Why Do Subservicers Continue to Pay Investors After Borrower Stops Paying?

It is now common knowledge that subservicers are continuing to pay investors and reporting the loan as “performing” after they have sent a default and right to reinstate notice as required by the mortgage (usually paragraph 22) and by the uniform debt collection laws. The first problem about this is that the actual creditor does not show a default whereas the bookkeeper Servicer is declaring the default. With the investor receiving his regular payments, how can a default exist? This appears to apply to securitized student loans as well.

Bottom line is that the subservicer is reporting to the borrower that the loan is in default but reporting to the investor (the creditor) that it isn’t in default. These payments have gone on for as long as 18 months that I have seen. Which brings us back to the first articles ever written on this blog.

The borrower is only required to make payments that are DUE. The payment isn’t due if it is already been made and there is nothing to reinstate if the creditor has already received his expected payment. The payments are NOT DUE TO THE SERVICER. They are due to the creditor. If the creditor received the payment on that loan as shown in the distribution report to the creditor, then the conditions necessary to declare that the loan is in default are not present. Remember that the presence of a table funded loan, an aggregator, the securitization, the trust was withheld from the borrower. The banks could have covered themselves by adding to the mortgage and note that third party payments to the creditor will not reduce the payments, principal or interest. But if they had done that, they would have required to answer so e uncomfortable questions.

The second issue is the constant question “Why would they continue making payments to the ‘creditor’ when they are not receiving payments from the borrower?” And “Where are they getting the money to pay the creditor?”

After talking with sources from deep inside the industry the answer to why they are paying is primarily to sell more bonds and hide the default issues. The secondary reason is to make the investor complacent about the accounting for what was really received on account of the loans and from whom. That inquiry could lead to a demand from the investor for payment in full and if the REMIC doesn’t pay, then the investors sue the investment banker who was the one playing with OPM (other people’s money).

The answer to the second question is that the money comes from the investment banker. Whether the investment banker is merely using the investor’s money (allowed under prospectus) or using insurance proceeds or payments on CDS (credit default swaps) or even sale proceeds to the Federal Reserve varies. Either way it is an effort to keep money that should go to the investor and reduce the amount payable to the investor and which would reduce or eliminate the debt owed by the homeowner to the investor. It is fraud, theft and probably a bunch of other things.

63 Responses

  1. Good for you go for it

  2. I feel badly for you if a reverse mortgage is your best option at this point. The mortgage insurance charges can be a scam depending on how much equity is in your home.

    Do you think a judge would ever deny or not credit you for the payments you have made for the past 20 years?

  3. No, Neil—securities investors are NEVER the “creditor”. (He’ll never give that one up, I guess.)

  4. @swarmthebanks – I just asked for confirmation of beneficiary interest by supplying copy of note before I paid off loan with rev mtge, but copy not forthcoming. So that in that sense I acknowledged the debt, just not the alleged beneficiary. So there’s no telling whether or when loan was written off as a credit against income taxes that was not reported to borrower, is there? Or any notification that foreclosure insurance paid off the debt from premiums taken from 20 years of payments.

    So yeah, I want my 20 years of payments to the wrong beneficiary back, or a free house.

    Do you understand now?

  5. “I did something wrong, but then they did something wronger, so, lets focus all the attention on them”. “Oh wait, they did something wrong before I did, therefore I should live in my home for free!”

    Its as if some are throwing anything and everything against the wall hoping something sticks. It might matter if it sticks or not a little bit, but what I think matters more is, homeowners agreed to a deal, then something happened.

    So what actually happened? The subservicer continuing to make payments even though the borrower stopped, therefore the borrower gets to what? Stay in the home for free?

    I will repeat what I stated at the very beginning of the comments section, how did an action by a RE-purchaser of your note (done without your consent), cause you to go into foreclosure? That is all a judge probably cares about because it means you are losing your home because of a change in terms to a PRIOR agreement that you did not consent to change.

    There are literally dozens of “change in terms” arguments that could be made, but they are never phrased as “change in terms” arguments on this site. Instead it sometimes feels like throwing stuff against the wall until something sticks types of arguments.

    Please connect the dots. Just because someone else did something wrong doesn’t mean you get a house for free. If however, a homeowner can show a change in terms occurred from all the note transfers, and can show the judge that that change in terms led to unwarranted penalties, fees, and confusion, then maybe the judge attempts to keep the homeowner in the home, but most likely not for free.

    I personally think, and I am in no way an expert, that proving that all of the changing of note ownership without the homeowners approval made it less likely to get a HAMP or HARP to be approved, would be a HUGE change in terms argument.

    You walk into your local bank where your original mortgage was made, they knew you, would vouch for you. Five years later your home is upside down, but that bank is not even whom you talk to anymore because the mortgage was resold several times, I would find that outrageous and an egregious change in terms, no?

  6. All conforming (fnma, fhlmc) and FHA and VA loans are guaranteed / insured by the government or its agencies.
    The only loans which needed protection of any kind are loans which exceeded F/F loan limits (jumbo loans) or were outside their (alleged) underwriting guidelines (subprime loans – loans which should never have been made).
    Losses which have to be borne by the players could only be on jumbo or sub-prime loans, since all the rest were covered. Not a large percentage of Americans got jumbo loans for which qualification was necessary, leaving the majority of uncovered-by-the-govt loans sub-primes. So when we hear of the “sub-prime’ mortgage crisis, that’s at least factual: it’s the making of sub-prime loans which caused this mess, compounded by CDS’s. Companies like MBIA and AIG insured these financial instruments. Why the heck, who knows. Probably the same reasons FNMA abandoned its own integrity: fat production bonuses. I’m not aware of any hijinx by MBIA, say, but I wouldn’t say the same at all about AIG. AIG, more than anyone else, had to have been at the center of this mess, and we got to bail them out in an unprecedented display of anti-capitalism and that done in the face of what certainly seems to be bad conduct. Maybe the conduct wasn’t known at the time, but it SHOULD have been since it’s a regulated insurer. Only two people that I know of have been prosecuted at AIG, those in the case I referenced yesterday and then only for pretending to re-insure another company, and they’ve gotten no more than a slap on the wrist. I don’t know how we’re not to lose our religion when this is the worst consequence of illegal acts by those wearing white collars. But the point I’m trying to make, for what it might be worth, is that all loans x jumbo and sub-prime are insured by the government in case we hadn’t all gotten that.

  7. Fannie’s guarantee of mortgage payments whether or not such payments are made by the homeowner makes Fannie a co-obligor on the homeowner’s note. Neil has written about this several times.

    The reason Fannie guarantees payments is to make their fake securities that much more attractive, as if to tell investors there’s no way they can possibly lose by investing in Fannie pools because the investors will get paid even if Fannie doesn’t!

  8. This is the same Summers Obama is considering to replace Bernanke… Read the entire post: it is sobering.


    “Does all this evil and pain flow from a single memo? Of course not: the evil was The Game itself, as played by the banker clique. The memo only revealed their game-plan for checkmate.

    And the memo reveals a lot about Summers and Obama.

    While billions of sorry souls are still hurting from worldwide banker-made disaster, Rubin and Summers didn’t do too badly. Rubin’s deregulation of banks had permitted the creation of a financial monstrosity called “Citigroup”. Within weeks of leaving office, Rubin was named director, then Chairman of Citigroup – which went bankrupt while managing to pay Rubin a total of $126 million.

    Then Rubin took on another post: as key campaign benefactor to a young State Senator, Barack Obama. Only days after his election as President, Obama, at Rubin’s insistence, gave Summers the odd post of US “Economics Tsar” and made Geithner his Tsarina (that is, Secretary of Treasury). In 2010, Summers gave up his royalist robes to return to “consulting” for Citibank and other creatures of bank deregulation whose payments have raised Summers’ net worth by $31 million since the “end-game” memo.”

  9. Meant 4billion in treasury notes
    To big of fingers for small key pad

  10. They offed a president for printing 4 billion on treasury notes ( when have real $ been printed since?)
    They kill 3,000 babies or more a day and call it freedom of choice
    Start a war saying it will only cost a total of 70 billion and forget to say monthly
    Who is kidding who it is one staged crisis after another since FDR failed to let us know we were going to be attacked
    When is common Joe & Jane going to stop taking it
    Just the facts please

  11. JG It is an inside game How do you think Buffet guarantee s a12% return So many boards that have no quality control munipulated by a chosen few Trade towers insurance claim anyone?

    Sent from my iPhone

  12. @ danmossisthewinner 01:33

    I had business dealings with the IRS for 2 decades (80’s and 90’s) as a data processing professional ,, believe me they ARE incompetent when it comes to their stated function. They lost data time after time.. their professional ranks are similar to any gov’t org , people are typically in positions 2 or 3 steps above where they would be in the private sector with the same capabilities. And they have no reason to care the in the least about maintaining any semblance of quality.

    The IRS became a political organization back in the 1970’s and has grown more and more brazen in support of lefties ,, mainly by ignoring $$billion dollar$$ accounting frauds (Planned Parenthood’s theft of tax dollars stands out) and persecuting any right wing group with extraordinary demands.

  13. http://www.reuters.com/article/2013/06/26/us-rescap-ally-settlement-idUSBRE95P1IB20130626

    “MBIA (MBI.N) and FGIC FGIC.UL, which insured residential mortgage-backed securities issued by ResCap, stand to get a larger piece of the settlement pie, about $1 billion total. But they have had to pay billions of dollars in claims stemming from the failed securities and may have to pay more in the future.”

    Why am I all over this? Because imo it has necessary pieces of this sorry puzzle, just like AIG. Anyone know who MBIA insured? Who exactly was the beneficiary of that insurance?

    Both Reuters and the other captioned their articles “BK court approves Ally 2.1 billion payment to ResCap” ish. What spins. Imo, the caption should read “Ally pays 2.1B for Stay out out of Jail Card”. But that’s not what’s of import to us in this stinking puzzle. imo.

  14. Hey smartie-pants MS – was ResCap a counter-party to default swaps?

  15. http://www.autonews.com/article/20130627/RETAIL02/130629903/allys-2-1-billion-payment-to-rescap-gets-courts-ok#axzz2cluPFfsA

    Ally just forked over 2.1 billion to rescap’s bankruptcy estate. Reading between the lines of this (June 2013) article, I take it to mean the 80 million dollar exam, recently unsealed, discovered that ALLY had stripped its subsidiary ResCap shortly before ResCap filed bk. And you’re not going to believe this: no one is being prosecuted! Maybe they’re the ones with the Kill Switch?

  16. The only other way I can think of that rescap would own that many loans which doesn’t scream sec’n is a scam is if they did so pursuant to default buy-back agreements and then just sat on defaulted loans. Yeah, right. .

  17. “ResCap’s board of directors said Thursday that Berkshire had submitted the best bid for its portfolio of 47,000 loans.
    ResCap’s parent company is Ally Financial, which is 74 percent owned by the U.S. government as a result of bailouts. ResCap has been a drain on Ally’s finances for years because it has struggled to make payments on its debt ever since the U.S. housing market collapsed in 2007.”

    jg: how/why did rescap have a portfolio of 47,000 loans?
    How does owning loans lead to a struggle to make debt payments?
    Even if rescap had borrowed the money to buy the loans or make them, wouldn’t they have paid off the borrowed funds when they sold the loans to trusts or aggregators? Well, I guess they could have spent those funds from the sale of the loans on mojitos and GS 5’s, but that wouldn’t tell us how it is they came to own 47,000 loans.
    Rescap could have bought or funded loans on credit and retained loans which became non-performing loans, but that still doesn’t tell at least me why they would own 47,000 loans in the first place If the
    loans were subject to security interests of rescap’s lendes, looks like Buffet got them free of those claims. Damn. Splitting the servicing from the ownership of the loans out of the bk seems sinister to me (as I recall, Buffet was after both). If Buffet’s company both owned and serviced the loans, seems much more likely there’d have been a shot at modifications of those loans.

  18. “Is it possible we are seeing a test of the Internet Kill Switch?”

    jg: is it possible we have to bear the torture of wondering who is
    throwing that switch, about which theories will abound?

  19. C – most of the people I know are not affected -to their knowledge – by this mess and wouldn’t run on the banks or not pay taxes, just as many people didn’t line up with opposing Viet Nam, and that is not said to open another can of worms. I’m just saying that except for here and other sites like it, people I know couldn’t be convinced. It’s way too radical for them, and way too radical an impression of what is patriotic. Most are covered head to toe in the American flag and apple pie.

    If I learned anything from my 60’s and 70’s era, it’s that people may be controlled thru economics. ‘They’ have the power to control even tho ‘we’ would have the ultimate power if we had the numbers. It was much easier to live and be ideological when bread was 23 cents a loaf and gas was 59 cents a gallon. it began its rise in early 79 – I’m sure you recall. Went way the h up almost overnight.
    If this ship is sinking, then I guess we’ll go down with it, those of us who don’t get out of here.
    In the meantime, I personally concentrate in my lay person way on what might be done to save some of our law. I don’t like unlevel playing fields, and I especially don’t like it when the pi$$ing match is already between David and Goliath. Maybe I and the others of us who do the same are dreaming, but I can’t accept that and apparently neither can the others. When I say I get close, i’ve no doubt others know just what I mean.( E.tolle, for instance, has indicated he’s just about had it.)

    My mother grew up dirt poor in the depression. It took me a lot of years to discover and get it that others were drinking champagne and munching cavier. Then it took longer for me to question just how it is that came to be. L and s, I guess, is I decided it needn’t have been that way. But now, in 2013, we may well be at a point which is unprecendently, dangerously close to no return, and if the dreadful gets any more dreadful, we coud be left to wonder if we might have done something else, including your suggestions.

  20. Oops? Coincidence? BHOO! conspiracy theory?

    By Susan Duclos

    On Thursday the Nasdaq Market suffered what they claimed was a glitch in their system which caused them to halt all trading for approximately three hours, which locked up trading in stocks with a total market capitalization of $5.7 trillion.

    Taken alone, this so-called glitch, while concerning, would be nothing more than a newsflash, it happened, it ended, situation over, but over the last two weeks there have been other “glitches” and “outages” and “technical errors.”

    One doesn’t have to be a conspiracy theorist to think that it is all a little too coincidental. [Duh!]

    August 14, 2013- Microsoft’s Outlook, SkyDrive, and People technologies experienced problems, making it difficult for some people to access the cloud services. [I know. I was there] August 18- Microsoft says it has fully recovered from a service outage that affected some users.

    August 16, 2013- Google Outage: Internet Traffic Plunges 40% [I know: I was there too]

    August 19, 2013 – Amazon.com, the website of the world’s largest online retailer, went down today for many users across the United States and Canada.

    August 20, 2013- A flood of erroneous trades hit U.S. equity options markets on Tuesday as they opened for business when Goldman Sachs Group sent orders accidentally because of a technical error, the latest trading problem to hit the options market this year. [I wasn’t there. No money invested with Goldman…]

    Nasdaq, Microsoft, Google, Amazon and Goldman Sachs– Two is a coincidence, three really bad luck, but five?

    [Update] Make that six, a reader just emailed me with an August 7, 2013 link- Outages effect App Store, iBookstore, Mac App Store, and iTunes for some users today.

    Is it possible we are seeing a test of the Internet Kill Switch?

  21. Ms – didn’t you rather oversimplify that Indy Mac deal? Or maybe undersimplify it? If someone offered 5% on the dollar, if I were holding them, I would’ve told them to take a hike, also. Even if I had to take a 10% or even 20% discount to get them off my warehouse line….. The first problem was probably that IndyMac waited too long to make the decision to take a hit, and they weren’t the first to do that. Maybe just the loudest. I’ve known other lenders whose traders thought wrong and bit it, but those were mortgage companies, not a bank (one of these led to the “good funds” law.) A bank has no business holding that much in loans on lines (right?),probably by their accounting rules (which I admit again I know next to nada about). If it took them down, isn’t it clear they exceeded their ratios or whatever the heck, if even day by day as the market moved? Are you suggesting it was better for them to take a 95% hit (from the gazillionaires) than for the FDIC to take a hit at all? I don’t think they could have done that even had they wanted to. Just saying. So you must ‘just be saying’ they should have been allowed to – at the expense of the depositors or like that?
    Why does the FDIC rush to take bum deals when it’s had to come in and then the govt turns around and buys junk paper, billions of it?*
    Since both these deals – ukg and you – seem to concentrate on
    IndyMac and the FDIC,, or at least that’s my impression, care to share with the rest of the class how it is that ‘what it is’ is collection rights?

    *which reminds me: In whose recent bk was that? Oh yeah, ResCaps’s. Buffet’s new co. picked up a gazillion dollar loan porfolio in a very sweet deal free of other claims (and NationStar got the servicing). I’m still ‘quite anxious’ to hear how ResCap had a gazillion dollar loan portfolio for anyone to pick up: How is it that ResCap retained a billion or 50 in loans? Were they so bad, they daren’t try to securitize them? Nope. So how? And what did “free of other claims’ mean? Just the regular old other bk creditors? Doubt that, too.

  22. JG,

    “I certainly didn’t direct those comments toward you.” I know that. Nor was I addressing anything at you either. I was just pulling an Ivent for a second there.

    I’m still not paying taxes. I’ll be damned if i do! Besides… what the F*** are we doing in Yemen? Never mind. Rome took 200 years to go down. The US are intent on beating that by 150 years. Pisses me off!
    At least wait until I’m dead!!!

  23. stopforeclosurefraud says there’s a bill to stop the GSE’s from purchasing or guaranteeing any loan involving MERS as original
    “beneficiary” or which is assigned to MERS. Yahoo! Neil, maybe you’ll cover this….? Lordie, to be younger. I would fight whatever I had to try to get that passed.

  24. Maybe one brave homeowner attorney with some money will hire an attorney who specializes in discovery issues. I don”t mean to knock or make light of the mongo efforts of homeowners’ attorneys, but we are losing our homes here.

  25. christine re: my assessment of the aig case. I certainly didn’t direct those comments toward you. I’m still hot on AIG and think everyone should be, but not as much as you think we should make a run on banks and quit paying taxes, I’d say. I don’t know what we should do collectively. Sure the h something. My own real beef with the IRS is what I’ve called its participation in class-warfare: looks to me like the IRS has chosen to protect one class of people – investors – at the expense of another – homeowners in general (though they are often the same people!) if we entered contracts which are factually ripe for (nasty) enforcement, then so be it. But courts and anyone else needing to pretend they are is just wrong. Plus the banksters took the HAMP funds, knowing modifications are at odds with their own interests.

  26. I looked at the case at christine’s link, Huff v flagstar, et al. Kudos to AZ attorney Findsen, but not so sure it’s properly touted as a major win….yet. I did appreciate what I perceived as the judge’s even-handedness, except that she said certain relief requested in the amdd complaint was not available and 86’d it. Imo Huff asked for quiet title against specific parties who in fact only pretended to be parties, but the court treated the QT as if Huff had asked for QT against anyone and everyone. Still, the court made the right decision in not 86’ing the false recording allegations. for once. Imo, one of two things will happen: the banksters will add two more attorneys to the two they already have and come back with brute force or it will settle. Maybe Findsen can “discover them to death”, an old well-known secret none of us have caught onto.

  27. JG,

    Read what I wrote afterwards. I am no dummy and I know it. That “behind the scene” crap irks me. Still no one in jail. Millions levied on banks and whatever else has a few bucks and… I haven’t seen one penny of it all while paying for people’s salaries when those people, who owe me transparency, don’t tell me what my money is buying.

    No sucker. i still haven’t filed my tax return. And i won’t until I get answers for what happened to the 30 years I paid. Where did my money go?

    Next dog i get will be called “Soliman”.

    Sit, Soliman. Sit. Go! Soliman, go! Down, Soliman. Down!

  28. You idiots, the default they are suing on is the collection account.

    This is a dialed in litigant Kudos brohter –
    your dialed in ….

    Indy Mac Bank is holding back volumes of paper on lines waiting for the market to come back . In mean time Fed wants the loans off the banks balance sheet . So Freddie comes to the rescure and kisses the paper . The terd loans move out and they pull the plug on IMB.

    FDIC Steps in as receiver and the vultures come out (See Philidelphia newpaper BK ) Fed rejects the offers to (1)tender the bad loans at 5 cents on the dollar to few billionaires and (2) allow billionaires to refiance the Borrowers happy and billionairs happy with borrowers at 50% loan to value for a quick in and out.

    So they formed One west and the nightmare commences under the Loss Risk Recapture dealio and appointent of a US Trustee as a revceiver .

    He is right I m the idiot for buying into the servicing crap ….

  29. from Christine’s AIG case link:

    “Greenberg’s and Smith’s remaining argument is that no basis exists for granting equitable relief. They argue, in substance, that all such relief that could possibly be awarded has already been obtained in litigation brought by the Securities and Exchange Commission (SEC), which Greenberg and Smith settled in 2009. In the settlement, without admitting or denying the allegations against them, Greenberg and Smith agreed among other things to

    permanent injunctions against violations of the anti-fraud provisions of the federal securities laws.”

    jg: really? they agreed to not break the law again?! Awesome – way to go, SEC! Where can I send a donation for your next prosecution?

    ” The Attorney General responds that more relief could be granted in this case “including but not limited to a ban on [Greenberg’s and Smith’s] participation in the securities industry and a ban on serving as an officer or director of a public company.”

    I guess orange is not in their future? (Recently a woman got 20 years
    for firing a shot to warn a guy who was in her face, nicely. Oh, I see. Her incarceration is no threat to global economy)

    This article seems to say that AIG (these two guys?) pretended to enter into a contract with another insuror to re-insure the other insurer’s stuff. It says the purpose of doing that was to ‘bolster’ AIG’s balance sheet as to not upset its stock (money change hands? IOU’s used? isn’t this a form of stock-pricing manipulation?) From my petite exploration into AIG a week or so ago, this looks to me like the tip of the iceberg.

  30. What about those of us who paid off their loan but Freddies servicer didn’t credit the payments? We never missed a payment in 25 years and yet were the victims of an illegal foreclosure on a home that should of been paid off? There are people out there living in their homes and haven’t made a payment in 3 years? We never missed and the bank is guilty of DEFALCATION. MA state officials are guilty of Dereliction of Duty. I will not stop until our story is exposed and the banksters and Judge are in Jail!

  31. did iwantmynpv just call us idiots and then offer to link his case for the benefit of us idiots? Geez, if he gets like that when he’s just won, glad I don’t have to see what he be like had he lost!

  32. Iwant,

    Pretty good. Do post it if you can. Which state?

  33. You idiots, the default they are suing on is the collection account. For every one step forward – you take two back.

    Also, I just received my decision on my motion for summary judgment with OneWest Bank, F.S.B.

    Turns out, when you explain it correctly, some of the Judges do get it and my motion was granted, and the case disposed!!!!!!

    If you would like to post it here, let me know – the Judge paid special attention to the scam with the FDIC.

    Filing a FOIL request with the FHFA tomorrow to get the information to disclose the true amount of taxpayer losses as a result of forgiving the recourse agreements with the OBAMA donors at One West for the INDY loans that defaulted – due mostly to fraudulent underwriting, which allowed the that shitty thrift to stay around for 2 extra years.

    I will let you know if they give me the info.

  34. Deb,

    Whatever I find that i can understand, I post in the hope that someone here can use it. Given the fact that you are pro se, try to see if that homeowner was represented and by whom. Your case is pretty complicated to handle alone and… you never know!

  35. “But advocates of the bill say the measure will put the real-estate market on sound footing by ensuring that title defects don’t later lead judges to invalidate foreclosures—a step that has already happened in Michigan and Massachusetts.” from usedkarguy’s link in link – Michigan????

  36. indeed Christine and the best defense … thanks
    and a great hockey player knows where the puck is going to be

  37. Homeowner Win in Arizona Court of Appeals in Stauffer v First American Title Relating to ARS 33-420 and False Recordings in Foreclosure

    20 August 2013

    FindsenLaw- Stauffer v. First American Title, Co., et. al. was the first case to go up to the Arizona Court of Appeals on the issue of whether Arizona’s false recording statute, A.R.S. 33-420 applies to the types of documents recorded in the typical non-judicial foreclosure, the Assignment of Beneficial Status in the Deed of Trust, […]
    – See more at: http://stopforeclosurefraud.com/#sthash.bqd7ArSG.dpuf

  38. Posted on 21 August 2013.

    Fuller v. First Franklin Financial, Cal. App. 3rd Dist. | PREDATORY LENDING: Overstatement of the appraisal value . . . Hidden kickbacks . . . Breach of fiduciary duty . . . Unfair business practices….

    Filed 5/1/13 Certified for publication 5/29/13 (order attached)


    MICHAEL FULLER et al.,
    Plaintiffs and Appellants,


    Defendants and Respondents.

    “Plaintiffs argue that they had sufficiently alleged delayed discovery of facts that defendants had purposely withheld from them in order to induce them to enter into the now defaulted loans. We agree. We shall thus reverse the judgments of dismissal with directions to overrule the demurrers.” –

    See more at: http://stopforeclosurefraud.com/2013/08/21/fuller-v-first-franklin-financial-cal-app-3rd-dist-predatory-lending-overstatement-of-the-appraisal-value-hidden-kickbacks-breach-of-fiduciary-duty-unfair-business-practices/#sthash.dqDXhhEC.dpuf

  39. http://stopforeclosurefraud.com/2013/08/22/huff-vs-flagstar-another-major-victory-in-arizona-false-recording-claims/

    HUFF vs FLAGSTAR | Another major victory in Arizona! – FALSE RECORDING CLAIMS

    22 August 2013


  40. omg and the guy whose name that was used?, his entire lifes savings invested in a piece of” collateral” – which happens to be his/her unique and sacred home has not a leg to stand on- uuhmm- I invested, im a party to FRAUD because I did not know- reliance- I had the right to rely on the originator and the appraiser and the underwriter and my land registry and my government ( whose government- EXACTLY,) to protect my interest as a public duty. I did not know about securities fraud, nor clouded title , despite MERS BEING on my docs- buyer beware- are you kidding me. ofcourse- no joke-definitely no joke.

  41. Check the cases for yourself.


  42. http://www.pacourts.us/assets/opinions/Superior/out/J-A08029-13o%20-%201014213761593261.pdf?cb=1

    In Wells Fargo Bank, N.A. v. Van Meter, the Superior Court of Pennsylvania addressed the ten-day notice requirement for a party seeking default judgment. The court found that, pursuant to Pennsylvania Rule of Civil Procedure 237, a party is not required to file its ten-day notice with the court. Rather, a party must certify in its praecipe to enter default judgment that such notice has been provided to the defaulting party, and attach the notice to its praecipe. Because this procedure was complied with in the instant matter (and because petitioner did not present a meritorious defense to the underlying claims), the court affirmed the trial court’s order denying the petition to open the default judgment. (May 14, 2013)

  43. This one is good to know for collection lawsuits. Half the business of our courts nowadays. Debt collection is BIG business!


    In Guidotti v. Legal Helpers Debt Resolution, LLP, the United States Court of Appeals for the Third Circuit, addressed the standards to be applied to motions to compel arbitration. The court held that when it is apparent from the face of the complaint that a party’s claims are subject to an enforceable arbitration cause, the trial court should consider the motion to compel arbitration as a motion to dismiss. If the complaint and supporting documents are unclear, or if the plaintiff has responded with additional facts sufficient to place the agreement to arbitrate in issue then the parties should be entitled to discovery on the issue of arbitrability and the court should consider the motion under a summary judgment standard. If a genuine dispute as to the enforceability of the arbitration clause exists, the court may then proceed summarily to a trial regarding the making of the arbitration agreement or the failure, neglect, or refusal to perform the same. (May 28, 2013)

  44. So much going on behind the scene we have no idea about.

    In People v. Greenberg, the Attorney General brought a civil suit seeking, among other things, equitable relief against former executives of AIG for violations of section 63(12) of the Executive Law and Article 23-A of the General Business Law (the Martin Act), alleging the defendants caused AIG to enter into a sham transaction. The New York Court of Appeals addressed whether evidence of knowledge of a fraudulent transaction was sufficient to raise an issue of fact for trial and whether the Attorney General is barred as a matter of law from obtaining any equitable relief. The court held that (1) there was sufficient evidence for trial where the credibility of the defendants’ denials was an issue for a fact finder to decide; and (2) the Attorney General preserved a claim for equitable relief even though it had not been a major focus at earlier stages in the case. (June 25, 2013)


    In essence, once we look at the “behind the scene” and try to make sense of it, it comes down to this:

    Peter suing Paul. Paul suing Peter and John jointly and severally. John suing Peter and getting Paul to testify while Peter is testifying against John on a lawsuit brought on by Paul against John. All the while, the NY AG is suing everyone, getting loads of money and we see none of it.

    And we, insignificant peons who slaved to pay the AG’s salary while parking our savings with Paul (for a fee), our retirement with Peter (for a fee) and obtaining a loan from John (for a hell of a fee!) got screwed from the top of our hair to the tip of our toes. We don’t know what the hell is going on, we don’t even know who’s who and we keep our money parked with Paul, our retirement with Peter and we pay John that hell of a fee while never, ever clearing the principal.

    Let me ask you: who is not good with money? Peter? Paul? John? The AG? Or… us, poor ignoramus suckers? Let me tell you one thing: Peter, Paul, John and the AG live extremely well. All on our dime. And all the legal expenses they fatten lawyers with come from… our dime, through the IRS that sends it to government that pays… the AG!

    Am I the only one who find a serious dysfunction in that whole system?

  45. Hey jack I have the document s to prove it

    Sent from my iPhone

  46. Many, many loans went thru FNMA and are subject to this treatment, and yet, it’s a circumstance we know little about, even after all this time).

    NG, you’re our best bet to find out what we need to know. imo.

    wtf THERE IS NO SERVICING – DONT ARGUE DONT SPEAK DONT LOOK LKE A FOOL (just save this piece as time will tell you what I cannot get across. NG If you were dialed in you would know this Dude , your posing and guessing ….Niel your guessing !

  47. What I am saying is they all kyted and made false claims to issuer as well as had no skin in the game

    REALLY , NO SKIN ..WHERE DID YOU GET THIS FROM ?. NO FLESH ..NO SKIN …NO CURTAILMENTS ? No I’m Sorry but its wrongand a moot commen



    It is now common knowledge that subservicers are continuing to pay investors and reporting the loan as “performing” after they have sent a default and right to reinstate notice as required by the mortgage (usually paragraph 22) and by the uniform debt collection laws.

    Wrong not true ! Why are you saying this editor . Bull shiezer . non sense …Not true Not true …cannot service …cannot service a closed end fund and or its assets ….borrower always , always ,household always pays the servicing …from first payment default through 72 months . C&D WITHDRAWL THIS EDITORIAL WRONG

    The lender and servicing agents never paid one cent wrong … lender is a seller and servicers are adminstrative trustees as accomodators…wrong where did all this come from …

    BY OCC ADMISSION – Because mortgages do not reach peak delinquency levels until they have seasoned 30 to 48 months, TRACKING the payment performance of seasoned loans over their entire term provides important information.

    That information allows the bank to evaluate the quality of the unseasoned mortgages over comparable time periods and to forecast the impact that aging will have on credit quality ratios.

    Codification Topic 860-Sale of financial assets under the rules for accounting for servicing of financial assets. Note: concept of Qualifying Special Purpose Entities (QSPE)” accounting for transfers and servicing TRACKING of financial assets and extinguishments of liabilities”

    SFAS 166 amended SFAS 140 in June 2009; SFAS 156 amended SFAS 140 in March 2006; SFAS 140 replaced SFAS 125 in September 2000; FAS 166, June 2006 “Accounting for Transfers of Financial Assets “an amendment o FASB Statement No. 140

    SFAS 156, March 2006.”Accounting for Servicing of Financial Assets”an amendment of FASB Statement No. 140; SFAS 140, September 2000 “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” a replacement of FASB Statement No. 125

    SFAS 125, June 1996

    Amendments to SFAS 140 by SFAS 166 in June 2009: Financial components approach was modified as for the application of sale accounting that is limited to transfer of an entire financial asset with isolation impact on any transfer of a group of financial assets, that preclude any transfer of a participating interest in an entire financial asset.

    Whether or not a bailment or a saleTwelve USC 371 provides the statutory authority for a national bank to engage in mortgage banking activities. It permits national banks to make, arrange, purchase, or sell loans or extensions of credit secured by liens or interests in real estate.

    Twelve CFR 34 clarifies the types of collateral that qualify as real estate. Finally, 12 CFR 7.7379 permits a national bank, either directly or through a subsidiary, to act as agent in the warehousing and servicing of mortgage loans.

  49. What I am saying is they all kyted and made false claims to issuer as well as had no skin in the game
    New Century BK protected them from default judgement and they were never disclosed to us as a player
    They book the assert for 90 days but only hold it 1day as Sutton funding did in my case, also not disclosed

  50. Found them after suit was brought & letters from the known ones
    Had them over a barrel but every court refused follow the rules knowing I had no $ for appeal

  51. Bijaya – I sort of know what the float is, but I’d still appreciate an explanation. The buy-sell of these notes along the way to the trusts
    (allegedly) has always bothered me. Not just that payment has to be made and that the cost of money changes minute by minute,
    but because the balance on the note changes daily because of interest accruing and then monthly as payments are made.

    I think what you’re saying is that all 8 (7?)in the chain floated the payment for the note and didn’t actually fork over any money. A promise to pay is good, as I recall. The only difference that comes to mind this minute is that one who acquires a note with a promise to pay v payment is a holder in due course (v ‘mere’ holder) only to the extent of payment actually made. In other words, If I buy a 500k note from you on my promise to pay and I give you 10k of that 500k, I am a holder in due course only as to that 10k. As to the 490k, I am a mere holder, and subject to all affirmative defenses from the note maker. If a note is sold down the line from A to F, and C is only a holder and not a hidc, can D, E, and F ever be hidc’s if they’ve actually paid? I think so, but don’t’ remember.

    Hmmm…Bijaya, if NO one, none of them, paid anyone for the note at all, there has been no transfer…. Is that what you’re saying? I just can’t get my head around it this minute, but it may be that if there were promises to pay (and let’s see them) and a transfer of possession, everyone was and is a holder (but not hidc’s). Also, if no one showed
    a liability for the promise to pay on books, the promise to pay was a sham, was it not? Legitimate books would also have to include
    an accounting for the escrow account.

    But, as usual, none of this is good for jack unless we make inroads for the right to discovery. You must have gotten some if you found 8
    entities in the chain.

  52. Unless the servicer has a pre-existing contractual right to subrogation, what you said, NG, is true imo. But even then, a claim made under a right of subrogation must be so identified, since it isn’t actually a claim under the note itself (pretty sure). And I repeat – those four payments are NEVER identified in the accounting of the loan balance, as imo they should be, which is a unilateral determination by the banksters that they are entitled to those monies under the note itself. There could actually be more than four payments made under fnma’s guarantee, because if fnma wants to end its guarantee, it must do so by repurchase, and who’s to say that’s actually done after only four payments? Btw, it’s actually the servicer who advances the FNMA guarantee payments to the trust and then submits a claim for
    reimbursement to FNMA.
    Voluntary payments, those made in the absence of a contractual agreement, on the other hand, imo can never form the basis of a cause of action against the note borrower under any theory, not even in equity. And NG may be talkiing about voluntary payments by
    third parties. FNMA, we know (if not fhlmc) guarantees payments on the MBS’s. Why, I still don’t know and in the absence of explanation from anyone who might know speculate that it’s because MBS’s are a load, in short (which reminds me of George Clooney in Oh Brother Where Art Thou’s ‘Soggy Bottom Boys’ I happened to catch last night – what a hoot!) As to fnma’s ‘four’ payments, one would first have to look to the contract or prospectus to determine if fnma has rights of subrogation, I would think. Unless a contract specifies otherwise, it seems to me that FNMA’s guaranteed payments are a voluntary contribution and there is no right to recovery from the borrower.

    While FNMA is making the four payments it’s guaranteed, the loan is not in default., To end its guarantee, FNMA must buy-back the loan
    at its current balance, BUT fnma pays the issuer, not the investors! WHY? what does it mean that fnma pays the issuer? Now, MS, if you really want to help us out here, you might lend your attention to this question. Just a suggestion………..

    Many, many loans went thru FNMA and are subject to this treatment, and yet, it’s a circumstance we know little about, even after all this time). NG, you’re our best bet to find out what we need to know. imo.

  53. And that, boys and girls, is why QE exists.

  54. Short sweet and lethal. Nice job Neil.

  55. BOA has been paying mine 41 months. I am not in foreclosure( yet ) but I was suing them, lost summary judgement and have filed an appeal. I thought they were paying it because I am not underwater, so this is interesting.

  56. ps…
    The IRS isn’t necessarily “incompetent”, the average american has been misled, as to, what the IRS’ exact mandate, purpose, function and organization serves…

  57. Article is more or less correct… A prospect of mine is looking to sell, “JPMCC 200X xx-xxxx” (whistleblowers get paid) and that package is full of “defaults” (I know because I checked it)…

    … but the payments are being made, as scheduled…

    I hate to sound like a broken record but, if you need assistance fighting an illegal foreclosure; we’ve got you covered.

    May the Lord bless you and yours.
    Dan Moss

  58. If the borrower could some how be matched up with the investor with out having to pay a fortune all of the lies in between would come to light and the borrower and the investor could sue the fraudsters.

  59. David Dayen is at it again……


  60. This is fascinating. The homeowner defaults but the servicer of the loan hides that fact so the investor does not panic and ask to be paid in full. And the servicer of the loan might attempt to then use insurance money to fill the gap until the home is resold. Then I presume they can attach a judgement against the original homeowner while also collecting from the new homeowner if they remain involved.

    However, I still care most about how a judge thinks. if the homeowner can show a change in terms after the mortgage note has changed hands without their approval, wouldn’t that get the judges attention?

    If the homeowner can link a change in terms with causing some type of default sequence to occur, I think the judge cares about that. However, the judge also cares as to whether or not the homeowner has the ability to pay on a monthly basis, even if all penalties and fees are removed, and in my opinion that will alway be the elephant in the room whether this site acknowledges it, or not.

  61. IRS is basically incompetent even on the best of days … they’re only good for basic data processing and being a collection bully… I turned in a 20 year tax cheat (well documented) 3 years ago who had just sold her business and had the ability to pay.. I advised the IRS that she would be returning to Canada … they delayed for almost a year and then declared that she was not able to be found.

    When it comes to allegations like yours that are “politically uncomfortable” you should have no expectation that they will act.

  62. IRS has done nothing since February 2012 notification

  63. Yep & more
    In my case we found 8 banks/sevicers in the chain but only 4 were disclosed to us
    On $515,000 all 8 used the float

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