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EDITOR’S NOTES: Maybe Lehman management is flipping for the prosecution. The fact remains that there is growing doubt whether there is any justification for putting a value on mortgages that are unenforceable and therefore whether the mortgage bonds, which are empty anyway, could have even the potential for value. This is why investors are suing the investment banks rather than attempting to form their own associations to collect from homeowners. The bottom line is that as things evolve, it is becoming increasingly apparent that the millions of foreclosures that have already been “booked” are fraudulent and subject to being reversed, as each court that actually looks a the paperwork and the PROOF sees that the would-be foreclosers are relying on non-existent proof.

The fact is they can’t prove their claim because there is no scenario under which they can identify themselves as creditors with respect to the homeowners. They are not on the paperwork, they did that on purpose and now they must live with it. They can’t fix it without a new signature from the homeowner-borrower which is highly unlikely. Of course, they didn’t lose money on the transaction because they never used their own money to fund the mortgages to begin with and they pocketed (Tier 2 Yield Spread Premium -YSP) a substantial amount of money that investors thought was being used to fund normal mortgages that were subject to the same rigorous underwriting standards that mortgage loans have been subject to for centuries: Ability to Pay and Adequate Collateral. Neither was true, the securitizers knew it and the investors are suing because of that.

Audit Notes: Lehman, Off the Hook; Foreclosure Scandal; Bloomberg Snooze

By Ryan Chittum

Bloomberg News scoops that the fearsome SEC is going to let top executives from Lehman Brothers off the hook without so much as a wrist slap. Instead, it will give them a “public rebuke.” Well, that ought to disincent a future generation of corporate criminals.

Bloomberg gets some good quotes from Duke professor James Cox, who rebuts the idea that Repo 105 was technically legal:

In April, the Financial Accounting Standards Board changed its rule for how firms have to account for the short-term transactions that let Lehman temporarily remove about $50 billion in assets from its balance sheet by treating them as sales. FASB’s move may bolster the defense that the rule, not Lehman’s application of it, was faulty.

Since Lehman is defunct, any enforcement action would likely target individuals, such as Fuld and Callan, said Cox.

“The executives had to sign off that the financial statements fairly presented the firm’s financial position,” Cox said. “Even though the Repo 105s were perhaps in technical compliance with GAAP, they were distorting the true economic image of the firm.”

The Wall Street Journal had a nice piece on the foreclosure scandal earlier this week, reporting that borrowers are having success fighting banks by arguing they can’t prove that they own their houses.

During the fall, banks temporarily suspended foreclosures to address so-called robo-signing problems, where employees were approving legal documents without properly reviewing them. They said that in weeks they could fix what they considered to be simple clerical errors. But borrowers are uncovering new types of document problems, further delaying banks’ efforts to get foreclosures back on track.

In some cases, borrowers are showing courts that banks failed to properly assign ownership of mortgages after they were pooled into mortgage-backed securities. In other cases, borrowers say that lenders backdated or fabricated documents to fix those errors.

And it gets this fun quote from the industry:

Laurence E. Platt, a banking-industry lawyer at K&L Gates in Washington, concedes that banks may have been sloppy. But he says “the real assault on the legal system” are efforts by judges and local officials to strip lenders of their rightful ownership and make foreclosures impossible.

Read Adam Levitin on why that’s nuts.

— Bloomberg’s new Bloomberg View editorial page offers a good example of why you can almost always skip a publication’s house editorials. Today it writes on the Groupon IPO:

There are lots of reasons to feel on edge about the future — but don’t try to impose any of them on Andrew Mason, the 30-year-old founder and chief executive officer of Groupon Inc. Yesterday, his online-coupon business filed to go public, with Mason blasting out a message that is worth remarking on for its youthful exuberance.

And that’s the lede.

This is even more insipid:

What comes next? Mason admits he doesn’t know, but his entrepreneurial zeal (and honesty) is welcome. “As with any business in a 30-month-old industry,” he writes, “the path to success will have twists and turns, moments of brilliance and other moments of sheer stupidity. Knowing that this will at times be a bumpy ride, we thank you for considering joining us.”

Groupon’s chances of success are impossible to predict —as up in the air as the Republican presidential field or the Mets’ future. The “risk factors” in Groupon’s prospectus include more than 40 ways the company could come unstuck. Even so, hats off for trying. And if it doesn’t work out, investors can’t say that young Mr. Mason didn’t warn them.

Zzzzzz.

19 Responses

  1. All the best for writing this, with any luck , it will come in handy in the future.

  2. The value ‘lender/investor’ agreed to keep asset on their books.
    Asset belongs to third party the bank decided to use in their best interest period.
    The consumer had no idea that the ‘lender/investor’ would procure cash for the asset through a third party using the third party credit line and deposit currency (convert asset into US Currency) by depositing into Corporate Securities Treasury.

    The rest smoke and mirrors

    The new mortgage is ‘note holder in blank’ who collects payments from somebody over 30 years and deposits funds into ‘Master Servicer’ account after all expenses deducted handled by the handlers.

    Again pure deposits converted into other assets owned by the banks.

  3. FORMERLY E. F. HUTTON MORTGAGE CAPITAL, INC. 1987
    RESTATED ‘CERTIFICATE OF INCORPORATION’

    RESTATED
    CERTIFICATE OF INCORPORATION
    OF
    STRUCTURED ASSET SECURITIES CORPORATION

    Pursuant to Sections 245 and 242 of the General
    Corporation Law of the State of Delaware

    STRUCTURED ASSET SECURITIES CORPORATION, a Delaware
    corporation organized on January 2, 1987 under the name E. F.
    Hutton Mortgage Capital Inc., does hereby amend and restate
    its Restated Certificate of Incorporation, aa heretofore
    amended, to read in its entirety as set forth below:

    ARTICLE I

    The name of the corporation is Structured Asset
    Securities Corporation (the “Corporation”).
    Delaware corporation (the “Corporation”), having its registered office at Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, in the County of New Castle

    FIRST: Item (a)(ii) of the Third Article of the Restated
    Certificate of Incorporation of the Corporation is hereby amended so as
    to read in its entirety as follows:

    mortgage notes and related mortgages, or interests therein
    (including, but not limited to, participation certificates with
    respect to such mortgage notes or related mortgages), or guaranteed
    notes, provided the guaranty is secured by a mortgage on real
    property (collectively, the “Pledged Mortgages”), which are either
    owned by the Corporation or granted by a Borrower to secure payment
    of a Mortgage Backed Note;

    ARTICLE III
    PURPOSES
    ——–

    The purpose for which the Corporation is organized is:

    (a) To acquire, own, hold, transfer, assign, pledge and
    otherwise deal with the following (the “Mortgage Collateral”):
    (i)(A) “fully modified pass-through” mortgage-backed certificates
    guaranteed as to timely payment of principal and interest by the
    Government National Mortgage Association; (B) Guaranteed Mortgage
    Pass-Through Certificates issued and guaranteed as to timely
    payment of principal and interest by the Federal National Mortgage
    Association; (C) Mortgage Participation Certificates issued and
    guaranteed as to timely payment of interest and principal, in most
    cases, by the Federal Home Loan Mortgage Corporation (collectively,
    the “Agency Certificates”); (D) securities representing interests
    in Agency Certificates; or (E) mortgage pass-through certificates
    or mortgage-collateralized bonds issued by any other entity with
    respect to or secured by a pool of mortgage loans (collectively,
    “Certificates”) which are either owned by the Corporation or
    granted by a Borrower (as defined below) to secure payment of
    Mortgage Backed Notes (as defined below); (ii) mortgage notes and
    related mortgages, or interests therein (including, but not limited
    to, participation certificates with respect to such mortgage notes
    or related mortgages) (“Pledged Mortgages”), which are either owned
    by the Corporation or granted by a Borrower to secure payment of a
    Mortgaged Backed Note; (iii) mortgage backed notes evidencing loans
    made by the Corporation to commercial banks, saving and loan
    associations and savings banks, the deposits of which are insured
    by the Federal Deposit Insurance Corporation (“FDIC”), affiliates
    of FDIC insured institutions, and other entities which are not FDIC
    insured institutions but are engaged directly, or through the
    owners of such entities or their affiliates, in mortgage financing,
    origination or funding activities (e.g., mortgage bankers, home
    builders and state agencies), or to any other entity (collectively,
    the “Borrowers”), which loans are secured by Pledged Mortgages or
    Certificates (“Mortgage Backed Notes”); and (iv) real property and
    any improvements thereon, including commercial, multifamily and
    residential properties (“Properties”);

    (b) To authorize, issue, sell and deliver bonds or other
    evidences of indebtedness (“Bonds”) that are secured by a pledge or
    other assignment of Mortgage Collateral, reserve funds, guaranteed
    investment contractor letters of credit, insurance contracts,
    surety bonds or any other credit enhancement device (collectively,
    the “Collateral”), and are rated in one of the three highest
    categories available by any nationally recognized statistical
    rating agency: provided that one or more classes of Bonds of a
    series issued by the Corporation may be subordinate to other Bonds
    of such series and need not be so rated;

    (c) To serve as depositor of one or more trusts that may
    authorize, issue, sell and deliver Bonds or certificates of
    interest that are secured by a pledge or other assignment of, or
    represents an interest in, the Collateral and are rated in one of
    the three highest categories available by any nationally recognized
    rating agency; provided that one or more classes of an issue of
    such securities by such trust may be subordinate to other
    securities of such issue and not so rated; and

    (d) To do all such things as are reasonable or necessary to
    enable the Corporation to carry out any of the above, including
    entering into loan agreements, insurance agreements, servicing
    agreements, reimbursement agreements, issuing debt (subject to the
    provisions of this Article III, Article VIII and Article X hereof)
    and selling residual interests in Mortgage Collateral or selling
    certificates of participation in any trust for which the
    Corporation serves as depositor.

    ARTICLE VIII

    LOAN AGREEMENTS AND INDENTURES
    ——————————

    The Corporation shall not do or perform any act expressly
    prohibited below without the written consent of each trustee and
    each lender (collectively, the “Lenders”) under any loan agreement,
    similar agreement or indenture to which the Corporation is party
    (collectively, the “Loan Agreements”);

    (i) The Corporation shall not incur, assume or
    guarantee any indebtedness other than indebtedness to the
    Lenders except for such indebtedness that (a) is
    described in paragraph (b) or (c) of Article III hereof;
    (b) by its terms is subordinated entirely to the
    indebtedness of the Corporation evidenced by the Loan
    Agreements; (c) is a capital stock liability; (d) is an
    account payable and expense accrual incurred in the
    ordinary course of business including fees and expenses
    payable pursuant to a collateral custody, pledge and
    security agreement entered into by the lenders; (e) is
    short-term borrowing from affiliates for the purpose of
    paying organizational expenses of the Corporation and
    initial expenses of filing any registration statement
    with the Securities and Exchange Commission; or (f) may
    be incurred by the Corporation that has been rated in at
    least the third highest rating category by Standard &
    Poor’s Corporation or other nationally recognized credit
    rating agency.

    (ii) The Corporation shall not engage in any
    business or activity other than in connection with or
    relating to the issuance of indebtedness evidenced by the
    Loan Agreements and such activities as are reasonable and
    necessary to enable the Corporation to carry out its
    purposes as set forth in Article III hereof.

    (iii) The Corporation shall not consolidate (other
    than for federal income tax purposes) or merge with or
    into any other entity or convey or transfer its
    properties and assets, substantially or in the entirety,
    to any entity (other than as described in paragraphs (a),
    (b) (c) or (d) of Article III hereof) unless (a) the
    entity (if other than the Corporation) formed or
    surviving such consolidation or merger, or that acquires
    by conveyance or transfer the properties and assets of
    the Corporation substantially or in the entirety, shall
    be organized and existing under the laws of the United
    States of America or any state thereof or the District of
    Columbia, and shall expressly assume, by a supplement to
    each Loan Agreement, executed and delivered to each
    Lender under each Loan Agreement, in form satisfactory to
    each Lender under each Loan Agreement, the due and
    punctual payment of the principal of and interest an all
    indebtedness then outstanding under each Loan Agreement
    and the performance of every covenant of each Loan
    Agreement on the part of the Corporation to be performed
    or observed and shall be subject to the restrictions set
    forth in this Certificate, (b) immediately after giving
    effect to such transaction, no default or event of
    default under any Loan Agreement shall have occurred and
    be continuing and (c) the corporation shall have
    delivered to each Lender under each Loan Agreement an
    officers’ certificate and an opinion of counsel, each
    stating that such consolidation, merger, conveyance or
    transfer and such supplement comply with the Loan
    Agreement and that all conditions precedent provided for
    in each such Loan Agreement relating to such transaction
    have been complied with.

    Upon any consolidation or merger, or any conveyance
    or transfer of the properties and assets of the
    Corporation substantially as provided above, the entity
    formed by or surviving such consolidation or merger (if
    other than the Corporation) or the entity to which such
    conveyance or transfer is made shall succeed to, and be
    substituted for, and may exercise every right and power
    of, the Corporation under each Loan Agreement with the
    same effect as if such entity had been named as the
    “lssuer” or “Borrower” therein. In the event of any such
    conveyance or transfer the entity named as the “Issuer”
    or “Borrower” in each such Loan Agreement or any
    successor that shall theretofore have become such in the
    manner prescribed in each such Loan Agreement may be
    dissolved, wound-up and liquidated at any time
    thereafter, and such entity thereafter shall be
    released.from its liabilities as obligor and maker on all
    of the indebtedness, and from its obligations under the
    Loan Agreements.

    (iv) The Corporation shall not dissolve or
    liquidate, in whole or in part.

    (v) The Corporation shall not amend, alter, change or
    repeal any provision contained in this Article VIII, Article
    IX or Article X without (a) the affirmative vote in favor
    thereof of eighty percent (80%) of the then outstanding stock
    and (b) the prior written consent of each Lender under each
    Loan Agreement pursuant to which indebtedness under each Loan
    Agreement pursuant to which indebtedness that are then
    outstanding may have been issued by the Corporation.

    ARTICLE IX

    COVENANTS REGARDING OPERATIONS
    ——————————

    The Corporation shall conduct its affairs in accordance with the
    following provisions:

    (i) It shall establish an office through which its
    business will be conducted separately and apart from that
    of any person or entity which is the owner of more than
    50% of its outstanding stock, currently Shearson Lehman
    Hutton Inc. (the “Parent”) (although the Parent may lease
    space to the Corporation).

    (ii) It shall maintain separate corporate records
    and books of account from those of the Parent. The books
    of the Corporation may be kept (subject to any provision
    contained in the statutes) outside the State of Delaware
    at such place or places as may be designated from time to
    time by the Board of Directors or in the Bylaws of the
    Corporation.

    (iii) Its funds shall not be commingled with those
    of its Parent or any of its subsidiaries or affiliates
    other than the Corporation.

    (iv) Its Board of Directors shall hold appropriate
    meetings to authorize all of its corporate actions.

    (v) The Corporation shall conduct its business so
    as not to mislead others as to the identity of the entity
    with which they are concerned.

    (vi) The Corporation shall provide for its operating
    expenses and liabilities from its own funds, which may
    include funds borrowed from affiliates (other than its
    Parent) (although certain organizational expenses of the
    Corporation may be paid by its Parent).

    (vii) The Corporation shall, when appropriate,
    obtain proper authorization from its Directors or
    stockholders for corporate action.

    (viii) The Corporation shall act solely in its
    corporate name and through its duly authorized officers
    or agents in the conduct of its business.

    (ix) The Corporation shall not hold itself out as
    being liable for the debts of any other entity (except as
    may me implicit in a subordination agreement executed in
    connection with the issuance of Bonds) and shall not
    permit the Parent to hold itself out as liable for the
    debts of the Corporation.

    (x) Each of the Corporation and the Parent shall
    maintain an arm’s-length relationship with the other.

    ARTICLE X
    AMENDMENTS
    ———-

    If the indebtedness under a Loan Agreement is given a rating
    by a nationally recognized statistical rating agency, this
    Certificate of Incorporation may not be amended prior to notice
    being given by registered or certified mail to such rating agency.
    In addition, no additional indebtedness may be incurred by the
    Corporation, other than indebtedness described in paragraph (b),
    (c) or (d) of Article III hereof.

    ARTICLE XI

    TRANSFER OF ASSETS
    ——————

    The Corporation may not transfer all or substantially all of
    its assets to a transferee unless such transferee is subject to the
    restrictions contained in this Certificate. A pledge of its assets
    in connection with the issuance of debt shall not be considered
    such a transfer. Additionally, the Corporation may transfer any
    residual interest it may have in assets so pledged to any third
    person and such transfer shall not constitute a transfer subject to
    this Article.

    ARTICLE XII

    SPECIAL COVENANTS FROM LENDERS
    ——————————

    The Corporation shall receive a covenant from all creditors,
    other than Lenders, prior to incurring debt, that no petition in
    bankruptcy shall be filed against the Corporation until at least 90
    days have expired since payment in full to the Lenders.

    The foregoing Restated Certificate van duly adopted in
    accordance with the provisions of Sections 228, 242 and 245 of the
    general Corporation Law of the State of Delaware.

    IN WITNESS WHEREOF, Structured Asset Securities Corporation
    ban caused this Restated Certificate of Incorporation to be duly
    executed in its corporate name this 26th day of October 1992.

    STRUCTURED ASSET SECURITIES
    CORPORATION

    By: /s/ Mark L. Zusy
    ————————
    Name: Mark L. Zusy
    Title: Senior Vice President

    ATTEST:

    By: /s/ Michelle Slaughter
    —————————-
    Name: Michelle Slaughter
    Title: Assistant Secretary

  4. sel,
    Tthe laws can be followed and still harm the nation.

    Lehman is an entity that can’t go to jail.

    You do know Goldman’s acquistion as UNDERWERITER of Littleton to Ocwen benefits the same owners who used tradename of Lehman and own the currency converted and moved out of US.

  5. Where is Mr. Soliman? I tried to email expertwitness as requested but email failed. Is he ok?

  6. True Economic Image of the firm really true electronic transactions of the firm’s affiliates, non-bank affiliates, subsidiaries, holding companies, etc.

    Can we please make a Living Lies ‘dictionary’ of terms for ‘consumers’?

    For example, ‘Wall Street’ is too generic.
    One must understand employees who worked for the financial holding companies were paid commissions by the owners of the commercial brand labels, taking assets into their treasury to be converted into electronic transactions held in the name of Owner of company c/o Cede & Co nominee DTC.

    Wall Street: Nominee (“DTC”) as Depository Trust Company electronic booked entries may not be converted without passing through gateway of c/o Cede & Co (Shareowners of foreign owners who are members of private group who benefit from each transaction and control access to the assets.)

    Who thought Lotus would lead to electronic spreadsheets trasmittals which allow US CURRENCY DEPOSITS (of third parties) LOOPHOLE allowing Corporate Securities Treasuries deposits to flow thorugh 90 days through pass through agencies each financial holding company or bank holding company owns and convert currency and assets into other form and out of control of Congress.

  7. m. soliman
    what do you say to….. FASB’s move may bolster the defense that the rule, not Lehman’s application of it, was faulty.

    Since Lehman is defunct, any enforcement action would likely target individuals

  8. Leapfrog,

    same old same old.

    Those on the inside (wall st & those connected) buy for pennies on the dollar, hype it up – media -pundits, yak yak yak, sell to public via IPO, thereby transfer money from public (and that includes Mutual funds, Ira’s, 401k’s, etc – such called smart managers managing your money – like they did buying ABS/MBS). And time goes buy, and

    past performance is not inditative of future performance, these are risk adverse investments – welcome to the secondary market, not main street.

  9. carie,

    OH — those debt buying divisions of the banks.

    Exactly — What Lies Beneath???

  10. I am and have been comfortable about my property ownership since I met Neil Garfield and believed in him from June 2007, I am a pro-se litigant that i fought the Supreme Court of New York, the Appellate Division Second Judicial department, the Court of Appeal in Albany New York, these courts improperly dismissed my case, and I filed a complaint in the USA Distric Court of New York, I precluded and stop the foreclosure procedure three times , I told them… then in 2007 what was going to happen and they did not believed me, instead they dismissed my allegations that where travesty and miscarriage of justice, now my case is pending decision in the Federal District Court of New York , the pretender lenders filed a motion to dismiss under …..MOTION to Dismiss Plaintiffs’ complaint pursuant to Rule 12 of the F.R.C.P. by GMAC Mortgages, Homecomings Financial, U.S. Bank National Association. (Attachments: # (1) Notice Pursuant to Local Civil Rule 12.1, # (2) Declaration of Robert M. Guttmann P.C. # (3) Exhibit A, # (4) Exhibit B, # (5) Exhibit C, # (6) Exhibit D, # (7) Affidavit of Service) (Guttmann, Robert) the fact of the matter is the affidavits from five Attorneys are not valid, because Honorable Judge Kiyo A. Matsumoto ordered that the case is non-dispositive, meaning that these cases are other cases which also in fact affects the Defendants motion to dismiss as Non-Dispositive these motions are all other motions, including but not limited to discovery, third party practice, temporary relief, intervention or amendment of pleadings, and now they are facing Attorney General Eric Schneiderman who in fact is going after the Banks. millions of foreclosures that have already been “booked” are fraudulent and subject to being reversed,

  11. I am and have been comfortable about my property ownership since I met Neil Garfield and believed in him from June 2007, I am a pro-se litigant that i fought the Supreme Court of New York, the Appellate Division Second Judicial department, the Court of Appeal in Albany New York, these courts improperly dismissed my case, and I filed a complaint in the USA Distric Court of New York, I precluded and stop the foreclosure procedure three times , I told them… then in 2007 what was going to happen and they did not believed me, instead they dismissed my allegations that where travesty and miscarriage of justice, now my case is pending decision in the Federal District Court of New York , the pretender lenders filed a motion to dismiss under …..MOTION to Dismiss Plaintiffs’ complaint pursuant to Rule 12 of the F.R.C.P. by GMAC Mortgages, Homecomings Financial, U.S. Bank National Association. (Attachments: # (1) Notice Pursuant to Local Civil Rule 12.1, # (2) Declaration of Robert M. Guttmann P.C. # (3) Exhibit A, # (4) Exhibit B, # (5) Exhibit C, # (6) Exhibit D, # (7) Affidavit of Service) (Guttmann, Robert) the fact of the matter is the affidavits from five Attorneys are not valid, because Honorable Judge Kiyo A. Matsumoto ordered that the case is non-dispositive, meaning that these cases are other cases which also in fact affects the Defendants motion to dismiss as Non-Dispositive these motions are all other motions, including but not limited to discovery, third party practice, temporary relief, intervention or amendment of pleadings, and now they are facing Attorney General Eric Schneiderman who in fact is going after the Banks.

  12. Here’s to Groupon and Ponzi schemes…

    http://www.zerohedge.com/article/grouponzi-exciting-news-ponzi-fans

  13. The BANK FREAK OUT has begun…fasten your seatbelts!!!

  14. DIRECT QUOTE MOMENTS AGO ON CNBC FROM PRESIDENT AND CEO OF MERION WEALTH PARTNERS—BOB ANRES:

    “At this point we don’t want to (invest in banks)…I think that people are afraid of what the banks ACTUALLY HOLD”…

    ’nuff said.

  15. Most posts here are really irrelevant, and help noone in the futherance of their foreclosure fight. Post what helps or doesn’t. post steps to take, and in what order, depending on where someone might be in the process. These attacks on other people’s posts and especially the political rants are so worthless and take up time that could be devoted to actual things that would help someone.

    .

  16. I’m really very confused by your animosity Carie. Should I dedicate 50% of my posts to attacking you like you do to me? That certainly seems like a waste of time…

  17. They always knew they were just counting on us never finding out.Lulled into a false sense of security that did not exsistBloomberg is a little slow on the uptake there just another rag bought and paid for by the banks.Lets face it they all had the chance to step up and take this on and run with it they simply chose not to.You snooze you lose and bear the repurcussions.What a hoot!!

  18. OMG, TN…LOL? R U 4 RL? C U L8TR…LK NVR!!!

  19. What a strange, disjointed post. Lehman, foreclosure, and Groupon all lumped in together, lol

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