UNDISCLOSED MIDDLE: Repurchase Obligation in the Mortgage Loan Purchase Agreement

FROM ANONYMOUS, MY FAVORITE CONTRIBUTOR 🙂

EDITOR’S NOTE: I would be better off and so would our readers if I could be as succinct in my writing as Anonymous. Somehow it always takes me longer to say what he does in a few sentences. Use HIS version instead of mine whenever possible. My version is more academic and runs the risk of putting the Judge to sleep.

  • This piece written by Anonymous underscores the BASIC point that needs to be made from the start: the TOTAL agreement between lender and borrower consists of far more than the loan closing documents.
  • The fact that the rest of the documents were withheld doesn’t mean they weren’t involved, signed, executed and delivered. It means they were not disclosed when the applicable federal and state statutes as well as common law required them to be disclosed.
  • The old school Judges and lawyers are confused ONLY because they fail to recognize this basic truth.
  • Once they accept the fact that the borrower signed a note but the lender received a bond from a party not involved in the borrower’s closing, it all falls into place.
  • There is no nexus between borrower and lender without recognizing the obvious — there were parties, documents, agreements and corresponding duties and obligations existing in the UNDISCLOSED MIDDLE.
  • The single transaction rule once applied, clears up all confusion. No money from investor – NO DEAL. No borrower to accept loan — NO DEAL. SINGLE TRANSACTION if there ever was one.
  • But perhaps the single most important point Anonymous makes is that the alleged assignment, transfer, endorsement etc of the note never took actually place which means that the title (encumbrance — mortgage or deed of trust) is and remains in the name of the originating “lender” to whom no money is owed. A classical case of an unperfected security interest.

From Anonymous: “Repurchase and stipulations is contained within the same Mortgage Loan Purchase Agreement – it is not a separate contract – it is the same document and contract under the stated Trust and SEC filings. Thus, none of the note endorsements were actually “without recourse.”

However, many of the repurchase demands were not executed because the banks often looked the other way – until they became massive – and the originators were shut down.

Most of the endorsements were in blank – only when they knew there was no longer any recourse, are the notes actually endorsed to the trustee. But, they did not know this at the time of the trust set-up.

And, the notes are executed before foreclosure – they are sold at steep discounts to the servicer and removed from the trust – at this point there is no recourse..

It is at the inception of the trust – that the notes were not actually negotiable. Thus, the trust never actually owned the notes – they did not have to – because only the receivables are passed-through.

If there was a separate contract for Repurchases – it would have had to have been filed with the SEC – along with other documents. There was no separate contract – the Repurchase agreement was part of the Mortgage Loan Purchase Agreement – they were one and the same.

Talk About a Guy Who Gets It – “Anonymous?”

As some of you knew or probably have guessed, livinglies is a lightening rod for information. We have posts like the one below on the comments and emails sent with details that are neither for attribution or publication. In addition, several people in sensitive government positions use livinglies as a method of getting the real information out. Take a close look at this comment posted from “Anonymous” a frequent contributor. While succinctly stated his points are pearls.

Yeah – searching Maiden Lane is good. But, it will only tell you what “toxic” tranches the government took off the books of the banks that held them. These are the tranches that were NOT paid by the swap protection.

My point is that if the upper tranches were paid via swap protection, then the bottom tranches – held by the government (Maiden Lane) are simply worthless tranches. This is because the pass-through tranche structure has been paid and is no longer existent.

Lower tranches are only paid current payout – if – and only if – the upper tranches have been paid. But, this payment must be current. If a swap payout has occurred, the upper tranches are NO LONGER current. They are done – there is nothing left for for the subordinate tranches to receive. Purchasing worthless toxic assets, by the government, was only a ploy to aid the financial institutions that held worthless “toxic” assets – that are no longer part of the originated “waterfall” structure payout. Worthless assets from a dissolved and dismantled Trust.

You must remember, the REMICs were set up for current pass through of receivables ONLY. Nothing more. Foreclosures cannot be assigned to REMICs with knowledge of default.

My anger is – the government knows this – and what the heck are they doing? They claim to be promoting modifications – and at the same time – are the investor in the toxic securities that are dead. Thus, ironically, the government is the one denying a loan modification and/or principal reduction – and, forcing foreclosure – despite their own law – including the 2009 TILA Amendment and .Federal Reserve Interim Opinion.

But, listen to Mr. Ben Bernanke – he wants short sales. This is their goal. And, for anyone who knows of someone purchasing a new home – ask them their terms – ask them the size of their mortgage, ask them their down payment. These people are going to be in trouble. All is simply a transfer of wealth of from you – to them (new home buyers). I cannot figure out how this ever came to be – except politics in the worst possible way.

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