Anonymous is in regular type, Garfield is in bold.

Dear Anonymous:

Think some of the confusion here is in the concept of funding of the loans.   As I have said before (and I know Neil does not like) investors do not directly fund individual mortgage loans.  They indirectly fund the securitization of a “POOL” of securitized receivables.    Thereafter, the pools are combined with other pools and multiple tranches, thus, forming CDOs – which are derived from the securities – which are derived from the receivables – which are derived from individual loans.  There is no funding by investors for individual loans – and, therefore, investors can never be considered your “creditor” or “lender.”  It’s not that I don’t like it. I know perfectly well that investors do not fund individual loans. My point is that all evidence I have is that the first monetary transaction is between the investor and the investment banker who underwrites the issuance of the MBS. That transaction is in contemplation and expectation that the money will be used to fund loans, although the borrowers are not yet known. All evidence I have shows that the LAST transaction involving money is in the funding of the borrower’s loan. Under the single transaction rule the test is simple: would the investor have advanced money to the investment banker if there wasn’t going to be loans to homeowners? The answer is no obviously as you can read from any prospectus or PSA. Would the borrower have taken a loan without the presence of the investor’s money? The answer is no if you exclude the small percentage of people who were in traditional loan situations. Therefore it is a single transaction — or so I say. There wouldn’t have been a borrower without an investor and vica versa. The creditor, under the law, is the party to whom the obligation is owed. At the beginning of the borrower’s transaction there is only one source of funds — the investor’s money which is sitting in a pool. If the investor is NOT the creditor, then nobody is. A creditor is a party who has given consideration for the benefit of the customer or borrower. If they hadn’t tried to securitize the receivables, then you would be arguably right. There would then be no easy evidence to show that it was a table-funded loan, since the originator could take the position that it is in fact the lender and where it gets its money is nobody’s business. But they DID try to securitize the loan thus disclosing the existence of the investors and the method by which the money was acquired. Thus you have a  disclosed principal acting through purportedly authorized agents acting within the scope and course of their authority which is why the investment banks say they are not the ones who bear the risk of the failure of the loans or the pools. It is under the pretender lender arguments that the only possible conclusion left is that investors de facto funded the loans through agents. The fact that they violated the securitization documents by not actually transferring the loans is a problem between investors and the investment banks. SO my position is that either there is NO creditor, which could be true but unacceptable to most judges, or the creditor is the investor.

Overcollateralization is not the “yield spread premium.”   YSP is the “bonus” paid to mortgage brokers to deliver higher interest rate loans to the purchasing bank. YSP is not defined by the recipient of the remuneration. It is defined by the manner in which it was calculated and why. The fact that the investment bank is not a mortgage broker licensed as such doesn’t mean it wasn’t acting as such. Overcollateralization is only evidence of the tier 2 YSP — the difference between the money that was advanced by the investors and the actual money used to fund mortgages.

Overcollateralization is when the face value of the underlying loan PORTFOLIO (Pool) is larger than the security it backs.    Banks were able to overcollaterize due to credit enhancement in the pool tranche structure.   That is, they were able to sell the securities for less than the value of the pool of receivables the bank owned because the risk to security investors of default was supposedly mitigated by a trance structure in which the higher risk (lower tier) tranches protected the lower risk (higher tier ) tranches.   Further, the risk was supposedly mitigated by combining many pools and tranches into CDOs. By not removing loans from pools – when the loan was actually not securitized into that pool or sold upon default- allowed for multiple inclusion of individual loans in separate pools. This would be a true statement if you were reading the securitization documents. It is not a true statement because the underwriters did not follow the restrictions, terms and conditions of the securitization documents.

You have to go the TILA and definitions of Creditor  (and the TILA Amendment in May 2009) to understand who is considered a lender/creditor to an individual loan borrower. Not really. Creditor is defined under the Bankruptcy code and many civil codes including the UCC.

How the creditor/lender pools loans to pass through income streams is bank’s business – but those derivative securities investors are never individually funding any loan – those derivative investors are only interested in a pool -in which your loan may or may not be very fractionally represented. Not true even according to the securitization documents. Regardless of whether you go by the securitization documents or just track the obligation without the documents, the answer is that the investors’ interest in the pool is derived from the supposed value of the loans in that pool. As it turned out there were no loans in the pool in most cases. And any attempt to put defaulted loans into the pool would violate many restrictions in the enabling documents for the pool.

Overcollateraliztion was to supposed to protect CDO investors from loans that went into default.  Thus, providing enough money to cover those defaults.   The derivative securities, therefore, could be purchased for much less than the face value of the “pool” and multiple “pools”.   But, the defaults came so fast that the the pool and pool’s value collapsed – causing the CDO’s value to fall to zero.  If I understand what you are saying here I agree.

Individual loans were funded by warehouse lines of credit that the purchasing banks provided to originators.   This is the missing link in chain of securitization that is never disclosed – making any conveyance of individual loans to any trust – false.   That is, the banks purchased the individual loans before they securitize their “pools” of receivables.   Only who funds individual loan is relevant to the borrower according to TILA. This lies at the heart of our disagreement. The banks never, or almost never, originated, much less bought existing loans before they actually sold the MBS> It was exactly the reverse.

Your serve 🙂


27 Responses

  1. David – right

    PJ – from “No Name” – because they have decided that saving the banks is more important than saving the people from fraud – so – want to always change the law to allow the fraud.

  2. One question, No Name aka Anonymous, why is everyone in DC trying to pass bill’s to make this fraud legal?


    A case of interest – Perry v. Federal National Mortgage, 59 B.R. 947 (E.D. Pa. 1986). Defendant failed to accurately disclose the security interest taken to secure the loan.

    IMHO – the simplest explanation is this… Follow the Transaction
    • Borrower went to Bank/Originator — Recordation Started

    • Originator sold to Sponsor —- Where’s the Note

    • Sponsor sold to Depositor —- Where’s the Note

    • Depositor sold to Trust —– Where’s the Note

    “A bank is not the holder in due course upon merely crediting the depositors account.” Bankers Trust v. Nagler, 23 A.D.2d 645, 257 N.Y.S.2d 298 (1965).

    The UCC is clear – § 1-201. General Definitions (21) Holder means; § 3-301 PERSON ENTITLED TO ENFORCE INSTRUMENT, or even the infamous lost or dog ate the Note…
    (1) the person seeking to enforce the instrument
    (a) A person not in possession of an instrument is entitled to enforce the instrument if:
    (2) the loss of possession was not the result of a transfer by the person or a lawful seizure; and

    Even a vague interpretation of the above combined leaves the Foreclosure Mill standing their empty handed before a TRUE COURT OF LAW…

    PROBLEM ONE – The Trust was NOT in Possession when LOSS OCCURRED…thus not entitled…

    They neither had POSSESSION when LOSS OCCURRED nor was the LOSS a RESULT of TRANSFER. So, the NOTES were NEVER Transferred to have possession when the alleged Loss Occurred – they are DEAD on both counts.

    I want to hear them explain HOW they can Transfer a Note that does not qualify to a Trust that was closed 2-3 years ago and has since probably been dismantled. ROBO-SIGNER or not the longer they deny the inevitable the more obvious their hypocrisy becomes. It only gets uglier the more folks learn the truth.

  4. Hi Bob,

    I’m NOT sure what it is you’re disagreeing with..? What do you propose folks argue or offer the judge?

    I’m not sure how to make it easier for the judge. The Deed of Trust & Note are the two components. The judge is assuming the transaction was good and everyone was happy at settlement. THAT’S THE LIE that must be EXPOSED. IMHO – THAT is the core of Neil’s crusade. The only reason it was a happy day for the borrowers is because they did NOT know what they signed.

    I agree with keeping it simple. I’m not sure how to do that.

  5. David,

    Agree – and you make a good point – regarding “legal” sale of assets. This brings us back to the old “true sale” of asset question – whether this occurred or not – which was once at the forefront. After to remember securities are backed by assets – there has to be an asset before a security. And, whether or not those assets were sold in a “true sale” to SPV – has been ignored. There is almost no case law on interpretation of true sale. “True sale” goes back to how assets (not securities) were financed.

    Bob G – I understand what you are saying. And an attorney has always told me this – you have to keep it simple for the judges – they do not like complexity. – I would answer – but the issues are complex – you have to educate the judges.

    Unfortunately, the mortgage mess is not simple. And, if we just keep issue in court as to who holds the note – believe we will lose.

    It is about time that judges took the glaze out of their eyes – and start looking at the fraud – from A to Z. Blame the glaze for the numerous foreclosures to date.

  6. Dave and Anon

    With all due respect, I submit the following to you.

    These theories are not going to carry the day en masse unless and until the major institutional certificate buyers make them with major national law firms. No judge is going to want to be responsible for unraveling the entire MBS structure in the U.S. based upon onesy-twosey foreclosure defense actions, by two bit attys and pro se litigants. It is just not going to happen.

    But if you guys insist on going down this path, more power to you. Just remember, when you lose you might be establishing stare decisis or other court precedents that you might not wish to have established and that might be adverse to the interests of many.

    just my 2 cents on this issue.

  7. Hi Bob,

    The RICO stuff is exactly that – stuff…

    The PSA is the ONLY “legal” document that gives that Servicer & Foreclosure Mill the right to do anything.

    The NOTES or Deeds of Trust don’t even mention the servicers in most cases. They were never assigned so how much simplier can it be. They claim to have sold the Note. If it was a “legal” sale, they had to perform specific legal acts (whatever the right word is). No performance = no rights to enforce the Note.

    Without Recordation that Note is non-Negotiable – it could not have Transferred. If you bought a new car and the loan was bank XYZ. The car manufacturer cannot repossess your car because the dealership failed to pay them for your car. That’s what these Trusts are doing. The are “claiming” to OWN that car but they don’t. They even hired a Servicer to accept payments but even that was presumpteous because they didn’t OWN the Note. That isn’t the borrower’s fault.

    Legally that loan does not even exist until it is properly Recorded. They typically completed the FIRST recordation process but FAILED the remaining and did it deliberately. Again THEY created the defective product by their own doing – not the borrowers. Slim-shady got caught with his pants around his ankles and now his wee-wee is caught in the zipper – I’ll offer him a scissors on razor – but I’m not helping him put it back…

    They are hiding behind the fact that the borrowers in default. Default is secondary to the real CRIME which was the misrepresentation and deception.

    Because that loan was never recorded propertly a good argument could be made their TILA 3-DAY Right of Rescission has not even begun. They signed the docs but the docs are NOT valid until that puppy is properly recorded.

    The Deed of Trust is document that proves their illegal acts because it never had anything permanently “affixed” for the remaining transactions. That deliberate mistake waives their right to the property because the loan is now unsecured.

  8. As much as I sympathize with many of the arguments being made here, I must stick with those that are practical. Once u start bringing in all this esoteric psa stuff, the judge’s eyes start to glaze over. Forget the RICO stuff and suing judges. Stick with tried and true simple claims.

    Until the NY Times or the like says it, it ain’t true. When u tell a judge all this stuff it sounds like rap music to him; when the NY Times tells him the exact same thing, it sounds like Pachabel’s Canon to him.

  9. When the sponsors failed to transfer the Note they waived their rights to foreclose. They “decollateralized” “decoupled” the Mortgage from the Note.

    The blinders over the judges eyes are the defaults.

    The proof of the decollateralization is in the Deed of Trust because it is the only doc recorded. Even the PSA requires proper recordation.

    The irony is – the PSA essentially proves the Trust, Servicer, & Foreclosure Mill, have no capacity, no authority, and no right to make any claims. If it was never recorded – it does not exist – per the PSA – end of story. They cannot put it in because its past the Closing Date and even then the Note does not Qualify.

    A judge should look at that and simply tell that lender to REIMBURSE the borrowers their payments and release the Note. The Servicer is hired by the TRUST. It is acting on behalf of the Trust. Its duties are outlined in the PSA.

    Because this was done intentionally, the Servicer & Foreclosure Mill should be charged with felonies – RICO – etc.

    All we need to do is LOCK IN THE REAL PROPERTY LAWS with the PSA & UCC – and take this away from the lenders & courts. They broke it and by their own greedy stupidity they’ve actually prohibited themselves from even fixing it.

    If judges don’t get with the program, we need to file lawsuits & greivances against them. Dig up their connections by the stocks and investments they hold and force them out of the picture.

    What we need is you smart guys to help us connect the dots between teh real property and UCC…

  10. ANON

    Gotta keep this simple for many of these judges. The more complexity we bring into the proceeding, the easier it is for the judge to just hang his hat on someone else’s decision and order that fits his preconceived notion of what the elements of the controversy are. I believe what Schack is saying is that you must show me that you are the creditor entitled to foreclose, and then i’ll let you go forward. One does not have to be a holder in due course to foreclose, merely a holder. So regardless of whether the note was properly assigned to the trust or not, the holder of the original note is in a very strong position. As for rescission under TILA….do folks really want to rescind, or do they want a major principal writedown? Also, what about all the folks who are in trouble because they lost their jobs? Will TILA help them?

  11. Bob G and David

    Bob G – partly agree with you. Believe “head to head” (regarding funding) with Neil is somewhat academic because – as you state – courts do not give a hoot. Also agree about Reg AB – it is not even our place or concern to bring this issue into court. But, disagree as to the relevance of TILA and creditor definition – as this affects standing/real party in interest.. It is particularly relevant to anyone who is asking for rescission. .

    I have read all of Judge Schacks decisions since his first decision. Judge Schack has stated – “if someone is going to take your home – you have a right to know who that party is.” (paraphrase). That right is being denied over and over again in courts across the country.

    As far as note holder – believe there needs to be more focus on countering this argument. Believe that courts like to simply boil down the whole issue – who holds the note. Part of the reason for this is because judges do not understand the rest of what has/is going on. They like to keep things simple.

    Some time ago, a reader here referred to a decision by a NJ judge. The decision, although unpublished, goes into great depth to explain notes, negotiability, and holder of he note issues. In a nutshell – the judge explains that in order to be a Holder of the Note – there must be possession AND conveyance. In the case at issue, a valid Mortgage Schedule that showed showed conveyance of the loan to the trust – could not be produced. Although the plaintiff claimed that they had possession of the note, the judge concluded, by the faulty Mortgage Schedule, that the loan was not properly conveyed to the Trust. The judge dismissed the foreclosure. Point is that the PSA and attached Mortgage Schedule was relevant as to Holder of the Note because conveyance may establish possession. This is regardless of whether or not borrowers are a party to the PSA.

    For those cases in which a valid Mortgage Schedule appears to be produced, there should be additional discovery to ascertain whether or not the loan remained in the Trust. That is, the trustee should produce it’s remittance/collection ledgers.

    This alone does not prove that loans were validly conveyed to Trusts – there are many issues. But, the NJ case demonstrates a challenge to Holder of the Note, and I believe may be a start to “educate” courts about the process. The judge also warns against law firms – who are “passed” the note -just before court – and therefore, invalidly claim possession.

    You may want to reread this case – available somewhere here.

    David – completely agree about conveyance and recording.

  12. ANON.

    NY is probably the best state to be challenging these foreclosures. But even here, if you try to bring in Reg AB or the Fed Res TILA creditor regs, you will be in for some rough sledding.

    The judges here don’t give a hoot about whether the notes/mortgages were properly conveyed pursuant to the PSA or the above regs. They are going by established NY law, period. They know that there is some institution trying to foreclose on a prop, and that there is a challenge to that foreclosure. Since the homeowner wasn’t a party to the PSA, relying upon it to stop a foreclosure is not going to be availing. One has to slug away at the weakest chink in the plaintiff’s armor, and that is who presently holds the note and is entitled to maintain a foreclosure action for nonpayment. All the other stuff you’ve cited is not going to matter a hill of beans in NY. Read judge Schack’s decisions. He’s on the cutting edge of this stuff. You won’t find anything in there about reg ab, or tila or the psa. This is the old saw about bringing a knife to a gunfight. You don’t wanna do it, at least not in NY.


    The conveyances – Transfers etc is what I was trying to point towards before. If the Notes were not legally Transferred per Real Property Laws, then the Chain is Broken.

    However, that is only part of it. If I went to the dealership and bought a new car – signed everything etc – then a year later they attempted to repossess it – because the DEALERSHIP failed to pay their tab – that’s illegal.

    The originator failed to perform by NOT Transferring the Notes or not doing-so legally. Because the Trust is not required a due-diligence, they are assuming they have authority to hire the repo-guy (foreclosure attorney) to came to the car. The Repo guy figures out the paperwork “snafu” and calls LPS to print them a NEW set that LOOKS GOOD but they too know its all shady.

    From what I can tell the Originators did their part but the Sponsors’ deliberately withhold THEIR PART to avoid the taxes & fees. The Sponsors provided the Letter of Credit to the Originator so, they took the Note from Day One and decided not to comply with Real Property laws for the other recordings & assigns.

    That assignment can’t be done after the Trust’s closing date and can’t done once its in Default (legally). The Deed of Trust is the ONLY recorded document a Borrower can rely upon that a judge would even consider. By proving the Deed of Trust shows no-evidence of transferrs/assigns/allonges/whatever – THAT should be the key to stopping the Mills. All other documents are controlled by the lender. They can print imitations all day long – but that Deed of Trust is recorded. There must be something recorded or permanently affixed or a stamp or something showing where the Note went?

    The Servicer & Foreclosure Mill get their marching orders from the Trusts’ PSA. If that Note was never perfected – Transferred (legally) then not only does that Trust have no authority – neither does that servicer to demand payment or the foreclosure mill attempting to get payment. Both get their authority from the Trust. A Shopping Mall Security Guard Cop does not have authority to right speeding tickets on our major highways. If our Note was not properly Transferred – that Trust has no authority to do anything and nor does the Servicer and certainly not the foreclosure mill.

    Sorry to be redundant…

  14. Neil – Okay – Head to Head – been out all day – but I am still very grateful for what you do. Just disagree on this one point.

    Let us call Neil’s responses A..B… C.. – and I address below..

    A) First, while MBS security investors may pre-subscribe to an offering – the loan receivables are not sold as securities until the loans are purchased by the bank, receivables removed from the bank’s balance sheet, and the rating agencies have RATED the securities. Which means the loans MUST have already been funded – and specifically identified as originated and funded. The pool of loans MUST be in place before the securities are sold. If investors were pre-funding loans that were not yet originated – or rated – and purchasing the not yet recognized security – this would be huge securities fraud (not that other security fraud did not occur).

    MBS are regulated by SEC – Regulation AB. Only CURRENT income streams can be passed through by MBS – and that current income stream must be accounted for on a balance sheet before securities backed by the current asset income stream – can be sold. It does not matter that the banks removed on balance sheet receivables to off- balance sheet conduits – the bank MUST own the receivables before securitization. Therefore, pass-through investors cannot prefund the securities they eventually purchase.

    However, will agree that there were prearranged agreements between banks and originators – for the banks to purchase the loans from originators – before the loans were originated. This is not the same for securities.

    B) Investors are never the creditor. The best definition of a creditor that we have is the TILA definition of creditor. TILA defines creditor as a) one who regularly extends CONSUMER credit and b) to whom the obligation is initially payable on its face. Case law has stated that both elements must be met in order to be defined as a creditor. And, challenges to federal law violations are based upon the identification of the creditor.

    Pass-through security investors do not meet either element of definition of a “creditor.” The Federal Reserve confirmed and expanded the definition of “creditor” in their Interim Opinion (now codified) of the May 2009 Amendment to the TILA. The Fed Res clearly states that pass-through security investors are NOT the creditor. Given securitization, the TILA Amendment expanded the definition of creditor. The Fed Res does inform that the creditor is the entity who accounts for loans on the balance sheet. If more than one entity accounts for loan on balance sheet, the entity with the largest position is required to identify itself as the creditor to the borrower. The Fed Res clearly states that pass-through security investors are not the creditor – and pass-through investors do not account for mortgage loan ownership on a balance sheet. They account for fractional interest in securities derived from the assets – which the bank owns.

    C) No where is a creditor defined in law – as you state – “a party who has given consideration for the benefit of the customer or borrower.” If you have this, I will look at it. Although bankruptcy courts are tougher on identifying the creditor, this does not means federal and state courts should simply ignore. And, if what you are saying is true – then borrowers have no right to challenge TILA and RESPA and FDCPA violations because – the creditor remains unidentified. Borrowers NEED a named creditor to challenge the law – and it cannot be a unidentified pass-through security investor – otherwise federal law is violated.

    D) Overcollateralization is not as you define in second paragraph and has nothing to do with YSP. It simply means that the portfolio (Pool) of receivables securitized exceeds the dollar price of the securities sold. Pass-through security investors do not match security prices paid to the pool of pass-through receivables the bank is offering for sale.

    YSP is what the mortgage broker receives for brokering the loan at above market interest rates. Can supply checks that mortgage brokers have pocketed for this YSP – and YSPs must be divulged to borrowers at origination. It is nothing more.

    E) Your response to my statement “creditor/lender pools loans to pass through income streams is bank’s business”
    Agree completely that the loan receivables were NOT conveyed properly to the pools – or to the trusts. However, again, if you are stating that investors prefunded the securities that they would actually then purchase – this is not only a violation of securities law (REG AB) but would also be impossible to account for.

    First, all certificates to SPV trust were first sold to the security underwriters. The security underwriters’ parent is the tranche holder. We may call these tranche holders – the creditor – because they own the trust that supposedly held the converted loans to securities. The bank owns the trust – and the tranche holders (security underwriters) are limited in number to tranches the security underwriter keeps – and the tranches the security underwriter sells to other financial institutions for CDO derivative utilization.

    Second, in order for pass-through investors to prefund the securities – they would have to prefund not only direct DERIVATIVE tranche pass-throughs – but also every CDO, Squared CDO, and every other derivative that was leveraged against the original loan asset held on the bank’s balance sheet that was eventually conveyed to bank’s off-balance sheet conduit. This would have taken incredible insight by the investors to calculate such leveraged prices. This could not happen – and did not happen.

    F) All the off-balance sheet conduits are now back on banks balance sheet due to FASB 166 and 167.

    G) Totally disagree with your last statement – “This lies at the heart of our disagreement. The banks never, or almost never, originated, much less bought existing loans before they actually sold the MBS> It was exactly the reverse.”

    And, this is the source of our disagreement. The reason I disagree is explained above. Regulation AB prohibits this. MBS is strictly regulated. If what you are saying actually occurred – this is massive securities fraud. And, MAYBE – THAT is your point. Nevertheless, this only helps the investors – and not the homeowners. We need to emphasize what was required to be done – and the that pass-through security investors are NOT the creditor. This then challenges every foreclosure action across the US.

    I greatly respect you Neil. And, I have commended you many times for all that you have done. And, maybe you are pointing out that there was massive security fraud. But, we need to emphasize the banks’ direct purchase of the loans – and, therefore, complete break in the chain of title. Foreclosure mills actually want the courts to believe and accept that the creditor is unidentified – silent pass-through investors that homeowners must turn their home over to. This is simply false – and in violation of all securities and federal law..

    The banks purchased the loans before the receivables are securitized – and they sell collection rights to defaults whenever they can. Homeowners have a right to know their creditor – and security pass-through investors are not the creditor – and if, somehow, security pass-through investors did prefund the loans for the derivative securities they would eventually purchase – this is massive fraud.

    Finally, like to address Bob G – who it appears is stuck with a court that only cares about who holds the note (how courts love to simplify). This is an issue that we should also be focusing on here. Holder of the Note depends upon negotiability of the note – which I now believe is question, and upon proper conveyance to the party that claims to hold the note. None of the loans were properly conveyed to bank conduit owned trusts for many reasons – but, as I have already stated, number one is the fact that the sale of of the loan origination to the bank is not documented.

    We need to focus more on tearing apart the note holder theory that courts are fixated upon.

    We have to be open to all opinions to put forth all arguments that potentially expose the huge fraud that was perpetrated upon American homeowners.

    I try to focus on the laws that exist – and demonstrate that they laws were broken. And, these laws include Regulation AB.

    But – and I do not know how to put in a smiley face – still great admire you and think you are incredibly intelligent – – think you are doing so much for so many – and hope you will always deep an open mind.

    Again, very grateful to what you have done – and still believe you will go down in history books for your blog and for what you are doing.

    But…… and with genuine admiration – I believe I am right – and will do whatever else it takes – to convince you.. Believe we cannot win otherwise.

    Welcome input.

  15. MUST READ! *cross-posting*

    Deposition of Expert Witness in a Securitized Trust/Trustee Foreclosure Case: Deutsche Bank v. Dennis








  16. Neil, it would be helpfull if the various loan products were identified….Thanks!

  17. Linda… your thoughts are the same that have been stewing in my mind for 3 years…the myriad of loan “products” need to be examined in detail!

  18. Ok let’s get real here.

    The original funding for the advance is coming indirectly from the FED Discount Window. Banks aren’t using their own money. That’s illegal. The originator is monetizing the “borrowers” note.

    Hasn’t anyone ever asked themselves this question?

    Out of what existing account or pile of money did the seller of the property get paid from?
    The originator can’t use their own capitol. They can’t borrow on their own credit and then pass-through an advance.
    Where was the money before it arrived in escrow at settlement? What account and where?

  19. Neil … here’s something else to consider.

    By the logic presented in your post, were ABC Corp to default on its loan to XYZ Bank, then XYZ Bank wouldn’t be able to sue to recover on the defaulted loan. They wouldn’t have standing. Rather, I and the others who provided the funds with which the bank made the loan would be the only ones entitled to sue to recover. This makes no sense to me whatsoever.

    Moreover, by the same logic, if XYZ Bank made a mortgage loan to me with the funds provided from a stock or bond offering, and even if it kept the original note and mortgage together in its vault, and I were to default on the mortgage loan, the bank would not be entitled to initiate a foreclosure action against me because it used someone else’s money to fund my loan.

  20. You are both right on the last point. Bank as seller in the purchase agreement provided the originator the credit to fund the loan. Servicer or broker was almost always originator yet was named as “Lender” in the Note and Mortgage. Either way still results in nondisclosure of true lender resulting in TILA violation.

  21. Niel, you seem to have hit on something here.

    I understand why there would be a 20% cushion, but then I had the thought…since there was a push to pass through as many loans as possible…what if most of those loans were 100% loans made to borrowers and lenders added the 20% cushion to make it appear to investors as if their loans were all 80/20 loans…as if the borrower had made a down payment…thus, justification for the saleability of the alleged loans with triple AAA ratings.
    Just a thought….or, something along those lines?

    If they pawned off applications with CUSIP numbers, they really wouldn’t even have to fund loans at all, just get the borrowers’ signatures on the applications, stamp them, sell them, then tell borrowers they were denied for the loan. Perhaps would-be borrowers who filled out applications but were denied loans should also be concerned their identities have been stolen in order to create and sell phantom debts and/or assets.

    There is no loan…but maybe NO HOME either!
    Wow. 120% collateralization on nothing but thin air.

    Ok, I am not a banker, just thinking out loud.

    I would like to know what a CUSIP number typically might look like and where it might be found if it were on a DOT. Thx.

  22. Neil … I think that your argument is irrelevant in certain respects.

    By your logic, something is fraudulent when a bank floats an additional bond or stock issue to fund loans it expects to make in the future, but has not yet identified who the borrowers are. So my broker calls me and says that XYZ Bank is selling $100MM in common stock. I do some DD and conclude that the bank’s future lending prospects look pretty good, and so I buy 1,000 shares of XYZ common at the offering price. (Wouldn’t matter if it were a bond issue and not a stock issue.) Two weeks after the stock offering is concluded, the bank makes a loan to ABC Corp. By your logic, it is I and not the bank that is the real creditor, because it is I and others that provided the bank with the money with which it made the loan to ABC.

    I’m sorry, but this makes no logical sense to me, and I don’t think it would hold up with either a judge or a jury.

    I think that the better argument is the quiet title argument. When the judge asks if you signed the note and failed to make payment, the proper response is to say that you signed a note to an unknown creditor. You don’t want a “free” house, but you do want a house free of title claims from someone who can’t prove that they are a real party in interest and the real creditor. When the real party in interest or the real creditor shows up, then that is litigation for a another day. Period.

  23. New Hilarious Fed Video: The Federal Reserve is Laundering Money


  24. Go New York. Florida and all other states to follow.

    Neil, Bravo for your head to head. On the mark, of course.

  25. After reading this I have a further understanding of why these originators when they filed for BK, they showed in the public record how they made their money. If they did not do that in those filings all the money they had in their funded escrow accounts would have been taken by the US trustees and used to pay the creditors claims.

    By showing that these moneys were for loans that were pre-sold to the investors which they were, they are in fact giving all of us tools to prove our claims.

    It is also possible that some pool managers did act in accordance to their obligations and some pretenders did as well. Some pools may be somewhat healthy. But the vast majority have trash as their assets. The investors know it.

    It is like the predatory debt collectors, they have copies and a spread sheet. The CUSIP argument is very obvious, the only issue is that having had inside knowledge of how a mortgage broker worked at the time, they never had control over the CUSIP #, they did send via email the loan applications at least twice a month to some originators and warehouse lenders. They always were very firm as to registering the loans in their systems, because they had to register their packages to the aggregators and to the Lehmans of this world.

    The mortgage brokers usually told their clients they could not lock in the interest rates on these loans, they did at at the very end to maximize the Yields.

    The originators and the warehouse lenders hated when they had to re submit a new loan into their date base and they charge fees to the brokers at times. The account reps were in charge of keeping the production line clean as far as resubmissions.

    I firmly believe that the CUSIP use on the loan applications was the way they created the illusion of the notes and the potential revenue stream. At the end the figures and numbers were adjusted to closely reflect what they had sold the investors, but this process did end up producing the double selling of many loans into different pools and some pools having fathom loans, loans that were securitized but that were never funded because the loan was placed into a different pool or the loan was withdrawn for some reason at the brokers office and resubmitted.

    It was very messy.

    companies like Option one, Loan America, Green Point, etc were very notorious doing this crap.

    How about New Your FRAUDCLOSURE lawyers not filing cases vecause all they have done in the past is filing false claims!!!

    Can you imagine the impunity in the non judicial states, where fraudclosure lawyers are even claiming that servicer are not debt collector, even though, they have recordings on their call centers that mention that up front that they are a debt collector and trying to collect a debt, claiming in court that the borrower, property owner and victim cannot change the foreclosure from a non judicial to a judicial proceeding.

    These are all claims being used by the fraudsters in court. They are not even answering the QWR’s and the Debt Validation letters, they feel they do not have to answer any question.

  26. New York Post

    Bank lawyers prosecuting the 80,000 foreclosure cases in New York are all but admitting that the cases they have filed over the past number of years have been riddled with fraud.

    In the three weeks-plus since New York State Chief Judge Jonathan Lippman put the foreclosure lawyers on notice that any fraud in foreclosure paperwork would be met with severe penalties — he is making lawyers sign affirmations promising they took “reasonable” steps to make sure the legal papers are true — practically no new foreclosure cases have been filed, The Post has learned.

    And existing cases have ground to a halt, a source close to the state’s foreclosure practice said.

    “Banks do not want to be the first to test the new rules,” the source said.

    The virtual shutdown of New York’s foreclosure business comes despite chest-thumping, bravado-filled statements made by some banks in October that they had nothing to be afraid of when it came to foreclosure fraud and that the lawsuits aimed at kicking delinquent homeowners from their houses would continue shortly.

    It seems lawyers pressing the foreclosure cases are not willing to bet their law licenses on such claims.
    Read more: http://www.nypost.com/p/news/business/fraud_closure_biz_fizzles_out_C1jme9Dx7jmnaX58BF55DK#ixzz15MYJeNra


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