“Securitization” is not the sale of homeowner debt and is not the product of free market transactions

Securitization is a lie. And so far nearly everyone, including homeowners, believes the lie. Small wonder that the courts also believe it — especially when homeowners admit the truth of the lie. 

Each new “financing” results in a brand new string of securities sales — without retirement of the previous string of securities sales. I have continually said, based upon market data, that each securities scheme produces $12 in revenue for each $1 transacted with homeowners. But as many people have pointed out, that is only the first level.

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The reason why Bloomberg searches reveal multiple “trusts” named in connection with a single homeowner transaction is that each new refi or sale changes a few data points but does not change the single and only underlying transaction. That transaction was neither intended nor recorded as a loan on the books of account of investors, investment banks or even the named originator don’t eh mortgage and note. That is why in bankruptcy filings you never see any report of any interest in any loan even if it was “closed” the day before bankruptcy was filed.
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The truth is that Wall Street is selling the myth of loans, not the actual loans, which are in fact thinly disguised incentive payments for homeowners to cooperate in creating the data reference points for the sale of securities to investors who have no financial interest in their transaction. Securitization means that an asset has been “securitized.” That means an asset has been sold in parts to investors. No such sale ever occurs in connection with homeowner transactions.
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Securitization is a lie. And so far nearly everyone, including homeowners, believes the lie. Small wonder that the courts also believe it — especially when homeowners admit the truth of the lie.
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Each time the property is subject to false claims of “refinancing” it starts a new scheme of securities sales that does not retiree the old one. And this is why the “shadow banking market” has gone from $0 to $1.4 quadrillion between 1983 and now. That dollar amount is “nominal value” because no financial transactions took place other than the issuance, sale and trading of derivatives based on falsely labeled “asset-backed” securities. It is not real money, which totals less than $100 trillion. But Wall Street has successfully sold the myth that it is real money when they say it is.
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Wall Street is a selling machine — as it ought to be. It is supposed to be the broker between two counterparties — a buyer and a seller. The current economic infection plaguing the American economy is not the result of Wall Street grabbing a higher commission on transactions. Everyone thinks that but it isn’t true. It is the result of Wall Street inserting itself into the transaction as though it was a real party in interest and doing that with impunity and without any disclosure. This completely blocks free market forces from making corrections.
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The advocates of free-market forces point out that the government can’t regulate every transaction and should not try to do so. They say that in a free market where buyers and sellers are reasonably well informed, stupid offerings or actions are corrected to reflect economic reality. I think they’re right. And I also agree that free-market forces are the magic hand that drives capitalism.
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But Wall Street is hiding behind a carefully constructed myth of free markets. Wall Street does not disclose and carefully conceals the relevant and material information to the investors who buy certificates or the derivatives of certificates, nor the homeowners who think they are getting loans. In plain words, Wall Street is lying about all of the transactions that occur in relation to the trading and sale of securities that use the data rather than the ownership of asset-based transactions.
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Investors have come to believe that they have some sort of indirect interest in transactions with homeowners. that is false and they would defend any claim that asserted such a relationship because that would make them lenders subject to liability for violation of lending laws — something that continues to take place with rampant regulatory.
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In fact, investors are told that this is a way of lending “without risk” — without being a lender. They have sold the myth that by not showing up on the paperwork of any “Closing” with homeowners they are protected from loss, bankruptcy, or liability for noncompliance with laws governing transactions with borrowers and consumers.
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Investors are not told that by adopting that form over substance strategy, they have written a blank check and abandoned all rights to force anyone to comply with the conditions of their purchase of certificates. And while the promise to make payments to them comes from a big investment bank doing business under the name of a nonexistent trust, that promise is subject to the sole discretion of that investment bank who also does not appear as a lender, owner, creditor, holder of paper from any homeowner.
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Investors are told that the certificates are insured but they are not told that the proceeds of the insurance are paid to the brokers, not to them. Investors, like homeowners, are left with a hologram of an empty paper bag. The Wall Street “banks” are left with all the money regardless (and especially) if the value of the investment declines in an “event” declared in the sole discretion of the Wall Street securities brokerage firms that are not allowed to use the powers of both brokerage and commercial banking — something that was completely banned until the repeal of Glass-Steagal.
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Going back to the “free market” how many investors would have completed their transactions under the same terms if they had known all of that?
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The other group of investors are the homeowners who are brainwashed into thinking they are borrowers in a transaction that leaves them without a lender, without a loan account receivable and without anyone with legal authority to administer, collect or enforce a promise to pay that they issued without knowing that the transaction was simply the start of a new securities scheme in which oversized revenue would be generated far exceeding the transaction they thought was a loan.
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How many homeowners would have completed their transactions on the same terms if they knew that there was no liability for noncompliance with lending laws, there was no incentive to create a viable loan transaction, there were incentives for appraisal fraud and there were incentives for the transaction to”fail?”
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This has not been the product of free-market transactions. The entire jumble of convoluted rationales for the falsely labeled “Securitization” scheme has been the exercise of deceit and theft. The fact remains that once the money hits the closing table, there are no financial transactions after that except for the cashout transactions.
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And that is why no foreclosure mill can come forward now, as they were required to do up until around 20+ years ago, and produce a witness from a company that could prove that they owned an existing obligation from the homeowner and that they were taking a loss because the homeowner wasn’t paying. That is why they are appointing companies to pose as servicers when those same companies are not permitted to touch any payments from homeowners or make distributions to investors.
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FORECLOSURE DEFENSE:

  1. The reason why nearly all homeowners walk away rather than contest a fake claim is that they cannot conceive or understand the alchemy of finance. It is absurd to think they could not owe money to satisfy a promise they made to pay it. They think any contest is an immoral breach of promise and as good people they are going to take their lumps.
  2. The reason why most of the 4% of homeowners who file anything to contest fake foreclosure claims are unsuccessful is that they admit the lie tacitly or explicitly. A secondary reason is that the losing homeowner tries to prove facts they cannot and will never prove.
  3. The reason why the last few contesting homeowners are successful in challenging the fake foreclosure is that they don’t admit the lie and they aggressively force the opposing law firm to prove the facts they Wall Street has so carefully constructed as “presumed true.” The winning homeowner undercuts the claim rather than attempting to prove it false.
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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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3 Responses

  1. I am not here to say all is despair. With good attorneys, one can win. First, these attorneys have to be found – very difficult. Second, these attorneys if they can be found have to understand the facts and not charge to the hilt – also difficult. I am here to say that crisis loans were bogus. The government knew this, and did nothing but cover-up. The government feared a financial meltdown had the truth been told. That would not have occurred. What would have occurred is a lot of jail time, and banks not too big to fail. Thus, those failed banks would have broken up into smaller regional banks much more regulated. Instead, the victims, and there are few that speak out, remain. And, no once in position cares.

  2. In my case I took the bank funds from the bank I worked at as Mortgage Loan Officer and we funded the loan, a few days later we sold the loan to WAMU, without the Deed of Trust (DOT) being recorded as the Title Company failed to deliver or have recorded at the register of deeds office. At this point its a done deal that no one can deliver and record the DOT.as the loan been sold and the originator did not establish a lien.

    Even as WAMU put the in the Ginnie MBS the never had proper title which is a requirement to pool the loan. Year later WAMU become defunct and never tried assigning the DOT to them as there no financially interest party!

  3. This must be why Bloomberg says a FreddieMac trust has an investment in the property yet FreddieMac states to the OIG, they have not been an investor in the property since BEFORE we have been living in the house since 2008.
    It’s absolute Fraud & Insanity !!!!

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