“Boarding Loans:” Centralized “Processing” at LPS (Black Knight)

It’s complicated. But as this article proudly states, Black Knight is a leading “fintech” company, meaning that it handles the technology and software for “servicing” loans in default. This is the same company that, through DOCX literally published a menu of prices for fabrication and robosigning documents several years back.

My point has been that based upon my investigations, there is no loan boarding. It is a complete fiction. This is hub and spoke management. The hub is Black Knight. “Boarding” actually consists of changing the user name and password, and perhaps not even that. So discovery should include inquiries as to whether Black Knight (or others like it) are the ones involved in the so-called transfer of data.

Consider this quote from the article: “MSP is a comprehensive, end-to-end system that encompasses all aspects of servicing – from loan boarding to default – for first mortgages and home equity loans.” (e.s.)

GO TO LENDINGLIES to order forms and services. Our forensic report is called “TERA“— “Title and Encumbrance Report and Analysis.” I personally review each of them for edits and comments before they are released.

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see Boarding on Home Point Financial and Black Knight

Among the names you should be digging for is “LoanSphere.” Check this out

In addition to MSP, Home Point Financial also implemented:

  • LoanSphere Bankruptcy, which assists servicers’ management of the bankruptcy process by using workflow and servicer-defined rules to automate bankruptcy-related tasks;
  • LoanSphere Foreclosure, which uses workflow and automated, servicer-defined rules to help servicers with the foreclosure process; and
  • LoanSphere Invoicing, a web-based invoice management solution that consolidates invoice process tasks – from bill presentment and processing to post-payment activities.

They are hiding in plain sight comfortable in the knowledge that practically nobody will understand what they are really doing. This is “servicing” for the servicers. Not for the trust, not for the investors, not for the beneficiaries (if there are any), not for the obligee of the debt owed by the homeowner, not for anyone except themselves.

The naming of a trust as beneficiary under a deed of trust or mortgagee under a mortgage is in actuality the underwriter of RMBS doing business as the name of the trust, — which is a name of a presumed entity that in fact does not exist. In fact no transaction in the name of the trust occurred in which the trust paid money for any debt, note or mortgage. Thus no proceeds from the foreclosure go to the trust. Just ask.

The changing of servicers is merely a game to set up more layers and more curtains with the goal of increasing opacity. In actuality the servicers are merely pretenders acting under orders of the underwriter for the sale of fake bonds and promises issued by a “Trust” that neither exists nor receives the proceeds of sale of securities issued in its name.

Practice Hint — the issue is always legal standing: QUESTION FOR CROSS EXAMINATION: Who will receive the proceeds of liquidation of the property after foreclosure sale? HINT: IT CAN’T BE THE TRUST BECAUSE IT DOESN’T EVEN HAVE BANK ACCOUNT. Will the trust receive the proceeds? Will the beneficiaries receive the proceeds? Will the Trustee receive the proceeds? Will the Master Servicer receive the proceeds? How will the trust or the beneficiaries receive any money from the proceeds of liquidation of the property?

21 Responses

  1. Roger — no one says anyone is clueless. This is the most complex fraud our country has ever seen.

    Kalifornia — In relation to diversity jurisdiction, it gets more complex. The Supreme Court defines business trusts and traditional trusts differently. REITs are different from traditional trusts, and have been deemed a business entity. But REMICs, for most courts, are still defined as a traditional trust. The Fifth Circuit has heavily looked at this, and is still struggling with the issue. Other circuits are behind.

    This is important beyond diversity jurisdiction because it spills over to who is representing who? That is, does the trust, or the trustee have standing in representation? In most cases, it is the servicer’s attorney that comes in representing the trust – not the trustee’s attorney. But, if we weigh in the court cases on diversity jurisdiction — this is wrong. Most case law says the trustee is the legal holder/owner/representative in court. But, even though their name may be there, they are not there — not by representation.

    Also,if the court goes against case law on traditional trusts, then there may be diversity jurisdiction issues if one is in federal court — or tries to move federal court. If the court says the trust is the legal owner/holder/representative, and the court decides, as in a REIT, that the trust is a business entity – then the shareholders must be disclosed to determine if diversity exists.

    Either way — there are issues.

  2. and I think the “clueless” was directed at me.

  3. I was referencing MasterServicer aka Maher Soliman aka Reham something or other…..

  4. @ ANON

    To the issue of “entity,” in Kalifornia a securitization trust or REMIC is considered an foreign business trust or a REIT mandated to annually register with the SOS, and annually pay state taxes; which was another purpose of the scheme, e.g., for originators, SPE’s, etc. to avoid and pass along to the MBS trust certificate purchasers.

    There are no foreign, nor domestic, securitization trusts or REMIC’s registered with the SOS to conduct business in Kalifornia.

  5. Mr. Rogers — not Maher — and not Reham. Sorry to disappoint.

    Kalifornia — you are correct — “unincorporated.” Some business entities are formed by other means than corporation. But, it still must be a legal entity able to stand on it’s own.

  6. Ah yes! Maher is still hanging around. Or is it Reham?
    Wazzup buddy?

  7. Kalifornia — You have to go the Prospectus (424b5) — not pleasant reading. A Prospectus is filed before the certificates are offered for public sale, and it is much more descriptive than a PSA. The security underwriters are not labeled “security underwriter.” You will see their names just printed somewhere close to the top. And, in Method of Distribution. Technically, the security underwriter should take the loans onto their balance sheet before securitization.

    You will find a section that describes “Offered Certificates,” by tranche names. In most, a few bottom tranches are not offered for public sale, but, rather, retained by the “seller” — usually original servicer, or by, Depositor, OR sold to a third party. In valid securitizations, loans reported in default, and deemed not collectible, are subordinated to the bottom tranche, and “swapped out” from the trust to go back onto the balance sheet of the “seller,.” for charge off. The loan may still be reflected in the trust but should be with a zero balance. Of course, most “sellers, and Depositors, are gone.

    GSE’s — Most of the loans in these trusts, but not all, were refinances. Where did the refinance come from? And, GSEs, were the top (upper) tranche investor in many, if not most, of these trusts.

    I am not attorney and this is not intended for legal advice. .

  8. …and…

    Where do the GSE’s fit in the scheme?

  9. @ ANON

    Thank you for the previous response.

    I, for one, am perplexed by the following repeated comment:
    “The bottom tranches…are retained by the depositor and/or servicer and not sold anywhere.”

    In terms of the securitization conduit, assuming arguendo that individual whole loans were pooled together for one MBS “trust” entity, then tranched into varying valued/rated certificates/bonds, once the “blender” had been turned on how could only the “cherries” settle at the bottom and remain whole as a tranche for a depositor and/or servicer to retain?

    I suspect what you are referring to has been known as mortgage servicing rights (MSR); if there is such an intangible that can remain as an individual tranche, separate and apart from everything else that was “blended.”

    The glaring issue of retaining an interest would be the necessity of a “true sale” for derecognition of the asset(s), and bankruptcy protection from creditor claims that could be argued in the species of a fraudulent transfer, resulting in some clawback effect.

    Where are the cognitive gaps?

  10. Roger — a lot correct, but loans are sold to trustee on behalf of the certificate holders – who are always, originally, the security underwriters.
    Nothing is sold to a trust, unless the trust is a corporation. The bottom tranches, however, are retained by the depositor and/or servicer and not sold anywhere. It was the top tranches, not the bottom ones, that were extinguished and paid off due to the crisis. This payoff destroyed the “waterfall” structure of the trust. Also, the PSA is just an agreement.
    However, it implies a security administration role after default. That role is usually fulfilled by the trustee — who is then is wearing multiple hats. . .


  12. louise is right: the notes were paid off via TARP and swaps. These are unsecured debt collections. The fraud is extrinsic of the original contract (multiple pledges of payment streams). It’s racketeering.

  13. wrong Wiley Coyote: certificates are purchased by the Securities Underwriter and sold into the market (transactions are held by Cede).

    Originator sells to
    Depositor (Seller), Seller to
    Sponsor. Sponsor delivers to Trustee
    via Securities Administrator.
    Custodian holds collateral files of mortgage loan assets.
    Loans are SOLD to Trust under the terms in the PSA (never followed)
    Securities Underwriter pays for the Certificates Issued
    and sold into the marketplace.
    Collateral goes to the Custodian
    Trust gets an EX-99 as part of an 8K filing (usually the third)
    10k filing establishes end of startup and cleanup done,
    1515D is filed and the trust “goes dark”.
    Seasoning period begins.
    Certificates are sold to investors
    Trustee is figurehead/nominee of the trust (SPV/VIE) intended to provide arms-length bankruptcy-remote status of assets.
    Servicers collect, special servicers handle defaults and foreclose, master servicer pays the advances.
    Swap counterparties and bond insurers provide credit enhancements

    PSA makes many statements that were never adhered to.
    Most PSA’s of record are UNSIGNED.
    Bond performance stats were published and made available only to those who could afford to pay for them. High end investors and institutionals.

    And please, PLEASE, if I have something wrong here, tell me!

    @legisman, I appreciate your no-nonsense style, but you’re full of shit. It DOES matter where the money came from if it wasn’t money to begin with. There is no “holder in due course” after the defaulted note has changed hands multiple times after default. Only “holder with right to enforce” is SUPPOSED to prevail. The number of banks wins contradicts that theory.
    Real party in interest (One who has sustained the loss to support the cause of action) must be the plaintiff, not a faux trust or a band of “certificateholders”, nor can the “certificates” foreclose: they are trust property that was sold to the investor.

    If the certificates no longer exist (paid off), who is collecting? The special servicer or new non-bank servicer.
    We know all the subordinated certificates (tranches) were extinguished in the crash. I would like to know how many 2000-2008 vintage certs are still trading? Equity tranches that still exist must be rare-they were paid first. But I really don’t know much about the bond market..

    The problem these banks have (and let’s face it…staunch foreclosure defenders are on the increase, but the banks have already won; they just need to keep the charade going) is there is no chain of title to any legitimate transaction. UCC 9 won’t get you there, brother, without some valid execution in the chain of title, but judges have turned a blind eye to accommodate the likes of you. (Not a personal attack, just an attack).
    If a purchase-money mortgage is rejected under reps and warranties, and the seller/depositor defaults and rehypothecates the OBLIGATION (DEBT) as another transaction (default resecuritization), refinancing it on his balance sheet, is it still a “purchase-money” transaction?
    No, it’s not. It’s a refinance.

    But what do I know after ten years of this crap….

  14. Louise has a way of getting to the point. She’s right. It’s the alleged sub-servicer in court trying to obtain judgment for the alleged trust’s Master Servicer. Master Servicer is trying to recover Advance Payments made to the trustee regardless of receipt of payment from borrower. Thus, sub-servicer is standing in the shoes of the trustee in court, when there is no contractual agreement between them (and cannot, by their governing docs). Sub-services are contracted with the Master Servicer. The MS is contracted to the trust via the PSA, and not to the trustee, though sends payments to trustee for the trust. And, finally, the hip bone is connected to the thigh bone.

    Trustee/Trust and Investors have no injury, the third leg of the stool of standing.

  15. Absolutely Neil. And security underwriters is correct – the nexus. All loans (actual) collection rights) were sold to the security underwriter’s parent corporation (those that settled). The child security underwriter “securitized” the debt collection rights. How do we know collection rights? Because the “loans” were never on the parent security underwriters balance sheet. NOT EVER. NO balance sheet — means no “asset” securitization and no negotiable note. So what did they “purchase” from the third party vendors who are now defunct? They knew what they were purchasing — and it was ONLY collection rights. Collection rights on default debt are transferred by assignment — not the note. The note is gone.

    If you have been here long enough, you will recall that courts originally tossed out the servicer as the standing party. So servicers had to replace with something. They chose – “Trustee to BS Trust 123.” But who are they representing?? Trustees are not incorporated – they are just part of the bank. Trusts? No incorporation. Organization is NOT incorporation. It is the servicer — who has been hiding.behind the 123 “trust” name without any standing. And, who does the servicer work for? Either themselves, or an undisclosed debt buyer.

    Again, ABSOLUTELY Neil. .

  16. Since my exegesis is right what is the meaning of the comments that the Trust doesn’t exist or that No loans were acquired or no consideration was paid. Those remarked are UNTRUE

  17. Basically, the servicer is stealing the money through fraud.

  18. Another potentially new entry into Servicer Servicing:

    Richmond Monroe Group
    82 Jim Linegar Ln, Branson West, MO 65737
    (417) 447-2931

    (now involved with SPS)

  19. @stanbsch,

    You’re close. But, in most cases, the SOS of Delaware doesn’t participate, the trust is allegedly only _formed_ there. The trusts operate as a ‘public trust’ by their ‘governing documents’ (the PSA, et al) allowed by Delaware law. Most of those governing documents state the trust will operate under New York law.

    The Depositor sells the loans to the trust and receives Certificates authorized by the trust/trustee. The Depositor receives consideration from the investor money paid for Certificates. Those Certificates are deposited with Cede & Co as they are sold to investors, thereby becoming “book-entry” certificates which investors never actually receive. It’s all accounting. The trustee/trust, as holder, pays interest only payments to the investors via Cede & Co records as to amounts negotiated with Depositor for each Certificate, regardless of whatever proceeds are actually received, though, are received in full from the Servicer (by contract), even if nothing was paid to the Servicer by the borrower.

    ….something like that.

  20. You clearly don’t understand evidence law. Your “QUESTIONS FOR CROSS EXAMINATION” are totally irrelevant. Where the money goes after foreclosure

    Foreclosures are breach of contract cases, the issue before the ct. is whether or not the borrower breached. Therefore, doesn’t matter where the money came from to loan it, or where it went when foreclosed.

    Furthermore, what difference would it make anyway, where the money went after the foreclosure; the homeowner has been booted out and their home is gone.

  21. Ihave often asked the following: The Trust is organized in Delaware and the SOS issues a Certificate of Good Standing. The Trust BUYS the Loans from a Depositor eg WAMU ASSET ACQUISITION and pays by issuing Certificates entitling the holder to receive money.The Depositor sells the certificates to the holder/investor and uses the proceeds to acquire the loans which it sells to the Trust and makes a spread.
    What is wrong with this analisys

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