NY and DE Examine Trust Documentation: Pandora’s Box Open


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If you don’t understand why the bundling of mortgages at the level of the investment banks is important to your case(s) involving securitized mortgages, then you don’t “get it” yet. It isn’t that you need to be an expert in securitization to win cases at the loan level and foreclosures, it is that you need to know key factors that affect the title, liability and ownership of the home, the obligation, note and mortgage. The inquiry referred to below runs to the heart of this issue.

WRONG QUESTION: People are asking where is my loan? What is the name of the Trust in which my loan is located? They should be asking what trust(s) or pools CLAIM to have an interest in your loan and do they really have it. That’s why the COMBO Title and Securitization Analysis, the Forensic Analysis and the Loan Level Accounting is so important. People ask “how do I prove which trust owns the pool?” Wrong question. The party seeking foreclosure needs to prove up ownership, not you. The real question is how do you turn the Judges head to see that your denial of the default, your denial of the mortgage, note and obligation is anything more than a delay tactic?

The banks and many “experts” are busy explaining securitization as though the loans were actually securitized. They were not. And THAT is of key relevance as to who can declare a default, whether they even know if there is a default, and the identity of the party(ies) who can enforce the obligation. It isn’t that you are required to prove THEIR case, it is all about knowing when to raise objections, what evidence to demand (knowing what the result will be) and creating insurmountable obstacles to the pretender lenders who don’t have a dime in the deal but want to foreclose anyway.

If you know the securitization scheme, because you have a report and analysis in your had, and you know how to use it because you have attended our seminar, you are standing in a much stronger position than simply quoting the blog. Knowing the truth is one thing, knowing what to do with the truth is another.

Here was have a story about how the only two states under whose laws these so-called trusts were created, are investigating to see if the trusts exists, and if so, what is in them. What they are going to find is that there is no trust because there is nothing in them. Your loan, although claimed by the trust, never made it into the pool. It never made it into the pool because (a) the mortgages, notes and closing documentation were defective in the first instance and (b) they never even made the attempt to cover their mess up with paperwork until they were challenged in court — years after the deadlines when they might have claimed any such right.

But they are also going to find that the money trail tells a a whole different story. The loan transaction wasn’t between the homeowner and the payee on the note. It was between the homeowner and the investor-lender. But the investor lender got an entirely different set of paperwork than the paperwork given to the homeowner at the closing of the loan. And the paperwork given to the investor-lender was rife with errors, lies and misleading statements. These offices of Attorney general in New York and Delaware are going to find that the entire chain is corrupted, that the only document in the registry of title in the County in which the property is located is a mortgage securing an obligation that does not exist — because it secures an obligation as described on a note signed by the homeowner containing the wrong parties and the wrong terms.

And so they are going to find out that there could be some type of enforcement of the undocumented obligation (not the note), but there won’t be because the investor-lenders are not interested in getting into pitched battle with homeowners, nor do they want to take a position in court that would be construed as an admission against their own interest. The admission would be that the mortgage documents were legal, valid and enforceable. The investors are saying that the mortgages were garbage and unenforceable when they sue the investment bankers for 100 cents on the dollar. The pretenders are trying to bootstrap their own intentional scrambling of the documentation into a right to claim property and take the homeowner out from his dwelling on the strength of defective documents — not on the strength of a case where the homeowner borrower money from them, owes them any money or even knew of their existence when the loan was closed.

Two States Ask if Paperwork in Mortgage Bundling Was Complete


Opening a new line of inquiry into the problems that have beset the mortgage loan process, two state attorneys general are investigating Wall Street’s bundling of these loans into securities to determine whether they were properly documented and valid.

The investigation is being led by Eric T. Schneiderman, the attorney general of New York, who has teamed with Joseph R. Biden III, his counterpart from Delaware. Their effort centers on the back end of the mortgage assembly lines — where big banks serve as trustees overseeing the securities for investors — according to two people briefed on the inquiry but who were not authorized to speak publicly about it.

The attorneys general have requested information from Bank of New York Mellon and Deutsche Bank, the two largest firms acting as trustees. Trustee banks have not been a focus of other investigations because they are administrators of the securities and did not originate the loans or service them. But as administrators they were required to ensure that the documentation was proper and complete.

Both attorneys general are investigating other practices that fueled the mortgage boom and subsequent bust. The latest inquiry represents another avenue of scrutiny of the inner workings of Wall Street’s mortgage securitization machine, which transformed individual home loans into bundles of loans that were then sold to investors.

It follows months of sharp criticism of the mortgage foreclosure process, which produced an uproar last year over shoddy paperwork and possible forgeries of legal documents by banks, other lenders or their representatives.

The slipshod practices in foreclosures led to further questions about whether all the necessary documents were delivered to the trusts and properly administered by them.

Some of the nation’s biggest mortgage servicers are currently in negotiations with a group of state attorneys general to settle an investigation into foreclosure abuses. The new inquiry by New York and Delaware indicates the big banks’ troubles may not end even if a settlement is reached in the foreclosure matter.

The stakes are potentially high. If the trustees did not follow the rules set out in the prospectus, they may be liable for breaching their duties to investors who bought the securities. That could expose the banks to costly civil litigation.

Spokesmen from Bank of New York and Deutsche Bank declined to comment about the investigation, as did representatives from the offices of both attorneys general.

A complex process that produced hundreds of billions of dollars in securities during the lending boom, the issuance of mortgage securities began with home loans, which were then bundled into investments and sold to pension funds, mutual funds, big banks and other investors. The bundles were created as trusts overseen by institutions such as Bank of New York and Deutsche Bank; they were supposed to make sure the complete mortgage files for each loan were delivered within a specified time and with the proper documentation.

After the securities were sold, the trustees disbursed interest and principal payments to investors over the life of the trusts.

The trusts were governed by the laws of the states in which they were set up. Roughly 80 percent of the trusts are governed by New York law with the rest by Delaware law.

The rules governing the securitization process are labyrinthine, and there are steps required if the investment is to comply with tax laws and promises made by the issuer in its offering document. If the trusts did not comply with tax laws, for example, the beneficial treatment given to investors could be rescinded, causing taxes to be levied on the transactions.

The terms of these mortgage deals varied, but many of them required that the trustee examine each of the loan files as soon as they came in from the Wall Street firm or bank issuing the security. For a file to be complete, it would typically have to include all of the information necessary to establish a chain of ownership through the various steps of the bundling process, as when the originator transferred it to the issuer of the security who then moved it to the trustee.

Complete loan files were supposed to be delivered to the trusts within 90 days in most cases. If the trustee found any missing or defective documents, it was supposed to notify the loan originator so that it could either cure the deficiency or replace the loan. Such substitutions are typically allowed only in the early years of the trust.

By asking for documents relating to this process, investigators are trying to determine if the trustees fulfilled their obligations to the investors who bought the mortgage deals, according to the people briefed on the inquiry.

34 Responses

  1. I need an attorney referral for the Los Angeles Ca area, my present attorney withdrew from mu7 case,…urgent, I have a 3rd court date this 8-30-2011 and was notified only today, I am versed in the subject and I have my case prepared, I would like to speak with someone ASAP, thanks for your help! Steve Harris 818-887-6911 cell 818-693-2700

  2. I found this youtube podcast to be a good outline on the positives and negatives of investing in trust deeds. The speaker is able to highlight many limitations of trust deed investing which I think will be helpful for investors looking to go into this type of investing with realistic expectations.

  3. […] NY and DE Examine Trust Documentation: Pandora’s Box Open MOST POPULAR ARTICLES GET COMBO TITLE AND SECURITIZATION ANALYSIS – CLICK HERE — EVIDENCE COUNTS!!! click-here-to-register-for-seminar   WHY YOU NEED TO ATTEND GARFIELD CONTINUUM SEMINAR If you don’t understand why the bundling of mortgages at the level of the investment banks is important to your case(s) involving securitized mortgages, then you don’t “get it” yet. […] […]

  4. I was so excited in reading the recent decision of James Hendricks v US Bank until the end when the court granted defendant’s Motion for Judgment of Foreclosure in favor of First Franklin. What does this mean? Is it a shallow victory? Please enlighten me.

  5. “Being one, truth cannot be divided, and the differences that appear to exist among the many nations only result from their attachment to prejudice. If only men would search out truth, they would find themselves united.”

    “The fact that we imagine ourselves to be right and everybody else wrong is the greatest of all obstacles in the path towards unity, and unity is necessary if we would reach truth, for truth is one.”

    Above quotes from this site:


  6. do you realize that there are only a few in town that create havoc for the majority. One Mr Potter, in It’s a wonderful Life, is only one and a few employees but create a havoc. The majority of people are good. Things are the same in real life, look it over, look over your life and determine who created havoc for you and how many did not.

  7. I always cry.

  8. The richest man in town ——-those that have friends.

    The real pay in life.

  9. now five years later, you can’t sell. No buyers, one is trapped. Housing gone down in prices, there’s no buyers and no credit.

    Oh my god, it’s all so complicated, real estate laws, UCC’s, contract law, who owe’s who now, oh my god. Why just walk or because I haven’t paid on my mortgage I guess they can take the house, I haven’t paid. Thus 99 out of 100 didn’t question it. Now, some are questioning it, and now some more are questioning it, and some more, and some more. But we trust the banks. Pottervile

  10. And thus they turned the housing market into a CONSUMABLE.

    Typical scene 6 years ago:

    Oh, when do you plan to leave, 5 years, 10 years, sell the house, here’s a nice low interest rate, here’s a nice adjustable interest rate – only 6% first 5 years and then it jumps to 10% – but you state you plan on only being here 5 years, so that is a good deal, you sell the house in 5 years and all is good, if you change your mind, why we just refinance, your credit is good, all is grand, your monthly payment is $2000 which compares to renting so that’s good but you have ownership so that’s good (but property taxes, home upkeep) and you get a tax write-off just like the big boys, sign here.

  11. or Free of the chains of debt. So far I have not used the courts. Sorry, I don’t need no stink’in badges.

  12. E.Tolle,

    I have called a few lawyers on the those that get list and either no call back and the one I talked to was BS.

    Thus, it’s all BS. And I agree with your statement. What I have to call 100 attorneys to get to find one that really gets it, and then educate him??????????? Oh my god. FU, and pay you too. Jeepers.

    You know in my late 20’s I filed bankruptcy, it wasn’t that much, maybe 10k I think, but at the time it was overwhelming. The lawyer even asked me you sure you want to do this, I said yes, I want it to end. Anyways, after it was done and all ok, I told the lawyer I would some day pay back the credit cards and banks. Her reply “Why, I wouldn’t”. I will never forget her answer. AS I now understand how money is created and I TRUELY UNDERSTAND HER REPLY. I was stuck in some moral obligation to these corrupt institutions who only care about their bonus’s and money they can get on the backs of others.

    All consumer credit should be abolished and not allowed. Real banking to increase production and exchange of products is sound. It’s consumer credit that is used to CONSUME is the evil. You get no return and all consumer credit does is jack up false demand, not real demand. And demand is defined as the want with the ability to pay.

    Take this example. You go out and buy a nice new fan for 40 bucks. Use it once and try to sell it to somebody. what will you get, maybe 10 bucks at a garage sale. So you got that fan on your credit card, and like everybody else you have a balance and you carry the balance forward and pay a few bucks in interest every month. But of course if you pay off the CC every month you are ahead as far as interest is concerned. But even so, sell that fan for 10 bucks which includes the hidden inflation. But oh yes, Fed Res job is to keep inflation low, doesn’t matter.

    I will never buy a new product again. Just certain things like food, certain car parts, tires, etc. But even those I can find on Craigs list or free cycle, you know what I mean.

    They have turned Housing into a god damn trading game for their benefit.

    A millionaire once said never buy retail, buy wholesale.

  13. @ Gregory Bryl & tnharry,

    With all due respect to the JD’s in the crowd, you guys must not have a clue as to how many brain dead attorneys there are out there, at least when it comes to securitization law. The real world is overflowing with them. Just because you two get it doesn’t mean that even 1% of your profession does.

    By placing a well done sec audit with highlighted litigation points into the hands of an otherwise bright lawyer who just doesn’t know better might mean the difference in a Ta-Da moment and that continued deer in the headlight stare. And I for one got over paying a couple hundred dollars an hour for gamey lawyers a long time ago.

  14. Mr Bryl is exactly right and makes the point I keep dancing around – the posts and editorial commentary are all too often geared to sell the livinglies and luminarc products and services. Unfortunately, most of those products and services are not admissible in actual court proceedings. My favorite is the $1800 “expert declaration”. Simply not admissible in a trial or other hearing.

  15. Mr Bryl

    When the banks assert the loan was securitized how do you rebut to show what has likely happened to missing docs etc

    It seems to me that numerous experts assisted the court in Ibanez and probably other cases. I have to believe experts have a role in these cases. If the courts think defense experts are a joke, it’s no wonder these cases can’t be won by “the little people.”. I would try to get expert testimony in, whatever the perceived admissibility (or lack of same) for the various species of audits.

    Just my opinion

  16. Thanks, zurenarrh, I’ll look for those docs. Are Fannie Mae trusts governed by the same New York and Delaware laws as regular PSAs? If not, whose law governs Fannie Mae REMICs?

  17. Carie, yes just like I had a WaMu credit card and when Chase bought them for pennies on the dollar, yes they bought my credit card debt for pennies on the dollar, and that’s when I realized they were in fact now a debt collector and not original creditor. So I never sent them another dime – 2.5 years ago now and several new collection companies sending me pieces of paper saying I owe them some money. No I don’t, you idiots BOUGHT my debt, tough shit, you did a bad deal, not my fault and you can not get me to agree to pay for something you bought, not lent. Chase wrote it off their taxes, Chase is a public company, a business. They are not the Government. Like any business that has a bad customer, you don’t do business with that customer anymore. And they the banks and CC companies all tell themselves who are good customers via your FICO score. Statue of Limitations in Calif is 4 years. I will never talk to any collection company nor respond to their pieces of paper they send me. Slip on that Banana you bitches.

  18. Carie: This one is for you. The edifice is starting to crumble…


  19. This is so strange and funny and very irritating at the same time:
    We had to default on our Heloc (originally WaMu—now Chase)—and they are absolutely relentless—calling 3 times day for two weeks now…we haven’t talked to them yet because we are getting our ducks in a row for chap 7, but yesterday some woman from Chase reminded me of the “big bad wolf” fable: She actually walked up to my house and started BANGING on the front door with her fist!!! My dogs were going crazy, and it made me so mad that I didn’t care to even open the door, so I ignored her…she kept bagging on the door like a maniac—I think she knew I was home—and finally she OPENED my screen door and shoved a letter under the front door that says CALL CHASE—signed, Chase. I thought she was going to huff and puff and blow my house down!!! I think she would have if she could have…

    On the paperwork it says “Chase is a debt collector”…

  20. Please sign the Stop Foreclosures Now Petition

  21. How many cases have there been in which the various reports/analysis that can be purchased at Luminaq and via this site have been admitted as evidence in court?

    Is there a list somewhere that shows ongoing cases that have successfully been allowed to use these reports/analysis as evidence? Are there cases that can be cited which allowed the use of these analysis and expert witnesses as evidence?

  22. Jack–my research into Fannie indicates that they use a trust indenture and prospectuses and prospectus supplements in lieu of a psa. And these documents are available on the Fannie website…

  23. Here is Gretchen Morgenson and Josh Rosner on Dylan Ratigan show yesterday:


    Please watch—very exciting that this is finally national news!

  24. This is exactly why most “securitization reports” or “securitization audits” are useless, including those from this very site. The point is, you don’t care which trust claims to own the note because it is just a “claim” anyway. If they have a “claim,” they will let you know. Otherwise, you just take the aggressive stance none of the parties who are bothering you have a valid claim to ownership, and that is all you need.

    Any “opinion” as to whether the loan has been “securitized” (as opposed to the fact itself, of securitization, established by objective evidence) is both irrelevant and inadmissible, whether the opinion is generated by an “expert” or my grandmother.

    These “audits” are totally inadmissible, and any judges knowing a scintilla of the rules of evidence laugh at them. What is the difference between Mr. Auditor submitting a report and my grandmother submitting a report? Hint: none.

    What is that field of expertise that these people purport to be “experts” of? Browsing the SEC website? What needs to be studied with a microscope and ballistic testing that is not accessible to the naked eye? Hint: nothing. Any “expertise” needed is that of a lawyer or a person understanding words and capable of complex logical thinking. Not to mention that expert opinions on the ultimate issue are inadmissible for other, independent reasons.

    This site certainly has a ton of value to offer, but securitization audits is not one of them (to the extent that it’s claimed to be needed for a specific case rather than for the general understanding of the securitization process and the participants’ incentives and motivations).

  25. Do trusts created by Fannie Mae have Pooling and Service Agreements? I’m looking for the PSA for Fannie Mae REMIC Trust 2009-101, can’t find anything. I’m looking for the rules about how a mortgage loan is legally put into that trust. Does Fannie Mae use something else in lieu of a PSA? Thanks.

  26. marilyn lane—

    It makes sense that the fraud is on ALL levels…

  27. I hope to read next….

    HACKERS BREAK INTO MERS! Everyone has access to their loan files!

    Somebody make it happen! Give us transparency!

  28. More Smoke and MERS

  29. Eugene V

    Your comment is exactly why I’ve never ordered a report. Without an expert to explain and authenticate it’s not admissible. Then you have how many levels of hearsay? These reports are fine for trial prep but I’ve never figured out how you get them in

  30. I don’t live in New York or Delaware. I live New Jersey and these judges are hiding behind a veil of ignorance. Even with a Securitization Report & Analysis which is not taken seriously because there is no one attesting to the Report & Analysis that shows the Mortgage/Note is being claimed by an entity other than the Plaintiff(bank) such as FannieMae or FreddieMac securitized loans.

  31. RE: On Fraud entering the Judiciary, New York Chief Judge Jonathan Lippman whose responsibility is making sure the lower Court Judges follow the Supremacy Clause of the Constitution in their rulings, would not accept a Petition for Judicial Review even though he ruled in my case in Oct 2009 that the Appellate Court lst dept decision is not a final determination within the meaning of the Constitiution.

    So I started to think. Judge Lippman was Chief Administrative Judge in NYS from 1996 thru 2007. What does he know about a Network Type Agreement ( similar to a Network Agreement that Fidelity and LPS DOCX had with foreclosure attorneys )
    between the Banks, Title Companies and the Judges and court personel?

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