This opinion could turn out to be incredibly important.  It provides a critical evidence for the argument that many securitization transactions simply failed to be effective because non-compliance with the terms of the transaction:  failure to properly transfer the mortgage meant that the mortgages were never actually securitized.

The Big Fail

posted by Adam Levitin

Last week the US Bankruptcy Court for the District of New Jersey issued an opinion in a case captioned Kemp v. Countrywide Home Loans, Inc. This case looks like the first piece of evidence in what might turn out to be the Securitization Fail or, in homage to Michael Lewis, The Big Fail.

Briefly, Countrywide as servicer filed a proof of claim for a mortgage in a bankruptcy case on behalf of Bank of New York as trustee for a securitization trust.  The bankruptcy court denied the claim because there was no evidence that Bank of New York ever owned the mortgage. The mortgage note had never been negotiated or delivered to Bank of New York, despite the requirement to do so in the Pooling and Servicing Agreement (PSA) that governed the securitization of the loan.  That meant that Bank of New York as trustee had no interest in the loan, so the proof of claim filed on its behalf was disallowed.

This opinion could turn out to be incredibly important.  It provides a critical evidence for the argument that many securitization transactions simply failed to be effective because non-compliance with the terms of the transaction:  failure to properly transfer the mortgage meant that the mortgages were never actually securitized.  The rest of this post explains the chain of title issue in mortgage securitizations and how Kemp fits into the issue.

Note and Mortgage Transfers in Securitizations

A residential mortgage securitization is a transaction that involves a series of transfers of two types of documents:  mortgage notes (the IOUs made by mortgage borrowers) and mortgages (the security instrument that says the lender may foreclose on the house if the borrower defaults on the note).   Ultimately, both the notes and mortgages need to be properly transferred to a trust that will pay for them by issuing securities (backed by the mortgages and notes, hence residential mortgage-backed securities or RMBS). If the notes and mortgages aren’t properly transferred to the trust, then the securities that the trust issues aren’t mortgage-backed and are worthless.

So the critical issue here is whether the notes and mortgages were properly transferred to the securitization trusts.  To determine this, we need to figure out two things.  First, what is the proper method for transferring the notes and mortgages, and second, whether that method was followed. For this post, I’m going to focus solely on the notes. There are issues with the mortgages too, but that gets much, more complicated and doesn’t directly connect with Kemp.

1.  How Do You Transfer a Note?

A. The American Securitization Forum’s Argument

The American Securitization Forum (ASF) has a recent white paper that purports to explain how notes and mortgages are transferred in a securitization transaction.  The white paper explains that there are two methods for transfer and that either can suffice, although typically both are used. Those methods are a negotiation of the notes per Article 3 of the Uniform Commercial Code (UCC) and a sale of the notes per Article 9 of the UCC (take a look at the definitions of security interest, debtor, and secured party to understand how UCC 9-203 functions to effect a sale).   (The ASF argues that the mortgage follows the note, meaning that a transfer of the mortgage effects a transfer of the note.  I’ve got my doubts on this too, but that’s for another time.)

B. Trust Law and the UCC Permit Parties to Contract for a More Rigorous Method

The ASF white paper is correct to the extent that is explaining how notes could be transferred from, say, me to you or from Citi to Chase.  But that’s not what happens with a securitization.  A securitization involves a transfer to a trust, and that complicates things.

It’s axiomatic that a trust’s powers are limited to those set forth in the documents that create the trust.  In the case of RMBS, that document is the Pooling and Servicing Agreement (PSA).  Most PSAs are governed by NY law, which provides that a transaction beyond the authority of the trust documents is void, meaning it is ineffective.

PSAs typically set forth a very specific method of transferring the notes (and mortgages) that goes beyond what is required by Articles 3 or 9.  This is perfectly fine under the UCC, which permits parties to deviate from its default rules by agreement (UCC 1-203), which can be inferred from the parties’ conduct, including the PSA itself.  So what this means is that if a securitization transaction did not meet the requirements of the PSA, it is void, regardless of whether it complied with the transfer requirements of Article 3 or Article 9.  The private law of the PSA, not Article 3 or Article 9, is the relevant law governing the final transfer in a securitization transaction.

There is some variation among PSAs, but typically a PSA will have two relevant transfer provisions. First, it will have a recital stating that the notes (and mortgages) are “hereby” transferred to the trust.  This language basically tracks the requirements of an Article 9 sale.  Second, it will have a provision stating that in connection with that transfer, there will be delivered to the trust the original notes, each containing a complete chain of endorsements that show the ownership history of the loan and a final endorsement in blank.  The endorsement requirement invokes an Article 3 transfer, but it imposes requirements (the complete chain of endorsements and the form of the final endorsement) that are not contained in Article 3.

There is a very good business reason for having the full chain of title in the endorsements:  it is evidence of the transfers needed to ensure the bankruptcy remoteness of the trusts’ assets. Bankruptcy remoteness means that the RMBS investors are assuming only the credit risk on the mortgages, not the credit risk of the originators and/or securitizers of the mortgages, and RMBS are priced based on this expectation.

It is also clear that historically the method of transfer for RMBS securitizations was endorsement, not recital of sale. The promissory note sales provisions of Article 9 only went into effect in 2001 (in 49 states).  Pre-2001 PSAs contain the sale language, however, as post-2001 PSAs. This indicates that the “hereby” language is really carryover boilerplate; in 2001, it was ineffective to transfer a note under Article 9 of the UCC. While that language might have been sufficient for a common law sale, it wouldn’t work for a transfer to a trust under NY law. When assets are transferred to a NY trust, there has to be actual delivery in as perfect a manner as possible; a “mere recital” doesn’t cut it (and frankly, endorsements in blank might not suffice either because there is nothing that indicates that something endorsed in blank is trust property, rather than the trustee’s or someone else’s).

2.  Was There Compliance with the Trust Documents?

So to tie this all back to Kemp:  the note in Kemp lacked the endorsements required in the PSA.  That means, as the Bankruptcy Court concluded, that the note was never transferred to the trust at the time the bankruptcy claim was filed.  The Bankruptcy Court did not need to opine beyond that point, but it is a small step to recognizing that if the loan wasn’t transferred to the trust in the first place, it cannot be transferred now.  PSAs contain numerous timeliness provisions about loan transfers, often related to ensuring favorable tax status for the trust. PSAs also require the transferred loans be performing (not in default). That means that for the securitization trust, the Kemp note is like caffeine in 7-up:  never had it, never will. The securitization of the Kemp note failed.

Now here’s the real kicker: there’s no reason to think that the Kemp note was a unique, one-off problem. All evidence from actual foreclosure cases points to the lack of a chain of endorsements on the Kemp note being not the exception, but the rule, and not just for Countrywide, but industry-wide.  Certainly on the non-delivery point (separate from the non-endorsement problem), Countrywide admitted that non-delivery was “customary.”  If either of these issues, non-delivery or non-endorsement is widespread, then I think we’ve got a massive problem in our financial system.

3.  Implications for Various Parties

Below I briefly review the implications for several types of parties.

Bank Regulators

Federal bank regulators should be all over this; there is monstrous systemic risk potential.  The new Financial Stability Oversight Counsel, as well as the OCC and the Fed and FDIC should all be doing very targeted examinations of the large trustee banks’ collateral files to grasp the scope of the problem.  I don’t know what they’re actually doing, but I’m afraid that they aren’t undertaking the proper investigation.  Fortunately, this particular issue is easily within the expertise of bank regulators: just go to the collateral files and start looking at a large sample of notes. See how many are missing complete chains of endorsement or lack signatures altogether. That will be a very quick way to tell if there is a problem.

I’m also very concerned that some banks might decide to start filing in chains of endorsement and backdating. But that’s fraudulent, you protest!  Surely no bank would ever engage in fraud! Of course backdating signatures is fraudulent, but if the signatures aren’t there, the banks are dead, so there’s really no downside in having some underlings fill in their signatures. If caught there likelihood of jail time is low. Why not bet the farm? Bank regulators should be very sensitive to this potential problem. They should insist on being the ones who actually select the collateral files to be reviewed and that they are the ones who pull the actual note out of the file. The examiners should be making digital images of all notes that they review and keeping those for potential examination against the actual notes if those notes are produced in future foreclosure cases.

My concern here is that the bank regulators so badly don’t want for there to be a problem that they won’t look at the notes in the hopes that this issue goes away. I hope that they are sensible enough to know that if there is a problem, they cannot prevent it, and would do best by gathering up all the information they can.

SEC and Accountants

If the mortgages weren’t properly transferred, there could be a variety of securities law violations, including servicers’ regular Reg AB attestations. There could also be securities law violations on behalf of the banks–if the assets weren’t properly transferred, they are still on the banks’ balance sheets (as are the losses) and should be accounted for as such.

Ratings Agencies

The ratings agencies should be all over this issue. It goes to the question of whether the collateral backing the MBS is there and whether the representations made to them about deals was in fact correct. I have heard, but cannot verify, that ratings agencies were themselves able to inspect the actual notes. If so, then there is a real conflict of interest on this point, as they should have caught this facially obvious problem. Unfortunately, the materials I’ve seen coming out of some of the ratings agencies make me concerned that they simply don’t understand the legal issue involved and may not even understand the difference between the note and the mortgage.

Banks (Securitization Sponsors)

The banks are in serious trouble if there are widespread securitization fails. If the loans weren’t transferred to the securitization trusts, then they are on bank balance sheets, which means that (1) the losses on the loans are the banks (to be sorted out with the investors), and (2) the banks need to be holding capital against the loans that haven’t gone into foreclosure.  Depending on the scale of the problem, the banks might not have enough capital to cover the securitization fails, which means we’re in Dodd-Frank resolution territory.


If the notes weren’t properly transferred to the trusts, then investors have the mother of all putback claims.  Investors probably also have claims against securitization trustees and against the law firms that did diligence on the securitization deals. (Note that these same firms are the ones lining up to swear that there isn’t a problem….). Of course, the danger for investors is that there is a huge problem, and the banks lack the money to fix it.

Let’s be clear that investor interests here are split. AAA investors who are still well in the money would prefer to simply be paid out on their RMBS at 100 cents on the dollar than mess with putbacks. But mezzanine (like CDOs) and junior investors have a lot of potential upside here.


This could be very awkward for the monolines. Generally they promise timely payment of principal and interest to investors. If that coverage obligation continues while the monolines make rescission claims, they might have to pay out of pocket first and then look to the banks for recovery. If so, they would be in a heck of a liquidity pickle.


Chain of title doesn’t affect whether homeowners are in default on their loans.  The loans’ validity is not in question because of chain of title. But chain of title does affect who has the right to foreclose. At the very least, if there is a chain of title problem, it means lots of foreclosures cannot properly proceed because of lack of standing. On the other hand, if the loans weren’t actually securitized, they are on banks’ books, which might, just might, facilitate workouts. More generally, if there is a widespread securitization fail, it means that there will have to be a legislative solution to the problem, which might facilitate real loan modifications.

November 22, 2010 at 2:50 PM in Financial Institutions, Mortgage Debt & Home Equity, Too Big to Fail (TBTF)

36 Responses

  1. What if my note states the “lender” is Bank A and then the bottom of it is indorsed “pay to the order of Bank B” with effective date, but Bank B never gets it transferred to them? Who then has the right to foreclose on my property? Does Bank B have to indorse it back to Bank A in order for Bank A to have interest? Bank A submitted and “assignment of mortgage” from themselves (in the name of MERS), back to themselves, 1 1/2 yrs later, is this legal?

  2. Buyer,
    I have cross reference with my older sisters loan in 2003. She has all signatures. I have ask my father to confirm the same. He is currently looking over his own mortgage to confirm the same. Plus, when I contacted the Department of Insurance in California, they stated there is no way a borrower is going to leave without containing borrower signatures and notarization s. I’m still awaiting letter from the department to confirm this letter.

  3. Steve,
    Mine are the same way. I think it is considered ‘industry standard’ to provide you a set of documents at the closing, which should be identical to those you executed. But, mine and I bet in all cases, they have you only execute their copy and give you a complete set in blank.

    I’ve kind of wondered, even at the time, if that complied with requirements. Or, did they just not want to take the time to sit there while you signed another set of documents.

    Anyway, I’ve no clue as to what it all means, but figured they have it worked out in their best interest.

    In my case, the notary sig sheet is seperate and noticably added after the fact since I initialed EVERY page as it went by me. The notary sheet does not have my initials.

  4. To expand on the mortgage, what if one took such executed lien down and registered it with the county clerk, so properly filed.

    Since the current claim involves a party who has never registered their claim in this manner, all registered claims are superior to unregistered claims, making the note holder’s claim unenforceable by foreclosure. Their note becomes an unsecured debt. Even if they registered it at a later date, the earlier claim would remain superior.

  5. I have another issue.
    Is a ‘promissory note’ different than any other contract?

    And, I guess, this could also apply to a mortgage.

    As I understand contract law (I’m not a lawyer, so that’s a wide variable), a contract is between two entities.

    The notes here, and the mortgage as well, seem to all be one-sided contracts, where only one party executes.

    Regular contracts require both parties to agree to the circumstances defined in the contract, thus would seem to require BOTH parties execution.

    After all, there is a responsibility of the lender in the promissory note. But, guess it basically boils down to “I agree to pay you…” with no other conditions.
    Could someone confirm a distinction between a ‘promissory note’ and a ‘contract’?

    As for the mortgage. IF it’s a one-party contract (by execution), then what’s to prevent that signing party from executing however many liens they desire, with anyone’s name on it?

  6. […] ALSO SEE adam-levitin-the-big-fail-securitization-never-occurred […]

  7. Dying truth and Buyer,

    I raised this question as to nothing in my closing documents contains notary signatures or signatures of my own. Only copies in blank are in my possession. I’m curious as to which documents upon final closing are required to contain a notary signature in California. Approximately a year pass foreclosure I received a copy of the mortgage note from the lender. I suspect the signatures are forged but if a notary signature is required then it is not present on the document. I understand that a notary signature is a witness and does not validate a mortgage to be void. But it does describe weather the mortgage note is original or not.

  8. DT sez:
    “endorsed to “Pay to the Order of [blank] Without Recourse” is equivalent to stamping “Paid” on the back of the note is it not?”
    I’d like to know if this is true or not.
    This would make a huge difference in a Quiet Title hearing.

  9. Steve & Dying Truth,

    I looked again at my papers. DT’s right, the note isn’t notarized, while the mortgage was.

    So, how does the mortgage secure anything defined on the mortgage as “Note means the promissory note signed by Borrower and dated….” if the note signature was not notarized?

  10. Some Case Law on the Subject

    Harris v. Johnston, 7 US 311 (1806)

    “This note was indorsed in blank by the defendant in error, and a suit was instituted upon it by Dunlap against Harris, in which suit he ultimately failed, it being the law of Virginia, that on a note, an action by the indorsee can only be maintained against the drawer, or his immediate indorsor….

    Upon principle, it would appear that such an action could not be maintained. The indorsement of the note passes the property in it to another, and is evidence that it was sold for a valuable consideration.

    If, after such indorsement, the seller of the goods could maintain an action on the original contract, he would receive double satisfaction.

    The case cited from 5th Term Reports, appears to be precisely in point. The distinction taken by the counsel for the appellee, that in this case Harris can never be sued on the note, is not so substantial as it is ingenious. Harris has a right to the note, in order to have his recourse against his indorsee, and Johnston has not a right to obtain satisfaction for the goods from Harris, while he is in possession of the satisfaction received from Dunlap. In the case quoted from Durnford & East, the liability of the defendant to an action from the actual holder of the note, is not the sole ground on which a disability to sue on the original contract was placed. That disability was also occasioned by the obvious injustice, of allowing to the same person a double satisfaction, and of withholding from the debtor, who had paid for the note before he could indorse it, and who would be compelled, by the judgment, to pay for the goods, on account of which he had parted with it, the right of resorting to his indorsor. But, if it was indispensable to show, that Dunlap has a remedy against Harris, it is supposed, that the holder of a note may incontestibly sue a remote indorsor in chancery, and compel payment of it.

    The case of Young & Clarke, decided in this court, does not apply, because, in that case, the plaintiff below had not parted with his property in the note.

    The court does not think that the order (made after the judgment was rendered) for the rendition of the note to the defendant below, can correct the error committed in misdirecting the jury.

    The judgment is to be reversed, for error in directing the jury that the action was maintainable on the original contract, after the note received as conditional payment had been indorsed.”

  11. Steve’s question is really a good question that I myself have wondered for a while.

    Is the notary required to notarize the “Promissory Note” at closing after you’ve signed it?

    Buyer says yes. But if this is true, then all the “Promissory Notes” are void, because none of them were ever notarized. Only the Deeds of Trust and Mortgages were.

  12. I’m sticking to my argument, the notes were endorsed and assigned to “[blank]” and an assignment endorsed to “Pay to the Order of [blank] Without Recourse” is equivalent to stamping “Paid” on the back of the note is it not?

  13. I’m with DebWynn and want to know where the funding for the loan originated. That is, who gave it to the loan originator (“Lender” of record, who is not the real lender).

    Since the trusts were established well in advance of the note origination, the funds received from investors were ostensibly used to purchase the notes. Where was this money in between the time the investor paid and the note originator (“lender”) funded it? It comes from a ‘warehouse lender’, but that’s really a fund established by either the bank or the trust (or the trust within the bank). That money gets distributed down to originator, but is stated to act as a bulk purchase of notes in the pool. Notes are pooled after the fact.

    I’d be both fun and revealing to be able to trace these funds completely through from investor to originator. Though, I doubt that can be done, because, I suspect, the banks were using their own money to warehouse to originators (probably from the last trust set up and completed).

    Who the actual lender is, remains to me, a BIG question.

  14. Ian’s got it straight, A->B->C->D by the PSA, which is a heightened UCC requirement, and allowed.

    Banks want to try to use Section 3 and Section 9 to grant assigment transactions, which would normally be fine, except the PSA requires greater standards.

  15. Steve,
    In a word, “Yes”
    The original note should’ve been notorized at closing, the notory is witnessing YOUR signature on the note, so, should’ve been standing near you at the time, followed shortly after with them placing the seal and signing.

  16. Again, when a borrower request a copy of the note. Shouldn’t the notary signature be present?

  17. Sorry Ian I’m not getting it at all today I give up … Today. Be back tomorrow

  18. Surely the author does not mean that the ASF’s position is that the note follows the security instrument? He had to have meant their position is that the security instrument follows the note, or it is WAY past my bedtime. Regardless of the ASF’s position on the issue, courts are split. A case which finds the deed of trust does NOT follow the note is In re Sheridan, ID.

  19. Ian,
    I don’t know if you’ve seen this or not:

    In this article it references the newly elected Florida Attorney General Pam Bondi and the recently released, highly critical presentation detailing legal issues surrounding the crisis. The presentation, titled “Unfair, Deceptive and Unconscionable Acts in Foreclosure Cases,” … To review the scathing 98-page presentation, visit:

    I thought it interesting because it mentions our mutual ‘friend’ Scott Anderson:

    “In another example, the signature of Scott Anderson, an employee of West Palm Beach-based Ocwen Financial Corp., appears in four styles on mortgage assignments.

    Paul Koches, executive vice president of Ocwen, has acknowledged that the signatures were not all Anderson’s, “but that doesn’t mean they were forged,” he said. “Certain employees were given authorization to sign for Anderson on mortgage assignments.” Once the robo-signing crisis was revealed, Ocwen stopped allowing other employees to sign for Anderson.”

    IT IS THE NOTARY and NOT the document signer who gives an oath (!?!).

  20. If my “loan” did not make it into the trust and I can show for the record , evidence that they knew, all of them that from origionation they all played their roles to deceive and hide things from me the courts and through their acts and my paper trail can show mens rae (evil mind) then darn it should win. The origionator purportedly had the funding wired on my day of signing where from? The trust ? From the depositor ( deutsche, I found this out after diligent research) The but I have this doc stating comerica
    offered indymac the “loans” but it’s already funded isn’t it? ( or wasnt it? ) So wS it servicing rights that was offered? Stil trying to piece thid part of my puzzle but if so, therefor they were never the beneficiary and never lost a dime and there was no default. Yet they took my home. Just like all those other homes. Now. We have the issue if charge off and derivatives and distressd debt buyers don’t we one big question I have is when these transactions occurred what fir value waspaid and hoe come hsbc can make a credit bid being trustee for that trust my loan is purportedly in, how

  21. Ian there us reason why I’m asking these backwards questions because my origionation appears sinister at best!

  22. Angelo,

    I think you are incorrect in the statement that with the blank endorsement, the deed follows the note. The PSA’s required the perfection of transfer into the pools by the cutoff date. In almost all cases, this did not happen. Again, using MERS splits the Deed and Note.

    Anyone else care to add to this argument?


  23. anyone have an opinion on this?

    Bank of America states in RESPA QWR response;

    1) loan sold to Wells Fargo, and investor is SAMI 2006-AR7 (loan lcosed in 2005)

    2) BofA admits that ” Bank of America has the Orginal Note in our possession, custody, and control have had since inception of your loan.”

    DIDN’T BofA just admitted the Trust or MBO does not have the Note and it was never transferred to the MBO per PSA guidlines.

  24. Ian

    Thats exactly what i am refering to, the UCC is what governs the negotiable instrumemnts in most if not all states. If there is one endorsement in blank of the note, all is needed id delivery to the othe entities and the mortgage follows the note.

    So the ABCD argument is only valid, when there is a break in the chain, when the note is endorsed straight from the originator to the trust. But if the note is endorsed in blank, then delivery is only needed. As for the PSA, there will be no intervening endorsements if the note was in blank.

    As for the mortgage, the fraud comes when there is an assignment of the mortage to help expedite the foreclosure process.

    Like I said earlier, the endorsement in blank to a trust, in my opinion is a major problem because you can co-mingle the note for whatever trust you see appropriate.

  25. Deb wynn- if your loan is in a trust,then the entity which “deposited” your loan into the trust has to be the depositor.(or sponsor) So, working backward, where did the depositor get it? From the SIV. And where did the SIV get it? From the warehouse lender.To be in a trust, the loan has to be deposited into the trust. I think that O.Max Gardiner website has a good article on abcde transfers, which are commonly referred to as “the alphabet problem” with securitized mortgages.

  26. Angelo- I think that you are referring to the UCC law for acceptance,delivery and transfer of mortgage. I was going by PSA, trust law, IRS remic/reit requirements. The trusts were all set up as bankruptcy-remote entities,and to do that, the ABCDE transfers/assignments/true sales all had to take place. Since endorsement in blank is easier on all parties as to concealment of fraud, the creditor or noncreditor doing the foreclosure sticks with the endorsment in blank. This is what I thought to be the case.

  27. Ian I may be confused ( which is mybusual state Since this fraud started) but I have a document I think dated months after signing thst is an offer of some sort ( the loans) to indymac without recourse which is from comerica mortgage warehouse. I’m trying to figure thelife of my ” loan” how it hatched from pretender lender to now “appear” in a dbslt trust

  28. Ian

    All they need is a single endorsement in blank, that will cover all the intermediate transfers by delivery, the problem is, there are/were no receipts to show that delivery was made correctly.

    What I think we need to show is that a note can’t be endorsed in blank to a trust, and that is one of Mr. Levitin other arguments. But there is no case law to support this theory,…..YET!

  29. What does all of this really mean? It means that all of the C’s (CEO’s, COO’s, CFO, and so on) of all of the major financial institutions should be rounded up and placed in holding cells pronto. Their minions in these institutions should be warned that any tampering with evidence will result in SEVERE penalties to include felony arrests.

    These so called titans of finance are nothing more than low-life criminals, who stoled money from nearly every single person on the planet in the largest, most perfectly organized Ponzi scheme of all time.

    And if in fact the regulators continue to play along with the criminals as if nothing ever happened, they too should be hauled away to the gulags, never to see the light of day save for their trials.

    It’s time we fill the courtrooms across the land not with hapless homeowners, but with three piece suited jackels who should be put away for the rest of their days, for causing misery to hundreds of millions of people worldwide.

  30. Was the original signed mortgage note obligated or suppose to contain a notary signature?

  31. Ian exactly. You Write succinctly
    ooo what do you make of this from warehouse to indymac…..?

  32. Deb Wynn- MERS was/is critical to the illegal foreclosure process because of the way all securitized mortgage foreclosures are recorded.
    Your county land records,and henceforth the default notice, list your loan originator assigning to MERS,and MERS assigning to XYZtrust2004-2. Number one, MERS has no legal interest in the note,just the mortgage(or deed of trust) Yet, they slide in the language and the courts don’t catch it. MERS cannot assign that which it doesn’t own.
    Equally as important, where a trust is purportedly the foreclosing party, there MUST BE a A>B>C>D>E transfer or assignment of the mortgage note. That is, the note must be endoresed and assigned from the borrower>broker, from broker>warehouse lender,from warehouse lender>to SIV(special investment vehicle), from SIV>Depositor or Sponsor, and from Depositor or Sponsor> Trust. This procedure is essential under NY trust law in order to organize the trust as a Bankruptcy-remote entitly, which protects the investors from losses or legal actions greater than their investment. Hope this helps.


  34. Tell me again why mers was crucial to this criminal enterprise by the way where has hultman gone.

  35. […] 31 Jan NOTABLE QUOTES: This opinion could turn out to be incredibly important.  It provides a critical evidence for the argument that many securitization transactions simply failed to be effective because non-compliance with the terms of the transaction:  failure to properly transfer the mortgage meant that the mortgages were never actually securitized. The Big Fail posted by Adam Levitin Last week the US Bankruptcy Court for the District of New Jersey … Read More […]

  36. If they didn’t transfer to the trusts, and essentially defrauded the investors, how can they still foreclose in their own names? So what if the loan is still on their balance sheets, the investors should have had the rights, thus isn’t it unjust enrichment? They cannot benefit from a fraud, right?

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