U.S. Foreclosure Fraud in a Nutshell, How Average Joe’s Home Was Stolen

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The PSA organizers also do not inform Joe at the other end of the chain that they have sold his $300,000 loan for $600,000 and that the payout to the MBS purchasers (and other derivative side-bettors) when Joe defaults is potentially multiples of $300,000.

Submitted by Ann

U.S. Foreclosure Fraud in a Nutshell, How Average Joe’s Home Was Stolen
Politics / US HousingNov 28, 2011 – 02:11 AM
By: LewRockwell
http://www.marketoracle.co.uk/Article31789.html

Bill Butler writes: The untold story in the foreclosure crisis unfolding across America is that, following a foreclosure perpetrated by one of the October 2008 Bailout Banks (e.g. Bank of America, Citibank, JPMorgan, Wells Fargo) Fannie Mae or Freddie Mac suddenly appear as the record owner of Average Joe’s home. These federal government sponsored entities then go into local housing court and get a court order authorizing them to evict Joe. If Joe resists, these supposedly charitable institutions obtain a writ ordering the local sheriff to forcibly remove Joe from his home.

Newt Gingrich recently admitted to accepting $1.8 million from Freddie Mac ($25,0000 to $30,000 a month during one span of time) for advising this proto-fascist entity. Gingrich claims that he supports Fannie and Freddie because he believes the federal government “should have programs to help low income people acquire the ability to buy homes.” But Fannie and Freddie don’t do this and never have. When government “helps” someone by subsidizing the purchase of something (through easy credit or lower-than-market rates), it makes that something more expensive. Helping someone buy something that is overpriced because of your help is not help. Fannie/Freddie subsidies not only hurt the low income people they intend to help, they hurt everyone by subsidizing, and therefore distorting, the entire housing market. Fannie/Freddie’s charity has now taken a dark turn. Like their Depression-era New Deal predecessor the Regional Agricultural Credit Corp., Fannie/Freddie are now repossessing homes at an increasing and alarming rate.

Mr. Gingrich either does not understand economics – government subsidies make things more expensive, not less expensive, and therefore hurt their intended beneficiaries – or he is a vain, selfish, and cynical man with no interest in actually helping his neighbor.

You decide.

THE OCTOBER 2008 BAILOUT PAID OFF THE HOLDERS OF MORTGAGE BACKED SECURITES AND DERIVATIVE INSUREDS

The facts indicate that the Federal Reserve “printed” at least 16 trillion dollars as part of the 2008 bailouts. The bigger questions, however, who got it, why and what did the Fed get in return? The Fed doesn’t just print money. It prints money to buy stuff. Most often this is U.S. Treasuries. That changed in October of 2008. In and after October 2008 the Fed printed new money to buy mortgage-backed securities (MBS) that were defaulting at a rapid rate. Want proof? Here is a link to the Federal Reserve balance sheet which shows that the Fed is holding over a trillion dollars in mortgage backed securities that it began acquiring in 2008.

Why is the Federal Reserve holding all these MBS? Because when “the market” collapsed in September of 2008, what really collapsed is the Fannie/Freddie/Wall Street mortgage “daisy chain” securitization scheme. As increasing numbers of MBS went into default, the purchasers of derivatives (naked insurance contracts betting on MBS default) began filing claims against the insurance writers (e.g. AIG) demanding payment. This started in February 2007 when HSBC Bank announced billions in MBS losses, gained momentum in June of 2007 when Bear Stearns announced $3.8 billion in MBS exposure in just one Bear Stearns fund, and further momentum with the actual collapse of Bear Stears in July and August of 2007. By September of 2008, the Bear Stearns collapse proved to be the canary in the coal mine as the claims on off-balance sheet derivatives became the cascading cross defaults that Alan Greenspan warned could collapse the entire Western financial system.

Part of what happened in October 2008 is that the Federal Reserve paid AIG’s and others’ derivative obligations to the insureds (pension funds, hedge funds, major banks, foreign banks) who held the naked insurance contracts guaranteeing Average Joe’s payments. To understand this, imagine that a cataclysmic event occurred in the U.S. that destroyed nearly every car in the U.S. and further that Allstate insured all of these cars. That is what happened to AIG. When the housing market collapsed and borrowers began defaulting on their securitized loans, AIG’s derivative obligations exceeded its ability (or willingness) to pay. So the Fed stepped in as the insurer of last resort and bailed out AIG (and probably others). When an insurer pays on a personal property claim, it has “subrogation” rights. This means when it pays it has the right to demand possession of the personal property it insured or seek recovery from those responsible for the loss. In Allstate’s case this is wrecked cars. In the case of AIG and the Fed, it is MBS. That is what the trillions of MBS on the Fed’s balance sheet represent: wrecked cars that Fannie and Freddie are now liquidating for scrap value.

Thank you Mr. Gingrich. Great advice.

BUT FANNIE/FREDDIE WASN’T MY LENDER AND WASN’T MY MORTGAGEE, SO HOW CAN THEY TAKE MY HOUSE?

To understand how it came to be that the Fed has paid Average Joe’s original actual lender (the MBS purchaser) and now Fannie and Freddie are trying to take Joe’s home, you first have to understand some mortgage law and securitization basics.

The Difference Between Notes and Mortgages

When you close on the purchase of your home, you sign two important documents. You sign a promissory note that represents your legal obligation to pay. You sign ONE promissory note. You sign ONE promissory note because it is a negotiable instrument, payable “to the order of” the “lender” identified in the promissory note. If you signed two promissory notes on a $300,000 loan from Countrywide, you could end up paying Countrywide (or one of its successors) $600,000.

At closing you also sign a Mortgage (or a Deed of Trust in Deed of Trust States). You may sign more than one Mortgage. You may sign more than one Mortgage because it does not represent a legal obligation to pay anything. You could sign 50 Mortgages relating to your $300,000 Countrywide loan and it would not change your obligation. A Mortgage is a security instrument. It is security and security only. Without a promissory note, a mortgage is nothing. Nothing.

You “give” or “grant” a mortgage to your original lender as security for the promise to pay as represented by the promissory note. In real estate law parlance, you “give/grant” the “mortgage” to the “holder” of your “promissory note.”

If you question my bona fides in commenting on the important distinction between notes and mortgages, I know what I am talking about. I tried and won perhaps the first securitized mortgage lawsuit ever in the country in First National Bank of Elk River v. Independent Mortgage Services, 1996 WL 229236 (Minn. Ct. App. No. DX-95-1919).

In FNBER v. IMS a mortgage assignee (IMS) claimed the ownership of two mortgages relating to loans (promissory notes) held by my client, the First National Bank of Elk River (FNBER). After a three-day trial where IMS was capably represented by a former partner of the international law firm Dorsey & Whitney, my client prevailed and the Court voided the recorded mortgage assignments to IMS. My client prevailed not because of my great skill but because it had actual, physical custody of the original promissory notes (payable to the order of my client) and had been “servicing” (receiving payments on) the loans for years notwithstanding the recorded assignment of mortgage. The facts at trial showed that IMS rejected the loans because they did not conform to their securitization parameters. In short, IMS, as the “record owner” of the mortgages without any provable connection to the underlying notes, had nothing. FNBER, on the other hand, had promissory notes payable to the order of FNBER but did not have “record title” to the mortgages. FNBER was the winner because its possession of and entitlement to enforce the notes made it the “legal owner” of the mortgages.

The lesson: if you have record title to a mortgage but cannot show that you have possession of and/or entitlement to enforce the promissory notes that the mortgage secures, you lose.

This is true for 62 million securitized loans.

Securitization – The Car That Doesn’t Go In Reverse

There is nothing per se illegitimate about securitization. The law has for a long time recognized the rights of a noteholder to sell off pro-rata interests in the note. So long as the noteholder remains the noteholder he has the right to exercise rights in a mortgage (take the house) when there is a default on the note. Securitization does not run afoul of traditional real estate and foreclosure law when the mortgage holder can prove his connection to the noteholder.

But modern securitization doesn’t work this way.

The “securitization” of a “mortgage loan” today involves multiple parties but the most important parties and documents necessary for evaluating whether a bank has a right to foreclose on a mortgage are:

(1) the Borrower (Average Joe);

(2) the Original Lender (Mike’s Baitshop and Mortgages or Bailey Savings & Loan – whoever is across the closing table from Joe);

(3) the Original Mortgagee (could be Mike’s B&M, but could be anyone, including Fannie’s Creature From the Black Lagoon, the mortgagee “nominee” MERS);

(4) the “Servicer” of the loan as identified in the PSA (usually a Bank or anyone with “servicer” in its name, the entity to whom Joe makes his payments);

(5) the mortgage loan “pooling and servicing agreement” (PSA) and the PSA Trust created by the PSA;

(6) the “PSA Trust” is the “special purpose entity” created by the PSA. The PSA Trust is the heart of the PSA. It holds all securitized notes and mortgages and also sells MBS securities to investors; and

(7) the “Trustee” of the PSA Trust is the entity responsible for safekeeping of Joe’s promissory note and mortgage and the issuer of MBS.

The PSA Servicer is essentially the Chief Operating Officer and driver of the PSA. Without the Servicer, the securitization car does not go. The Servicer is the entity to which Joe pays his “mortgage” (really his note, but you get it) every month. When Joe’s loan gets “sold” multiple times, the loan is not actually being sold, the servicing rights are. The Servicer has no right, title or interest in either the promissory note or the mortgage. Any right that the Servicer has to receive money is derived from the PSA. The PSA, not Joe’s Note or Joe’s Mortgage, gives the Servicer the right to take droplets of cash out of Joe’s monthly payments before distributing the remainder to MBS purchasers.

The PSA Trustee and the sanctity of the PSA Trust are vitally important to the validity of the PSA. The PSA promoters (the usual suspects, Goldman Sachs, Lehman Bros., Merrill, Deutchebank, Barclays, etc.) persuaded MBS purchasers to part with trillions of dollars based on the idea that they would ensure that Joe’s Note would be properly endorsed by every person or entity that touched it after Joe signed it, that they would place Joe’s Note and Joe’s Mortgage in the vault-like PSA Trust and the note and mortgage would remain in the PSA Trust with a green-eyeshade, PSA Trustee diligently safekeeping them for 30 years. Further, the PSA promoters hired law firms to persuade the MBS purchasers that the PSA Trust, which is more than100 percent funded (that is, oversold) by the MBS purchasers, was the real owner of Joe’s Note and Joe’s Mortgage and that the PSA Trust, using other people’s money, had purchased or soon would purchase thousands of similar notes and mortgages in a “true sale” in accordance with FASB 140.

The PSA does not distribute pool proceeds that can be tracked pro rata to identifiable loans. In this respect, in the wrong hands (e.g. Countrywide’s Angelo Mozilo) PSAs have the potential to operate like a modern “daisy chain” fraud whereby the PSA oversells the loans in the PSA Trust, thus defrauding the MBS investors. The PSA organizers also do not inform Joe at the other end of the chain that they have sold his $300,000 loan for $600,000 and that the payout to the MBS purchasers (and other derivative side-bettors) when Joe defaults is potentially multiples of $300,000.

The PSA organizers can cover the PSA’s obligations to MBS purchasers through derivatives. Derivatives are like homeowners’ fire insurance that anyone can buy. If everyone in the world can bet that Joe’s home is going to burn down and has no interest in preventing it, odds are that Joe’s home will burn down. This is part of the reason Warren Buffet called derivatives a “financial weapon of mass destruction.” They are an off-balance sheet fiat money multiplier (the Fed stopped reporting the explosive expansion of M3 in 2006 most likely because of derivatives and mortgage loan securitization fraud), and create incentive for fraud. On the other end of the chain, Joe has no idea that the “Lender” across the table from him has no skin in the game and is more than likely receiving a commission for dragging Joe to the table.

A serious problem with modern securitization is that it destroys “privity.” Privity of contract is the traditional notion that there are two parties to a contract and that only a party to the contract can enforce or renegotiate that contract. Put simply, if A and B have a contract, C cannot enforce B’s rights against A (unless A expressly agrees or C otherwise shows a lawful agency relationship with B). The frustration for Joe is that he cannot find the other party to his transaction. When Joe talks to his “bank” (really his Servicer) and tries to renegotiate his loan, his bank tells him that a mysterious “investor” will not approve. He can’t do this because they don’t exist, have been paid or don’t have the authority to negotiate Joe’s loan.

Joe’s ultimate “investor” is the Fed, as evidenced by the trillion of MBSs on its balance sheet. Although Fannie/Freddie purportedly now “own” 80 percent of all U.S. “mortgage loans,” Fannie/Freddie are really just the Fed’s repo agents. Joe has no privity relationship with Fannie/Freddie. Fannie, Freddie and the Fed know this. So they are using the Bailout Banks to frontrun the process – the Bailout Bank (who also have no cognizable connection to the note and therefore no privity relationship with Joe) conducts a fraudulent foreclosure by creating a “record title” right to foreclose and, when the fraudulent process is over, hands the bag of stolen loot (Joe’s home) to Fannie and Freddie.

Record Title and Legal Title

Virtually all 62 million securitized notes define the “Noteholder” as “anyone who takes this Note by transfer and who is entitled to receive payment under this Note…” Very few of the holders of securitized mortgages can establish that they both hold (have physical possession of) the note AND are entitled to receive payments on the notes. For whatever reason, if a Bailout Bank has possession of an original note, it is usually endorsed payable to the order of some other (often bankrupt) entity.

If you are a Bailout Bank and you have physical possession of an original securitized note, proving that you are “entitled to receive payment” on the note is nearly impossible. First, you have to explain how you obtained the note when it should be in the hands of a PSA Trustee and it is not endorsed by the PSA Trustee. Second, even if you can show how you obtained the note, explaining why you are entitled to receive payments when you paid nothing for it and when the Fed may have satisfied your original creditors is a very difficult proposition. Third, because a mortgage is security for payments due to the noteholder and only the noteholder, if you cannot establish legal right to receive payments on the note but have a recorded mortgage all you have is “record” title to the mortgage. You have the “power” to foreclose (because courts trust recorded documents) but not necessarily the legal “right” to foreclose. Think FNBER v. IMS.

The “robosigner” controversy, reported by 60 Minutes months ago, is a symptom of the banks’ problem with “legal title” versus “record title.” The 60 Minutes reports shows that Bailout Banks are hiring 16 year old, independent contractors from Backwater, Georgia to pose as vice presidents and sign mortgage assignments which they “record” with local county recorders. This is effective in establishing the Bailout Banks’ “record title” to the “mortgage.” Unlike real bank vice presidents subject to Sarbanes-Oxley, Backwater 16-year olds have no reason to ask: “Where is the note?”; “Is my bank the noteholder?”; or “Is my Bank entitled to receive payments on the note?”

The Federal Office of the Comptroller of the Currency and the Office of Thrift Supervision agree with this analysis. In April of 2011 the OCC and OTS reprimanded the Bailout Banks for fraudulently foreclosing on millions of Average Joe’s:

…without always ensuring that the either the promissory note or the mortgage document were properly endorsed or assigned and, if necessary, in the possession of the appropriate party at the appropriate time…

The OCC and OTS further found that the Bailout Banks “failed to sufficiently oversee outside counsel and other third-party providers handling foreclosure-related services.”

Finally, Bailout Banks consented to the OCC and OTS spanking by admitting that they have engaged in “unsafe and unsound banking practices.”

In these “Order and Consent Decrees,” the OCC and the OTS reprimanded all of the usual suspects: Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife, MERSCorp, PNC Bank, US Bank, Wells Fargo, Aurora Bank, Everbank, OneWest Bank, IMB HoldCo LLC, and Sovereign Bank.

Although the OCC and OTS Orders are essentially wrist slaps for what is a massive fraud, these orders at least expose some truth. In response to the OCC Order, the Fannie/Freddie-created Mortgage Electronic Registration Systems (MERS), changed its rules (see Rule 8) to demand that foreclosing lawyers identify the “noteowner” prior to initiating foreclosure proceedings.

NEWT’S FANNIE/FREDDIE ENDGAME: PLANTATION USA

Those of us fighting the banks began to see a disturbing trend starting about a year ago. Fannie and Freddie began showing up claiming title and seeking to evict homeowners from their homes.

The process works like this, using Bank of America as an example. Average Joe had a securitized loan with Countrywide. Countrywide, which might as well have been run by the Gambino family with expertise in “daisy chain” fraud, never followed the PSA, did not care for the original notes and almost never deposited the original notes in the PSA Trust. Countrywide goes belly up. Bank of America (BOA) takes over Countrywide in perhaps the worst deal in the history of corporate America, acquiring more liabilities than assets. Bank of America realizes that it has acquired a big bag of dung (no notes = no mortgages = big problem) and so sets up an entity called “BAC Home Loans LLP” whose general partner is another BOA entity.

The purpose of these BOA entities is to execute the liquidation the Countrywide portfolio as quickly as possible and, at the same time, isolate the liability to two small BOA subsidiaries. BOA uses BAC Home Loans LLP to conduct the foreclosure on Joe’s home. BAC Home Loans LLP feeds local foreclosure lawyers phony, robosigned documents that establish an “of record” transfer of the Countrywide mortgage to BAC Home Loans LLP. BAC Home Loans LLP, “purchases” Joe’s home at a Sheriff’s sale by bidding Joe’s debt owed to Countrywide. BAC Home Loans LLP does not have and cannot prove any connection to Joe’s note so BAC Home Loans LLP quickly deeds Joe’s property to Fannie and Freddie.

When it is time to kick Joe out of his home, Fannie Mae shows up in the eviction action. When compelled to show its cards, Fannie will claim title to Joe’s house via a “quit claim deed” or an assignment of the Sheriff’s Certificate of sale. Adding insult to injury, while Joe may have spent years trying to get BOA to “modify” his loan, and may have begged BOA for the right to pay BOA $1000 a month if only BOA will stop the foreclosure, Fannie now claims that BOA deeded Joe’s property to Fannie for nothing. That right, nothing. All county recorders require that a real estate purchaser claim how much they paid for the property to determine the tax value. Fannie claims on these recorded documents that it paid nothing for Joe’s home and, further, falsely claims that it is exempt because it is a US government agency. It isn’t. It is a government sponsored entity that is currently in conservatorship and run by the US government.

Great advice Newt.

CONCLUSION

It is apparent that the US government is so broke that it will do anything to pay its bills, including stealing Average Joe’s home.

That’s change that both Barack Obama and Newt Gingrich can believe in.

APPENDIX

More and more courts are agreeing that the banks “inside” the PSA do not have legal standing (they have no skin in the game and so cannot show the necessary “injury in fact”), are not “real parties in interest” (they cannot show that they followed the terms of the PSA or are otherwise “entitled to enforce” the note) and that there are real questions of whether any securitized mortgage can ever be properly perfected.

The banks’ weakness is exposed most often in bankruptcy courts because it is there that they have to show their cards and explain how they claim a legal right, rather than the “of record” right, to foreclose the mortgage. More and more courts are recognizing that, without proof of ownership of the underlying note, holding a mortgage means nothing.

The most recent crack in the Banks’s position is evidenced by the federal Eight Circuit Court of Appeals’ decision in In Re Banks, No. 11-6025 (8th Cir., Sept. 13, 2011). In Banks, a bank attempted to execute a foreclosure within a bankruptcy case. The bank had a note payable to the order of another entity; that is, the foreclosing bank was “Bank C” but had a note payable to the order of “Bank B” and endorsed in blank by Bank B. The bank, Bank C, alleged that, because the note was endorsed in blank and “without recourse,” that it had the right to foreclose. The Court held that this was insufficient to show a sufficient chain of title to the note, reversed the lower court’s decision and remanded for findings regarding when and how Bank C acquired the note.

See also, In Re Aagard, No. 810-77338-reg (Bankr. E.D.N.Y., Feb. 10, 2011) (http://www.scribd.com/doc/48827432/In-Re-Agard-48750818-US-Bankruptcy-Court-New-York-Memorandum-Decision Judge Grossman slams MERS as lacking standing, working as both principal and agent in same transaction, and exposes MERS’ alleged principal US Bank as unable to produce or provide evidence that it is in fact the holder of the note); In Re Vargas, No. 08-17036SB (Bankr. C.D. Cal., Sept. 30, 2008)http://msnbcmedia.msn.com/i/msnbc/sections/news/JudgeBuffordsRuling.pdf (Judge Bufford correctly applied rules of evidence and held that MERS could not establish right to possession of the 83-year old Mr. Vargas’ home through the testimony of a low-level employee who had no foundation to testify about the legal title to the original note); In Re Walker, Bankr. E.D. Cal. No. 10-21656-E-11 (May 20, 2010) http://www.1215.org/lawnotes/mortgage/rickie-walker/066.pdf (holding that neither MERS nor its alleged principal could show that they were “real parties in interest” because neither could provide any evidence of the whereabouts of, much less legal title to, the original note); Landmark v.Kesler, 216 P.2d 158 (Kan. 2009) http://www.scribd.com/doc/51767549/Landmark-vs-Kessler (in this case the Kansas Supreme Court provides the most cogent state court analysis of the problem created by securitization – the “splitting” of the note and the mortgage and the real party in interest and standing problems that the holder of the mortgage has when it cannot also show that it has clean and clear legal title to the note); U.S. Bank Nat’l Ass’n v. Ibanez, 941 NE 40 (Mass. 2011), (http://www.scribd.com/doc/46472917/U-S-Bank-v-Ibanez-WELLS-FARGO-v-LaRACE-Sjc-Slip-Opinion-1-7 the Massachusetts Supreme Court denied two banks’ attempts to “quiet title” following foreclosure because the banks’ proffered evidence did not show ownership of the mortgages – or for that matter, the notes – prior to the Sheriff’s sale); and Jackson v. MERS, 770 N.W.2d 489 (Minn. 2009) http://brunettelawoffice.com/blog/wp-content/uploads/2009/11/jackson-v-mortgage-electronic-reg-sys-770-nw2d-487-minn-2009.pdf (this federal-gun-to-the-head – certified question from federal court asking for state court blessing of its already decided ruling – to the Minnesota Supreme Court is most notable for the courageous dissent of NFL Hall of Fame player and only popularly elected Justice Alan Page who opined that MERS should pound sand and obey state recording standards).

Bill Butler [send him mail] is a Minneapolis attorney and the owner of Butler Liberty Law.

http://www.lewrockwell.com

28 Responses

  1. re: Weidner post , case linked by Ann 12/1 at 12:57
    I think it’s important to note that the FLA decision highlighted something procedurally critical, and was the reason the court threw out the bankster’s SJ: The attachments to a complaint take precedence over allegations in the complaint. HSBC attached a copy of a mtg from the homeowners to a third party, the originator of the subject loan. HSBC contended it owned the note and mtg. Relying on the attachment to the complaint, the appeals court said nope, your attachment is what we’re going with, and this presented issues of material fact which could not be disposed of in HSBC’s favor in a SJ
    motion. I wonder if the homeowner could’ve been granted a counter-claim for summary judgment given that HSBC’s ‘evidence” served as evidence against HSBC.

  2. @abby, I followed your link and read it. Good arguments. Collusion itself is actionable. IMo every one of these bs self-assignments is collusive between MERS and the company executing the self-assignment. The assignor had no interest and the assignee will receive none (and including an assignment of the note in the assignment of the dot is recordation and submission of a false document, which is a crime of one degree or another in all states) At best, the assignment is being done to impact and invoke the jurisdiction of a court, a threshold issue, where none exists because that party, despite the pig-in-lipstick Veal case, has nothing at risk and has suffered no loss or injury. At worst, homes are being out right stolen. As MA DC Judge Young recently pointed out (despite his massive misinterpretation of a hugely salient statute), the fact of a borrower’s default does not make for a free-for-all. There is a landmark case which discusses collusion in assignments:

    http://www.scribd.com/doc/48254612/MERS-COLLUSION-IN-THE-ASSIGNMENT-OF-DEEDS-OF-TRUST-AND-DIVERSITY

  3. In a good amt of litigation seeking treble damages for violations of securities laws in the 80’s and 90’s, plaintiffs alleged securities fraud and sought treble damages under RICO for fraud in the sales of securities. WS likely lobbied for and were the beneficiaries of the Public Securities Litigation Reform Act (PSLRA) of l995 which 86’d the use of federal RICO claims predicated on fraud in the sale of securities in violation of the anti-fraud provisions of the Securities and
    Exchange Act of l934. (So please don’t posit I’m high). Apparently
    WS successfully argued the treble damages were too big a stick in litigation, about which I may vomit just thinking about the disparity
    in litigation and bargaining power the homeowner faces every day trying to save his home from an industry which probably tricked him in the first place and which debt has likely been paid and which is being sought by people with no real ties to the home. ( And here I remind you that an IRS agent actually had the cheek to seek and get the prosecution of a guy who got a liar loan. I wonder if the agent pulled wings off flies when he was a kid. And hell with the fact that the lender offered and encouraged the liar loan and we know why.)

    In Fairfax Financial Hldgs, Ltd v S.A.C. Cap Mgmt, NJ Sup Ct, the plaintiff successfully dodged the invariable motion to dismiss, citing
    state law RICO claims in lieu of the Congressionally outlawed federal RICO claims for fraud in the sale of securities. There is a question as yet unanswered to my knowledge. Does federal conflict pre-emption doctrine preclude state law RICO claims in securities fraud? Here’s anopther one: why was WS the beneficiary of such congressional largess by way of the PSLRA?
    Don’t take this as gospel- I am demonstrating that Wall Street is no stranger to RICO charges and I stand on RICO as a likely avenue for the sophisticated lawyer or attorney general.

    As to homeowners, there’s no doubt in my mind that RICO violations go on, also routinely, and which are not included in the narrow definitions profferred here. Earlier this year, I posted Nevada’s RICO definitions, below. Each state has them. Just google “my state RICO statutes” and see what offenses are likely being committed against you….with impunity. “No one has the guts to change the tempo.” Well, that’s changing, isn’t it? State AG’s are standing up for their people and the law. Thank God. If you’re a brilliant attorney who was forced out by an age clause, say, and have had enough golfing, you could do some good by contributing to these efforts.

    http://www.scribd.com/doc/67339009/Primer-on-RICO-including-Definitions

  4. knew we are on the same page. RICO is the vehicle and imo if someone with cahunas would lead the charge

    For Gods sake – RICO = Drugs, Gambling, Prostitution ; Organizied Crime – Stop …

  5. iwantmynpv, on December 1, 2011 at 4:51 pm said:

    M Soliman: You also miss the point. The fact remains; if something was conveyed for value, where did it occur.

    MSoliman- Look at your HUD -1 . What are you saying –

    expert.witness@live.com

  6. If we don’t take the banks out soon, we are doomed. We need to be systematically rounding up the perpetrators and putting them in jail, so they can’t shoot President Paul like they did Lincoln, (tried to kill) Jackson, McKinley and Kennedy. If you ever doubted how far the bankers will go to protect their own selfish interests in profits and power, I should think you don’t doubt it now, after having watched this video.
    We can never hope to return to being the Republic our founding fathers intended us to be, where individual liberties and freedoms trump everything else including government authority, unless we kill the banks. We have a duty to our children and grandchildren to end the central banker’s reign, for posterity. When we have ejected them from power, congress will return to being a body that serves the common man, not the bankers who stuff money in our representative’s pockets, and lead their decision making to favor their own selfish interests while we suffer and starve. They say the seventh time is the charm–this removal of the central bank will be the seventh time they have been defeated. It should be made an amendment to the constitution, that no central bank should EVER be allowed on our sovereign soil, or be allowed to do business here, and that congress shall never be permitted to delegate the issuance of money to any bank, agency or entity and shall perform that duty exclusively.

    Once the TBTF banks have destroyed themselves through greed, we must work to undo the harm they have done, worldwide. We must have transparency in government. There must be no more secret meetings, no more secret initiatives, no more secret groups and no more laws passed in secret without a vote. End all debt-based spending, use interest free money to fund the day to day operations of a limited government, and stop the integration of nations to destroy their sovereignty. Restore the constitutional rights jeopardized or lost during the bankers assault on individual freedom.
    The rule of law and justice must be enforced and those responsible for the massive financial crimes they’ve committed, punished. They must be made to suffer the consequences for their actions and make restitution in full. Vaccinate them with their own poisons and feed them the genetically modified foods they profited from, and put them in the FEMA camps so that they can develop some of the empathy they cannot feel for others. Sterilize their children with BPA from plastics, and expose their children to the horrible bio-toxins and designer diseases they’ve unleashed on the unsuspecting world, and make them work until they drop from exhaustion. Let them feel the fear of having their lives under the complete control of someone who openly wishes them dead, and wants to take away everything they have that makes life livable; shelter, medicine, security, and comfort. This is what they deserve as a sentence for their crimes against humanity and treason in the name of profit.

  7. @iwantmynpv – that was quite a mouthful and I admit I struggled to follow it, but when I got to this

    “We should start by liquidating the counter party on the default swaps. Indict all the officers and strip their personal wealth through RICO.”

    I knew we are on the same page. RICO is the vehicle and imo if someone with cahunas would lead the charge, it might be all downhill from there. There is a monster conflict going on here, the size and depth of which I don’t think we’ve seen before.
    The group considering themselves the props of global economy
    seek one end regardless of its impact on ‘average’ Americans and right or wrong are not words associated with their effort (not considering those who operate and influence for pure profit). A few souls say hell with that and seek to uphold the law on which our country was founded and which is necessary for a democratic and free society. There is and can be no harmony – the roads and ramifications are too diverse. The government by and large has chosen its course, one which sacrifices all our values imo and that’s why each of us make a difference. We are the only thing which stands between a tyranny which like other historical tyrannies meant as temporary measures for the alleged better good will become permanent. I for one don’t think we have much if we have no law.

  8. This is SUPERB analysis and breakdown of the what/why/how of the past few years abuse of every honest American Homeowner. The writer is astute, professional, and above-all a knowledgable winning attorney. I hope all 50-A.G.’s are reading this, then following-up with local judiciate emails so that the little-Joe guy doesn’t have to fear that each county judge may be too busy to know how this all began, ran and is heading us into illegal forelosures from wrongful (lying) parties.
    This was an impressive read. Neil, you are attracting the cream of the crop: thanks for being our “Billy Jack”.

  9. Him and his banker buddies refer to people as “Joe lunch bucket.” Says it all about these scumbags.

  10. DYLAN RATIGAN FOR PRESIDENT!!!

    http://www.msnbc.msn.com/id/37560195/#45514370

  11. This is the most precise, enlightening explanation of how we homeowners get robbed. THANK YOU VERY MUCH. Our NV Attorney General is collecting input from us ‘screwees’ with facts, to go after the unsanitary “banks” and servicers. This State has more foreclosures per capita than any other. If the “mob” still ruled here, we wouldn’t have so much of these crimes. I’m facing one BofA – or whoever owns my note??? now and wish I had a ‘mobster’ on my side to clean out the garbage thieves. The blooming bank won’t tell me who the Note Holder is these days, because “I am not entitled to it”. Oh, yea??? I signed the Original—-

  12. […] Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, LOAN MODIFICATION, modification, quiet title, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND Livinglies’s Weblog […]

  13. our whole global monetary system is based on debt.

    Stay away from the banks.

    Meaning don’t ever borrow,,,,,,,,,,,,and keep credit as a second cushion.

    Look. microsoft never borrowed. apple never borrowed. they pay their employees well, real well.

    Banks are crooks. Only upper management gets paid well. All others are paid so called market rate wages.

    There is a difference between offering a real product that people will exchange for, and a product that is based on BS, laws, and contracts, and such bull crap.

    Think about it.

    The credit cards and loans from these banking enties, are all designed to keep you in debt………….forever……….as it is compound interest……………..

    Don’t ever borrow, stay away from the banks.

  14. I would not recommend voting for any party canditate. I would recommend voting for bill still…………check it out———-

    and do your research———–

  15. Usedkarguy, thanks for the insight. it is as always-the illusion of choice. The real players in this country don’t care if the money seat is held be a democrat or a republican, that is all for perception that us average folk hold dear to while they fleece us for trillions.

    They only care that it is one of the candidates they control. Herman cain and Newt gingrich are strictly in this race to deflect attention from the next nominee, Mitt Romney. He is right up their alley. A guy the hides his socialist ideals behind a conservative cloak. He is rigch just like them and they all believe in back-door socialism. It keeps the banks liquid and us average folk in line because access to capital is limited despite the largest expansion of currency in the history of this great nation.

    These guys all play for the same team and we ain’t on it!.

  16. “Crappy settlements” have become a cheap payoff system not serving the public interest.

    Posted on November 30, 2011

    It will only continue to get worse. What will it take for our politicians and government to understand that the securities fraud committed by Wall Street and their associates have created joblessness, homelessness, foreclosure and eviction that has affected families across the country? How can we continue to ignore the enormous wrongs?

    Judge Rakoff was right when he told the Securities and Exchange Commission that their deal with Citigroup Global Markets, Inc. was not transparent enough and stated,
    “[T]he Supreme Court has repeatedly made clear, however, that a court cannot grant the extraordinary remedy of injunctive relief without considering the public interest.”

    The public interest has been sorely damaged by the fraud committed by the Wall Street banks and a slap on the wrist and a cheap fine is not going to change or deter their immoral behavior. The depth of the disaster the fraudulent behavior has caused reaches epidemic proportions because it flatten a major sector of our economy: housing, construction, construction manufacturing and labor. On top of that it destroyed the pension and retirement funds (including corporate 401ks) that caused the downsizing and layoff of personnel in corporate America. This was not a simple scam – this was an elaborate Ponzi scheme that went unnoticed and unregulated for years until it failed.

    The following must-see 60 Minutes segments, Scott Pelley further highlights the deteriorating economic conditions across the United States. This is so pervasive that it hits every town across the country from Maine to Hawaii. We can no longer afford to ignore the collateral damage to American families and their children.

    Click here to watch the 60 Minutes video.
    It takes a few moments for it to load.
    http://www.cbsnews.com/video/watch/?id=7389750n

    More at http://deadlyclear.wordpress.com/2011/11/30/crappy-settlements-have-become-a-cheap-payoff-system-not-serving-the-public-interest/

  17. Not a Newt fan, but…..
    His “dying wife” did not die
    she was divorcing him (or she wanted the divorce)
    but still a detestable human being, to be sure!

    the vacuum that is the modern Repucan party forces us to choose another path.

    Where’s Marco Rubio?

  18. If the last one does not get me shot – i will put up a detailed post about why the mortgages do not get conveyed and the real reason behind MERS.

    While waiting, just remember, Newt Gingrich served his wife divorce papers while she was dying in the hospital. is this the guy we want in charge.

    He will be like the Gin_grinch who stole Fanne Christmas, and yes all the politicians shake down fannie and freddie for dollars.

  19. M Soliman: You also miss the point. The fact remains; if something was conveyed for value, where did it occur.

    Joe American buys a house and heads over to the commencement bank (Bedrock Federal). They allege to underwrite a loan and provide a wire transaction to the bank attorney escrow for disbursement “at closing / recission”; yet, did not use real monies to fund the loan.

    They immediately assign the mortgage at the table to MERS, as nominee, [no money from MERS and Bedrock still owns the mortgage). The original Note is not conveyed or forwarded to MERS, only notice that MERS now holds this mortgage in Bedrock’s name for registration purposes, or nominee; because, (still no real money)

    Turns out Bedrock had a side deal with a larger funding/warehouse bank ( Wilma National Bank) who had given (Bedrock Federal) a warehouse line and provided lucrative compensation for (Wilma National Bank) to act a back-door agent for (Bedrock Federal) to get them as many loans as possible that met certain underwriting guidelines and they would up the Premium / SRP. (Wilma) had deals like this with a bunch of different (Bedrock) or regional’s / correspondent lenders; because, (still no real money)

    Turns out (Wilma) had a pre-arranged deal with Originator Bank (Mr. Slate Bank, FSB) to get them as many loans as possible as quickly as possible, and they would pay a premium based on volume, interest rate an prepay penalties, because they were building the pool of loans for sale. (Mr. Slate Bank, FSB) has deals like these with a bunch of different (Wilma National Bank’s); because, (still no real money)

    Turns out (Mr. Slate Bank) had a deal with a sponsor bank (Wells Fargo Bank, a wholly owned subsidiary of Well Fargo Bank, N.A.) to sell them all their loan with certain underwriting criteria etc.. who had a prearranged deal with the parent company, Wells Fargo Bank, N.A. as the sponsor; because, (still no real money)

    Wachovia was acting as the Seller Bank to a securitization trust which needed to purchase 1 billion in loans to provide cash flow to the pass through certificate holders of the Merrill Lynch MBS ARM pass through account- Series 842-BC. (still no real money)

    Merrill Lynch would sell 500 million in certificates to investors around the globe – x dollars would go into the reserve account and they stripping process would begin on MERS so the credit enhancers could write just enough monoline insurance to guarantee a triple A rating. The seller (SPV) leverages the loans outside the trust to carry certain notes on its balance sheet and the cash flow from the loans are forwarded to the Trustee of the REMIC. (long story for another day – but we have some money created to pay down the leverage through the chain).

    Now the reason everyone pays so much for the loans is because the Trust has already been registered with the SEC in shelf form, the prelim prospectuses had already been sent to would-be investors explaining loan criteria, different traunches and series, along with a 450 page PSA. Each Trust one has a closing date and cut-off date reflecting when the last loan can be purchased and conveyed from the donor bank to the trust, along with the cut-off date for the notes and all other original collateral docs to be received by the Trustee. Oh yeah, this is also when all the financial institutions indemnify themselves against future suits.

    Two things, the mortgages never made it past the first lender in most cases, banks always figured MERS could foreclose as the registration company so they never bother. in many cases it is difficult for them to foreclose on the Note because some states have judicial remedy for foreclosure based on the mortgage recording and standing becomes the immediate issue. Yet, some folks are getting smart under RESPA and the FDCPA. Not one lender in the assignment chain operated as a dealer, or used their own funds. In actuality many security cases look at the capacity in which multiple parties conduct the transaction. Some, quick questions, what service did all the banks in between the commencing bank and the trustee provide, aside from marking the loans up and having connections to (Glass Steagal Banks) whom could leverage current deposits (90-1 leverage) thanks to CDS, despite the counter-party not having the capital reserves to pay in case of default.

    That is why the lie, bribe, forge,pressure, buy congress and regulators. The truth really is no party was injured and plenty of capital would flow. That is why the first rule of banking is to redeem the collateral at all cost. The reserves are leveraged and in the majority of the cases the seller bank also provided the swap insurance and than wrote synthetic swaps to hedge, while all scumbags shorted and bet against the pools in proprietary accounts.

    My favorite is the FDIC, which is more of a wash pool than fannie and freddie. they provide the early deleverage by wiping shareholder and bondholder equity in the bank holding company before stripping the assets into a conservator bank, than they repackage the crap and sell it to a larger bank who thros them into a repo package with the FRC.

    Lastly, the majority of the fed balance sheet, although enormous and costing taxpayer is actually mostly ridden with dollar swap and other short term facilities to keep the banks from dumping the derivative exposure into deposit balance sheets. TARP was never repaid, it was simply rolled into other liquidity programs that did not carry the higher penalty interest like TARP.

    We should start by liquidating the counter party on the default swaps. Indict all the officers and strip their personal wealth through RICO. You will see that the same folks that claim the homeowners caused all the financial woes are the same folks who collected the premiums for imaginary insurance being masked as an investment vehicle. Just remember, it costs 500 billion every three months to keep the DOW above 10,000 and another 100 billion to pay the interest on the debt itself.

    I want to pledge my house to the federal reserve corp has a held-to-maturity investment and get 700k at .0825 interest and I will use it all to purchase 10 year treasuries paying me two. I will than redeposit the treasuries back with the Fed as my reserve requirement and lend 9-1 off that, unless I can set up a special purpose vehicle which allows me to leverage 40-1 with a default guy involved.

    Happy holidays and lets all wish France well by sending them 300 billion through the IMF, and happyyy new year.

  20. Action by the states and ag’s and or federal govt should be foreclosure moratorium until strict rules are in place and enforced – chain of title (original mortgage docs showing full chain of assignments to deed of trust and endorsements to note as per state statutes and UCC and trust law and sec and irs) and all accounting records showing full chain of detailed financial transaction (verifiy true source and course of funding and refi payoff, destination and application of borrower payments since origination, all servicer payments to any trust or to any other, all other payments to any trust from all sources that reduce the balance due, amount of the balance due true legal beneficiary today) all fully accounted for and fully disclosed from origination to securitized trust to anyone else – or no foreclosure. People who have paid on time should get this information also. Funds should be reimbursed for unjust enrichment in all cases where this has occurred without hesitation (its too good a deal – ought to be triple damages). This will stimulate the economy and stop the ongoing crisis. If it breaks the banks take them in receivership just like the crisis of the 80’s. Hire and train legal aid attorneys fast – collect the funds from already identifiable crooks. Pay up big time or go to jail. Justice should not be limited to people who can pay hefty retainers and hourly fees.

  21. Duke v. HSBC- Another Great Summary Judgment Reversal

    November 30th, 2011 | Author: Matthew D. Weidner, Esq. Another great opinion out of the 4th DCA! http://mattweidnerlaw.com/blog/2011/11/duke-v-hsbc-another-great-summary-judgment-reversal/

    Duke SJ reversed 4DCA 11-23-11
    http://mattweidnerlaw.com/blog/wp-content/uploads/2011/11/Duke-SJ-reversed-4DCA-11-23-11.pdf

    Appellants, Rodger and Lina Duke (“the Dukes”), appeal the trial

    court’s order granting final summary judgment of foreclosure in favor of

    appellee, HSBC Mortgage Services, Inc. (“HSBC”). We reverse the trial

    court’s order and hold that the record reflected genuine issues of

    material fact, making summary judgment improper.

  22. First quiet-title victory in Virginia (by default): first-mortgage deed of trust declared null and void:
    http://bryllaw.blogspot.com/2011/12/bryllaw-litigation-first-quiet-title.html

  23. @Soliman

    “Only where the note is completely filled with endorsements is it possible to indorse on a separate attachment and therein the alonge is permanently affixed as attachment.”

    Exactly! A note is like a check: If I write Carie check made out to her, Carie may legally transfer it to E.Toile if she endorses it first. The original order it was made out to still remains on the face of the check but who gets the money will depend upon who last endorsed it on the back of it. It’s called “the chain of transfer”. E. Toile may then decide to transfer it Mr. Soliman by signing it over to him (still on the back of it)If Carie wanted to sign an allonge in order to transfer it E.Toile without her signature directly on the check itself, the bank would literally laugh to her face!

    Now, that’s basic financial law, understandable by any judge and jury. Yet, very few people harp on it enough. A lot of writing has been done on the why and how but not enough on “let’s get to basics, here!”

    What happened with mortgage notes (yes, i know! Not “mortgageS”… we’ve got to call it something for sake of communication…) is that they were all transfered a zillion times via allonges. Written after the fact. Sometimes years after the fact…

    Educating judges means making them understand that all the laws were circumvented, starting with the most elementary and basic ones to create the monster we now know as “foreclosure crisis”.

    It is NOT a foreclosure crisis. It is the greatest financial scandal ever visited on humankind.

  24. Here we have North Dakota looking to end property tax and thus you can actually own a piece of property.

    This whole property tax is BS. Who thought of it?

    https://docs.google.com/viewer?a=v&pid=explorer&chrome=true&srcid=0B7x5jzUE2d4IZGU3Nzc0NWQtNjhmYy00ZWJmLTgyODEtY2JkZDkwM2U0ZTNj&hl=en_US&pli=1

    http://www.activistpost.com/2011/11/secret-revolution-in-north-dakota.html

    And consider this:

    “The national mainstream media is not covering this story. The NEA has pledged $4-5 million to fight passage of the measure — this in a state where a Senate race costs less than $1 million. They clearly see the national impact this measure will generate and want to stop it before any other states get any bright ideas. “

  25. Leave a Reply

    Article :

    If you are a Bailout Bank and you have physical possession of an original securitized note, proving that you are “entitled to receive payment” on the note is nearly impossible.

    M.Soliman – The note is a contract- installment contract. The article misses the point.

    First, you have to explain how you obtained the note when it should be in the hands of a PSA Trustee and it is not endorsed by the PSA Trustee.

    M.Soliman – Preferred shares are debt – the author of this story is fishing. The note is collateral held by the obligor that entitles them to payments. The payments are passed through as a debt under a different master note or obligation

    Second, even if you can show how you obtained the note, explaining why you are entitled to receive payments when you paid nothing for it and when the Fed may have satisfied your original creditors is a very difficult proposition.

    M.Soliman – All wires originate out of the Fed for its member banks. The Fed and not the bank are going after the wire it is alleging to have not been repaid.

    Third, because a mortgage is security for payments due to the note holder and only the note holder, if you cannot establish legal right to receive payments on the note but have a recorded mortgage all you have is “record” title to the mortgage.

    M.Soliman – Not true, as in hypothecation, guaranteed obligation of the note holder as obligor and or pledged assets collateralized debt. CDO Collateralized Debt obligations; Hmmm

    You have the “power” to foreclose (because courts trust recorded documents) but not necessarily the legal “right” to foreclose. Think FNBER v. IMS.

    M.Soliman – The courts know in my opinion and do not like what is happening. They are not going to reward arguments that simply cite Robo Worms, unendorsed alonge and questionable recorded instruments. The skid marks at a hit and run accident prove it was a mustang – and?

    The “robosigner” controversy, reported by 60 Minutes months ago, is a symptom of the banks’ problem with “legal title” versus “record title.”

    M.Soliman – Wong Dr Wrong. The matter is clearly a symptom of “bearer” paper. If I give you a Whacky Gift Card like they sell at the markets. If it becomes activated and I sign it Fred Flintstone, does it matter it should have been signed by Barney Rubble?

    The 60 Minutes reports show that Bailout Banks are hiring 16 year old, independent contractors from Backwater, Georgia to pose as vice presidents and sign mortgage assignments which they “record” with local county recorders. This is effective in establishing the Bailout Banks’ “record title” to the “mortgage.”

    M.Soliman – Get your facts in order Sunshine – If a note is negotiable, however it differs from other contracts in that it is implied without proof that it was issued for valuable consideration.

    Unlike real bank vice presidents subject to Sarbanes-Oxley, Backwater 16-year olds have no reason to ask: “Where is the note?”; “Is my bank the note holder?” or “Is my Bank entitled to receive payments on the note?”

    M.Soliman – Slow down Cowboy – if it is implied without proof that it was issued for valuable consideration, therefore every person whose signature appears upon the note is deemed to have become a party thereto for value.

    Summary –

    Nothing there I can see little of value here But I’m feeling a little gratuitous so…

    Remember that a holder of bearer paper is anyone in possession. A holder of the order paper is the payee or endorsee in possession. Therefore to negotiate bearer paper all that is necessary is to deliver it. GOT IT. Leaving the note unendorsed is to say the paper is not subject to formal assignment and transfer by the holder as compared to a blank check. I myself have beaten these arguments as a lender in court.

    I recall a chat with Citibank execs and First Franklin Execs and Countrywide Securities execs about Joe Lunch-Bucket (as we called him). My concern is for the means and methods of creating bearer paper. For you attorneys pleading these cases, I say get off the Robo signatures (but you can’t – you just can’t).

    Focus on the Blank endorsements and blank assignments. A blank endorsement called an Allonge is not the problem. The problem is where the judicious has yet to convene as follows-

    THE ENDORSEMENT MUST ALWAYS BE ON THE INSTRUMENT ITSELF IN ORDER TO OPERATE AS A NEGOTIATION. – ALWAYS!

    The “Ibanez lower and higher Court went through Hell to arrive at this simple presumption. “Only where the note is completely filled with endorsements is it possible to indorse on a separate attachment and therein the alonge is permanently affixed as attachment. Its fact – so

    As for the Pooling and Servicing Agreements – I don’t do these searches . . . the work done here can come in handy.

    However the references and arguments in this article – I would NOT use if preparing an Expert Declaration in “Opposition of Creditors Request for Relief” or to “Stay” the matter and, or for Seeking an Injunction”. The articles are frustration mounted on frustration and understandably so.

    Its regurgitated shock value and disbelief – concerned analysis of something the author does not get – And that is why these guys are such a “Formidable “Opposition”.

    They are vulnerable however – I assure you of that.

    M.Soliman
    Expert.witness@live.com

  26. […] See the original article here: U.S. Foreclosure Fraud in a Nutshell, How Average Joe’s Home Was Stolen […]

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