Freddie Mac Changes Its Language from “Loan Portfolio” to “Reference Pool”


People still don’t believe it. Loans were not securitized but are being treated as though they were securitized. “Securitization” means selling off an asset in pro rata shares to investors who get a piece of paper telling them that they own X% of the asset.

Ask anyone who knows (or read it yourself) — all of the securitization documents are “forward statements” meaning they are referencing a future event. And none of the securitization documents convey any ownership, equitable or legal interest in any debt, note, or mortgage. And the future event never occurs. That’s the point for the Wall Street bankers.

Since they never retain any interest in any debt, note or mortgage they face no exposure to any risk of loss, and no liability for violations of federal and state statutes as issuers or lenders even though they are both. When they foreclose through various intermediaries (usually a bank appearing solely as trustee of a nonexistent trust) they still receive the net money proceeds but they have no loan account receivable to credit when they receive those sales proceeds.

ACCOUNTING NOTE: There is a difference between a loan account and a loan account receivable. A “loan account” can mean anything or nothing at all. But a loan account receivable is ane try on a general ledger that is reported on the issued balance sheet of a business entity showing that the company paid value (debt cash, credit assets) in exchange for a conveyance of ownership of the underlying debt (from one who legally owns it) — all as required by Article 9 §203 UCC which has been one existence, in one form or another, for centuries.

Without such a transaction there is nothing to report.

And without a conveyance of ownership of the asset receivable, there is no legally allowable entry on the general ledger claiming ownership of the debt, note or mortgage.

The securitization of loans never happened. This means that all claims of rights or authority to administer, collect, or enforce any debt, note or mortgage are completely and utterly false if they are based upon securitization of the subject loan.

But the Wall Street PR machine has convinced virtually everyone including “borrowers” that the loans were securitized. And there are hundreds of appellate decisions referring to loan portfolios that do not exist but are treated as real nonetheless.

So watch for how bulletins and announcements are phrased. In order to avoid indictments and civil liability for outright lying, they are now referring to loan portfolios as “reference pools,” which is exactly what I have been saying for years.

Yes, there were securities created, issued, sold, and traded. And in fact, the indenture did indeed have references to groups of data derived from announcements by investment banks referring to the performance of those loans. But that is not securitization of loans. It is the securitization of proprietary data relating to the performance of the loans — not the ownership of loans (which is what is required to speak of securitization of loans).

SO WHERE DID THE LOAN GO? This could be a reasonable basis fr dispute — i.e., whether the loan was extinguished or simply became inchoate (sleeping) pending a reformation of the transaction such that a designated virtual creditor was replaced with a real one — as required by law.

DOESN’T THAT GIVE AN UNFAIR WINDFALL TO HOMEOWNERS WHO RENEGED ON A PROMISE TO PAY? Again subject to dispute, but my answer is absolutely not.

In fact, it reveals exactly the opposite.

The “lender” (securities brokerage firm doing business as an “investment bank”) is actually an issuer of securities that cannot be sold without the cooperative signature of the homeowner together with detailed personal information of the homeowner.

The resulting sale of securities produces a windfall to the investment bank equal on average to 12 times the principal paid, thus far, to the homeowner.

The homeowner is required under the disclosed part of the deal to repay the principal paid to him — which means that the homeowner did not receive any consideration for the concealed part of the securitization deal.

In addition, the homeowner has unknowingly taken on the risk that the investment bank has dumped. As a putative “lender” (not really) its sole business reason for the transaction is the issuance of securities without which it would not near lending to individual homeowners.

The more securities the merrier and the larger the windfall to the investment bank— all without giving any conveyance of any debt, note or mortgage. (You never see the investment bank as the grantee on any recorded conveyance).

Since the investment bank has no risk of loss, it does not care about the future performance of the alleged “loan transaction.” This one fact removes the basic balance between any person who is characterized as a borrower and any person who is characterized as a lender.

According to federal and state lending laws and basic common sense, the lender, as a sophisticated financial enterprise, is charged legally with determining the viability of the loan because it has a risk of loss.

Without that risk of loss, the only interest remaining is getting the “borrower” to submit personal data and to have the homeowner sign documentation promising to pay back the consideration (plus interest!) received for the concealed, involuntary participation in the securitization scheme.

In contract law, this is a classic example of a failure of an element of enforceable contract — no meeting of the minds. Borrower intent + NO lending intent = no contract. 

The homeowner is deprived of the opportunity to receive the benefit of bargaining for a share of the securitization scheme or not to participate at all.

Therefore my conclusion is that (a) the homeowner owes nothing because of contract failure and (b)is entitled to quantum meruit under quasi-contract law to reasonable compensation for the concealed securitization scheme that could never have existed but for the homeowner’s signature and personal data.

What does this mean? It means that NONE of the investors who bought or traded swaps, certificates, or other securities ever acquired any interest in any loan. None of them acquired the ownership of any debt, note, or mortgage. None of them ever acquired the legal right to administer, collect, or enforce any debt, note, or mortgage. And it means that all documents suggesting the contrary are fabricated and false.

Thus under such circumstances no servicer, trustee, trust or investor Including Fannie and Freddie) possesses any right, title or interest in administration, collection or enforcement of any loan.

DUMP THE RISK: The theory behind securitization is perfectly sound, legal, moral, and politically expedient. It is intended to attract investment by reducing risk. But Wall Street took this one step further. They completely eliminated the risk. In order to do that they had to completely eliminate the loan account from the general ledger of any company that was involved in the securitization process. The loan account was a cover for fraud. It doesn’t exist.

Nobody loses money when a homeowner stops paying. And when a homeowner does pay they are contributing to bonuses and largely untaxed profit of investment banks — and that is an apt description of what happens to the money when a homestead is forced into sale. NO entry is ever made decreasing the amount of a receivable because there is no receivable.

And that is the part that is completely “counterintuitive” to nearly everyone. It is also the reason that Foreclosure Mills consistently Stonewall any attempts to get discovery of information that would obviously lead to admissible evidence in court.

There are thousands of Foreclosure cases that have been pushed to the back burner for 10 years or more (I have one that is 12 years old) as a result of lawyers and pro se litigants experimenting with this concept.

The concept is simple. The claim brought against the homeowner either directly or indirectly asserts that the designated claimant exists in the real world and possesses a claim against the Homeowner. The homeowner says OK, tell me how you exist and how you acquired a claim against me. The Foreclosure Mail refuses to answer because it knows that the truth will kill the claim. 

BUT by sheer force of will and perseverance and infinitely deep pockets, the investment bank continues litigating a claim that has absolutely no merit. And in most cases, because our government regulators are sleeping the cost of defending the baseless claims falls onto the homeowner who lacks the resources of time, money and energy to preserve the largest asset he/she owns.

Neil F Garfield, MBA, JD, 73, is a Florida licensed trial and appellate 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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3 Responses

  1. To Susan Batista- more evidence is published every quarter by Comptroller of the Currency. Google OCC Report on Derivatives and go to page 35 (or 36) it has a table how much exposure to derivatives has each Big Bank.

    OCC said: four large banks held 86.7 percent of the total banking industry notional amount of derivatives. Derivative contracts remained concentrated in interest rate products, which represented 73.9 percent of total derivative notional amounts.

    No, they don’t stop at 12 times. Goldman Sachs makes about 184 times trading IMAGES about PERFORMANCE of INFORMATION related to someone’s home, based on the SAME Data related to the SAME mortgage traded by their piers.

    From OCC report, , page 37, in millions:

    JP Morgan: Assets: $ 2,690,959. Taxpayers bailout $25,000,000. Derivatives: $59,611,878. About 27 times.

    Goldman Sachs: Assets: $254,668 (siphons wealth offshore) ; Taxpayers bailout: $10,000,000 plus $50,000,000 as AIG bailout; Derivatives $47,218,470. About 184 times.

    OCC said: Derivative notional amounts increased in the first quarter of 2020 by $26.0 trillion, or15.2 percent, to $197.5 trillion (see table 10).
    Derivative contracts remained concentrated in interest rate products, which totaled $146.0 trillion or 73.9 percent of total derivative notional amount.

    Public record: There is approximately US $37 trillion in circulation: this includes all the physical money and the money deposited in savings and checking accounts. The world’s total wealth is about $241 trillion. Money in the form of investments, derivatives, and cryptocurrencies exceeds $1.2 quadrillion

    Do your math. $1.2 Quadrillion divide by $37 trillion.

    No, GSEs do not “buy” “own” “sell” or guarantee any loans. It is published in their Prospectuses, go to SEC websites and find them.

    Example: Freddie Mac UMBS AND MBS MASTER TRUST AGREEMENT. (b) Freddie Mac MAY from time to time (i) purchase Mortgages, [.] the parties to this Agreement do hereby declare and establish this Agreement and do hereby undertake and otherwise agree to the transfer of the Mortgages to various Pools, the
    issuance of the Securities and the establishment of the rights and obligations of the parties.

    So, Freddie MAY purchase mortgages and AGREE to transfer them to some Trust – but never DID it.

    Because everything is done by other parties, (Big Banks (aka Federal REserve), DTC and its branch Cede and Black Knight and CoreLogic. who never appeared in any RESPA or TILE and who must be kept hidden from the homeowners.

    Freddie said: Book-Entry Rules: The provisions from time to time in effect, Freddie Mac MAY issue securities on the book-entry system of the Federal Reserve (read: Big Banks).

    Freddie MAY issue securities – but never did. Because ALL securities are issued by DTC for the benefit of Cede who sell DERIVATIVES to its members – which they sell to investors as a second DERIVATIVE which is not backed by ANYTHING.

    Investors are not even allowed to have any proof of their investment.

    All that investor pay for is a nice-looking IMAGE on someone’s computer screen which tell them about performance of DATA related to some mortgages.

    GSEs merely cover up for the Biggest crime in the World operated by FEDERAL RESERVE (which is a Private corporation owned by eight families and its members – Big Banks Goldman Sachs, JP Morgan, BOA. Wells, Citi, Morgan Stanley) and their branches – Depository Trust Corporation and Cede &co, (which is FR’s version of MERS.

    Money for “mortgages” are most likely coming from Federal Reserve operating pool which is controlled by Big Banks.

    These money are passed to Black Knight, Inc (Fidelity National Financial) or CoreLogic, Inc (operated by First American Financial)

    Since 2015 ALL so-called mortgages are originated by either Black Knight or CoreLogic – while their bosses – FNF and FAF sell bogus “Title Insurance Policies ” where they specifically exclude “loans” made by fake Lenders.

    Usually BK pass FR’s table pool money either to bigger intermediaries – CWF (now Caliber, PennyMac or BAC), Fremont (now HomeExpress Mortgage); or to smaller actors for hire who pretend to be “Lenders”

    Media actively promotes these fake intermediaries as “independent lenders” while none of them lent a cent to anyone.

    PennyMac, for example, not only never funded any loans, do not provide any servicing for loans, but even does not own its Company. It is owned by BlackRock (branch of Merrill Lynch/BOA) and HC Partners LLC. According to recent SEC filings, the major owner of PennyMac became Mortgan Stanley, while other “underwriters such as BOA, Goldman Sachs JPM and other Big Banks actually own and operate PennyMac (whom they owned and operated as Countyrwide Financial)

    After “borrower” – aka contractors for financial services – signs a Promissory Note, it is scanned , converted into IMAGES and these IMAGES are sold to Investors as BETS on performance of someone;s DATA.

    No, Servicers do not service anything. First here is NOTHING for them to service. Second, here is NOBODY for them to service. Third, nobody would entrust servicers any money to handle.

    PennyMac never “bought” any loans because here is no one who can sell them.

    ALL DATA about loans is held by Federal Reserve via DTCC and Cede and investors can only buy virtual “Certificates” (contracts) with Cede.

    These rights can be terminated without notification to or recourse by the common man.
    Payment of dividends (solely based on discretion of Wall Street brokers, pursuant to these Beneficial Ownership Rights is what keeps a financial revolution at bay.
    These Beneficial Ownership Rights can only be held, in name only, by Members of the DTC. The actual legal control authority over these Beneficial Ownership Rights is maintained by Cede & Co. as the Sole Registered Shareholder only and not to either the equity shares or the Street Name Stock that are owned by Cede & Co.
    By written contract, Cede & Co. will only give Beneficial Ownership Rights to those DTC Members who have purchased the Street Name Stock from Cede & Co.
    Derivatives, as a trading commodity, are literally a figment of the imagination.
    The Street Name Stock sold to DTC Members is the 1st Derivative since the Street Name Stock has no connection to any physical assets of the company.
    Without the fallacious Street Name Stock being generated by Cede & Co., there would be no Paper to sell to the public and the IPO would generate no money.
    The public is of the belief they are buying ownership in the company but this is a lie.
    At this point, once DTC Members receive their portions of the Street Name Stock, the IPO is announced.
    DTC Members owning the Street Name Stock now sell ONLY Beneficial Ownership Rights to the public.
    The public buys the 2nd derivative, or 2nd figment of the imagination, and receives only the revocable and cancellable Beneficial Ownership Rights to receive the net majority of declared and paid dividends.

    Regarding REMIC Trusts, it states:
    “If issued in book-entry form, the classes of a series of certificates will be initially issued through the book-entry facilities of The Depository Trust Company, or DTC. No global security representing book-entry certificates may be transferred except as a whole by DTC to a nominee of DTC, or by a nominee of DTC to another nominee of DTC. Thus, DTC or its nominee will be the only registered holder of the certificates and will be considered the sole representative of the beneficial owners of certificates for all purposes.”
    In other words, only the DTC and Cede & Co. may distribute Beneficial Ownership Rights.
    Therefore, the only Beneficial Owners, in all cases, will be the Direct or Indirect Participants in the DTC that are completely managed, controlled and regulated by the DTC for its own benefit.

    PennyMac NEVER owned anyone’s debt – simply because nobody allow them to own it; NEVER initiated any loans because they don’t have money to loan; and NEVER serviced any mortgages since Big Banks are well aware about PennyMac’s executives criminality.
    PennyMac is is merely a foreclosure and Title laundering vehicle for Big Banks/ Federal Reserve whose sole purpose to pretend to be a “buyer” from GSEs (read Cede who passed data about my loan to a new player via new password to DTCC/Black Knight database

    According to Wikipedia, Cede and Company, also known as “Cede and Co.” or “Cede & Co.”, is a specialist United States financial institution that processes transfers of stock certificates on behalf of Depository Trust Company, the central securities depository used by the United States National Market System, which includes the New York Stock Exchange, Nasdaq, and other exchanges together with associated clearinghouses such as NSCC, FICC, DTCC, and others.

    Cede technically owns substantially all of the publicly issued stock in the United States.
    Thus, investors do not themselves hold direct property rights in stock, but rather have contractual rights that are part of a chain of contractual rights involving Cede.
    Founded in 1996, Cede was formed for the purpose of efficiently processing transfers of stock certificates on behalf of the Depository Trust Company.[3] The company is at 55 Water Street, Suite Conc4, New York, New York 10041
    A common misconception is that ‘Cede and Company’ is merely a fictitious legal name used to refer to Depository Trust Company. In fact, Cede is actually a New York City-based partnership of certain employees of DTC.[5][3] Cede is a separate legal person from Depository Trust Company, which is owned by DTC Participants, who are banks and brokerage houses, and not employees of DTC.[citation needed]

    One reason Cede is structured as a partnership is that each general partner can order transfers of stock registered in the name of the partnership without the need of presenting a separate corporate resolution to the stock issuer’s transfer agent or stock registrar to validate the authority of the transfer.

    How Wall Street Gets Control

    1. Before the IPO is offered through a Wall Street exchange, the offering company creates the original Equity stock that represents true ownership of the company as it exists prior to the IPO being formalized and offered for sale.
    2. By SEC law and Wall Street procedure, before the IPO is released for sale, a binding contract MUST be executed with at least one Wall Street exchange, all of which are owned and controlled by the DTCC.
    3. After Contract execution and prior to IPO offering release, all original hard copy shares representing actual equity ownership of the company must be physically delivered to the exchange(s) conducting the IPO.
    4. After receipt of the original equity shares, the exchange declares itself the Sole Depository for all hard copy shares.
    5. The exchange is now the Legal owner of the company.
    6. At this point, the common man’s ability to own actual equity in the company ceases to exist.
    7. Pursuant to the Securities Act of 1934, the SEC notifies the exchange that it cannot simultaneously own and trade the equity shares.
    8. The SEC notifies the exchange that it can transfer ownership of the equity shares to the Nominee of the exchange.
    9. As the sole Nominee for all exchanges, the equity shares are transferred to Cede & Co.
    10. Cede & Co. now becomes the Sole Registered Shareholder of the company.
    11. The exchange retains physical custody of the equity shares during the IPO offering period.
    12. Cede & Co., as the Sole Registered Shareholder and for the purpose of giving the exchange something to sell as a shill commodity, creates one (1) electronic only share certificate referred to as the Street Name Stock.
    13. The Securities Act of 1934 as amended requires that all traded shares must be delivered to the buyer in 1 to 3 days.
    14. Therefore, Cede & Co., electronically trades only the Street Name Stock on the DTC- owned exchange.
    15. Cede & Co. trades its Street Name Stock on the exchange floor as the meeting place for all sales and trades.

    16. The DTC keeps its trading protocols private such that outside parties are precluded from discovering what goes on behind closed doors and keeps the public from becoming aware of these acts.
    17. By written contract, Cede & Co. may only sell its electronic only Street Name Stock to direct and indirect Members of the DTC on the DTC owned exchange trading floor.
    18. Members of DTC may only trade and sell their electronic Street Name Stock to other DTC Members or to Cede & Co.
    19. Therefore, this closed-loop sales system keeps the electronic Street Name Stock in the DTC Member family and directly under the control of Cede & Co.
    20. Only Cede & Co., as the Sole Registered Shareholder who actually owns the company, can give Beneficial Ownership Rights to any subsequent buyer.

    What Are Beneficial Ownership Rights

    1. Beneficial Ownership Rights represent the right to vote by Proxy when that Proxy is ONLY authorized by the Registered Shareholder.
    2. Beneficial Ownership Rights are those revocable and cancellable rights to receive the major portion of a dividend, if declared. Beneficial Ownership Rights have nothing to do with Ownership of the Actual Equity Shares that represent Actual and Perfectible Ownership in the company.
    3. This extremely important clarification between Actual and Perceived Ownership of Equity Shares representing Ownership in the company is the basis for the Wall Street System being able to bilk and acquire most of the wealth in the Country.
    4. Thousands of these transactions take place each business day are done so in the black and go unchallenged by the American Public.
    5. This is the primary reason that, since the majority of the American Public typically doesn’t read or study and is ignorant of this legal reality, Cede & Co. has basically been able to acquire and steal the ownership of America.
    6. The American Public, thinking they are buying Actual Equity Share Ownership, is being mislead and set up just as American homebuyers were in the Mortgage Crisis.
    7. Most Public Buyers accept the assurances of their Brokers and others and never read or research to ascertain the factual reality that they are buying NOTHING of actual collateralized value.

  2. Need more evidence of why you stated the Banks make an average of 12 times the amount of the loan. What about Mers Inc.,members being able resell the same Mortgage among members without recording the sale in the County Records. There were 5 000 members, why would they stop at 12?

  3. The power of such fraud is beyond us. Perhaps, President Biden will address. But this is doubtful, as he already concealed it. We will have a new housing secretary. And, individual homes will be transferred to affordable housing. This process is already in the works in many states.

    Bottom line — DO NOT BUY A HOUSE. Hardship is unpredictable, and one minor move will fall into the pit of no return.

    Headed for housing for all. That does not sound bad — sounds good.
    But the consequence to homeowners is not good. And, the consequence to our country — well, that is a different topic. Might as well not work hard for anything. Will get you nowhere.,

    Stand in line for affordable housing. “Man” – do I regret ever paying a dime.

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