BANKS PAYING OFF HOME LOANS? TO WHAT ACCOUNT WILL THESE “SETTLEMENTS” BE CREDITED?

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“The game is on: a race to foreclose and get the properties in the name of some entity that is “bankruptcy remote.” While investors and homeowners continue to sort out what happened to them and why they are in the hole, the banks move forward grabbing as much as they can. But the banks can’t change law and can’t change the fact that no matter what they do they can’t make those mortgages good without another signature from the homeowner, past, present and future. That means that foreclosures will ease up if the current trend in the courts continue. But it also means that BOA et al will be taking an increasing number of hits on their balance sheet requiring them to raise additional capital or go out of business.”— Neil Garfield

EDITOR’S ANALYSIS: Think about it. BOA now announces it will cost $20 billion for it to clean up the mortgage mess. That is a BOA figure, which means it is the figure BOA wants everyone to use. But it is false. There will be more such announcements and then more again — for as the courts increasingly knock down any argument that the mortgages are enforceable or even unpaid, the value of the bogus mortgage-backed securities will fall. Those MBS were supposedly backed by mortgages. But we now know that the the mortgages never made it into the SPV (Trust or Pool) that was “backing” the SPV’s obligation to the investor who was the beneficial owner of the “assets” — assets that were not there!

Think about it some more. BOA says it is paying investors money for defaulted mortgages. Why are they paying? And why are they paying the money to investors? In the courts BOA has steadfastly maintained that the investors were not the creditors — and here they are paying them off as though the investors were the creditors. That being the case, from the investor’s standpoint it is therefore true that the investor is accepting this money in lieu of payment from the borrower. But the borrower is not receiving a credit against his “unpaid account” for this payment. Why not? It is also true that the investors are never going to see a nickle from the foreclosures — this settlement being a reason to give up those claims, which they know they can’t prosecute successfully.

If the “assets” on BOA’s books were stated correctly, then the investors would surely NOT take a pennies on the dollar settlement. The fact remains that the banks are still playing games through the media and with these friendly settlements that make the problem look far smaller than it is. And the fact remains that the number of hits BOA will take on bogus mortgages that supposedly were in bogus pools is going to increase from both ends — the homeowners and the investors. The more educated homeowners and investors get, the more they are looking back to the original transactions and realizing that virtually everything was an outright lie.

The game is on: a race to foreclose and get the properties in the name of some entity that is “bankruptcy remote.” While investors and homeowners continue to sort out what happened to them and why they are in the hole, the banks move forward grabbing as much as they can. But the banks can’t change law and can’t change the fact that no matter what they do they can’t make those mortgages good without another signature from the homeowner, past, present and future. That means that foreclosures will ease up if the current trend in the courts continue. But it also means that BOA et al will be taking an increasing number of hits on their balance sheet requiring them to raise additional capital or go out of business.

Which brings me to the next point of analysis that I was withholding until now. Once BOA makes that payment, what happens to the obligation, note and mortgage? BOA pays Investor and now investor as creditor releases the claim to BOA and assigns it (presumably) to BOA. But the real reason the investors are getting paid off is that the loans were not properly originated, serviced or even foreclosed. So the same question comes up — what were the investors assigning. The Banks would have us believe that the more they assign an “asset” the more real it becomes and maybe that is true from a PR perspective. But legally, BOA is receiving nothing, because the investors had nothing other than a claim for unjust enrichment against the homeowner because they had no rights under mortgages that were never properly created or transferred.

So who owns the obligation from the original borrower and is that obligation secured? Despite all the complexity and skullduggery the answer is actually quite simple. If the mortgage was never assigned then the originating lender — the one on the note and mortgage — is still the mortgagee of record. But the mortgage is now wholly separate from the obligation (and probably always was). So the mortgage secures nothing. The right of investors to seek damages for unjust enrichment is completely different than a mortgage obligation and must be enforced in a completely different manner than mortgages —certainly not in non-judicial proceedings.  And it won’t be “secured” until it becomes a judgment lien subject to state laws on homestead etc.

BOA will say that it has been subrogated to the rights of the investor to foreclose. But that could only be true if the investor actually had the right to foreclose. They didn’t have the right to foreclose because they didn’t own the mortgage — and it is only through the mortgage that the right to foreclose exists. And it is only through a valid enforceable mortgage that the right arises. There is no security instrument (mortgage) that secures the right to unliquidated damages from an unjust enrichment claim. That simple fact eliminates the mortgages, the foreclosures and the value carried on the books of BOA et al.

So homeowners, past, present and future should be asking whether the figures used in their foreclosure are right and should be doing so through discovery that reaches into the loan level accounting. Is the loan in default from the creditor’s perspective? Probably not if they were getting paid from the servicer even while the servicer was declaring it in default. Having made the payment they certainly cured the default, and if the payments from the servicer were regular then the loan was never in default. The borrower’s non-payment triggered the liability of the servicer, the guarantors, the insurers etc.

Many of these arrangements were kept from the borrower at closing, which is of course a TILA violation making the loan subject to rescission. The fact that the borrower did not pay is not a default unless the payment is due after the default date and remains uncured.

Here we see that the payment was in fact made to the creditor even though the borrower did not make the payment. So now it is the servicer that may have a claim against the borrower but not under the original obligation, note and mortgage because the servicer is not in the contract and never acquired the contract to repay the loan. The servicer only has a partial claim for the payments it made, while the rest still belongs to the creditor. So if the servicer asserts a claim against the homeowner for default, the obligation is split into at least 2 parts — the investors and the servicer. Can both be secured by the mortgage? That is the question that must be answered in the courts. I think not.

Bank of America Settles Claims Stemming From Mortgage Crisis

By and

Just how much will it cost the big banks to atone for the mortgage mess?

Bank of America announced Wednesday that it would take a whopping $20 billion hit to put the fallout from the subprime bust behind it and satisfy claims from angry investors. But for its peers, the settlements may just be starting.

Heavyweight investors that forced Bank of America to hand over billions to cover the cost of home loans that later defaulted are now setting their sights on companies like JPMorgan Chase, Citigroup and Wells Fargo, raising the prospect of more multibillion-dollar deals.

“Bank of America has charted a path that our clients expect other banks will follow,” said Kathy D. Patrick, the lawyer who represented BlackRock, Pimco, the Federal Reserve Bank of New York and 19 other investors who hold the soured mortgage securities assembled by the Bank of America.

Ms. Patrick’s clients are seeking $8.5 billion from Bank of America — a settlement that needs a judge’s approval and could still face objections from investors seeking a better deal. A date to review the blueprint has been set for Nov. 17 with Justice Barbara R. Kapnick in New York Supreme Court.

All told, analysts say the financial services industry faces potential losses of tens of billions from future claims — real money even by the eye-popping standards of the nation’s biggest banks. Indeed, even that $20 billion announced Wednesday will not be enough to completely stanch the bleeding at Bank of America — it says litigation over troubled mortgages could cost it another $5 billion in the future.

The proposed settlement is more than just another financial blow to a company staggering from the collapse of the mortgage bubble. It also represents a major acknowledgment of just how flawed the mortgage process became in the giddy years leading up to the financial crisis of 2008, typified by the excesses at Countrywide Financial, the subprime mortgage lender Bank of America acquired in 2008.

Ms. Patrick and her clients claim that Countrywide created securities from mortgages originated with little, if any, proof of assets or income. Then, they argue, Bank of America did not properly service these mortgages, failed to heed pleas for help from homeowners teetering on the brink of foreclosure and frequently misplaced documents.

Most of the loans in the pools covered by the settlement were underwritten at the height of the mortgage mania: in 2005, 2006 and 2007. But with borrowers soon unable to meet their monthly payments, defaults soared.

For the banking industry, the reckoning could not come at a worse time. On Wall Street, trading revenue has been devastated by the economic uncertainty in Europe, the anemic recovery in the United States, and the stock market swoon of the last two months.

What’s more, new regulations have already taken a big bite out of profits. Despite a modest amount of relief on Wednesday, when the Federal Reserve completed new rules governing debit card swipe fees, the banks stand to lose billions when the regulations take effect next month.

If all this were not enough, further weakness in the housing and job markets has reduced lending by the banks to businesses and consumers alike, cutting yet one more source of profits.

Nevertheless, investors appeared to endorse the proposed settlement, with Bank of America shares rising nearly 3 percent, to $11.14, a move mirrored by shares of other big financials.

Some experts said the settlement could prove good news for consumers and the broader economy, speeding the foreclosure process for hundreds of thousands of homeowners while potentially making it easier to obtain modifications of existing mortgages.

By providing a template for cleaning up past claims and setting standards for future practices, the settlement could make it easier for banks to bundle and sell mortgages again, a business that has been all but dead since the financial crisis.

“That is important for providing funding for people to buy homes, grow their businesses and create jobs,” said Michael S. Barr, a former assistant Treasury secretary who now teaches law at the University of Michigan.

The accord does not resolve an investigation by all 50 state attorneys general into allegations of mortgage service abuses by Bank of America and other major lenders that could ultimately cost the industry billions more in fines and penalties. Nor does it cover liability from soured home equity loans or bonds the bank created with mortgages from lenders other than Countrywide.

Of the $20 billion that Bank of America announced Wednesday, $8.5 billion will go to investors who bought the most troubled securities backed by Countrywide mortgages. Another $5.5 billion will cover future claims by Fannie Mae, Freddie Mac and private investors that also bought troubled mortgage bonds from the bank.

The remaining $6.4 billion represents a noncash charge to reflect the drop in the value of Countrywide, as well as the increased cost of more rigorous servicing requirements and additional legal expenses.

Those charges will cause Bank of America to record a loss of $8.6 billion to $9.1 billion for the second quarter. The company, however, tried to portray the settlement as one more step in putting Countrywide’s poisonous legacy behind it, rather than a surrender.

“We did fight for the last several months,” said Brian T. Moynihan, chief executive of Bank of America, in a conference call with analysts. “But when you look at this over all, it’s a better decision for the company. It was much more adverse to the company if we kept fighting. We’ve been battling it out.”

The fight began last October when eight investors holding mortgage securities representing $104 billion in home loans spread across 115 deals charged that Countrywide and Bank of America had passed off troubled mortgage loans as safe investments, and failed to properly collect money for the investors from homeowners. Pimco and BlackRock, two of the original eight investors, had been longtime clients of Ms. Patrick’s firm, Gibbs & Bruns, and first approached the firm for help in the spring of 2010.

In early January, Bank of America announced that it had settled for $2.5 billion similar claims from Fannie Mae and Freddie Mac, the government-controlled mortgage giants. That provided valuable data for Ms. Patrick’s group to use in assessing just how many mortgages were improperly presented as safe investments or not serviced correctly.

By March, said Ms. Patrick, the group had grown to 22 firms with holdings in 530 deals that represented $424 billion in underlying mortgages.

Meanwhile, Bank of America’s stock was falling, sinking nearly 20 percent this year in part because of the fallout from the mortgage debacle, which encouraged the Charlotte, N.C.-based bank to resolve claims. Rather than just address mortgages held by Ms. Patrick’s investors, however, Bank of America decided to reimburse investors in all 530 deals — nearly all of the subprime loans that were assembled and sold to private investors on behalf of Countrywide.

The $8.5 billion settlement on $424 billion worth of mortgages suggests that 2 percent of Countrywide’s loans may have been underwritten or serviced improperly. A much bigger segment of those mortgages — about a quarter — are either in default or severely delinquent now. Bank of America attributes many of the foreclosures and defaults to the downturn in the economy.

In addition to the financial terms, the settlement also requires Bank of America to adhere to more rigorous servicing standards, on top of new requirements imposed by federal regulators.

Home loans from 300,000 borrowers will be removed from Bank of America’s servicing arm, and placed among 10 special sub-servicers, with the goal of fast-tracking a resolution of their cases. Borrowers will get answers on any possible modification within 60 days, have a single point of contact and avoid having to resubmit documents.

Now, the pressure will be on Bank of America’s main rivals to reach similar accords. JPMorgan Chase, Wells Fargo and Citigroup also face potentially billions of dollars in legal claims.

In a research note published on Wednesday, Keith Horowitz of Citigroup said the Bank of America deal was likely to set the high-water mark for other potential settlements. Using the 2 percent loss rate as a guide, he projected that Chase could face about a $9 billion hit on its portfolio of troubled mortgage bonds. Wells Fargo, Mr. Horowitz estimated, could face losses reaching $4 billion, though that could be lower because of tighter underwriting standards. Other analysts previously put Citigroup’s exposure at about $3 billion.

If that is the case, analysts say that all three of those banks appear to have set aside enough money in reserve or have the earnings power to eventually cover the cost of resolving the claims, without having to raise more capital or sell stock.

“This tells us the shape of the biggest dollar litigation settlements from the crash,” said Peter Swire, a former special assistant for housing policy in the Obama administration, and now a law professor at Ohio State University. “The doomsday scenarios for this private litigation would have threatened the solvency of the biggest banks. That risk has dropped a lot.”

Gretchen Morgenson contributed reporting.

62 Responses

  1. Show me, please, how bailment applies to a party unknown, as is the case in a blank assignment. Just who would you say are the two parties to “bailment” in this context?
    A bailor leaves HIS property with the bailee. Under bailment, the OWNERSHIP of PERSONAL property does not change hands. “Bailment happens when the property owner chooses to temporarily place HIS property in the possession or control of another individual.” An assignment of a deed of trust is not a bailment. I think bailment and assignment are mutually exclusive. An assignment is a document which transfers all rights and legal title to the interests created in a dot. Bailment doesn’t do that. IF someone other than the trust OWNS those interests created in and evidenced by the dot, then the note and dot are bifurcated, and bailment will not stand to change that.

  2. My home of 20+ years will be sold at Trustee’s Sale in two weeks, but I’m no longer angry because this ceases to be a country I recognize when the Poor and Middle Class are suffered to bail out the filthy rich. We’re headed for a class war of epic proportions, so you’ll have to excuse me while I prepare my body for a

    PEACEFUL DEATH
    http://groups.google.com/group/morteplaceda

  3. Here’s some truth in case we forget. This court addressed the strictly voluntary entries made by MERS’ members to its data base (which is all MERS is, a data base) . This is from in re Agard, NY. It’ds been bandied about, probably even here, was decided in February, but still noteworthy. The first 2 paras and part of the third are taken from a blog by Lee Jason Goldberg:

    “As a threshold matter, citing In re Mims, which we have discussed previously, the court held that in order to have standing to seek relief from the stay as a secured creditor, the servicer had to show that the trustee (i.e., the purported assignee) held both the mortgage and the note. For the note’s enforcement under New York law, the servicer had to show that the trustee had a written assignment of the note or physical possession of the note endorsed to it, but the servicer could show neither.

    The servicer produced merely an “assignment of mortgage,” containing a vague reference to the note, which the court held to be insufficient to prove an intent to assign the note. Moreover, MERS was not a party to the note, and there was no representation in the record showing that MERS had any authority to any action as to the note. Rather, MERS maintained a database allowing its members to electronically self-report note transfers. The court held that this database did not confirm that the note was properly transferred or indicate who, in fact, had physical possession of the note, depriving the court of an evidentiary basis to find that the note was endorsed to the trustee or that the trustee had physical possession of it.

    Even if the servicer could show that the trustee was the holder of the note, however, it still would have to establish that the trustee held the mortgage in order to confer on it standing to bring the lift stay motion. After noting the “adage that a mortgage necessarily follows the same path as the note for which it stands as collateral,” ala Carpenter v Longan, the court observed that the parties in this case (as ALL MERS’ mortgages) had adopted a process “which by its very terms alters this practice where mortgages are held by MERS as ‘mortgagee of record’” while the notes are transferred among MERS’s members.
    (The notes are transferred to non-MERS members, also.)

    The court: “MERS admits that the very foundation of its business model.as described herein.requires that the note and the mortgage travel on divergent paths.”

    So what the Agard court is saying is not that it disputes that a dot/ mtg follows a note generally, but that MERS and its members have chosen to play the game differently, in which case the hard-working Ms Hearne, etal up there in Reno will be or were happy to find support for the bifurcation issue. What I am not sure the Agard court addressed is whether or not once bifurcated, a note and its collateral may in fact be re-joined. I guess that would depend on restatement of contracts law, and I have no doubt, though I don’t know, that Ms Hearne and the other diligent attorneys involved in the class-A have addressed and answered this question in the negative.

    The court went on to note that MERS maintains a data base which, as I’ve pretty much shouted about, allows its members to SELF-REPORT note transfers. The court held that MERS data base is evidence of nothing. If and since MERS’ database evidences nothing, it also calls into reasonable question the veracity of assignments of collateral interests on that score.

    Agard, like all lower court decisions, is not bindng precedent. This shouldn’t stop us from advancing the issues presented therein, even with a good cut and paste job.

    @cubed2 – looks like good info you posted.

  4. But after six years we are finally getting some, not much, but some support for the truth of the matter.

  5. the Depositor agrees to cause the Notes and other specified key loan documents (usually including an unrecorded, recordable Assignment “in blank”)
    IT SOP FOR THE INDUSTRY UNDER A WH LINE AGREEMENT

    (NB that several recent courts have raised serious legal questions about the assignment of a real estate instrument in blank under such theories as the statute of frauds and whether or not an assignment in blank is in fact a “recordable” legal real estate document) to be delivered to the Custodian (with the Securitizer to do the actual physical shipment);
    YOU MUST – WRONG – ITS CALLED BAILMENT .

    the Custodian agrees to inspect the Notes and other documents and to certify in designated written documents to the Trustee that the documents meet the required specifications and are in the Custodian’s possession;
    BAILMENT PROVISION

    and establishes a (supposedly exclusive) procedure and specified forms whereby the Servicer can obtain possession of any Note, Mortgage, Deed of Trust or other custodial document for foreclosure or payoff purposes.
    IT ALL UNDER BAILMENT AND MEANINGLESS TO SUBJECT MATTER .

    msoliman
    expert.witness@live.com

    Again – why was this posted ? Purpose ? Real late in the game to proffer ambiguous content. Blank endorsements and assignments are part of the bailment agreement

  6. Warehouse Lender. The Originator probably borrowed the funds on a line of credit from a short-term revolving warehouse credit facility (commonly referred to as a “warehouse lender”);
    NOT PROBABLY – DID. THIS IS THE NEXUS FOR THE LITIGATION
    Nevertheless the money used to close the loan were technically and legally the Originator’s funds.
    TECHNICALLY . . . WAY TO UNCERTAIN OR UNCLEAR HERE. DEBT. CASH…
    Warehouse lenders are either “wet” funders or “dry” funders. A wet funder will advance the funds to close the loan upon the receipt of an electronic request from the originator. A dry funder, on the other hand, will not advance funds until it actually receives the original loan documents duly executed by the borrower.
    IRRELEVANT
    Responsible Party. Sometimes you may see another intermediate entity called a “Responsible Party,” often a sister company to the lender. Loans appear to be transferred to this entity, typically named XXX Asset CORPORATION.
    HUGE!!! (THAT’S ALL – THIS IS ACTUALLY IMPORTANT SUBJECT MATTER..LIGHTLY REGARDED BY THE AUTHOR….SO WHAT WAS THE PURPOSE OF POSTING THIS ANYWAY ? .)

    MSoliman
    expert.witness@live.com

  7. Like any trust, the Trustee’s powers, rights, and duties are defined by the terms of the transactional documents
    INDENTURE AND OPERATING POLICIES SET FORTH BY SEC AND IRS

    That creates the trust, and is subject to the terms of the trust laws of some particular state, as specified by the “Governing Law” provisions of the transaction document that created the trust.
    SUBJECT TOO AND NEVER COMPLIED WITH….correct

    The vast majority of the residential mortgage backed securitized trusts are subject to the applicable trust laws of Delaware or New York.

    MASS setup registered in Delaware.

    The “Pooling and Servicing Agreement” (or, in “Owner Trust” transactions as described below, the “Trust Indenture”) is the legal document that creates these common law trusts and the rights and legal authority granted to the Trustee is no greater than the rights and duties

    OUCH – NOLO …NO DONT AGREE – TRY PURCHASE AND SALE – LIMITED TO THE SPV AND CAPITALIZATION. ITS FOR THE LESS THAN ARMS TRANSACTION. IT NOT WHAT YOU THINK IT IS – LOSS LEADER FRIEND.

    See your comments about the trustee and by your own admission . . . the transactional documents

    M.SOLIMAN
    EXPERT.WITNESS@LIVE.COM

  8. NOT ALL TRUE AND SOME OF IT IS WHAT IS MISLEADING AMERICAN AND THEIR ATTORNEYS. (AS YOU CAN SEE) .

    Trustee. The Trustee is the owner of the loans on behalf of the certificate holders at the end of the securitization transaction.
    ALMOST.- BUT NO CIGAR HERE -LOOK A LITTLE CLOSER HERE. YOU’RE SAYING A SECURITY IS ISSUED AGAINST A SECURITY FOR SECURITIES OFFERED IN WATERFALL LATER?

    MSOLIMAN
    Expert.Witness@live.com

  9. Your Client’s Securitized Mortgage: A Basic Roadmap PART 2: Transaction Steps and Documents [2009-11-19]
    Your Client’s Securitized Mortgage: A Basic Roadmap:
    By O. Max Gardner, III and Richard D. Shepherd

    Part 2: Typical transaction steps and documents (in private-label, non-GSE securitizations)

    1. The Originator sells loans (one-by-one or in bundles) to the Securitizer (a/k/a the Sponsor) pursuant to a Mortgage Loan Purchase and Sale Agreement (MLPSA) or similarly-named document. The purpose of the MLPSA is to sell all right, title, claims, legal, equitable and any and all other interest in the loans to the Securitizer-Sponsor. For Notes endorsed in “blank” which are bearer instruments under the UCC, the MLPSA normally requires acceptance and delivery receipts for all such Notes in order to fully document the “true sale.” Frequently a form is prescribed for the acceptance and delivery receipt and attached as an exhibit to the MLPSA.

    The MLPSA will contain representations, attestations and warranties as to the enforceability and marketability of each loan, and specify the purchaser’s remedies for a breach of any “rep” or “warrant.” The primary remedy is the purchaser’s right to require the seller to repurchase any loan materially and adversely affected by a breach. Among the defects and events covered by “reps” and “warrants” are “Early Payment Defaults,” commonly referred to as “EPD’s.” An EDP occurs if a loan becomes seriously (usually, 60 or more days) delinquent within a specified period of time after it has been sold to the Trust. The EDP covenants are always limited in time and normally only cover EDPs that occur within 12 to 18 months of the original sale. If an EDP occurs, then the Trust can force the originator to repurchase the EPD note and replace it with a note of similar static qualities (amount, term, type, etc.)

    2. The Securitizer-Sponsor sells the loans to the Depositor. This takes place in another MLPSA very similar to the first one and the same documents are created and exchange with the same or similar terms. These are typically included as exhibits to the PSA.

    3. Depositor, Trustee, Master Servicer and Servicer enter into a Pooling and Servicing Agreement (“PSA”) in which:

    — the Depositor sells all right, title, legal, equitable and any other interest in the mortgage loans to the Trustee, with requirements for acceptance and delivery receipts, often including the prescribed form as an exhibit, in similar fashion to the MLPSA’s;

    — the PSA creates the trust, appoints the Trustee, and defines the classes of securities (often called “Certificates”) that the trust will issue to investors and establishes the order of priority between classes of Certificates as to distributions of cash collected and losses realized with respect to the underlying loans (the highest rated Certificates are paid first and the lowest rated Certificates suffer the first losses-thus the basis for the term “structured finance”); and

    — the Servicer, Master Servicer and Trustee establish the Servicer’s rights and duties, including limits and extent of a Servicer’s right to deal with default, foreclosure, and Note modifications. Some PSA’s include detailed loss mitigation or modification rules, and others limit any substantive modifications (such as changing the interest rate, reducing the principal debt, waiving default debt, extending the repayment term, etc.)

    4. All parties including the Custodian enter into the Custodial Agreement in which:

    the Depositor agrees to cause the Notes and other specified key loan documents (usually including an unrecorded, recordable Assignment “in blank”)(NB that several recent courts have raised serious legal questions about the assignment of a real estate instrument in blank under such theories as the statute of frauds and whether or not an assignment in blank is in fact a “recordable” legal real estate document) to be delivered to the Custodian (with the Securitizer to do the actual physical shipment);
    the Custodian agrees to inspect the Notes and other documents and to certify in designated written documents to the Trustee that the documents meet the required specifications and are in the Custodian’s possession; and
    establishes a (supposedly exclusive) procedure and specified forms whereby the Servicer can obtain possession of any Note, Mortgage, Deed of Trust or other custodial document for foreclosure or payoff purposes.
    Finding Documents on the S.E.C.’s website (the EDGAR filing system):

    If you know the name of the Depositor and the name of the Trust (e.g. “Time Bomb Mortgage Trust 2006-2”) that contains the loan in question, then the PSA and Custodial Agreement probably can be found on the SEC’s website (www.sec.gov):
    On the SEC home page look for a link to “Search for Company Filings” and then choose to search by “Company Name,” using the name of the Depositor. (Alternatively, click on the “Contains” button on the search page and then search by the series, i.e. 2006-2 in the above example.)
    Hopefully, this will enable you to find the Trust in question. If so, the PSA and the Custodial Agreement should be available as attachments to one or more of the earliest-filed forms (normally the 8-K) shown on the list of available documents. Sometimes the PSA is listed as a named document but other times you just look for the largest document in terms of megabytes filed with the 8-K form.
    The available documents also should include the Prospectus and/or Prospectus Supplement (Form 424B5) and the Free Writing Prospectus (“FWP”). The latter documents (at least the sections written in English, as opposed to the many tables of financial data) can be very helpful in providing a concise and straightforward description of the parties, documents, and transaction steps and detailed transactional graphs and charts in the particular deal. And because these are SEC documents, the information serves as highly credible evidence on these points, and the Court can take judicial notice of any document filed with the SEC.
    For securitizations created after January 1, 2006, SEC “Regulation AB” requires the parties to file a considerable amount of detailed information about the individual loans included in the Trust. This information may be filed as an Exhibit to the PSA or to a Form 8-K. This loan-level data typically includes loan numbers, interest rates, principal amount of loan, origination date and (sometimes) property addresses and thus can be very useful in proving that a particular loan is in a particular Trust.
    November, 2009

  10. Your Client’s Securitized Mortgage: a Basic Roadmap Part 1 [2009-11-19]
    Your Client’s Securitized Mortgage: A Basic Roadmap

    PART 1: The Parties and Their Roles

    The first issue in reviewing a structured residential mortgage transaction is to differentiate between a private-label deal and an “Agency” (or “GSE”) deal. An Agency (or GSE) deal is one involving Fannie Mae, Freddie Mac, or Ginnie Mae, the three Government Sponsored Enterprises (also known as the GSEs). This paper will review the parties, documents, and laws involved in a typical private-label securitization. We also address frequently-occurring practical considerations for counsel dealing with securitized mortgage loans that are applicable across-the-board to mortgages into both private-label and Agency securitizations.
    The parties, in the order of their appearance are:

    Originator. The “originator” is the lender that provided the funds to the borrower at the loan closing or close of escrow. Usually the originator is the lender named as “Lender” in the mortgage Note. Many originators securitize loans; many do not. The decision not to securitize loans may be due to lack of access to Wall Street capital markets, or this may simply reflect a business decision not to run the risks associated with future performance that necessarily go with sponsoring a securitization, or the originator obtains better return through another loan disposition strategy such as whole loan sales for cash.

    Warehouse Lender. The Originator probably borrowed the funds on a line of credit from a short-term revolving warehouse credit facility (commonly referred to as a “warehouse lender”); nevertheless the money used to close the loan were technically and legally the Originator’s funds. Warehouse lenders are either “wet” funders or “dry” funders. A wet funder will advance the funds to close the loan upon the receipt of an electronic request from the originator. A dry funder, on the other hand, will not advance funds until it actually receives the original loan documents duly executed by the borrower.

    Responsible Party. Sometimes you may see another intermediate entity called a “Responsible Party,” often a sister company to the lender. Loans appear to be transferred to this entity, typically named XXX Asset Corporation.

    Sponsor. The Sponsor is the lender that securitizes the pool of mortgage loans. This means that it was the final aggregator of the loan pool and then sold the loans directly to the Depositor, which it turn sold them to the securitization Trust. In order to obtain the desired ratings from the ratings agencies such as Moody’s, Fitch and S&P, the Sponsor normally is required to retain some exposure to the future value and performance of the loans in the form of purchase of the most deeply subordinated classes of the securities issued by the Trust, i.e. the classes last in line for distributions and first in line to absorb losses (commonly referred to as the “first loss pieces” of the deal).

    Depositor. The Depositor exists for the sole purpose of enabling the transaction to have the key elements that make it a securitization in the first place: a “true sale” of the mortgage loans to a “bankruptcy-remote” and “FDIC-remote” purchaser. The Depositor purchases the loans from the Sponsor, sells the loans to the Trustee of the securitization Trust, and uses the proceeds received from the Trust to pay the Sponsor for the Depositor’s own purchase of the loans. It all happens simultaneously, or as nearly so as theoretically possible. The length of time that the Depositor owns the loans has been described as “one nanosecond.”

    The Depositor has no other functions, so it needs no more than a handful of employees and officers. Nevertheless, it is essential for the “true sale” and “bankruptcy-remote”/“FDIC-remote” analysis that the Depositor maintains its own corporate existence separate from the Sponsor and the Trust and observes the formalities of this corporate separateness at all times. The “Elephant in the Room” in all structured financial transactions is the mandatory requirement to create at least two “true sales” of the notes and mortgages between the Originator and the Trustee for the Trust so as to make the assets of the Trust both “bankruptcy” and “FDIC” remote from the originator. And, these “true sales” will be documented by representations and attestations signed by the parties; by attorney opinion letters; by asset purchase and sale agreements; by proof of adequate and reasonably equivalent consideration for each purchase; by “true sale” reports from the three major “ratings agencies” (Standard & Poors, Moody’s, and Fitch) and by transfer and delivery receipts for mortgage notes endorsed in blank.

    Trustee. The Trustee is the owner of the loans on behalf of the certificate holders at the end of the securitization transaction. Like any trust, the Trustee’s powers, rights, and duties are defined by the terms of the transactional documents that create the trust, and are subject to the terms of the trust laws of some particular state, as specified by the “Governing Law” provisions of the transaction document that created the trust. The vast majority of the residential mortgage backed securitized trusts are subject to the applicable trust laws of Delaware or New York. The “Pooling and Servicing Agreement” (or, in “Owner Trust” transactions as described below, the “Trust Indenture”) is the legal document that creates these common law trusts and the rights and legal authority granted to the Trustee is no greater than the rights and duties specified in this Agreement. The Trustee is paid based on the terms of each structure. For example, the Trustee may be paid out of interest collections at a specified rate based on the outstanding balance of mortgage loans in the securitized pool; the Master Servicer may pay the Trustee out of funds designated for the Master Servicer; the Trustee may receive some on the interest earned on collections invested each month before the investor remittance date; or the Securities Administrator may pay the Trustee out of their fee with no charges assessed against the Trust earnings. Fee amounts ranger for as low as .0025% to as high as .009%.

    Indenture Trustee and Owner Trustee. Most private-label securitizations are structured to meet the Internal Revenue Code requirements for tax treatment as a “Real Estate Mortgage Investment Conduit (“REMIC”). However some securitizations (both private-label and GSE) have a different, non-REMIC structure usually called an “Owner Trust.” In an Owner Trust structure the Trustee roles are divided between an Owner Trustee and an Indenture Trustee. As the names suggest, the Owner Trustee owns the loans; the Indenture Trustee has the responsibility of making sure that all of the funds received by the Trust are properly disbursed to the investors (bond holders) and all other parties who have a financial interest in the securitized structure. These are usually Delaware statutory trusts, in which case the Owner Trustee must be domiciled in Delaware.

    Primary Servicer. The Primary Servicer services the loans on behalf of the Trust. Its rights and obligations are defined by a loan servicing contract, usually located in the Pooling and Servicing Agreement in a private-label (non-GSE) deal. The trust may have more than one servicer servicing portions of the total pool, or there may be “Secondary Servicers,” “Default Servicers,” and/or “Sub-Servicers” that service loans in particular categories (e.g., loans in default). Any or all of the Primary, Secondary, or Sub-Servicers may be a division or affiliate of the Sponsor; however under the servicing contract the Servicer is solely responsible to the Trust and the Master Servicer (see next paragraph). The Servicers are the legal entities that do all the day-to-day “heavy lifting” for the Trustee such as sending monthly bills to borrowers, collecting payments, keeping records of payments, liquidating assets for the Trustee, and remitting net payments to the Trustee.

    The Servicers are normally paid based on the type of loans in the Trust. For example, a typical annual servicing fee structure may be: .25% annually for a prime mortgage; .375% for an Alt-A or Option ARM; and .5% for a subprime loan. In this example, a subprime loan with an average balance over a given year of $120,000 would generate a servicing fee of $600.00 for that year. The Servicers are normally permitted to retain all “ancillary fees” such as late charges, check by phone fees, and the interest earned from investing all funds on hand in overnight US Treasury certificates (sometimes called “interest earned on the float”).

    Master Servicer. The Master Servicer is the Trustee’s representative for assuring that the Servicer(s) abide by the terms of the servicing contracts. For trusts with more than one servicer, the Master Servicer has an important administrative role in consolidating the monthly reports and remittances of funds from the individual servicers into a single data package for the Trustee. If a Servicer fails to perform or goes out of business or suffers a major downgrade in its servicer rating, then the Master Servicer must step in, find a replacement and assure that no interruption of essential servicing functions occurs. Like all servicers, the Master Servicer may be a division or affiliate of the Sponsor but is solely responsible to the Trustee. The Master Servicer receives a fee, small compared to the Primary Servicer’s fee, based on the average balance of all loans in the Trust.

    Custodian. The Master Document Custodian takes and maintains physical possession of the original hard-copy Mortgage Notes, Mortgages, Deeds of Trust and certain other “key loan documents” that the parties deem essential for the enforcement of the mortgage loan in the event of default.

    This is done for safekeeping and also to accomplish the transfer and due negotiation of possession of the Notes that is essential under the Uniform Commercial Code for a valid transfer to the Trustee to occur.
    Like the Master Servicer, the Master Document Custodian is responsible by contract solely to the Trustee (e.g., the Master Document Custodial Agreement). However unlike the Master Servicer, the Master Document Custodian is an institution wholly independent from the Servicer and the Sponsor.
    There are exceptions to this rule in the world of Fannie Mae/Freddie Mac (“GSE”) securitizations. The GSE’s may allow selected large originators with great secure storage capabilities (in other words, large banks) to act as their own Master Document Custodians. But even in those cases, contracts make clear that the GSE Trustee, not the originator, is the owner of the Note and the mortgage loan.
    The Master Document Custodian must review all original documents submitted into its custody for strict compliance with the specifications set forth in the Custodial Agreement, and deliver exception reports to the Trustee and/or Master Servicer as to any required documents that are missing or fail to comply with those specifications.
    In so doing the Custodian must in effect confirm that for each loan in the Trust there is a “complete and unbroken chain of transfers and assignments of the Notes and Mortgages.”
    This does not necessarily require the Custodian to find assignments or endorsements naming the Depositor or the Trustee. The wording in the Master Document Custodial Agreement must be read closely. Defined terms such as “Last Endorsee” may technically allow the Custodian to approve files in which the last endorsement is from the Sponsor in blank, and no assignment to either the Depositor or the Trustee has been recorded in the local land records.
    In many private-label securitizations a single institution fulfills all of the functions related to document custody for the entire pool of loans. In these cases, the institution might be referred to simply as the “Custodian” and the governing document as the “Custodial Agreement.”
    O Max Gardner, III and Richard D. Shepherd
    October, 2009

  11. Your Client’s Securitized Mortgage: A Basic Roadmap PART 3: Dealing with Notes and Assignments [2009-11-19]
    Your Client’s Securitized Mortgage: A Basic Roadmap
    By O. Max Gardner, III and Richard D. Shepherd

    Part 3: Dealing with Notes and Assignments

    There are two basic documents involved in a residential mortgage loan: the promissory note and the mortgage (or deed of trust). For brevity’s sake these are referred to simply as the Note and the Mortgage.

    A Note is: a contract to repay borrowed money. It is a negotiable instrument governed by Article 3 of the Uniform Commercial Code (UCC). The Note, by itself, is an unsecured debt. Notes are personal property. Notes are negotiated by endorsement or by transfer and delivery as provided for by the UCC. Notes are separate legal documents from the real estate instruments that secure the loans evidenced by the Notes by liens on real property.

    A Mortgage is: a lien on, and an interest in, real estate. It is a security agreement. It creates a lien on the real estate as collateral for a debt, but it does not create the debt itself. The rights created by a Mortgage are classified as real property and these instruments are governed by local real estate law in each jurisdiction. The UCC has nothing to do with the creation, drafting, recording or assignment of these real estate instruments.
    A Note can only be transferred by: an “Endorsement” if the Note is payable to a particular party; or by transfer of possession of the Note, if the Note is endorsed “in blank.” Endorsements must be written or stamped on the face of the Note or on a piece of paper physically attached to the Note (the Allonge). See UCC §3-210 through §3-205. The UCC does not recognize an Assignment as a valid means of transferring a Note such that the transferee becomes a “holder”, which is what the owners of securitized mortgage notes universally claim to be.

    In most states, an Allonge cannot be used to endorse a note if there is sufficient room at the “foot of the note” for such endorsements. The “foot of the note” refers to the space immediately below the signatures of the borrowers. Also, if an Allonge is properly used, then it must describe the terms of the note and most importantly must be “permanently affixed” to the Note. Most jurisdictions hold that “staples” and “tape” do not constitute a “permanent” attachment. And, the Master Document Custodial Agreement may specify when an Allonge can be used and how it must be attached to the original Note.

    Mortgage rights can only be transferred by: an Assignment recorded in the local land records. Mortgage rights are “estates in land” and therefore governed by the state’s real property laws. These vary from state to state but in general Mortgage rights can only be transferred by a recorded instrument (the Assignment) in order to be effective against third parties without notice.

    In discussions of exactly what documents are required to transfer a “mortgage loan” confusion often arises between Notes versus Mortgages and the respective documents necessary to accomplish transfers of each. The issue often arises from the standpoint of proof: Has Party A proven that a transfer has occurred to it from Party B? Does Party A need to have an Assignment? The answer often depends on exactly what Party A is trying to prove.

    Scenario 1: Party A is trying to prove that the Trustee “owns the loan.” Here the likely questions are, did the transaction steps actually occur as required by the PSA and as represented in the Prospectus Supplement, and are the Trustee’s ownership rights subject to challenge in a bankruptcy case?

    The answers lie in the UCC and in documents such as:

    the MLPSA’s;
    conveyancing rules of the PSA (normally Section 2.01);
    transfer and delivery receipts (look for these to be described in the “Conditions to Closing” or similarly named section of MLPSA’s and the PSA);
    funds transfer records (canceled checks, wire transfers, etc);
    compliance and exception reports provided by the Custodian pursuant to the Master Document Custodial Agreement; and
    the “true sale” legal opinions.
    Some of these documents may or may not be available on the SEC’s EDGAR system; some may be obtainable only through discovery in litigation. The primary inquiry is whether or not the documents, money and records that were required to have been produced and change hands actually do so as required, and at the times required, by the terms of the transaction documents.

    Another question sometimes asked when examining the “validity” of a securitization (or in other words, the rights of a securitization Trustee versus a bankruptcy trustee) is, must the Note be endorsed to the Trustee at the time of the securitization? Here are some points to consider:

    Frequently the only endorsement on the Note is from the Securitizer-Sponsor “in blank” and the only Assignment that exists, pre-foreclosure, is from the Securitizer-Sponsor “in blank” (in other words, the name of the transferee is not inserted in the instrument and this space is blank).
    The concept widely accepted in the securitization world (the issuers and ratings agencies, and the law firms advising them) is that this form of documentation was sufficient for a valid and unbroken chain of transfers of the Notes and assignments of the Mortgages as long as everything was done consistently with the terms of the securitization documents. This article is not intended to validate or defend either this concept or this practice, nor is it intended to represent in any way that the terms of the securitization documents were actually followed to the letter in every real-world case. In fact, and unfortunately for the certificate holders and the securitized mortgage markets, there are many instances in many reported cases where these mandatory rules of the securitization documents have not been followed but in fact, completely ignored.
    Often shortly before foreclosure (or in some cases afterwards) a mortgage assignment is produced from the Originator to the Trustee years after the Trust has closed out for the receipt of all mortgage loans. Such assignments are inconsistent with the mandatory conveyancing rules of the Trust Documents and are also inconsistent with the special tax rules that apply to these special trust structures. Most state law requires the chain of title not to include any mortgage assignments in blank, but assignments from A to B to C to D. Under most state statutes, an assignment in blank would be deemed an “incomplete real estate instrument.” Even more frequent than A to D assignments are MERS to D assignments, which suffer from the same transfer problems noted herein plus what is commonly referred to as the “MERS problem.”
    Scenario 2: Party B seeks to prove standing to foreclose or to appear in court with the rights of a secured creditor under the Bankruptcy Code. OK, granted the UCC (§3-301) does provide that a negotiable instrument can be enforced either by “(i) the holder of the instrument, or (ii) a non-holder in possession of the instrument who has the rights of a holder.”

    Servicers and foreclosure counsel have been known to contend that this is the end of the story and that the servicer can therefore do anything that the holder of the Note could do, anywhere, anytime.
    The Fannie Mae and Freddie Mac Guides contain many sections that appear to lend superficial support to this contention and frequently will be cited by Servicers and foreclosure counsel as though the Guides have the force of law, which of course they do not.
    There are many serious problems with this legal position, as recognized by an increasing number of reported court decisions.
    Authors’ General Conclusions and Observations:

    Servicers and foreclosure firms are either wrong, or at least not being cautious, if they attempt to foreclose, or appear in court, without having a valid pre-complaint or pre-motion Assignment of the Mortgage. Yet at the same time, Servicers and note holders place themselves at risk of preference and avoidable transfer issues in bankruptcy cases if, for example, endorsements and Assignments that they rely upon to support claims to secured status occur or are recorded after or soon before bankruptcy filing.
    In addition any Servicer, Lender, or Securitization Trustee is either wrong, or at least not being cautious, if it ever: (1) claims in any communications to a consumer or to the Court in a judicial proceeding that it is the Note holder unless they are, at the relevant point in time, actually the holder and owner of the Note as determined under UCC law; or (2) undertakes to enforce rights under a Mortgage without having and recording a valid Assignment.
    The UCC deals only with enforcing the Note. Enforcing the Mortgage on the other hand is governed by the state’s real property and foreclosure laws, which generally contain crucial provisions regarding actions required to be taken by the “note holder” or “beneficiary.” State law may or may not authorize particular actions to be taken by servicers or agents of the holder of the Note.
    For the Servicer to have “the rights of the holder” under the UCC it must be acting in accordance with its contract. For example, if the Servicer claims to have possession of the Note, did it follow the procedures contained in the “Release of Documents” section of the Custodial Agreement in obtaining possession? Does the Servicer really have “constitutional” standing under either Federal or State law to enforce the Note even if it is a “holder” if it does not have any “pecuniary” or economic interest in the Note? In short, the concept of constitutional standing involves some injury in fact and it is hard to see how a mere “place-holder” or “Nominee” could ever over-come such a hurdle unless it actually owned the Note or some real interest in the same.
    The Servicer should have the burden of explaining the legal reasons supporting its standing and authority to act. Sometimes Servicers have difficulty maintaining a consistent story in this regard. Is the Servicer claiming to be the actual holder, or the holder and the owner, or merely an authorized agent of the true holder? If it is claiming some agency, what proof does it have to support such a claim? What proof is required? Sometimes this is just academic legal hair-splitting but many times it involves serious issues of fact. For example, what if the attorney for the Servicer asserts to the court that his or her client actually owns the Note, but the Fannie Mae website reports that Fannie is the owner? What if the MERS website reports that the Plaintiff is just the “Servicer?” What if the pre-complaint correspondence to the borrower names some entirely different party as the holder and indicated that the current plaintiff is only the Servicer?
    Finally, the Servicer always has an obligation to be factually accurate in borrower communications and legal proceedings, and to supervise employees and vendors and attorneys to assure that Note endorsements, Assignments of Mortgage, and affidavits are executed by persons with valid corporate authority, and not falsified nor offered for any improper purpose.

    The focus of the default servicing industry must move from “how fast we can get things done” to “how honestly and accurately can we be in presenting the proper documentation to the courts and to the borrowers”. Judicial proceedings are not like NASCAR races where the fastest lawyer always wins. Judicial proceedings are all about finding the truth no matter how long it takes and regardless of the time and difficulties involved.

    November 14, 2009

    Richard D. Shepherd

    The Law Office of Richard Shepherd

    Troy, Virginia (W.D.VA)

  12. Moving right along: So the servicers pretend their advances don’t exist when submitting claims. In bk court they do this because their advances, even if found to be a proper claim along the lines of reimbursement or unjust enrichment (which must be found first)against the debtor, which they’re not, would render the servicer’s /banksters claim an unsecured one, and they could get in line with the rest of the debtor’s unsecured creditors. It’s fraud on the court and they’re ripping off the debtor’s other unsecured creditors. They are submitting claims, I believe under penalty of perjury, which include the funds they contributed to principal reduction, part of the amt they want to be reimbursed, as principal owed on the note.

    In any other case outside bk, it’s still fraud on the court or something like that because they’re still lying about the principal amt due on the note, just not ripping off other unsecured creditors.

    And btw, based on info at FNMA’s website, I do believe that FNMA actually reimburses the bankster for these advances, anyway. So double rip. They get reimbursed by FNMA (as applicable), turn in a fraudulent claim against the borrower, and then sock it to the noteowner as a reimbursement.

    If they’re getting reimbursed from FNMA also, Is it any wonder they prefer foreclosure?

  13. It’s kind of like this: if your dad makes your mtg payment for you, can your dad deduct any part of it? No, he can’t because he is a volunteer. Yet, any portion of his payment attributable to principal reduction will be reflected in your balance.

    If you promised to pay Dad back, and didn’t, he may have a cause of action against you, but this didn’t create a right for him in or under your note or reimbursement or ANYthing under the note. He might prevail on a claim you owe him money ( said claim having nothing, nada to do with the note); the difference here being that you promised to pay him back.

  14. Comments –
    From the great state of Oregon – nonjudicial foreclosure is available only when the beneficiary’s interest is clearly documented in the public record.

    Under US Bankruptcy rules cite the “least color of title will prevail in a power of sale” . Your job is to show how the means and methods used by the powers at be are washed of any color at all.

    Therein and for this reason , the power of sale is a moot point.

    MSoliman

    One day this war is goning to end . . . .

  15. I expressed the first sentence wrong. The servicer has no claim against the borrower even if the servicer has a contract for reimbursement for advances on the note. The servicer may look to the noteowner for reimbursement of advances, but this does not create a claim against the borrower by the servicer for the servicer’s contributions, including principal reduction.

    So, no , there are not two claims on the note. There is one, and the one and only true claim as to the note balance is the one which appropriately noted the servicer’s contribution as a credit against the note balance.

  16. A Man : Admitting fraud would amount to self-destruction. No bank will ever admit wrongdoing, they settle to avoid going there. Settlement is contingent on no admission of wrongs.

  17. The servicer has no claim against the borrower for any payments it may have advanced, unless that claim is rooted in a contractual agreement with the noteowner that it has a right to reimbursement,
    which may or may not be the case.
    Any payment made on the note by the servicer reduces the note accordingly.
    Any right to reimbursement even if contractual with the noteowner, does not bind the homeowner/note maker. The borrower was not a party to any such contract. If and as applicable, reimbursement is not a right under the note. It’s a separate and distinct claim and an unsecured one at that. The servicer is as a matter of law a “volunteer” and he will not prevail even on an allegation of unjust enrichment, imo. False numbers are being submitted to courts regarding balances outstanding on notes, also, because of these tenets; the servicers are including payments made by them on the note which are not considered (deducted from amt o/standing on the note) in the numbers being submitted to probably every court in this country. And this is true regardless of whether or not the servicer has a contractual right with the noteowner to reimbursement.
    Volunteer definition:

    b (1) : one who renders a service or takes part in a transaction while having no legal concern or interest

    (2) : one who receives a conveyance or transfer of property without giving valuable consideration

    And it looks to me like (2) would describe the bankster who makes a credit bid which is really NO-bid since the bankster has no right to a credit bid as consideration for a trustee’s deed. A bankster (allegedly) holding a bearer note, while maybe entitled to enforce, is still not the creditor. The creditor is the party to whom the money is owed.

  18. The length of time that the Depositor owns the loans has been described as “one nanosecond.”

    Good point – elaborate (clue SPV is the dpositors contribution for deposits).

    expert.witness@live .com

  19. The storyline and comments are off – sorry —-way off!
    Par example ….

    Comments – Here we see that the payment was in fact made to the creditor even though the borrower did not make the payment.
    ** Hello, Bank NA Pledge and common stock holders!

    Comments – So now it is the servicer that may have a claim against the borrower but not under the original obligation, note and mortgage because the servicer is not in the contract and never acquired the contract to repay the loan.
    ** You cannot service a rated ABS that performs autonomous to the seller.

    Comments – The servicer only has a partial claim for the payments it made, while the rest still belongs to the creditor.
    **No an absolute full bonefide obligation (Whattttttt!)

    Comments – So if the servicer asserts a claim against the homeowner for default, the obligation is split into at least 2 parts — the investors and the servicer.
    **Derecognition baby FAS 140- 3 and transferring off balance sheet liabilities – it takes the balance sheet from $0.00 net asset value to $200,000 for every $100,000 in loans

    Comments – Can both be secured by the mortgage?
    ** The pass through is the mortgage. They foreclosed on stock. One is the basis in assets and the other is residual cash flow over the repository cost of funds.

    That is the question that must be answered in the courts.
    I think not….neither do I but , . . I am lost here with your point! Really lost Bubba!

    Gretchen is “fetchen” bad information and poorly describing convoluted subject mater.

    This storyline is so filled with errors and omissions or inaccuracy and material fact that is highly distorted. It is further proof the public is far outside the understanding of what is really happening behind the scene.

    * Settlement insures the trusts live on including consolidation of broken securitized pools.
    * BofA Settles as a seller and the seller had no duty to make claims to loans delivered into a bonefide sale and lawful transfer. [Please make him stop —bring it down …stop him]
    * BofA settles on its recourse of provisional recourse held by it – not Countrywide. BofA was Countrywide so shame on laying the blame on
    Angelo whose emails stated “Why are we doing this …”
    * Noncash charge to earnings – Hello…Derecognition under FAS 140 and reversal of phantom assets in real loans

    This settlement sets the homeowner further in arrears to their claims where the reporter states, now BofA will remove loans and try to work out modifications and workouts etc. THIS SETTLEMENT WAS TO PRESERVE THE TRUST STRUCTURE AND FURTHER ENFORCE INTO AMERCIAN LIVES. .

    M. SOLIMAN
    expert.witness@live.com

  20. @Julia,

    I also am not interested in being argumentative. Some points you raise just hit the debate button, that’s all. When you write that putting someone in jail doesn’t do anything for the homeowner in foreclosure, I have to admit to feeling totally dumbfounded. What in the world does one have to do with the other?

    The fact that many in foreclosure obviously need help in these unprecedented times goes without saying, and I applaud any effort at anything that will truly benefit each and every one. At the same time, I also applaud any and all efforts to lock up every single person involved in the crimes of the centuries….crimes so big as to dwarf anything ever witnessed on the planet. You can have both at the same time you know. One is not exclusive of the other. Keep the house and toss the banker in jail. It’s all good.

    Modifications promote fraud. They condone it, overlook it, even give it tacit approval. What are these new documents doing? Are they lowering principal? No, they’re not. Are they lowering interest? Maybe, just a little. Are they rewriting the conditions of the original agreement, just like the aforementioned B of A settlement, to erase the criminality that went on on a scale never before seen? You betcha’! You can take that to the bank.

    You said you were unsure what I was proposing. In my previous post, I didn’t propose anything. Why? Maybe it’s because right now there are few remedies. Why? Because our system has been captured….by the Fed, the Treasury, the so-called regulators, our president, and on and on. But the times they are a changing.

    This will take a little time….the cracks are starting to appear in the dam. Every one of us who uses smart law gets us all a little closer to the tsunami that will eventually wash over this whole barren landscape. I have no doubt about that. Americans are up to the task.

    Let me get one thing straight….I’m interested in seeing the Linda Greens of the world prosecuted, as per your post. But that’s the little stuff. I want to see Blankfein behind bars, for what is obviously 100% fraudulent actions on the part of Sachs, which could only be ordained from on high.

    I want to see Dimon led off in handcuffs….the alternative is “off the table!” Ken Lewis should be given life in prison for being stupid enough to buy the most blatantly fraudulent company ever incorporated. OK, I know that’s a stretch. It’s just my wish list. Mozilo….solitary confinement for excessive hubris without any redeeming values. If not simply for his tan, but also for his obvious knowledge that he’s not ever going to jail because he knows people.

    Sure you’re right. We signed a note to purchase a house. Unfortunately for many of us, we weren’t aware that appraisal fraud was rampant, that our note was being securitized and sold repeatedly into a dozen trusts whole, and that at any given time, we could be thrust into foreclosure all the while busting ass to get the documents requested by the servicer to the right person for the third time, while all the time heading for a certain date with foreclosure.

    And for some reason, the fact that Wall Street packaged us all up and then bet upon our demise reaping windfall profits just somehow rubs me the wrong way. I guess I’m just funny that way.

    On a lighter note, I love the song the Beatles did for you.

  21. @ cubed2, now you’re talking. I have cited NRS 111.315 (Nevada)numerous times here and encouraged others to check their own states’ recording laws and let us know. Just because one statute says something doesn’t have to be recorded, that is not the end of the inquiry. NV has such a statute – 107.070, I think it is, which says assignments of dots need not be recorded. But NRS 111.315 says documents affecting an interest in real property must be recorded to be effective against anyone but the parties to the assignment.

    Oregon, for instance, also requires assignments to be recorded to be effective against the homeowner, as evidenced in this case:

    McCoy v. BNC Mortgage, Adv. No. 10-6224-fra, Case No. 10-63814-fra13 (February 7, 2011)
    Nonjudicial foreclosure, MERS, unrecorded transfers

    The court denied a motion to dismiss a wrongful foreclosure claim. Under Oregon law, nonjudicial foreclosure is available only when the beneficiary’s interest is clearly documented in the public record. Here the complaint alleged a number of unrecorded assignments of the beneficial interest in the trust deed.

  22. Mortgage rights can only be transferred by: an Assignment recorded in the local land records. Mortgage rights are “estates in land” and therefore governed by the state’s real property laws. These vary from state to state but in general Mortgage rights can only be transferred by a recorded instrument (the Assignment) in order to be effective against third parties without notice.

  23. The length of time that the Depositor owns the loans has been described as “one nanosecond.”

  24. In my refinance, the originator was sterns lending, but in actuality it was Chase. Sterns was a another broker in fact and we had another broker who brokered the loan and he made his commissions. But my note says Sterns Lending as the lender.

  25. Usedkarguy I’m in the Joliet area.

  26. Regarding the recent BofA settlement ($8.5B) did they admit that they commited Fraud? Just asking.

  27. And in the case of NY sec law, they couldnt’ cancel the end and do it over, anyway, for strict compliance with the time certain req’d by the governing documents. I think.

  28. @cubed2 – the psa’s changed to allow ends in blank to accomodate enforcement by the most convenient people, not to be confused with people with rights.

    But at any rate, that’s why they were endorsed in blank. Well, another reason could be that if I have a note endorsed in blank as opposed to a special endorsement, I could actually sell that note again. Who’s to stop me? Nobody bothered much with transfer or custody or any of those legal niceties.

    But as to why a note allegedly endorsed in blank is not then endorsed to the trustee, it can’t be done imo. Who could do it once endorsed in blank? Not the trustee – the blank end is allegedly for his benefit as trustee, so even in blank, he’s already the alleged endorsee. What’s he going to do – re-endorse it to himself? An endorsement may be cancelled, I think, but that’s a lot like work.

  29. I am a little unsure of what you are proposing for a remedy to the thousands losing their homes. Sure criminal activities, forgery, etc. ‘should’ be exposed and ideally punished but putting someone in jail does little for the homeowner/borrower in reality? It does not get him or her a free home at all. If a bank is going to buy back packages as they sold packages to investors, how does the individual find remedy? Aren’t we skipping a step here? The courts continue to process foreclosures regardless of paperwork malfunctions in non-judicial states. Who is looking into the trail of each of these foreclosures; certainly not the mills pushing them through. No one in reality. The AGs are pushing their own agenda, they do not represent individuals. So who is looking out for the homeowner?

    Maybe you can get a judge in a judicial state to look at your case, one on one, should you be fortunate enough to have legal representation with the knowledge to support and expose the fraud, if you can prove it exists. I am talking legal expert in this field. Are there many of those representing individuals? So what if they prosecute the Linda Greens and put them in jail for forgery? Is that going to stop foreclosure?

    I agree that criminal fraud took place. I agree that it should result in the investor nor the bank having legal right to foreclose. I agree that they may have no legal standing even. What I am saying is that foreclosures continue even now, they will continue whether banks buy back some or all of these troubled trusts regardless of homeowner’s supposed rights. In fact buying back may negate the Trust’s claim to ownership to some extent giving the bank free reign to some extent unless they are challenged legally in the court system. I believe this is why Moynihan said it was in the banks best interests to payoff. The banks will recover when they resell the collateral, regardless of who owns it. If they buy back for pennies on the dollar they can afford to sell it for nickles and dimes and still make a profit. Who wouldn’t buy and sell houses they could purchase for less than 10% value and resell for 30-60% of value all day long. Now it may be sorted out over the years but I really doubt it. The banks think the public is too ignorant and helpless to pursue legally and it will all eventually smooth over and go away. They may be correct? Why?

    Who, at this time, is standing up in the courts on behalf of the homeowner or to a great extent to punish from a criminal standpoint? Isn’t the fraud non-specific, too broad and ill defined at this point? That was the point I was making for a Class to expose chain of title or ownership. It is good to be accurate in theory but being correct does not stop foreclosures nor remedy the market losses due to underwater values. My point was that we signed a note to purchase a house. We never expected the house to be free even if the process was predatory or the value diminished as a result of criminal fraud. But since it was predatory, which in turn diminished our home’s value, we should be entitled to a reduction in principal, similar to what the banks are getting from investors or the reverse. Not trying to be argumentative, just looking for realistic legal remedy.

  30. spell check – wont re-publish

  31. Continued –

    What I know about the secondary and capital markets is from living it and that is drowned out by the flood of so called experts pushing attorneys daily to do audit’s. As Bank of NY complemented me in court last year – “OhNo …you again! Counsel then said “I never lose- want to bet ? We will be in and out of hear in 10 minutes – I want my house back NOW. Lets bet ?

    Four hours later we were heading into trial — LOL (really). They are on a different agenda and will defeat the text book arguments your seeing.

    In contrast, I know procedure at a level of 1/100 of what your counsel does and s/he knows the approach better than I do. I so very well respect this issue.

    It is the collective efforts and contribution of my knowledge and facts that for the evidentiary and together, he and I would make a great collaboration.

    Whatever he was paid to date, perhaps it’s likely fallen short of the time counsel needs to put into this case. In all honesty your property is worth $300,000 at reversion in 20 years – includes both cash flow and sale. You’re out of pocket to date is nothing and the cost to cure here needs to be within a reasonable budget.

    My basis for claim and alleging your right to restore title by release of lien is based upon the nexus of the following- The courts hold that foreclosing parties’ claims to title must be sustained by clear, precise and indubitable evidence, sufficed to induce equity to declare an absolute deed a mortgage.

    The judicious hearing the matter day in and day out cannot get either side to admonish one or the others arguments with absolute causation for a release of lien or allowing an F/C to proceed. They therefore err to the least color of title owed to the foreclosing parties.

    The certainty of the language contained in the deed and specificity of the CA Code §2924(h) and deceptive state efforts to support lenders, not consumers in CC §2923.5 merits further investigation and delay for deciding the matter of title and recovery.

    It is woefully clear that the deed would never survive the counter arguments made assuming counsel will shake the status quo that dates back to the first work war and time for authoring the civil code. Counsel that refutes the evidentiary consisting of the balance sheet and Derecognition is lost to his claim. Web sites and attorneys need to be mindful of this with regards to malpractice and E& O insurance. Look at the MA appellate decision and order to reverse under the nexus of bifurcation – I am shocked at the incompetence for the judicious. Splitting a note from deed? Oh lord…And the Pooling and serving agreements used as evidentiary are the last stop a lender can use to pursue a LAWFUL foreclosure referencing the SPV…OH lord again!
    Continued –

    The substance offered to date will demomnstrate several missing links necssary to show th eleast collor of title . The foreclosure avoids the ipossible claims that circumvent the existing securities holder’s dervitives, charged deposits , claims, contracts, counter parties claims and other regulatory prohibiting factors. RESPA TILA and Claptons LAILA offer no subject matter relevance nor does the Pooling and servicing that covers depositis and less than arms cunter parties understanding.

    In other words the foreclosure is a symbolic procedure whereby the title to subject matter is lost , verifiably lost and the court is made a party to the wirt of attanchement , not posession , in every occupancy hearing in CA . Void is the power of sale.

    The assets never left the trust and that is a fact. Or try it this way ….Did the securties offering really offer a security secured by a security in order to issue the prefered securities secured by classes of secruties offerings secured yield in a waterfall of securities . . .Oh Lord.

    What are we pelading hear folks …

    M.Soliman
    expert.witness@live.com
    Supporter of the Better Business Bureau and
    Society for Neurotic Approaches to Quieting Title.

  32. – Answer to Question . . .

    Be mindful of you’re attorney client privilege (to some) extent where counsel has not acknowledged the expert retainer and evidentury left from peading .

  33. @Julia,

    Yes they’re referring to blanket actions here, as there’s no way they can handle an assessment dealing with millions of loans. They’re sampling the notes.

    Your words sound reasonable until one stops and thinks about what it is your suggesting, that is, more of the same that’s already been proposed and has already failed for over three years now. Think HAMP.

    You say, “Trusts will write off blocks with buyoff not tied to individual notes/mortgages but in inseparable packages. If so, this will not bode well for individual borrowers because the trail to who owns the loan with authority to modify or reduce principal is lost.” The so-called trail you refer to was lost the moment, actually before the moment these loans were closed. This possible B of A settlement doesn’t change a thing as far as that fact is concerned. Once the egg is scrambled it’s a little passed difficult to unscramble, and all of these notes in different tranches and multiple placements make it even harder than unscrambling eggs.

    You write, “If they can’t prove who owns the loans, are guilty of forgery and fraud, that could be a sticking point to force wholesale modification and settlement.” Actually, I view that as the entry point for mass incarcerations and financial penalties that would make TARP look like a girl scout cookie sale. Settlement? How does one settle fraud? Modify fraud? What about the trillions we poured down the TARP black hole….shouldn’t that settle something?

    You wrote, “Until we can force the servicer/bank to divulge who or what owns the note you will not discover if the chain of title is legal, or fraudulent.” Trust me, it’s fraudulent. They all are. That’s the beauty of securitization, from a bankers point of view. Too much money! No records! No one watching! Insurance at 30 to 1! Casino Royale!

    You said, “As homeowners we don’t need criminal charges against the banks, we need reduction of principal, like the trust is getting in their settlement.” I couldn’t agree with you less. Although I’d go along with principal reduction if it were from a third party while the banks are put into receivership and our country restored to where it was a few years ago, pre-rampant fraud days, there’s simply no way our country can ever recover from this fraud without thousands of jail cells getting packed full. These actions cannot go unpunished, plain and simple. And monies returned.

    Actually, I wouldn’t read too much into this so called settlement at this early stage. Since the Fed is both a litigant and a wet nurse to B of A, very little trust can be put into any agreement at this point. Besides, who owns the Fed? Why, Bank of America for one! And when one reads the agreement’s fine print, all kinds of sinister things pop out, such as, and I’m paraphrasing here, “Don’t even think about coming after Countrywide or B of A for problems concerning:

    “….the origination, sale, or delivery of Mortgage Loans to the Covered Trusts.

    And everyone involved with this settlement will agree that there will never be any problems concerning:

    issues arising out of or relating to recordation, title, assignment, or any other matter relating to legal enforceability of a Mortgage or Mortgage Note, and the servicing of the Mortgage Loans held by the Covered Trusts

    Squeaky clean! How can one read this without thinking this so called settlement is in fact laundering the true issues here? One is reminded of the bumps in the desert outside of Vegas back in the heyday of the Mafia. Out of sight, out of mind, problem solved boss!

    Your last statement says it all. “You never expected a free house anyway did you?” Your question is perfectly legitimate when turned around and framed against the bank and their fraudulent foreclosure machine that have been playing scorched earth games in courts across the land. Exactly why should they get a free house, along with free insurance monies? Furthermore, why should they be settled with? Why do they deserve the act of modifying their fraudulent documents?

    Not only do the bankers deserve to lose the houses, tens of thousands deserve to lose their freedom, for the totally reckless abandon that resulted in millions without work, without health insurance, losing all of their equity, their life savings, and now their homes. Trust me, it has nothing to do with deadbeats getting anything for free.

    It does have to do with restoring plenty that was lost in America. Decency, trust, and honor to start with. We can never deal with the world again if we don’t restore these old time-tested American traditions.

  34. “But the borrower is not receiving a credit against his “unpaid account” for this payment. Why not?” (see para 2 above…)

    I believe that the accounting issue will turn attention to the actual amount that BofA has paid. This is no small matter and I think the best point of all made here. If BofA pays only pennies on the dollar to get off the hook to the investor, then that money saved must be subtracted from an involved homeowner’s balance-owed. In other words, the bank admits (1) wrong doing and (2) taking possession of homes for a greatly reduced price. I believe the courts will, like Congress did, want to pass through the good deal to the homeowner in the form of “Principal Reduction”.

    I now see an end to the housing crisis. A lawyer would have to be very asleep not to see the newly offered simple accounting solution to his clients problem that this case presents.

  35. Quote: “We did fight for the last several months,” said Brian T. Moynihan, chief executive of Bank of America, in a conference call with analysts. “But when you look at this over all, it’s a better decision for the company. It was much more adverse to the company if we kept fighting. We’ve been battling it out.

    Afterthought: Does anyone doubt Moynihan’s admission of guilt in selling bogus products to trusts here? A pig in a poke! The die is cast, the banks will settle but only those who legally challenge through the courts. The sooner action is taken the better. We need a class!

  36. My impression is that banks will cover payoffs in blanket actions much as the products were packaged and sold. Trusts will write off blocks with buyoff not tied to individual notes/mortgages but in inseparable packages. If so, this will not bode well for individual borrowers because the trail to who owns the loan with authority to modify or reduce principal is lost. I doubt banks or trusts know other than in a general sense. So if trust owners are willing to “write down” principal FOR THE BANKS, the individual homeowner is without standing to appeal for modification or principal reduction unless he sues for it. If you cannot define who owns your loan you have no legal standing to go against the trust for modification.
    The trails have been lost in fraud, deception, forgery, etc.

    In many cases the original note was written by a broker entity with MERS as nominee in name only. Until we can force the servicer/bank to divulge who or what owns the note you will not discover if the chain of title is legal, or fraudulent. The courts are bound to follow the legal standing of MERS or the trustee nominated to proceed with foreclosure. This legally supported process in some states goes unchallenged. Until MERS rights are both legally challenged and broken, foreclosure is inevitable, regardless of note ownership.

    After foreclosure. collateral fades into the system. There is a real disconnect between banks and trusts with definition of what they own. I suspect in the Trust’s view these are indivisible packages, backed by mortgage based collateral. If every trust that is defrauded challenges the banks the whole house of cards could take the banks down. The government and trust owners know this and will take pennies on the dollar where they can get it. It is not in their interest to toss the banks.
    Where does that leave individual homeowners?

    It is mandatory that MERS standing be legally challenged in those states with non-judicial process. In others it is imperative that ownership be challenged and produced according to property law. However, we are thinking too individually in our challenges to this massive deception. Only a class focused on chain of title, ownership legality and proof will succeed in bringing foreclosure to a halt. Why?

    The industry’s take (and the courts) is that YOU, the homeowner signed a note, you owe the money, RIGHT? You are liable to pay back what you borrowed, regardless of who owns the note or their deception in processing! Two wrongs do not make a right. In this old line of thinking, while banks are reeling from discovery of their deception, trust lawsuits, attorney general settlements, it is time NOW to form a class and sue them to discover who broke the law. If they can’t prove who owns the loans, are guilty of forgery and fraud, that could be a sticking point to force wholesale modification and settlement. The more homeowners get on board will legitimize the process that has the courts reeling with tales of fraud now. As homeowners we don’t need criminal charges against the banks, we need reduction of principal, like the trust is getting in their settlement.

    As long as ambiguous anonomity is preserved, banks, as servicers, will continue to act as agents, MERS will continue to function as trustees and foreclosures will continue BECAUSE the individual borrower can’t demonstrate who has or where his note is actually housed or owned. It is going to take a legal team or teams who have the knowledge and experience to get to the heart of the matter. Of course lawyers will make the money but if it results in keeping you in your home, forces principal reduction, allows bankruptcy judges to do the same, it might be worth it?

    You never expected a free house anyway did you?
    We need a legal team that has knowledge of real estate and property law with money to finance that can’t be bought off by the banks. Anyone have any thoughts?

  37. The geniuses at the Florida Banker Association had this to say in court testimony two years ago:

    <b<In actual practice, confusion over who owns and holds the note stems less from the fact that the note may have been transferred multiple times than it does from the form in which the note is transferred. It is a reality of commerce that virtually all paper documents related to a note and mortgage are converted to electronic files almost immediately after the loan is closed. Individual loans, as electronic data, are compiled into portfolios which are transferred to the secondary market, frequently as mortgage-backed securities. The records of ownership and payment are maintained by a servicing agent in an electronic database.

    The reason "many firms file lost note counts as a standard alternative pleading in the complaint" is because the physical document was deliberately eliminated to avoid confusion immediately upon its conversion to an electronic file. See State Street Bank and Trust Company v. Lord, 851 So. 2d 790 (Fla. 4th DCA 2003). Electronic storage is almost universally acknowledged as safer, more efficient and less expensive than maintaining the originals in hard copy, which bears the concomitant costs of physical indexing, archiving and maintaining security. It is a standard in the industry and becoming the benchmark of modern efficiency across the spectrum of commerce—including the court system.

    http://www.floridasupremecourt.org/pub_info/summaries/briefs/09/09-1460/Filed_09-30-2009_Comment_Bankers_Association.pdf

    Note: This is in direct violation of long established black letter law, and resembles the argument concerning the viability of Mers, i.e. Mers is now too established in the trades to rule against it. Both the “accepted practice” of the destruction of the note as above, and the seperation of the note and deed as is commonplace with Mers, are illegal acts and neither should need to be argued otherwise in a court of law.

    Yves Smith at Naked Capitalism wrote this last year:

    One of my colleagues had a long conversation with the CEO of a major subprime lender that was later acquired by a larger bank that was a major residential mortgage player. This buddy went through his explanation of why he thought mortgage trusts were in trouble if more people wised up to how they had messed up with making sure they got the note. The former CEO was initially resistant, arguing that they had gotten opinions from top law firms. My contact was very familiar with those opinions, and told him how qualified they were, and did not cover the little problem of not complying with the terms of the pooling and servicing agreement. He also rebutted other objections of the CEO. They guy then laughed nervously and said, “Well, if you’re right, we’re fucked. We never transferred the paper. No one in the industry transferred the paper.”

    http://www.nakedcapitalism.com/2010/09/more-evidence-of-bank-fubar-mortgage-behavior-florida-banks-destroyed-notes-others-never-transferred-them.html

    Note: The failure to transfer the note to the trust is a violation of long established trust laws, and should need to be argued in a court of law.

    Welcome to the Machine. If you disagree with the Ministry of Truth, you will be dealt with harshly. Stare into the neuralizer. You won’t feel a thing.

  38. where in Illinois, Luana?

  39. I closed on my loan on 9/12/03 with Integrity Financial Services as the lender. It was immediately assigned to US Bank. My terms were a 30 year fixed 6.75% on 70k. I just discovered documents sent to me by US Bank dated 3/16/04 showing a loan app for 30 year fixed 5.5% on 72k with my name signed on the bottom. I did not and never did apply for a loan from US Bank. If I did why have I been paying a 6.75% rate all these years? I need an attorney in IL that can help me stop the foreclosure and put these criminals where they belong. Anyone out there have any ideas that can help??

    Thanks all!

  40. They didnt get the notes endorsed nor delivered, I tell you. Maybe they did lose them, but if so, it was because they got put on the ‘we’ll get to this tomorrow pile’, today’s business being to bring in more loans in the Ponzi ish scheme to add to that pile of tomorrow’s work – the endorsements and proper delivery. What was sitting in tomorrow’s piles were notes with only the endorsement of the originator, the broker, whomever: A singular endorsement in blank. Under other circumstances, those notes would be bearer notes, but this does not comport with securitization rules (I take it) and the psa’s which specifically called for endorsement by all parties along the way and delivery to the appropriate custodian.

    I dont’ know if tnharry is right in his assessment. It does seem that more people will have difficulty making payments when the rate resets. Those terms are heinous. If litigation doesn’t lead to relief for a lot of people as facts evolve and more appropriate argument is made, in my opinion it will be because the banksters have found more creative methods to continue lying.

  41. @cubed2
    If a note never made it into the trust, the seller was paid by a buyer (trust)who never got and never will get the note. That says to this guy that the seller was paid for a note, the note is retired by that payment, and no debt is owed. The trust has no right to a note which could not have gone in the trust by the legally prescribed time. The seller, who must be the owner since it never made it into the trust, though has been paid by the trust, which trust received no real benefit for its payment. Not the borrower’s problem. No one’s problem, that is, until the borrower stops paying because until then, the seller pretends it did make it into the trust and makes the payment stream to the trust coming from the homeowner.

    It isn’t a question of what this means tax wise to a trust. It’s my understanding from current arguments that if a loan didnt make the cut-off date, that’s the end of the story, and with the inclusion of the fact that the seller has been paid for a loan that seller still holds/owns as a matter of trust law, that should be the end of the argument. Any argument about tax ramifications to the trust only serves to dilute the real argument, imo, and really offers no support for the proposition the note is paid, which IS the argument. And of course the seller can’t seize on collateral for a debt for which it has been paid.

    Nothing new perhaps, but I think arguments need to be framed this way if they’re not and these circumstances exist.

  42. NEIL YOU ARE THE MAN. I AGREE WITH YOUR ANALYSIS 100%

    Be Strong and Courageous.

  43. bytheway: Dream on. What you are asking on a short sale is impossible. There is no guarantee on a short sale. In fact, you will be lucky to ever get a named entity to rubberstamp the process much less indemnify it. They can’t guarantee what they have don’t own and have no authority to even sell. Who are you talking to, the owner of the mortgage, NO. You have the servicer, right? He doesn’t even know who the actual owner is much less speak for him. Having listed a property that I tried to short sell with two market cash offers, Denied both yet still hasn’ foreclosed although junk fees have tripled, you have to know that the accuracy of the right hand not knowing is fact and they do nothing because they know they can’t back it.

  44. This was all in the plan from at least 2008, imo. TARP bailout funds, keep the tbtf gang afloat, the investors would get around to bringing suit, recover some of the lost billions at a time when the hits to the bailed out gang could be handled, and the world would still spin.
    But the homeowner got left out. And they are by and large of the class which pays the majority of taxes. Double whammy – lose your home and pay for the tbtf bailout. Due to WS’s organized crime, many of us lost our jobs. Not all these loans were liar loans, you bums. And whose to say more of the liar loans (created to bet against, apparently) wouldn’t have seen more performance if WS hadn’t ‘grabbed’ such an inordinate amount of available funds. The value of our retirement and other accounts went to hell and stayed there. We’re paying through the nose for things we can’t do without, like gas and bread. Every time they want to restock their coffers, they sock it to us at the pump. It’s been going on since l979. We ought to trick them and make a real concerted effort to not buy gas unless we must. That probably hurts some good people, too.

    So the banksters got saved. Saved? I guess the government couldn’t make the mucks, like Paulson who personally gained 4 billion, give it back. So they sent over the TARP gimme funds to replace the billions which went into the pockets of a few and straight out of circulation.
    ISo maybe the government did what it thought it had to do.
    But the best the government could come up with for the formerly-employed middle class was HAMP, the mechanics of which the government either overlooked willfully or overlooked on ignorance, such mechanics which would cause many if not most homeowners to be ‘declined’ for HAMP?

    According to that info I posted last night, there is a program for up to 50k to homeowners for bringing their loans current and or make payments for up to two years. The government also extended unemployment benefits. So one can’t say it did no-thing for the average joe.

    It’s just not enough. In order for this boat to float, there must be consumers. Hard to be a consumer when you’re jobless or you’re a person whose house payment is choking you for any number of reasons, all or mostly caused by WS.
    The government needs to re-call those HAMP funds and create an agency or otherwise turn it over to someone else to implement, ANYone but the banksters who caused this economic tsunami and have no motivation to help the people they mostly ruined.

    And I agree with I think it was cubed2 – the banksters should be made to properly maintain foreclosed homes. Or, the government can buy them and sell them back to the homeowner, or new homeowners if they must, at cost. These are different times, and they could take strictly temporary measures in this regard. That may be a dangerous proposition, since we sure as heck don’t want the government to be any more of a land owner than it is. But it could be done – somehow. I don’t know how you make a loan to someone who has just defaulted, but they GAVE billions to companies that were defaulting, so why not the middle class?
    The government can buy a portfolio as well as anyone else if they want to.

  45. “The Straw Man”

    My fellow Americans,

    Why will it not be “credited”?

    Because the ONLY loans they (FDIC-BOFA etc..)are suing on, (about half) were made to “THE STRAW MAN” using fake names, and in a great percentage of cases- YOUR stolen identity. They created a “mirror” loan package of yours, then made secret loans in YOUR name.

    Most traces of this can be found if you look at your docs. If you find docs that have differences in your name, one with just your middle initial, and then another document with it spelled out.
    For instance the Application showing (as an example )
    “Richard Lawrence Nali” then maybe the purchase or DOT in only “Richard L. Nali”

    Also look for anything that says “Sole and Separate property” like a purchase agreement- Brian Davies, are you there?

    –well, folks, that’s how they ballooned up all these non-existant trusts, and that’s why Blue-Collar-Joe, wont get any “credit” in this massive government cover-up.
    All that Blue-Collar-Joe will get is a greased shaft up the arse.

    LAWYER WANTED!
    I have names of three other people, one in CA, two in AZ who had secret loans made, and those homes foreclosed on (homes they did not even KNOW about!)

    I faxed them the TEN-DOLLAR GRANT DEEDS, and well they are pretty pissed. Especially the WIFE, who apparently
    “gave up all rights to the separate property of her husband”

    in a document she NEVER signed!
    (These are Arizona people) Neil? What do you say about this?

    My name was forged on secret loan docs, by First American Title Company, and used in the purchase of a home.
    A home that I never even knew I owned, and never lived in~ I want it back!
    Then they secretly foreclosed on it. (as it was a “straw -man purchase”- but they used my husbands name)

    First American Title insurance company (a non-party pretender defendant) now wants get a sum judgment when they know I am out of town..
    as I just discovered the TRUTH.

    I did not sue this party, yet the pretending has not stopped. They have NO STANDING! But in LA County- its a slam dunk for them 100% of the time.

    AGAIN LAWYER WANTED! I have the names!

    Martha Nali

  46. SO if we do a SHORT SALE, to have this nightmare end, can we ask the Servicer, such as a Wells Fargo or BofA to cover us if someone comes out of the wood work later claiming they have a claim on the note or mortgage? HOW DOES THIS END. I don’t want to battle with the folks for years to get my house free and clear, I just want to move on with my life and have the people agree to forgive the shortfall and leave us the heck alone.

  47. Never has the phrase “You can lead a horse to water, but you can’t make them drink” been more appropriate…I tell people ’till I’m blue in the face about the “Great Fraud” and they say “you go, girl!”, but most of them still don’t think it applies to them and their mortgage, or they don’t want to deal with it…The ubiquity of the fraud is just unfathomable to some people…and that ignorance is what the banksters have counted on all this time…

  48. A lot of illegal things go down. Unless you have legal remedy it goes unchallenged. The process will play out as usual in non-judicial states, no one to challenge or know the trash that lies beneath. Hell, you can’t even find out who owns your loan even if you go to court. In Judicial states, court procedures are robotic acts where the system is overwhelmed. Judges want it off the books. Only really sharp foreclosure attorneys could get in and make a difference. Really is there motivation or money to help them? Sheila told it like it was, anyone pay attention?

    Regardless of whether fraud or deception would negate the process, it will proceed as designed unless there is legal challenge or class action. The time is now and the action is ripe! People need to stop wringing their hands and shouting the sky is falling. The chicken littles need a voice’ with some clout. Most of the outright “infected products” as tagged by FCIC Sheila Barr, are just now beginning to surface with the 60 minutes expose. Most people don’t even know what they have. Unless knowledgeable parties are willing to take on the banks, they will prevail in buying their way out of this mess anyway they can. Only a class could gain enough momentum financially to prevail.

    You don’t hear the President or Congress screaming about fraud do you? They are on another tangent trying to save the country from default. Everyone wants it to go away. Banks will pay off those filing suit, screaming the loudest., whether investors, AGs or what. Hang the homeowner!
    We need a genuine CLASS!

  49. here’s Indymac Ledger transactions with affiliates…from FDIC lawsuit when they sued Indymac Bancorp in 2008

    http://www.scribd.com/doc/59142340/Fdic-Sued-Indymac-Exibit-D-General-Ledger-showing-Transactions-with-Affiliates

    can someone make heads of tails of it?

  50. They just want the Tier 1 capital i.e. the house. They can fractionalize the house and print new cash via public law 106-122.

  51. Neil,

    It seems to me that settling with investors still does not unwind any transactions that have occurred. Even while a servicer may settle with an investor still does not give the servicer full chain title rights….it is just another smoke and mirror PR stunt!

  52. The banks are out in front of this. B of A is holding these defaulted loans, escalating fees and costs, in some cases boosting total value to 50-75% of original through servicing costs, forced insurance, appraisals, collection fees, etc. etc. Think of the original loans as inflated so numbers mean little in settlement value. What is retained by B of A and others will be the ability to re-market the collateral (houses) and recover as the judicial and non-judicial states work through the backlog. If B of A retains servicing rights and to an extent, a finger in either the whole pie or a good slice, their liquidation process will recover most of the nickels and dimes on the dollar that were expended to satisfy investor claims for a product paid pennies to acquire.

    Modification in reality will never take place (unless legislated) so forget that little token. What passes for modification is a series of paper offers denied by some unseen entity/investor/whathaveyou.

    The houses will be marketed as REOs, liquidated, further dropping the housing market into the abyss. The bank will recover something from a product they never owned in the first place. Remember they sold it to investors, who took pennies on the dollar to release and the bank will make nickles and dimes on the resale as they work through the process. Think of it as something for nothing.

    Or better still , think of it as writing down the original loan principal. Something they denied the homeowner as not expedient.

    B of A will recover a second time from the same predatory process that initiated the economic fall even though they have thrown back a fraction of initial profit to shut up investors, attorney generals and Fannie and Freddie. B of A. Other banks will follow suit, recovering a profit from their mess in the end.

    The homeowners, victims in this case, are the ones losing everything.

  53. On the modifications bit, B0A cannot legally modify a mortgage/note
    unless it is the true lender. If B0A is servicing mortgages, then this
    talk of modifications to notes is BS. Once again the same con to put
    people into the foreclosure fast track.
    Only the person/entity that owns the note (as it was their money being used) can lower a borrowers’ mortgage payments.

  54. Jan,

    I have a definition of execution that I’d like to apply to you know who, and there are lot’s of “who’s” I am referring to.

    And it involves a horse, rope and tree branch.

  55. Hey, cubed, I’m a big fan of Mandelman too and love his “bringing up the rear” articles. Did you see the Fannie Mae yet? Hilarious.

    “Okay, look… why is Fannie Mae allowed to decide anything? They’re not even a company anymore. They went bankrupt and we “nationalized” them. Oh okay, call it a “conservatorship” if it makes you feel better, but it doesn’t change the fact that Fannie Mae and Freddie Mac were both nationalized back in September of 2008. We the taxpayers put $200 billion into Fannie and Freddie back then, as we took over approximately $1.5 trillion in debt and $5.3 trillion in loans.”

    http://mandelman.ml-implode.com/2011/07/bringing-up-the-rear-%e2%80%93-fannie-mae%e2%80%99s-president-and-ceo-michael-j-williams/

  56. Neil’s lengthy analysis on “default” overlooks one key element: non-payment, however construed, is still not a default. To become a “default” in the legal sense, the non-payment has to be “declared” and “uncured” beyond the cure date.

    Declaration of default is still not a legal default. It is a predicate step. Before it becomes an enforceable default, the default has to be declared and exist uncured (by anyone) past the stated “cure date.” Alternatively, the default has to be challenged. An unchallenged claim of default that remains uncured past the cure date is now a “default,” in the sens that enforcement action can now start.

    One of the problems we see in “talk-blogs” is that folks toss around terms which have specific legal meanings, without understanding the meanings. Another example is the term “executed.” I see statements like “I executed the Note…” all the time. Guess what: you never “executed” anything. Execution in law requires two elements: signing the Instrument, and delivery of the Instrument. The befuddled homeowner never “delivered” anything; he sat in the broker’s office and signed a stack of documents an inch think, usually without even reading them. That, folks, is not “execution of the Instrument.” All it is, is a signing. Avoid using terms like “execution” and “default,” they have legal meanings more than “signed” or “did not personally pay.”

  57. some good questions by Mandelman:

    “Why can’t the banks just show up with the note assigned to the trust, as they are legally required, when they foreclose? Because they all lost them? Is that the story from the world’s largest banks… that they’re all having a problem losing stuff? It was a mass misplacement?
    The question, of course, is what happens next? What happens if the bank cannot establish that a note was assigned to a trust that now wants to foreclose? Does the amount owed become an unsecured debt, dischargeable in bankruptcy? And if the trust does not hold the note because it wasn’t ever assigned, who owns it? And where is it, damn it?”

    http://mandelman.ml-implode.com/2011/07/bringing-up-the-rear-tom-deutsch-executive-director-american-securitization-forum/

  58. They won’t be credited because they already have been way in the beginning of the loan. Selling servicing rights is all they ever do, no need to tell the so call debtor that loan has been paid. Banks are just collecting fees and passing. Then since there is not a real owner anyone can come in and claim ownership of your home. Buying unsecured mortgage debt and acting like its secured has been going on for years.

    Investigate on this market you will be shocked how the game is played.

  59. I couldn’t disagree more. Foreclosures will continue at the same pace or greater, as adjustable rate mortgages reset. The cases in courts and the readers of this blog and others represent only a fraction of 1% of the banks’ portfolios.

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