Wells Fargo “Explains” Securitization

YOU NEED AN INFINITE NUMBER OF BASES AND PLAYERS TO PLAY BALL WITH THESE GUYS: The Trustee controls the trust as trustee. Oops, wait, it is the Master Servicer who has all the control. No, wait again, it is the subservicer who has the right to administer the loan. But actually if there is an alleged default it is the special servicer who has exclusive authority over decision making. Except that the “Controlling Class” has the last say in the matter. But actually it is the Controlling Class Representative who has the last word.

I have always felt that there must be some way to force the other side into approving a modification or at least providing access by the borrower to the “lender” to discuss or negotiate the matter. I still believe that. Maybe this article will help spur some ideas. Information is leverage, especially in the world of false claims of securitization.


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Hat Tip Bill Paatalo

see Wells Fargo Document – No Lender in Remics

Essentially the banks would have us believe that by magic they created loans without owners or holders in due course. So it might as well be the banks who foreclose under any pretense they choose to offer. The political decision was to let them do it for fear that the banks would bring down the entire system. But if that were true, the bank’s capital would be worthless as would every world currency including the dollar. They bluffed Presidents Bush and Obama and the Presidents blinked. Millions of foreclosures followed because the ordinary guy is just not that important even if it involves a substantial portion of a population.

I will provide my comments and suggestions for discovery or cross examination along with each statement in the above cited article. Keep in mind that the entire article is an exercise in deceit: It is assuming that securitization actually happened. If that were true then they would be more than happy to show that the subject loan was purchased on a certain date by the payment of value to a specific seller by a trust. The trust would then be a holder in due course. But as we have seen numerous times nobody ever refers to the trust as a holder in due course which can only mean there was no such purchase.

The indented portions are direct quotes from the WFDb article cited above.

The thing most borrowers fail to realize about conduit loans is that once a loan has been securitized, they are not working with a “lender” anymore.

That’s the first sentence of the “explanation.” And the first thing that pops out is “conduit loans.” What is a conduit loan? Is the subject loan a conduit loan? In what way is the subject loan a conduit loan? [This also corroborates what I have been writing for years — that Matt Taibbi (Rolling Stone Magazine) got it right when he describes securitization as a monster with multiple tentacles.]

There is no legal definition for a conduit loan. The banks would have us believe that if they present any tentacle, that is sufficient for them to foreclose on a loan. But that isn’t legal standing — it is fraud on the court. A loan is a loan, but Wall Street banks don’t want you thinking about that. But by calling it something different it immediately plays into the bias of the court assuming that the big banks know what they are doing and that only they can explain what is going on.

Corroborating my description of the “Conduit”: remark, WFB explains that you are not dealing with a lender anymore. Is that supposed to make us feel better? There is no lender? Was there ever a lender? If, yes, then please identify the party who loaned their money to the borrower.

Now this on servicer advances:

If a loan becomes delinquent, the Master Servicer is usually obligated to make the first three or four payments to the certificate holders as well as pay trust expenses on delinquent assets…

The Master Servicer is reimbursed when the borrower makes up the payment or when the property goes into foreclosure and is later sold.

So we are being told that the Master Servicer is making payments to investors regardless of whether the borrower makes any payment. First, the payments to investors are made by the Master Servicer because they are the only one with access to a giant slush fund or dark pool created out of money that should have a gone to each trust and been maintained as a trust account, administered by the trustee.

But it is true that the Master Servicer gets paid for the “servicer advances” when the property is sold. So if the investors received 12 months of payments (of at least interest), even though it was taken out of a reserve pool (read the prospectus) consisting of their own money, the Master Servicer gets paid as though it was a reimbursement when in fact it is a windfall. Needless to say the incentive is to let the case languish for years before foreclosure and sale take place.

The longer the time period between the alleged default and the sale of the property, the more money is received by the Master Servicer as “reimbursement” for money it never advanced.

The Special Servicer makes all final decisions about dispositions of defaulted property and Real Estate Owned (REO). Often they are also the holders of the “first loss pieces” of the pool. Because they are taking the most risk, as part of their agreement to take that risk, they usually insist on being the Special Servicer as a requirement of their investment. There are only a handful of special servicers in the country.

Really? So the Master Servicer, the subservicer and the Trustee of the alleged REMIC trust have no say in whether to work out or modify a loan that is economically not feasible but which could be feasible if there was a workout or modification. What is a first loss piece of the pool? What is the account name of the pool supposedly held in a bank somewhere? Does the account name match the alleged REMIC trust in any way? Is there an account administered by the Trustee? Does the Trustee get performance reports or end of month statements?

Oops wait! There are other people with special powers —

The PSA also designates a “Controlling Class” who will provide input on recommendations for Special Serviced Loans and REO.

If the Special Servicer is willing to extend the loan, they have to get permission from the Controlling Class Representative (CCR), who is a fiduciary for all the certificate holders.

Anyone who has seen that famous but from Abbot and Costello in the 1950’s understands what is happening here. The Trustee controls the trust as trustee. Oops, wait, it is the Master Servicer who has all the control. No, wait again, it is the subservicer who has the right to administer the loan. But actually if there is an alleged default it is the special servicer who as exclusive authority over decision making. Except that the “Controlling Class” has the last say in the matter. But actually it is the Controlling Class Representative who has the last word.

So in discovery ask which of those entities was contacted about modification and why the borrower was instructed to send the application and documents to the subservicer when the subservicer had no authority?

And let’s not forget the fact that the certificate holders have no right, title or interest in the loans, the debt , the note or the mortgage. So their “Fiduciary” (who apparently is not the Trustee of the alleged Trust) does what?  How do we contact these intermediaries to whom powers and obligations of a trustee are passed around like free money? How do we know if the subservicer is telling the truth when it reports that the “investor” turned down the settlement or modification.

And by the way, why do we not have recording of the modification agreement? Why does not the Trustee of the REMIC Trust sign the modification agreement? Instead it is ALWAYS the signature of the servicer who, as we already know, has no power to accept or deny requests for modifications — and of course it is never recorded in county records. Why?

Remember, there are no “pockets of money” to use for refinance. Special Servicers, although legally allowed by the PSA to forgive any portion of the debt, rarely do so because often that would negatively affect one or more of the bondholders at the expense of the others. Instead, the Special Servicer, on behalf of the conduit, will almost always foreclose and sell the asset.

Hmmmm. So the Special Servicer (and the CCR?) ordinarily chooses to drive down the price of the collateral and take a larger loss on the subject loan because it “would negatively affect one or more of the bondholders at the expense of the others.” But the principal reduction would positively affect some bond holders more than others by saving the collateral. So exactly what are they saying as Wells Fargo Bank about the roles and rules of securitization?

And lastly, why did WFB task authors to write about this when their experience is limited to manufactured home communities? Probably the same reason why robo-witnesses know nothing.









22 Responses

  1. U got alot going on there! One thing that popped to mind was criminal penalty for power of attorney I believe based on false docs, fraud etc I believe specifically w FHA if within ur docs.

  2. Agree. Whistleblower group said basically I had a good case but they didn’t have the resources. Did encourage to file pro se if necessary. Makes u wonder why lawyers won’t take cases. Instead of class action we should file whistleblower, rights cases in every county, state. I’m compiling good info so far in CA couple of other states.

  3. Our lender passed to money heaven in 07-08 . Note and deed magically migrated to WF Servicing. WF is using a manufactured
    assign. doc. from the dead bank to prove their right to our money.
    A three year old knows that once dead and gone, no way back.
    Maybe there’s been some advance in technology ? We been lawyer
    trolling here in Tenn. and nobody wants the job to flat out sue WF for fee , pro bono, legal services, nobody – seem to all be unavailable to
    the members of the great unwashed living in ” factory housing “.
    Anyone out there got any thoughts ?

  4. my mortgage fraud was caused by fhfa and just got documents back to prove it. you cant get a lawyer to jump HUD.. i proved this in Dec. 2010 but documentation got burnt up in house fire Feb. 2011. (?) The same FHA employee i proved it to in dec. 2010 (Mrs, chandler in Oklahoma city). This HUD employee sent me a e-mail stateing that they gave carrington mortgage permission to sell my 21 acres. i have the ticket number by changing this mortgage to a conventual loan. now i found HUD’S ID number as a member of MERS. My mortgage wasnt in the FHA connection in 2009 and i have the document to prove it. it also wasnt in MERS. After my conversation with the FHA in 2011 it got in the FHA connection. The FBI is also a member of MERS. Now the OIG of the US states treasury Dept is going after the state of Ga. and Ca. about funds alloted them to help home owners in 2010. In Ga. the judicial system as high as the supreme court is backing MERS and Big banks. Ga. supreme court says MERS is legal and georgia citizens are not a party to mers assignments yet my MERS assignment changed a 205,00 dollar debt on my social sercurity number. Also the IRS sent the state Ga.a fraudlent document adjusting my income and they put a lien on my social security number. This was denying capital loss on my federal return. now Carrington mortgage kept 129,724 dollar BOA recieved in 2011 on an insurance claim. BOA says they didnt foreclose but FHA said they did. Carrington sold the poperty for 55,000 on FHA’s permission and keep that money. Corelogic filed a PT 61 for 21,800. Thiese monies wasnt taken off the 1099 from carrington. No wander the state and federal governments are broke. When does this turn criminal. OIG HUD refuses to fix.

  5. Lisa D:sure! My email is : iansopko@gmail.com , if I can be of any help to anyone else also!

  6. Ian: Can you give me your contact info to forward to ANON?

  7. ANON-
    Furthermore, the FRB balance sheet, due primarily to QE, holds some 5 trillion in “assets”, which are primarily mortgage backed securities, which the FRB was buying at the rate of 85-100 billion$ per month. And the MBS which the fed purchased were not made public. You also had the Maiden Lane I and Maiden Lane II funds which I believe were primarily Lehman/ Bear Stearns “assets” which the Fed purchased.
    What did they buy, who got paid, and what happened to the legal status of the enforceability of the mortgages and/or notes held by the Fed? 5 trillion, at the time, was almost 1/3 of the US mortgage market.

  8. ANON-
    once again: when you call any servicer, you will hear ” we are a debt collector: any information received may be used to collect a debt….”. Debt collectors deal only with default ( charged off) debt. Someone somewhere has received the full value of the charged off debt as a credit against tax liability. Although this amount may vary due to principal/interest owed, amortization and other accounting procedures etc. So as debt
    Collectors, the servicers are purportedly collecting the debt for another. Not for themselves. And under the FDCRA, an individual is only required to pay the debt collector the amount which they, the debt collector, paid for the debt. Generally 2-5 cents on the dollar.

  9. This is amazing “The “friendly banker”
    you knew five years ago may not be the party you will be dealing with tomorrow. “

  10. Wells Fargo…LOL. They are debt collectors much of the time and securitized the loan with a REIT, after it failed, not a REMIC. Most of them are de-listed back in 2006, 2007, 2008, shortly after they “allegedly” pooled the loans and sold certificates. The certificates are nothing more than “junk bonds”, IMO. If they came after us as the “debt collectors”, which they don’t, they wouldn’t have a right to the collateral, just an old debt, that has run the Statute of limitations. Just my non-legal opinion.

  11. @ anon (lower case)

    Threaten the BROKER ,, not the RE sales agent with a lawsuit if the property is not de-listed ,, The agent works for a broker and they like their license… simultaneously file a complaint with the agency that issues the brokers license… just ask the broker for how to do it ,, they have to give you the info…

  12. What’s interesting is no one brings up Merchandise practicing laws. When my attorney sold me under the bus and refused to file my adversary this is how he was going to tackle them. Put the truth in writing and they can’t PRODUCE THE NOTE. They thereafter, are dismissed w/o prejudice then judge lets them continue the THEFT. THE GRAND ILLUSION is what they don’t want you to know. No one will tackle them on the “Enforced Identity Fraud” issue either. See with the system Roosevelt brought in no one can identity assets they should of inherited. Then they track us by our DNA to pay for something we never had anything to do with! To deal with them you must know the truth! This is something they are far from giving! Start hitting a few of the nails on the head they accuse you of “Harrassing” the court, disqualify, and recuse. Recusal let’s them pass to another corrupt judge. Recuse again wash repeat. 80 years of MANUFACTURED FRAUD @ least! Brought to you by the most corrupt government in the WORLD! mortgagefraudclosure.blogspot.com

  13. True — you are absolutely correct. Servicers will tell you they are the Lender/owner of the debt — then they will put something else in writing..

    Scratch and Dent from the onset.

  14. I completely understand that as I am living that scenario; however, in my case the servicers, HomEq and Ocwen, implicitly represented and represented in writing that they were the lender and then when I called them on it, they didn’t follow through… instead, the idiots concocted an assignment that puts them nowhere in the chain of title. They have created a void between a 2007 bankrupt originator on a “loan” that was never registered with MERS and the year 2015. (What I feel is a scratch and dent kick out that was never repurchased then hijacked by Ocwen) That is 8 years worth of paperwork they can’t pull out of their ass unless given enough time… I just brought up the HAMP Supplemental guidelines and IRS Revenue Procedure and Notice as examples as to how far they have come to make up the “rules” as they go along.

  15. Many, wrongly, consider the servicer the “Lender.” Depending on who asks, Ocwen and other servicers, will sometimes answer that they are the “Lender” and that they own the debt.

  16. The Home Affordable Modification Program mandatory guidelines note that a Lender or Investor number be input onto the first page of the Agreement.

    …and the IRS seemed to think their was a lender involved with the REMICs.

    “HAMP provides incentives to lenders and servicers of the securitizations in which such loans are held (such as a REMIC or an investment trust) to modify these loans so that the monthly payments are consistent with the program’s desired debt-to-income ratios.”


  17. Excellent Bill, Thank you for reminding us of Wells Fargo “conduit” loans.

    1) No Lender? If there is no Lender, TILA act does not apply. They can do whatever they want.

    2) Why is a modification the only answer? Why can’t these loans be refinanced? Especially if no payments were ever missed? Answer to that is that all these loans have reported missing payments – whether the borrower actually missed a payment or not, and whether or not they were informed of any recorded missing payments, perhaps, even prior to the last transaction in question. This is why servicers have prior transactions to the last transaction in question in their possession.

    3) Who are these modifications, if you can one, really with? A modification simply modifies the last contract. If there was no Lender – there is no contract. If the last contract party is defunct, there is no contract. This also means your last Lender was not your Lender and the loan was table funded in violation of RESPA. (of course nothing was funded because all the transaction did was transfer already declared default debt).

    4) The one party that is rarely looked at is the security underwriter to the REMIC trust. The security underwriter either purchased the “loans” directly before claimed securitization, or purchased all the securities to the trust (except the servicer owned tranche which was not securitized) before selling tranches that pass through cash flows only, to other investors – including the GSEs. This is why the large bank settlements were with the big banks who were the security underwriters to the trust.
    You will not find the security underwriter in the PSA. Need to go to the Prospectus. The problem is that none of these settlement helped the homeowners.

    5) Servicers can stop advances even after one alleged missed payment. Up to them.

    6) Why are these “loans” called accounts?? “Conduit” accounts? These loans could not originally be marketed through traditional individual sale to GSEs. These “accounts” had to take a special vehicle or “pipe” to go through another channel – and right back to the GSEs. Who were the original servicers to the GSEs? Only the big bank security underwriters.

    Sandy — the investor is a distressed debt buyer.
    anon — up to a lawyer, but tough. .

  18. Our home was foreclosed despite violations in the securitization. We litigated the foreclosure and the case was not dismissed as the judge might have found that there was something to be adjudicated. The bank and the servicer ignored pending law suit and now the bank is selling the house by advertising through a real estate agent. If the house is sold, could we sue the bank and the buyer as well?

  19. When you’re involved with Rushmore/Roosevelt, you’re in big trouble. The servicer is owned by the investor. That’s why they’re foreclosing so fast.

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