Repurchase agreements only advance the myth that loans were purchased in the first place.

Investors would do much better if they stopped litigating the duty to enforce repurchase agreements. The repurchase agreement is void because there was no purchase. There are better claims to make that are more easily proven.

Homeowner litigants need to have more courage and attack the existence and ownership of the underlying alleged obligation much more explicitly and directly. They will be pleasantly surprised. While they will never get an admission that the whole affair is a scam, they will be able to raise the inference and thus limit the evidence in court that would ordinarily be allowed to prove the existence, ownership, and enforceability of what the claimant says is an unpaid debt. The key to winning any defense narrative is establishing insufficiency of the evidence.

As I stated in 2006 on TV, radio and articles published in many news outlets, both homeowners and investors should get on the same page. This was a sham. Investors probably can become creditors if they ask the court for a declaration of rights and maybe even appointment of a receiver. The debtors would be the Wall Street firms and possibly even homeowners — although not to the full extent of the purported obligation to repay the compensation paid to homeowners for assuming concealed risks.

see https://www.nationalmortgagenews.com/opinion/will-cmbs-litigation-be-the-new-rmbs-litigation

This is how the legal system became twisted beyond recognition in dealing with claims arising from investors, homeowners, and GSEs. There was a faulty and totally erroneous assumption (in most cases) that there was ANYTHING to buy or sell.

Wall Street banks have successfully relied upon complexity to force everyone else to rely on a single source for explanation of the falsely proclaimed “securitization” process. That single source is Wall Street. As long as we are only getting our information from the perpetrators of this financial terrorism we will be paralyzed.

Now this is spilling over to commercial transactions where some securitization actually happened. As between banks it was called “syndication” of loans, but when they get outside investors to take a piece then it is called “securitization” because each investor gets some paper document proclaiming them to be the owner of part of the loan debt, note, and mortgage.

That never happened with residential loans. No investor ever purchased a share of any loan. No Wall Street securities brokerage firm (aka “investment bank”) ever established, maintained or sold any homeowner obligation. But the Wall Street firms did pretend to sell the note and mortgage, albeit without any conveyance of the alleged underlying obligation.

A paper transfer of an asset is evidence of transfer, but it is not the actual transfer. So homeowners can ask for proof of payment of value for the underlying obligation (see Article 9 §203 UCC) to rebut the appearance of a transfer. A transfer of a mortgage without transfer of the underlying obligation is a legal nullity in all 50 states, as it should be.

And unless Wall Street wants to tell us that such transfers were gifts, then those “purchases” were never completed because there was no payment of value one exchange for a conveyance of ownership of the alleged underlying obligation. This is one of the finer points that Wall Street is exploiting. They may point to the movement of money or value — but that movement did not result in a transaction in which an owner of the obligation (i.e.e someone who paid for it) was paid value for the obligation and executed a transfer document “for value received.”

Of course, the underlying obligation had been extinguished contemporaneously with the origination or acquisition of the obligation — because nobody wanted to be left holding the bag. Any entry on the accounting ledger of any entity that established the obligation as an asset purchased for value would make that entity liable for violations of lending laws. And nobody wanted to suffer a real loss if the homeowner failed to make scheduled payments to pay off a nonexistent debt.

So nobody wanted to own any debt from homeowners. And they didn’t need to own anything. The securities scheme was not securitization of any homeowner debt. It was a much larger scheme that used homeowner transactions only as an outside reference point for data reporting in the sole discretion of Wall Street firms who were the bookrunners in each scheme.

The securities were bets — not evidence of ownership of anything. The sale and trading of such securities, combined with insurance and hedge contracts produced so much money that the homeowner transaction became irrelevant excepts as a reference point for data. So everyone got paid in full and then some. Nobody needed to own any homeowner obligation and the fact that they didn’t own the obligation would not stop them from pursuing enforcement despite the lack of ownership.

In order to really sell an asset, you must own it. In order to own it you must pay for it. In order to transfer ownership of the asset, you must transfer the actual asset not just a piece of paper that talks about the asset. It is possible that some payment of value exchanged hands in which there was a reference to both residential and commercial loans. But in residential transactions with homeowners, it is mostly NOT possible that any underlying obligation was transferred (even if it appears to have been “sold”).

So “repurchase agreements” for bad loans were in fact a misnomer and perpetuated the myth that securitization of residential loans actually occurred. Litigation over rights that do not exist is a farce. But that is exactly where the courts are stuck. This is not a failing of the courts. It is the failure of litigants to bring the true facts to the court’s attention.

This failure arises from the lack of understanding of the process that Wall Street is calling “securitization.”

Litigants need to have more courage and attack the existence and ownership of the underlying alleged obligation much more explicitly and directly. They will be pleasantly surprised. While they will never get an admission that the whole affair is a scam, they will be able to raise the inference and thus limit the evidence in court that would ordinarily be allowed to prove the existence, ownership, and enforceability of what the claimant says is an unpaid debt. The key to winning any defense narrative is establishing the insufficiency of the evidence.

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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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One Response

  1. Neil repeatedly tell that Courts do not know that is going on in their rooms (robbery by Walls Street Banks who confiscate the only payment for performed services – plus tax-free homes and all the money from American families.

    I have plentiful evidence that Judges KNOW about the Scheme and intentionally promote it.

    EVERY JUDGE before whom I appeared and said that Deutsche Banks is not a Trustee for GSAMP Trust 2006FM1; that documents presented (but never given to me) are forged; ect. said that Wells Fargo Bank (whom Nat’l Mortgage Settlement identified as my “Servicer” is my “conclusory unsupported assumption”

    So, if DBNT is not a Trustee for non-existing Trust and Wells Fargo Banks as a Servicer is merely my “conclusory assumption” – even though The Settlement said otherwise) – when WHO is the real party?

    Now I know it was Goldman Sachs – but JUDGES knew it much earlier. They KNEW it from the beginning.

    And EVERY Judges who called my statements “unsupported assumption” – resigned from his job shortly thereafter.

    In other words, Judges are expected and they DO cover for Wall Street Banks crimes, just like CFPB, DOJ and others

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