“Participants” in False Claims of Securitization

What do you think the average homeowner would have said if he was told “Look, the actual lender is someone else but we want you to name us as the lender.”

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Bill Paatalo has uncovered another layer of onion skin revealing the emptiness of the claims of participants who say they were involved in either the lending of money to homeowners or involved in the transfer of the obligation to repay the alleged loan. As he points out, some refer to “participants” who are ill-defined and essentially unknown quantities. There are many such entities lurking behind the curtain. The one thing they have in common is that they are all making pornographic amounts of money that ultimately comes out of the pockets of investors who were deceived into buying, hedging or insuring bogus and worthless MBS.

The essential fact is that those mortgage backed securities are (a) not backed by anything (b) issued by an empty SPV (Trust) entity existing only on paper (c) completely unrelated to any actual transaction and (d) completely unrelated to the documentation that was fabricated and executed at the “loan” closing.

GASLIGHT: None of the “participants” are who they appear or claim. What is emerging is that in addition to playing musical chairs with actual entities, the banks have created musical terms to the multiple players who are in constant motion switching roles on paper. Several judges have either mused from the bench or confided their discomfort as to why the servicers keep changing and the ownership goes through so many iterations.

The good news is that this is leading to inconsistencies between their correspondence with the borrower, their pleading in court and their proof — often with last minute Powers of Attorney. It appears that all of them are sham conduits for the the ultimate sham entities — the underwriter (“Master Servicer”) of MBS issued by the empty trust and the Seller of those securities. Revealing those inconsistencies often leads to victory (successful defense) in court. And it often can lead to large cash awards for damages arising from violations of FDCPA, FCCPA, RESPA and common law doctrines like wrongful foreclosure — with aggravating circumstances permitting the award of punitive damages.

The reason for all of this chicanery is simple: the party who gave the homeowner money didn’t even know it was their money on the “closing” table. But the moral and legal view on this is that he who gave the money is owed the money in return (unless it is a gift). This is true regardless of what documents are drafted or even executed by homeowners whose signature was obtained by fraud in the inducement.

What do you think the average homeowner would have said if he was told “Look the actual lender is someone else but we want you to name us as the lender.” THAT is a cause of action for common law rescission and cancellation of the instrument — once the homeowner finds out that he made the “check” out to the wrong person. Since the designated “lender” gave no money of its own and assumed no risk of loss the homeowner cannot be required to give “back” what he or she never received from the fake lender.

Adam Levitin might be right in calling it “Securitization Fail” because the securitization never happened; but it assumes that the intent was to have securitization succeed. This is not the case. The entire business model of the banks, as confirmed by industry insiders, was to take the money out of the securitization chain that had been created on paper.  Actual securitization of debt in residential “transactions” was never intended to happen. It was always supposed to be an illusion to cover criminal and civil theft.

PRACTICE HINT: Assume none of the transactions that are represented, assumed or presumed ever happened. Aim your discovery, motions, trial objections and cross examination at that and you will have the best shot at hitting the bulls-eye. That is exactly how Patrick Giunta and I won our cases.

12 Responses

  1. Neil,

    Was this their ultimate goal


    or are they planning on the rent-backed-bonds to default, so they can collect insurance on these deals too?

  2. Rhonda. You tell the sad long story well. As the crisis hit , high officials stated there was not enough money to help the people. Thus, a decision was made to help the banks instead of the people . But that decision only put a bandaid on the real problem and failed to investigate the real fraud. Let’s hope the new administration is different. Let’s hope something can finally be done Years ago I promoted to all join together. That didn’t happen. I suggest to do it now.

  3. Hello Neil I googled FBI investigation of mortgage fraud. It’s ironic that the site is talking about fraud crimes that perpetrators commit against banks. The crimes described are what banks are perpetrating on homeowners. I copied this quote from the FBI site….”Fraud for profit aims not to secure housing, but rather to misuse the mortgage lending process to steal cash and equity from lenders or homeowners”

    When I looked up press releases for this category of crime it appears the FBI is going after a few individuals who are commiting mortgage crime but the banks appear to be immune from investigation. Do you have any insight as to why the FBI isn’t investigating reports that banks are abusing the modification process and stealing homes, cash and equity from homeowners? More than 7 million who attempted to modify were foreclosed on by banks. Freddiie Mac reported That 60 percent of the foreclosures were on loans that had less than seven years remaining. This is an indicator that the bank services targeted borrowers with the most equity to steal.

    I reported the fraud Wells Fargo is involved with in my modification to the Chicago FBI office in an online complaint form. I submitted it in September and haven’t heard a word.

    I can’t watch tv shows on people Decorating bargain FLIP houses knowing they were Probably stolen from a family in a Bank mortgage fraud scam when they tried to save their home in a Modification. I feel sick knowing that my foreclosure was denied and an 85 year old couple had their home sold in a foreclosure sale after three failed modification approvals. They loved in their home for 50 years.

    I’ve complained to the CFPB to the FBI and to senator Elizabeth warren I’ve written to the Wall Street Joirnal and the LA times. Everyone is caught up in their own political agenda while this epic failure persists. I can hardly bear the sickness that I feel from this horrific crime. I want To write a story that informs Average readers what banks are Doing and how people are suffering from the great lies that are ruining lives.

    Ronda Scott Sent from my iPhone


  4. To Neil’s question – a good one — “What do you think the average homeowner would have said if he was told “Look, the actual lender is someone else but we want you to name us as the lender.” There was no “lender” — loans were just restructured. If the homeowner knew that, then they would have asked – WHY??

  5. Stillfighting ,

    I too had to surrender (because of the wife and money deep into an appeal) and accept a bad deal that kept us in the house ,,, the main thing to determine is whether the “Settlement and Release” names valid parties ,, if they have no claim on the note and their “authority” comes down from a party that is not in their doc chain then I’d sign and fight them when you have the $$$$.

    Like you I already had the necessary proof so this doc is meaningless to me…

    The main parts to inspect are:

    1.) the opening paragraphs where the parties are defined …
    2.) a “clear title contingency” if one exists ..in combination with the usual invalid AOM’s and lack of validly documented sales it gives you an easy “out”
    3.) The reps and warranties ,, you have already stated they are warrantying claims that you have strong proof against. Another disqualifier.

  6. Neidermeyer and Neil,

    I am in the final stages of negotiating a settlement, but it won’t be considered punitive damages. I will probably be “gagged” too. I don’t want to leave money on the table, and I would like to not give up my rights to go after some of the parties for wrongful foreclosure. I, too, have an ironclad case, and the plaintiffs are scrambling. And, yes, the legal teams for the pretenders all knew/know about the fraud and fabrication of documents over the last decade of this fight. Yet, they conspired on the wrongful foreclosure regardless.

  7. ANON,

    I just created a new email for public use ,, neidermeyer@mail.com ,, I’ll check it for maybe the next week before discarding. My post is accurate ,, some heavy hitters already did all the discovery for me.. I just don’t have the funds necessary to make a move right now and I’m damn tired of the abuse.

  8. neidermeyer,

    Don’t know if Neil will contact you, but I would like to speak with you. Provide contact information if you want. What is being missed here is the concept of securitization. For securitization to be valid, the loans must first be assets on a banks balance sheet. Securitization is simply the removal of on balance sheet assets to off balance sheet conduits. But, if the assets were never on balance sheet to begin with, and instead went supposedly straight to off balance sheet conduit then there can never be valid securitization. Then one has to ask why the loans were never on the balance sheet.

  9. Reblogged this on UZA – a people's courts court of conscience and commented:
    Is the partner of my partner, my partner?

  10. StillFighting ,

    Neil would say that those cases are settled and the winners are gagged. I would offer myself to Neil as a case study with the typical 1/3rd 2/3rds contingency … What do you say Neil… I have a valid rescission with the actual lender (as verified in a federal suit that cost them $650mm) renouncing the debt ,,, we’ve got all the evidence/exhibits from that trial available and in our favor… and I’m in Florida… Not only that the legal team for the pretender knew of the evidence that contradicted their position 100% and still forced me into a deal… What do you say Neil ,, a fat double digit million dollar wrongful foreclosure suit with aggravating circumstances.. You can even sit at home ,, all I need is for you to work a deal with my lawyer ,, she’s good and ready to rock..

  11. Neil mentioned the “award of punitive damages.”

    Does anyone know of any Florida cases where punitive damages were awarded to the Defendants?

    My attorney and I cannot find any such cases, and they would be very handy in the current phase of my fraudulent case.

    Thank you in advance for any assistance in this matter! Keep the faith!!!

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