Dorian Grey: Loan Agreements have changed without detection by the courts

The normal loan agreement is based upon certain accepted and presumed elements. The borrower desires to borrow money, he/she gets a loan of money and signs documents in favor of the lender setting forth the terms of repayment. The lender, who is responsible under TILA for the viability of the loan, makes the loan with the expectation of being repaid and earning a profit from interest and fees. The borrower relies upon the lender’s desire to be repaid and the lender relies upon the borrower’s intent to repay the loan according to its terms.


When the Federal Truth in Lending Act was passed — 5 decades ago — Congress made findings of fact that lenders were overreaching and even cheating consumers in loan transactions. So they passed laws that govern every mortgage loan. Those laws put the burden of viability of the loan on the lender. They also required disclosure of t he actual lender so that the consumer borrower had a choice about who he/she wanted to do business. And most importantly disclosures were required that revealed all compensation, commission, bonus or profit paid to anyone arising from the loan transaction.


Securitization as a theory would not have disturbed any of those rules (Reg Z) and laws (TILA). But as practiced it was warped into something unimaginable even to the PhD’s working at the Federal Reserve. By the late stage at which the FED woke up and realized what had been done the ongoing damage to homeowners, communities, cities and states had advanced far beyond anything that most analysts imagined was possible.


Unknown to all but a select few in underwriting investment banks, the loan agreement was enlarged to include elements that were unrecognizable even to experts. The borrower was led to believe that the loan agreement had not changed and that he/she was receiving all the necessary disclosures. The borrower was led to believe, by law, that the lender was taking responsibility for the viability and repayment of the loan.


But what had changed through the process of labeling parties and documents was that lenders were no longer lending money and even the parties who set up “warehouse lending” agreements were not lending money because they were all funded by investment banks who were using money advanced by investors who bought “certificates” that were, at the time of sale of the certificates, not tied to any list of loans. Thus table funding became the norm. More importantly the actual lenders, the investment banks, would not have entered into the loan agreement without the sales to investors. The signature of the borrower became extremely valuable — a fact unknown to consumer borrowers and which is still largely unknown or not well understood.


This scheme resulted in an average of $12 of revenue for every dollar loaned. Such revenue or compensation was unimaginable until the investment banks split the debt from the paperwork. Contrary to the borrower’s understanding of the loan transaction the goal of the investment bank was not to take a risk on nonpayment, but to obtain the borrower’s signature for the sole purpose of creating a paper infrastructure above the signed loan documents. The investment bank has little interest in the viability of the loan and whether it is paid back. They were trading not on the debt but on the collateral.


Thus the relationship was different and much larger than the one presented to borrowers and inverted the incentive of the real lenders to make any loan rather than good loans likely to be repaid. The implied or actual contract was that the consumer borrower was contributing their signature , credit reputation and their homestead to a deal in which most of the revenue and profit was continually hidden and concealed contrary to the laws and rules expressed in TILA.


The main interest of the investment bank is to preserve the securitization infrastructure which is far larger than the underlying loan, whose existence is kept alive by a variety of ruses solely to preserve that infrastructure. Foreclosures are initiated  for nonpayment not to get payment but to produce revenue. The monetary  proceeds from foreclosure sales is distributed to the investment bank and its affiliates as revenue and not to pay down the debt, the existence of which is maintained as an illusion to justify the existence of the derivative instruments sold that derive their supposed value from various elements of the loan — principal,  interest, collateral etc.

Since the law of contract starts with the intent of the parties it may fairly be said that there was no meeting of the minds because the true nature of the loan transaction was illegally concealed from the consumer/borrower. It is obvious that the borrower was directly intending to enter into one contract while the investment bank, acting indirectly through conduits was entering into another contract that entirely altered the scheme of interest, principal and cash flow.


In the end nobody owned the debt who paid value for it —  a key component because only a party who has paid value for the debt may enforce the security instrument (Article 9 §203 UCC). The investors had paid value but never received ownership nor any right to enforce any debt, note or mortgage from consumer/borrowers. In foreclosures all documents had to be fabricated and forged to create the illusion that the paper trail was evidence of the money trail.


The investment bank had paid value using investor money but also never received title to the debt, note or mortgage and then the investment bank sold all elements of the debt to multiple third parties who were essentially betting on the outcome of the cash flow or the value of the loans or the value of the “certificates” that served as the ground floor of the derivative infrastructure.


This loan agreement viewed from the perspective of both the borrower’s point of view and the lender’s point of view was not a mirror (as required by contract law) but more like a picture of Dorian Grey in which reality masks the corruption of what had been a sacrosanct commercial transaction.

This opens the door to defensive claims of unjust enrichment when the loan agreement was executed and a new claim for unjust enrichment when the foreclosure ends with sale of the homestead property.

12 Responses

  1. Papergate, what kind of money are we talking about for ads, and how frequently?

  2. We need to pull together funds buy full page ads in NYT – LAT and ask point blank – which candidate is going to attack directly these issues now going on 12 years – and remind them there are legions – millions of us waiting to hear just one candidate state and they would inherit millions of votes – regardless of party lines – and we publish in our ads a list of the wrongdoers – pit candidates against issues and the culprits – that will suss out who is concerned about us . . . good article and really good commentary folks!

  3. Because Poppy — the government covered-up to “save the economy.” They decided that there had to be scapegoats who took the fall. And, they presented this way to the media. The media “bought it.” What kind of real journalists do we have in the media? Same as attorneys? Two plus two equals five?

    Well, I don’t know about anyone else, but I don’t want to be a scapegoat. I care about the “economy” but not going to take the hit. I don’t even know where my money is going. I know NOTHING. And judges? They bought the whole “save the economy” and media falsities.

    So — we are left with brain-washed judges. BUT — I will not be a scapegoat. Don’t think anyone here wants to be one either.

    Geez — they dig up dirt from years ago on other issues– why not dig up this dirt? Because it causes too many problems for those who are not the “scapegoat.”

    Neil is right — need right approach. Yet, I want more than individual cases won. I want the entire truth told. Will get there. Let Neil get them – one by one. More in the pipeline.

  4. These sanctimonious judges do not care if the right party is made whole…which is the very essence of a court intervention. Right from the start the homeowners should be contesting the standing-rights of the party before the court. I have started filing Motions to Dismiss, Motions for Summary Judgments and a request to strike the record, against these bastards. Judges should know better.

    Seriously folks, if I as a non-legal expert can decipher the paperwork, how is it the judges are lost in space? Read the documents, your honor!

    Finally, if the breach of contract began with their non-adherence to the contract they agreed to for establishing rights of enforcement, my “alleged” breach came long after. And under the law, it is my observation/understanding, one cannot establish title-ownership-possession or legal recourse, unless or until they have strictly adhered to the rules for such rights to be established.

    Rights to one’s property are not automatic, exist because you say so…hence the reason for contracts, notes, mortgages, deeds, etc…if the judges are only using one contract, our’s, to adjudicate…it’s all a lie. There is no such thing as a free house. We make a down payment, make payments, pay insurance, taxes, upkeep, etc….the fact is after 10-12 years if you take interest off, the principle is about paid. So, they are foreclosing on their profit margin…enough said.

  5. “AND Entitled to Enforce”….typo not OR must be ENTITLED….by way of legal right…

  6. Legislation is the process needed. The way the have twisted the rules, makes it near impossible to defend. When I look at the note and it says “ANYONE in possession or ENTITLED to enforce….this is the most telling statement….having read the PSA and trust documents this is not the same language as above. A trust instrument is specific, not ambiguous. A bearer instrument is the language being presented, the two are not interchangeable. “Entitled” to enforce means they must adhere to the contract, to have rights of enforcement and a “legitimate” default. This is not complicated for the judge if they actually “READ” the specific sections of the PSA. If these “faux lenders” actually have rights why are they not required to show proof? If I went to the DMV the requirement would need to be followed OR I would not get clear title to the vehicle…this part is not complicated. Assignments are an attempt to transfer, but they mean nothing. The judges are not holding their feet to the fire. At the end of the day, the judges own this, in my opinion. If the standard got any more relaxed for the lawyers, they could post the stuff in a chat room, for the judge to read.

    This I can say: over the years I have been in court over contract disputes and the judges give much more scrutiny to civil contract disputes than this, very meaningful litigation. I am 100% about theft of property is being allowed daily, with no adverse consequence to the land thieves, and beguilers. In reality, this problem has nothing to do with “missed payments”. The larger picture is control, manipulation of debt and greed. There is nothing that has happened here, that could not have been remedied….they don’t want a remedy for you and I.

    If they had rights, this would have been over years ago….and we now have to deal with, down the road, the corruption of title records all around the country.

  7. And Hammer –get me somewhere. Anyone here – get me somewhere. I will speak – and speak I will I am still paying – always paid – high rate– like a dope. Does not matter – internal “fake” default reported anyway – and I have every single proof of payment.
    Everything was kept.

    Can’t refi – because of “title issues.” Can’t sell home either. Have substantial equity. Seniors – but were not seniors when I started. Believe me. .Been that long.

    I can’t get anywhere in my state. I can’t get anywhere in any other state. I can’t get to any Senator, any representative, or Trump, or Warren, or Bernie. Can’t get anywhere. And, believe me, I have been EVERYWHERE NO one will even respond. NO ONE. And — I have the “goods.”

    So – get me there. I am ready. We need more than legislation. We need CORRECTION. But you are right – let us start with legislation.

    Anyone here who can get me there — let me know.

  8. This is EXCELLENT. There was nothing “lent” because there was NOTHING paid off BY THE BORROWER at the “Transaction.” That is the only word I can find to use – “transaction.” There was no Mortgage and no Deed of Trust. Nope – an undisclosed “transaction” is all one got. .

    Remember – “paid off” and “paid out” are NOT the same thing. Nothing was “paid off” by the borrower at the “transaction.” .

    So – what the hell did the borrower pay for at the “transaction?”

    NOTHING. Title? Nope. Nothing.

    And where are our official representatives????? No where to be found. To them I say — WAKE UP.

    Thank you. Thank you. Excellent.

  9. We all need to push for legislation that defines in plain common sense terms what a mortgage is including terms for lender, payment etc

  10. Good article Neil. I had major problems with a private hard money lender who tried to blackmail us into paying outlandish fees in order to obtain a release? Never had this happen in all my 47+ years as a real estate broker. I called their bluff and we prevailed.

    I have been in contact with the state of Colorado on legislation for control and regulation of these crooks. It is really sad. Today’s golden rule is “he who has the gold rules”!!!! This is just not right and more people need to step up to all lenders out there in my humble opine.

    Thanks again for ALL you do. Semper Fi.

  11. In short: There was No Loan given to “return” a “precondition” of the Note its self “In return for a Loan I have received, I promise to pay”.. The “promise to pay is conditional of having a “Loan” and it is the “Loan I have received” (past tense, having been accomplished fully) which is to be “returned”. It is impossible to “return” something you have not “received”.
    Even if the money (there is no “money” only “currency” which is credit and banks are prohibited from “loaning” credit) was transferred to the “borrower” (name only) is was not a loan it was investors investing which is not a “loan”
    So as the note specifies, “anyone who takes this Note by transfer and is entitled to payments under the Note, shall be called the “Note Holder”. The “Note Holder” has obligations and duties under the Note and that is why it must be “transferred” so that the new party take liability and responsibility to perform which must be agreed to (meeting of the minds) since “Neither slavery nor involuntary servitude shall exist in the United States or territories subject to its jurisdiction.” (XIIV Amendment) This is why any “ASSIGNMENT” is void and without force or effect.
    “and entitled to payments under the note” again there must be an “exchange of value for value”. Clearly no one paid, gave or “Loaned” anything of substance or value to expect it to be returned except the signor (creditor of all things named “borrower”) That’s right, the only one “entitled to payments under the Note” is the “borrower”. And the “borrower is entitled to all the “proceeds and profits” their Note and Mortgage papers with only their signature on it have produced.
    One last point, they are failing to pay taxes on all this “pure profit” taxable activities (theft by deception) and yet OUR Government is refusing to prosecute and the IRS is failing to go after tax evaders!!! and the SEC is refusing to go after these thieves by forged and fabricated security instruments and other unlawful activities. So we the people must “alter or abolish” “any Form of Government which becomes destructive of these ends” (“That to secure these rights governments are instituted” and “to effect their (our) Safety and Happiness.”)

    Thus we the people must institute legislation, law, code and even an amendment to the Constitution(s) for all those holding or applying for any office of public trust to be periodically tested as to their Knowledge, Understanding and Accurate Use of the “principles” upon which this republic and the office thereof which they aspire to fulfill and are sworn by “oath or affirmation to support”.
    Blessings from, man with proper given name (as apposed to an assumed name like legal entities) “Colin Derek”

  12. 1. ANY Loans. NOT Good Loans.

    2. The signature is most valuable.

    3. NOBODY owned the debt. UNSECURED debt.

    The borrower is OWED the money !!!

    How can so many people understand what happened and YET here we are 12 years later still getting steamrolled by the criminals, lawyers and judges.

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