I receive information from many different sources. I analyze that information for relevance, materiality, and utility in connection with Foreclosure Defense. One of the things that has been brought to my attention by a contributor is the erroneous conclusion that is reached by homeowners when they receive tax forms from the “servicer.”
Let me say first that while homeowners are wrong (and so are their lawyers) about the existence, status, and ownership of a loan account, their current consensus is both reasonable and understandable.
After all the homeowners know that their own intent was to start a loan account. They also received documents that did not warrant but strongly implied that payments were made to them or on their behalf by a “lender” who was starting such an account.
Homeowners had no reason to believe that the situation was anything else. Nor did they have any access to information about claims of securitization or any cause to inquire about how any alternative scenario could be true. The concealment was complete.
The fact that no such loan account was ever created in most instances, and that any created loan account was quickly extinguished is unthinkable — just as the revelation that the original promissory notes were destroyed concurrent with closing and that millions of false, fabricated documents were forged and robosigned. It makes no sense — which is why the investment banks have been able to persist in their extra-legal scheme and even institutionalize their own illegal behavior. Yet all of that is true.
Let me say that in a number of situations where homeowners have received a form indicating that they have received “income” from debt reduction or forgiveness, I have often advised that the report should be challenged as fraudulent and that the homeowner should not accept the label of “income”, nor pay taxes on the so-called income.
The creation and filing of a form that is sent to a governmental agency and to the homeowner is not a legal or acceptable accounting substitute for data entries on the accounting ledger of a creditor. But the receipt of those forms reinforces the common belief that a loan account exists somewhere on an accounting ledger of some person or some company.
The most recent inquiry I received was regarding Ocwen Loan Servicing and Ocwen Financial. Ocwen is the brand name of a web of registered company names — like everything else in the securitization world. Ocwen designed to be thrown under the bus if and when the consensus shifts from accepting the mythology proffered by investment banks to understanding that early everything that is claimed in the context of false claims of securitization is extra-legal. That conclusion, if reached, would mean that all foreclosures would cease if they were founded on the false premise of a sale of the loan for value.
Ocwen does not need a charge-off if by use of that term you mean a deduction for tax purposes. Ocwen has no substantial profits requiring such devices. It is a thinly capitalized entity maintained by the investment banks. But Ocwen (and other servicers) will often send out the 1098 form and 1099 form for the same reason it is used to pose as a servicer who handles and processes receipts and disbursements — a shield or layer or legal veil for protection of the securitization and foreclosure players.
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The filing of the 1098 mortgage form is an illegal false declaration of events that are at best questionable. While the homeowner tendered money that the homeowner believed was interest and principal, it was never recorded as such on the accounting ledger of any person or company. While the proceeds of foreclosure or reductions are usually believed to be some sort of reduction in the loan account receivable, it is never recorded or claimed as such.
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Ocwen does not pay any tax and reports no income from such “interest payments.” In fact no person or company reports or pays taxes on such cash flow which is never recorded as revenue or income. If that were to happen, then there would need to be a base loan account receivable on the accounting ledger of some person or company — something we already know does not exist.
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The opportunity exists for the investment banks to claim deductions for fictional losses that are reported by Ocwen, but I have not yet confirmed that this is being done.
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Such forms and reporting have the added benefit of producing written documentation to corroborate the false claims relating to the so-called securitization of debt. In publishing or sending such reports it reinforces what the consumer homeowner already believes — that he or she has a loan account. It would be interesting to see what would happen if homeowners began suspecting or understanding that no such account exists.
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PRACTICE HINT: Start with the proposition that there is no loan account. That means there is no loss reported or recorded and no claim that is subject to resolution in any court or any legal procedure. The ability to obtain a “remedy” without ever claiming or enduring some loss of something of legally recognized value is not possible under our laws, starting with the “case in controversy” requirement in the U.S. Constitution. It is only by lying about it that anyone can fake their way to a remedy they did not earn or own.
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Whether you believe it or not, stick with that premise and you are likely to win at the end of the case. But this is ONLY true if you are aggressively litigating and revealing one simple fact: when pushed, shoved, or even threatened with jail, the opposition will never, ever produce a loan account receivable from the accounting ledger of the named claimant nor any documents supporting entries in such ledger. Instead, they will do everything possible to convince a judge that such production is not necessary, is proprietary information, trade secrets, and that the “Payment History” is sufficient. Ask any CPA. The Payment HIstory is not sufficient and it is not the loan account. The loan account would show disbursements.
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Neil F Garfield, MBA, JD, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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