Livinglies's Weblog

… world-class fortune to be made (10%-15%) using the IRS anonymous tip line once you figure out the players. Just remember where you got this information and throw a little our way when you collect. Anyone can do it. You don’t need to be a lawyer. All you need is the  right investigation to discover the parties involved (i.e., who is probably taking the deduction).

Since the trusts were empty to begin with, one would think that trading stopped. Quite the contrary. Virtually all prior REMIC Trusts have been “resecuritized” or tossed into a distressed asset trust (DAT). Some nominal value is placed on the nonexistent assets and the loans (falsely claimed as REMIC trust assets) are subject to  write down.

In one case they picked some nonexistent distressed debts that were never going to be paid. And they paid around $18 Million for it. But they got a $1.1 billion write off saving  them as much as $400 Million in taxes.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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Hat tip Bill Paatalo

Why is this relevant to homeowners fighting foreclosure? Because the payment for the alleged debt creates the illusion of consideration when in fact there was nothing to sell from the REMIC trusts and the entire transaction is a sham to avoid taxes.

Here is another reason: The alleged REMIC Trust mortgagee or beneficiary was not ever funded, and so it never purchased any loans; but more importantly, the Trust named as beneficiary or mortgagee does not exist anymore — even in New York. The standing issue is insurmountable if you ask the right questions in discovery.

You will find support for all this in tax cases. Such “transactions” — even though some nominal summon money exchanged hands — are“a meaningless and unnecessary incident” inserted into the chain of entities, transactions, and agreements through which the non-performing loan (NPL) acquisition took place.

Since none of the REMIC Trusts were actually funded, the opportunity to claim all loans ever made as a loss and therefore a deduction from taxes. Just another way the banks made money stealing from investors and preying upon homeowners.

While the courts are striking down such “arrangements” most of the time the banks are getting away with it because the IRS doesn’t have the resources to find all such transactions and strike the deduction, add penalties etc. But I dare say that there might be a world-class fortune to be made (10%-15%) using the IRS anonymous tip line once you figure out the players. Just remember where you got this information and throw a little our way when you collect. Anyone can do it. You don’t need to be a lawyer. All you need is the  right investigation to discover the parties involved (i.e., who is probably taking the deduction).

How much is involved? From the looks of things the deductions may amount to all of the mortgage loans made between 2001 and the present. Altogether that means potentially trillions of dollars. Fake REMIC Trusts — it’s the gift that keeps on giving. The banks are laughing all the way to their vaults, while the investors and the borrowers are left with scraps on the floor of bank cutting tables.

From Bill Paatalo:

This may be at the heart of what’s going on with Lone Star’s LSF9 Master Participation Trust.

https://www.forbes.com/sites/robertwood/2011/10/10/irs-wins-tax-shelter-trifecta/#332716b17c26

https://blog.myirstaxrelief.com/2008/02/distressed-asset-trust-dat-tax.html

 

Andy Beal, who has been a huge player in the NPL market, got shot down in the Southgate case for setting up sham entities. From Southgate Appeal Decision:

(3) The lack of a business purpose
Finally, Culbertson instructs us to ask whether the partners were “acting
with a business purpose” when they made the decision to form the partnership.

Southgate was a redundancy, “a meaningless and unnecessary incident” inserted into the chain of entities, transactions, and agreements through which the NPL acquisition took place.

Filed under: foreclosure, sham transactions, tax cases | Tagged: DAT, Distressed asset trusts, Empty REMIC Trusts, REMIC trusts, TRUTH |