC purported to assign the note and DOT to itself, but in the guise of MERS.

    I have a letter from Recontrust dated the very next day identifying BAC as my creditor (making such a claim necessarily means they hold the note, right?). However, in its answer to my complaint, BAC said Fannie Mae holds the note–so wouldn’t that make Fannie Mae my creditor? So in the space of about 2 1/2 weeks, the note and/or DOT is purported to have been held by MERS, BAC, and finally Fannie Mae, when I now know for a fact that Fannie Mae bought the note less than two weeks after closing. What the hell is going on?

    I thought the trustee of the deed of trust was supposed to be a neutral party. Is this not correct? Is it legal for Countrywide/BAC to make Recontrust a trustee on a deed of trust when Recontrust is owned by Countrywide/BAC?

  30. GUESS



  31. Is there a way that others may gain the benefit of this conversation? Will it be introduced into evidence in a court of law that others may use in their own (or their clients) case(s)? A transcript of the entire conversation would probably be the best vehicle for this, but I’m sure others would be most eager to use any available evidence.

  32. My loan was just assigned to the Trustee… it was the only assignment ever made. It is missing quite a few dots already. It was assigned by MERS to the Trustee of the trust my loan might be in and signed by Bill Koch…who is the Document Control Officer of my servicer! He signed as Assistant Secretary of MERS.

    I finally found a lawyer that gets it and was already familiar with livinglies! He is thrilled with all the work you people have taught me to do and all I have come up with. We are prepared and represented…whew!

  33. I agree the sec should investigate onewest dba indymac and the fdics role when taking on receivership. Received what from who and how and what relevance that has with regards to my particular loan and obligation

  34. Send that tape to the SEC and the IRS. According to FAS 140, the seller cannot have “control” of the asset once it is sold or the sale is not a bona fide sale. Let’s get the SEC investigating Indymac, FDIC, Deutsch, JP Morgan, (all the Banksters) collusion of illegal and fraudulent behaviors.

  35. And the ‘average borrower’ is supposed to understand this double-talk? And then in turn get the judges to understand too?

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