Why Securitization Does and Should Make a Difference to Consumers Who Think They are Borrowing.

It’s true. Transactions with consumers have in fact been securitized.

What consumers and their lawyers fail to realize is that the securitization of the transaction does not mean that securitization of the underlying obligation or legal debt has occurred.

The fact that such a nuance exists is beyond the knowledge and understanding of any person outside of the inner circle of Wall Street investment bankers. The significance is that consumers are neither getting what they asked for nor getting what they should get out of the securitization deal, which they know nothing about.

Ignoring or overlooking the difference is causing wild gyrations in the financial markets, the real estate markets, and in transactions with consumers that are now falsely labeled as loans. Overlooking the very real distinctions between securitization of an actual transaction versus securitization arising from reported data about that transaction produces wild crashes and instability.

These Invisible Whales Could Sink the Economy

The only reason that “total return swaps” even exist is that it is in the short term interest of managers of financial institutions and managed funds to engage in this kind of chicanery. It turns out that the managers of each such entity or institution or make money regardless of whether their employer loses money or even goes out of business. This is not free-market economics and it is not capitalism. It is a form of theft. Robbing someone for their money does not make the act inspired by capitalism.


If you don’t overlook or ignore these distinctions in the country completely avoids the catastrophe that happened in 2008. And the continuing catastrophic foreclosures through the present day would’ve also been completely avoided.

It’s true that I am a recognized expert in the securitization of debt. It is equally true that none of the transactions with consumers involved the securitization of any debt.

The structure of any secured loan involves four things:

  • An underlying obligation created by the receipt of money that is not a gift and it’s not a payment for goods or services.
  • A legal enforceable debt if the circumstances conform to the requirements of statute.
  • A legally enforceable memorialization of the obligation and debt, if the instrument conforms to the requirements of statute.
  • A legally enforceable lien on personal or real property, to assure payment of the underlying obligation as required by law, and as probably set forth on written instruments.

If you don’t ignore the basics, and you don’t assume that the basics are present, the analysis of any transaction with any homeowner fails at the first element: there was a receipt of money and it wasn’t a gift. No goods were involved either. But there is no underlying obligation because the payment was for services. The homeowner provided those services by execution of documents to conform to the published illusion that the transaction was a loan and not fee for service.

How do you know that? The answer is that you do not know that, except that I am suggesting that is the case. How do you prove that? The answer is that you don’t prove it. In order to succeed in foreclosure Defense you need to only reveal that the presumptions arising from the fabricated documents should no longer be applied; because neither of the Foreclosure mill nor the named claimant (i.e., the named plaintive or beneficiary) is willing to answer the question: describe and produce the transaction details in which value was paid by this claimant. And yes that is exactly how I have won these cases and it’s exactly how many other lawyers have done so.

Securitization is the reason why the underlying obligation vanished. Securitization was the vehicle to avoid liability for violation of lending and servicing statute. None of the principles could be easily charged with such violations if they could not be described as lenders or servicers.

  • No investor would have advanced funds if they could have been held liable for violation of lending statutes or servicing statutes.
  • No investment bank would have ever started a securitization scheme if it meant that they would be liable for the violation of lending statutes or servicing statutes.
  • No company calling itself a servicer would have ever provided the use of its name if it was accountable for a violation of debt collector and servicing statutes. If it was really handling the deposit of funds from homeowners and dispersing those funds to investors the insurance expense alone would have bankrupted most companies claiming to be servicers.
  • No bank would have allowed for the use of its name as the trustee of a nonexistent trust, if it actually had a fiduciary duty to administer the affairs of that trust including individual transactions that were labeled as loans.

All the entities are placeholders. They are sham conduits who sometimes don’t even play the role of a conduit. They are simply there for the purpose of concealment and confusion. None of the actions attributed to them are actually performed by them. Therefore none of the records that are produced in support of a foreclosure can be used as exceptions to the hearsay rule. And that means that the Foreclosure Mill Will lose the case because of insufficiency of evidence — not because you proved some point of law or fact.


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, 74, 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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