if the investment bank paid the homeowner as an incentive payment rather than as a loan, then there is no debt any more than salary or wages can later be called a loan. The fact that the consumer/homeowner thought or even wished it were otherwise makes no diffeerence. If I pay you money and you think it is a loan but I paid you for services you rendered, the substance of the transction is “fee for services” — not a loan — and there is no legal or ethical or moral obligation to pay it back.
I think the one idea that sticks in the throat of nearly everyone is the idea that no money was loaned. That idea seems impossible and to many skeptics, it sounds like a snake-oil salesman trying to peddle what people want to hear. People know that they did really buy their home, and the majority of these transactions are refinancing, which means that the old “lender” got paid off, right?
If there is one thing missing from most articles analyzing consumer debt, it is the failure to recognize that a handful of investment banks are the center of all of those transactions and they all have reciprocal agreements. Those agreements are mostly in writing but difficult to obtain, and sometimes tacit. You don’t need to look any further than any pooling and servicing agreement to see the world’s largest banks all participating in the same venture. In prior years, this fact alone would’ve been sufficient for antitrust action.
- The homeowner is buying a new home from a developer or contractor.
- The homeowner is buying a home from the existing homeowner.
- The homeowner is buying a home from a party or business entity that asserts ownership after foreclosure on the previous homeowner.
- The homeowner is refinancing the new home they purchased from a developer or contractor.
- The homeowner is refinancing a home they bought from a prior homeowner.
- The homeowner is refinancing a home they bought from a foreclosure buyer.
- The homeowner refinances by entering into a forbearance agreement.
- The homeowner refinances by entering into a modification agreement.
- Securitization of data and attributes of homeowner’s promise to make scheduled payments — no relevant transaction because there was no sale of the underlying obligation, legal debt, note or mortgage (or deed of trust). Since law requires that sale for enforcement by successors, the foreclosure players fake the documents.
- The money trail for this transaction looks something like this: LENDER—>MONEY SOURCE/INVESTMENT BANK—>SUBSIDIARY OR CONTROLLED AFFILIATE OF MONEY SOURCE—>CLOSING AGENT—>DEVELOPER.
- The paper trail (i.e. contracts) for this transaction looks something like this: MONEY SOURCE/INVESTMENT BANK—>AGGREGATOR (like Countrywide Home Loans)—>(a) Assignment and Assumption Agreement with Originators (like Quicken Loans) and (b) Indemnification Agreement with title insurers—>Mortgage Broker—>Mortgage salesman—>Homeowner execution of promise to pay and collateral for making scheduled payments to Originators.
- Bottom Line: The homeowner is getting money, courtesy of an investment bank that is NOT intending to make a loan or be governed by any lending laws.
- The homeowner is making a promise to pay the originator who did not lend any money or make any payments to or on behalf of the homeowner.
- The only party identified as a lender is the originator who did not make a loan.
- The only party that arranged for payment disclaims any role of being a lender.
- The payment made on the homeowner’s behalf was an incentive payment designed to procure the signature of the homeowner on a note and mortgage (or deed of trust).
- Legally since there was no lending intent by either the named “lender” or the Money Source, there is either no contract at all or no loan, since there was no meeting of the minds.
- If the transaction is not rescinded the deal needs to be reformed with a court determining what incentive payment the homeowner should have received from the scheme to issue, sell and trade unregulated securities.
- But if the homeowner tacitly or expressly asserts or agrees or admits it was a loan, then for all purposes in court, it will be treated as a loan not subject to reformation.
- Most of such transactions are steered to originators and aggregators who represent the money source (investment bank) who was involved in the financial transaction with the prior homeowner.
- Because the proceeds of the “new financing” or “purchase money mortgage” would be paid to the same investment bank, no money exchanges hands with respect to the “pay off” of the prior note and mortgage.
- The confusing point for most lawyers and homeowners is that there is nothing illegal about a bank holding a prior mortgage lien. There is nothing illegal about the same bank doing business with the next owner. And there is nothing illegal about the bank not issuing a check to itself when the owners change.
- But that is not what is happening. “The bank” does not exist. The money source (investment bank) is not carrying the homeowner’s promise to pay scheduled payments as an asset and therefore is not “the bank.”
- For legal purposes, the test is simply whether or not the investment bank has suffered a loss as a result of the refusal or failure of the homeowner to make a scheduled payment.
- Or, phrased differently, the question from the beginning is whether or not the investment bank has the source of money ever excepted any risk of loss arising from the value of a loan account receivable.
- The answer to both questions is in the negative. In dozens of cases across the country, lawyers have been asked to identify the creditor and have admitted that they cannot do so.
- The only logical conclusion is that the transaction was never intended to be a loan (with the exception of the homeowner who did intend to get a loan, but did not receive it).
- The investment banks wanted the homeowner to believe they were getting a loan instead of an incentive payment to execute a promise to make scheduled payments. They did not want the homeowner to know that they were receiving an incentive payment. Disclosure of that fact is an absolute requirement under the law. If they had disclosed the true nature of the transaction, they would have been subject to bargaining and competition.
- Forbearance is a form of “refinancing” because it accomplishes a number of things for the investment bank. First, obtain a signature from the homeowner that ratified or admits that the previous paperwork and financial transactions were all valid. Second, it essentially removes the placeholder originator from the paper trail. Third, it installs a new placeholder name and obtains consent from the homeowner. Fourth, it establishes a company claimed to be the servicer as the legitimate recipient of funds or proceeds from homeowner payments or the sale or foreclosure of the collateral (i.e., the home).
- Modification is the same as forbearance: It introduces new parties under coercion. Homeowners sign these documents with total strangers mostly out of sheer panic. What they’re doing is waiving rights and creating tracks in the sand that are opposite to their financial interest and well-being.
CLICK TO DONATE
Click
FREE REVIEW: Don’t wait, Act NOW!
-
But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
-
Yes you DO need a lawyer.
-
If you wish to retain me as a legal consultant please write to me at neilfgarfield@hotmail.com.
Filed under: discovery, Discovery -Subpoena, evidence, Fabrication of documents, foreclosure defenses, foreclosure mill, investment banking, Investor, legal standing, Mortgage, originator, Pleading, Presumptions, prima facie case, quiet title, securities fraud, sham transactions, standing, Student Loans |
Trying again. Chase was early involved. Goldman was late to the game. At some point, the loans were all GSEs until the PLMBS began. If these were primarily refinances, and prior principal is NOT paid by the borrower at the transaction, then GSEs were NOT paid by the borrower. Whether there is debt or not – the homeowner is captured by the distressed market – forever. The problem is getting courts to understand what has been concealed. Not easy. Judges, as Neil points out in other post, write 100 page decisions about the validity of securitization.
Neil did not post my response.
ANON makes two errors. (1) the heart of this was Goldman, Sachs, CitiGroup and other companies owning or controlling securities brokerage companies that refer to themselves as “investment bankers. They were never servicers for GSEs, (2) if the investment bank paid the homeowner as an incentive payment rather than as a loan, then there is no debt any more than salary or wages can later be called a loan.
This is well written by Neil. As Neil previously pointed out, most of the “crisis” “loans” were refinances. Ben Bernanke stated this in 2008. Neil correctly writes – “The only money paid out is the excess, after fees, over the amount previously declared as “principal.” He also correctly writes – “this “principal” is not carried on the accounting ledger of any company or any person as an asset.”
The “few” large investment banks involved were previous “servicers” to the GSEs, and they needed the payment trail to go to them – not the GSEs. In the process, they manipulated “Servicer” reporting to whatever they wanted. Thus, Neil’s statement – “nor is there any reserve for bad debt (simply because there is no risk of loss”) – has to be looked at further. Because what the investment bank acquired was falsely reported bad GSE “debt.” This makes a reserve unnecessary. Most important is Neil’s statement – “The confusing point for most lawyers and homeowners is that there is nothing illegal about a bank holding a prior mortgage lien.” That may very true, but this was not conveyed to homeowners. Further, title does not reflect the same. Homeowners were told it is mortgage, and they paid for a mortgage. If there is no payoff of the prior loan by the homeowner – they did not get a mortgage. None of this was disclosed to homeowners. And, that is the most relevant part to the homeowner. No one agreed to sell their soul. But they unknowingly signed with the devil. And, that is fraud. All has been concealed from the public.
Closings are also digital – perfect crime with no witnesses
How could be Nationtitle Clearing Company a house of GHOSTS?
Try to cal them and find the name appear on your Assignments – and you will get totally different directory of names – and usually automated respond ! And if you get a human being on the phone – this human being will not let you to speak with anyone from your Assignment
Most of the recent forebearances were done on line or on the phone without signature from the homeowners.