Fannie Mae Admits Mortgage Transfers Without recording — Sees Substantial Liability

Hat tip: Bill Paatalo

Everyone in law enforcement knows that if you  can get suspect to say something he thinks will help him, you have the beginning of a confession or at least an admission against interest. That is why criminal defense lawyers tell their clients to shut up and stay shut up.

Here is Fannie Mae in all of its glory disclosing a high risk element if proposed regulations go into effect requiring the recording of mortgage transfers in land registers and disclosure of the transactions. And it is potentially throwing MERS under the bus.

Spoiler alert: Those laws already exist. And violating them clouds title and hides taxable income and profits from transactions that are reported for purposes of foreclosure but never reported to the IRS because the transactions never occurred.

What Wall Street is doing is clever and they might get away with it. By convincing lawmakers and regulators that such disclosures and recording are unnecessary expenses for a “beleaguered giant” Fannie is leading the way to the holy grail of finance: transfers and transactions based upon or indexed to mortgage loans without any oversight. More importantly it is attempting to institutionalize the practice of violating existing laws requiring the recording of any transfer of a mortgage and the disclosure to the borrower.


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So over half of all mortgage loans claimed to be “owned” by Fannie either in its own portfolio or as Master trustee of a private label REMIC trust are registered with MERS. And Fannie admits that virtually all of those loans have been transferred multiple times but disclosed and recorded much less than the number of transfers. Hmmm.

That is why fabricated, forged, backdated and robosigned documents became so ubiquitous. Lots of paper transfers of the loan took place without anyone buying the debt. And we all know that a transfer of the mortgage without the debt is no transfer at all. So you might think “No harm no foul,” right?

Right except for the fact that the last party on that paper train is the party who brings the foreclosure action and who (a) has not purchased the debt for value and (b) is relying upon unrecorded transfer documents pursuant to transactions (“for value received”) that never occurred.

So they make up documents as if the transactions actually occurred but they never actually say that there was a transaction because that would be lying to the court.

By creating facially valid (i.e. conforming in form to statutory requirements) documents, they rely on the presumption that everything stated in the facially valid document is true. Why would someone record an assignment of mortgage if there was no transaction? The answer is simple: for foreclosure purposes only.

The Fannie disclosure is an exercise in misdirection. It wants people to think about the revenue to be gained and the price to be paid for recording those transfers so they won’t think about whether any of those transfers were real.

If people started asking that question then they might start finding out that the party named as the claimant in foreclosure actions is just a sham conduit not for the owner of the debt but rather for an investment bank seeking more revenue. And that too is a violation of law. Conduits can’t foreclose in any jurisdiction. Only the owner of the debt can foreclose and then only if the claimed owner has paid value for it.

You cannot foreclose just because you want income. You can only foreclose on a debt that is owed to you because you paid value for it. This isn’t capitalism. It’s theft.

Practice hint: What is the name of the trust? Is that a REMIC trust? A REMIC trust is a conduit. For what is the trust acting as conduit?

And for those who might forget

REMIC = Real Estate Mortgage Investment Conduit

38 Responses


  2. And, Neil is right – there was no consideration — except – there was – we just don’t know about it. We just don’t know it was a contract – not within any trust — but a contract for debt buying – that goes way back.

  3. Don – if you want to contact me – provide your email. Thanks.

  4. Don — if anyone signed under fraud — that the prior transaction would be paid by you — and it was not — huge fraud. Fraud in contract, and fraud in the solicitation — and solicitation there was. Yes — you are correct there is no case law on this – because no one ever goes back. I have emphasized to do this for a very long time. No one listens. No one ever gets a subpoena on the entire history and INTERNAL reporting of the loan. You CANNOT rely on bogus assignments/discharges in County – County accepts Mickey Mouse. Focus is, wrongly, on last transaction – which – you are right – diverts court’s attention. It seems like such a simple thing to do – but, no one does it. Again, you are right – no case law – because no one does it. .

    Working on it — and, it is not pretty.

    Thanks, and as always – smile back.

  5. Anon, we can’t just put this info in a suit without case law or consent orders or some proof they understand. The suit I am helping on is open to fire away with your wishes, but where’s the beef?..the real don

  6. Great info…ty

    the real don st clair …smile.

    Neil wrote this is… this statement back words?

    Then the court presumes that the transferor was the owner of the debt because if the transferor was not the owner of the debt then the purchase would have been just for the note and not the mortgage (transfer of mortgage without the debt is a legal nullity).

    just for the note and not the mortgage” mortgage, not the note?

    And if the purchase was just for the note then the claimant would appropriately claim that it is a holder in due course which frees it from most defenses of the maker of the note regardless of who owns the debt. But the HDC may not foreclose on the mortgage because it was not paying for the debt unless the owner of the note happens to be the owner of the debt. And not so oddly there is not a claim of HDC status in this foreclosure.
    So the way forward might be a recent tack I have taken. And that means taking it one step further. If the claimant did not purchase the debt for money the claimant is not entitled to foreclose. But this still leaves the court thinking that this is a technical objection to prevent restitution for a just unpaid debt. While the “other creditor” idea is theoretically correct, it gains no traction in court. 

  7. Exactly! Keep digging.!

  8. DON- I am never on “break” – but Happy Labor Day to all.

    You are right – “you cannot foreclose on mortgage only,” but also – in many states, you cannot foreclose on a note only, you need the mortgage and a note – both. The mortgage, however, is assumed to follow the note, it does not. This is because there was no valid mortgage on these “crisis” loans to begin with.

    Now that PLMBS is understood, question remains, how did all these mortgages and notes, that were originally Freddie/Fannie loans (they were the only entities to originally securitize) become owned by the banks in PLMBS? Even putting that issue aside, how did Freddie/Fannie then become owner again? Because the banks sold the top PLMBS tranches back to Freddie/Fannie. Freddie/Fannie then becomes an indirect investor in the high rate loans that were nothing but reported default debt, originally, to them. .

    But those PLMBS have all been just about dissolved. The top tranches were paid out by the government bail out. Yet, we see two other consequences:

    1)Freddie/Fannie put back (demanded repurchase) of many loans by the FHFA (conservator) lawsuit against many entities. How could these loans be put back IF the mortgage did not always remain with Freddie/Fannie even after collection rights were sold to their servicers (the big banks)? Those servicers packaged the collection rights into their own PLMBS — but it was the FHFA (Federal Housing Finance Authority) who settled the lawsuit with put backs. This has to mean that the mortgage never left F/F despite sale of collection rights to the big banks. No one is told if their loan was repurchased.

    2) Originally, before PLMBS, loans reported in default to F/F, the rights were sold individually to big bank servicers when the loan is reported in default by servicers. Borrowers didn’t even know this was happening when they took the big bank “loan.” Either partial or full insurance covered the sale of the collection rights. But, it was not F/F insurance (that would be PMI), it was the big bank insurance. In or about 2013, F/F began selling “distressed” debt in bulk – not individually. They do not specify whether this debt was indirectly or directly owned by F/F — nor do they specify whether the mortgage follows the note on these bulk sales.

    For HAMP and HARP purposes, F/F was required to state whether they were an “investor.” It did not matter whether it was a direct or indirect investment. All they were required to do was state whether they are an investor. HAMP and HARP have basically ended. Websites are not updated to reflect forced repurchase by FHFA lawsuit settlement, or bulk sale of distressed debt.

    All of above was concealed because investigation was shut down by the DOJ settlements with the big banks. No one is going to revisit it – (I agree with Bob G on this). Nevertheless, the result to homeowner victims remains – a trail of fake documents to conceal true ownership of “default debt” – which was in reported default before anyone defaulted, and with bogus title all across the country. Further, modifications, which the government promoted because they knew these loans could never be refinanced with clear title, are few and far between. Most, are desperate for relief, and will take whatever they can get without question. .

    I see no one here that addresses these issues. We all know there are fake documents, and missing documents, but no one asks – WHY??? Above is why. Would appreciate if someone would address.

    What you see on people’s loans is the “effect” – not the cause. We need the “cause” understood. Without the cause, we have courts across the country who simply do not understand what really happened, attorneys who do not understand, representatives that will not help, and no government agency to go to. The “result” is that we remain victims.

    Also — see no one here following the CFPB lawsuit against Ocwen. It is amazing what is happening. Will get to Neil, and see if he wants to discuss. Trump trying to dismantle the CFPB, but I see no democrats coming out saying why it should not be dismantled. They, too, refuse to address the issues.

    Thanks Don (St Clair) — not Trump. .

  9. ANON, By the way during all that, the loan was assured by their website to be under Fannie’s umbrella as a “true sale” per their notes from a pretender lender.

  10. Thanks Bob G.


  12. Anon,
    Hope I’m not disturbing your holiday. Just a few thoughts:
    1, If Fannie sold the collection rights, obviously by definition, it was not for full value…just as a start.
    2. you cannot foreclose on a mortgage only.
    3. In my friend’s case, Countrywide assigned only the mortgage to the wrong company in BOA…and they admit the chain break, 5 years after they were defunct. then to GREENTREE (Complaint, LOL) DITECH, SELENE FOR COLLECTION and now assigning (with note also) to another…Comedy of presumption errors. ALMOST TOO MUCH FOR BELIEF OF WHO’S WHO. Believe me that’s the beginning.
    4. I know MBS, but what is PLMBS?

    Have a great break…don

  13. There are no arbitration clauses in notes or mortgages.

  14. Seek remedy in arbitration.

  15. Anita — more than sloppy — that is a privacy violation. Same has happened to me — I have gotten other people’s docs.

    There is no one to go to. If you go to your state DOJ – they send you to CFPB — who cannot help individuals. And the “Bank” will “close” the case at the CFPB. You will get nowhere. So then one goes to Court, if you are not already in court, but everything is blocked at Court. You will not get discovery. They will believe every lie the other side tells them. And, you would not believe the lies that have been told in my case — I am not just talking about the loan itself — but personal. We had to prove to court – false. They will use every strategy under the book to WIN. It is an utter nightmare.

    And, no court will believe you are not in default. Years ago, judge said to my attorney — Are you sure these people have never been in default? Yes – was the answer. And, we have the proof. Everything you need. Did it matter? Nope. My investment friend with well known contacts tells me — NO ONE CARES. It is over — chalk it up – as “bad things happen to good people all the time. ” Of course, I am not “chalking it up.” This has been my life for more than anyone here – even Neil.

  16. Most definitely.

    The Banks fraudulent actions and inactions have gotten worse since the Settlements!

    The Banks are still refusing to provide responses to QWR’s, Debt Validation Letters..ect!

    They are sloppy and very careless with our mortgage documents!

    My servicer actually sent me a complete package that contained a copy of another Homeowners loan documents!

    CENLAR, representative blamed it on the mail room staff?

    Absolutley, No oversight, accountability or internal controls!
    So, I have a message for Mr. A. Russell
    Mrs. Nelsa S. Russell
    Spring Valley, CA 91977
    Loan Depot Loan #0108244864

    I was given a copy of your loan documents? Courtesy of
    Citi-mortgage Inc. (Sub- servicer) CENLAR!

    Did you receive a copy of my mortgage loan documents?

    In 2019…This is what homeowners are having to deal with!
    Still a very broken system!

  17. OH — and I am not attorney. I cannot “advise” anything. I just suggest to be careful as scammers are on this blog. Trust Neil. Any information I provide is for educational purposes only, and not for legal advise.

  18. Anita — the “settlements” shut down investigation. Nothing was allowed to proceed. This was under Obama. But Trump not helping — he knows — that the economy has been held together with a band aid since the crisis, and he can’t afford to pull that band aid off – or he will lose re-election. So. What do we do? Warren? Maybe. But she is not addressing. I would like to support her – but she is silent.

    This is an utter nightmare. Modifications? That is all the government would do – and then courts say — no right to challenge. NO obligation. Modification is worthless according to courts. I have seen one case in an eastern state – non judicial , where the woman died trying to get a modification. She was young, single, cancer, and with children. Won a big settlement. I know the amount of the settlement. BIG. But, what do we have to do to get recognition – DIE? If we have any good case – we will die in court trying to litigate. That is the “mill” goal.

    Where is the government? They promoted modifications (no refinance – just a loan mod) but then courts say – no right. No legal action – even if so called “bank” abandoned agreement/ Title? You will never get with a loan mod. Recordings? Fake.

    So – can anyone answer me — where do we go? Neil can help. Advise against any other assistance. Too many details not understood by anyone but Neil. But, Neil — still some “points” to be discussed. Number one — diversity (can’t look at until know name of the trust – many just “incorporated” AFTER the crisis and are business trusts – not the original traditional “REMIC” pass through trust) Thus, the bogus “crisis” trusts” – still questionable. Have to go by the law. Number two — prior transactions? Just not addressed. They relate to current or LAST transaction – They are derived from. CRITICAL- as to how subsequent “transactions” came to be. Thanks. .

  19. Absolutely…it is a well known fact.
    It is just a matter of escalating the Wrongful foreclosure cases to the proper parties in the Federal government.

    Arkansas has some problems! Major problems

    In Arkansas….The investigators need to be investigated!

    It is institutionalized FRAUD.. You can start at the top…!
    It is going to take outside intervention to clean this state house!

  20. Manufactured “Default”… by the mortgage “servicer”!

    Wrongful foreclosure … by the mortgage servicer and Foreclosure Mills attorneys!

    That is some Serious shadow banking!

    Investigations need to be conducted!

    I understand your concerns regarding privacy.

    I am going to go a step further and provide you with my Telephone contact numbers: Home (501) 392-6677 and Cell (501) 349-0043. Again E-mail:

  21. Anita — will get to you. This is why I warn borrowers about paying. BIG PROBLEMS – when no one knows where money is going.

    And, yes problem with the attorneys for the mills. They think they can get away with anything in court — and they are, unfortunately, probably right.

  22. Thank you! My e-mail is as follows: ANON…You are right!
    Homeowners are blatantly ignored and denied due process in the courts!
    Likewise, I have filed multiple consumer complaints with the CFPB, OCC, my state Attorney Generals Office, Senator French Hill,ect. the list goes on!
    SERVICERS; Are executing wrongful foreclosures! They basically NEVER stopped!!!
    “How is it was possible for a Homeowner to “NEVER” miss a mortgage payment and the servicer execute Foreclosure proceedings?

    In nonj-udiciary states like Arkansas, The foreclosure mill attorneys (debt collectors) are the individuals implementing this FRAUD.

    If the loan was not properly securitazied and delivered to a Remic Trust!? What did the servicer do with my monthly mortgage payments?
    I have 2 separate Liens recorded for the same mortgage? Two separate entities claiming that they are the owner of the mortgage and Note?
    I look forward to hearing from you! I am on my own.
    Unfortunately, Attorneys in the state of Arkansas do not want to get involved and have “Politely” declined to take my case. That is fine.
    Again, thank you for your response and willingness to help homeowners! Neil’s (Livinglies blog) and other individuals like yourself, who take the time to ” Inform and Educate homeowners) have been the lifeline for homeowners who are struggling to comprehend “What happened and Why”…! Inadequate regulations, no oversight, allowing the banks to swindle homeowners and society!
    How prevalent is this?
    I hope that other homeowner who NEVER missed a mortgage payment would log on and document their case.

  23. Anita Howard Please give me your email to contact you. These were all manufactured defaults. I never missed a payment either – and have the proof. Not just early payment missing, but entire past refinance payoff missing too – with default internally recorded by me.

    Servicer could report liquidation to trusts at whim. I have all proof of payoff and payments. All those reports about “early first missed payment by the borrower” – put out by media, were false. It would be awfully odd for all those borrowers to have missed the first payment. They did not miss the first payment — it was just never recorded as paid by the borrower. The media (and government) blamed the people, and settlements claimed – poor underwriting. This is all false. People want to pay, but they want to pay the right party, and they do not want to be stuck in a high rate. They do not want their money to vanish. If people really knew that their past refinance payoff, and “early” payment went nowhere known to them — each and every foreclosure would be won. Recorded discharges were fake. Try to get government or court to help on this though – and you will be shut down or kept in court – for LIFE.

    Usually, the foreclosure begins when the borrower DOES miss a payment, but the loan was in false recorded default before the borrower ever missed a payment. Yours, it appears, fell through the cracks early on. Freddie/Fannie will not give you any information. These were all F/F loans to begin with. Been through FOIA to no avail.

    Mine never went to foreclosure only because I have been in court for so long (court began for me many years ago on other issue that mushroomed into the mortgage). They could not foreclose on me because of court — it would have sealed my case for me. But, it has affected title – and I can’t get out of the high rate loan. Even though I did not want a modification (it does not fix title) , modifications were denied due to equity. So I keep paying very high rate. Most don’t care about title, so they accept modification (if granted) and will have to worry about title later. This is why government pushed modification and not refinance. Modification helps conceal the debt buyer. Thus, nothing is ever disclosed as to what really happened.

    Thank you for this – provide email if you can. I am getting more bold here, but still can’t provide my email. . . .

  24. Thank you Neil for this post! Very timely! I have a question? What is Fannie Mae doing NOW to address the problem that homeowners face with mortgage loans that were originated, bundled, sold to FANNIE MAE as MBS yet have securitazation failure?
    I am a homeowner in the state of Arkansas who NEVER missed a mortgage payment. Yes!!….I NEVER missed a mortgage payment!
    Yet, in 2013, I was forced into this Debauchery!
    Citimortgage Inc. as designated servicer for Fannie Mae, systematically engaged in gross servicing abuse practices and created the “Default ” on my loan. In 2006. my loan was originated by “The Carroll Mortgage Group Inc., sold to Fannie Mae Investor Loan #1700882024.
    Citimortgage Inc. failed to correct the transaction errors on my loan.
    In 2013, Citimortgage Inc., inaccurately reported my loan as being in “Default”, outsourced my loan to attorneys at. “Wilson & Associates Law Firm and began executing foreclosure proceedings against my property?!! The Mickle Law Firm in (2015) again in (2018), The Marinosci Law Firm in (2019).
    I repeatedly contacted FANNIE MAE “Mortgage Fraud Dept.” and filed reports on their website online. Also, I submitted copies of the fabricated mortgage and Note assignments as instructed by Fannie Mae representative via certified mail and FAX.
    The Mortgage Fraud Dept. at Fannie Mae did absolutely NOTHING!?? No response! No assistance! Fannie Mae ignored the reports I provided regarding the wrongful foreclosure by their designated servicer Citimortgage Inc,….Again, I am a homeowner who NEVER missed a mortgage payment!

    In my case I noticed that the foreclosures have been executed soley in the name of Citimortgage Inc. (servicer) on behalf of the ORIGINATOR “The Carroll Mortgage Group Inc,. (warehose lender) not FANNIE MAE?
    Also, I discovered that In 2012, six (6) years after my loan was first originated. Citimortgage Inc. executed and filed a fabricated mortgage assignment and a Note endorsement via a (allounge) to itself…(Citimortgage Inc.) from the originator ” The Carroll Mortgage Group Inc.??.
    I have NEVER seen or heard my (servicer) Citimortgage Inc.,(CENLAR) state that they are the ( servicer) executing foreclosing proceedings on behalf of FANNIE MAE (Investor)!
    The parties executing foreclosure are a SHAM!
    Fannie Mae helped spurred the creation of MERS, and the social beast ” Foreclosure Mills” decades ago to help themselves process large volumes of foreclosures quickly and cheaply.
    Fannie Mae other (Big banks) cut their cost with shady practices, but they didn’t have to shoulder the legal liability for them.
    Straightforward Fraud. Big banks broke the law and hired other people to break the law for them, scored big profits without being punished! They are still at it!



  26. don st clair — Freddie/Fannie sell the collection rights at fake reported “event of default.” That is where all those PLMBS come from.

    F/F can no longer collect — but they remain the last actual mortgagee of record. At that “event’ – the note is charged off. What we really have is a mortgage without a note. As the Inspector General said – quite some time ago — what you then have amounts to nothing more than (unsecured) credit card debt.

  27. Boy, does this open a can of presumption worms (2013)

  28. Slowly but surely the lies are starting to come out. I hope there is going to be a precedent set when that special lawsuit is filed.

  29. Learn something new everyday. Thanks !!!

  30. Junior – excellent post again. The courts allow foul play., They are reluctant to ever grant discovery. Decisions are often based on technicalities created by the courts. Why are the courts doing this? Their own self-interest – or mandates? .

  31. Java—-

    PETE is person entitled to enforce.

    Bob G.–

    Do not take the word of the courts, who are only offering an opinion. That opinion then needs to be weighed against appeals courts and state supreme courts, whose job it is to more closely apply the law.

    Unfortunately, we see too often that courts are legislating from the bench, and homeowners not appealing because they have had enough or lack the resources to keep fighting. In my own case, the COA overturned every single thing that the trial court did. If I had not appealed, it would have ended right there for me.

    NY is also different from many states because of what is needed for prima facie case to be established. Example, in my case, the plaintiff claimed to be the original lender–way back when, anyway. That’s changed now. But when the case was filed, the court allowed it to proceed despite the fact that they claimed only to have a copy of a note. They did not claim to have the original in their possession. Nor could they even provide a complete copy of the note. My state law requires that they be able to provide the original instrument–either that, or, if the original was lost or destroyed, then they must state as such and follow additional procedures in order to foreclose. The plaintiff in my case did neither. The court, even with my arguing the law, allowed their case to proceed anyway. The law did not matter. Case law did not matter, even from the state supreme court. The judge ruled in their favor anyway.

    Thankfully, the appeal erased all of that, but the point still stands. Courts are not always following the law anyway, as written. I even had to have a judge removed from my case because they were holding private conversations with the plaintiff’s attorney, and when I found out about it, the court pretended that that’s standard procedure.

    But more importantly, like you said earlier, proof of both payment and delivery are required. I promise you, in most foreclosure cases around the country, the UCC is not much considered by the courts. How often do we actually see cases where proof of payment and delivery of the note are provided?? I’ve yet to see one. I even asked for such evidence in discovery, and they tried to pretend that what I asked for was covered by privilege. Still fighting that one out, but we’ll see where it goes.


  33. Ok. I’m not afraid to be that guy.

    What is PETE ?????

  34. @JUNIOR,

    Actually, I’m not missing a thing. I understand fully what you are saying and it is what i say in my own lawsuits. The PETE has to be able to prove up its authority, being traced back to the real owner of the note. However, you’ve got to be able to get discovery on that issue first. And to do that, you’ve got to get past the sumjudg mtn, because the mill attys are never going to cooperate with you in discovery. And why should they? you’re a one-off adversary. they are never going to see you again or need to to grant them any accommodation or any favor in any future legal proceedings. so they don’t need to be collegial and cooperative.

    your best weapon is a judicial subpoena to produce documents served upon a third or non-party. the bankster attys don’t have standing to make a motion to quash that subpoena.

  35. Junior – excellent post. And, what you describe can only happen with debt buyers and collection. Debt buyers purchase collection rights for pennies on the dollar. Windfall to them to get the house.

    All we have is recycled debt – from the onset. Problem with the FDCPA is it’s short statute of limitations – one year. By the time one discovers the SOL is over.

  36. Bob G.—yes, the PETE can be a servicer or other entity….but you’re missing the point that that party CANNOT be the PETE UNLESS they were granted that authority by the one legitimate party that actually truly owns the note/debt. If a pretender lender does not actually own the loan they claim to own, then they have ZERO legal ability to authorize any servicer or anyone else to act on their behalf with respect to that specific loan.

    In my case, the supposed original lender—which, as it turns out, sold the note/loan off as soon as the papers were signed, claimed for years to be the proper holder. It was all a lie. That lender then turned around and resold this same note at least four other times, each to a different entity. Let me say that again….

    Lender was selling the note multiple times, to multiple parties, long after it had actually sold off the note/mortgage.

    Stop and think about what that actually means. NO PARTY can now come forward and legitimately claim to be PETE unless they can show the chain of title that puts them as the first buyer, or down the line from that first buyer. Once you sell something, you cannot sell that same thing to others over and over again without first buying it back yourself—to pretend to do so is fraud, plain and simple. This “lender” sold the loan and the account number changed within 2 weeks of us signing the loan docs. Then, they “sold” it again less than 5 months later to someone else….then, “sold” it again a couple years later, and so on. The most recent “purchaser” is actually the FIFTH party that “bought” this loan from the so-called original lender. It is now believed that the loan was even table-funded at the start, which would mean that the “original lender” was not a lender at all—but they sure have “sold” the loan that they never even made several times.

    Fast forward, the party that supposedly bought this loan in the fifth sale is not even named anywhere in the chain of title that the plaintiff presented. They drafted an assignment of mortgage that names a different party–not named at all in the sale–as the purchaser. There’s no explanation given for this change. In fact, I had to force them to admit that, based on their own written agreements, that a different party was the actual purchaser. In effect, they just admitted to committing fraud upon the court, because they doctored up a fake assignment of mortgage, listing a party that did not purchase anything involving this “loan”. A party in that position has ZERO authority to actually entitle someone else to enforce, because they cannot be the lawful owner in the first place.

    Imagine if I took your car while you were on vacation, and then tried to sell it. I would have NO legal authority to sell what I don’t actually own. This is no different. So yes, a PETE can be a third party, but they MUST be duly and properly authorized—and can ONLY be duly authorized by the proper party. Anything aside from that and you have fraud. What’s worse, they then brought in ANOTHER unrelated third party—a servicer—and tried to use an employee of that servicer to tie it all together. Sorry, no good. That person had zero legal authority to speak on behalf of any other party without power of attorney–which the other side never provided, in fact they refused to provide when I pointed out this fatal flaw. Anything other than a person who is speaking with relevant authority, and it’s nothing more than inadmissible hearsay.

  37. I don’t think anyone questions that courts allow foreclosure by PETE.
    The problem is the bogus document trail by which PETE claims to “hold” – for itself or any other entity. More importantly, if it is just a transfer of debt collection rights – there is no PETE because the note was long charged off. This is what the crisis securitization was – securitization of debt collection rights. This type of securization can occur, but it is not traditional securitization, and all must be disclosed. Nothing was disclosed. This is rarely brought to attention of courts. Bankruptcy should allow write down of the unsecured debt, which is exactly what Barney Frank wanted, but the debt buyer lobbyists have too much influence – it was voted down.

    This is an old article posted here, and we know the settlements have since blocked investigation. However, Neil and Bill point out, correctly, that Fannie (and Freddie) not only invested directly in mortgages, but indirectly by investment in Private Label Mortgage Backed Securities (PLMBS). Does not anyone think this is odd? Why wouldn’t the loans be sold directly to Freddie and Fannie. Why did the banks “package” the loans and then sell them back to Freddie Fannie? We know the Community Reinvestment Act (CRA) required F/F to promote funding to low/middle class Americans, so there was no reason for the banks to get involved. But F/F was not profiting on fixed rate loans, and the banks were not profiting on the demand to fund the loans and then sell them to F/F. Adjustable rate loans, and PLMBS were born.

    The result is that the mortgage itself stayed with F/F with collection rights sold. The banks repackaged nothing but loans already classified as default debt. Thus, the PETE status today is bogus. There is no PETE.

    The government handled this “accounting” crisis by throwing the “borrowers” under the bus. Their reasoning was that these borrowers should never have gotten the loans in the first place. But that is wrong – because the CRA required F/F to fund these loans. The CRA did not require high adjustable rates that would click in after two or three years. This was the profit scheme developed by the banks — the debt buyers of F/F classified debt. The banks were original servicers and biggest debt buyers of all. .

    If someone is going to lose their home, and not be able to save it, they should at least know the truth of what really occurred. They might be willing to pay the current debt buyer, but that debt buyer must be disclosed, or payment is never accounted for. When “PETE” appears, borrowers know PETE is a fake. Those that have worked hard here know – something is very wrong, and they don’t like being a double victim. Can’t blame them.

  38. once again, i have to take issue with this post.

    the P.E.T.E. does not have to own the debt. the PETE can be a servicer acting for the Holder or Owner of the NOTE, not the debt. it has been my experience that the courts, at least in NY, don’t care about who owns the debt. it is well settled law here that in order to establish a prima facie foreclosure case entitling one to judgment as a matter of law, all that is needed is proof that the plaintiff was in possession of the note and mortgage at the time the action was commenced and proof of default. now, granted, that may have been all well and good pre-securitization and with an original lender who was a holder in due course, but should not be the standard by which to adjudicate securitized foreclosure actions. See NYUCC 3-306(c). proof of both payment and delivery required.

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