If it’s not a loan, then what was it?

As many homeowners are still finding out, they are confronted by a pallet of entities who are constantly rotating as though the mortgage scene was some giant display. Like their lawyers they are completely confused by the difference between their perceptions and reality in which they find themselves.

see https://livinglies.me/2018/09/26/matt-taibbi-puts-things-in-perspective/

Matt Taibbi of Rolling Stone got it dead right:

history is written by the victors, and the banks that blew up the economy are somehow still winning the narrative

Banks like Lehman had lent billions to fly-by-night mortgage mills like Countrywide and New Century. Those firms in turn sent hordes of loan hustlers into lower-income neighborhoods offering magical deals to anyone who could “fog a mirror,” as former Countrywide executive Michael Winston once put it to me. The targets were frequently minorities and the elderly.

The loans were designed to have short, fragile lives, like fruit flies. They had to stay viable just long enough to be sent back to Wall Street and resold to secondary buyers, who took the losses.(e.s.)

the game had nothing to do with whether or not the homeowner could pay. The homeowner was not the real mark.(e.s.)

OK so if the game had nothing to do with payments from homeowners, then exactly what was that? The homeowner wanted a loan and was told he was getting one. If there was to be an agreement for a loan there needed to be a meeting of the minds. So the homeowner wants a loan of money and gets a loan of money from a Lender with a capital “L”, to signify that the lender wants to be “repaid.”

That isn’t what happened for most homeowners. They received lies instead of information. (Information that was legally required to be disclosed). Lies that reinforced their erroneous belief that they were in a loan agreement. The real deal was that they were being given a temporary boost that would ultimately destroy their lives and ultimately bring the country and the rest of the world to its knees.

The homeowner was being paid a temporary royalty for a scheme that assured destruction of the homeowner, his neighbors and the foolish investors who gave their money to the investment banks. All because the investment banks paid off the rating services, paid off the insurance companies, paid off the fund managers — all because there was so much money flowing they were all shitting green.

Did you really think all that money came from your 8% interest payments, part of which was deferred?

If it was a loan then loan defaults would have been the problem. But as TARP history played out the problem was revealed to be thousands of times bigger than missed payments from homeowners. The problem was the deep hole created by securities brokerage firms who ran wild. They created names and lied about the existence of companies bearing those names. Then they issued securities issued in the false names of the nonexistent companies.

And then the real fun began as they issued and traded bets on the performance of securities based upon the performance of unrelated data; but it’s not a bet when you know what is going to happen. You don’t loan money to people on false appraisals and nonexistent incomes and then feign surprise about what happens next. In fact you don’t lend money at all. You only pretend to loan money. You only claim surprise when it comes to begging the government for a bailout of nonexistent losses.

So the homeowner thinks he is getting a loan but what he is doing — and the only reason he is getting the money — is writing his signature on documents labelled as “loan documents.” The homeowner’s name is suddenly transformed into a financial weapon of mass destruction starting with ratification of a real transaction between pension funds and the securities brokerage firms who falsely claimed they were underwriting and selling securities in conventional IPOs.

Wall Street “banks” knew it would explode and counted on it. The explosion was necessary to cover for their misdeeds in pretending to issue securities when fact they were merely selling tickets to their own game, and keeping the money.

And the explosion was welcome because they knew about it in advance so they bought insurance products in which the banks were the payee instead of anyone who had actually paid out money thinking their investment somehow backed by certificates in a remote vehicle that didn’t exist and even if it did had no right, title or interest in any transaction with any homeowner.

And it was celebrated when homeowners walked away from homes they erroneously thought were encumbered by liens in favor of companies that were carrying their debt.

And the celebration grew as they even designated false names to act as claimants in foreclosures, sold the property and then distributed the bounty without regard to any investor who had parted with real money. The foreclosures were the icing on a cake that no homeowner knew about.

And each foreclosure sale created a “legality” to the process that was accepted by almost everyone. They saw it as real because of the assumption that at the very beginning there was a loan. There was a meeting of the minds. there was an expectation  of repayment. But that expectation was only held by the homeowner — not some mortgage origination mill that could care less about anything other than receipt of fees.

For old times like myself, do you ever remember being told you could buy a car without making any payments for the next three months and without interest for the next 7 years (84 months). Who does that? Why would anyone loan you money on those terms? The answer, just like the mortgage loans, is that they wouldn’t if it was really a loan. Because if it was really a loan they would be losing money hand over fist.

But instead they were making money hand over fist and they were paying pizza delivery guys hundreds thousands of dollars to go into neighborhoods where the homeowners were the least sophisticated and easiest to “move” by talking a good game. So homes that had been in the family for generations were lost. And with the growth of that industry even more sophisticated homeowners got caught up in the spree.

So how do you make a ton of money making bad loans? Wait! How do you make the most money when the “loans” fail? Sorry, not a trick question. Or maybe it is. You make money by pretending it’s a loan and then doing something else. You sell the data arising from the fake transaction as though it was a real loan. And then you sell the data on the performance of the data. And then  you sell the data on the performance of the data that is based upon the data.

Then you make money by acting as though it was a loan and when the homeowner balks at paying you invoke foreclosure procedure even though you don’t own the loan and you don’t represent anyone who does. And when the property is sold because everyone thinks it as a foreclosure, the players all gather round to get their share of the proceeds, excluding of course anyone who ever had a financial stake in the homeowner transaction.

So now what? Well if you are an “investment banker” you keep doing it because you never saw so much money in your life and come to believe you earned it. And you make everyone else believe it unless —-

Unless the homeowner says you lied to me and you hid behind layers of curtains so I wouldn’t even know you were their. You used me, my name, my signature and my home as leverage to issue fake securities and you made a fortune doing it. This was not a loan I received. It was payment for my signature, my name, my reputation and my house — a payment you wanted back from me. This was a royalty payment that I never had a chance to bargain for because you said it was a loan. So guess what? I want my share of the deal you never disclosed to me, which you hid from me and that you lied about.

Then if you are the investment banker you think I can beat this guy. I have enough money to make him cry in court.

But what happens when many or most homeowners start asking for their share and they pool their resources to get it? Hmmm?

Here is what I sent as a comment to the CFPB on their rule making procedures:

Consumer Finance is driven by false claims of “securitization.” Consumers are lured into damaging transactions. And false claims for enforcement are filed daily on behalf of unidentified “holders” of unidentified “certificates” that neither convey nor even allow any knowledge nor any right, title or interest in any debt from a consumer.

The Agency should conduct hearings on the identification of claimed creditors who have both paid for and currently legally own the underlying debt. Rules should require such identification. It’s what the law and common sense require.

The current system involves no purchase of underlying debt by any investor. As a result claims of servicing rights or administrative rights over a loan are not based on a grant of authority from the owner of the debt. Instead servicers are merely designated by investment banks with no vested interest in any loan except the expectation of additional profit.

Foreclosures and other collections are regularly conducted for profit and not repayment.

This undermines the entire paradigm of lending because the “lenders” are only originators and the investment bank is providing funding from money advanced by investors for reasons other than the purchase of debt, the securities issues are neither mortgage backed nor exempt from securities regulation.

In reality such scenarios present an entirely different scenario than their label as “loans.” The payment of money to or on behalf of a consumer is actually a royalty payment for the use of data relating to the the consumer’s name, signature, reputation and home or car. It is the data that is sold not the debt. This is why no claimant in any foreclosure or bankruptcy has ever been able to present proof of payment for the debt despite the clear requirement that they do so under Article 9 §203 UCC.

The royalty payment is conditional and creates a concurrent liability of the consumer. The arrangements is not disclosed and neither is the compensation, profits, bonuses and fees arising from issuing securities, which is the actual basis for the transaction with the consumer., But for the issuance of securities the transaction would never have occurred. If proper disclosure had occurred the consumer, pursuant to TILA and other statutes would have had an opportunity to evaluate and bargain for better terms on the royalty payment.

Collection efforts and foreclosures are inconsistent with the royalty payment and are only viewed as legal because the transaction is labeled as a loan and the designated claimant, who has no financial interest and represents nobody who owns such an interest, is labeled as a claimant, a Plaintiff, a successor, or a lender — all of which labels are false.

In a conventional loan the lender is known by the “borrower” to have a stake in the outcome which depends upon success of the loan performance. In the current paradigm that is reversed. Investment banks are able to multiply vast profits by simply taking money from investors at one rate (a conditional promise of return on investment) and then lending at another rate to “borrowers.” The incentive is to make loans that will fail and then bet on their failure — the opposite of a conventional loan paradigm. This produced an undisclosed yield spread premium of as much as 70% of the amount invested or 300% of the amount loaned.

By grouping such “risky” loans into a tranche, the investment bank knew with certainty that an “event” would occur (many declared “defaults”) thus diminishing the value of the tranche that triggered an insurance or hedge counterparty payment to the disinterested investment bank — thus vastly increasing already exorbitant profit margins. Credit default swaps were disguised sales of the tranche triggering still more payments, while the “borrower” was in the dark unaware that everyone had been paid and was continuing to receive payment while demands were made to make still more payments or even give up collateral.

The base assumptions that such collections, enforcements and foreclosures ultimately result in payment to someone who paid value for the debt is wrong. Such efforts are strictly for-profit ventures and do not result in any restitution for an unpaid debt.

This agency is not only devoted to protection of the consumer but also for the protection of our financial system which is now undermined everyday by the sales of “certificates” issued in the name of “REMIC Trusts” that have no legal existence and no ownership or claim to ownership of any debt, note or mortgage.

Stop treating the investment banks and their co-venturers as creditors. Start requiring full transparency on the money chain. If it matches up with the claim then it should be allowed. If it doesn’t, then no claim should be allowed and anyone who makes such false claims should be the subject of discipline and damages.

The courts and the public need guidance on these complex transactions that are disguised as loans.

8 Responses

  1. Have to look for that Ian! Thanks!!

    I have spoken to Levitin before. Levitin was an expert in the Mazzei v. The Money Store case. That case went on for well over a decade.

    The Money Store (fictitious name) was owned by First Union – who was then sold to Wachovia. Wachovia used the fictitious name “Homeq.” for servicing. Wachovia then sold the “servicing” to Barclays Capital in 2006 who also used the fictitious name. “Homeq.” Barclays then sold to Ocwen – who just used “Ocwen.” (Wachovia went to Wells Fargo).

    For those who do not know, the Mazzei case was about illegal fees charged to borrowers whose loans were accelerated and foreclosed upon. A jury awarded 54 million to Mazzei. The judge overturned the jury award – mostly saying that borrowers do not have a contract with their servicer. I recall Levitin disputing that. The Second Circuit affirmed the district court’s overturn of the award. Many files were “sealed.”

    I had Homeq, and when notices went out for class — I got a notice of inclusion for “loans accelerated with fees charged.” Fidelity National (LPS) was involved. Only problem for me was — I was never accelerated, never in foreclosure, and never in default!!! But I did have fees charged. More recently I was told that the fees were allowable for foreclosure. Whoops — WHAT FORECLOSURE???

    The attorney for Mazzei – who I met in NYC — did another case – Bigsby and he recently lost. But he is up to something.

    Anyway, much respect for Levitin. He was on the Board (or is) at the CFPB.

    As to RIck S – for those who do not recall See


    Sorry to ruin your day.

  2. Sorry , “non mortgage-backed securities”

  3. Say I missed these posts from the 17th- regarding Rick Santelli and his “rants” on deadbeat borrowers causing the fraud crisis:
    On the blog Credit Slips- ( it’s for bk attorneys , professors, etc, there was a Post by Adam Levitin, a professor of law at Georgetown Law School, he’s the one who coined the term “securitization fail”, and “ no mortgage backed securities “:
    It’s called “The Big Lie“ , that homeowners caused the 08 mortgage crash. He blows it out of the water. I’d link it to here but still don’t know how….

  4. The “Like” button is not working so I have to write one out – thanks Anon.

  5. Paper — I will go to the end for the truth to be told. Will do everything and anything.

    I have already lost my life — and nothing I can do about that. I regret, terribly, ever continuing to pay. And if I can be a Poster Child – I am ready. What I have is shocking. I have tried to give it here – best way I can. It is not “theories” — I lived it. I have been everywhere I can. NO RESPONSE. It is always NO RESPONSE. . .

    Was a typo in #2 — I have a bad habit of ignoring the “NOT”– and not even seeing it even upon reread. Should read “They did NOT qualify for a traditional bank loan…” ..I will even find this mistake in briefs – too late – we are only human. .

    And, Paper, that is horrible. Years ago I went to one journalist and asked — “Why don’t they work with the people — why a foreclosure and/or short sale etc.? What makes you think someone else will NOT (I almost did it again) ever “miss payments” on the foreclosed house they purchase? She agreed – but nothing was done. I know why – they can never fix title unless there is foreclosure (and foreclosure buyer – beware – you will not be covered should bad title be uncovered). They will haunt you. They have your number. Foreclosure does NOT cure title.. You may assume something you never intended to assume.

    Yes, Hammer — the media jumped on “too much house” and “Deadbeats” I recall Rick Santelli was a raving lunatic on this. Thanks – get what you say and agree 100%. Glad someone else makes typos. I also tend to use a lot of “dashes” here. Long ago someone criticized me here for that, but I write like I think ——- as if I am speaking in person.

    My Dad always told me — “It is not always how you say it that is most important, but what you have to say.” That was when I ran for local representation. I regret NOT pursuing that further. Lots of regrets.

    Nothing just “happened” – it was all well planned. Ya gotta admit — their scheme was “Genius.” And they got away with it.

    But we will never “go away.” We know better.

    Again, thanks to Neil, for our voice. Whether one agrees with everything said or NOT — Neil gave us a voice, and I hope we can expand upon that voice.

  6. Coincidentally was thinking of using Taibbi’s articles along w Garfield posts in continuing attempts to change the narrative. Prob is the good banks r “sponsoring” elected officials and they repeat the narrative remarkably in one meeting recently using 10 yr old excuse that homeowners did not want “deadbeats” to get help. Sub prime tbough sas a trigger and used for the scapegoating narrative. Data shows it was a myth that people of color and low income went crazy buying mcmansions and Jacuzzis. Sure it happened but credjt agencies tightening tge squeeze made it impossible along w servicer abuses for any good faith workouts. Along w war on terror impact and outsourcing that killed the middle class. No way $1 trillion TOTAL sub prime mushrooms to $15+ trillion on fraction of manufactured defaults.

  7. Anon: Excellent reply. Hope you are my team member some day in a mass joinder – if one happens!!! Thanks for taking time to write this – and thanks to you Neil – I clicked “Like” but it is not ‘taking’ . . . not sure why. Anyhow – my “Like” to both Neil and Anon. Thanks!

    BTW: as I type this reply, the new ‘owners’ of my home have just parked a commercial ‘dumpster’ in front of my home – where everything I own will end up . . . this is now a million dollar lawsuit against PHH, US Bank, Aero Mortgage, Phelan, Hallinan, Fannie Mae, etc., etc.

    this is truly a war –

  8. There are many that claim the Community Reinvestment Act (CRA) was not the cause. I disagree. And I have said this before.

    1) It was mandated by the CRA that loans be given to low/middle income. It was required that banks “fund” these loans and then sell them to Freddie/Fannie/Ginnie. Banks did not like this, but all figured out a way to profit and satisfy the CRA demands at the same time..

    2) Many people did not qualify for F/F loans on their own. They did qualify for a traditional bank loan on their own– so they went to the non-banks who were soliciting and sending up affiliations with the big banks who were servicers to F/F.

    3) Most of the financial crisis loans were refinances, not home purchases (although they figured out a way to get these loans by manipulation of records of prior owner too).

    4) Early payment default may have occurred – but not in the grand scale claimed. I never defaulted, and have proof. But that did not stop them from recording an early payment default.

    5) Attorneys for those so-called bank “trusts” told me early on — “The trust is nothing more than a “shell.”

    5) These so called loans were nothing but classified restructured F/F reported default debt – even though there was no default by the borrower when dotted line was signed. This is the only way people received “loans” for which they did not qualify by F/F or by a traditional bank refinance..

    6) If we could get records of F/F one would see reported defaults (by the servicers) before there was any actual default. You will see “fees” assessed that did not belong. We can’t get these records even by the Freedom of Information Act.

    7) The scheme became so profitable that people were being set up and targeted without even knowing it. It was tied to bank credit cards — which were being solicited left and right. They had all the data. Banks were colluding in NYC to insert arbitration agreements into credit cards. People were forced to arbitration if there were any problems. The goal was never credit cards — it was what was falsely called a “mortgage refinance.” Yes, the banks were making so much money they used every means to keep the scheme going.

    So did you get a loan? No. Got a restructured debt. I have asked many here, but no one can answer. Is a “note” negotiable or valid when fraud was used? Is a note valid if it never accomplished what it was intended to do. That is, pay off the prior “note” by you?

    I recall the TARP Inspector General Oversight Committee saying in a footnote: “A mortgage without a note is unenforceable. A note without a mortgage is nothing more than unsecured credit card debt.”

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