The Neil Garfield Foreclosure Show at 6pm Eastern: Phantom Collectors of Phantom Debt

Phantom Debt

Phantom Debt collected from Servicers on behalf of Phantom Creditors

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Mortgage servicers are collecting Phantom Debt on behalf of Phantom creditors by creating fabricated and forged documents.  Servicers counterfeit mortgage notes, assign them a value, and pursue collection of this ‘debt’- but who do they send the proceeds to, if there is no true creditor or funded trust that can be identified, or can accept payments from the servicer?
According to Neil Garfield:

  • We know that the banks funded themselves instead of the trusts which never really existed (phantom trusts).
  • We know that the banks covered up their theft of investor money by originating or buying loans with investor money and not trust money.
  • We know that the theft has been the subject of settlements in which the owner of the debt — the investors — is paid off with cash and “resecuritization” in which actual loans were  “sold” into a new trust (Like Zuni) by a party who STILL didn’t own them (phantom sales).
  • We know that the proceeds of judicial and nonjudicial sales does not go to investors but back to the “underwriters” of nonexistent worthless certificates issued by nonexistent trusts that are registered nowhere and unfunded(phantom trusts).
  • We know that the underwriter acts as “Master Servicer” for the phantom trust and collects “servicer advances” that were neither advances nor from the servicer, but rather a return of investor capital even if it was OTHER investors.
  • We know that the “Trustee” of the Trust is not a Trustee either in writing nor in practice (phantom trustees).
  • We know that the banks are acting on their own behalf and not on behalf of the investors or the trusts.

So with this fact pattern, the central question becomes: To whom does the “Servicer” send money after they collect their monthly servicing fee, or after they foreclose?  Based on the aggressive and illegal behavior of mortgage servicers- it would be fair to speculate that the servicer does not forward funds to any party but retains all money for itself.  It would also explain why loan servicers used HAMP to generate payments from the homeowner and sabotage any modification.  Servicers are incentivized to force the loan into default, not to work-out a plan that helps the homeowner remain in their home- because a foreclosure results in massive profits likely retained by the loan servicer.

Investigator Bill Paatalo of BP Investigative Agency will also discuss the fact that he has examined Hundreds (thousands) of cases and has yet to see a single document or any information that reveals the mortgage securitization money trail.   Neil Garfield speculates that “since the underwriter is posing as the Master servicer, even though the trust might not exist, that the money is going to the underwriter. That in turn leads to the question of what the Master Servicer did with the money?”

One thing is known for sure and that is that the servicer is collecting payments from homeowners who are paying. It is also common knowledge that servicer advances have been securitized indicating that “certificate holders” are being paid without recourse. Of course we don’t know how much is claimed as servicer advances and whether the money was claimed but not really paid because the banks have successfully buried this information.   It’s a rat’s nest by design,  but eventually the information will surface.


Paatalo will touch on Cashmere Valley Bank v WA Dept of Revenue_Unsecured Mortgages (WA Sup Ct 2014), where it was discovered that REMIC investors are far removed from the underlying mortgages.  In this case the court ruled that the investor must have some type of recourse against the collateral.  In Cashmere, the REMIC issuers, “offered no interests in mortgage or trust deeds to back their promises to pay investors. Relatedly, Cashmere has no direct or indirect legal recourse to the mortgages that underlie its REMIC investments in the case of default.”  Thus, the court ruled that Cashmere could not claim a tax deduction.

Neil Garfield points out that that in Cashmere, the borrowers do not owe Cashmere because Cashmere never loaned money and there is no contractual relationship between the borrowers and Cashmere. That is especially significant and Garfield reminds homeowners and attorneys that some of the best cases supporting securitization fail are found in tax law.

Cashmere illustrates how different types of interests are given to the holders of certificates and vary. Which means that in cases where US Bank appears as Trustee for certificates or certificate holders that might mean nothing- but homeowners and attorneys should have an absolute right to see the certificates and any indenture or other agreements regarding the certificate and its entitlement to income and the alleged underlying mortgage.

Garfield reiterates that strategy, “might be just what we need to force the opposition to respond to discovery about the nature of the certificates and if the Trustee is asserting a direct agency relationship with the certificate holders (i.e., in cases where a trust is not mentioned), and then we would be entitled to see that agency agreement and very possibly allowed to see the names of the certificate holders.


Excerpts from Cashmere include (thank you Bill Paatalo for providing these excerpts):

Cashmere snip - Investors are far removed from the underlying mortgages.PNGCashmere snip - Investors are far removed from the underlying mortgages(1).PNG

and lastly:Cashmere snip - no direct or indirect legal recourse to the mortgages that underlie REMIC investments.PNG

Bill Paatalo, Private Investigator:
BP Investigative Agency, LLC
P.O. Box 838
Absarokee, MT 59001
Office: (406) 328-4075
Attorney Charles Marshall, Esq.
Law Office of Charles T. Marshall
415 Laurel St., #405
San Diego, CA 92101

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