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“Instead of the financial world being the lubricant for business, they are out there manufacturing products with no utility whatsoever except for generating fees,” he said. “Somebody’s got to do something about Wall Street. It is destroying the country.” — Gerald D. Hosier

EDITOR’S ANALYSIS: Open the newspaper on any given day and you see judgments, arbitration awards and settlements between Wall Street securitizers (pretender lenders) and the investor lenders who advanced the money that was pooled and used to fund gargantuan fees to Wall Street with the balance used to fund loans to homeowners who were borrowers.

So the question nobody wants to deal with because of competing ideological views is whether we do the math and apply normal rules of addition and subtraction or we leave the borrower hanging with a debt that has been paid several times over? It wasn’t the homeowners who created this mess and it sure seems to me that if there is going to be some collateral benefit out of unravelling this securitization scam (illusion) it ought to at least be shared with the homeowners.

SIMPLE MATH: Investor-lender puts up the money. Borrower gets SOME of that money as a loan (based on false pretenses, but we won’t go there now). The investor-lender gets its money back or settles the case. It seems obvious that the obligation from the homeowner MUST be proportionately reduced or eliminated when the creditor is repaid. The only exception would be if the payment to the investor-lender was a sale in which all rights were transferred to the payor — but that isn’t what is happening. Instead, it seems that the overwhelming majority of cases are ignoring the fact that the creditor has been paid and Judges, already confused by the whole notion of securitization, don’t seem to see the relevance.PAYMENT IS THE ULTIMATE DEFENSE TO ANY ACTION ON A LOAN. AND IF YOUR AUNT TILLIE WAS THE SOURCE OF THE PAYMENT INSTEAD OF YOU IT DOESN’T MEAN YOU STILL OWE THE MONEY.


A Crack in Wall Street’s Defenses


TWO individual investors just scored a remarkable win against Citigroup.

A few weeks ago, the pair was awarded a total of $54.1 million in a securities arbitration case against the Smith Barney unit of the company — the largest amount ever awarded to individuals in such a case, according to the Financial Industry Regulatory Authority.

This legal dust-up involved supposedly conservative municipal bond investments that Smith Barney had peddled to its wealthiest clients. The investments, which were big money-makers for Smith Barney, turned out to be anything but safe for the firm’s clients: various portfolios lost between half and three-quarters of their value during the financial crisis.

Arbitrators rarely, if ever, discuss such cases, and the materials turned over by both sides are kept under wraps. But the outsize award, which included $17 million in punitive damages, is not the only thing that is noteworthy. The arbitrators appeared to reject — resoundingly — three defenses that Wall Street often employs when clients sue:

No. 1: We didn’t blow up your portfolio. The financial crisis did.

No. 2: If you’re wealthy and sophisticated, you should have understood the risks.

And, No. 3, the most common defense of all: The prospectus warned that you could lose your shirt, so don’t come crying to us if you do.

The investors who prevailed here are Gerald D. Hosier, 69, a wildly successful intellectual-property lawyer, and Jerry Murdock Jr., 52, a prosperous venture capitalist. Mr. Hosier and a trust he set up for his adult children received $48 million. Mr. Murdock got about $6 million.

The men, neighbors in Aspen, Colo., suffered $27 million in out-of-pocket losses on their investments. The big clunker was a municipal bond arbitrage strategy that their Smith Barney broker had characterized as safe, according to the men’s complaint. The deal was supposedly designed to eke out more income than a simple portfolio of bonds would generate.

Not only did the men recover all their losses in the award, they also received damages. Mr. Hosier was awarded $15 million in punitive damages and $6.3 million in market-adjusted damages. The arbitrators also awarded $3 million for the men’s legal fees.

Alexander Samuelson, a Citigroup spokesman, said: “We are disappointed with the decision, which we believe is not supported by the facts or law.” He noted that the bank had won a number of arbitrations involving such leveraged municipal bond strategies and said that the bank was considering its legal options in this case.

Mr. Hosier invested in the bank’s municipal arbitrage strategy from 2002 through 2007. Requiring a minimum investment of $500,000, the deals employed the wonders of leverage, borrowing 8 to 10 times the value of the municipal bonds in an underlying portfolio to generate higher income. Calling the strategy conservative and ideal for investors’ safe money, Smith Barney sold the trusts to wealthy investors.

But Smith Barney and its brokers were the prime beneficiaries of the strategy, which generated fees not only on the money that had been borrowed to juice the returns but also through the life of the investment. Clients paid 0.35 percent annually on the portfolios, plus a fee of 20 percent of all income earned by the investors above a 5.5 percent threshold each year.

Smith Barney’s sales representatives kept 40 percent of the total fees paid by their investors, far exceeding what they would have earned selling ordinary municipal bonds. This arrangement encouraged Smith Barney to lever up the portfolios, Mr. Hosier’s lawyers argued, putting the interests of their clients and those of Smith Barney at odds.

Investors who bought these deals agreed to lock up their money for two years and had to pay a substantial fee if they redeemed their holdings during the next three years.

Mr. Hosier was the single biggest buyer of Smith Barney’s municipal arbitrage deals, with $26 million invested over time. But four different portfolios in which he invested raised almost $2 billion from all investors. All of the portfolios performed badly.

“Citigroup mismarketed this product to high-net-worth investors as an alternative to municipal bonds with a slightly higher return,” said Philip M. Aidikoff, a lawyer at Aidikoff, Uhl & Bakhtiari in Beverly Hills, Calif., who represented Mr. Hosier and Mr. Murdock. “Our clients never knowingly agreed to risk a significant loss of principal for a few extra points of interest.”

AS for Citigroup’s three defenses, Mr. Aidikoff, along with the co-counsel Steven B. Caruso, at Maddox, Hargett & Caruso in New York, demonstrated that municipal bonds did not suffer catastrophic losses during the period. This squelched the bank’s argument that the financial crisis did in the strategy.

Regarding their clients’ sophistication and wealth, the lawyers agreed that both men were comfortable taking risks in certain circumstances, but not with the money they had given to the bank. “Citigroup misled their wealthiest clients and then tried to blame them for relying on what they were told,” Mr. Caruso said.

Arguing that the risks were laid out in the prospectus also seems to have run into a stone wall. Mr. Hosier’s lawyers produced seven different notices on the topic published by Finra and its predecessor regulator since 1994, including a notice from 2009 that states: “Providing risk disclosure in a prospectus or product description does not cure otherwise deficient disclosure in sales material, even if such sales material is accompanied or preceded by the prospectus.”

Mr. Hosier’s victory is particularly noteworthy, given the nominal amounts typically extracted by regulators in cases against major banks. The punitive damages awarded to Mr. Hosier, for example, are more than triple the $4.45 million penalty levied against Wachovia Securities by the Securities and Exchange Commission this month in a suit that the S.E.C. settled with the bank. The S.E.C. accused the bank of selling about $10 million of mortgage-related securities to investors at above-market prices and at excessive markups. Wachovia, now part of Wells Fargo, neither admitted nor denied wrongdoing in the settlement.

The arbitrators in Mr. Hosier’s case seemed keen to hold Wall Street accountable. And his win against Citigroup does not appear to be an anomaly. Since April 2010, his lawyer, Mr. Aidikoff, has argued 16 other arbitrations involving the same type of investment. Mr. Aidikoff and the lawyers who assist him have won every one.

In an interview, Mr. Hosier said the experience had opened his eyes to the disturbing ways of Wall Street.

“Instead of the financial world being the lubricant for business, they are out there manufacturing products with no utility whatsoever except for generating fees,” he said. “Somebody’s got to do something about Wall Street. It is destroying the country.” 

68 Responses

  1. john gault,

    Not sure who you want to smack. We are all here to expose what we know. Smacking unnecessary.

    Everyone is hurting — we are all angry — we do not need any more “smacks.” Have had enough smacks — and fraud to boot.

    And, thanks Carrie — for responding.

  2. John Gault

    I applaud you for being a good samaritan.You are the first person to share how to attack these pretender lender from stealing our home via misrepresentation to so called “mortgage” in the world of illusion.

  3. April 25 (Bloomberg) — Hedge fund Paulson & Co. paid as little as 9 cents on the dollar for some of its $4 billion in Lehman Brothers Holdings Inc. senior bonds, according to a court filing…………..

    The hedge fund is headed by John Paulson, whose estimated earnings of $4.9 billion in 2010 made him the highest-paid hedge-fund manager for the year, according to AR Magazine. His hedge fund made $15 billion during the credit crisis by betting the U.S. housing market would collapse because of losses tied to subprime mortgages.

    No, let’s don’t go quietly.

  4. I lied – one more.
    You know, so many people in the same communities could benefit from good (key word) legal advice about bk and how it might help them.

    People can find each other – craig’s list, newspaper
    ad, friends, neighbors, co-workers, whatever. If you can get a group together, then find a reputable bk attorney and as a group propose and pay him or her for a 3 to 4 hour workshop or longer, depending on available funds and the cost. Yeah, it’s different, but still makes sense. Have to figure out ahead of time how to guarantee the funds from everyone in the group, of course. And, hate to say it, but some bk attorneys run chop-shops and don’t know any more than bare-bones about bk. ” Get em in – get em out.” An attorney who has served for a decent amt of time as a bk trustee should theoretically be fairly knowledgeable. Well, yes, theoretically.
    Attorney referal from past clients is best.
    Also, don’t get second-stringed. This is when you pay for Att.Smith’s expertise, but you get pawned off on a jr associate and never hear from Att Smith again.

  5. Sorry – just one more. If you are considering bk, you just have to spend the money to get legal advice from a reputable bk attorney about your particular situation, about which chapter of bk you might qualify for. C-13, for instance, is the wage earner’s plan, and if you have no income, it”s not for you and you’d prob have to file C-7, in which case you dont’ keep much of anything. C-11 is referred to as business bk.

  6. PS – is your home homesteaded?

  7. Oh, golly gosh. C – 11 debtors can avoid lien when assignment not recorded. Need well-versed C-ll attorney for this one. C-13 debtors can at least strip (get rid of) second mortgage when wholley unsecured (no problem these days). * Dollar amt of first mortgage loan may be bifurcated (between secured amt and unsecured amts) “on paper” for purposes of qualifying for max secured debt limit in bk.

    I have looked at so much of this stuff, I forget not everyone does. * If you got one of those lousy HELOC loans for instance, you can prob dump it in bk and just have the first. Better than a sharp stick in the eye.

    Don’t forget – I am not an attorney and this is not legal advice!

  8. Ok, JOHN GAULT!

    Here you go (I’m carie, not anonymous!)

    Thank you—I was thinking chapter 7—I’ve never filed bk before, but really need to…also have heloc—would love to let that go too!
    Lawyer fees for house—LOVE IT!!!

  9. Anonymous, come here so I can smack you. Either that or give me you da– email address so I can send you some stuff about modifications. Create a new email to then ditch -just give me one. You’re smart – you can figure stuff out. You have to actually read it, though! You can possibly ditch your loan if no assignment has been recorded under Chapter 11, for which you should have an attorney who knows “S” from shortcakes about C-11 bankruptcy. Nice trade – lawyer fees for home.

  10. @Pat. Like I said, who would have guessed the IRS might become a buddy? I admit this is a tough issue – beating up tax-wise the poor rubes who got suckered into the scam investments. This article says there is a limited amt of time for the investors to sue the banksters / Wall Street (since the notes didn’t get into the trusts). Hope that’s from the time of discovery of the malfeasance. So great. Investors sue Wall Street for damages plus the taxes they’re gonna owe – U.S. coffers refilled – money back in circulation.

    I’ll tell you this – the article says the IRS has not committed to going after the taxes due on the REMICs. They better not even think about giving anyone else a ‘by’ until and unless the government steps in and gets this HAMP baloney straightened out for the American homeowner. Be nice if the judiciary would properly apply existing law, also.

  11. Anonymous,

    So, I talked to my “IndyMac servicer” today:

    “Who is my actual creditor?”

    “Uh…Deutsche Bank”

    “Oh, can I pay them?”

    “No, no! You go through us, we’re the servicer!”

    “Oh, I thought you were a debt collector.”

    “Well, we are the servicer…”

    “So, why isn’t Deutsche Bank anywhere on my Deed of Trust, or the note? And where is my original promissory note?”

    “Well, Deutsche Bank has your note, and MERS is authorized to be the beneficiary for Deutsche…”

    Blah blah blah…

    I REALLY don’t want to send in a second “trial plan payment” to “modify” a “phantom loan”…I would love to file BK (which I was planning on doing anyway), and just make it all go away—is this possible to do on my own? Or is the idea still too new for the attorneys and judges?

  12. carie

    Shall we say “distressed debt investor/creditor” — who purchased collection rights to charge-off debt. Collection rights “swapped” out of trust.

    No identification of this party. They are deregulated and servicers and banks protect to hilt.

    Some banks have had trouble disposing of distressed debt. These banks are known. Most others have already disposed of — or government did it for them.

    One, violation of consumer laws by not distressed debt investors not identifying themselves in court.

    Two, debt is likely dischargeable in BK –charged off and unsecured.

    Three – foreclosures are false because real party not before court — meaning borrower will owe to someone ELSE — for the rest of his/her life.

    Four – Opportunity for valid modification -with decent principal “correction” — was great — given distressed debt was sold/swapped at a great discount. Nevertheless, current “investor”/creditor has concealed itself from direct negotiation — violating homeowners right to negotiate a valid and meaningful modification under HAMP mandates –
    Five — current creditor/distressed debt investor must be identified under TILA Amendment/Federal Reserve Opinion — now law.

    All protected by those in power determined to protect a distressed debt buying industry that they consider vital to economic growth and stability. And, according to them –current homeowners are dispensable — they want NEW homeowners — who – will also- very likely — eventually be deceived. And, the cycle goes on and on and on.

    Ongoing recycling of distressed debt — biggest business across the globe.

  13. Are you saying the “default investor” is the “actual creditor”?

  14. anonymous,

    So, how the heck do we find out WHO is the “actual creditor”?

  15. Thanks, anonymous—or should I call you Deep Throat? 😉

    I am in Los Angeles/Long Beach Ca area if anyone knows of a good BK attorney who understands this stuff.

    How about pain and suffering, too? I have a $9,000 hospital bill from a severe panic attack when I was in the middle of LOAN MOD HELL last summer…

    So many people not only lost their home—which can be even worse than a death in the family—but they were treated like total CRAP when they tried over and over to get a “loan mod” for their “phantom” mortgage…

  16. Carrie and Pat

    Absolutely essential that the BK court have the identity of the actual creditor — and not the servicer name. Am seeing BKs reopened due to this gross error.

    “Pools” and “securities” — are NEVER the creditor. This is where the focus must be. This is only for pass-through or receivables. For support, use the TILA Amendment, Fed Res opinion.

    Part of the problem has been too much focus on the “investors.” There is a clear distinction between “security investors” — related to “pools” — and “default investor” — related to collection rights. If the latter one is not properly named in BK — then the BK is FALSE.

    Would really like to see Neil focus on this. There is some benefit in saying “investors” were harmed by the MBS fraud because it demonstrates fraud in general. But, unless the distinction between types of “investors” is clarified, we will continue to see incidents like the one Pat describes with judges ignoring the law.

    Carrie — see if attorney in your state is listed on this site. .

  17. Carrie,

    My loan was discharged in bankruptcy and two years later another servicer starts reporting on my credit. So my attorney assures me I was discharged we will do an adversay proceeding and get sactions for wrongful collection and ruinning my fresh start ..FAT CHANCE.

    The BK judge says they are a servicer and collection calls and notices are ok, SAY WHAT!!!
    Fact is this servicer came into existence 2 years after complete discharge and with a new loan number to make matters worse. They are clearly a debt collector with no protection under the law but the judge just takes their word for it because I am indefault. That should have no barring on this case the question is did they go against a court order period! The judge is biased. Make no mistake they are a debt collector. UGGH!

    Now the debt collector (oh I mean servicer) wants to offer modification instead of going to court. I can’t modify something with no proof that they own the loan and refuse to reaffirm at this point that would be sucide. So to court I go with a biased judge and a BL attorney that does not want to argue anythig but the wrongful collection.

    One day at a time 🙂

    Reality is the first servicer should have foreclosed but did not and just passed us on to not one but two additional servicers. To make matters worse I have letters from two seperate UNRELATED foreclousre mills in two different states over a one year period saying they are going to foreclose.

    I say bring it on I will continue to fight.

  18. @cubed2k- I stand by what I’ve said. Modifications can’t be done.
    And, I made a loan with RCI, say (at least ostensibly). RCI is out of business, or at least no longer has interest in my note, so RCI can’t modify my loan, right? Who has such an interest in my Note that it could agree to mod? Just WHOM would be on the other end of MY modification agreement? WHO if it required an autograph to modify my loan, which is a contract, has signatory authority and on what basis? 5000 fractional owners of whatever the heck?
    There’s something at FNMA’s website which hints at Bankster having to buy the loan back first. Is this not a good trick? How would this be done?
    ‘Securitization’ changed everything.

    Whether or not the few mods which are allegedly done are actually done’ to get a homeowner to move to party B an allegedly existing debt to party A , I don’t know. Seems so, but really more as a consequence of pretending to modify for appearances. But that doesn’t make sense to me, either, since B can’t modify my loan. Modification wouldn’t cancel the original note, certainly when contracted by someone wth no authority to do so, if that note actually still exists. Now there’s a scary thought. And good luck getting an indemnification out of those folks.

    One thing does strike me, however. Loan servicers like Aurora Loan Services, LLC are not licensed lenders in most states. ALS entered into HAMP, as I recall. Does ‘modification’ even if it were legit require lender licensing? I dont’ know why it wouldn’t, and certainly if those are in fact ‘new’ loans. More lousy HAMP malfeasance.

    I wish someone here would take up a serious review of material at FNMA’s website regarding modifications. I have been incensed enough over the brutal treatment of homeowners to take a gander, but my main focus has been and continues to be elsewhere. No secret what that is.

  19. Anonymous,

    I am willing to pay an attorney that would know what to do in my situation to get the debt (or whatever it is at this point), discharged…in bankruptcy, I guess, if that’s what I have to do. The problem that I see is just finding an attorney who understands what is going on and sees a clear path—and then finding a judge who knows what’s going on?

  20. anonymous,

    AND the letter I received in December of last year when I inquired about WHO OWNS MY LOAN said this:

    “Your loan is is part of a pool of mortgages we service on behalf of another party which, in turn, may have sold your loan, individually or as part of a mortgage backed security, on the secondary market. Each such security has a designated name and/or number, and is administered by a master servicer or trustee.
    IndyMac Mortgage Services, a division of OneWest bank, FSB, is the servicer of your loan.

    So, are you saying it’s all smoke and mirrors, and a judge might actually discharge it in bankruptcy?

  21. anonymous,

    My NOD says to “arrange payment to stop foreclosure”, contact:

    Deutsche Bank National Trust Company, as Trustee of the IndyMac INDX Mortgage Loan Trust 2006-AR19, Mortgage Pass-Through Certificates, Series 2006-AR19 under the Pooling and Servicing Agreement dated June 1, 2006 C/O Aztec Foreclosure Corporation.

    Quite a mouthful…of crap.

  22. thanks ANONYMOUS.

  23. carie

    No modification is valid without identification of the current creditor/lender (“investor” in pass-through will not do). Modification must be a new CONTRACT with the proper NEW LENDER —- since the old supposed LENDER to original contract is likely GONE.

    Do not know your personal situation as to original loan. But, believe every subprime loan refinance is a note/loan without a mortgage — thus, a discharge in BK is in order. As to Quiet Title — nice approach — but still leaves a false debt without a mortgage. Have to understand — these were not valid mortgages subject to Quiet Title.

    My opinion — that is all — and know I will get grief from someone – do not need to name names.

    Nevertheless, absolutely — and by more and more evidence — stand by this.

    Why did financial services so fight Bankruptcy Reform before Congress — which was twice defeated by Congress?? Because, they knew this to be the case — but as now stands borrower must demonstrate the fraud in BK court.

    They were convinced courts would reject any challenge to current BK law — thus, BK reform — which would have eliminated the need for challenge — had to be rejected.

    Just on the face of it — and please ask yourselves this — how can a borrower be held responsible to an inflated loan value of an inflated asset that is now so currently devalued??? Under what other financial circumstances could this even occur???

    Needed to rid themselves of the “assets” by foreclosure to cover up the fraudulent trial. Goal — just do it — and do not look back.

    Problem is — it is not going away.

  24. I think everybody has to be on the same page and that page is the Constitution. The Constitution being the paramount law of the land, when the Constitution states you cannot do something, YOU CANNOT DO IT.

    Every judge in every state has taken an oath to uphold the Supremacy clause of the US Constitution and their state Constitution.

    Art 1 Para 1Cl.1 states…or emit bills of credit.
    That being the case almost every mortgage contract is illegal .

    The banks could only exploit there other scams because they had the jerks (us) sign the original contract.

    If the foundation is no good the house falls.

    We have to wake up and fight for our Constitution

  25. EXACTLY, anonymous!

    And here is my dilemma today:

    I was approved for a “trial payment plan”…

    I have made ONE payment so far…I was about to put the SECOND one in the mail, when I decided to look carefully at my Deed of Trust and Promissory note.
    The first page of the DOT says United General Title Insurance Company is Trustee.
    The last page of the DOT has NO SIGNATURE on the line for trustee.
    The note says MERS is the beneficiary
    My Notice of Default says Deutsche Bank is Trustee, also says Aztec foreclosure Corp is ‘duly appointed Trustee under Deed of Trust dated 05/24/06”.

    How is this not obvious fraud?

    I would like to know if a quiet title is possible, and then get this discharged in bankruptcy…?

  26. carie,

    You are right. The reason for the speed of wind in foreclosure actions was to push foreclosures through as fast as they can — before layers of fraud are discovered and publicized.

    One of the worst situations is being told to default — in order to get a non-existent modification. And, why can no valid modifications be executed?? Because this would entail CORRECTING past fraud and mortgage title fraud. No can do — without possible criminal exposure.

  27. When will it be REALLY exposed that these mortgages are illegal/non-existent, and STOP throwing people out of their homes? No WONDER they are kicking people out as fast as they can—they knew it was all illegal and they wanted to do it as fast as they could before people started understanding what the hell happened. The judges STILL keep looking the other way, and NO ONE is looking at the LAW. If I hadn’t dug my heels in and decided I was going to do WHATEVER IT TAKES to stop a foreclosure on my house (after I was forced to default because IndyMac told me I had to stop paying on my loan in order to get a mortgage modification—which of course they make IMPOSSIBLE to qualify for), I too would be out in the street with my kids. But I decided to fight, and I’m glad I did. I want to stick it to the banks sooooooo bad. My heart aches for all the people who’s lives have been thrown into such pain and turmoil because of all the pervasive, disgusting fraud. The American homeowners should get pain and suffering compensation in the billions…or at least a house for their family.
    How can the average person like me fight this?
    We don’t have money for a slick attorney, and who knows if a judge will laugh at you or take you seriously if you try to do it yourself?

  28. I see Soliman writes”…Lender material misrepresentation..” that is exactly it.

    The bank only lent you prehaps 5% in money and the rest of what they lent you was in their credit.

    This seems to be a subject that no one wants to pay attention to. The reason the banks are getting away with this is most people are like ostriches with their heads in the sand.

  29. The issue is almost no one has a mortgage contract that is not illegal.

    That bankers don’t like the Constitiution and refuse to follow it doesn’t make our Mortgage contracts legal. They are not legal.

    That bankers took these illegal contracts and flipped them,flipped them, flipped them to other conviving enterprises still won’t make the original mortgage contracts legal.

    That bankers don’t like the Constitution and want to make up their own law is what made this mortgage mess.


  30. hello
    if any one folllowed the Constitution
    Art 1 Para 10 Cl 1
    no state shall coin money, nor emit bills of credit they would see the whole mortgage contract from the beginning is void ab initio and ultra vires.

  31. Yes, Mr. Gault. That IS exactly what happens because no one really reads what the words of the Deed of Trust (contract) actually say.

    John this is not directed AT you; it’s directed at all of us (especially me). Read the damn words. (They’re even written in English!) It’s amazing what they actually say.

  32. John Gault,

    so the whole HAMP, Making homes affordable thing is just an attempt to get new contracts thereby covering up the MBS fraud and all is none the wiser and everybody is happy. Gov’t says look we helped, we are looking after your (homeowner) interests.

    Don’t you think?

  33. John Gault

    “So what about any remaining indebtedness by borrowers on these:
    On Janary 3, 2011, B of A (CW garbage loans) paid
    2.8 billion to FNMA and FHLMC so it wouldn’t have to buy back the loans. The 1.28 billion to FHLMC settled 787,000 loan claims. ”

    I agree, what about the homeowners. They sell collection rights to some company with loan, lender, servicing, etc in their names. And homeowners think they still owe so go for a modification (new contract=new debt) or default (pretender lender gets house) or homeowner continues to pay and someday sells the house many years later to somebody else and all is forgotten or confused.

    Do you think this is what happens? A real question by me.

  34. correction in grammar for post below

    99% of all mortgage contracts are ultra vires
    A bank can only lend its money.
    A bank cannot lend its credit.

  35. 99% of the mortgage contracts are Ultra Vires. A bank can only lends its money, it cannot lends its credit.

  36. Hmmmm…

  37. You need to make your case and evidence your basis for claims. MERS holds the ticket here and oh how I would love for a Judge to open up there books by joining them to a claim of Lender material misrepresentation and manipulation of a “wholesale” electronic platform.

    Careful if you do not prevail . I know what I a talking about.

  38. MS, ways -which stands for what are you smoking?
    MERS doesn’t own anything, especially the note.

    MERS was a lousy placeholder in the collateral instruments. It isnt’ even that anymore since MERS members no longer have an interest in the notes. It is not and never has been even an intended or other beneficiary of those collateral instruments. It has no basis or nominal basis in jack, by any other snazzy names.
    No application of GAAP or anything else is going to change that. If that doesn’t do it for you, read its own admissions in case law, starting with NB Dept of Banking and Finance. Read its contracts.
    Okay, lack of tender can implode the deal………..

  39. So what about any remaining indebtedness by borrowers on these:
    On Janary 3, 2011, B of A (CW garbage loans) paid
    2.8 billion to FNMA and FHLMC so it wouldn’t have to buy back the loans. The 1.28 billion to FHLMC settled 787,000 loan claims. (Dang. Is that a misprint?)
    The payment of 1.34 billion to FNMA (after applying credits to an agreed upon settlement amount of 1.52 billion) settled repurchase claims of 12, 045 CW loans (with approx 2.7 billion of unpaid prin. balance) and other specific claims on 5,760 CW loans w/ nearly 1.3 billion of unpaid prin.balance.

    This info is from a case in Hawaii filed by attorney
    J. Fosbinder.

  40. “Homeowners’ lawyers and advocacy groups contend that MERS has no right to initiate the actions because it doesn’t own the mortgage loans.


    Fact: MERS is not the problem….its the issue of tender that implodes the deal.


  41. ~States face $1.26 trillion shortfall in funds to pay retiree benefits~

    By Michael A. Fletcher, Tuesday, April 26, 12:08 AM

    The state funds that pay pension and health-care benefits to retired teachers, corrections officers and millions of other public workers faced a cumulative shortfall of at least $1.26 trillion at the end of fiscal 2009, according to a new report.

    (Oh…I wonder why that is?)

    The study, to be released Tuesday by the Pew Center on the States, found that the pension and health-care funding gap increased by 26 percent over the previous year. Pew officials said the growing shortfall was driven by inadequate state contributions

    (Oh…Once again I wonder why that is? Could it possibly mean that the elite who own the underlying debt have raised the premium by 26%?) an aging population (damn, can’t they just get on with it?) and market losses that accompanied the recession…..whoa now….let’s hold up on that last point there.

    Folks….do you see what’s going on here?

    Either this dweeb is seriously just a dweeb, or he is a paid patsy of the oligarchy.

    “Market losses that accompanied the recession?” Let me repeat that thought.

    “Market losses that accompanied the recession?”

    They are clearly saying here that the recession caused market losses. Anyone else here feel a bit betrayed by this revisionist thinking? Wasn’t it, according to my own limited understanding and knowledge of the events, due to a COMPLETE MELTDOWN OF MORTGAGE LENDING STANDARDS, UNDERWRITING, APRAISALS, DUE DILIGENCE, NON-EXISTENT INCOME VERIFICATION, SALES OF EMPTY INVESTOR SECURITIES AND THE TOTAL LACK OF GOVERNMENT REGULATIONS THAT USED TO BE SUBJECT TO HARSH ENFORCEMENT, the cause for the present death defying debacle?

    Is that like saying:

    “She got pregnant because she was young and sexy?”

    “He died because of the powder around his nose?”

    “They wouldn’t have been foreclosed upon if they’d discussed their income capabilities prior to taking on more debt than they could handle.”

    “If they’d only faxed in their income statements, after they were not received.”

    Who needs Glass-Steagall?

  42. Ditto

    Thanks again. I tried to get info from the Court clerks office a couple of months ago. They essentially refused to give me any information on Ivey; they put me on a speakerphone during the short conversation. It was truly creepy: Big brotherish.

    I’ll look into it again. Iveys attestation on the Assignnent was so detailed and elaborate; I thought undermining his veracity would be key to voiding the assignment.

  43. E. Tolle I like your story. Just one thing Obama Bernanke Paulson etc… are the house Slaves.

    Who are the real Slave Owners?


  44. E. Tolle I like your story. Just one thing Obama Bernanke Paulson etc… are the house Slaves.

    Who are the real Slave Owners?


  45. So, I took a little trip down to my county recording office last week, and I am wondering if anyone out there knows if this example (below) qualifies as grounds for quiet title because of broken chain of title and/or fraud——and thereby making it unsecured debt which can be discharged in bankruptcy…I can’t seem to get a straight answer—-(so what else is new!)

    Original Deed of Trust says:

    Lender: IndyMac Bank

    Trustee: United General Title Insurance Co.

    MERS is beneficiary under this security instrument. (a database!?!)

    (okay…then on the LAST page it says: )

    Request for Full Reconveyance

    To Trustee: The undersigned is the holder of the note or notes secured by this Deed of Trust, which was recorded in the office of (BLANK) County, State of California, in book (BLANK), page (BLANK) of official records. Said note or notes, together with all other indebtedness secured by this Deed of Trust, have been paid in full. You are hereby directed to cancel said note or notes and this Deed of Trust, which are delivered hereby, and to reconvey, without warranty, all the estate now held by you under this Deed of Trust to the person or persons legally entitled thereto.

    _______________(trustee date:____________________


    AND my Notice of Default says:

    “Deutsche Bank National Trust Company as Trustee of the IndyMac INDX Mortgage Loan Trust.”

    Yet I have no documentation and there is no recording of a change in Trustee…

  46. tnharry,

    8:00AM: Nerd comes to school, is slapped and his entire lunch is taken.

    12:00PM: Lunch is offered to 90210 crowd….several takers, deal made. Many dollars change hands.

    1:00PM: 90210 crowd realizes that the lunch was nothing but empty food boxes and wrappers, already eaten.

    2:00PM: 90210 crowd shows up at school office complaining that they paid for really decent food, but got nothing but wrappers.

    3:00PM: Fed Schoolmaster determines that it should be looked at by others not in the heirarchy of the school.

    3:30PM: Many of the students who have been taken from are hungry, and starting to complain.

    3:45PM: Federal authorities show up declaring that everything is OK. Not to worry. Students should send in expenses and income reports.

    4:00PM: The Feds say that although many will go without lunch today, tomorrow, and for the foreseable future, it’s not really that bad. The overall markets that include the original offenders are doing well.

    5:00PM: The wealthy succeed, the others go without.

    That’s what is happening around the globe right now.

    THEY = 0.01% HAVE.

    WE = 99.99% HAVE NOT

    It’s not by accident. Bernanke, Geithner, Obama, Paulson, they’re all from the bully class, and they will not be usurped.

    At least that’s what they think. The “let them eat cake” line only goes so far. Think about it. Watch Egypt, Jordan, Algeria, then pay close attention to the PIGGS as things continue to get worse. How far are you willing to enslave your offspring to the debt slavery of the Goldman’s and the Chase’s?

    If you don’t believe me, that’s OK. Just roll up your sleaves and toil for the rest of your lives, just like the deep south did a hundred or so years ago.

    Owned by the elite who owned the cotton and the land, but had nothing else to do with it rather than get wealthy from it. The people who toiled mattered not. Just like now.

    It’s exactly the same.

  47. Hey Randy Frodsham,

    would that be fraud-scam……..?

    You are correct. My DOT on my last refinance states exactly that.

    In this refinance, the prior loan refinanced was paid in full by new lender as that was recorded in the Calif land records by America’s Servicing Company, and then at the same time a Full Reconveyance was done by America’s Servicing Company and filed in the land records. And this states:

    Wells Fargo Bank, N.A., as present trustee for the DOT executed by us ……….having been requested in writing, by the holder of the obligations secured by said DOT, to reconvey the estate granted to trustee under said DOT, does hereby reconvey to the person or persons legally entitled thereto, without warrany, all the estate, title and interest acquired by Trustee under said DOT.

    And nothing further has been rcorded in the land records. Chase was our servicer for the refinace, and now it is IBM Lender Business Processing Servicer. And per IBM LBPS per my QWR to them, they responded Fannie Mae is the beneficiary. Doesn’t sound right to me.

  48. Marie – go to the Secy of State website for the state where they have their license. Then you can search for their application, bond and maybe even e&o insurance. The application will show you his real signature and you can then match it to what your document has. Get a handwriting expert to verify if it is a forgery. If Georgia requires a log book then write to the notary and request a copy of the page with your entry on it. Many of these robo-notaries didn’t bother. If they don’t respond you can also put that in your report. Also look at and see if he has been diposed and send a copy of that as well. Go for it.

  49. The answer to Mr. Garfield’s question, “WHO GETS THE HOUSE IF THE DEBT HAS BEEN PAID?” (at least for California) is found in Paragraph 23 of most deeds of trust, which says:
    ‘RECONVEYANCE. Upon payment of all sums [it does not specify who pays] secured by this Security Instrument [the Security Instrument is the Deed Of Trust], Lender shall [this is mandatory, not permissive] request Trustee to reconvey the Property and shall surrender this Security Instrument and all notes evidencing debt secured by this Security Instrument to Trustee. Trustee shall [again, mandatory language, not permissive] reconvey the Property without warranty to the person or persons legally entitled to it.” If the entity named as “Borrower” in the Deed Of Trust is the same as the entity to whom title was granted on the Grant Deed, That would probably be the “person or persons legally entitled to” the title.
    What say you?

  50. I found a blog called STOP or Stop Taking our Property with alot if information on Mers.

  51. Ditto

    Thanks for that info I wasn’t aware that there was potentially compensation: I’m an aggrieved party but I didn’t file the complaint I need to find out what specifically provoked the revocation–other than my wishful thinking

  52. Ditto on substitutions of trustees

  53. Speaking of malfeasance:

    MERSCorp, which is the parent of MERS Inc., has entered into a 7 year contract with a company called “Genpact”. The link below appears to describe an authentic event, words we’re not really familiar with these days.
    MERS has engaged in the largest case of corporate malfeasance in history.

    Here is the link for the announcement made at Genpact:

    According to Dave Krieger, author of “Clouded Titles”, Genpact is headquarted in the Bahamas and apparently operates in India.Yes, India.

    In addition to the most egregious insult to most egregious injury, some fear this is an effort at spoilation. It will also likely serve to add yet another layer and another party to legally ‘haggle’ with, in efforts to get at the truth of MERS’ ‘records’. What is going on here? This private ‘record-keeping’ wasn’t and isn’t brutal enough? Now it’s leaving our shores?

    As the illusion of MERS has unravelled – to our horror – it has become clear that it is only members of MERS who actually enter any information including transfers of notes into its database. This has been done on a strictly voluntary basis with absolutely no oversight by MERS, which has and never has had employees. Nor is oversight possible in a clandestine, voluntary only system, especially one with no corporate governance of its own and no oversight or governance of actions taken by alleged principals in the name of the alleged agent (this is legally skewed).
    What has also become clear is that MERS has operated without one scintilla of corporate governance, from non-existant resolutions to the following list of malfeasance, misfeasance, nonfeasance, or d) all the above.

    MERS does not have nor has it ever had any copies of notes or deeds or trust or mortgages. It has no copies of collateral instruments for which, through its members, it has claimed either nominee, agent, or beneficiary status.

    MERS does not participate in any litigation in which it is a party. Counsel allegedly representing MERS is retained and paid by members, members who are also represented by that same counsel and more often than not, in the same litigation. This is a prima facie, unprecedented instance of conflict of interest, and is purposefully misleading to all involved, including the judiciary. “MERS” litigation arguments are being made by the members in defense of the actions taken by those members in the name of MERS.

    MERS has no corporate central archive for, nor has it ever had, copies of litigation undertaken by its members in its name. MERS may or may not have even been notified of litigation undertaken and paid for by its members in its name.

    MERS has never provided a copy of any document or instrument attached to any motion or pleading in any litigation or foreclosure action taken by its members in its name. Someone else did, in MERS’ name.

    MERS did not file foreclosure actions. These actions were taken by other parties in MERS’ name, and yet other participants in the foreclosure process were hired and paid by members, not MERS. Documents signed in MERS’ name were not based on MERS’ books of accounts, files, records, or documents within MERS’ corporate supervision, custody, or control.

    No employee or real corporate officer of MERS ever executed an assignment of anything. Members did, with no corporate oversight or supervision by MERS. MERS does not have a central corporate archive nor has it ever had copies of these alleged assignments executed in MERS’ name by member’ employees or foreclosure mills.

    Unless an affidavit or declaration was signed by one of MERS’ four true corporate officers, that affidavit or declaration was actually signed by a member’s employee. MERS does not have a central archive nor has it ever had copies of these affidavits and declarations. These affidavits and declarations were never made with any MERS’ corporate oversight or supervision nor based on MERS’ corporate records, documents, or accounts.

    MERS does not maintain a central corporate archive for notices, demands, or correspondence related to foreclosure done by its members in its name nor were any of these ever constructed or executed with MERS’ corporate oversight or supervision.

    MERS does not maintain a corporate archive of Mr. Hultman’s alleged appointments of (straw) certifying officers. The current corporate iteration of MERS, Inc. (“MERS III)” has no corporate resolution authorizing these appointments.

    An audit of MERS’ database, long overdue, would likely reveal more transfers of servicing rights than transfers of notes. Transfers of notes to ‘securitized trusts’ are not to be found – the trail , if at all straight and narrow, ends ‘prematurely’, I do believe.

    Not pretty. And there, in this pretense of legitimacy, are the only ‘records’ of collateral interests in our land ownership. This is NOT a reason for the government of we the people to turn a blind eye, along the lines of too big to fail. We cannot and will not be held hostage by this gang. MERS’ entire ‘records’ need to be made public and let the chips fall where they will. MERSCorp’s own actions and inactions have provided a big enough stick.

    How about this? MERSCorp can hire thousands and thousands of AMERICAN workers, tax-paying employees (not contract workers), to begin the seemingly impossible task of ‘correcting’ this atrocity. This would mean auditing (trying, anyway) the voluntary entries, and returning proper chains of collateral interests to our land records where they stinking belong. County recorders can hire thousands, as well. The task may well be all but impossible, and of course will be small comfort to those who have already lost their homes to the boogie man, but hiring out of work American employees is a better move than out-sourcing and out-sourcing out-of-this-country. MERS, the no-employee-corporation seems to have a major aversion to paying taxes into our coffers, as again evidenced by outsourcing a contract to a foreign entity, such as it will not inure to the benefit of tax-paying American-out-of-work-forces and thus not generate income taxes. Who ARE these people?
    Who wants to work for MERS? No one, really. But in the larger scheme of things, it would serve a greater purpose.

    MERS participated in, was the major enabler, if it were not the co-architect along with Wall Street of an unparalleled economic disaster.
    I literally shudder to think what they are up to with this contract. If MERS is not up to no good with this move, (dubious, dubious, dubious), they can dump the contract, buy their way out, or they can honor their new contract AND hire Americans. They’ve got the funds.
    Is our only path to righting invaluable, irreplaceable land records leaving, off for India? I hope like heck I’m wrong and this is not as it appears.

    This malfeasance, misfeasance, and nonfeasance is not without significant legal consequences. The judiciary should recognize the legal implications now that these issues are more fully disclosed.Yes, they sneaked up on us initially. That was then.

    The judiciary has had years now to grapple with “free” home, about 100 times longer than it took our government to grapple with handing over billions of “free” funds. What, the American homeowners’ blood is not as red (or is it blue?) as Wall Street’s?

    MERSCorp should be more than ashamed. This writer is livid. Tuck your tail between your legs, own your sins, and choose the right course of action.

  54. Congressman “Lost Note” Posey to address local board of realtors this week in Melbourne, FL.

    From the flyer:

    “This forum will provide you with all you need to know about Foreclosures & Short Sales. Panelist from Fannie Mae, Freddie Mac and HUD will be available to answer all your questions.”

    *I’d like to hear the reasoning on his sponsoring SB 282 which allows virtually anyone to negotiate lost notes?

    Posey’s new campaign slogan:


  55. Then you have Congressman Bill “Lost Note” Posey (Realtor)… former FL Senator – loophole specialist!

    Google “Posey” & “Florida SB 282”

    *any wonder why the Congressman (realtor) and Rep (mortgage broker) aren’t going after the “real” crooks??

  56. Wow – looks like the banks sure did a number on Florida’s Retirement System. Now Rep Workman (Brevard – also a mortgage broker) proposes to take 3% from the paychecks of public employees to cover losses incurred by FRS. Banks committing the largest financial crime in the history of the world, then pushing through bills that would take from the pockets of public employees to cover the losses on the State’s retirement fund… Priceless!

    Link to FRS Investments

    PS – Workman is also a mortgage broker!

  57. Marie – have you filed against the notary’s bond? Get a copy of the revocation and file a claim against his bond. Could be $5K or more

  58. Yeah, what he said!

  59. Harry, the point here is that in both situations(borrowers of residential property and borrowers of municipalities) there is an obligation created. However, when it is learned that there was malfeasance and a settlement had been reached and paid to the source of the original funds, what happens to that obligation? Does the borrower still have the same obligation or is it reduced/eliminated? Neil is arguing that it is indeed reduced or eliminated.

    If I borrow $5,000 and my lender was ultimately found to have committed fraud and ordered to pay $10,000 to the investors that came up with my $5,000, then I no longer have a $5,000 obligation because it was satisfied by the $10,000 payment/settlement. There may still be a note. That note may still be enforceable. But the obligation is not. That note has become unsecured when my obligation ceased to exist.

    Ditto for any municipality caught up in this crap.

  60. It is relevant. It is more wall street hijincks to suck ALL the cash out of us in whatever illegal manner possible.

  61. The borrower doesn’t have anything to do with this article. Borrowers can read yet another article that describes how the “rich and famous” obtain legal remedies for their inconveniences. Gretchen wrote *another* article recently: ‘Borrowers are Not to Blame”. (Not to blame, and they can’t afford due process, and many lawyers are not really interested)
    The two investors here have access to legal remedies (power) that the average borrower/citizen will never have.

  62. c’mon Karen, that makes no sense. replace words in Lady Gaga’s song Pokerface with LPS and DocX and post those lyrics here. Same level of irrelevant nonsense

  63. Apologize for distracting from the subject, but I was today informed by a contact that CHRISTOPHER IVEY georgia notary on (and no doubt lots of others) a 2009 Assignment of my Deed of Trust (Linda green and tywanna Thomas) from Ahmsi to deutsche bank, has apparently just had his notary license revoked.

    This info might be of interest to others similarly affected by his unprincipled behavior.

  64. tnharry, THIS is how it relates:

    “Citigroup misled their wealthiest clients and then tried to blame them for relying on what they were told,” Mr. Caruso said.

    Replace with: “The (illegally securitized) mortgage industry misled homeowners/borrowers (with inflated appraisals), and then tried to blame them for relying on what they were told when everything blew up in their face with the ‘Crash’…”


  65. While I am glad the two investors got their money back, and more.

    BUT, they are rich, as compared to me and most Americans (and Global Citizens amongst all other Countries which are involved in this MBS crap),

    and they can afford and get their money back, so the rich continue to get rich or stay rich………….

    While us 98% of the people still get fooked as we can’t afford the legal costs and doing it alone is hard…………and we have to work day to day, week to week to make ends meet.

    But, I will fight, and continue to do so until they force me out, and I will make them force me out, and I will have at least won to that degree as opposed to just walking. And I realize I will be dealing with dumbed down people that are caught in the trap unbeknownst to them. And I am their worst enemy as I have nothing to lose.

  66. This is getting more and more bizarre. Slapping a title including the word “borrower” on a story about an arbitration award dealing solely with municipal bonds doesn’t make it relevant to the mortgage fiasco…

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