Pension Fund Bangs Goldman for $26.6 Million

Editor’s Note: The allegation was that the Pension Fund was misled into buying securities backed by risky mortgages from the now defunct New Century Financial.

The importance of this is that it corroborates what we have been saying all along. The pension funds were required by law to invest in “stable” funds which means in Wall Street parlance — investments that have very little risk. Goldman came to them with what appeared to be Triple A rated inured investments with a higher return than what the pension fund could get elsewhere from similar investments. The proposal was an outright lie and Goldman knew it. The only thing that the Pension Fund missed was an opportunity to get punitive damages. It is possible that the pension fund managers had a relationship with Goldman that might have raised questions about whether the fraud could be proved.

But there is no doubt who funded those loans — the Pension Fund. So there is no doubt that whoever was named on the promissory note and mortgage was a naked nominee at best and probably just a regular bad country lie. And there is also no doubt that the terms and quality of the loan were DIFFERENT from the terms and quality proposed to the borrower. Thus we have a mismatch: the terms and names of the principals in the transaction were changed to allow Goldman to trade the loans and resell them as “temporary” owner of the loans while the Pension Fund was left high and dry on the actual lender.

No mortgage broker originator has been punished or sued for giving those bad loans to to Goldman, because Goldman knew the loans were bad and in fact counted on it: they were betting the loans would fail. But just for good measure they included language in the tranche terms that made it certain that they, as Master Servicer, could pull the rug out from the Pension Fund by simply declaring that the level of defaults resulted in a write-down or wipe-out of the investment. Then Goldman made a claim on AIG et al, for proceeds of insurance and credit default swaps payable to Goldman instead of the Pension Fund.

So there was no meeting of the minds, in lawyer speak, between the borrower (homeowner) and the lender (Pension Fund). The note was void because the party identified as the lender was not the lender at all. And it was void because it recited different terms than what the lender thought would be in the loans. Therefore, the mortgage lien was never perfected because it was securing the faithful performance of a note, under which no performance was required — the borrower did not intend to pay a party from whom he had received no loan.

The borrower had intended to pay the real lender, not the party named on the note and mortgage who had neither funded nor purchased the loan. The lender had intended to own a piece of high quality loans that together constituted a stable fund. They were both fooled.

Now here is the kicker: since there was no meeting of the minds, common law takes over. The terms of the loan have yet to be resolved. One thing is fairly sure at this point, which is that the obligation to the lender has not been secured.


16 Responses

  1. So does anyone know exactly what took place with the loans that they allege to be in, say GSAMP2007he2, and attempt to foreclose as trustee of GSAMP2007he2???


    Benjamin And Cynthia Washington: HSBC Debt Collectors Called 14 Times A Day For Months

    Doucet told HuffPost that it’s not even clear whether HSBC actually has the authority to enforce or collect on the Washingtons’ mortgage — that authority may in fact belong to another party. The Washingtons’ complaint alleges that their original lender was a company called MorEquity, Inc., and that they were working with an unnamed third party to settle their debt — a fact the Washingtons allegedly made clear to HSBC’s collectors. Still, the complaint says the calls kept coming.

    “At some point, HSBC claims to have become the servicer of the account,” Doucet told HuffPost. “We’re going to be interested to see what HSBC has to say about that.”

  3. @ BSE…: if you have the transcript please copy paste it with case details to give people heads up of crooked judges so if they get cases assigned to him to ask court to change judge immediately. that crook must have pulled same fraud on thousands of victims…

  4. @Martha Raysik, on August 7, 2012 at 7:25 pm said:

    This guy needs an attorney to present his case to the judge properly.
    Any judge working for a bank and providing cover for Freddie and Fannies will ensure websites like Livinglies and other medai reprots hold no credibility.



    (Smiling at the homeowner)
    So what? Did you stop semding money
    to the debt collectors?

    Yes, but I signed with Indymac, not
    with chase, and the MINS are wrong!
    And the escrow agent is in prison!


  5. CALPERS doesn’t reveal how many tens of billions they’v be screwed…

  6. Anyone wants to refi without having to send any doc whatsoever? Chase wants you! All you have to do is sign their letter and return it.

    Here is take on it.

    “Is this the new scam for banks to become owners of homes they do not currently own, now that judges are starting to understand the banks don’t own the homes they have been foreclosing on?
    “All that is required in order for a principal reduction on their loan is a signature sent back with the included self-addressed stamped envelope the bank provides.” Many have been fighting years for a loan mod/reduction, and now the banks are going to simply do it for you, and all you have to do is send in your signature?”

    Chase offers no doc refis, principal reduction
    By Jon Prior
    • August 6, 2012 • 4:45pm

    JPMorgan Chase ($37.01 0.71%) went from fast-tracking foreclosures to rubber stamping and pre-approving some borrowers for refinances and even principal reduction.

    The five largest mortgage servicers signed a $25 billion deal with federal prosecutors and 49 state attorneys general in March to settle foreclosure abuses and documentation problems in the past. Chase agreed to provide roughly $4.2 billion in relief to homeowners under the agreement, including principal write-downs, modifications and refinances for underwater borrowers.

    Servicers receive more credit for granting the relief within one year, according to the terms of the settlement.

    But since the foreclosure crisis first struck five years ago, borrowers have grown weary of the documentation black holes at the major banks. Many have spent hours in front of FAX machines, only to be asked for resubmissions or another piece of paperwork.

    To provide relief more quickly under the settlement, Chase executives are addressing the borrower fatigue with a letter sent to borrowers notifying them that their loan was refinanced into a new mortgage with a lower interest rate. No documentation was needed. Chase owned the loan.

    Borrowers receiving these letters saved an average of $300 per month on their payments, according to a statement from the bank sent to HousingWire.

    Chase is sending different letters to other underwater borrowers. All that is required in order for a principal reduction on their loan is a signature sent back with the included self-addressed stamped envelope the bank provides.

    Roughly half of the borrowers targeted by most major servicers for principal write-down consideration agree to the deal. But nearly all of the borrowers who received a letter from Chase, sent it back with a signature, according to the bank.

  7. Mark Stopa Esq. Florida “Gets It”

    Preparing for Trial In a Foreclosure Case

    Posted on May 11, 2011 by Mark Stopa
    I have a trial tomorrow in a foreclosure case. It’s in Lee County, of course – the county where the judges prosecute cases by setting trials sua sponte. Right now, I’m earnestly preparing for trial, but I thought I’d take a break to discuss the two issues are paramount in virtually every foreclosure case/trial. Depending on the facts of a particular case, there may be other issues, of course, but these two issues are critical to a Plaintiff’s ability to win at trial and should, in my view, be vigorously defended in virtually every case:

    1. Introducing the Note into evidence.

    2. Proving the homeowner’s default in payments and the amount owed.

    Re. the former, we all know the Plaintiff must introduce the original Note into evidence, failing which a foreclosure judgment cannot lawfully be entered. The fact that a Note is “self-authenticating” makes this seem like a low hurdle – the Plaintiff’s attorney simply needs to hand the original Note to the judge and it will be admitted into evidence. Fortunately for homeowners, it’s not that simple.

    Under Fla. Stat. 673.3081, if a homeowner denies the authenticity of a Note or the signatures thereon in the pleadings, the Plaintiff must authenticate the Note, and its signatures, at trial. There is still a presumption the Note and all signatures are authentic, but by contesting authentication, a homeowner can force the bank to authenticate the Note at trial. This may be harder than you think. For instance, if I challenge the authenticity of a blank indorsement, the Plaintiff must put on testimony from someone who can swear, under oath, that he/she saw the indorsement executed or that he/she recognizes the signature and it is authentic. Similarly, if I challenge the authenticity of the Note, the Plaintiff must present a witness who can testify he/she saw the homeowner sign the Note or who recognizes the homeowner’s signature based on other documents. The way that Notes change hands between banks, neither of these things would be very easy, and I doubt the Plaintiffs’ lawyers will be prepared to deal with these evidentiary issues. In other words, it’s quite possibly that if the homeowner preserves these evidentiary objections at trial, the Plaintiff’s lawyers won’t be prepared for them and won’t even have the requisite witness(es) at trial to testify.

    Re. the second issue, testimony at trial must generally be based on personal knowledge. That means the Plaintiff must testify to events he/she has seen with his/her eyes or heard with his/her ears. This is virtually impossible to do with regard to proving a homeowner did not pay a mortgage payment or proving the amount owed, so the Plaintiff invariably must rely on documents to prove these facts. This is permissible, but only if the Plaintiff can introduce these documents under the business records exception to the hearsay rule.

    Again, this is harder than you think. The Plaintiff must show: (1) the documents are a memorandum, report, record, or data compilation; (2) made at or near the time of the event; (3) by or from information transmitted by a person with knowledge; (4) kept in the course of regularly conducted business activity; and (5) that it was the regular practice of that business to make such a record. All five elements must be satisfied or the documents cannot be used as evidence at trial.

    I’m not trying to teach anyone how to practice law. Rather, my point is that there are virtually always things that can be done to make it difficult for a bank to prevail in a foreclosure case; these are just two examples. So don’t give up – keep fighting foreclosure!

    Mark Stopa

  8. FADE IN:


    (Smiling at the homeowner)
    So what? Did you stop semding money
    to the debt collectors?

    Yes, but I signed with Indymac, not
    with chase, and the MINS are wrong!
    And the escrow agent is in prison!


  9. $26.6M… Pocket change. They made much, much more than that just in bonuses received for their job so well done.

  10. “So there was no meeting of the minds, in lawyer speak, between the borrower (homeowner) and the lender (Pension Fund).”

    These kinds of statements confuse the issue even more. A “pension fund” is not a real creditor. Can someone please explain what motivates Neil to say these things?

  11. Makes sense to me , but why doesn’t it make sense to any judges , when I stand in front of them !

  12. Question of the day!

    How many times has Fannie Mae (via Wells Fargo or whoever) actually WON a foreclosure trial defended by a lawyer in Florida?

    I don’t know the answer but I am hearing that defended foreclosures in Florida go nowhere.

    I had read some statistics earlier that almost no cases go to trial in Florida.


  13. This is from the comment section of today’s Huffington Post article about Geithner and Barofsky…very interesting…:

    In the 1990′s desktop scanners relieved the lenders of the burden of the paperwork.
    This is where the mischief started.
    I have personally destroyed hundreds, possibly thousands of notes after we rendered mortgage paperwork to disc format. We never separated the the note from the lien portion in order to preserve it from the Gods of Fire, Dumpster and Shredder.
    It is naive to suggest that all troubled homeowners are responsible for the situation in which they presently reside. It is criminally negligent to suggest bankers should be rewarded for rampant fraud.
    The banks that may have retained the note are now proving malfeasance in multiples of other ways, through: securitization, bonding, transferral, recording; fraud through conversion, bait-switch, swaps(insurance fraud), forgery, perjury, insider trades…
    In my opinion, the claims of these banks went into the dumpster, along with the pink slips years ago.
    As a society, it is necessary we restore dignity and the rule of law.
    Banks proven in criminal behavior should be forced to underwrite the process (presently denied most) wherein troubled homeowners demonstrate their inclusion within a judicial system that is the birthright to every American and not only the richest among us.
    Failure to provide a voice for the weakest among us will further erode the good judgement of those in the middle, the banks will continue their predation and it will be the ruin of us all.
    Accountability and restoration of the housing market is the key.

  14. My original note no longer exists. They tried to tell me and show me a copy and represent it as the original. Too bad, so sad.

  15. Thank you for that. What happens to the alleged loans (note & mortgage) that is claimed to have been sold to GS and securitized, allegedly GSAMP2007HE2?? Isn’t that one of the securitized trust that was subject to the FHFA vs. Goldman lawsuit.

    How can the alleged owner and holder of the note foreclose on a home in Florida??

    Input anyone, please….

  16. Excellant post

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