Livinglies's Weblog

It has been happening for at least 10 years. Most homeowners never knew it happened. They were served with foreclosure notices and they simply walked away thinking that they had an unpaid account receivable with their name on it and that foreclosure was inevitable.

A satisfaction of mortgage, usually by the Bank of America or Ocwen, is recorded in the county records. But there is a wrinkle. As far as the homeowner is concerned the loan still exists, the homeowner keeps paying on it, enters into modification agreements, and lately is asking for COVID forbearance on a loan account that does not exist and which has been satisfied, released, and reconveyed (nonjudicial states). The biggest twist is that the name of the filer is recited as Bank of America or Ocwen but they appear to know nothing about it — the same as the homeowner.

Most homeowners never learn of the release and never learn of the fact that the lien on their house has been completely and legally released. They go on paying and even, upon selling or refinancing, proceeds are delivered to the “servicer.” But some homeowners do catch it — some earlier than others. And they feel guilty as though they are getting away with something. They think the release was a mistake and that the lien can and should be reimposed. That is incorrect.

Homeowners who sell their home after the release of the lien get all the sales proceeds and they are entitled to keep those proceeds. That’s how our legal system works. Nobody can come back against a bona fide purchaser for value and impose a lien on the property. It’s possible they might have a claim for damages, unsecured, against the prior owner who signed the mortgage or deed of trust — but only if they plead and prove that they are the owners of an account receivable with the name of the homeowner who signed the origination paperwork.

And there is the rub. There is no such account receivable. It was extinguished contemporaneously with its origination in cases where the transaction was funded by a Wall Street broker under the cloak of “securitization.” No sale of any account occurred. So it is not possible for Ocwen or any other “servicer” to come back and say “We made a mistake. the homeowner got a windfall and we are injured because we suffered an economic loss arising from the loss of value of our account receivable.” They can’t say that when there is no account receivable.

It’s not hard to imagine why all the players collaborate on administering, collecting, and enforcing a nonexistent account receivable. But what is mysterious to everyone is how they would end up releasing a presumptively valid lien in favor of an iffy claim for damages unsecured by any lien.

The system is so geared up to think of the homeowner transaction as a loan that nearly everyone comes to the same conclusion — that it was an administrative mistake. But that does not quite cover it. Sure it was an error to cancel out the only hope of getting paid on a nonexistent debt. But is that the end of the story?

In order to piece this together, you need to understand that the”servicers” are merely placeholders that can only do as instructed by third party entities who are controlled by the Wall Street brokers that initiate each scheme that is called “securitization” with a “REMIC”, which is a “trust,” which in turn is administered by a “trustee” who has absolutely no rights, duties, obligations or even knowledge with respect to any of the assets that are claimed by third parties to be in the nonexistent trust.

Many of these scenarios start with either a modification agreement with homeowners, a settlement agreement between investors and the “trust” (alias the investment bank), or both. The investors get paid off either in cash or seemingly in full by the issuance of new certificates by a new “REMIC Trust.” The new certificates carry slightly higher assurances of payments to investors than the old ones issued 1998-2011.

The modification agreements that involve the release of the second mortgage and part of the 1st mortgage appear to be the primary candidates for the “mistaken” lien release. But someone must’ve given the order for the lien release to be prepared, executed, and recorded. Who is that?

The answer probably lies in the automation of the entire machinery that serves as the front for false claims of securitization and false claims of foreclosure on nonexistent debt. The account receivable does not exist. So the servers maintained by Black Knight and similar entities working with or parallel to Black Knight must maintain the illusion of the account receivable.

Bill Paatalo postulates that the lien release is probably related to a settlement with investors. I think he is partially correct. Since Black Knight, Ocwen or the investment bank don’t want to get caught overtly trying to collect the same debt twice they have ordered black Knight to do a conflict check to make sure that there is only one “creditor” designated for each fake account receivable. This came up when there were several instances in which more than one foreclosure mill, representing more than one designated “Creditor” all tried to foreclose on the same homeowner, on the same property at the same time. It was very embarrassing — but not as embarrassing as it should have been.

When one securities scheme is replaced by a new securities scheme the fake Mortgage Loan Schedule (MLS) is transferred to the new securities scheme. Since all records are kept and administered by Black Knight, the old MLS is canceled and a new fake MLS is created with some adjustments as to purported content. This triggers the deletion of the payment history that is usually presented as if it was the account receivable — and that is interpreted by the machine algorithm as satisfaction and reported as such, thus generating the release and reconveyance. It’s possible that no human ever sees the document until the robosigner signs it without reading it.

It is a mistake in the sense that nobody intended for that to happen. But it wasn’t a mistake in terms of what was real. There never was an account receivable and all collections and enforcements were based on lies. The difference was that having “accidentally” released the lien, the securitization and foreclosure players had removed an important piece of weaponry from their arsenal: the presumption that the loan exists, that the designated creditor owns it, and therefore that the foreclosure mill is telling the truth when it says it represents the designated creditor for the collection of an unpaid debt.

That heavy artillery moved the burden of proof onto homeowners. Now if they want to undo their mistake, they need to plead and prove the account receivable and how it was a mistake. They can’t succeed but they will always try. I know of several cases where the Bank of America got stuck in that vise and tried to cancel their previously recorded satisfaction of mortgage. They were not successful.

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Filed under: foreclosure |