U.S. Sues UBS for Fraudulent Sales of RMBS But Still Manages to Get It Wrong

The bottom line is that the loans themselves were fatally defective in terms of the loan documents. The money was delivered but not by the named “lender” nor anyone in privity with the named lender. At all times nearly all of the loans were in actuality involuntary direct loans from investors who had no knowledge their money was being used to originate loans without any semblance of due diligence.

All the other parties were conduits and brokers for conduits. None of them were brokers for a plan of investment to which investors agreed. and all of them were based upon fraudulent inflated appraisals.

In equity, as I have repeatedly said, the debt, regardless of to whom it is owed, should be reduced by the excess appraisal amount, a fact that ought to be presumed when anyone attempts to bring an action in collection or foreclosure.

This is because the source of the loan, regardless of who it might be in actuality, assumed the risk of loss associated with affordability and most importantly the risk from a false inflated appraisal. Licensed appraisers warned congress as early as 2005 when 8,000 of them petitioned Congress to do something about them being forced to either bring in false appraisals or not get any work at all.

Contrary to popular myth there is no such responsibility for borrowers to figure out if they really can afford the loan or if the appraisal is accurate. That is the state of the law under the Truth in Lending Act. The “conventional wisdom” that home buyers and borrowers don’t need a lawyer or a financial adviser on the largest investment of their lives leaves a vacuum where consumers are entirely at the mercy of predatory and fraudulent operators like Wells Fargo, Bank of America, Citi, Chase, US Bank, Deutsch, and others.

“Don’t bother getting a lawyer. Save your money. They can’t change anything anyway.” That is the catch phrase used to make certain that the fraud being perpetrated on consumers will not be revealed until it is too late and the courts presume that the fraud never occurred (or that if it did occur, it’s somehow too late to complain about it).

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

I provide advice and consultation to many people and lawyers so they can spot the key required elements of a scam — in and out of court. If you have a deal you want skimmed for red flags order the Consult and fill out the REGISTRATION FORM. A few hundred dollars well spent is worth a lifetime of financial ruin.


Get a Consult and TERA (Title & Encumbrances Analysis and & Report) 202-838-6345 or 954-451-1230. The TERA replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).



Hat tip to Dan Edstrom

see United States vs UBS

see https://dtc-systems.com/us-sues-ubs-to-recover-penalties-for-fraud-in-the-sale-of-rmbs-securities/

So once again the Federal government sues a major bank for fraud and corruption causing “catastrophic” damages to investors and fails to mention any losses to homeowners. Piling the entire loss on the backs of homeowners is the third rail. Nobody touches that because of the erroneous perception that the rule of law is contrary to public policy. That may come as something as surprise to those of you who thought we were a nation of laws and not public policy decided behind closed doors.
The successful myth perpetrated by the banks is that since borrowers stopped paying the wrong people on their loan, that they should nevertheless  be held liable and lose their home to the wrong people because otherwise (a) borrowers would get a free house and (b) applying the rule of law would undermine the financial system. Both the premise and result are contrary to good sense and our existing laws. The courts generally twist themselves into pretzels to avoid the law and arrive at the public policy result rather than the legal one.
Everyone is willing to accept that the entire securitization process was a gigantic process to perpetrate fraud and, as some lawyers who resigned rather than draft securitization documents, part of a “criminal enterprise.” But somehow the victims are only investors who are still called “beneficiaries” even though it is well established that the trusts named in foreclosure lawsuits never participated in a single business transaction and were neither organized nor existing under the law of any jurisdiction, much less the owner of loans..
Once again the suit fails to state that the loans were at best problematic in the sense that transactions utilizing undisclosed third party money compromised the efficacy of the loan closing documents.

And once again it doesn’t say that the securitization plan itself was fraudulent in that the entities represented as owning the loans did not exist and/or did not own the loans. It also doesn’t say that the use of fraudulent inflated appraisals (a) hurt homeowner and and that therefore (b) UBS lured investors into an investment plan fraught with liabilities.

Nor does the new lawsuit say that investors were promised that their interests would be remote enough to avoid liability for lending violations and bankruptcies of the originators but in fact the money from investors was directly used in the loans and did not go through the alleged “Trusts” that were supposedly purchasing loan portfolios from aggregators who in fact had no interest in the loans and were merely conduits for a paper chain bearing no relationship to the money trail.
But it does hint at what the banks were doing. The review of the loans by UBS was simply a sampling and that sampling, was in fact a method of picking low hanging fruit to serve as benchmarks. From that false process of sampling, UBS hoped to avoid liability for mischaracterizing the real defects in the securitization process. In other words they were using their cherry-picked samples to describe the entire “loan portfolio” which in fact was neither owned nor conveyed to the special purpose vehicle (REMIC Trust) that was created (on paper only).
You may remember that in my seminar in Malibu in 2008, I described this process as covering a pile of dogshit with gold plating. In the end it is still almost entirely dogshit.
Thus we have revealed the unwillingness of Federal law enforcement to get to the real issue, which would in fact protect both investors and homeowners — the fraudulent nature of the loans themselves, the fraudulent nature of the so-called loan portfolios, and the fraudulent enforcement of documents that fraudulently named the wrong party as the lender and are fraudulently brought to courts on a mass basis for fraudulent enforcement that keeps adding to the pain  and anger of Americans who continue to suffer from the discard of the rule of law in favor of “public policy.”

14 Responses

  1. KALI — I agree. Beneficial security investors are NEVER the lender to borrowers. NEVER. These loans were not funded by anyone. Only cash out was funded — by warehouse lenders. Borrowers owe no money to security investors — if anyone owes to them it is the security underwriters who promoted “debt” cash flows to security investors.

    IF it is claimed that security investors FUNDED these loans — that is a violation of TILA. Not only a violation, but TILA protection was withheld altogether. CANNOT say investors funded the loans. And, cannot say money is owed to them by the borrower.

    What the courts go on is the “right to enforce the note.” But, since there was no valid note — as the loans have no Lender and loan was never funded — there should be no right to enforce anything. .

    These loans were all debt collection pass-through of cash flows. Security investors invested in debt collection. I am hoping someone finally gets these TILA issues to SCOTUS.

  2. @ ALL

    The point is: the BAILEE can not purport to sell the BAILOR’s property (in this instance a NOTE) for value, and later ALSO claim the BAILOR owes the BAILEE the value of the property — which the BAILEE does not own.

  3. @ ANON

    Regardless of who the origination documentation shows, the purported “lender” (1) DID NOT LEND ANY OF ITS OWN MONIES; (2) DID NOT TAKE A RISK OF LENDING MONIES; and (3) was merely brokering securitization conduit transaction(s) for the fee(s)/commission(s).

    Also, the NOTE is personal property of the MAKER/BAILOR, and the property in a special relationship by operation of law: BAILMENT; leaving a vehicle at a repair shop is a BAILMENT; loaning the lawnmower to the neighbor is a BAILMENT; depositing currency in a bank is a BAILMENT; the exchanging of a NOTE for a loan is a BAILMENT. The BAILOR remains the owner of the property, and is the beneficiary of ALL gains from the use of the property, sometimes for an agreed fee.

    The misunderstanding is the various legal CAPACITIES that the originating entity was in fact engaged in: BROKERING as a BAILEE.

    A BAILEE is not a “lender”, it is the agent of the BAILOR with possession of the property in exchange for its use.

    Regardless of the trickery and deceit on the origination documentation, as WELLS FARGO admits: “There was NO LENDER.”


  4. Anon.

    Yes. Been here a long time. I spoke with Neil’s office a few times over the years and I agree with most of what he posts and says but don’t feel they can do much to help me as a pro se with documents the courts do not care about.
    So I just don’t see the victory’s from others and would prefer to save my money and fight for myself.


  5. Java — have you asked Neil for help on this? I know you have been here a very long time.

    Difficult to trace that trust. Countrywide. But, I found it. Do you have the documents? Describes how Freddie was involved. Loans were NOT sold directly to Freddie.

    Most of the loans in the private MBS trusts were refinances, but some trusts did “alternative loans.” Often, traced to issues with prior owner. Some, however, were split with the funding to meet Freddie/Fannie standards. Interest Only loans — negative amortization. Countrywide was heavy into this. My nieces had these loans. I remember speaking with a state AG (not mine) who was prominent in the National Settlement — that these types of loans were NOT addressed. The AG knew it was an oversight. I was concerned for nieces. They managed to get out.

    No matter what — these trusts have been torn apart and the “servicer” continues to act for debt buyers.

    Give me your email — and will send what I found to you.

  6. Anon

    New purchase. All done online in 2007. Only spouse name on mortgage. Crazy stuff since day 1. Freddie Mac now admits they were involved as investor/creditor from day1 (they keep switching the terms as they please) although we never heard their name for about 5 years or so.


    The CWALT in the original BOA documents is the part of the shell games I still haven’t got my head wrapped around just yet.

  7. And, Java — was it a refinance or new purchase? I know you say CWALT disappeared — but which one was it?

  8. Which CWALT trust is it?

  9. Anon.


    We have had BOA from beginning. Who has claimed to be lender. Creditor. Servicer. Also then said it was CWALT Trust involved.
    That somehow mysteriously got removed from all future BOA documents and Freddie Mac started showing up on documents as the investor. And/or creditor. BOA after 11 years as lservicer , switching the account numbers and the servicer names between BOA Home Loans and BOA NA 4 times just dumped Servicing to Specialized Loan Servicing the lowest of the low of All servicer debt collectors. Who will now to try and fraudclose with the invalid and fraudulent and incorrect documents given to them from BOA.

    Can you make out who is who in this above shell game that is being played against us ??

  10. Java — I am not an attorney BUT everyone should understand:

    1) Lender is the party that lent you money. That name should be on the original executed document. If they are no longer alive — it should be the successor to that Lender. Trusts are NOT successors to Lenders. (Of course there may have been a warehouse lender for cash-out — but irrelevant to borrower — the LENDER stands as is on documents).
    2) Creditor is the Lender — and the party obligated to abide by the TILA. Unless the “creditor” is a debt buyer – then must abide by the FDCPA.
    3) Investor is the entity to whom cash flows are passed. The mortgage and note are NOT passed to the “investor” of cash flows. Bernanke also stated this at onset of financial crisis. A beneficial security investor (in cash flows) is NOT the Lender/Creditor according to the Fed Res Opinion of new TILA law — which has been codified.
    4) Servicer is the entity one makes payments to for a securitized trust. They are not the creditor, not the lender, and most often not the investor (Servicers internally conceal that they are collecting for swap out derivative debt buyers). Servicers collection does NOT change the Lender — or change the entity to which the debt is owed. Borrowers DO NOT owe to beneficial security investors. And, if they owe to swap out derivative debt buyer contract holder that party should be disclosed. The security underwriter may owe to beneficial security investors — but not the borrowers. .
    5) If you have a non-bank servicer, they are a debt collector. Meaning they have been debt collecting since origination of the loan. These debt collectors fail to disclose the true creditor/debt buyer.

    The problem is that the government treated all these loans as loans validly in default in origination. Best anyone can get is a loan modification of the default originated debt. This is false — but government may be afraid to fix it. Trillions at stake.

  11. Anon

    Lender. Creditor. Investor. Servicer. Debt collectors.

    Please explain all of the above.

  12. This is so off — it is so frustrating. Investors are NOT Lenders. Who a bank chooses to pass through cash flows with is their business – and should be of no interest to borrowers. The LENDER remains the LENDER as stated on the original document. If the investors were Lenders to any entity it was the banks — not the borrowers. When will someone get this right?

    In addition, nothing was lent to borrowers by the refinance question. . Only any possible cash out. These loans were actually restructuring of loans already wrongly internally reported as in default. The investors are no more than debt buyers. You do not lend money on debt collection.

    By far, not everyone subsequently defaulted on the fake loans. To the contrary — the default rate is marginal compared to those that continue to pay. If this could only be admitted by the government — those who did default would be able to easily challenge the false foreclosure.

    But, the government continues to wrongly state that ALL the loans were bad and defaulted. The reason the government sees “bad” loans is because the servicers wrongly classified them as bad loans to the original investor — and we all know who that was.

    If you keep chasing in wrong circles — you keep coming up with wrong answers and solutions. .

  13. At the same time the Inspector General of TARP reported that local government with same bias is not following actual public policy of TARP to do everything to keep people in their homes

  14. * Appraisals * Paying wrong party * Homeowner victims vs Investor victims


Contribute to the discussion!

%d bloggers like this: