Still think it was a loan, think again! Look at these allegations from investors who thought they were buying loans.

If Countrwide was really a lender it would never have entered into this transction as a loan. If Countrywide was an underwriter it would never have approved this as a loan. Common sense dictates that Countrywide was an aggregatgor of data that was massaged to meet the instructions and needs of an investment bank.

The investment bank, at a glance, would know that this transction could not possibly perform as a loan and would have two new options to make money: bet against the loan and bet against the securities and tranches that referred to the “loan.”

And it would have a third option which is to sell securities to investors that masqueraded as “mortgage bonds” based upon data reported by Countrywide upon which the investment bank “reasoanbly relied” and the truth of which they could “plausibly deny.”

And all the while, the investment bank controlled — but never owned — the underlying obligation, debt, note or mortgage of any property owner. And THAT Is why TARP (Troubled Asset Relief Program) had problems with definitions. It was passed by lawmakers thinking that it covered losses from risky loans, then it was changed to define losses from mortgage bonds. Upon discovering that the banks were selling, not buying, certificates that were not in fact mortgage bonds, the definition changed again to simply the undefinable “troubled assets” 

So I invite anyone to tell me how or why the transactions described was in fact a loan or even part of a business plan with profit from making a loan was ever anticipated. The Plaintiffs were as follows:


  1. Plaintiff Joel I. Sher is the Court-appointed Chapter 11 Trustee for the Debtors.
  2. Plaintiff Zuni Investors, LLC is the holder of certificates issued by Zuni Mortgage

Loan Trust 2006-OA1 (referred to as the Trust). In March 2011, Zuni Investors and the Trustee entered into a Joint Prosecution Agreement to bring this claim and other claims like it.

4. Defendant Countrywide Home Loans, Inc. (referred to as Countrywide) is a corporation organized under the laws of New York with its principal place of business in Calabasas, California.

5. Defendant Bank of America Corporation (referred to as BAC) is a corporation organized under the laws of Delaware with its principal place of business in Charlotte, North Carolina. BAC owns numerous subsidiaries, which together with BAC will be referred to


Case 09-17787 Doc 1330 Filed 04/29/11 Page 3 of 41

collectively as Bank of America. As alleged below, BAC is liable to Plaintiffs under the doctrine of successor liability.

This taken verbatim from the complaint filed in Federal Court:

No appraisal: Countrywide represented and warranted that the property had been appraised by an independent appraiser and that the appraisal was in a form acceptable to Fannie Mae and Freddie Mac. The loan file shows that the borrower requested a specific appraiser, which is not permitted under Fannie Mae and Freddie Mac standards. The appraisal of the property in the loan file was contingent on improvements, including an all- weather riding arena, paddocks, and a grand prix field. Current housing


Case 09-17787 Doc 1330 Filed 04/29/11 Page 13 of 41

listings and Plaintiffs‟ investigation show that those improvements were never completed, and so the appraisal was not accurate or complete. The loan file notes that a complete appraisal was never received for the property. [NOTE: UNDER FEDERAL TRUTH IN LENDING ACT, LENDER IS RESPONSIBLE FOR ACCURACY OF APPRAISAL AND VIABILITY OF LOAN, NOT THE BORROWER OR ANYONE ELSE]

Inappropriate valuation: Countrywide represented that the mortgage loan was originated in a way that was in all respects legal, proper, prudent, and customary. The property was conditionally appraised for $4.8 million. Nine months before the loan was originated, the property sold for $500,000. A Countrywide employee noted in the loan file that, if the conditional appraisal was used, the property had appreciated 860% in nine months. If a property has been sold in the 12 months prior to a loan being originated it is customary to use the lower of the sale price or the appraised value as the value of the property. Because this was not done, the loan was not originated in a customary manner.


Poor ability to repay: Countrywide represented that the mortgage loan was originated in a way that was in all respects legal, proper, prudent, and customary. However, the Countrywide underwriting system described the borrower‟s ability to pay as “questionable” and “poor” and stated that her debt-to-income ratios of 48.4% and 57.7 % were too high and exceeded the limits in the underwriting guidelines. The borrower‟s credit report showed late payments and numerous credit inquiries in the months before the loan was originated. Because of the high risk that the borrower would default, as she eventually did, the loan was not underwritten in a prudent way.

Failure to follow underwriting standards: Countrywide represented that the mortgage loan was originated in a way that was in all respects legal, proper, prudent, and customary. Under Countrywide‟s underwriting guidelines in effect at the time the loan was originated, the maximum loan amount for a reduced documentation loan like this one was $1.5 million; however, this loan was for $2.8 million. Thus, this loan was not underwritten in a prudent way.

No manager approval: Countrywide represented that the mortgage loan was originated in a way that was in all respects legal, proper, prudent, and customary. A Countrywide employee noted in the loan file that a manager needed to sign off on the loan before it was funded, but there is nothing in the loan file that shows that a manager ever signed off on the loan. In the loan file, Countrywide employees note that the borrower‟s husband called and pressured Countrywide to close the loan within 24 hours because he and his wife were leaving the country. Countrywide acquiesced and cut corners to close the loan quickly. This failure to follow protocol shows that the loan was not underwritten in a prudent way.


Case 09-17787 Doc 1330 Filed 04/29/11 Page 14 of 41

Uninhabitable property: Countrywide represented and warranted that the property was “lawfully occupied” and that the borrower would occupy the property as her primary residence. However, house listings for the property show that the interior fixtures in the property were never completed and thus the property was never fit to be occupied.

Fraudulent borrower income: Countrywide represented that there was no fraud in connection with the origination of the mortgage loan. However, the initial application for the loan shows the borrower‟s monthly income as $49,000 while the final application for the loan shows her monthly income as $84,000. This difference is not explained and strongly suggests that the borrower‟s stated income was fraudulent and that Countrywide made no reasonable inquiry to verify the borrower‟s income.

So I ask you again, reader, can you explain how anyone expected to make money from such a transaction?

Was it not fully expected that the transaction would fail as a loan and therefore would only succeed as something other than a loan?

Did not the parties bet on the failure and make money when the value of the transaction sank to nearly zero?

Under what circumstances would any lender, prudent or not, want to enter into that transaction as a lender?

What would a “lender” have to gain by entering into such a transaction?

What was the real business plan?

What did the property owner receive for their participation?

How much money was generated as revenue as a result of this transaction?

Where did it all go?

Could anything be more clear that Countrywide was not a lender and that it was a sham conduit for investment banks? Could anything be more clear that Bank of America’s claims in court to own obligations owed by homeowners was an outright lie? A LIVING LIE!


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. I believe I do understand…my case is different in ways. After checking paperwork I have appraisal value inconsistencies, a seizure, land-boundary-survey issues-with a known encroachment, a NINA loan-even with proper documents, un-applied payments from origination… my case has nothing to do with securitization or Regulation AB. When I talk about chain-of-custody, in my particular case, it is referenced to the seizure and the party before the court, without “standing” or the paperwork to initiate. In one court, which I cannot disclose, the issue was acknowledged…and modestly accounted for. I was very uneducated about my case at the time. It served me poorly… who do you trust with this, when you are woefully unprepared for this?

  2. If I am understanding what Neil is saying here, these are contractual issues. Attack the contract…

  3. There were “corridor” agreements between Countrywide and BofA. Good analogy Summer — and who was the “actual” mother? Only the one who truly cared about the child – not necessarily the one who gave birth. Who really gave “birth” to these Wall Street loans? The GSEs. And, they didn’t care. But neither did Wall Street – who was waiting in the wings.

  4. And why Wall Street Basks destroyed actual mortgages and Notes? Because for them IT WAS NOT A LOAN!

    Like King Solomon’s Judgement in which King Solomon of Israel ruled between two women both claiming to be the mother of a child. Solomon revealed their true feelings and relationship to the child by suggesting the baby be cut in two, each woman to receive half.

    With this strategy, he was able to discern the non-mother as the woman who entirely approved of this proposal, while the actual mother begged that the sword might be sheathed and the child committed to the care of her rival.

    IF it was a LOAN and someone funded it with its money- they would CARE about performance of this LOAN.

    But Wall Street Banks did not put their money on the table; and they don’t care about performance. In fact, they CREATE obstacles for homeowners prompting them to feel like homeowners are in default, such as artificial deficiencies on non-existing accounts, bogus insurances, ect.

    In other words, a FAKE lender does not care about loan as well as a fake Mom did not care about well-being of someone’s child.

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