Livinglies's Weblog

see https://www.fhfa.gov/SupervisionRegulation/LegalDocuments/Documents/Litigation/FHFA_v_JP_Morgan_Complaint.pdf

In a complaint filed on September 2, 2011, the Federal Housing Finance Association alleged the following:

A mortgage servicer is necessary to manage the collection of proceeds from the mortgage loans. The servicer is responsible for collecting homeowners’ mortgage loan payments, which the servicer remits to the trustee after deducting a monthly servicing fee. The servicer’s duties include making collection efforts on delinquent loans, initiating foreclosure proceedings, and determining when to charge off a loan by writing down its balance. The servicer is required to report key information about the loans to the trustee. The trustee (or trust 32 administrator) administers the trust’s funds and delivers payments due each month on the certificates to the investors.

This reflects the commonly understood definition and description of the role of a servicer and a REMIC trustee. Any qualified securities analyst will tell you the same thing: this definition and description is wrong and neither reflects the documents nor the economic realities (money trail) of any of the homeowner transactions. It is a lie. But the institutional bias I wrote about last Thursday caused this agency to misstate the facts, thanks to the ignorance of the lawyers about the facts of the current iteration of securitization.

1. “A mortgage servicer is necessary to manage the collection of proceeds from the mortgage loans.” This is true but the parties named as s services do not manage anything. They’re not servicers in the sense that this description conveys. Their records are not business record exceptions to the rule against hearsay because all of those records are merely reports of reports by third and fourth parties.
2. “The servicer is responsible for collecting homeowners’ mortgage loan payments, which the servicer remits to the trustee after deducting a monthly servicing fee.” Also true as a general statement but the companies who are named as servicers and whose name appears on correspondence and notices are not the “servicers” who perform such tasks nor do they manage the persons and companies that do perform those tasks.
   1. Discovery (or QWR, DVL) will reveal the absence of any record of any receipt of any payment by the named servicer.
   2. Discovery (or QWR, DVL) will reveal the absence of any record of any disbursement by the named servicer — primarily because it neither receives payments from homeowners nor maintains any depository account with the payments of homeowners. Hence there is nothing to disburse.
   3. Discovery (or QWR, DVL) will reveal the absence of any report, communication or transmission of data or money from the named servicer to the REMIC Trustee.
   4. Discovery (or QWR, DVL) will reveal the absence of any deduction from any depository account controlled or maintained by the named servicer for payment of its fees.
   5. Discovery (or QWR, DVL) will reveal the receipt of fees from third parties who do not receive or maintain any depository account containing the money proceeds of payments from homeowners.
3. “The servicer’s duties include making collection efforts on delinquent loans, initiating foreclosure proceedings, and determining when to charge off a loan by writing down its balance.” If the company was performing servicing duties this statement would be true. But the delegation of trustee duties to a third party is illegal in most states. This structure is commonly used by organized crime to claim plausible deniability for the responsibility of the actions of a third party. Recently this claim has been debunked by a Federal District Court judge in Conencticut.
   1. Discovery (or QWR, DVL) will reveal that there is no officer of any bank named as REMIC trustee who issues instructions to the subservicer to perform any of these tasks.
   2. Discovery (or QWR, DVL) will reveal the presence of indemnification agreements because neither the REMIC trustee nor anyone else warrants title to the underlying obligation, legal debt, note or mortgage of any homeowner. The duties are described but not granted because there is no legal grantor.
4. “The trustee (or trust 32 administrator) administers the trust’s funds and delivers payments due each month on the certificates to the investors.” This statement is untrue. The REMIC trustee performs no functions. If the homeowner obligations were sold and thus securitized into shares sold to investors this statement would be true. Since no legal sale of any debt has occurred nor the sale of any right, title, or interest to any underlying obligation, note or mortgage, this statement could never be true.
   1. Discovery (or QWR, DVL) will reveal the absence of any loan account receivable, paid or unpaid, on the ledgers and accounting records of any party who is asserted to be a “servicer” or “REMIC Trustee.”
5. Note that these facts will usually be initially presumed by a court in favor of the lawyer presenting the bogus case for the bogus named claimant. Defeating that presumption leaves the Emporer without clothes. There is no account and so there is no proof of any claim.
   1. Homeowners need to attack the allegations of the claims against them not prove that the players are evil or have done something wrong.
   2. In a subsequent suit for wrongful foreclosure (after they have won the principal suit against them) then they can allege abuse of process, wrongful foreclosure, breach of FDCPA, RESPA, RICO, and other claims.

The bottom line is that the agency missed the point entirely either intentionally or unintentionally. Homeowners and their lawyers should not repeat that mistake.

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• But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more.
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Filed under: foreclosure |