How Judges, Attorney, Homeowners and Even Investors Get it Wrong about “RMBS”

Sign Petition to Change the rules to Protect Homeowners from Fraudclosure.

The main point is that the “MB” in RMBS” is “BS.” The certificates are not mortgage backed — as has been repeatedly determined by competent courts considering the status of holders of those certificates.

  1. Investors do not have any right, title or interest in any obligation, note or mortgage from any homeowner.
  2. Investors do not have any right, title or interest in receiving payments from homeowners.
  3. Investors do not have any right, title or interest in enforcement of contracts with homeowners.
  4. There is no connection between investors and homeowners.
  5. There is no connection between investors and foreclosures.

Look at this Ohio decision:

Countrywide Mortgage Loans, Park Granada Mortgage Loans, Park Monaco Mortgage Loans, and Park Sienna Mortgage Loans (“Countrywide”) were mortgagees that loaned money to homeowners and then pooled the mortgage loans and sold them to a depositor, which would transfer them into trusts. These trusts were created to facilitate residential mortgage backed securities (“RMBS”) transactions with Countrywide as seller.The depositor then transferred them to defendant-appellee Bank of New York Mellon (“BNYM”), which was the trustee. As trustee, BNYM issued certificates that entitled investors, or certificateholders, to income from the principal and mortgage payments collected by the master servicer, which received loan payments from the borrowers and serviced the loans. In this case, the mortgage servicer was a Countrywide affiliate, Countrywide Home Loan Servicing LP. BNYM also held the mortgage documentation for the loans. These mortgage files were supplied by Countrywide after the closing of the loans. Ultimately, BNYM would distribute payments to certificateholders. Plaintiff-appellants Western and Southern Life Insurance Company, Western-Southern Life Assurance Company, Columbus Life Insurance Company, Integrity Life Insurance Company, National Integrity Life Insurance Company, and Fort Washington Investment Advisors, Inc., (“W & S”) purchased certificates representing bundles of these mortgages with a face value of $ 538 million.

W. & S. Life Ins. Co. v. Bank of N.Y. Mellon, 129 N.E.3d 1085 (Ohio Ct. App. 2019)

To make things easy all recitals that are completely without merit and wholly untrue are in bold italics.

  1. Countrywide Mortgage Loans, Park Granada Mortgage Loans, Park Monaco Mortgage Loans, and Park Sienna Mortgage Loans (“Countrywide”) were NAMED (NOT ACTUAL) mortgagees that loaned no money. THEY DID NOT LOAN MONEY, THEY DID NOT PAY MONEY AND THEREFORE THEY COULD NOT BE MORTGAGEES BECAUSE ONLY PAYMENT OF VALUE FOR THE DEBT EFFECTUATES A VALID LIEN ENCUMBRANCE ON THE SUBJECT PROPERTY. 
  2.  NO DEBTS WERE POOLED, AND THEREFORE NO LOANS WERE POOLED. Loan data was aggregated without regard to ownership, which was irrelevant.
  3. No sale to any depositor was ever concluded with the payment of value for any loan.
  4. No transfer of a loan could ever be completed without transfer of ownership of the debt which was not owned by any of the above parties even temporarily. Such transfers are considered to be a legal nullity in all US Jurisdictions.
  5. No trust or trustee ever received any ownership of any obligation owed by any homeowner.
  6. Countrywide was never a seller of obligations. It was an aggregator of loan data.
  7. Bank of New York Mellon never issued any certificates.
  8. Certificate holders were never entitled to interest and principal from paid by homeowners. They were only entitled to discretionary payments from the investment bank doing business under the name of the “trust.”
  9. Bank of New York Mellon never touched a single penny, document or had any interaction with anyone regarding any obligation relating to any homeowner. They are strictly a paid vendor — use of their name provides a royalty and under certain other agreements like “Corridor Administration  Contracts” they receive money for a service that the counterparties actually perform for themselves through intermediaries.
  10. Bank of New York Mellon has never received a payment from a homeowner in this context nor has it ever paid any money to investors. It maintains no financial accounts through which such money could even pass.

The real question is why the investors chose to sue Bank of New York Mellon instead of alleging vicarious liability against the investment bank that was pulling all the strings. The answer could be that the fund managers were controlled or influenced by the investment banks who were responsible for this mess.

The secondary question is whether the beneficiaries of the investment funds (pension funds) that bought the worthless certificates can sue fund managers for breach of duties including perhaps the covenant of acting with due diligence and good faith. Any real securities analyst who looked at this scheme refused to have anything to do with it.

Neil F Garfield, MBA, JD, 73, is a Florida licensed attorney since 1977. He has received multiple academic and achievement awards in business and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.

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12 Responses

  1. Hi Tom — You are right about the MLPA and MLS, but some are there. But the MLS is referenced by the MLPA which is always only an “intent” to sell, and never any actual sale. As to WAMU — some of the WAMU subsidiaries may not have gone to FDIC. Including WAMU security underwriting firms. In addition, Chase won lawsuit against FDIC as to repurchases by settlements. Chase did not assume liability for repurchases.

  2. Anon-the Paa at the FDIC website shows that Chase acquired certain assets of Washington Mutual, Henderson, NV on 9/25/08. On 9/26/08 Washington Mutul Investment Holdings, encompassing a hundred plus other WaMu entities-filed BK. MFI Miami has some enlighteing articles about Chase/WaMu. Both the FDIC and the D Federal Reserve board of governors have confirmed that they had no specific info on individual mortgage “accounts” to convey-as would be required, along with Receivers deeds or bills of sale-by section 3 of the Paa. As a practice-WaMu table funded/pre sold “mortgages”…so were any on the books of Washington Mutual, Henderson NV on 9/25/08? Seems Chase acquired servicing rights at best…
    TK

  3. Bob G…You believe everything you read? Have never heard yet from anyone who has seen such a schedule. Just because a document says something is available does not make it so…no? The prospectus supplement references an MLS too-and also says all notes must be endorsed to the Trustee,,,yet I know of nobody who has seen (copies of) notes other than indorsed in blank by a Cynthia Reily or Jess Almanza rubberstamp-likely years after the fact, by Chase. Sans the MLS /MLPA it appears the first attempt at portraying any conveyance of MY “account” was a 10/2/12 assignment to this trust which closed 8/30/05 and terminated at the SEC on 1/6/06. Violations of the PSA and governing NY trust law… If you ever run across that MLS-you let me know.
    TK

  4. Bob G — didn’t most of Long Beach go to WAMU and then to FDIC – then to Chase?

    But FDIC really doesn’t know if EVERYTHING went.

    But, again, MLPA is only an intent to sell — any schedule you would get was only preliminary and not final.

    In addition – the trust were USUALLY set up into multiple REMICs — any preliminary schedule would then have been segregated into separate REMICs from title series name. Getting that info is important because some segregated REMICs were NOT offered for security sale.

  5. @ TOM KIBLER…you apparently did not read the PSA.

    EXHIBIT D

    MORTGAGE LOAN SCHEDULE

    Copies of the Mortgage Loan Schedule (which has been intentionally omitted from
    this filing) may be obtained from Long Beach Securities Corp. by contacting:

    James Mark
    Long Beach Securities Corp.
    1201 Third Avenue, WMT1041
    Seattle, Washington 98101
    Telephone: (206) 377-2977
    Facsimile: (206) 490-5656

    You wasted my time. Do your homework before posting. Otherwise, folks won’t take you seriously.

  6. If you can get a MLS – it will not have servicer account number that you have. Also, a Mortgage Loan Purchase Agreement (which should have the schedule) is only an “intent’ to purchase, and is also a “Repurchase Agreement.”

    Also, many of these trusts (if not all) were set up in violation of securities law, with segregated loans into segregated REMICs that do not match the stated “trust” “SERIES” name.

  7. Bob G- Long Beach mortgage loan trust 2005-WL2 has no mortgage loan schedule- nobody has ever seen an MLPA, or a 1066, or any proof of conveyance. Also never seen a proper sequence of assignments recorded in the land records, or a note with indorsrments reflecting s conveyance by the depositor to the trust. No authenticated security agreement to comply with UCC 9-203….This Trust may never have been ‘consummated’

  8. I’ve seen schedules, but they do not match what is before the court in terms of amounts, loan numbers [in cases] and many of them are not performing as soon as a year later. Don’t know what to make of that? Mine had 2 loan numbers in it. The same numbers in the original entry, were the very same 9 years later, then US Bank has a completed foreclosure on their balance sheet from 2013, then 2015, when it was supposed to have happened in 2009? If nothing else, wildly inconsistent. Oh and AIF Ocwen, the servicer, transferred the note in 2012 to the CSMC trust…from NCMC what is all that? Anyone explain?

  9. Some time ago, my judge ordered that adversaries disclose the “mortgagee.” This is because the claimed originator was defunct (with no successor). .

    The answer was: “(Big Bank), as trustee.”

    “Trustee to what? we asked. They would not answer that question. But then – five years after the transaction occurred – they recorded an assignment to “Big Bank, trustee, to ABC BS Trust” despite our objections.

    We have never defaulted, and continue to pay, but refinances are denied because we are told by title insurers – “You have no mortgagee.” Some banks refuse applications because they say the application is “DOA” – dead on arrival (DOA was actually written on the application) – because we have no mortgagee. Other banks say that there must be a successor to the claimed originator to the “transaction,” and also refuse application. Others, including the claimed Trustee, simply denied due to “title issues.”

    Securitization should never remove a “Lender” – that would be a violation of TILA (short SOL). Investors, trusts, trustees – never directly lend money to borrowers. They invest in “cash flow” pass-through only -which is their business and should not affect the borrower. ,.

    So what is correct in everything in this post is that borrower should have no business with any “investor” or “Trust” or “Trustee” because, as Neil states, that is business between the security underwriter banks (fraudulent or not), and should have nothing to do with borrowers. In fact, foreclosures were never initiated with then only “Investors” Freddie or Fannie prior to the financial crisis fraud. Freddie/Fannie was never even recorded in title as the originator remained the “Lender.”

    Then we must ask: “How did this happen?” It happened because the “Transactions” were never valid loans, mortgages, with mortgagees to begin with. There was no “Lender.” These were once valid loans that were falsely reported as in default by the security underwriters (who then wore servicer hat) to Freddie/Fannie, that only became Restructured debt at the last “transaction.” People paid for Lender title insurance, because they were told Owner’s title insurance is only necessary at purchase – not refinance. So no one is even covered by title insurance.

    Investors never received title to any mortgage or note. This was codified by the Federal Reserve.

    When foreclosure occurs — only the right to enforce the note is claimed. Since any “Crisis” note is only by a fraudulent “Transaction” and did not do its purpose – repay the prior loan by the borrower -, is the note still negotiable even by fraud?

    The Big Banks settled because they wanted no further investigation, and none there was.

  10. Ian…can you provide an example of a RMBS trust with no mortgage loan schedule? thanx.

  11. Bob G., I think everyone was buying RMBS to the tune of billions of dollars per month. But a Trust with no assets is not a trust, as per both NY and Del Trust Law, and the only place you can find the Trust corpus is in the PSA, and every one I ever read states “ this page intentionally left blank” for the mortgage loan schedule. I can’t imagine why an investor would purchase shares in an offering where they hadn’t a clue as to what they were buying.
    Also, the loans, if there were any, were supposed to be deposited into the Trust by the cutoff date. I’ve never seen one which made it into the trust in a timely manner. According to the PSA, which is the governing document, this causes the instrument to be void. Also according to the IRC REMIC rules and regs.

  12. I must respectfully disagree with much of this post. Countrywide was real. Bank of America paid billions for it. My investment department at the pub pension fund where I worked rolled over CW’s commercial paper to the tune of $50MM to $150MM several times a month. I participated in these funding activities. Was I hallucinating? Was it all just a dream? I could go on and on about the rest of the post, but what’s the point? Some of these ideas and notions—such as there were no trusts, no loans were ever consummated, the investment banks made a profit of 10-12 times the amount of each homeowner’s loan, the courts got jesinoski wrong, etc., etc.—couldn’t be dislodged with dynamite.

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