Ambac v US Bank Dismissed in SDNY BUT Lots of Interesting Facts and Corroboration Contained in Order

When you look at the pleadings and orders entered in these cases between investors, insurers, trustees and investment banks, you see things that actually corroborate the defense narrative in foreclosure cases. But more than anything there is confusion about the true roles of any  of the players and the true trail that the money follows.

The players litigate only what they feel comfortable alleging and arguing leaving the bigger  picture out of the context of their lawsuit. The result is straight out of Bleak House by Charles Dickens where there are pleadings and motions a generation after the whole thing started on issues taken out of context and the adjudged by a clueless judge.

The choice of words in this decision clearly reveals the fact that neither the judge or the parties wanted to get into the ownership of debt. But the opinion speaks to that issue anyway. And then you also have money being paid to satisfy the investment banks’ promise to pay investors, which they have already received.

But none of that gets credited against the account receivable due from borrowers because the investors are not entitled to payment from the borrowers nor are the investors entitled to enforce payment from the borrowers. And still the investors paid the investment bank who  funded the origination or acquisition of the loan. AMBAC does not reserve any rights of subrogation meaning they have no rights to enforce the loan either.

The investment bank ends up flush with cash, no risk of loss, but apparent owner or bare legal  title to the debt without any injury regardless of whether the debt gets paid or not. That risk falls on certificate holders even though they don’t own the debt. That risk also falls on the insurance company who uncharacteristically gave up any right of subrogation against the borrowers debt, note or mortgage.

The question then is how do these payments and settlements get disbursed and how do the players account for their disbursement and receipt?  AMBAC clearly was entitled to recover money that was paid in settlement by Bank of America as successor to Countrywide who made false representations about thousands of loans. That is because AMBAC insured the certificates and not the residential loans.

But either way — through insurance or settlement the owners of certificates received payment — or at least US Bank (or its surrogate) received them for distribution to the certificate holders. AMBAC said US Bank was not accounting for those receipts properly and was not distributing those receipts properly. That is probably because US Bank doesn’t get any money and has no control. The investment bank retains all control. The certificate holders only had a receivable from the investment bank  who had sold the borrowers’ debts into the secondary market where investors bought certificates, and contracts based upon those certificates.

This is the confusion that results when an actual debt is picked apart like an atom into its component parts, each being sold separately to different types of investors. The end result is that the investment bank is left with nothing relating to the borrower’s debt but it has received windfall profits from the sale and trading of unregulated securities, each deriving value from some single attribute of the residential loans.

The investors who bought certificates, have only the promise of payment from the investment bank, the trustee never actually handles any money except through surrogates, and nobody is carrying borrower debt on their books as an asset-receivable.

see Ambac v US bank 18cv5182

In short, nobody owns the debt and nobody has any legal right to enforce the mortgage.

And THAT is why all the foreclosure litigation was not simply closed out with the production of a creditor who owned the debt. There isn’t one.

The debt, now only hypothetical, was converted from an asset into income. And as long as that continues to happen, the debt will never be paid and investment banks will continue to further line their cash drawers with the proceeds of the sale of foreclosed homes taken as revenue for bookkeeping purposes and payback of loan for tax purposes.

All this is not for presentation in court. It is for you to know that you have the upper hand when you ask for discovery and when you cross examine the robowitness. You can be confident that the gaps cannot be filled.

4 Responses

  1. Note the zero value for liquidation. These loans are NOT subject to repurchases. And, loan was likely never in default when it was liquidated. Yet, the zero value allows foreclosure attorneys to go in under the trust name.

    No recovery is ever passed to the trustee to trust after liquidation. NONE.

  2. PS. And…

    If nobody owns the debt, then ALL foreclosures are FRAUD, as well as foreclosures sales to the new owners by non-existing Boards of Directors and never formed Trusts (aka possession of stolen properties)

    JUDGES must address this issue immediately and explain their enthusiasm to award a prize to criminals who committed fraud upon their Courts on regular basis

    What was judicial rationale to disregard all applicable laws and rules of ethics besides expecting donations from banks’ lawyers and judicial VIP investments in Ponzi schemes with derivatives?

  3. Excellent post.

    The next question: if nobody owns the Debt, when nobody has the Title for the Property…..Obviously, the property Title cannot be divided as atoms on myriads of separate pieces

    Which is a HUGE issue for Title Insurances….


    First American Title is an affiliate with CoreLogic who owns Countrywide’s Appraisal company ..

    Fidelity Title has close ties with The Black Knight aka Lenders Processing Services aka DocX (mass document forgerers)

    So, this is still the same MOB

    Almost three years after Fidelity National Financial Inc. reacquired the business that became Black Knight Financial Services Inc. and two years after Chairman Bill Foley said it was “unbelievable, really dumb” to let that business get away in the first place, Fidelity is giving it up again.

    The company last week announced a plan to give up its majority interest in both Black Knight and another subsidiary, Fidelity National Financial Ventures (FNFV), making both of them independent public companies.

    When the dust settles, there will be four independent public companies sprouted from the Fidelity family tree headquartered at the company’s Riverside Avenue office complex. Fidelity National Information Services Inc., or FIS, was spun off in 2006.

  4. Kudos to you Sir for bringing to light this case!!! I wish I could get my attorney to use some of this knowledge!

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