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EDITOR’S COMMENT: SINCE JUDGE RAKOFF APPROVED THE SETTLEMENT, WE CAN ONLY ASSUME THAT THE NUMBERS WERE MORE IN LINE WITH WHAT WAS APPROPRIATE. But on the other hand, here you have payment from BOA to the actual creditors who advanced money for the funding of mortgages. They are getting $315 million. Why isn’t anyone asking how that affects the balances due to those creditors?

What if that payment completely resolves the outstanding balance of Joe Smith, the plumber who was foreclosed for not making payments that, it turns out, were indeed to be paid by third parties because of the faulty procedures and representations made by Merrill Lynch and the mortgage aggregators and of course the mortgage originators and mortgage brokers?

What happens to Joe’s house, now that the creditor has received payment in full? What happens to Joe’s house if the creditor received partial payment in addition to the foreclosure? Why is there no accounting to Joe, besides the 1099-A often issued to people who were foreclosed? Is this tax fraud?

You can’t pick up one end of the stick and not pick up the other. You can’t pay the creditor off, even in part, without reducing the balance owed by the debtor. This simple fact is being ignored, along with dozens of other accounting and legal issues that go with them. Will the attempt be made to categorize this as unspecified damages that have nothing to do with the balance owed to the creditor? Who is going to believe that?

And THAT is why you need the COMBO and loan level accounting together with perhaps even further research to determine if the creditor has received or agents of the creditor has received payments that should be taken into account, along with payments from the “debtor” whose debt may well have been paid off completely at closing. If so, then there was no mortgage encumbrance that should have attached to the land. The parties who were losing money on the deal had separate contracts with third parties and eventually they are getting paid even as millions of homes are being foreclosed for the SAME DEBT.

Don’t be intimidated. It is just arithmetic.


NEW YORK (AP) — Bank of America agreed to pay $315 million to settle claims by investors that they were misled about mortgage-backed investments sold by its Merrill Lynch unit.

The settlement was disclosed in court papers filed late Monday in U.S. District Court in Manhattan and requires the approval of a judge.

The class action lawsuit was led by the Public Employees’ Retirement System of Mississippi pension fund. The fund claimed that the investments were backed by poor quality mortgages written by subprime lenders Countrywide Financial Corp., First Franklin Financial, and IndyMac Bancorp, a bank that failed in 2008.

The settlement represents another attempt by Charlotte, N.C.-based Bank of America Corp. to put its legal issues behind it. In the first half of the year alone the bank put up $12.7 billion to settle similar claims from different groups of investors.

U.S. District Judge Jed Rakoff has to approve the settlement, something that could prove difficult since the settlement includes no admission of guilt from Bank of America.

Just last week, Rakoff struck down a $285 million settlement that Citigroup Inc. reached with the Securities and Exchange Commission. The settlement would have imposed penalties on Citigroup even as it allowed the company to deny allegations that it misled investors.

Rakoff said the public has a right to know what happens in cases that touch on “the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives.” In such cases, the SEC has a responsibility to ensure that the truth emerges, he wrote.

26 Responses

  1. @ ian:

    Completed the Missal BK analysis. Good info, although some of it doesn’t pertain to me. Having said that, a lot of questions persist, about if New Century retained the servicing and “financed” that part out, which means Ocwen has no rights to foreclose. Also, New Century kept loan proceeds and did not fund my loan and used the money to buy-back stock for their company, drying up reserves for repurchases to the investors. Loans that were sold, were discounted…Hmmmm, by how much I don’t know, but it surely means the principles of many of their mortgages were written down or charged-off. Interesting? Too, the trust was collapsed. There was a breach of contract in the New Century Master Purchase Agreement to the pool/trust, etc…now to find the details! Still at it!

  2. Ian:

    Thanks, I will start right away checking that out. There is so much information….hundreds of hours. Chris

  3. chris- you seem to be up on all things New Century. In case you are not already aware, there was the famed ‘Missal Report’, compiled by an atty.named Missal, which served/serves as the operating manual for New Century for the Del BK judge, detailing what they did, how they did it, etc. Abby in Ca., who posts here, is pro se in Delaware courts and has alot of info on NC. Confidential witnesses interviewed while compiling the Missal Report detailed NC’s cut and paste department, and their scan and shred department. Lots of stuff in there to give one a warm fuzzy feeling deep inside.

  4. @ Joann:

    Can’t find the original link, but this should get it done.

    The audit report is from KPMG, 2007, published in 2008, referencing New Century, very lengthy, but real insightful.

    It pertains to SEC documents, Countrywide, Ocwen Servicing, SPS Servicing, assignments, etc…

  5. No balls to stand up and let them take their medicine. I thought there was a Judge who said no to the settlement offer, must have been another case.

  6. @tony – you’re quite right imo abou the needed discussions. And you said

    “..don’t even talk about QFC/NON QFC which is one of the most important things in any defense when lawyers say homeowner is not a party to the contract …”

    Well, as to this part, I think MERS itself provided a sustainable allegation that the homeowner is some kind of quasi-party ( or some such legal deal) to the psa because of how MERS and WS touted and sold themselves. They claimed MERS and securitization would be beneficial to homeowners because of more availability of funding for home ownership, blah, blah, blah. Sound like a stretch? Maybe. But maybe not in the hands of the right litigator. This may not be the route, but there’s a way into interest in the psa, imo. We just have to find it.

  7. Mr G said:
    “….the actual creditors who advanced money for the funding of mortgages. They are getting $315 million. Why isn’t anyone asking how that affects the balances due to those creditors?”

    First of all, I’m afraid the statement ” the creditors advanced money for the fundiing of mortgages” is not a fact in evidence imo. I don’t think they did. Investors bought something, derivatives, securities, something, but they did not fund the loan at its origination. Secondly, without reading the decision, we cannot know what the 315m represents. Return of investment for some kind of alleged security? Damages? Now if it were found that they (investors) purchased the notes, and I mean the notes, notes being defined as the debt instruments with our signatures on them, and are now being given their money back, that is also not a payment which would go to the benefit of the payor on the note/homeowner as it would not pay the note. It looks more to me like rescission of a sale in this regard.
    But the question would then become WHO owns the note now?

    Someone I’ll call the depositor put 50m in notes into a trust and someone else gave the trust or the depositor money in exchange for certificates issued by ?, which certificates were then sold to investors as mbs’s.

    If I buy an interest in the revenue produced by an oil well, I do not own the oil well. If the oil well dries up, I have and will get nothing. That is, unless the oil well owner sweetened the deal to get my investment with at least short-term guarantees. Now if the oil well owner were a criminal, he might have led me to believe I had an interest in the well itself. He might also have overstated the well’s production. Or maybe he even knew the well only had an expected life of 2 years because of
    structural problems, though he sold me a 30 year ride. And then maybe he bought some insurance which would pay him when the well dried up or gave out, which only he knew was coming. That way, he’d have some dough to pony up when I sue his tail. If I don’t sue his tail, he really makes out. I don’t think the investors bought the actual notes, one way or another. If they did, the oil well story can be tailored with pretty much the same result imo. And if they did, then the answer to Mr G’s question can only be found by reading the decision to see exactly what the award is being called.

  8. @ Tony,

    Don’t sweat the sales pitch. I have tried repeatedly to actually speak to someone here on Neil’s blog, going so far as to spend several hours doing research to get a direct phone number (because it is not
    listed on this blog ANYWHERE) leave multiple voice messages and e-mails to the accounts I found, and post under the responses regarding purchasing these products, and to date (this has been since May) I have yet to even receive an e-mail response back from anyone.

    Which worked out in our favor because what we have found out is that an audit of any kind without expert witness testimony by a known local expert that the Judge will issue an Ex Parte’ approval for PRIOR to the
    audit being ordered, then 9 out of 10 times, the audit is disallowed.
    And you have just wasted as much as $2,500 for NOTHING.

    So while they may be obligated to pitch these products on this blog
    for whatever reason, they are not really interested in selling them. So like I said, “Don’t sweat it!”

  9. I can’t wait to hear what Rakoff has to say about this. Hopefully he will not allow this settlement. Since my mother’s account is with Mississippi PERS, this is a big deal to me. Resistance is victory!

  10. @ joann;

    Yes, the information is out here. I was referring to an accounting analysis 581 pages of New Century Mortgage. It is relevant, in my opinion, to many of the brokers behavior. It shows an actual excel chart of possible mortgage defaults, explains how insurnace was purchsed, betting on the defaluts. They explain how the loans were not funded, New Century did lie about profits and losses in SEC filings, while filed erroneous paperwork about their investor status AND the dissolution of the original trust in the 2005-2006 calendar year. I have to go into my history, but will get back with the link. The report is very unsettling and telling.

  11. @chris

    “BK reports of sales and liquidation of pools and trust that have been extinct, have not existed for years”

    chris – where can you find this info? Is is public? Links? Tip on where to search? Do lists exist of extict pools and trusts? SEC filings always show requirement to report stopped almost immediately. Question to SEC produced result – essentially “we don’t know – have no way to know because not reported”.

    Also heard that some trusts listed by treasury where lenders – “servicers” are not allowed to proceed with foreclosure….find that hard to beleive but if true where is that info?

  12. chris- Scott Anderson may not exist as an actual person. In Nye Lavalle’s Pew Mortgage Institute (Pew Charitable Trusts) he wrote a piece about 2 yrs ago, detailing 42 known variations of Anderson’s “signature”. Judge Arthur Schack ordered Anderson to produce W2s or 1099s for the previous 3 years in order to prove who he worked for, in other words who paid him. Anderson didn’t respond, and Schack dismissed the FC with prejudice. In Ocwen v. MERS, it was stated that Scott Anderson was the only person authorized to sign foreclosure notices. I don’t think he exists. There is no one anywhere within commuting distance of his purported office in Fla. after searching 11 databases. Unless he has a person jet or helicopter.

  13. @Tony
    “if we don’t have a deep talk about FASB and GAO and how to use it? We don’t even talk about QFC/NON QFC …………What about the NIM TRUST”

    Thanks Tony I know you have already posted some points about these items….time running out here…can you post a few lines of significance of each that could be used in a typical case if you have time…. can search and research based on a few tips or craft a few lines into a complaint that reference it if it is understandable – can’t present something effectively though until understood. You are right = knowledge is key.

    Many articles and comments on this site have been absolutely invaluable and freely shared by Neil but still up the creek struggling to stay afloat and not go over the waterfall and time is running out. Most sites and this one too rightfully essentially focus on need for govt to pay attention and do something – that was true six years ago…..but time ticks on as something like 10 million foreclosures have already happened in that time.

    So in an individual battle, nothings off the table. Have research skills and need to deeply understand in order to apply to personal case which needed to be filed months ago…much info and knowledge already succintly piled in. Tight focused case is probablyly best especially if coming from a pro se. Focus has to be in what the judge can simply and easily “get” in what you present to court and critically – hope and pray “discovery” is compelled in some way from the “proof” you have the burden to present (at least in non judicial as a plaintiff) and present nothing that is either beside the point of a positive outcome or worse present nothing that could undermine a positive outcome.

    The vast majority of attorneys want nothing to do with foreclosure defense and definitiely not homeowner offense. And they want an arm and a leg for advice when they have no more clue than the judges and are stuck on – homeowner bought too much house – can’t pay – sham mod with get out of jail free agreeement for bankster – or get out – ownership issues beside the point – it’s homeowner trying to get free house – doesn’t matter who gets the house as long as it isn’t the homeowner. Then there are some attorneys who have tried and failed and don’t want to go down that road again.

    I really liked the offensive summary judgement article posted about a week ago about Florida (non-judicial) firm’s success with that but no answer from anyone yet whether you could do that in non judicial ie CA.
    WINNING FORECLOSURE TRIALS: BOA Loses Another One in Brevard County Florida.

    Anyway never would have learned the psa abcd’s and the ucc and the state statues and federal codes and more. Was able to do my own forensics and securitization audit (if not all the way to loan level accounting) because of info freely shared. No doubt Neil’s products would be invaluable for those who can afford it. Max Gardener’s boot camps another invaluable source for attoryneys. Some of his info gets posted online occasionally.

  14. They can’t problem here is they have gotten away with this so frequently in the past because nobody knew that it has become an accepted business model.They have also convinced the courts to look the other way.Doesn’t make it legal,doesn’t make it moral or ethical.But it doesn’t mean it doesn’t happen either.Lets face it in a perfect world none of this would happen,so much for that.

  15. Bottom line: Geithner and the Administration said it’s okay for the debt collectors to “create” (and record) bogus fraudulent paperwork and “documents” in order to steal houses…and courts and lawyers are either clueless, look the other way, or are somehow making blood money on the ignorance of hapless homeowners.

  16. dee, the obvious answer is…they can’t. Now comes Pan’s winding Labyrinth, the search for the holy grail, the pot of gold somewhere at the end of the rainbow….convincing a judge otherwise, a judge that believes banks are pillars of the community and all that is right with this nation….explaining to him/her that it JUST CAN’T HAPPEN LEGALLY!

    That’s the hard part.

  17. dee

    We know. They cannot, but this is where the court battle must go. I have the same issue. The foreclosing attornies are the trustees, nothing makes sense.

    My assignments were made in 2010, by Scott Anderson. I have 5 different signatures and cannot find the guy. Also have an original application from a notary, with signatures that do not even remotely match the assignment to Anderson in the foreclosure paperwork. I know I cannot give you an exact answer, but can tell you, the entire thing is bogus and wrought with the lies, forgery and fraud on the court. Proving it and getting a sophisticated judge to see it, that’s entirely another problem. You are correct in your assessment…you must keep digging and fight.

  18. Chris, Pamela

    My concern is how can a foreclosure mill attorney sign as Assistant Secretary of Mers to assign the Assignment of Note and Deed of Trust from the original lender two years later to the new Assignee. Also, this same attorney signed an Appointment of Substitute Trustee as attorney-in-fact for the new Assignee. The Substitute Trustee is employed by the foreclosure law firm which is a debt collector.

  19. @ dee:

    Sure, they have all been transferred. The question of the day: is it done legally and with authority? Probably not. That’s where the digging begins.

  20. The sale would have to take place before the co. went defunct.Just had this happen and got a letter from the Independant Foreclosure Review board called them to say your paperwork is not in the right name could you please send corrected docs.They are now so confused they have to research it to find the answer.

  21. I would like to know if a Assignment of a Note and Deed Trust can be transferred if the original lender is out of business or in bankrutcy?

  22. Tony…you’ve got it. The issue is profound and the layers are not only in the combo, securitization. There are SEC filings, BK reports of sales and liquidation of pools and trust that have been extinct, have not existed for years. Rules of law in all areas of real estate, contract, civil, criminal, tort, racketeering, tax, etc…have been broken. There are PSA CONTRACTS that have been defaulted on. Servicers that have no entitlements to anything, never mind a property. Many loans have not been funded. These and the one’s you mention are all reasons to question the banks litigation on homeowners. Any number of these issues, defended properly can be a win-win for the investor and the homeowner. Everyone is harping on the combo and accounting. It is much bigger than that, although I think that information may be helpful. Just my $.02….

  23. The addendum to the settlement: Any and all settlement monies need to be applied to reductions in principle for every homeowner in the pool/trust, from which it was stolen, PERIOD…or no DEAL!

  24. I have been quiet on this issue, but not anymore. No one needs no “combo and loan level accounting”, what the people need is what made this blog famous in the first place. Knowledge and break down defenses on how to beat the banks in any and every way.

    While no “legal advise” may be given there is no reason why discussions can not be given and case law broken down to explain why and how someone won/lose. I am tired of people acting like the banks and typing “there is money to be made in this” so selling there services. There is no money to be made, only houses to be saved! Leave the homeowners money alone! If anything they should be saving there money for either a legal defense fund or for if somehow they lose there home to purchase another via tax lien or tax deed sale.

    Instead we have people saying buy this and that or come to my seminar. This is out right crazy and needs to stop now! I mean how can you even talk about accounting in mortgage securities if we don’t have a deep talk about FASB and GAO and how to use it? We don’t even talk about QFC/NON QFC which is one of the most important things in any defense when lawyers say homeowner is not a party to the contract so they can not use the PSA.

    What about the NIM TRUST? This is the source that funds all trusts, we talk about wall street funding these trust but the NIM TRUST which is funded by a PPM (private placement memorandum) is what really does it. Yet never a discussion about them even though if you look on any PSA it always talks about it.

    What about talking about jurisdiction and why people need to beat banks on this issue? No one talks about this when this is the meat of any defense. What about these FDIC deals? Why isn’t no one explaining this deeply.

    There is so much more its crazy. This site needs to get back to real information and facts. Not people selling there services on here. Or posting same old new clippings to keep your hits up. I mean good Elohim, people are using this site because of the hits it gets and its wrong.

  25. Pamela: Word. I just met a mathematician in NYC who specializes in this area. Look for updates and commentary from him soon.

    Neil: A huge day in Federal Court Monday man, Ms. Do-Anything-for-Banking Kelly Ayotte is hating the day she decided to pick and choose media at her publicly advertised events.

  26. That doesn’t even come close to what is owed but I guess something is better than nothing.

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