WHAT IF THE POOLS ARE EMPTY?

SEE ALSO The Third Rail — Validity of the Loans, Notes and Mortgages

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

If you’re looking for an analogy for the current mortgage crisis, look at the salad oil scandal, where the tanks were empty and the business model was simply fraud.  The only difference, at the present time, is that most people are not even looking for the mortgages, much less their validity.

In the salad oil scandal of 1963 the game was simple. Investors were taken to a site where a substantial number of huge tanks were located. Each tank, they were told,  was filled to the brim with salad oil. They were taken to the  first tank and sure enough it was filled to the brim with salad oil. The tanks were so large that it took some time before the investors could be escorted to the second tank. During the time that they were traveling from the first tank to the second tank the oil was pumped from the first tank to the second tank. Thus going from tank to tank they confirmed that all of the tanks were filled to the brim with salad oil when in fact virtually all of the tanks were completely empty except for the oil clinging to the walls. The perpetrators had all of the arrogance and self confidence that we see in the current masters of the universe on Wall Street. They were wealthy and powerful with substantial influence and Washington DC. None of that change the fact that the tanks were empty. And at the end of the day the fraud was exposed, people went to jail, and investors lost $150 million.

Just like the great mortgage fraud that produced the great recession, the salad oil scandal would not have been possible without reams of documents that looked right even if they were wrong. It would not have been possible without credible sponsors upon  whom many people would rely, since it was reasonable to assume that nobody with a good reputation would risk everything to participate in a fraudulent scheme––the exposure of which was inevitable. So it is with the current mortgage mess and this article looks at the consequences of the final revelations that are yet to come.

Contrary to the Wall Street Journal’s editorial opinion, the transfer of property and the creation of contracts are extremely important to the stability of our marketplace and our standing in the world. There is nothing in this article that the rest of the world does not already know. What everyone is waiting for in this country and beyond our shores is an acceptance and acknowledgment of the truth. Without that, there can be no confidence in our currency and no-confidence in our markets. Without confidence in our markets there can be no real financial stability of any meaning––to homeowners, investors, and foreign governments. The use of documents and public records and transactions relating to real property and personal property is essential for the stability of our society. Until this mortgage mess we all thought we knew what happens after an offer and then acceptance resulting in the transfer of real property or personal property. We all thought we knew that when a real property transaction was recorded in the public records, it was binding in the absence of fraud. We all thought we knew that the amount of fraud was minimal because the transactions had to be recorded in the public records. That model has been turned on its head and we now are faced with the question of finding a remedy to the distorted title chains in tens of millions of transactions.

The capital markets are beginning to perceive the depth of the problem. The so-called faulty filings and foreclosures as revealed a much deeper problem of far greater significance. The problem is that the documents referred to in the “faulty filings” do not exist and in many cases never existed. As I revealed on these pages repeatedly over the last year and a half, it has become readily apparent that transferred documents were never prepared, executed or delivered as required by the securitization documents. The time period for curing that issue has expired. Under the law, I can find no support for any strategy based upon an intention to transfer or an equitable transfer. The simple and inevitable conclusion is that virtually none of the loans were actually transferred into the pools. The fact that they distributed money as though the transfers had occurred leads to contractual matters and tax consequences that have very little to do with homeowners or borrowers, although they may have a profound affect on the investors. If the tanks were empty, the investors are simply entitled to recover their money from the parties that took their money. Any claim against the borrowers is strictly equitable based on unjust enrichment or other similar causes of action––none of which are secured.

If the tanks were empty, then any contract, loan, hypothecation, insurance, credit default swap or credit enhancement provision in any contract was based on an asset that did not exist. Federal bailouts were thus fraudulently obtained along with any payment from any party for any loss attributable to depreciation of assets that did not exist. Any current liability based on a claim to cover those losses would be eviscerated. Any claim of value on a balance sheet consisting of these non-existing assets would require a corresponding correction. Hence the values of the stock prices of the securitization players have begun to decline again while the stock values of the insurers and counterparties who were thought to have a liability on these nonexistent assets are seeing appreciation.

If there was no valid transfer of the loan, then the lender of record (in the public records of the County recording office) is named on an encumbrance which is unenforceable because the obligation of the debtor is not owed to the lender a record. That is the reason why I believe that none of these loans are actually secured. In fact, I believe there is a serious question as to whether any of the documentation prepared closing can be used at all, since the full intention of the parties and the identity of the real parties involved was never disclosed (contrary to federal law) before, during or after the alleged closing. It is therefore my opinion that after a thorough analysis by the courts the conclusion will be that each homeowner who acquired one of these obligations is free from any encumbrance until a legal judgment is executed in a court of competent jurisdiction. Any such claim could only be brought by a real party in interest and would be subject to affirmative defenses and counterclaims from the homeowner in connection with the fraudulent misrepresentations at the alleged closing.

So What? If you get the title and securitization data and documents and you know what to do with them, the leverage is now in the process of shifting to your advantage. But it will only happen if you have facts that can be admitted in evidence. You can’t argue something into evidence. You can only proffer it. That is why lawyers, in particular, are ordering the COMBO securitization and title package (see above) from us. It gives them a third party report upon which they can rely in Federal and State court and upon which an expert could rely in executing an expert declaration if necessary.

14 Responses

  1. Bank of America $10.7 Billion of Trades Proof of FAS 140 Fraud “Sales” From 2007 To 2009 To Reduce Its End-Of-Quarter Assets”

    By Maher Soliman – Oct. 10, 2010 2:05 PM PT
    Bank of America Corp. admitted in a public statement issued in May earlier this year how it classified $10.7 billion of short-term repurchase and lending transactions as qualifying sales.

    Plaintiffs who anticipate filing action against BAC in Los Angeles Superior Court allege the FDIC failed in its capacity to regulate a member bank for trades involving various direct and indirect capacities trading mortgage backed collateral involving securities.
    In its statement Bank of America confirms having used Repo 105-type transactions on $10.7 billion in assets, registering sales rather than borrowings, or repos, in the period between 2007 and 2009.

    Bank of America, the largest U.S. bank by assets, asserts the inaccuracies aren’t material and “don’t stem from any intentional misstatement of the Corporation’s financial statements, and was not related to any fraud or deliberate error,” according to a May 13 2009 letter released from the U.S. Securities and Exchange Commission.

    Comments made by Boston University School of Law, Director Cornelius Hurley, addresses the revelation of BAC abuses for which he is quoted “It’s hard to see how the SEC can accept BofA’s rejoinder as being sufficient.”

    Controversy surrounds the private label mortgage banking sector whereby MERS is the elixir for all the industry’s errors and omission and now it appears for criminal activity.

    Grossly misstated financial statements of FDIC members that exchange loans for agency guaranteed securities and that transfer loans in residential mortgage private-label securitization transactions.

    Grossly misstated financials result from triggering the prohibition against transferors entering into financial guarantees with SPEs [special-purpose entities] would render the SPEs used in those securitizations, as ‘non-qualifying.

    Securities backed by a pool of mortgage loans make it difficult to comprehend how banks are garnering this ability to manipulate the accounting rules, It will violate the terms reps and warranties of these registrations without the Securities and Exchange Commission enforcement. In addition there are additional prohibitions on the types of assets a QSPE may hold.

    It makes no sense to carry on their books loans that are collateral for agency-guaranteed and private-label securities Mortgage-backed securities (MSBs)

    Enforcement of rules affecting reporting for investors and related to other accounting rules issues are further drawing problematic results under a non transparent platform naming MERS as a nominee.

    MERS is solely used in an unlawful manner and for the object of that purpose, intended to manipulate the most beneficial outcome in reporting and in a recovery of assets.

    What begs the question of the FDIC as pertains to the mess is how this cover up can continue to this day?

    Bank of America is not the bank it once was and that allows for it to escape the ravonus prosecution of others such as Enron, Tyco and others.

    The aforementioned could not escape the of the wrath of lax and complicit accounting rules by the Financial Accounting Standards Board, which permit banks to declare their own fictitious value for their balance sheet assets, imposed in April 2009, the big banks would undergo liquidation.

    MSoliman
    expert.witness@live.com

  2. “Are institutional investors, like pension plans, frieghened to go to mortgage servicing agents and the Mortgage Electronic Registration System and request an audit of the title and accurate registration of the mortgages the institutional investor holds in CMO’s? I believe they may be unwilling to do so because of the consequences such an audit would have. If you are a fiduciary, it’s better not to raise questions, after the fact, on issues which might impugne the quality of the due-deligence you should have done before the fact.”

    “Mortgage investors should go to the investment bankers from which they bought the mortgage pools they invested and demand that those investment bankers audit the title registration of the mortgages in the pools the inatitutional investors purchased and, the institutional investors should demand that the investment banker or servicing agent buy back, at original price, every mortgage in the pool that is not properly registered.”
    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1684729
    If you want to know more about the possible problems with MERS go to this link:http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1684729

  3. Shariah Law -I think that Its application to the banksters would go a long way in quickly solving this mess.

  4. ANON or other authorities —

    VERY IMPORTANT TO UNDERSTAND WHAT THIS CASE MEANS:

    Carpenter v. Longan, 83 U.S. 271 (1872). This case is still good law and has been cited through 2010.

    The holding here is that the mortgage is inseparable from the note. The note is deemed essential, the mortgage incidental. The court held that: “The transfer of the note carries with it the security (mortgage lien), without any formal assignment or delivery, or even mention of the latter.”

    The note is gone somewhere, but the county clerk records show that the mortgage may still be with the originator or has been further assigned to another party, perhaps without mention of assignment of the note.

    But within the context of current events, what exactly does this mean?

  5. Did somebody raise Reagan and Nixon from the dead?
    The name of today’s game is…(drum roll, please)
    PLAUSIBLE DENIABILITY!
    NEVER ADMIT TO ANYTHING, ALWAYS MAKE IT SOUND LIKE IT’S NO BIG DEAL, THAT ANY PROBLEMS ARE MINOR, THAT THE OPPOSITION IS USING FLAWED INFORMATION AND EVERYTHING YOU HAVE DONE IS LEGAL, PERMISSIBLE AND BEYOND REPROACH!
    And when cornered to account for issues, DENY, DENY, DENY!
    Followed by massive LIES, LIES, LIES!
    Finished off with a huge dose of feigned indignation at being accused of any wrong doing.
    It’s right up there with TOO BIG TO FAIL!
    WHAT THE HELL WAS THAT SUPPOSED TO ACTUALLY MEAN ANYWAY?
    THERE HAS NEVER BEEN A BUSINESS OR NATION THAT WAS TOO BIG TO FAIL!

  6. SUBJECT: GOLDMAN SACHS LOAN EMBEZZLEMENT SCHEME
    In May 2005 we deposited and invested $200,000 in Real Property, where we recently found out that $118,800 was embezzled out of our property from Mortgage Lenders and Trust Brokerage Companies, namely Goldman Sachs through an escrow Transaction. The $118,800 in funds was paid to these embezzlers from the Investors unbeknownst that the securitization happened by encumbering our property and making up a fraudulent fake Promissory Note and Deed of Trust.

    See the link for further information: https://fdaaccount.box.net/shared/a1pjz9sz5c

  7. It appears that only the income from the Notes was
    securitized. The Notes themselves remained with the
    correspondent lenders, many of which went out of business and no longer exist. In many cases, the Notes were never “lawfully transferred”, therefore the
    debt “died” with the dissolved correspondent lender.
    The borrower won the “death gamble” (French translation of the word “mort gage” and now owns the
    property “free and clear”. The servicer “robber banks”
    and “pretender lenders” are trying to steal the properties in foreclosure court inspite of having no
    equity in the property.

  8. What if the Pools are empty??

    What if the Trust was never created??

  9. http://www.housingwire.com/2010/10/15/jpm-robo-signing-now-borrower-strategy-to-avoid-foreclosure

    The hubris of the felons in pin stripe suits is only exceeded by the glory with which they paint their lies and pad their invoices.

  10. Public May be Deprived of Seeing Mozilo Tried “In The Flesh”.

    http://nymag.com/daily/intel/2010/10/public_will_probably_be_depriv.html

  11. Organized crime

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