Wells Fargo “Lending” Securities It Didn’t Own

Translation: WFB was the “custodian” of alleged “mortgage-backed” certificates issued for the benefit of investors who paid billions of dollars for ownership of the certificates. WFB “Loaned” those alleged securities to brokers. The brokers in exchange provided “collateral” the proceeds of which were reinvested by WFB. In short, WFB was laundering the investors money for the sole benefit of WFB and not for the investors who owned the certificates and certainly to the detriment of the brokers and their buyers of derivative instruments based upon the loan of the securities.

This case reveals the flowering of multiple levels arising from false claims of securitization. First WFB issues certificates from a fictitious trust that owns nothing. Then it keeps both the money paid for those certificates and it keeps the certificates as well. On Wall Street this practice is called holding securities in “street name.” Then WFB engages in trading on securities it doesn’t own, but which are worthless anyway because the certificates only represent a promise from the REMIC trusts that exists only on paper.

It is all based upon outright lies. And that is why the banks get nervous when the issue of ownership of a debt, security or derivative becomes an issue in litigation. In this case the bank represented the trades as ownership or derivative ownership of “high grade money market instruments” such as “commercial paper or bank time deposits and CDs.”

None of it was true. WFB simply says that it thought that the “instruments” were safe. The lawsuit referred to in the linked article says they knew exactly what they were doing and didn’t care whether the instruments were safe or not. If the attorneys dig deeper they will find that the certificates’ promise to pay was not issued by an actual entity, that certificates were never mortgage-backed, and that WFB set it up so when there were losses it would not fall on WFB even though WFB was using the named trust basically as a fictitious name under which it operated.

So I continue to inquire: why does any court accept any document from WFB as presumptively valid? Why not require the actual proof?

Let us help you plan your defense strategy, discovery requests and defense narrative: 202-838-6345. Ask for a Consult.

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Hat Tip Bill Paatalo

see  WFB Securities Lending Scheme

The investments by WFB went into “mortgage backed assets.” Really? So let’s see how that works. First they create the certificates and sell them to investors even though neither the investors nor the trust have any interest in mortgage assets. Then they “loan” the same certificates to brokers, who provide collateral to WFB so that WFB can “reinvest” investor money using commingled investor money from a variety of sources.

Then derivatives on derivatives are sold as private contracts or insurance policies in which when the nonexistent trust assets are declared by WFB to have failed, in which WFB collects all the proceeds. The investors from all layers are screwed. And borrowers, as was originally planned, are screwed.

The lender to the borrower in the real world (where money is exchanged) are be the investors whose money was in the dynamic dark pool when the loan of money occurred. But the investors have no proof of ownership of the debt because of the false documents created by the “underwriter” bank.  The money from the second tier of investors is used to “purchase” the certificates WFB is “printing”. And then derivatives and hybrid derivatives and synthetic derivatives are sold multiplying the effect of every certificate issued. Such has the control over currency shifted from central banks who control around $8 trillion of fiat currency to the TBTF banks who boast a shadow banking market of $1 quadrillion ($1,000,000,000,000,000.00).

This every loan and every certificate is multiplied in the shadow banking market and converted into real money in the real world. Based upon prior securities analysis and review of disclosures from the publicly held banks it thus became possible for a “bank” to receive as much as $4.2 million on a $0.1 Million loan (i..e, $100,000). But in order to maintain the farce they must foreclose and not settle which will devalue the derivatives.

Then having done all that through control of a dynamic dark pool of investor money they must of course create the illusion of a robust lending market. True this particular case involves a business acquired when WFB acquired Wachovia. But WFB acquired Wachovia because it was the actual party in control of a false securitization scheme in which Wachovia acted primarily as originator and not lender.

WFB barely cares about the interest rate because they know the loans that are being approved won’t last anyway. But its trading desk secures extra profits by selling loans with a high interest rate, as though the loans had a low interest rate thereby guaranteeing two things: (1) guaranteed defaults that WFB can insure and (2) buying low (with investor money) and selling high (to investors).

All of which brings us back to the same point I raised when I first wrote (circa 2007) about the systemic fraud in securitization not as an idea, but in the way it had been put into practice. Using established doctrines in tax litigation there are two doctrines that easily clear up the intentional obfuscation by the banks: (1) The single transaction doctrine and (2) the step transaction doctrine. Yes it is that simple. If the investors didn’t part with their money then the loan of money would have never reached the desk of the closing agent. If the homeowners had not been similarly duped as to who and what was being done, they would never have signed on the dotted line.

To assume otherwise would be the same as assuming that borrowers were looking for a way to waste money on non-deductible down payments, improvements and furniture in exchange for a monthly payment that everyone knew they couldn’t afford.


19 Responses

  1. So what’s the hope for us client against Wells Fargo we lost our residence due to WFB Fake modification

  2. Hat tip to usedkarguy:

    After a seven-week trial, a federal jury in Minnesota found that Wells Fargo did not misrepresent its investment strategy and was not liable on any plaintiff claims in a securities lending matter brought by a class of institutional investors. Plaintiffs alleged that Wells Fargo had grossly mismanaged investments in its securities lending program by putting assets in high-risk ventures and failing to disclose the deteriorating condition of the investments. The jury rejected allegations that the bank had marketed the investment program as risk free, responding to Wells Fargo’s argument that the program losses were attributable to the financial crisis. In a related ERISA matter, a judge in the U.S. District Court for the District of Minnesota dismissed allegations of fiduciary breach and fraud leveled against Wells Fargo.

  3. Deja Vu All Over Again? Subprime MBS Demand “Oversubscribed” And S&P Says Risk Is “Contained”

    The stock market is at record highs and people with FICO scores as low as 500 are once again happily obtaining mortgages. Not only that, but these mortgages are once again being securitized and are in demand by yield chasers.


  4. My residence foreclosed like a joke, by Wells Fargo bank transferred my loan to BSI toward the end of Modification never called us back ! All what you say me Neil is true! Why there is no class of action!
    I couldn’t believe 2 huge Sherrif came in to evacuate us! It’s all fraudulent! One lawyer took $4k was referred by legal shield he did not even fill any form! Baby boomer on the street Shame!

  5. @ Dan ,

    Link Please.. can’t find it?? http://caselaw.findlaw.com/court/us-7th-circuit

    If you lost due to procedure (no decision on the merits) and it’s a good case I don’t see why you can’t refile and correct the errors…

  6. Please look up this case.
    Pro se litigants ; class action against 15 banks. United States court of appeal seventh circuit No#17-3656,
    case no# 1.17 cv-07714 northern district of Illinois eastern division.
    We need your help. We have been in court for over two years and caught there hand in the cookie jar, default judgement on civil rules of procedure.

  7. This link is to an article about a law firm Rosicki in NY that got caught overbilling Fannie Mae and scamming Fannie Mae, read the government. https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-lawsuit-against-foreclosure-law-firm-systematically

  8. Reblogged this on California freelance paralegal and commented:
    The government really needs to revoke the national banking charter for Wells Fargo, either permanently, or for a minimum of 5-10 years. That will send a message to the other big banks that fraudulent behavior will not be tolerated.

  9. Please go back to reality. You cannot brake the walI with the head. I lost my case Fl.1D 2016-CA-282 last Tuesday 3/20/18. Wells Fargo as Trustee for 2007-BC1, Ocwen as second servicer, Shappiro and Van Ness as Plaintiff counsel and Sandra Tramble as Ocwen rec.custodian.
    I ordered the transcript, another $ 750. I will appeal if….my appeal counsel by review of transcript will find judicial error.

  10. Reblogged this on Deadly Clear and commented:
    This is why there is over $11 TRILLION in UNREGULATED MBS DERIVATIVE debt when there are only 100 million mortgageable properties in the U.S. housing universe. Securitization and rehypothecation have taken down the American Dream and creamed Fannie & Freddie.

  11. And then derivatives and hybrid derivatives and synthetic derivatives are sold multiplying the effect of every certificate issued. Such has the control over currency shifted from central banks who control around $8 trillion of fiat currency to the TBTF banks who boast a shadow banking market of $1 quadrillion ($1,000,000,000,000,000.00).
    ThermoNuclear grade economic Toxic sludge… you better have REAL assets.. not paper.


  13. Puts it all together. Except carrying on idea homeowners generally couldn’t afford their payment or used homes as ATMs. That’s a bankster argument. Iraq war and intentional credit crunch trapped homeowners

  14. James it coming, as BOA got that class action against them for the same type of thing. Your situation sounds like the Holm v. Wells & Freddie Mac case where Freddie could not prove the purchasing of the debt.

  15. Well got to say that WFB foreclosed on me in 2010 and told us that freddie owned the note, BUT yet WFB was the one who foreclosed on me? NOT freddie? is this just a Bunch of Bullshit or what. Somebody PLEASE stat a Class action against WFB with Freddie as the fake lender. I want my money back from these crooks who offered HAMP to us and lied like assholes about it. Just so they could put us in default and take our homes.

  16. SEC Whistleblower claim SCR1328885716655 about Wells Fargo Bank faking as if they were the owner of Washington Mutual Bank (WaMu) Ginnie Mae MSB, after the bank was seized as the 1.3 million FHA, VA, USDA could not and did not get purchased by JPMorgan because they were relinquished to Ginnie under UCC3 as owner of the blank Notes but not the debts as UCC9 requires that Wells produce purchase agreements on those loan as they are not the originator of the loans. Wells had Kozeny & McCubbin draw up the “Forged” Titles and mail them (Mail Fraud) to the local courts to illegally file the document as if Wells purchase the loans.

    All the Notes which 100% of them are owned by the Fed Gov because they are owned by We the Taxpayers and Wells is only the custodian of records and neither Wells or Ginnie has a financial interest in the debt which no longer existed as the WaMu is a defunct bank and could not pay its bill including the Ginnie MSB investor payments.

    Another party cannot pay the bills for the bank that no longer exists, as the only place for a claim by Ginnie was through a bankruptcy proceeding of the bank, not the WaMu Inc that bank holding company. It appeared to be a BK by the Bank on Sept 26, 2008, but that was the Inc.

    The Fed Gov does not have to go to court to get the files that contain the Notes because they are the property of the Fed Gov with Wells only as the custodian of records for Ginnie!

    $11.4 billion in fraudulent foreclosures and false insurance claims against the FHA & Dept of VA insurances!

  17. All of this continued scam by the big servicers and their lawyers is based on fraudulent, forged documents. We need to get some forensic document/handwriting experts to examine the documents.

  18. Courts across the country should know by now that big, phony, pretend lender/servicers like Wells Fargo, Bank of America, Citi Bank, Chase Bank, and others have no such thing as “clean hands”.
    People like Jamie Dimon, Brian Moynihan, and even Steve Munuchin should all be hauled off to jail from what I have read, and discovered in my 8+ year battle with Bank of America.
    There are some really nasty stories out there of ALL the poor Americans who have been wrongfully foreclosed upon and bullied by the various co-conspirators and all the court people who agree to go along with this continued activity or just plain don’t know anything about all the phony, fabricated, forged, robosigned documents.
    All these lenders have gone to unreal extremes in time, effort, and BILLIONS in legal fees that should have been used to help all us property owners who were victims of this huge Ponzie Scheme as Neal would say. Keep up the great work Neal and a big hats off to David Dayen for his continued work and the great book “Chain of Title”!!!! Semper Fi.

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