Talking to a prospective lawyer when neither you nor he or she knows anything about securitization by Wall Street players, double-entry bookkeeping or accounting

Law students are taught only two forms of securitization: (1) divide an asset to sell to multiple investors or (2) divide ownership of the whole asset into multiple shares between investors. They are never taught anything about the dozens of other forms of securitization, most of which form the foundation of current practices.

The main applicable form of securitization as it relates to transactions with homeowners neither splits the “asset” (i.e., the unpaid loan account on the ledger of a creditor), nor divides ownership of the entire “asset” into shares for multiple investors. This one fact accounts for nearly all the confusion on the part of lawyers and judges.

The main applicable form of securitization as it relates to transactions with all consumers is that the role of the “lender,” the creation of a loan account on the ledger of the “lender,” and the accountability for compliance with lending and servicing laws are completely blocked out leaving the consumer (homeowners in particular) twisting in the wind under a label of “borrower” — despite the complete absence of a “loan,” as the law would describe such a transaction.

Consumers have been converted from intended borrowers to actual issuers – of documents that would be underwritten and sold as unpaid loan accounts. Homeowners were paid money labeled as a Loan based upon the creation of a nonexistent and unintended loan account.

This one fact accounts for nearly all the confusion on the part of lawyers and judges. They can conceive of no other alternative simply because they are not trained or licensed in investment, banking or accounting — because they are not trained or licensed in investment, banking or accounting.

So then people read my blog, and they go to a lawyer, expecting the lawyer to understand everything that I have written. Most of what I write is based on the fact that I am trained in investment, banking, and accounting. I was licensed as a securities broker. And I was a practicing investment banker for decades. The legal ramifications of such practices are only apparent if you know the actual fact scenario and why it exists. Lawyers don’t know that and neither do consumers.

Unless the lawyer has done both extensive and intensive research and analysis of the development of the current iteration of “securitization,” he or she is likely to only partially understand what is going on. Such people often feel likely a wall when they receive facts or documents that they are unable to rebut or even interpret.

The typical quote from the lawyer about being satisfied with someone just stating that they are the note holder is completely understandable within the aforesaid context. And you can’t really expect most lawyers to be very conversant in the language of Wall Street or GAAP. However, the lawyer needs to look more carefully at the definition of a “holder” and an “HDC” (holder in due course).
Of course, they have no reason to do so unless you pay them to do it. They are under no obligation to learn something that might assist you in some way unless you reach an agreement for the engagement of their services. And because most homeowners know that the system has screwed them and most homeowners view lawyers as being part of the system, they think that the lawyers have some obligation to perform free work for them.
Most lawyers and judges practically slept through their class on the Uniform Commercial Code. So most of what they know is basically hearsay. One of the common misconceptions that play court decisions is that mere allegation of possession is sufficient to establish the status of a “holder” of the promissory note.
First of all the allegation of possession is not the same as proof of possession. That means that delivery from a person entitled to possess and enforce can be proven. This is never done in the context of foreclosures.
2nd, if mere possession of the original note was all that would be required to have the status of a “holder,” then the term “holder” would be unnecessary. The Uniform Commercial Code in such a circumstance would refer to the possessor. This is not the case.
To be a “holder” under the Uniform Commercial Code, article 3, you need to have both a legal delivery (and actual acceptance of the delivery) and authorization to enforce the alleged original promissory note.
{Note the use of “actual acceptance” — when US Bank or Bank of New York Mellon or Deutsch is named in an assignment or endorsement, they neither accept the transfer nor make any claims based on that transfer. This is ALL done by third parties working for the investment banker (not the transferee Bank “as trustee)}.
That authorization is usually given or implied from an entity that never had any financial interest in the administration, collection or enforcement of the note or any unpaid loan account. Such authorization is a legal nullity just as my authorization to do it would be a legal nullity because I have nothing to do with the history or conduct of the transaction in any form.
The assumption that such authorization exists is the second most common reason why homeowners fail to convince a judge that the case against them is false and fabricated.
Ultimately the authorization must come from the owner of the underlying obligation – the party to whom the homeowner allegedly owes a debt.
This is never the case in current foreclosure actions – except for rare instances in which an original lender can produce a records custodian with a ledger that shows the creation of the loan account and all debits and credits to the loan account from inception to the date of production.
Since most installment payment documentation represents the first step in the issuance of securities (with the homeowner as the initial issuer) that will then be sold by securities brokerage firms on Wall Street, the idea of the old and original lender appearing anywhere on the horizon with respect to an alleged unpaid loan account does not exist.
I suggest you show your proposed lawyer a copy of this letter and then advise me of dates for a 30-minute telephone conference. As I have suggested, whether the lawyer is willing to prosecute the defense narrative is within his or her sole discretion.
While I have one most of the cases out of the hundreds that I have been directly involved in (and thousands in which I have been indirectly involved), I concede that other lawyers have been successful by focusing on other issues. But in my opinion, such successes always directly relate to the insufficiency of evidence to establish the existence of the unpaid loan account and its ownership.
I caution you not to adopt an adversary approach to a lawyer whose experience with investment banking, accounting, and double-entry bookkeeping is very limited. If a lawyer accepts the engagement, he or she will be learning at the same time that they are gradually teaching the judge and changing the outcome of what seemed like an inevitable result.


Nobody paid me to write this. I am self-funded, supported only by donations. My mission is to stop foreclosures and other collection efforts against homeowners and consumers without proof of loss. If you want to support this effort please click on this link and donate as much as you feel you can afford.Please Donate to Support Neil Garfield’s Efforts to Stop Foreclosure Fraud.
CLICK TO DONATENeil 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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But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 14 years or more. In addition, although currently rare, it can also result in your homestead being free and clear of any mortgage lien that you contested. (No Guarantee).

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2 Responses

  1. Ronald – you got lucky

  2. Good article. When I went thru this against Chase and Deutsche – we actually won but only because I was patient and stubborn. Could not find an attorney here in KC that knew diddly. Judges were a joke.

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