There are two broad classes of investors. First the ones who drank the cool-aids and second the ones who didn’t.
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The ones who drank the cool-aid are managers that responded to promotional literature and extra judicial statements about what they were buying. In summary they thought they were buying into the lending marketplace without risk because their investment was collateralized by mortgage liens, rates investment grade by Moody’s and Fitch, and insured.
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The certificate that was “issued” promised payments from the investment bank. The cool-aid drinkers thought that this was akin to a persona guarantee. It wasn’t, and the obligation was written as the legal debt of a separate entity that had no existence or assets that could serve as a funding source. No certificate was ever collateralized because no certificate was ever evidence of a debt between the homeowner and the certificate holder. Yes, it is that simple.
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The second group depended entirely on contrived ignorance. They knew the certificates were worthless but they went ahead anyway and bought trillions of dollars of IOUs from the investment banks. The fund managers raised their individual incomes by reporting spikes in fixed income and higher values for the certificates.
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Many of them were responding to instructions communicated from the investment bank that had launched the new securitization scheme. They knew that the full definition of securitization consisted of only one thing: the issuance of a security. The subject of the securitization scheme was whatever was described in the prospectus if one was required. They knew that the certificates were securities, but they used their influence in Congress and Clinton administration to specifically exempt the certificates from SEC enforcement.
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I personally spoke with fund managers who had made those purchases, and I can report that they knew exactly what they were buying. They didn’t care that the certificates were worthless because the certificates — and the risk of loss attendant to the certificates — was passed off into the shadow banking market. Some reporters got it right at first pass — the entire scheme was based on the structure of three-card monte.
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The weak point of the scheme — and the one I have used in winning dozens of cases — is that the premise is the existence of an unpaid debt owed by the homeowner to a bona fide creditor. Up until the 1980’s no foreclosure was approved without the judge physically seeing and approving the unpaid loan account, including all debits and credits starting with the creation of the account. But nearly all originations were carried out by agents whose only economic interest in the transaction was the fee they were paid for posing a “lender” (under the provisions of an agreement with yet another agent.
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With no lender, there could be no loan account established. The economic damages that are required in every civil claim are measured by the amount of money that was due but not paid. This is where the dark side lawyers manage to confuse the judge, the homeowner, and, most importantly, the lawyer for the homeowner. It is human nature to make the jump despite the absence of the bridge.
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So the lawyer for the homeowner leaps over the fact that he or she has absolutely no corroborative evidence supporting the implied (but never asserted) statement that the foreclosure has been launched on behalf of a party who owned the implied (and nonexistent) loan account. Having missed that, the lawyer provides ample fertilization for the synthetic and nonexistent account use only in foreclosure cases but as the basis for any other transactions with any other players. In short, the lawyer has convinced himself and herself that the claimed default exists simply because a claimed payment was not tendered. There is no default unless the party proclaiming the default suffered an economic loss arising from nonpayment. If I do not pay you $10, that is not a default unless I owe you $10 and agree to pay it.
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And that is why all of my strategies and tactics are devoted to revealing the fact that the dark side lawyer has never received information on any real-world transaction in which value was paid for the underlying obligation, debt, note or mortgage. If he has not received it he cannot produce it. And if he cannot produce it, he can make all the claims he wants to make at the pleading stage, but he can’t prove it without the judge’s cooperation — making the assumption that such a transaction actually occurred.
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So the problem is not the refusal of the judge to apply the law. The problem is the refusal of lawyers who purport to represent homeowners.
Filed under: foreclosure |
Well explained. The elephant’s in the room but they do not care, this is about multiple revenue streams distributed to many players at the expense of the borrowers/homeowners. It is theft facilitated by Congress and the public is awakened.
So the bottom line is: Since this market collapsed, due to the explanations here, what happened to the claimed debt of the borrower? What did the government do with it when they bailed out the banks and purchased these invalid and junk securities — by which there is no accounting (and securitization cannot occur without accounting). It appears that the government invented a program called the Public Private Investment Program (PPIS) which sold off invalid rights to collect to bottom feeders. So all we have left is invalid rights to collect by an invalid claimed servicer for a invalid and dismantled trust that invalidly existed in the first place. The claimed servicer is nothing more than a debt collector of claimed debt that was invalid to begin with. THIS is why modifications rather than refinances were pushed by government. There can be no refinance by a valid bank who originated and perpetrated the fraud to begin with. All began with the Community Reinvestment Act (Clinton) which did not anticipate that the ‘loans’ to be created would not be valid in the first place. To Rich – trusts are prohibited from lending directly to borrowers. Thus, you have no lender.
Well stated! My alleged lender is a “trust” out of Delaware that I do not believe exists,
SPS is the servicer… complete frauds.
I would like to schedule a call to discuss.