If the revenue stream from trustee fees can be packaged for sale, then the next logical step will be the securitization of that package. Investors in such securitization vehicles will be laying for their own screwing. The duties of the trustee, already clouded, will be further diluted into thousands of pieces, effectively eliminating any accountability of the Trustee for an asset backed REMIC trust.

In a final insult to our financial system, our society and our government, the Banks have set new rules: they say that if you appoint a trustee of your trust, the trustee can sell its position to another trustee. It is a natural offshoot of the “successor by merger” strategy they started a couple of years ago. But this one goes a step further. It says that the Trustor and beneficiaries have no choice but to accept the new Trustee who bought its position for some consideration. This is an important challenge to our system.

U.S. BANK has filed documents in some of my cases where it states that it is the successor in interest to Bank of America BY PURCHASE OF THE POSITION OF TRUSTEE. BOFA is a alleged to be successor in interest by merger with LaSalle Bank (a merger that is doubtful because of the prior acquisition of CitiGroup, who reports that it acquired ABN AMRO, the shareholders of which own LaSalle Bank). The purchase involves hundreds of asset backed pools commonly known as trusts. Investors in those pools are beneficiaries of the trust and owners of undivided interests in the loan documents transferred to the trust. The revelation that the loans never made it into the asset pools, that the loans were likely to fail, and that the investors money never made it into a trust account for the trust has put the trustee of the trust at risk for liability to investors. Thus BOA made this friendly deal with U.S. Bank adding another layer of complexity to dissuade regulators, insurers, guarantors, investors and potentially borrowers from bringing claims.

The Federal Reserve stated in its approval of the merger of LaSalle Bank and Bank of America that the merger with LaSalle is the same as a merger with ABN AMRO. CIRCULAR REASONING COMBINED WITH A SHELL GAME COMBINED AS A COVER FOR WHAT IS, IN THE FINAL ANALYSIS, A PONZI SCHEME. And that is why the banks are being sued by investors, insurers and guarantors for fraud — an intentional act of misrepresentation designed to cause damage to those who reasonably rely on these misrepresentations and which does cause damage to them. It was the banks who we’re really controlling the Trustee of the asset pool.

Ultimately banking depends upon trust and relationships based on trust. By commoditizing the job of a trustee, the entire system is undermined and will lead most certainly to chaos and collapse. We now know that when a bank says “trust me” they really mean “your trust means nothing to me. I can sell it anytime I want.” Any argument about a threat to the financial system if we take apart the big banks is undermined by the fact that the banks continue to move the goal posts and continue to present us with questionable deals that destabilize the marketplace. The current policy of the administration continues to look good and be bad. The entire policy is based on an illusion or even a delusion.

But the issue is much larger than that. Trust lies at the heart of our systems of finance, commerce and government. Ultimately people consent to be governed by these systems because they repose confidence in the outcome of transactions, public and private. Imagine that you hire a trusted agent to do something that will have an enormous impact on your life. This trustee, according to the banks, can sell their position of trust to another party. And the more the banks are allowed to shift, switch or substitute parties in litigation, the more judges are going to conclude that the maze is impenatratable. Harried judges will resort to simplistic views of the mortgage, the note and Foreclosures.

Normally if your secretary or administrative assistant quits, you replace them with someone else you trust or someone else you with who you can build a trusted arrangement. Not so with the US Bank purchase from Bank of America. Managers of Pensions who believed in their trustee for the trust that issued them the bonds (that turned out to be worthless) now have no confidence that employee, agent or servant won’t sell their job to someone else whom you don’t know or don’t trust. Trust commodities cannot and should not be allowed by a clueless government and an apathetic public.

The “Bill of sale” essentially provides that for dozens of “trusts” Bank of America will be replaced with the looming bank in control, U.S. Bank. Clearly Bank of America is expecting a heavy legal hit with its failure to protect the beneficiaries of the trusts — the investor lenders. But the agreement is more pernicious than that. If you have a problem with what happened with the funding of the trust, the distributions, or the acquisition of loans, or the Foreclosures or even getting a satisfaction of mortgage, you can go to Bank of America, during whose tenure many illegal and fraudulent acts occurred. Bu they will refer you to U.S. Bank who “now handles” those trusts. And if you go to U.S. Bank to complain, they will tell you that they are new to the trust and that your complaint relates to BofA actions as trustee for the asset backed trust. But it doesn’t stop there either. Each one is agreeing to indemnify each other in a manner than will spin the complainant around until they dizzy with the subterfuge.

Creating a salable commodity out of a trust relationship cuts to the core of confidence in the marketplace. People no longer know the identities of the parties responsible for what the investor lenders placed in trust — money that was supposed to be deposited to the trust account managed by the trustee. Whether we like it not, the banks are shuffling the cards once again. They are testing us, our government and our marketplace — a marketplace where certainty is now eliminated. Between off balance sheet, off record transaction, and now the ability to add, replace or subtract parties with whom you were willing to do business, with parties whom you are unwilling to do business, they have created a Middle East bizarre where everything changes by the minute. Consumers, pensioners, government guarantors, insurance companies are all filing suits that may fail because the same hairsplitting legal analysis that is rejected for borrowers but which is accepted for banks.

Action is needed now. This “sale” of the duties and obligations of the trustee must not and must never be permitted. The unintended or perhaps intended consequence is chaos in the marketplace where the United States won’t even be allowed a seat at the table, except as the military policeman of the world.

10 Responses

  1. Neil, I’ve only gotten down to the second para. but don’t know if I can stomach any more. There comes a point when a person making an investment has to be held accountable for his own decisions. If someone is dumb enough to buy into a deal where one party to the deal can be changed to a gremlin, then I know a song for a little, tiny violin for him. Can’t change what’s happened, but certainly can change what’s to come by demanding a contract which is not one of adhesion. Moving right along…..What it reminds me of is the scam in the dot of naming a tried and true (well, used to be x FAT imo) title company with real-property-law-specialized staff attorneys on board and then replacing that trustee with some yeahoo at a company the new alleged lender and or servicer probably owns, which is enough of a conflict to choke a large horse, never minding their ignorance and willful blindness. The legislators had a crooked hand in that one – it’s allowed far as I can tell. The only remedy is prevention: “prevention precludes correction”. Investors will do what they will and tough on them if history is teaching them nothing (but it’s tough on us, too, because we also get the brunt).

    Don’t sign a MERS’ mtg and don’t sign a dot which doesn’t restrict who may be a sub trustee and which doesn’t at least express that the trustee will serve in a neutral capacity (which is how it’s supposed to be if a stinking state law won’t impose a fiduciary) and who is expressly NOT the agent of the lender and won’t be affiliated with any other person or entity related to the loan in any way, said as I hum the chorus of “Dream On”. What the hell ever. That’s how it should be. The dot should be amended to recite stuff it doesn’t, including what docs the trustee is to get before initiating non-j f/c and that the borrower will receive certified copies. We are signing antiquated documents.

  2. The word was everlasting. ( sorry, again)

  3. They will bottle and securitize fresh air soon and call it oxygen of evetlaying life force

  4. @LDeanTX

    They are just a bunch of junk debt buyers/debt collectors of false-default unsecured debt—-creating fake paperwork to make it seem like these were real, “funded mortgages”—they weren’t.

  5. I have a question… Isn’t that done all the time by employers with 401K accounts? Isn’t that done all the time when people “roll over” their retirement fund from one trustee to the other? Am I missing someting?

  6. @carie,
    care to shoot me an email?

  7. To Neil Garfield:

    Neil, I must say that I am surprised that you posted this piece. There are quite a few misconceptions here.

    First, under NY common law and the PSA indenture itself, it is perfectly legal for a trustee to resign and to be succeeded by a successor trustee, with or without compensation for the trusteeship. Know that these are investment and indenture trusts, not lifetime trusts under NY law. There is a difference. The indenture trustee’s duties to the beneficiaries are spelled out in the trust indenture agreement itself. His position until a default occurs is principally ministerial. After that, he becomes more of a fiduciary as he would be if he were a lifetime trustee.

    Second, the Trustees didn’t issue any certificates to anybody—the Sponsor issued the Registrant’s certificates.

    Third, unlike a lifetime trust wherein the beneficiaries can overrule the trustee, call him to account and call the shots, the investor beneficiaries in the PSA indenture trust have no such authority. In fact, they are not even parties to the PSA. Look at the signature page of the PSA. It is signed by the originator, sponsor, depositor, trustee and custodian. The investors are merely third party beneficiaries, as are the mortgagors.

    Fourth, under NY law the acts of a prior trustee cannot be the liability of the successor trustee. So US Bank is correct in referring your complaint to BOA. That’s fine. In fact, I’m glad that there is cross indemnification. Puts more deep pockets in play.

    Lastly, who cares if there is a successor trustee? Doesn’t eliminate liability for the wrongdoers. Actually, it puts another arrow in your discovery quiver: “Please explain why your firm resigned as trustee.” “Please explain how purchasing BOA’s trusteeship was beneficial to your firm.” I like it.

  8. This is clearly wrong & turns upside down rule of law for 200 years

    Sent from my iPhone


  9. Flyer left at my door from the local real estate guys…hmmm…:
    Selling A Home “In Trust”?

    Selling a home “In Trust” entails more than legal forms…


    Many of the homes we sell are held “In Trust”. We have many years of successfully navigating through the challenges of dealing with attorneys, trustee(s), beneficiaries, and often times, the emotions tied up with preparing a beloved family home for sale…

  10. Mr. Garfield

    I am hoping I may ask a question that does not sound so ridiculous to you that you cut me off but I am wondering how after Bank of New York Mellon puts in writing to you that they are not the owner/holder or investor of the note, do not own the property, have no say in loan modifications or past due fees etc., how can they assign by Power of Attorney Bank of America as a Trustee or Recontrust as Trustee? I am confused. If a blue ink copy of the promissory note can not be provided by Bank of New York Mellon or Bank of America, who is the lender? How can any of these banks be a trustee if the Lender America’s Wholesale Lender did not by assignment transfer note to deed of trust to Mortgage Electronic Registration Systems, then to Bank of New York Mellon? How is anyone lawfully considered a Trustee and how can a Power of Attorney by Bank of New York Mellon be filed in Land Records which gives Bank of America rights to foreclose? What about the PSA? What about Bank of New York Mellon not being owner and holder of the note? This is getting so deep for me.

    Thank you

Leave a Reply

%d bloggers like this: