Livinglies's Weblog

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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Filed under: foreclosure |