Attention Accountants: Follow Up to Forensic Loan Seminar

see NON GAAP REsults Being reported by Entities Trading in new and old Derivatives

Recent reporting by companies involved in the creation and trading of various instruments that are designated to be “derivatives” or contracts on derivatives clearly shows a disclosure that they are not reporting results in accordance with GAAP. I don’t know how the SEC deals with such disclosure, since reporting requirements under the rules governing the SEC and companies reporting under those rules, clearly were choir compliance with accounting standards promulgated by the to the Financial Accounting Standards Board and previously the American Institute of Certified Public Accountants.

The the point here, just to reiterate, is that employing GAAP, which is required by law, would reveal that there are no entities that actually carry debts subject to derivative claims. Under current law, this leaves no creditor with authority to collect on the note or to enforce the mortgage. Parties receiving the proceeds of payments made by borrowers or proceeds of sales – both voluntary and involuntary – are receiving income.

If they are receiving income that they are not receiving assets, like cash or property. Foreclosure laws are intended to provide a method of restitution to creditors who otherwise would be subject to an actual financial loss caused by the failure of the borrower to repay the loan.

If the failure of the borrower to repay the loan merely results in the loss of expected revenue and not in a loss to an asset designated or deriving its value from a loan receivable, there is no law in existence that allows property to be involuntarily sold to satisfy the desire of any party to obtain revenue, even if that revenue was not a windfall.

I believe that only a CPA with experience in auditing could provide the testimony for the foundation of the defense narrative in which the homeowner is revealing the lack of ownership of the debt and the lack of a party identified as being the owner of the debt by virtue of having paid money to acquire the debt.

But I also believe that forensic examiners, auditors and reporters play an important part in getting to the point where such testimony could be proffered by the homeowner or the lawyer representing the homeowner.

To be clear, I am suggesting that the best practices would include employment of a forensic auditor, a CPA, and a licensed attorney with experience in trial law. For the attorney, that means experience in actually going to trial dozens of times. For the CPA that means experience in digging beyond data entries by management and purported receipts in the records of the Company. For the forensic auditor that means experience in dissecting the content and signature blocks unrecorded documentation, correspondence, statements and notices.

2 Responses

  1. I’ve been stating this for years. I am a forencis loan auditor and absolutely every loan I have dealt with has had fraud. Proving that to stick is not easy despite having volumes of proof. The corruption runs deep. Through the loans that are securitized it is not difficult to show the lack of standing perpetrated by the fraudulent foreclosing party. This information is clear. However, that does not make a case complete. It is up to the legal arguments to formulate the exhibits and the forensic information. The judges are known to throw out true information and run without facts against the homeowner. This is quite common. Knowing this, I agree with you, that you and/or your legal team must be in harmony and concise in the formulation and delivery of the arguments in able to prevail. Simple Prima Facie evidence is not enough.

  2. This may be true – but the big banks and firms subject to the requirements to file the SEC Reports are all usually audited by CPA firms who are SUPPOSEDLY applying (since they are REQUIRED to apply them) the rules of FASB and GAAP. Somehow these CPA firms MUST have found a way to “reconcile” or “just not see” those differences that they are SURELY seeing in their audits and in filing the 10-K statements for these banks and lenders. Or the SEC and IRS are “not seeing” things also and they are not auditing themselves. So the conspiracy continues…….looks like it is getting larger by the day.

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