CASE DECISIONS ARE NOT SCRIPTURE. But they are precedent and you can expect that once a decision is rendered by an appellate court in a specific jurisdiction all the lower courts in that jurisdiction will most likely follow the reasoning and application of the law in that appellate decision. This fact, though, does not make the original decision correct. Dredd Scott was a famously wrong decision by the Supreme Court of the United States. And a correct decision does not automatically mean that lower courts will apply — see the Jesinoski decision on TILA rescission.

If you read my blog article on the subject it will clear up my view. APPLYING THE UCC IN FORECLOSURES

There’s a difference between what the courts are doing and what they should be doing.
  • In a nutshell, the law in every jurisdiction says that it is possible to obtain a judgment on a note without owning the underlying obligation and therefore without alleging financial injury to the claimant.
  • This is a huge exception to the rules governing every civil case. It might be unconstitutional but it is universally accepted as the exception to the rule.
  • I agree that the courts have extended this exception to the enforcement of security instruments like mortgages. But in every jurisdiction, that exception is actually banned by their own statute.
  • There is an age-old expression that you can pick up one end of the stick without picking up the other.
  • They are using the exception based upon the state legislature adopting the uniform commercial code.
    • Article 3 of the uniform commercial code provides the exception.
    • Article 9 specifically bars the use of that exception in the enforcement of security instruments. §203.
  • This is not the first time the courts of general jurisdiction have gotten things wrong and it won’t be the last. That is why we have higher courts and legislatures to overrule what the general courts are doing.

The plain fact is that the loan account is eliminated at or near the time of creation of the homeowner transction. This is true in all securitization schemes and let me remind you that nobody anywhere has ever contradicted this statement. The reason is that money came in but was labeled as something otehr than repayment of loan or return of capital. But the indisputable fact is that money came in covering not only the cost of doing business with the homeowner but in geometrically larger ums as revenue.

The fact that investment banks did not record it as payment of a loan account does not mean that they didn’t get the money. The entire point of securitization for the investment banks was for them to enter the lending marketplace without ever making a loan  — i.e., without ever disclosing their presence and without any risk of loss. The fact taht hoemwoenrs inteded to get a loan does not mean that is what theyr eceived. At some point — contemprneous with the “cliosing” the transction was in substance strictly converted from what it appeared to be — a loan —- to a payment to homeowners for launching the sale of securities.

A loan without a lender is not a loan. A loan without any risk of loss is not a loan transction.


One Response

  1. This is great analysis by Neil. Just misses the fundamental point. Quote – “The plain fact is that the loan account is eliminated at or near the time of creation of the homeowner transaction” NO – the “loan account” is ELMINATED prior to the time of the creation of the LAST homeowner transaction. And, that creation is based upon a false mortgage presented to homeowners. That is, the prior loan is placed in “Created default” and the homeowner “transaction” is nothing more than attempted reinstatement of a FALSE reported default on the prior transaction. Thus, the securitization is false, as valid securitization only occurs via transfer of on-balance sheet accounts receivable to off-balance sheet conduit. But given the reported default PRIOR to creation of homeowner LAST transaction – no mortgage and no securitization can ever occur. This is simple to ascertain by demanding proof of valid funds provided at creation of LAST homeowner transaction. With crisis “loans” (not mortgages – although stated as a mortgage to homeowner) – no funding for a mortgage ever occurred. All you have is fake reinstated debt. And, in foreclosure – who is it up to “reinstate” the fake default debt? No one knows, Thank you to Neil for broaching the crux of the financial crisis. Just need to go a wee-bit further – prior loan and “transaction” funding. It is so simple. No one can prove proof of funding. And, no one addresses. We are partly to blame for not addressing. Thanks.

Contribute to the discussion!

%d bloggers like this: