So I recently received an inquiry from a homeowner who is a long-term contributor to this blog asking how and why Wells Fargo got involved in her case. From the information that had been disclosed and recorded, Wells Fargo had nothing to do with it. But here were reports from Wells Fargo to investors, including information about her transaction. And here was a report (“Payment History”) showing the Wells Fargo name on the cover sheet. The report issued to investors contained a general disclaimer of truth, accuracy and reliability of anything reported.
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The answer is simple. It is also highly counterintuitive.
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As originators went bankrupt in the 2008 crash and the mid-range investment banks folded (Lehman, Bear Stearns, Merril Lynch, etc), several of the bigger surviving entities moved into the shoes of what had been the originating investment bank. Wells Fargo, Chase, and BOA were primary beneficiaries of this. This move was not allowed, it was encouraged by 4 successive presidential administrations who continued to accept information and instructions from Wall Street as though the source was reliable.
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Years, back, one of the cases I won in Florida started off with Wells Fargo being named as the Plaintiff in a judicial foreclosure by the lawyer who filed the lawsuit. As the trial began, Wells Fargo conceded it was not the Plaintiff and that it was only the servicer. Although I eventually achieved a successful result, I made the mistake of NOT asking for immediate dismissal — for lack of a plaintiff.
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Then it came out that Wells Fargo was claiming to be a servicer, but it wasn’t saying it was working for anyone else. [It was keeping the money it received.] “So Wells Fargo” employees physically received payments from homeowners?” I asked. “I Don’t know,” the witness replied. “Well did Wells Fargo disburse funds to any third parties that included payemtns received from the Defendant?” I asked. “I don’t know.” he replied.
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Then the sole witness for the “Plaintiff” admitted that he had no idea what “American Broker’s Conduit” was — whether it was a name used by a registered business entity or was an entity itself. [I had previously established that a New York State corporation of that name emphatically disclaimed any interest or consent to the use of its name or any connection in Melville, NY as stated on the mortgage.]
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Then we looked at the “Payment History” produced in the name of Wells Fargo. I asked, “What does that mean?” And the witness replied “That is a code indicating an investor.” I asked, “who was the investor?” He said, “Fannie Mae from the start.”
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“From the start?” I asked. “Well yes, this was always a Fannie Mae loan,” he replied. “Are you saying Fannie Mae funded this loan,” I asked? “I don’t know,” he replied. “So you don’t know who paid money to the Defendant” I asked. “No,” he replied.
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And where does American Brokers Conduit fit into this transaction that you are calling a loan?” I asked. “I don’t know.” he replied. “And if this case were to be decided in favor of the attorney who filed the case, who would receive the proceeds from the forced sale of the subject property?” I asked. AND THAT IS WHEN THE CASE SETTLED.
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So this was a government-sponsored game of three-card monte. Because giving relief to the homeowners was unthinkable, the government allowed the major banks to pose as if they were involved all along and take over the role of the originating investment bank — wherein the big investment bank who and nothing to do with the deal would receive the proceeds of payments received from homeowners, and it would receive the money that was collected from the forced sale of properties. This was all done without the major banks spending a single penny.
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And, of course, the investment bank kept the money it received without giving a dime to investors. They NEVER forwarded money to investors. They paid investors according to a scheme in which the payments were (a) discretionary and (b) indefinite as to time. And they issued distribution reports to investors like the one mentioned above, wherein they made it look like they were forwarding payments from homeowners.
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The certificates are purchased from investment banks doing business as the XYZ Certificates or the ABC Trust. The certificates were not legal persons, so nobody could go to prison. The trusts may have technically existed (“inchoate” — look it up) under common law, but they had nothing in them, so the existence of the trust was irrelevant — no matter how many times the “trustee” was named as U.S. Bank, LaSalle Bank, Bank of New York Mellon, BofA etc. And they were named millions of times in foreclosures. But they never had any duties nor performed any functions at all, much less as trustees.
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The only player was an investment bank who, by hook or by crook, managed to swing into position to reap the rewards of the largest economic crime in human history. An investment bank that never had any money or credit at risk when they induced homeowners to become issuers in a securities scheme under the veil and threat of a transaction (or loss of it) if they did not sign the documents that served as the basis for sale of securities that under current law are unregulated.
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The midlevel investment banks like Lehman Brothers et al, had leveraged their positions to increase the flow of sales of certificates. When the music stopped, there was no chair to sit on. So Lehman went under and Wells Fargo stepped in and quietly put shoes of Lehman on Wells Fargo’s feet. Quite a feat. When the sale of certificates stopped, so did the payments to investors. Collections from homeowners were not enough and were never planned to be enough.
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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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Wells Fargo admitted to it illegally foreclosing on TARP protected loan on Mar 15, 2010, so who TARP protected loan was that? My Dept of VA loan was serviced by Wells not granted a HAMP or VA HAMP as the loan was not process for the protected modification. Mortgage loans are originated with a modification clause guaranty and bankruptcy did not handle the primary residential mortgage, as it turned that over to the bank.
What Wells has cleverly done is point everyone to cases in bankruptcy to limit the damage to a few when in fact there are thousand more who were supposed to be granted one of the HAMPs. The situation should have been handled under the Independent Foreclosure Review Board but the banks renegotiated out of the “No Standing” category which would have paid out $125,000 however, as these bankruptcy are talking about $24,000 for the 400 of so out of the 3,200 that were denied mods, but there are thousands of Dept of VA borrowers in 2010 that were foreclosed that were not process for VA HAMP because Wells refused to process any of our loans!
Once again, Mr. Garfield references another case he has allegedly won, this time in Florida. He has failed and refused to show proof of ANY case he has ever won. This is very alarming. Lawyers who win their cases are more than happy to show their wins.