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Thursdays LIVE! Click in to the The Neil Garfield Show

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Tonight Neil Garfield and California attorney Charles Marshall will address why  homeowners haven’t sued the Certificate Holders of a specific Trust who are allegedly directing the foreclosure behind the scenes.

The long answer runs is always more complex and includes :

1. The investors are the real parties in interest.
2. By now they know their money never went into any trust and that it was commingled with all kinds of investors who thought they were dealing with hundreds of “Trusts”.
3. The Trusts don’t exist unless they have a res.
4. The trusts never received the proceeds of sale of the MBS issued by the trust nor were they ever intended to receive those proceeds, unbeknownst to the investors.
5. The promotional material on derivatives and securitization of residential “loans” repeatedly refers to “bankruptcy remote” and other language stating that the investors don’t need to worry about liability for lending violations because they had the protection of the trust layered on top of everything.
6. BUT it was pretty early on that the media was reporting on the many crazy NINJA loans and teaser payments that could never be maintained. So it seems unlikely that the managers of stable managed funds and other institutional investment funds could not have known that those loans were being created at a furious pace.
7. BUT BUT is it equally probable that the managers knew it was their money being used to fund those loans? The alter  you get int eh scheme the more likely it is that they knew and didn’t care because they were being told everything is fine, we have insurance etc.
8. And THAT brings us to the possibility of suing the investors of XYZ Trust and all other investors with an interest in XYZ trust by piercing the veil with an entity that essentially does not exist — no bank account, no assets, no liabilities, no income no expenses and no trust officer running things. You probably would have to sue the trust as well but you could argue around that saying that you refuse to sue the trust because it is an entity with no legal existence if there is no res. If you sue them you are basically saying the trust DOES exist.
9. Then there is the possibility that the investors could be sued based upon knew or should have known. They are professional fund managers  with decades worth of experience in securities analysis. How could they not know?
10. If you get past a motion to dismiss and into discovery you will have a field day. This is where the large settlements occur.
    
11. So far all the settlements with investors have been sealed and neither side wants the info to come out. If it did, then the fund managers would have to write down their “assets” to reflect the fact that the MBS, even though sold to the Federal Reserve at 100% of par value, are worthless.