No Martha this is an opportunity — not a tragedy — for the public to deal with mortgage “servicers”

Wall Street sees this as another opportunity to bag a bailout. Don’t let them.

The alarm bells are going off. Giving relief to homeowners is going to collapse the entire financial system! The sky is falling!

See https://www.youtube.com/watch?v=bbdSEJCibe8&feature=youtu.be

The first thing to notice is that they are referring to the servicers. They are not referring to lenders who are going to lose money because there are not any lenders losing money on forbearance, moratorium or even complete elimination of mortgage debt. They don’t have any asset receivable reflecting ownership of mortgage debt. Nobody does.

The second thing to notice is that investors are still getting paid. So they are not suffering any losses due to “nonpayment” of mortgage payments. Nobody is.

If the investment banks and the investors are not losing money arising from “nonpayments”, forbearances sand moratoriums then who is losing money?

The myth is that servicers are losing money. That isn’t true. Mr. Cooper, Ocwen et al have no liability to investors. Who does?

It turns out that the investment banks have a theoretical discretionary liability to investors that they are only honoring because they are trying to sell more certificates. They have no obligation to actually make those payments because this is an “event” (in their contract with investors) that they could declare and thus temporarily or permanently reduce or suspend payments to investors.

AND the payments they are making are coming from a reserve fund (aka slush fund) created out of the money advanced by the investors themselves. Investors are receiving their own money as “payment” — a classic example of Ponzi scheme allegedly made legal by contract. So not even the “Master Servicers” have lost one cent by paying investors. 

That’s how securitization works now. Nobody has any risk of loss and everyone makes money except investors and homeowners, who are the only two real players in the game. But they are kept in the dark, cheated and destroyed by a scheme that is falsely called securitization of debt.

Real securitization of debt would occur if someone ended up owning the underlying debt of borrowers. This plan doesn’t. There is no risk of loss and there is no relief package that would be anything other than another gift to the financial industry.

So once again, like Iceland did in 2008 along with similar programs in other countries, if you are going to spend money on a bailout in a consumer driven economy then send it to consumers, stupid. Reduce household debt. that fuels the recovery when we have a recovery which now won’t occur for quite some time.

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PRACTICE HINT: In their enthusiasm to provoke another “Bank” bailout Wall Street could be stepping on a rake. they are revealing the absence of any party who owns a debt — a black letter condition precedent to the collection, administration and enforcement of any alleged loan. They are claiming nonexistent losses and at the same time admitting to making those payments. From where did they get the money to make those payments?

And all of this highlights the difference between pleading requirements and proof requirements. As long as attorneys representing homeowner fail to make the distinction they will lose a contested foreclosure case simply because they tacitly admitted all the facts necessary to establish a prima facie case. These cases are won by homeowners who reveal that there is no meat on the plate — not by raising questions or doubt.

Be relentless about revealing the unwillingness of the foreclosure mill to respond to the simple questions about ownership of the debt and risk of loss from nonpayment. Their refusal entitles you to inferences in your favor. And stop thinking that the foreclosure mill actually has a client  that is owed money. They don’t.

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Neil F Garfield, 73, is a Florida licensed attorney. He has received multiple academic and achievement awards in business and law. He is a former investment banker. securities analyst, and financial analyst.

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6 Responses

  1. Says it all (Neil):

    “…The first thing to notice is that they are referring to the servicers. They are not referring to lenders who are going to lose money because there are not any lenders losing money on forbearance, moratorium or even complete elimination of mortgage debt. They don’t have any asset receivable reflecting ownership of mortgage debt. Nobody does.”

  2. And Happy Passover to those who celebrate. I have celebrated with family friends for 30 years. I miss them.

  3. Summer — Who are the investors? We know names like Lone Star and NewRez — but, who are the investors in them?

    Foreign?

  4. Dear God – I love this! And right before Good Friday and Easter. Amen!

  5. “Nobody has any risk of loss and everyone makes money except investors and homeowners, who are the only two real players in the game. But they are kept in the dark, cheated and destroyed by a scheme that is falsely called securitization of debt”

    I can understand how borrowers are kept in dark – yet, many already know that is going on but Govies pretend they do not heat even if CATTLE (borrowers) Moo louder. The Govs simply pretend that nothing is going on.

    But how investors who put their money in the game can be completely uninformed to step on the same rack over and over again??

    Investors also do not care – because they happily collect 50% returns from Lone Star’s Mr. Grayken and are absolutely confident that once Big Banks Ponzi Scheme will collapse – the CATTLE (us) will bail them out no matter how many cows will be killed.

    Investors are NOT kept in dark, they willfully support this Ponzi scheme because investors also do not have any losses – except illegally obtained gains.

    Investors know that they will get their original investment back – this is why the Govies play so significant role – they INSURE investors from losses – at CATTLE expense.

    Investors are the active part of this scheme, as well as banks and judges.

  6. Okay — so question becomes – how are there “Investors” when there is no valid trust or trustee? How are there investors when there is no actual or valid securitization?

    Mortgage servicers we are told have a liquidity problem. If borrowers can’t pay because now many are unemployed, “servicers” can’t advance any payment to any investors that should not be investors to begin with.

    So they will be asking for a bail-out — to continue the Ponzi scheme and fraud.

    Govies – as Bob G calls them – did not handle the problem properly back in 2008/09. When you handle things badly – it will come back to haunt you.

    Hank? TIm? Ben? Are you watching?

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