Wall Street Is Still Selling the Myth That Transactions With Homeowners Were Loans and That Risk IS Properly Allocated to Homeowners Instead of Securitization Schemers

Today we are still living with the myth that the transactions with homeowners were loans, that the concealed risks absorbed by homeowners should not be compensated, and that administration, collection, and enforcement of nonexistent accounts receivable should be allowed. We can all change that by being open to the idea that maybe it isn’t the way that Wall Street is selling it.
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IN PLAIN TERMS, THE GRANTOR, TRUSTOR, SETTLOR GIFTOR NEVER HAD ANY  RIGHT, TITLE OR INTEREST TO ANY DEBT, NOTE OR MORTGAGE AND NEVER GRANTED ANY RIGHT TITLE OR INTEREST. BUT LAWYERS HAVE MADE ASSERTIONS FOR MORE THAN 20 YEARS THAT SUCH A GRANT OCCURRED. THEY ARE PROTECTED, AS IS THEIR CLIENTS, BY THE DOCTRINE OF LITIGATION IMMUNITY.

THE ROLE OF ELECTRONIC PLACEHOLDERS

The simple but unbelievable truth is that Chase bought nothing as it relates to your loan. They may have succeeded to servicing rights — but servicing rights do not exist in a vacuum. Servicing rights ONLY exist when the owner of the underlying debt grants authority to administer, collect or enforce the underlying obligation as evidenced by the promissory note.

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Without that connection, the “servicer” is not serving anyone. But by pretending to be the servicing through the publication of self-serving correspondence, statements, and notices, the use of the servicer’s name creates an opportunity to collect scheduled payments from homeowners — even though they are not being collected on behalf of anyone who owns the underlying debt.
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The usual retort to that is that the servicer must only produce evidence of a “holder.” A holder is someone in possession of the promissory note (not the mortgage or deed of trust) who has been granted the right to enforce.
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POSSESSION OF THE NOTE

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Our system has been set up for centuries to create legal fictions that are designed to produce confidence in the marketplace and judicial economy; nobody wants to go through the process of establishing the right to enforce a debt that is evidenced by a note when the outcome is obvious. Once upon a time that was true. In 1995, all of that changed.
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So mere possession of the note is often translated into an assumption or legal presumption that the one in possession of the note is also the owner of the underlying obligation. Viewed from that perspective, the physical delivery of the note is sufficient to presume that the underlying obligation was also transferred. In that context, the note is treated as though it was a title document instead of what it is — evidence of an event.
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What the major Wall Street brokers did, was remove physical delivery and replace it with the appearance of physical delivery, so that production of a copy of the note along with some assertion, affidavit, or allegation about the note, would give rise to the assumptions that something real was happening to the note. In fact, it affirmatively appears that in most cases, the note was destroyed to prevent two fictional trees (or more) from growing from a lie.
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SERVICERS MUST SERVE

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A servicer is an agent of a principal. In this case, the principal would be the owner of the underlying debt. In our system you can only get to own something upon the occurrence of one of two events in the real world — you buy it or it is a gift. There are no other ways to own any asset.
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PURCHASE OF A DEBT MUST INCLUDE PAYMENT

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In the case of a purchase, there would be easily confirmable supporting documents that show proof of payment along with an entry on the accounting ledger of the buyer showing a decrease in one asset category (e.eg. “Cash”) and a corresponding increase in another category of assets (e.g. “loans receivable” or “loan account receivable”).
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No such documents or ledger entries occur in the world of “securitization.” Without a sale of the asset (e.g. “loan”) the representations and claims, correspondence, notices, allegations, and assertions in and out of court are without any foundation — which is a legal objection that should be raised early and often when the foreclosure players go into action.
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To put it simply, no securitization has occurred within that scenario despite millions of cases, thousands of articles, and tens of millions of illusory “transactions” resulting in some state authority approving of foreclosure in favor of the disinterested foreclosure players.

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TRUSTOR, SETTLOR, DEPOSITOR MUST HAVE TITLE TO GRANT IT

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A gift is often implied in the lies told by the securitization players (Wall Street brokers). They will often represent or at least imply to investors and borrowers that somehow the “Trust” acquired possession and ownership of “the loan” meaning possession and ownership of the underlying obligation, note, and mortgage (or deed of trust).
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And yet in foreclosures, the party (e.g., “depositor”) supposedly “giving” the loans to the named “trustee” never shows up in the chain of title that is alleged, executed, or recorded. The depositor is thus cast in the role of trustor — i.e. one who funds a trust so that the trustee has something to administer and the beneficiaries receive some benefit.
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IN PLAIN TERMS, THE GRANTOR, TRUSTOR, SETTLOR GIFTOR NEVER HAD ANY  RIGHT, TITLE OR INTEREST TO ANY DEBT, NOTE OR MORTGAGE AND NEVER GRANTED ANY RIGHT TITLE OR INTEREST. BUT LAWYERS HAVE MADE ASSERTIONS FOR MORE THAN 20 YEARS THAT SUCH A GRANT OCCURRED. THEY ARE PROTECTED, AS IS THEIR CLIENTS, BY THE DOCTRINE OF LITIGATION IMMUNITY.
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LITIGATION IMMUNITY HAS BEEN WEAPONIZED AGAINST THE LEGAL SYSTEM AND CONSUMERS

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Instead of producing legal documents executed by the “depositor”, the foreclosure players hire a lawyer who can say a lot of things that are untrue as long as he/she doesn’t absolutely know that their allegations are untrue. It’s called litigation immunity and it is necessary because, without it, nobody would be a lawyer. But Wall Street brokers have weaponized that concept into a shield that protects not only the lawyer but everyone in the foreclosure team — none of whom own or have any rights to the debt, note, or mortgage.
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Since there were no real transactions, and since the legal system requires documents memorializing transactions, Wall Street brokers and the foreclosure teams went into the business of mass fabrication of documents that were forged, backdated, robosigned, etc. They did everything possible to make a signature block look real when it actually said nothing.
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TRUST EXISTS IN NAME ONLY

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The reality is that the “trust” existed in name only and even that is usually twisted into gibberish. Instead of saying, for example, “SASCO 2007-4A Trust,” a subtle change is made in which the “name” be practically a whole sentence like “U.S. Bank. NA as Trustee, as the successor to Bank of America, trustee, as successor to LaSalle bank, trustee, Structured Assets Securities Corp. Series 2007-4A Trust on behalf of the holders of registered certificate holders of U.S. Bank. NA as Trustee, as the successor to Bank of America, trustee, as successor to LaSalle bank, trustee, Structured Assets Securities Corp. Series 2007-4A Trust.”
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Later, when documents are fabricated, they use that meaningless sentence followed by the name of a servicer (e.g. “Ocwen”) signing as “attorney In fact.” And the signatory is an “authorized signor” who is usually rotated into other positions around the country so nobody gets to take testimony from them about why or how they or even if they ever signed the document. Linda Green was literally put out to pasture with a payoff and an ironclad confidentiality agreement — after it was found by Lynn Symoniak and others that she had been supposedly executing assignments of mortgage and endorsements of notes at the rate of one documents every 5 seconds or less.
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Taken together nothing is said in those documents but lots of things are implied making it easy for the foreclosure mill attorney to make the most outlandish statements about what that all means and leaving the foreclosure defense attorney to be so bamboozled by the smoke, mirrors, and circular statements, that they are dumbfounded into silence. And that was the goal.
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WALL STREET CONTROL — OFF TRACK BETTING

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In order to retain apparent control over everything without actually being in legal control, the Wall Street brokers had to do two things. First, they had to make sure that none of the placeholders —- MERS, servicers or trustees — ever touched any money except that which was paid to them through a convoluted series of conduits. Second, they had to make certain that none of the placeholders actually did anything.
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MERS was an electronic placeholder with insecure access so that foreclosure players could manipulate data and apparent chains of title without ever recording those changes which were an illusion.
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Servicers were electronic placeholders often acting as the face for Black Knight and sometimes other entities who controlled lockbox addresses to which all payments were forwarded. Those checks or payments were deposited into accounts controlled by a conduit for the Wall Street broker. Accounting is automated so servicers could produce “reports” and then “servicers” send in robo witnesses (usually “contract employees”) to attest to the records being within the hearsay exemption as business records.
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Trustees were electronic placeholders whose only role was to rent their name out, same as MERS and Servicers, but they play absolutely no role in any administration, collection, or enforcement of any debt, note, or mortgage.
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The grant of rights, duties, or obligations from one who does not own or control them is a legal nullity. But a piece of paper saying that such a grant was made, raises inferences, assumptions or presumptions from the document if it conforms to what is expected of such a document in appearance (hence “Facial Validity”).
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THE CHASE-WAMU HEIST

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So translating this to Chase, for example, Chase did take over Washington Mutual bank. WAMU, from the inception of every loan, had merely been another placeholder (originator or “aggregator”). Each loan was financed through another byzantine structure in which the Wall Street brokers would borrow money from third parties, short-term, using the prospective sale of certificates to investors as collateral.
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The borrowed money was used by the Wall Street brokers to put money on the closing table of transactions with homeowners. Then the sales of certificates were closed thus paying off the lenders to the brokers and leaving a hefty trading profit — because far less than the borrowed money was used for homeowner transactions.
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Homeowner transactions were only a necessary expense or advance in order to justify the sale of securities that could be issued indefinitely precisely because there was no conveyance of any right, title, or interest to any debt, note, or mortgage of any homeowner.
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If the Wall Street brokers could have figured out a way to get homeowners to issue notes and mortgages without paying them anything, they would have done so. But that proved impossible. So they did the next best thing — they forced homeowners to pay back the advance paid to them as an incentive to sign “loan papers” without any loan account or lender. This completed the illusion that “loans” were being securitized. The reality is that there were no loans and nothing was securitized.
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So WAMU  owned nothing except servicing rights that might have been worth something if there was any owner of an account receivable with your name on it. But no such person or entity existed. Hence the servicing rights, just like the title rights in MERS and the administration rights in the named “trustee” were strictly an illusion.
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But what Chase did was something spectacular. It took over WAMU at a net profit of around $200 million to Chase. Consideration was recited as zero because of an IRS refund that was due to WAMU that instead went to Chase. And then Chase slowly, step by step, asserted ownership and control over transactions with homeowners that had in fact been funded as described above.
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Each foreclosure was pure profit — untaxed because it was reported as though it was actually a loss on a loan that had never existed in the first place. In fact, Chase made an untaxed profit on each foreclosure. Each fictional loss on “homeowner default” was written off against income reducing the amount of taxes that chase would otherwise have paid.
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This pattern, with minor variations, was repeated over and over again. Chase again did it with Bear Stearns. Wells Fargo did it with Lehman and Wachovia (World Savings). Bank of America did with Merrill Lynch. In no case do you find any bump on the balance sheet of the mega bank that claimed to own — only for enforcement purposes — every transaction ever “originated” by the failed company.
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The worst case was OneWest taking over IndyMac. Over a weekend, OneWest was formed with virtually no money (just promises). The people who made the promises were very well connected. They got a deal that was outlandish. The FDIC would pay 80% of all losses claimed by OneWest as if it had sustained the losses. All the transactions with homeowners were labeled as loans and all those “loans” were subject to claims of securitization. So IndyMac owned no loans — no matter how you look at it. When Sheila Bair, a straight shooter, burst into flames and rebelled against the deal, as head of the FDIC, she was fired.
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U.S. GIVES FREE MONEY DESCRIBED AS BAILOUT OF NONEXISTENT LOSSES

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Adding insult to injury, despite the complete absence of any economic losses from “loan” defaults, the U.S. government ultimately paid trillions of bailout to the players who had profited from this scheme. Homeowners received no help of any consequence. They were treated as deadbeat borrowers.
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In the end, we did have the steepest economic downturn since the great depression. It had happened when Wall Street used its influence to push the narrative that their transactions with homeowners had been loans and that everything they had done was legal, proper, equitable and just.
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We could have avoided the downturn entirely or in large part if we had just recognized the truth: that payments to homeowners were never intended to be loans, that nobody had any loss, and that the transactions needed to be restructured in court and by legislation to reflect economic reality instead of Wall Street fantasy. Iceland and others did it. They simply reduced the amount due from households on debt. And they recovered within months.
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Today we are still living with the myth that the transactions with homeowners were loans, that the concealed risks absorbed by homeowners should not be compensated, and that administration, collection, and enforcement of nonexistent accounts receivable should be allowed. We can all change that by being open to the idea that maybe it isn’t the way that Wall Street is selling it.
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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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11 Responses

  1. Look -it makes no sense to foreclose. Java, I discussed the same with media many years ago. Why short sales? Why not work with the borrower? Why toss to another borrower – who may also miss a payment or two? And servicer then does the same thing — they won’t allow any recovery, and they continue to misappropriate funds. Media agreed. But they did nothing. Why? It can’t be fixed. There are agreements with debt buyers — and if the claimed servicer negates those agreements– there will be litigation against them. And these debt buyers are international. So all cover for each other. And, really think the judges just don’t have a clue. They see big law firms, and there is no way, they think, that little guy is any smarter than those big law firms. But they are wrong. And, their eyes wide shut has allowed the fraud to continue. ON an ON and ON it goes. And, one little guy winning some bogus settlement does not help. We need case law – with real issues, and real representation. We need to expose. Sorry – we missed the boat. But not too late to catch it.

  2. or are in conflict with their own pension funds

  3. If we are to believe that Truman Trust SC-2016, a trust closed in 2016, somehow was able to purchase 555 NPLs at $55,000 each in the year 2020, my question is….
    So why isn’t the homeowners allowed to purchase for $55,000 @ right of first refusal ????
    This Government is a total fraud ….

  4. To Charles Reed:

    “Ginnie is the owner of the 1.4 million blank endorsed Noted until the end of time because they cannot act on debt they did not purchase!”

    Ginnie as you know not only never “purchased” any debt but even dumped their junk “guarantees” to Federal Reserve.

    Since April 2020 Feds officially PURCHASED over $2 Trillion of “mortgage backed securities” from GSEs.

    So, Ginnie, who never owned anyone’s debt now SOLD it to Fed.Res.

    The key word is PURCHASED. Mortgage – Backed. So, Ginnie cannot own any blank endorsed Notes since they SOLD their rights to Federal Reserve while during all this time in question it was ALL in Federal Reserve’s branches Depository Trust Corporation and their solo beneficiary Cede and Co.

    All these bla-blas with GSEs’ “sales” to anyone is merely a scam to defraud homeowners and investors.

    And this is why the Government covers for it – they are active players

  5. Huuuummm, It feels really good about Title Insurance Companies – specially those owned by Black Knight (Fidelity Titlem Stewart Title, Chicago Title and other junk) and CoreLogic’s partners First American Title.

    They all mostly sell their garbage “title insurance policies” via sham conduits where they “exclude mortgages” with fake Lenders.

    And of course they all know that is going on since their right hands – Black Knoght and CoreLogic are highwaymen for Big Banks who originate “loans” – collect borrowers applications and forward them money; fabricate bogus “defaults” by creating hardships on homeowners; collect all money via lockbox agreements; pay property taxes and insurances from Big Banks’ pools, ect.

    It feels good about fake “default debt buyers” like Black Rock (who reinstated Countrywide as PennyMac, fake Servicer)

    It feels good about Courts, too – since Judges are so eager to comply with the law, they have no chance to reverse all VOID foreclosures and return possession to lawful owners .

  6. don — that is implied above, and agree. This is an attorney cover-up. But when you are up against big law firms — the judges conclude that they cannot be wrong, or, are afraid to conclude that they are wrong. .

  7. Instead of producing legal documents executed by the “depositor”, the foreclosure players hire a lawyer who can say a lot of things that are untrue as long as he/she doesn’t absolutely know that their allegations are untrue. It’s called litigation immunity and it is necessary because, without it, nobody would be a lawyer.

    HOW THEN CAN THERE BE WRONGFUL FORECLOSURE?

  8. When creating a Hinnie MBS there is no actual trust as Ginnie in the case of WAMU has there custodian of record in Wells, that took physical possession on the UCC3 process. FED Gov first mortgageoans cannot have some type of co-ownership as it is a two party loan only between the lender and borrower!

  9. The easiest path is the one you know exactly how a Ginnie Mae MBS is set up where no monies exchanged hands as Ginnie is forbidden to purchase any mortgage loan. However Ginnie is the owner of the 1.4 million blank endorsed Noted until the end of time because they cannot act on debt they did not purchase!

  10. Quote from above – “Instead of saying, for example, “SASCO 2007-4A Trust,” a subtle change is made in which the “name” be practically a whole sentence like “U.S. Bank. NA as Trustee…Structured Assets Securities Corp. Series 2007-4A .” This is what must be changed in courts. There is no trust without a legal holder trustee. This is American law. But nowhere in courts are the trustees found. This is misrepresentation by attorneys. Once this is exposed, the pieces fit.

  11. Neil is unaware that on Jul 31, 2006, it was Wells Fargo Bank that purchase the servicing rights too 1.3 million FHA & VA loan. So when WAMU went under they did not transfer those loans they had possession of and that they were the custodian of records for Ginnie Mae which all the “blank endorsed” Notes were physically transfer when Wells started servicing the WAMU Ginnie pooled loans!

    It been a decade and still we not dealt with the $140 billion in Fed backed loan that not Chase but Wells who illegally foreclose and sending out payouts on refinances on loan that stop existing when WAMU was shut down on Sep 25, 2008!

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