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EDITOR’S NOTE: This article corroborates something I have been saying since October, 2007. If you get a chance to do discovery on any of the originating lenders you will see the same thing over and over again for nearly all the loans made 2000-2009: the loans were not booked on the balance sheet, they were instead booked on the income statement.
This seemingly innocuous statement tells the whole story from start to finish. If the originator was the lender, as it said it was at the closing with the homeowner, then it would have shown a loan receivable on its balance sheet, a reserve for default on its balance sheet, and some income items in originating the loan. As is reported below, under Regulation C, the originating lender would also report to the regulator that it had loaned you money. But that isn’t what happened.
In terms of booking the transaction for purposes of reporting in their SEC filings and the regulator filings, they only show the transaction as income and only booked it on their income statement, with no entries on the balance sheet. That means they performed a “service” for which they received a fee. Based on that they might just as well have slipped in the name of the mortgage broker, the title agent, the closing agent on the note and mortgage or Donald Duck. It really doesn’t matter. The fact is that for all purposes OTHER than closing they did not report the transaction as THEIR LOAN. BUT SOMEBODY ELSE DID — SOMEBODY NOT DISCLOSED OR SHOWN ON ANY CLOSING DOCUMENTS.
In my opinion that means something. The Banks who control the narrative have the regulators all flustered about it being just a paperwork problem. But the law says otherwise and common sense says otherwise. And this isn’t rocket science. They lied about the identity of the lender and recorded it in the property records of the country in which the property was located. Remember we are talking about the documents here, not the actual obligation, which I agree exists with or without proper documentation.
False documents that contain false statements about the transaction are subject to various levels of enforcement against the perpetrators under Federal (TILA) and state (deceptive lending practices etc.) law. But that is not what I am talking about here. I’m talking about the fact that if the documents were false, the “best case” scenario for the banks is that they must sue to reform those documents to have them correctly state the lender’s identity and request that the Court issue an order that does in fact change the documents so that a real lender and a real borrower are shown BEFORE any enforcement action can be undertaken. That IS the law in every state as far as I can see.
In the “best case” scenario for the Banks, the order from the Judge would relate back to the date of the funding of the loan. And in that scenario the loan would then be documented by the promissory note — if it contained all required disclosures of the securitization process, which would be a whole addition to the the terms of the note. So that would “cure” the note problem which at the present time is unenforceable. Then in the “best case” scenario for the Banks, the order of the Judge would relate back to the time of closing WITH all the new terms and identification of parties.
That still leaves the mortgage, which is a separate agreement that is recognized as neither the note nor the obligation, but an instrument that is incident to the note. That too would need to be reformed with reference to either the note or the obligation as amended by the Court’s order and that too would need to relate back to the time of the funding. But here is a catch. Recording the mortgage, as amended by court order would take place whenever the court order was entered. AND THAT is why the mortgage could not be enforced against the homeowner for any acts that took place or any “breaches” that took place before the second time the mortgage was recorded with all the court-ordered changes.
The worst case scenario for the Banks is what most jurisdictions already follow: you cannot re-write history to suit you and correct fraud by later disclosure in most instances. THAT would leave the investor/lenders with a bare claim for money loaned without documentation or a secured lien on the property. Investors have universally steered away from getting involved in foreclosures because it would subject them to claims of predatory lending and fraud. So they have effectively abandoned claims against homeowners in favor of suing the banksters. But the banksters are foreclosing as if they are following the direction of the investors when in fact they are only doing it for themselves. And THAT, my friends, is the whole story.
One of the key issues I have been scratching my head about my loan is that Annual Reports filed by First Union in 2002, 2001 brag about the fact they exited the subprime lending market loan, but my loan was definitely subprime because of its adjustable rate features. Having an accounting degree, I am always seeking to verify, match, etc. (I get frustrated with attorneys who just believe everyone will be honest in depositions/testimony and never verify) so I sought how to independently verify the lender.
Come to find out that there is a little known item known as Regulation C that exists to assure lenders comply with fair credit reporting. Banks are required to submit to their regulator, Wachovia’s case (2002) the OCC a data file of ALL loan applications, including amount, dates, application number, refinance, etc and even now if the loan is being sold. The public data file than can be purchased from the FFEIC redacts the application number and date but leaves enough information so if you know your address, you can see if a loan in your amount, to a white male, with x income, was made for refinance, in your census tract by your lender.
Funny thing, Wachovia did not report any loan in my amount in my census track in 2002. However, Lehman and Equity One reported such a loan. [editor’s note: with money they had from investor/lenders who remain undisclosed]
Because I know the date of my loan application, date of closing and the loan/application number is on my application, HUD and closing documents, I attempted a FOIA request to with the OCC to identify my lender.
The first response from the OCC was that no such information was collected. After I wrote them back and supplied them with Regulation C and their own instructions for what/how to transmit data, I was told that I could not have access to the information because it was not ‘public’ and therefore would not be disclosed under Exemption 5 of the FOIA.
My immediate thoughts are how in the world would the OCC or any auditor know that banks were simply not making this shit up? The bank could open a fake file under the under any name and as long as they transmitted the false data, the OCC would be none the wiser. The regulator is not even attempting the kick the tires.
Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: balance sheet, bankruptcy, borrower, countrywide, disclosure, foreclosure, foreclosure defense, foreclosure offense, foreclosures, fraud, income statement, LOAN MODIFICATION, modification, MORTGAGE ORIGINATION, OCC, quiet title, REGULATION C, rescission, RESPA, securitization, TILA audit, trustee, WEISBAND | 37 Comments »