You Got the Money, Right? So why are you telling me it wasn’t a loan?

what did the homeowner get in exchange for executing the note and mortgage? 

The answer is not a loan because there was no loan at the conclusion of the transaction cycle. The answer must be that either the homeowner was investing in the securities scheme or was not getting anything for the note and mortgage. 

For many lawyers and judges, especially in bankruptcy court that is the only relevant question. After that everything else is obvious. But truth be told, they’re only asking that question because they have already decided everything including the “fact” that you received the money. But just because everyone is asking the same question doesn’t mean that they are asking the right question. In law, as it is practiced in a courtroom the right question presupposes nothing.

The right question is what is the contract? To answer that in the context of transactions with homeowners by securitization players you need to back up to the start. In order to decide the existence and terms of the contract, you must first determine contractual intent. And the fact that one side means or intends something does not mean the other side has agreed or has the same intent.

Who were the parties transacting business with the homeowners and what was their intent? The answer is that there is a long line of players ending usually in a thinly capitalized virtual nonentity or actual nonentity acting as the originator of the transaction.

The facts show that at the end of the transaction cycle,

  • there is no lender,

  • there are no investors who own partial shares of any obligation due from any homeowner,

  • there is no loan account receivable,

  • there is no reserve accounting for default,

  • there are no entries on any accounting ledger that reduce or increase the loan account receivable owned by anyone who paid value for the underlying alleged obligation (debt)

  • nor anyone who can trace their authority back to an owner of such an account receivable on the accounting ledger of a company keeping their records in accordance with Generally Accepted Accounting Principles.

  • Hence there was no profit in the receipt of interest payments reflected on those books of account. 

Where is the loan? The facts show that payment to or on half of the homeowner was therefore something other than a loan.


So if the securitization parties were not in the deal to make money from receiving interest on the payment to the homeowner, why did they give the homeowner any money at all?

The facts show that without sales of securities to investors there would have been no transactions with homeowners. Wall Street investment banks are not in the business of lending. They’re in the business of making money through the creation, issuance, sale, and trading of securities. Hold up on that assumption! I know you are thinking that the securities were shares of loans. All evidence in thousands of cases shows that not to be true; even more telling is that no lawyer from any foreclosure mill has ever alleged, asserted or argued that to be the case.

And the same facts show that the implied trust that is designated in attempts to enforce the promise made to pay back the money received by the homeowner has absolutely no interest, rights obligations or duties with respect to any payment made by a homeowner or any proceeds of a “successful” forced sale of the property.

The same facts show that but for the homeowners there would have been no sales of securities. Without those two elements securitization could not occur.

And the facts show that the only parties who maintained and expanded their financial health in the Great Recession 2008-2009 were those same investment banks. While commercial activity declined, reported revenues and profits went up for the Wall Street investment banks.

So the real question is what were the Wall Street banks paying for? Since they’re unable to show the purchase of a loan, debt, note or mortgage on their books or reported to regulators, what were they buying?

They were buying cooperation from homeowners. And homeowners gave that cooperation and that is fine. That is a valid and legal business deal. Wall Street pays the homeowner and the homeowner delivers cooperation. But that is not the end of it, because homeowners knew nothing about it. And the reason they knew nothing about it, is that they were never told — despite stringent laws and regulations requiring explicit disclosure in good faith. And the reason why nobody has been prosecuted for lending violations is that there was no loan.

Investment banks needed to get a promise to repay the money paid for cooperation. In order to do that they needed to withhold and conceal key attributes of the transaction and to lie about what was happening. So they dressed up the cooperation payment as a loan. And because a loan was what the homeowner wanted and expected, the investment banks made sure that the homeowner signed documents that were evidence of a loan transaction —even though on their own books no such transaction took place. The advance to homeowners was a cost of doing business.

Homeowners, without a single clue that they were paid money for their cooperation and with no knowledge of the lack of lending intent by any of the “originators” or their affiliates and co-venturers, started making scheduled payments without any knowledge that their money was not going to pay anyone who was reducing their debt by the amount of their payment.

So if you back it up to the point of origin where the investment banks created an infrastructure to sell a securities scheme disguised as partial ownership of loan receivable accounts, the real question becomes “You got their cooperation, didn’t you? So why should you get the money back?”

So you are left with the inescapable fact that the homeowner issued a note and then a mortgage to secure payments as promised on the face of the note. And that is the question — what did the homeowner get in exchange for executing the note and mortgage? 

The answer is not a loan because there was no loan at the conclusion of the transaction cycle. The answer must be then that either the homeowner was investing in the securities scheme or was not getting anything for the note and mortgage. 

The only way that could not be true is if there was admissible evidence showing the accounting ledger of some company or entity showing the existence of entries on that ledger arising from the payment of value in exchange for ownership of the debt, note and mortgage claimed to have been legally created. That is the only thing that would reveal that the loan relationship between a borrower and a lender actually existed at least at the time of foreclosure.

As we have seen in thousands of cases no such evidence is ever preferred or presented. 

Using ordinary tools of construction of language and legal precedent it is more likely that the homeowner either received something for the issuance of the note and mortgage than that no consideration was present. By process of elimination we can only arrive at one conclusion, taking the entirety of the transaction into consideration as it occurred in the real world: the homeowner, without knowledge or consent, became an investor into the securities scheme.

That leaves only one remaining question: Was the payment that the homeowner received enough? Since it was never subject to knowledge, consent or bargaining, that is up to a court to decide.

  • If it wasn’t enough then it is the securitization players that owe the homeowner money, not the current paradigm.
  • If it was too much then maybe some portion of the amount set forth on the note remains as a liability.
  • And if it was just right, then there would be no reason to have executed the note and mortgage at all.
  • Lastly, if nobody asks the court to decide the note becomes an unliquidated amount upon which no judgment can be entered.

Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.

Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.


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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4 Responses

  1. what did the homeowner get in exchange for executing the note and mortgage?

    The answer is – Homeowners get a VERY expensive RENT from Wall Street Banks – without any renters’ rights ; years of unpaid labor since people transfer all their wealth to Wall Street as “mortgage payments” and daily ROBBERY which starts from day one.

    Wall Street Banks start to exploit borrowers’ and make money as soon as “application for a loan” was submitted.

    This application was treated by Wall Street Banks as a Letter of Guarantee to Investors that Wall Street will issue sell securities proceeds of which treated as a Collateral.

    So-called “loan underwriting process” is as much money Wall Street Bankers need to present “letters of guarantees” (applications for loans”) to borrow money from investors

    When Wall Street Banks steal ALL savings (downpayment for a “purchase a home” , on top of “closing costs (could be as high as tens of thousands dollars)

    Next step is designed to put renters (who think they are owners) in eviction – by creating artificial defaults of non-existing loans.

    Is is usually achieved by placing bogus insurances; creating fake deficiencies on non-existing “loan accounts” (Black Knight is very proficient at it) ; placing all possible fees and charges, misapplication of “mortgage payments”, ect.

    The real goal behind EACH so-call “home purchase” transaction is theft of money paid for homeowners’ cooperation; theft of borrowers money – all of them- and confiscation of property to pass it to another RENTER/SLAVE who thinks he of she is an “owner”

  2. If the securitization is no longer a debt, is the purchaser renting the property? Disclosure of a contract would be effective

    Title 15, Chapter 41, § I, Part B › § 1641
    All prior exhibits and paragraphs are hereby incorporated and made a part hereof.

    (f)Treatment of servicer
    (1) In general
    A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as an assignee of such obligation for purposes of this section unless the servicer is or was the owner of the obligation.
    (2)Servicer not treated as owner on basis of assignment for administrative convenience
    A servicer of a consumer obligation arising from a consumer credit transaction shall not be treated as the owner of the obligation for purposes of this section on the basis of an assignment of the obligation from the creditor or another assignee to the servicer solely for the administrative convenience of the servicer in servicing the obligation. Upon written request by the obligor, the servicer shall provide the obligor, to the best knowledge of the servicer, with the name, address, and telephone number of the owner of the obligation or the master servicer of the obligation.

  4. Nonsense!

    RAMOS V. U.S. BANK, No.12-CV-1820, 2012 WL 4062499, at *1 n.1 (S.D. Cal. Sept. 14, 2012) (where loan paperwork “plainly identified” a lender, “the loan was consummated regardless” of who the “true lender” was); MBAKU V. BANK OF AM., N.A., No. 12-CV-00190, 2013 WL 425981, at *5 (D. Colo. Feb. 1, 2013) (because the “deed of trust identifies [] the lender[,]” “plaintiffs were obligated on their mortgage to [that lender]” without regard to any third party involvement); SEPEHRY-FARD V. MB FIN. SERVS., 2015 WL 903364, at *4 (N.D. Cal. Mar. 2, 2015) (“District courts routinely reject [] allegations that a servicer
    commits fraud in collecting on a note that it does not own or physically hold.” (collecting cases)); Rhodes v. JPMorgan Chase Bank, N.A., No. 12-80368-CIV, 2012 WL 5411062, at *4 (S.D. Fla. Nov. 6, 2012) (stating that the subsequent securitization of a note did not deprive the defendant of any legal interest in the promissory note); CHAN
    & PAO TANG V. BANK OF AM., N.A., No. SACV 11-2048, 2012 WL
    960373, at *7 (C.D. Cal. Nov. 30, 2012) (dismissing pro se plaintiffs’ claim that the securitization of their mortgage affected defendants’ power to foreclose); LANE V. VITEK REAL ESTATE INDUS. GRP., 713 F. Supp.2d 1092, 1099 (E.D. Cal. 2010) (rejecting the plaintiffs’ contention that none of the defendants had authority to foreclose because their loan was packaged and resold in the secondary market, where it was put into a trust pool and securitized); YVANOVA V. NEW CENTURY MORTG. CORP., 365 P.3d 845 (Cal. 2016) (“California courts have held that a trustor who agreed under the terms of the deed of trust that MERS, as the lender’s nominee, has the authority to exercise all of the rights and interests of the lender . . . is precluded from maintaining a cause of action based on the allegation that MERS has no authority to exercise those rights.”)

    Is this enough, I could post dozens more if necessary. And please spare me from the “courts are corrupt” lunacy.

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