Answering the Shell Game

Most of the questions I get come from lawyers and homeowners who are totally confused by the array of names of companies that appear, disappeared and replaced by lawyers operating under instructions from command central — a group of lawyers who oversee the foreclosures of loans claimed to be securitized. They are the ones who give the orders to “servicers” and “foreclosure mills.”

The goal is to force the sale of homes and obtain the proceeds of sale for the benefit and account of a stockbroker who initiated a scheme of “securitization.”

Everything that happens in correspondence, statements and enforcement actions is specifically designed to make lawyers, homeowners and judges think that is not the case. Everything is designed to create the false impression that the parties involved have every legal right to originate, process and enforce residential loans when in fact no such authority exists.

The foreclosure process is just one step in many that results in unconscionable profits, fees and commissions distributed to a multitude of players whose livelihood depends upon successfully duping the courts into allowing foreclosure despite the fact that the money from the forced sale will never be paid to the investors who paid for the debt.

One such question came in from a reader regarding BONY Mellon as trustee of a supposedly REMIC trust. As with all things in the era of securitization fail (see Adam Levitin) even that is false. An entity that does not serve as a pass through vehicle for payment of principal and interest on residential loans is not a Real Estate Mortgage Investment Conduit — so it isn’t a REMIC. A name that includes the word “trust” in it without a trust agreement in which something is entrusted to the “trustee” is not a trust.

So BONY Mellon is simply renting its name out for use by stockbrokers who call themselves “investment banks” in order to create the illusion of an institutional loan when nothing could be further from the truth. With only a few exceptions the same statement applies to all entities named as “trustees” of “REMIC” “trusts”.

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Here is my reply to the reader:

They are playing a shell game and that is  what you should say:

  • None of the BONY Mellon entities ever owned or paid for the debt, note or mortgage.
  • None of the BONY Mellon entities ever served as trustee for the benefit of certificate holders
  • None of the certificate holders ever received a conveyance of ownership in the debt, note or mortgage. The assignment is always void (see below).
  • None of the certificate holders hold any equitable interest in the debt, note or mortgage because they expressly waived any such interest.
  • None of the BONY Mellon entities ever received your loan to hold in trust for anyone.
  • The assignment of bare naked title without the debt is a legal nullity. The trust agreement says that BONY holds bare naked legal title for the investment bank, but it does not have legal title because the debt was not also transferred.
  • The appearance and disappearance of technical legal entities occurs for the sole purpose of creating the illusion of business transactions that never occurred.
  • None of the BONY Mellon entities will ever receive the proceeds of a forced sale of property in this case.
  • None of the BONY Mellon entities have ever received the proceeds of forced sale of any property related to the subject “trust” or trust name.

BLOOMBERG: Mortgage Crisis Still Unresolved, New Crisis Looming

No two financial crises are ever quite the same. The next one won’t be like the last. But history teaches lessons, and there’s no excuse for ignoring them.

Regulators have done a lot to reform the financial system since the 2008 crisis, but they still haven’t fixed the market where the trouble started: U.S. mortgages. It’s an omission they need to put right before the next crisis hits.

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THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.

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see https://www.bloomberg.com/view/articles/2018-04-30/america-s-mortgage-market-is-still-broken

David Shipley, Senior Editor for Bloomberg Views has hit the nail on the head. While there are some errors in his article, they are understandable.

He’s right when he says that the servicers lacked the necessary incentives and resources and still lack those incentives and resources. But when he talks about “delinquencies” he fails to grasp the fact that those “delinquencies” are based upon a debt that neither the servicer nor its client is authorized to administer.

This failure of perception is understandable. It is difficult to to accept the fact that the debt went up in smoke and therefore no creditor has authorized the administration or collection of the debt. It is challenging to accept the notion that the banks engineered this scheme so they could step in as if they were creditors without actually saying so.

But he gets very close when he says

Private-label mortgages (which aren’t guaranteed by the government) were packaged into securities with extremely poor mechanisms for deciding who — investors, packagers or lenders — would take responsibility for bad or fraudulent loans.

The whole idea was to make it unclear who would be injured by nonpayment of a debt. That was how the banks, as intermediaries, transformed themselves into apparent principals and how entities created the illusion of self proclaimed servicers. Or as Shipley puts it

The parties involved in securitizations became embroiled in legal battles about who owed what to whom — litigation that goes on to this day.

So even amongst the principals of the scheme coined as “securitization fail” (Adam Levitin) there is no agreement and in fact fierce court battles as to the identity of the injured party. In other words their pleadings in court constitute admissions that are inconsistent with the pleadings in foreclosure cases. If there is no identified party with injury then there is no legal standing.

What is clear now is that the money taken from investors was not used to fund REMIC trusts, that the REMIC Trusts never bought any debts and in fact never bought any of the dubious paper that was issued in connection with origination or transfer of the “loans.” Those investors were largely not becoming beneficiaries of the trust; instead they were becoming creditors of the trust.

Knowing that, investors are stuck — if they blow the whistle on the diversion of their money into a completely different “investment” than the one they thought they were buying, they are undermining their potential claim based upon the “security” offered by the mortgages. And they are undercutting the value of the certificates they bought. That is what threatens a large segment of the shadow banking market.

The fix that Shipley thinks should happen will never come to fruition because the government has been convinced that a fix would eviscerate the shadow banking market where derivatives are traded. Nobody knows what the outcome will be if that market fails.

But in the meanwhile current policy reflects a decision to let investors and borrowers take the entire brunt of the scheme that ultimately left the banks in solid control and rising profits despite small settlements compared to the amount of money siphoned out of the US economy. So the Federal reserve and American taxpayers continue the bailout by lending support to the false presumption that the RMBS derivatives are based upon mortgage loans owned by a trust.

Shipley narrowly misses the point when he says

Advancing payments to investors when loans go delinquent — a core responsibility of servicers — demands a lot of cash. It also requires ample capital to absorb possible losses on servicing rights, an asset whose value can quickly evaporate if defaults and prepayments eat into expected fees.

Think about it. Why would a company guarantee payments from a third party? Who would take that risk on loans known to be at best fragile? Where is the money coming from to make those payments? Is it really the “servicer.” And if the money is “recovered” as “servicer advances” when the property is liquidated, is the foreclosure really a disguised suit to force the recovery of servicer advances rather than a true foreclosure — contrary to the interests of the certificate holders?

And if Ocwen was actually entitled to receive and expected to receive recovery of servicer advances why would it be teetering on the edge of bankruptcy? The more likely scenario is that subservicers like Ocwen have nothing at all to do with servicer advances. They don’t make them, they don’t initiate them and they don’t collect them. The Wall Street playbook has the real puppet masters hidden behind several layers of curtains. Ocwen, like so many others, is just there to get tossed under the bus to make people happy that they extracted a pound of flesh — except there was no skin in the game.

Fact Check: Robo-witness knows nothing

Information is admitted in evidence only after a proper foundation has been laid. If the witness knows nothing about the foundation the evidence should not be admitted as evidence. Appellate courts will usually reverse a trial court’s error in ruling on evidence UNLESS the appellate panel decides that the error would not have made any difference in the outcome. The fundamental fact at the root of all foreclosures is that the homeowner owes a debt to the foreclosing party and has not paid.

In the passage below a witness supposedly employed by US Bank displays a lack of personal knowledge on anything that would contribute to foundation for establishing the standing of the foreclosing party. I have inserted in brackets the significance of each answer of an actual witness in a court proceeding.

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Get a consult and TEAR (Title & Encumbrances Analysis and & Report) 202-838-6345. The TEAR replaces and greatly enhances the former COTA (Chain of Title Analysis, including a one page summary of Title History and Gaps).
https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments. It’s better than calling!
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
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Hat tip Bill Paatalo

Videoconference deposition of JOHN G. RICHARDS,II

Would you please provide your official title for
11 the record.
12 A Yes, I’m the vice president at U.S. Bank within
13 the global corporate trust services group. [The problem that was overlooked here is that his title is not foundation for establishing the existence of a trust that is managed by US Bank as Trustee. Additional questions regarding the existence of any account that is under trust management by US Bank would have revealed lack of knowledge because the witnesses are not given any information that could be used by the homeowner or counsel for the homeowner. In truths I have repeatedly pointed out, if you proceed under the assumption that there is no “account” in existence under which Trust assets are managed for the benefit of beneficiaries, all the pieces fall into place. There is no Trustee because there is nothing that has been entrusted to the trustee for the benefit of beneficiaries. Thus parties claiming authority “from the Trust” to serve as services or master servicers lack any foundation to support the assertion of that authority. This is why no modification is signed by anyone other than the servicer acting as attorney in fact for the purported Trust or other foreclosing party.]

——————

Q I see. Do you know who the beneficiaries are of

10 the WaMu trust?

11 A I do not know the specific beneficiaries — or I

12 would call them certificate holders. I don’t know the

13 identity of those investors or certificate holders. [Here is US Bank whom the attorneys have named as the foreclosing party. The witness is supposedly someone who knows about the USB trust arrangement for a REMIC Trust. Yet on the most basic questions about the existence of a trust — the existence of beneficiaries, he is unable to answer the question regarding their identity. A trust without beneficiaries is not a trust   — i.e., it is not an legal entity. In fact he is saying that there are no beneficiaries but that there are certificate holders. He can’t identify either the beneficiaries or the certificate holders. Note also that he knows nothing about the “certificates, which in most cases expressly state that the holder is NOT entitled to an interest in the loan, debt, note or mortgage. What they have is a promise to pay them money coming from a nonexistent trust.]

14 Q That’s fine. And because you don’t know, do you

15 know who would know or is there a list?

16 A I do not know specifically if there is a list

17 that would have the names of actual individuals or

18 entities who are certificate holders. [This further erodes the foundation for proving that the trust exists, the beneficiaries exist or the certificate holders exist. More importantly it is an admission that even a list of the certificate holders might not exist — thus corroborating a central point on this blog — that the money never went into the trust and that instead it was commingled with the money of other investors in a different entity altogether. I have referred to this scenario as a dark pool or slush fund in which the underwriting banks (who appoint themselves as Master Servicers) take charge of the investor funds instead of the money being administered by a Trust. Remember that in 2008-2009, the banks and servicers were asserting that such Trusts did not exist. That was probably a true statement in that the Trust was never an active trust and the trustee was never an active trustee.] 

19 It is common for many of these certificates to

20 be held. I’m not sure the exact way to hold it, but

21 something that is significant amount to brokerage or some

22 other place for the general holding of investment

23 securities. [He is referring to the practice of holding securities in street name — i.e., in the name of the brokerage house that allegedly completed the transaction on behalf of the investor. This enables the investment banking entity to assert ownership of the certificates for title purposes while supposedly holding the certificates for investors, the only evidence of which would be the end of month brokerage statement telling the investors that they own the rights to certificates even though the certificates are not in their name. Of course the rub here is that most certificates are uncertificated — merely computer entries. But that doesn’t mean that there isn’t a master certificate in electronic or paper form. The witness is saying he doesn’t know where such certificates are held, by whom or for what purpose] It’s a company called DTC that serves that

24 function just generally in the industry. But I don’t

25 have information about the identity of the specific certificate holders.

2 Q So you’re saying that this entity, DTC, holds

3 that information who would know?

4 MS. DARNELL: Objection. Calls for speculation.

5 THE WITNESS: I don’t know. I think I’m using

6 that as an example of sort of how these certificates are

7 commonly held and the entity that might be positioned to

8 communicate with actual certificate holders.

Q So does the trust actually communicate directly

11 with the certificate holders?

12 A I am not familiar with the — with any direct

13 communication between U.S. Bank as trustee for this trust

14 and certificate holders on an individual basis. I’m not

15 familiar with that at all. [This is as close as you will get to the admission that there is no active Trustee and there is no active Trust. If there is no communication or no knowledge of communication between the Trustee and the certificate holders then it is an inescapable conclusion that there is no activity in the alleged REMIC Trust. If there was such activity within the Trust it would need to be disclosed to the “beneficiaries” or “certificate holders.” There isn’t. The master servicer sends out a distribution report with the disclaimer that none of the information on the distribution report has been verified and could be entirely wrong.]

———————

23 Q So with respect to it being vague and

24 ambiguous — and I just want to clarify. Do you manage

25 Chase as the servicer of the trust?

A I would not describe that there is any kind of

2 management or oversight role by the trustee of a servicer

3 in this trust or any other. [So the party claimed to be the servicer is not managed by and need not report to the party named as the Trustee — thus further establishing that the Trustee is inactive and the “trust” is a sham. If there is no “kind of management or oversight role by the trustee of a servicer” then who directs the “servicer” on the distribution of the money collected from homeowners? Some document must exist that is not being produced in court. It would be a document that establishes the duties and responsibilities of the subservicer. It would be executed by the “Servicer” and the Master Servicer but kept secret because the document would establish, once and for all, that for all purposes other than foreclosure the parties conduct business as though the trust did not exist.]

Given the above testimony and commentary, the testimony of the witness should not be admitted into evidence at trial. The reason is lack of foundation. Proper objections on foundation, leading, and hearsay must be repeatedly raised or else the testimony, however riddled with untruth, will be admitted because the objection was” waived” by failing to raise it timely. If the objections are sustained and the witness has managed to spew out an answer as you were objecting then a motion to strike is absolutely required lest the objectionable testimony remain in the record. As Plan B, bring these things out in cross examination and then move to strike the testimony.

 

 

Deutsch Bank: Peeling back the layers

submitted by Raja

Investor /Trustee on MERS Record

Please use this small sentence for these thieves who have multi roles,
“”You cannot be a Trustee or investor or own the note, lest it become a partnership with the certificate holders”

FOR ALL THOSE WHO HAVE DEUTSCHE BANK.
a). Investor and Trustee as per MERS member Org. ID # 1001425. Deutsche Bank cannot be a trustee and investor. If it has both then it has a partnership with the Certificate holders.
b).. Interim Funder and Trustee as per MERS member Org, ID # 1002959
c). Document Custodian, Trustee and Collateral Agent as per MERS member Org. ID # 1000649
d). Investor and Trustee as per MERS member ORG. ID # 1001426
e). Servicer, Subservicers, Investor, Document Custodian, Trustee, Collateral Agent as per MERS member Org. ID # 1000648

The address of Deutsche Bank from “ a-e” above is the same 1761 East St. Andrew Pl. Santa Ana CA 92705-4934

Deutsche Bank is also acting under the various layers 424(b) (5) Prospectus, Pooling & Servicing Agreement (PSA) filed by the THIEVES with the SEC.of Trustees, without any specific description, where One Trustee ends and other Trustee Begins. It is classic obfuscation and musical chairs Note that Deutsche Bank is identified “as trustee” but the usual language of “under the terms of that certain trust dated….etc” are absent. This is because there usually is NO TRUST AGREEMENT designated as such and NO TRUST. In fact, as stated here it is merely an agreement between the co-issuers and Deutsche Bank, which it means that far from being a trust it is more like the operating agreement of an LLC)

DEUTSCHE BANK cannot be a Trustee or investor or own the note, less, it becomes a partnership with the certificate holders(Who bought the certificates and invested money).

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