SECURITIZATION If They Did It Right

SECURITIZATION If They Did It Right

Sometimes it IS easier to prove a negative than a positive. Your opposition has far more facts than you do and in due process, should be required to prove them up into a prima facie case using real evidence from competent witnesses, with real documents that nobody played with before initiating foreclosure.

So let’s take a look at how all this WOULD HAVE BEEN DONE, because most judges, even today are seeing the transaction through this lens.

  1. A homeowner or prospective homeowner would apply for refinancing or a purchase money first, second or Home Equity Line of Credit (HELOC).
  2. Loan Closing and Disclosures
  3. Details of the loan and loan closing, good faith estimate and closing statement are provided in some form to both the borrower and the investors who acknowledge receipt and acceptance in binding form. Presumably this would be done through the offices of the manager, agent or “Trustee” of the Special Purpose Vehicle, the name of which and contact information was disclosed to the borrower prior to closing and is confirmed at closing.
  4. Assignment of Loan into Pool, acknowledged by Borrower. Intermediaries and Investors disclosed to borrower/debtor. The lender is identified as the group of investors who have provided funding for the loan.
  5. Investors’ representative(s) identified and disclosed, with contact information.
  6. During the life of the loan, Borrower receives same statement as investor — receipts and disbursements allocable to the loan are allocated and applied to payments and loan balance. If third party payments are received for any reason by any of the intermediaries, who are all disclosed, the amount of the receipt and the method of allocation to the borrower’s loan is disclosed.
  7. If the Borrower falls delinquent, the Investors either decide as a group or through their representative, manager, agent or named Trustee whether to offer a workout or to foreclose. A modification or settlement would be negotiated with parties known to Borrower at closing or successors in interest which would have been disclosed immediately upon execution of closing documents between the investors, or part of them, and the successor(s).
  8. Any change in ownership of the loan would be a change in beneficiary and a change of Payee under the note, which would be the same party. Such change would be recorded in accordance with State Law. The change would not, under these circumstances leave the Borrower in doubt as to the amount of the obligation and whether the obligation was or should be affected by the third party transactions. If the third party transaction is intended contemporaneously with the closing with the Borrower, even if the third party is not identified, this fact would also be disclosed to the Borrower and the Investors.
  9. Insurance, credit default swaps, and other credit enhancements are identified and disclosed to the Borrower — pursuant to contractual provisions executed between the Investors as a Group or individually; provided however, the insurer or third party payor would have rights of subrogation in which upon payment under the referenced contract, they have acquired the interests of the insured parties, in order to mitigate their losses, a fact which was identified and disclosed to the borrower at the closing with the borrower.
  10. In this transparent series of transactions that are part and parcel of a single transaction consisting of many steps, the Borrower having accepted all the terms and conditions of the approval of the loan and the securitization of the loan, achieves no greater standing or defense in the event of default. The only exception would be malfeasance or misfeasance by the participants in the securitization chain wherein, disclosed or not, the loan, or part of it, was satisfied by direct or indirect payment to a representative with apparent authority over the loan and to act in the interests of the investor as an agent. If the loan was sold multiple times, neither the Borrowers liability nor the Initial investors’ asset would be effected. Any dispute would NOT include the Borrower whose obligation would be unaffected UNLESS the intermediaries receiving multiple payments for sale of the same loan or percentage interests in the same loan pool were allowed to retain the proceeds of said sale, inasmuch as this would mean that the liability of the borrower would either (a) be diminished by the excess payments or (b) spread out to investors that were not disclosed at the Borrower’s Loan Closing.
  11. In the event that the matter is referred to a foreclosure proceeding, the action (whether private non-judicial sale or public lawsuit in foreclosure) would be brought on behalf of the named investors, through their authorized representative, with a complete statement of accounting and exhibits showing the entire securitization structure and the balance due on the Borrower’s obligation, including any third party payments, whether those were allocated to payments, interest or principal, and what balance of the obligation exists. Also named as foreclosers would be those party who acceded to a subrogated interest in the Borrower’s loan in whole or in part.
  12. Since a judicial allocation would be required to determine the relative interests and priority of interests of the investors, successors and subrogated parties, it is probably not possible to initiate a non-judicial sale unless there existed an agreement between all of the parties as to those matters. Such an agreement would specifically describe the distribution of proceeds of sale, which party was entitled to enter a credit bid, and what would be done with the property if the bid resulted in a Trustee Certificate being issued giving title to the party that initiated the foreclosure.
  13. If the creditor parties were able to satisfy all the prerequisites of a non-judicial foreclosure sale and the sale took place under non-judicial circumstances, the Borrower would lose the right of redemption and the Creditor would lose the right to pursue any delinquency or deficiency resulting from the sale of the home.
  14. If the Borrower was the defendant or re-oriented as the defendant in a foreclosure lawsuit, then the borrower’s right to redemption would be retained, if State Law permits same, and the Creditor would, if State Law permits it, be allowed to pursue a deficiency judgment against the Borrower. The allegation for suing for damages to cover a deficiency would include the fact that the sale price was fair and reasonable under the circumstances. The prima facie case of the Plaintiff Creditor in those circumstances would require evidence from an appraiser or other credible resource that is admitted by the Court as competent testimony and evidence of the fair market value and the sales price. Submission of a written affidavit or document is sufficient to support the allegation, not insufficient to satisfy the requirements of establishment of a prima facie case. A competent witness with personal knowledge and recollection is required to establish the foundation of any document. Business records do not include records regularly prepared after the loan goes into default, if those records are offered to prove facts that relate to events prior to the default. SUCH RECORDS ARE ONLY ADMISSIBLE TO PROVE (WITH FOUNDATION FROM A COMPETENT WITNESS) FACTS, CIRCUMSTANCES OR EVENTS THAT OCCURRED AFTER DEFAULT.

11 Responses

  1. Oh . . . and let’s not forget that the investors (the so-called Real Parties in Interest) were all UNKNOWN and UNDISCLOSED to me at the time of my acceptance of the offer, ALSO increasing the costs of the so-called loan because your paying the Pretender lender, the trustee, and the investor.

  2. @Mr.Subprime.

    Gotta get a lawyer??? Well, by the tone and statements of your post, why bother?

    You stated: “Problem is, we’re telling some guy in a black robe we want our house for free. . .”

    That’s a curious statement indeed. This raises a question in my mind based on the following:

    1. If your promissory note is “SOLD” (as evidenced by the endorsement “PAY TO THE ORDER OF . . . WITHOUT RECOURSE”); and

    2. The Pretender lender “borrows” funds to lend, based on its representation to the party(ies) it seeks funds from that it will secure an application from its solicitation of offers of loans;

    3. Using the alleged borrower’s (me) promissory note to obtain those funds ( BY SELLING MY promissory note )

    Then (and here’s the question), who really got something for “free?” It was NOT me!!!

    And that’s not even raising for discussion the question of “what’s credit?” Because then we would have to discuss the FACT that a promissory note is a CREDIT INSTRUMENT, and the FACT that if the Pretender lender is lending CREDIT (or FUNDS —i.e. credit instruments) was loaned by the Pretender lender, then wouldn’t that be an OFFSET due to an equal EXCHANGE of credit for credit???

    So who’s getting what for free? The Bank shareholders, and investors. Because they provided no consideration. But if the defrauded so-called borrower fails to perform they get the increased costs of the so-called “loan,” for the time period during performance, the proceeds from the multiple tranche sales of interests in the so-called “loan”, the property sale proceeds after failure to perform and default, the insurance proceeds from the failure to perform and default.

    Is this making any sense? Is this resonating?

    So again…who really got what for free?

    Seems to me that both the buyer and seller got nothing for something.

  3. I don’t know what ever made me think I could play a lawyer, but I thought I could, AND I LOST. You’re stroking yourself if you think you can win in court without a lawyer, much less without a lawyer using competent forensic accounting to back up his claims. The forensic accounting for the trust (read SERVICER) and distribution of default and insurance proceeds relating to the subsequent borrower default (no defense against non-payment) and extinguishment of the subject loan (obligation of the depositor, and on to FASB 140-3), the act of the fraudulent securitization (fraudulently rated AAA and guaranteed to fail) leaving the mortgaged debt unsecured and in the hands of a third-party debt collector (read SERVICER again, most likely related to the SPONSOR) claiming a loss at the hands of the borrower, being allowed to take the property (and buy back the note (liability for the secured borrowing) on the courthouse steps), while the borrower is barred from adjudicating any claims relating to the fraudulent origination, appraisal, and inducement of the borrower to purchase the inflated asset, due to holder-in-due-course provisions (while the banks are violating UCC, state recording, ’33 and ’34 Act, GAAP) and the fact that the “lender” is invisible or twice-removed by the securitization, all leads to the FEDS not enforcing the TAX LAW. THE INVESTOR LOST BUT THE HEDGE FUND WON! Nobody cares and YOU’RE FUCKED! Call the State’s attorney and tell him you cracked the biggest fraud in history and they did it with your loan. He’s busy getting re-elected. YOU’RE FUCKED AGAIN! Call and write your congressman and senator, state representative, talk show host, news reporter, NOBODY CARES! Now your NEARLY HOMELESS AND FUCKED! Now we come to court asking some county judge to open a can of worms that he doesn’t want to understand. We all see the fraud, through our own eyes and circumstances. The story fits nicely in our quest for righting this wrong perpetrated against us. Problem is, we’re telling some guy in a black robe we want our house for free because everyone broke the law in the course of creating a loan with our name on it. Fat chance of convincing him on that one! YOU GOTTA GET A LAWYER!

  4. @Anonymous,

    I’ve never seen any go to discovery. Just commenting @Edgetraderplus.

    Speaking of which, @Edgetraderplus, maybe try removing “if” then it should start clicking. But then again, if “if” was a fifth, then we’d all be drunk.

    Maybe Anonymous should get this convo started on another area of these threads. THAT’s it in a nut shell. Now, there’s contractual issues. Isn’t “assent,” and a “meeting of the minds” a necessary element of any contract?!

    How is there a meeting of the minds with unknown, undisclosed, pre-contract, or condition precedent existing parties??? Wtf???

    Notwithstanding the Pretender lender “BORROWING” to obtain funds, which they get by “selling” the alleged borrower’s note. Who’s really the creditor? Who’s really the borrower? Can anyone say role reversal? How about conversion? I thought you could.

  5. Monday 17 May 2010

    My initial response addressed the first few sentences, which is as far as I had read, until now.

    This article makes no sense. The word “if” is conditional. IF a frog had wings, it would fly. So would this article.

    There are more pertinent contributions from Mr Garfield elsewhere.

  6. Neil
    ANONYMOUS has pointed out multiple time his “statement of the investors relationship” re -the trust & investor rights [silent or otherwise].
    You are an intelligent man , so this leads me to think that a info with a puzzle piece is somehow missing?!
    ANONYMOUS has revealed a in-depth understanding and has explained “imho” the structure of the MBS & predatory finance model succinctly [as convoluted as these models are]. If you have a missing piece that you do not wish to reveal in this open fashion…i completely concur, we now need a method to convey such with out “tipping our hand ” so to speak.
    Then again i may be just suffering from Hypoxia ie “low oxygen.” to the brain.

  7. LawFantic

    If you ever get to discovery.

  8. Edgetraderplus

    Well put. And, we have to get off this “investor” kick. Beneficiaries in pass-through receivable securities DO NOT OWN YOUR LOAN. Just feeding the mouth that will eat you. Securities and mortgage loan “title” ownership are two very different things.

    You will never see legitimate security investors suing the borrower – they sue the security underwriter (and parent). We are aiding and abetting if we continue this path. SOMEONE (unknown) else is suing the borrower.

  9. I partially agree, and disagree @Edgetraderplus. I agree mostly with respect to the statements regarding due process (right to be heard, and in a meaningful manner, knowing what it is and how to ensure due process requirements are complied with, and demanding), and I would even go farther to say that only government agencies are “required” to comply with due process requirements. However, when it comes to litigation, both parties are “required” to FULLY disclose all material and relevant evidence. Otherwise it can be construed as fraud upon the court when one withholds material and relevant evidence. If one has a valid and legitimate claim, then it shouldn’t be a problem providing FULL disclosure. Let the facts and the law speak for themselves.

    The days of ambush litigation are “supposed” to be over, ESPECIALLY when one is represented. Was this not the intent of the enactment of the Discovery Acts (federal and state)? I say “especially” when one is represented, because an attorney is “duty” bound to provide such information, which is the intent behind the federal rules of civil procedure’s rule 11, and its counterpart, California code of civil procedure’s section 128.7.

    Of course this is not to say that it happens. BUT, this is the purpose of “discovery” (in so far as it relates to this

  10. Good clear and understood

  11. Monday 17 May 2010

    Due process is used rather loosely, in several occasions I have seen on this site. One would get the impression that due process is an entitlement to have the opposition present all the evidcence.

    In law, due process is the right to be heard, and in a meaningful manner. That is it! One has the right to be heard, and if one does not pursue one’s case properly or make timely demands of the opposition, that is all that is required in the right to be heard.

    In a meaningful manner can be interpreted in many ways by the court, and the slice of what meaningful may mean in one’s favor can be rather thin.

    The second sentence in the above article is misleading and inaccurate. The opposition is not “required” to do anything on your behalf. If you want due process, you have to know what it is and how to get it.

    The judicial system is adversarial when it comes to pro se, or self-represented. Do not expect ANY help from the court. If you want rights, first, you have to knnow what they are. Secondly, you have to know how to demand them.

    A note of caution.

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