It Was the Banks That Falsified Loan Documents

I know it doesn’t make sense. Why would a lender falsify documents in order to make a loan? I had a case in which a major regional bank had their loan representatives falsify loan documents by having the borrower certify that there were houses on his two vacant lots. The bank swore up and down that they were never involved in securitization.

When the client refused to make such a false statement — the bank did the loan anyway AS THOUGH THE NONEXISTENT HOMES WERE ON THE VACANT LOTS. Thus they loaned money out on a loan that was guaranteed to lose money unless the borrower simply paid up despite the obvious loss. The borrower’s error was in doing business with what were obviously unsavory characters. True enough. But he was dealing with the regional bank in his area that had the finest reputation in banking.

He figured they knew what they were doing. And he was right, they did know what they were doing. What he didn’t know is that they were doing it to him! And they were doing it to him in furtherance of a larger fraudulent scheme in which investors were systematically defrauded.

When I took the client’s history all I had to hear was this little vignette and I knew (a) the bank was involved in securitization and (b) this loan was securitized BEFORE the closing and even before any application for loan was solicited or accepted by the bank. The client balked at first, not believing that a bank would openly declare its non-involvement with Wall Street when the truth would so easily be known.

But the truth is not easily known — especially when the bank is involved in “private label” trusts in which there are no filing with the SEC or other agencies.

The real question is why would the bank ask the borrower to certify the existence of two homes that were never built? Why would they want to increase their risk by giving a loan on vacant land that supposedly had improvements? Or to put it bluntly, Why would a bank try to cheat itself?

The answer is that no bank, no lender, no investor would ever try to cheat themselves. The whole purpose of our marketplace is to allow market conditions to correct inefficiencies and moral hazards. So if the bank was cheating or lying, the only rational conclusion is not that they were lying to themselves, but rather lying to someone else. They were increasing the risk of non repayment and decreasing the probability that the loan would ever succeed, while maximizing the potential for economic loss to the lender. Why would anyone do that?

The answer is simple. These were not “overly exuberant” loans, misjudgments or “risky” behavior situations. The ONLY reason or bank or any lender or investor would engage in such behavior is that it was in their self interest to do it. And the only way it could be in their self interest to do it is that they were (a) not lending the money and (b) had no risk of of loss on any of these loans. There is no other conclusion that makes any sense. The bank was being paid to crank out loans that looked valid and viable on their face, but in fact the loans were neither valid nor viable.

Why would anyone pay a bank or other “originator” to pump out bad loans? The answer is simple again. They would pay the originator because they were being paid to solicit originators who would do this and then aggregate over-priced, non-viable loans into bundles where the top layer contained apparently good loans on credit-worthy individuals. And who would pay these aggregators? The CDO manager for the broker dealers that sold toxic waste mortgage bonds to unwitting investors. As for the risk of loss they created an empty unfunded trust entity upon whom they would dump defaulted loans after the 90 day cutoff period and contrary to the terms of the trust.

So it would LOOK LIKE there was a real lending entity that had approved, directly or indirectly, of the the “underwriting” of a loan. But there was no underwriting because there was no need for underwriting because the originators and aggregators never had a risk of loss and neither was the CDO manager of the broker dealer exposed to any risk, nor the broker dealer itself that did the underwriting and selling of the mortgage bonds.

Reynaldo Reyes states that “it is all very counter-intuitive.” That is code for “it was all a lie.” But we keep treating the securitization infrastructure as real. In the 2011 article (see below) in Huffpost, the Federal Reserve cited Wells Fargo for such behavior — and then the Federal Reserve started buying the toxic waste mortgage bonds at the rate of some $60 billion PER MONTH, which is to say that approximately $3 Trillion of toxic waste mortgage bonds have been purchased by the Federal Reserve from the Banks. The Banks settled with investors, insurers, guarantors, loss sharing agencies, and hedge counterparties for pennies on the dollar, but so far those settlements total nearly $1 Trillion, which is a lot of pennies.

Meanwhile in court, lawyers are neither receiving nor delivering the correct message in court. They seek a magic bullet that will end the litigation in their favor which immediately puts them in a classification of lawyers who lose foreclosure defense cases. The bottom line: the lawyers who win understand at least most of what is written in this article, have drawn their own conclusions, and are merciless during discovery and/or at trial. Then the opposition files a notice of voluntary dismissal or judgment is entered for the homeowner “borrower.” Right now, these losses are acceptable to banks who are still playing with other people’s money. If lawyers did their homeowner and litigated these cases aggressively, the bank’s illusion of securitization would end. And THAT means most foreclosures would end or never be started.

Wells Fargo Illegally Pushed Borrowers into SubPrime Mortgages

29 Responses

  1. And it’s triple

  2. Scott Thompson listen.
    vengeance is mine said The Lord- Romans 12:19. I will repay in due time he said.

  3. It caught us all by surprise. Toiling away at Originating mortgage’s in my own private universe – I had no idea.

    The broker side was/is actually very-very positive/zen. Somehow keeping it together with your fav investors and hard earned cool customer’s.

    I had a batch of houses go into default all at the same time. As an added bonus – the entire financial planet was in default too.

    Like a chain gang, we ALL did the Thelma & Louise right over the cliff.

    Kicker here is, we all saw it coming but nobody could predict exactly when or how bad – or what the hell to do about it.

    I figured the mega-staking-mega-goon-mega-lying-paranormal-mega-berserk-threatening-shittiness from the foreclosure firms was just something special they were doing for me.

    Because, you know, if you have nice things the Special-Edians get to follow you around foaming at the mouth for war. That is what makes it fair!

    But yea, they stalk your house/office/life like crazy – waiting to hit..

    And the servicer’s are just the servicer’s they don’t know anything!

    Until they get into court. Then they are the All Knowing Bank THAT KNOWS EVERYTHING!

    They are even the note holder because they do not have the note it makes perfect sense!

    I had to experience it to believe it.

    At some point, I suspect somebody will systemically and methodically burn their vile houses down to the ground.

    I am not the only one that knows it takes 5 minutes to throw a main breaker + cross wires + turn back on and enjoy.

    Verifiable electrical fires are easy-easy, anybody can do it.

    And by their logic, because it is an electrical fire – that makes it legal!

    There are sooooo many ways to jam these completely retarded MEGA MORONS INTO THE GROUND.

    Makes everyday seem like Christmas.

    Make it a Great Day.

    No. 13–316. Argued April 1, 2014—Decided June 23, 2014
    A part of the federal bank fraud statute, 18 U. S. C. §1344(2), makes it a crime to “knowingly execut[e] a scheme . . . to obtain” property owned by, or under the custody of, a bank “by means of false or fraudulent pretenses.”

    Now would falsifying mortgage and note documents apply to this federal bank fraud statue?

  5. @DwightNJ thanks for the ruling as it what I been saying all a long and the is there is a separation of Note, debt & title.

    The got these settlement happening and I hope they realize with BOA and Countrywide, and Wells Fargo and Washington Mutual that both BOA & Wells only held the blank Notes as the alleged custodians and not as the “Holder in due course”!

    The judge got it right as UCC 9 says that the originator does not have to provide proof of ownership if they are in possession of the Notes, however in the case of the CW & WaMu loans there is no proof of purchase of the Ginnie Mae pooled loan because we know for a fact that Ginnie Mae requires no debt against the loans that the lender has sold an interest of has borrowed monies to produce the loans, and the blank Notes are relinquished to Ginnie Mae free and clear.

    However as Ginnie does not purchase the debt in is in physical possession as the loan Notes were transferred physically to BOA & Wells unlike an originated loan they originated is what blow the top off thing mess. WaMu was seized on Sept 25, 2008 and declared a “failed bank” and could not if they wanted act like a bank, but the remote bankruptcy procedure of relinquishing the Notes and the fact that the Notes are in the possession of Wells as the custodian records seals their fate. MERS cannot act for a dead company that no longer authorized to act and is not in possession of the Note!

  6. Tomorrow I find out the effect I had on the appellate justices when I pointed out it doesn’t make a difference that whether it was state law or federal law the banksters broke; the homeowner has committed no crime. So explain the ethical behavior of the justices in presenting argument and misstating material facts for the banksters in order to punish the homeowner who has done no wrong in order to justify providing the criminals with judicial relief.

  7. July 7, 2014

    The Maine Supreme Judicial Court has further debunked MERS’ alleged authority, vacated a foreclosure judgment, and affirmed sanctions against the attorney for Bank of America (which filed the foreclosure action) in its July 3, 2014 opinion in the matter of Bank of America v. Greenleaf, No. 2014 ME 89. The 24 page decision explains why BOA did not have standing to foreclose on the Mortgage despite having possession of the Note endorsed in blank, which the Court found only gave BOA the right to enforce the debt evidenced by the Note.

    The Court held: “The interest in the note is only part of the standing analysis, however; to be able to foreclose, a plaintiff must also show the requisite interest in the mortgage…Thus, whereas a plaintiff who merely holds or possesses – but does not necessarily own – the note satisfies the note portion of the standing analysis, the mortgage portion of the standing analysis requires the plaintiff to establish ownership of the mortgage.” (original emphasis, case citations omitted here).

    The Court then analyzed the MERS language in the Mortgage in the context of the purported MERS assignment to BAC. The Court concluded that “notwithstanding its reference to MERS as the ‘mortgagee of record’, the mortgage in fact granted to MERS ‘only the right to record the mortgage’ as the lender’s nominee, and ‘having only that right, MERS did not qualify as the mortgagee pursuant to our foreclosure statute.” The Court held that MERS did not have any right to foreclose on the property, and that the Mortgage only conveyed to MERS the right to record the Mortgage as nominee for the original lender. Thus, the MERS assignment to BAC only transferred what MERS had, which was a right to record the mortgage, period. The series of assignments demonstrated “the right to record the mortgage as nominee, but no more”.

    The Court concluded that BOA lacked standing to seek foreclosure, and vacated the trial court’s foreclosure judgment.

    The Court also affirmed the award of sanctions against BOA’s attorney who failed to comply with Maine’s civil procedure rules governing filings on summary judgment and had “inappropriately sought to create a foundation for the admission of the Bank’s business records by submitting an affidavit of his knowledge of the Bank’s recordkeeping practices” and other matters about which he lacked personal knowledge.

    The Court also concluded that that the representative of BOA (who testified that she is a bank employee who testifies at trials) did not testify as to the requirements for the admissibility of the bank’s records under the business records exception to the hearsay rule (Rule 803(6)). There was no testimony as to how long or in what capacities she worked for the bank, what type of familiarity with the records were required for her job as “litigation liason”, and that her first encounter with the “Account Information Statement” (which BOA attempted to admit into evidence) was through obtaining the document from the law firm representing BOA in the foreclosure case and not through BOA. The Court found that the requirements of Rule 803(6) were not supported by the record.

    This is the second recent decision which is finally unraveling the MERS myths which have been perpetrated on the courts nationwide for far too long. Brave to the Maine Supreme Court!

    from a post by: Jeff Barnes, Esq.

  8. Proof of Claim is both a State and Federal problem, I agree, a taxpayer problem. Sighhhh. How does that harm you other than being a taxpayor? Did you do something when they slandered your title? Did you do something about it when they didn’t correct it in a time set by state laws? If you did then you would have discovered… The titles hadn’t been laundered/washed of ALL the dirt left by unclean hands. Viruses spread rapidly on dirty surfaces. . Wouldn’t you know it … I have 0CD when it comes to dirty things. No Trust!

  9. Fannie, Freddie and Ginnie are not National Mortgage lenders and are not license in any state to do business, but they are trying to use a contract/Notes for their land grab. The “No Standing” is a product of a RICO organization which the Fed sit at the top of!

  10. Chapter 1. Theft by Conversion. The End. Cough … Cough … Aasschooeeee!

  11. @mycookiejar “No Standing” as with other crimes are covered by both State and Federal, and if you have “No Standing” and you took action and held a foreclosure sale its called “Theft by Deception”!

    Now as we know that Ginnie Mae is in possession of these blank Notes but are foreclosed in the name of another entity with “forgeries” which DocX did and also MERS, the OCC and Fed should have handled these crimes and turned it over to the FBI, however the FBI was not receiving any reporting of crimes from the FBI.

    We got Stolen Property in the amount of hundreds of thousand dollars which is a Fed crime and we got bank fraud which is what is being done as the wrong party is claiming ownership to something they do not own and have no proof of purchase!

  12. Agree with you cookiejars
    But for the folks that can’t fight individually under private causes of action then perhaps states might start filing eminent domain suits. The future lies in how each State handles this on behalf of their constituents and the public interest in that state. It’s time they started doing their jobs properly under why they are in the job in the first place.

  13. Yes I mean the law firms and the individual attorneys that produced requests for judgements that they knew they were not entitled to and under a rocket docket umbrella.

  14. I do have a lying, thieving, forgery, fraudulent documents foreclosure mill atty on the other side of my case. For the mortgage broker who posted: they also send viruses and Tojans into your computer. Law in the US of A has really had a radical change over the last ten years, and it is really sad that we do not have a judicial system anymore.

  15. Deb, when you say the foreclosure firms, you mean the law firms who are foreclosure mills, is that right? Still my fearless forecast that this whole Ponzi scheme involving fraud and forgery is going to blow sky high.

  16. No Standing is covered under State ” Laws. It was N0T taken out of the settlement, it was left to State Laws. And that is why you need an attorney in the jurisdiction rhe property is located. Its called Slander to Title. Now what harm can that cause you?

  17. Indeed Charles,
    It’s a big platinum card toting club. But tax payer is on the hook. Enough is enough.

  18. @Deborah after that chart in 2011 the Fed was buying $85 billion a month in securities! This is why I been saying that the Ginnie Mae pools are a Ponzi scheme, as the Fed negotiated the Independent (wink wink) Foreclosure Review Board and eliminated the “No Standing” payout option, because it would effect the Fed who is the largest investor of the Ginnie MBS!

  19. Now consider this in the link. Furtherance of the biggest fraud cover up

  20. Exactly why the foreclosure firms were in the mix- they will go under the bus. Make no mistake about that.

  21. The bad one’s blew up so bad it blew up the good one’s. Like everything else – not ALL banks are run by The Clinically Retarded.

    As an independent mortgage broker I can tell you with absolute assurance – as long as you play nice with these MEGA-RETARDED foreclosure firms .. they will keep doing it.

    Like they have patented Stalking-Lying-Threatening-Thieving / as if this is something new.

    Go empty a clip into their vile-moron-special-ed houses. See if that changes their frontal lobotomy tone for a minute.

    Until they forget.


    Wish I was joking.

    Make it a Great Day.

  22. The market place was totally hostile – appraisers were complaining in 2004 and before about the pressure that they were put under to stretch the appraisals of real property, and if they did not they did not get to work and many left the industry because of this pressure since they have a public duty professionally and ethically. not only were the banks already greedy they gut greedier and created a toxic environment which cost not just our homes but jobs and hope of many things based on their lies. The mortgage crisis should be called the mortgage fraud scandal, and even then that’s an understatement. They all know, the public awareness is increasing I find since my job involves all cross sections of my community. This affects all of us , the 99%. And another thing the courts and the wages staff are paid are because the people pay them, they are the peoples court, the building may have been sold to god knows who but the operation is supposed to be in support of the people and a civilized society. We are looking fundamental human civilization core values in the face here, where us the outrage why can’t people stand up and protest, at some point it will happen and then what. The biggest question is why are we placing our money in these banks they are not banks for the little guy, of that I am sure, our community banks should be marketing on this, the trust is gone excuse the pun.

  23. County in PA already won against MERS and now the rest of the counties are joining in and Texas counties have also filed! This train ride is over!

  24. William Black – best way to rob a bank is to own one.

  25. County recorders in South Carolina have sued MERS. Should be fun!

  26. @judemcdonald your right as Neil keeps writing about non actions he and other attorneys are not doing instead of doing. We are in the middle of settlement are settlement of the bank admitting they falsified document, but no release is being asked of the banks for the list of falsified documents!

    We got as Neil said $1 trillion paid out but not a name for a single forgery that DocX or MERS created and the property address or homeowner’s name!

    Bottom line on most of this is these loan were in securities that had a illegal part of that securities being illegal which if not corrected makes the entire securities bad!

  27. My original loan account # was changed by bank while in good standing for no reason. Absolutely nothing changed, none of the serviing, etc…from the day the loan was closed.
    One can only imagine the fraud that must be in that paper trail.

  28. I have spent years I have a boxes proof that I found on my own my problem is lawyers.

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