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“ALL OF THESE FORECLOSURES ARE TAINTED BY THE PROBABILITY THAT EVERYONE HAS RECEIVED PAYMENT BUT THEY ARE TRYING TO GET THE PROPERTY TOO AS WINDFALL TO ONE OR MORE OF THESE FRAUDULENT PLAYERS. THE BORROWER IS LEFT HOLDING THE BAG WHILE EVERYONE ELSE GETS PAID OR BAILED OUT.” see https://livinglies.me/2008/09/11/foreclosure-defense-records-frequently-dont-exist-until-required-in-litigation/

The ONLY thing I had wrong was that there was ANY holder in due course and that ANY sale of any “loan” had taken place. I got that wrong because it was securities brokerage firms that were at the base of this scheme and they were definitely issuing securities. Like everyone else I had assumed that the securities must be related to “loans” and that investors were buying pieces of loan portfolios. It did not occur to me until much, much later that even that assumption was wrong.

It was only when the TARP rollout kept changing that it dawned on me that I had something wrong. The assumptions kept changing. First, it was to cover troubled loans — but the investment banks did not own the loans so it couldn’t be for that. Second, it was for the mortgage-backed bonds — but there were no mortgage-backed bonds. And the investment banks were selling them not buying them. And finally, they redefined the Troubled Asset Relief Program to generally toxic assets with full recognition that the investment banks were making money not losing money. Because the policy decision was to pump money into the financial markets, they didn’t care what it was called.

As the assumptions changed I began to re-examine my own. If the transactions with homeowners had been loans and the loans were securitized (i.e., sold off to investors) then why were regulators floundering? It is a pretty straightforward proposition. The credit markets had frozen because nobody wanted to buy the certificates, whose value was supposedly derived from ownership of the “loans.” The answer was obvious and it was the Federal Reserve that did it. They started “buying” “Bonds” at a window exclusively reserved for investment banks who were making up the “bonds” as fast as they could to get trillions of dollars in “relief” (i.e., bonuses) in addition to having made trillions of dollars in the run-up.

That still doesn’t explain TARP. The only trouble for the investment banks was the projected absence of revenue from the sale of certificates (labeled by the selling investment banks as mortgage-backed bonds) that amounted to no more than unsecured discretionary IOUs issued by securities firms calling themselves “investment banks”. Because of the way the “relief” program was structured, the investment banks were able to keep selling certificates to investors as though they were mortgage-backed bonds. So even the revenue was preserved.

Still, I couldn’t quite let go of the notion that there must be a loan account receivable on the books of some company. But in litigation with the fictitious claimants, I eventually realized that no such account existed. The “servicer” was working for a fictitious entity that had not paid for nor did it own any “loan” nor the underlying obligation, The servicer had been inserted to imply the existence of a loan account receivable in order to foreclose.

In thousands of cases, no servicer has ever asserted or demonstrated that it was the bookkeeper for the accounting statements of the party named as a claimant in a foreclosure. They could neither state the identity of anyone who owned the underlying obligation nor could they tell us who received the money that homeowners were paying. And it turns out that in most cases the “Servicers” were neither receiving any money nor were they keeping the books. this was all funneled to thrid-party vendors mostly controlled by Black Knight.

Foreclosure was the method by which the myth of the existence of a loan transaction was reinforced. Because the labels were consistently applied by the conduits, sham entities, and lawyers employed by the investment banks, and because the true nature of the deal had been consistently concealed, everyone believed the false narrative that the transactions with homeowners had been loans and that the holders of certificates were investors in those loans.

The concealment was successful and so millions of Americans were forced out of their homes by a void foreclosure process that resulted in revenue distributed to the various players in the foreclosure scheme and the various players in the securities scheme. But not all of them were forced out. Many, if not most, simply left the biggest asset of their lives because they did not understand that the money they had received was not a loan, it was a payment for their participation in launching the securities scheme that netted millions of dollars for each so-called loan.  They might owe tax on that compensation — after deduction for all the losses and risks they assumed in the transaction. But adding liability to what turns out to be the investment banks is adding insult to injury. And foreclosure in that context is cruel and inhumane.

On average homeowners were paid around 8% of the total revenue which seems fair. But then the deal was disguised as a loan which meant that the payment for their services had to be returned by the homeowner. This leaves the homeowner with negative consideration for sponsoring a securities scheme that made unconscionable profits through fraud and deceit.

So in the end I have concluded that neither the “loan agreement” nor the “securities deal” is enforceable against the homeowner. the homeowner had no opportunity to bargain or reasonable compensation because of the total and consistent concealment of the true nature of the deal. But we can start with what the investment bank obviously determined was the right amount — the amount paid to or on behalf of the homeowner. If the investment bank wants that money back then they are admitting they never had any intent to honor any contract with the homeowner. They are seeking to leave the homeowner with negative consideration for the deal — loss of equity because of inflated appraisals and nonviable payback schemes, plus loss of the only consideration they received from the investment bank, plus the “interest” paid, leaving all homeowners in a deeply negative position.

The “loan agreement” was no enforceable partly for the same reason that the securities deal is not enforceable. As a result of concealment, there could be no “meeting of the minds” the most basic element of an enforceable contract. And here again, consideration was totally absent. The investment bank was operating through sham conduits to lure the homeowner into what was labeled as a loan. but the investment bank had no lending intent nor any intention of establishing a loan account receivable on the accounting ledgers of any company or business entity. the “loan” simply did not exist to the investment bank. It only existed in the minds of the homeowner who accepted the label of “borrower.”

The homeowner “borrower” then issued a note and mortgage and the signature on other “loan documents” because of the belief that everyone involved was telling the truth and was operating in compliance with lending laws and common sense for lending transactions. In other words, the homeowner was operating under a false assumption created by lies, deceit, and concealment. The homeowner was not purchasing a loan product as you have seen above. There was no loan product. The homeowner was issuing the note as payment for something he/she never received.

As it stands then, here is my conclusion. Neither the securities deal nor the loan agreement legally exists and therefore there is nothing to be enforced. The normal remedy for such situations is rescission, but the issuance of derivatives on derivatives has added so many layers of additional investors who may be bona fined purchasers for value that rescission is not practical or reasonable. This is true even though those investors acquired no part of any loan and were only placing bets on the reports by the bookrunner investment bank’s reporting of data regarding the “performance” of loans that did not exist.

So the only other option, in my opinion, is reformation. Any stakeholder can ask for it. I think the obvious major stakeholders are simply homeowners and investors. The investment banks and servicers should be cleared out of the mix. The court would use its equitable powers to decide the terms of the total quasi-contract giving each of the real stakeholders their just reward and enforcing those elements of the contract that remain outstanding. This will provide substantial relief to both investors and homeowners and a strong stimulus to the economy — which was the original object of the bailouts and relief programs in 2008-2009.

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