How “servicer advances” advance the false premise of securitization of loans.

Posted on August 22, 2022 by Neil Garfield

Since the times of ancient Greece and even before that, it has been a commonly used statement that before discussion of an issue each party should precisely define their terms. The obvious conclusion has been that without agreed definitions, it is highly probable that each side is talking about something different and making no point in the debate. Every generation since then has agreed with that premise.

This is exactly what is happening in the world of finance. Wall Street has its own definitions that are never disclosed to the marketplace, consumers, investors, the courts or government regulators.

Each of those entities or people have their own definitions  based upon partial information and mostly blind faith in certain facts that appear to be axiomatically true. even the Federal reserve under the venerated Alan Greenspan made that error.

Wall Street capitalizes on that assymetric information to create a completely illegal place for itself in the economy — that of disguised principal while everyone else thinks they are merely acting in their assigned and proper role as broker.

What I find fascinating is the meaning of securitization of servicing advances. Remember that securitization means, by definition and by law, that an asset or group of assets has been sold for value to multiple investors in exchange for pro rata ownership of those assets. That is the essence of all securitization, including IPOs and existing common stock traded on national or international security exchange services or platforms.

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Analyzing the data published by the firms promoting “securitization,” we see that no “loan” or debt has ever been purchased and sold by a grantor who owned the underlying obligation or a grantee who paid any value. “Securitization” exists — but not for the paper or the money trail (payments and collections). The securities issued are based upon a discretionary unsecured promise to make indefinite payments to buyers of certificates issued by the promisor (securities brokerage firm).
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The terms of payments from securities brokerage firms to investors who purchased certificates have no direct relationship to the terms of payments scheduled from homeowners, who are unaware that the sale of the securities resulting from their signatures greatly exceeds the amount of their transaction, leaving a zero balance due and quite possibly opening the door for a claim for greater compensation as the essential party making the securitization scheme possible. This is discussed at length on my blog.
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The securitization scheme has many subplots. One of them is “servicer advances.” A real servicer advance is one in which the company designated as the servicer receives, processes, accounts, and distributes money to the investors.
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To my knowledge and my proprietary database, there is not one existing scenario that conforms to that description. In plain terms, servicers do not make advances mainly because they do not pay investors — ever. And as I have previously discussed on this blog, they don’t receive payments either.
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So these falsely labeled “servicers” can’t and don’t create data entries reflecting the receipt of payments — but law firms seeking foreclosure argue or imply that they do receive such payments and that their “records” are business records — i.e., records of business conducted by the designated “servicer” who in fact performs no servicing duties.
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The true meaning of a servicer advance under the current schemes of securitization claims is that some of the money paid to investors is labeled as a servicer advance even though the servicer paid nothing and had no duty to pay the investors anything (just like the homeowner had no duty to pay anything because securitization sales had eliminated the debt).
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That duty (to pay investors) was reserved for the promisor, who we will remember is a securities brokerage company that is not a “servicer.” The label “servicer advance” comes from the reports issued (fabricated) by the company designated as “Master Servicer,” showing that some scheduled homeowner payments have not been paid or received. This disregards the obvious premise that there is no payment due.
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The reader should understand that the sole reason investors would be paid regardless of the number or amount of incoming scheduled payments from homeowners is that the securities firm wants to keep selling unregulated securities (certificates). That is the point of the securitization scheme —- to sell securities.
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While incoming payments from homeowners are a partial basis for payments to investors, the promise requires that new securities from new securitization schemes are being sold, producing revenues and the ability to say that certain “tranches” (that contain nothing) are “over-collateralized.”
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The reader should also understand that the fact that homeowners are making payments is the sole factual support — in law and, in fact — that payments are due. In a twisted way, homeowners, through their ignorance of the actual events in which they are key players, are playing an active role in deceiving each other, the government, investors, and the courts.
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The promissory note and mortgage role in this scenario are strictly symbolic. But they do raise the legal presumption that they are valid documents if they are facially valid according to the state statute. Nonetheless, the real reason anyone believes that payments are due when they’re not due is that homeowners make the scheduled payments to anyone who commands them to do so.
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So the fact that the investors received their promised payment from the securities firm that controls the scheme (but does not own anything) is why they call it an “advance. The idea that it came from a “Servicer” is just a fabrication to imply that a third party was involved. But that is enough to raise the facial presumption from the self-serving documentation and claims prepared by the securities firm or on its behalf.
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The prospectus for each securitization plan reveals the plot to claim “servicer advances” by labeling money not paid by homeowners (whether due or not) as a “servicer advance.” The prospectus shows that a fictional reserve account is created by selling certificates containing the investors’ money.
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The prospectus discloses that investors would receive payments from a reserve pool, which is disclosed as a return of the money the investor paid. But that is exactly the money amount used to claim “servicer advances.” The reserve account may actually exist in some securitization schemes. Still, the “reserve account” is completely controlled by the securities brokerage firm that served as the bookrunner underwriter of the securities (certificates offered for sale).
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And the money proceeds of the sale of derivatives (more unregulated securities traded in the shadow banking marketplace) based on the “servicer advances” go to the investment bank, not the servicer. This is yet another way to reduce any hypothetical (fictional) loan account below a zero balance.
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Since the investors have contractually agreed to that arrangement, the fact that it is not an advance and only a return of capital make no legal difference. So they are converting false declarations of homeowner “defaults” into saleable assets, thus creating the foundation for securitization of false claims of “servicer advances.”
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As you can see from the above explanation, the answers to almost every question dealing with securitization of debt are extremely convoluted. In fact, the vice president of asset management for Deutsche Bank described it as “counterintuitive.” The reason that it is counterintuitive is that it doesn’t make any sense, once you break it down into its component pieces.
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The big stumbling block for everyone is the fact that money appears to have been paid to or paid on behalf of the homeowner. It is therefore assumed as axiomatically true that the money reported to have been paid to the homeowner or paid on behalf of the homeowner must have been alone, if for no other reason than the fact that the homeowner executed a note and mortgage and then started paying.
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 But even that apparent reality is not true in most cases. Nearly all existing transactions that have been labeled as mortgage loan transactions are directly or indirectly the product of supplemental securitization schemes.
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That is to say that most of such transactions consist entirely of reports of payments that never occurred. To the extent that such transactions were presented as paying off a previously classified mortgage loan transaction, such reports were entirely untrue in most cases.
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As long as both transactions resulted from a controlled securitization scheme by a common securities brokerage firm acting as the book runner underwriter of certificates offered for sale to investors, there was no need to transfer any money. Our investigation has revealed the absence of any evidence ingesting that any such money was transferred.  This raises a basic defense for homeowners: lack of consideration and breach of the alleged contract.
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 If the homeowner received, for example, $30,000 from the “refinancing” of the property, but signed a note for $500,000, based upon the false premises of a payoff of the previous “mortgage loan,” the consideration for the note and the mortgage is either completely absent or at least mostly absent.
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 What most people do not understand is that the “refinancing” was just an opportunity to start another controlled securitization scheme with the new set of securities being sold without the retirement of the old securitization scheme or those securities.
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PRACTICE NOTE: The presence of servicer advances described in the prospectus and pooling and servicing agreement provides a foundation for the homeowner’s defense based on standing. Since servicer advances have priority in the liquidation of property, the outcome of foreclosure results in payment to the investment bank rather than the designated creditor. Proper discovery and objections at trial are likely to successfully undermine the most basic element of the claim: legal standing.
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There is a false premise implied in “servicer advances” that leads to false conclusions. The false premise is that the money is owed to the “Master Servicer,” and the debt is that of the investors on whose behalf the advances were presumably made. The fact that there were no such advances remains concealed, and the fact that the investors have absolutely no liability to the recipient of the “servicer advances” is also concealed. But this false premise that is always implied if the subject comes up, is usually sufficient to convince a judge that servicer advances are irrelevant. Upon proper scrutiny and analysis, the subject of servicer advances are highly relevant and even dispositive of the entire claim.

Filed under: foreclosure | Tagged: , , , , , , , | 3 Comments »

Could IRS Enforcement of REMICs Bring Wall Street Into Line? Yes but they won’t do it. Investors and homeowners continue to suffer as victims of fraud.

Posted on May 14, 2020 by Neil Garfield

The most obvious places to look for correction in the illegal conspiracies masquerading as securitization of residential debt were the IRS , the SEC, the FDIC and the FTC and probably later the CFPB. Qui tam (whistleblower) actions were regularly dismissed because the agency that lost money due to false claims rejected the notion that it was a false claim or that anything bad had occurred. Sheila Bair lost her job as head of the FDIC for protesting policy set by Presidents Bush and Obama that failed to hold the line.

So here is a 2014 article that talks about how we could have regulated the investment banks through IRS examination of the REMICs.

Corruption is the answer. Too many people were making too much money and were “donating” too much money to people in public office. Enforcement was impossible. The real answer is extremely simple — stop all private money in elections. All elections should be publicly funded. No exceptions.

see.. PA Journal of Business Law – REMIC Tax Enforcement

The problem remains that US government agencies refuse to police schemes that are labelled as securitization of debt. If they are securitization of debt then market forces apply and everything COULD even out in the end. The problem is that the debt was never sold into a securitized scheme and nobody cares even though that has eliminated even the possibility of the existence of any creditor.

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REMIC policing by the IRS would be ideal to reveal the fatal deficiencies and fraudulent character of these securitizations schemes. It is why the first 9 lawyers tasked with drafting the documents for securitization all quit with one declaring that she would not be party to or an accessory to a criminal enterprise. There is no entity that qualifies as REMIC in residential loans. AND the reason is very simple:  neither investors nor the trust is buying the loans.
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So all the tests and premises about having an ownership interest, and about the quality of the loans are all false tests designed to cover up the fact that there has never been securitization of any residential loan except is very specific rare circumstances where individual mortgage brokers have sold loans to small groups of investors with repurchase agreements. In most instances those turned out to be scams.
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The way they got away with it is that there was a securitization process — i.e., one in which new securities were issued, even if they were unregulated. But only those schooled in Wall Street finance grasp the fact that they were securitizing bets on data — something that is very ornate and complex.
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Once you DO grasp the idea of what they really were doing and are still doing then you see why all the documents in all the foreclosures had to be fabricated, forged, backdated and robosigned. 
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You can also see why they have robowitnesses come to court and why they show only the business records of a servicer who has no contact with the so-called principal named in the claim or lawsuit. You can see why there is never a proffer of the business records of a creditor because there is no creditor.

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There cannot be contact between foreclosure mill and trustee of REMIC trust, there cannot be contact between “servicer” and Trustee of REMIC trust, there cannot be direct contact between investment bank and any of the players because any such contact would undermine the essential ingredient of the entire plan — plausible deniability of intent or knowledge of the scope of the illegal plan.

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The job of the litigator is to assume that that the entire thing is fraudulent and to ask for what they cannot give — answers to simple questions about the ownership and authority and status of the “obligation” that in reality is nothing more than a return of the consideration paid for a license to sue the homeowner’s private data and homeownership as mere points of reference for the issuance and trading of complex securities.
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But you must make it look like all of those companies are in actual contact and that payments from consumers or from the forced sale of their property are going to a creditor. You need to do that in order to give a judge cover for ruling in favor of the investment bank who is not even in the courtroom.
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The answer is as simple as simple can be: they are making everything up.
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Documents are not real unless they memorialize something that happened in the real world. But Wall Street banks put together a plan that made it appear that a sale of the debt occured where there had been no such sale. Or to be even more specific, they made it appear that there had been a purchase by or on behalf of the investors or trusts. Nothing could have been further from the truth. The truth is that investment bankers never looked at homeowner transactions as loans. They saw the money they paid to homeowners as a cost and condition precedent to creating and selling new securities. 
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Why no creditor? Because that is how you escape liability for lending law violations. 
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Why call it a loan? Because that is how you keep consumers from bargaining for their share of the very rich pie created by investment banks in the sale and trading of derivatives, insurance contracts, hedge products and just plain bets on fictitious “movement” of data that was completely controlled, in the sole discretion, of the investment banks. 
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They were printing money for themselves. The losers were and remain investors who buy “certificates” that are nothing more than a cover for underwriting the sale of securities for a company that doesn’t exist. the losers are the homeowners whose issuance of a note and mortgage triggers a vast undisclosed profit scheme in which the wealth of America shifted from the many to the few.

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BUYING RMBS CERTIFICATES IS LIKE BUYING TULIPS JUST BECAUSE THERE IS A MOB OF PEOPLE WHO FOR COMPLETELY IRRATIONAL AND TEMPORARY REASONS THINK THEY ARE VALUABLE.
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Filed under: Bailout, CORRUPTION, discovery, Discovery -Subpoena, evidence, expert witness, Fabrication of documents, FDIC, foreclosure, foreclosure defenses, forensic investigation, investment banking, Investor, jurisdiction, legal standing, originator, Pleading, Presumptions, prima facie case, securities fraud, Servicer, sham transactions, TRIAL OBJECTIONS, trial strategy, trustee, Unlawful Detainer | Tagged: , , , , , , , | 3 Comments »

The Facts Behind Smoke and Mirrors

Posted on January 24, 2019 by Neil Garfield

Nearly everyone is confused as to the identity of the real holder in due course, or the “creditor,” or the owner of the debt. Nearly everyone thinks that ultimate it is investors who purchased certificates.

In fact there is no holder in due course and there never will be in most instances. There was never any possibility for a holder in course claim because in most cases the origination of the loan took place in what is called a table funded loan, which is against public policy as a matter of law (as expressed in the Truth in Lending Act).

The creditor or owner of the debt is actually a party who was never disclosed in any of the dealings with borrowers and is not adequately disclosed in the secondary market or pretend underwritings and sales of certificates.

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A Client just asked me if we should consider all the disclosed players as a single entity. Here is what I replied:

You could take that position but in reality they are all taking orders from a single entity that does not appear anywhere in the paper trail.

But it’s not like they are receiving orders on specific cases or events. They have standing orders to which they have agreed.

The party from whom they are receiving instructions is an investment bank who posed as an underwriter for the issuance and sale of bogus certificates from a nonexistent trust. The investment bank used money obtained under false pretenses from investors.

The investment bank might, under law, be considered a creditor — but it can’t assert that without opening itself up to a myriad of liabilities. In fact the investment will move heaven and Earth to avoid the revelation that the only financial transaction that means anything as a basis for foreclosure involves the investment bank and NOT any of the other disclosed parties with whom you are in litigation.

So in the end, the bottom line is that there is party who is willing to step up and claim status as creditor or owner of the debt — ever.

If you push this to the extreme in litigation you get some interesting results. Instead of being afraid that they will pop out a real creditor or owner of the debt, you should know that that in the end they will refuse to produce any such party.

And you will know that when they do assert or imply that this is the creditor you should look carefully at their wording and realize they are using a sham entity to cover up the fact that the investment bank who started it all is the real party in interest.

It is the investment banks’ unwillingness (for good reason) to be revealed as having anything to do with the loan, foreclosure or any other transactions that can be used as leverage if you push hard enough.

Filed under: burden of persuasion, burden of pleading, BURDEN OF PROOF, CORRUPTION, discovery, Discovery -Subpoena, evidence, Fabrication of documents, foreclosure, foreclosure defenses, foreclosure mill, forensic investigation, investment banking, Investor, legal standing, MODIFICATION, Mortgage, originator, Pleading, Servicer, TILA, TILA rescission, TRIAL OBJECTIONS, trial strategy | Tagged: , , , , , , | 2 Comments »

Servicer Advances: More Smoke and Mirrors

Posted on April 4, 2014 by Neil Garfield

Several people are issuing statements about servicer advances, now that they are known. They fall into the category of payments made to the creditor-investors, which means that the creditor on the original loan, or its successor is getting paid regardless of whether the borrower has paid or not. The Steinberger decision in Arizona and other decisions around the country clearly state that if the creditor has been paid, the amount of the payment must be deducted from the amount allegedly owed by the “borrower” (even if the the borrower doesn’t know the identity of the creditor).

The significance of servicer advances has not escaped Judges and lawyers. If the payment has been made and continues to be made, how can anyone declare a default on the part of the creditor? They can’t. And if the payment has been made, then the notice of default, the end of month statements, the notice of acceleration and the amount demanded in foreclosure are all wrong by definition. The tricky part is that the banks are once again lying to everyone about this.

One writer opined either innocently or at the behest of the banks that the servicers were incentivized to modify the loans to get out of the requirement of making servicer advances. He ignores the fact that the provision in the pooling and servicing agreement is voluntary. And he ignores the fact that even if there is a claim for having made the payment instead of the borrower, it is the servicer’s claim not the lender’s claim. That means the servicer must bring a claim for contribution or unjust enrichment or some other legal theory in its own name. But they can’t because they didn’t really advance the money. Anyone who has experience with modification knows that the servicers make it very difficult even to apply for a modification.

Once again the propaganda is presumed to be true. What the author is missing is that there is no incentive for the Servicer to agree to make the payments in the first place. And they don’t. You can call them Servicer advances but that does not mean the money came from the Servicer. The prospectus clearly states that a reserve pool will be established. Usually they ignore the existence of the REMIC trust on this provision like they do with everything else. The broker dealer (investment banker) is always the one party who directly or indirectly is in complete control over the funds of investors.
Like the loan closing the source of funds is concealed. The Servicer issues a distribution report with disclaimers as to authenticity, accuracy etc. That report gets to the investor probably through an investment bank. The actual payment of money comes from the reserve pool made out of investor’s funds. The prospectus says that the investor can be paid out of his own funds. And that is exactly what they do. If the Servicer was actually taking its own money to make payments under the category of Servicer advances, the author would be correct.
The Servicer is incentivized by two factors — its allegiance to the broker dealer and the receipt of fees. They get paid for everything they do, including their role of deception as to Servicer advances.
When you are dealing with smoke and mirrors, look away from the mirror and walk through the smoke. There, in all its glory, is the truth. The only reason Servicer advances are phrased as voluntary is because the broker dealer wants to make the payments every month in order to convince the fund manager that they should buy more mortgage bonds. They want to be able to stop when the house of cards falls down.

Filed under: AMGAR, CORRUPTION, escrow agent, evidence, expert witness, foreclosure, foreclosure defenses, foreclosure mill, GARFIELD KELLEY AND WHITE, GTC | Honor, investment banking, Investor, MBS TRUSTEE, MODIFICATION, Mortgage, Motions, Servicer, TRUST BENEFICIARIES, trustee | Tagged: , , , , , , , | 86 Comments »

Who Has the Power to Execute a Satisfaction and Release of Mortgage?

Posted on March 11, 2014 by Neil Garfield
 The answer to that question is that probably nobody has the right to execute a satisfaction of mortgage. That is why the mortgage deed needs to be nullified. In the typical situation the money was taken from investors and instead of using it to fund the REMIC trust, the broker-dealer used it as their own money and funded the origination or acquisition of loans that did not qualify under the terms proposed in the prospectus given to investors. Since the money came from investors either way (regardless of whether their money was put into the trust) the creditor is that group of investors. Instead, neither the investors or even the originator received the original note at the “closing” because neither one had any legal interest in the note. Thus neither one had any interest in the mortgage despite the fact that the nominee at closing was named as “lender.”

This is why so many cases get settled after the borrower aggressively seeks discovery.

The name of the lender on the note and the mortgage was often some other entity used as a bankruptcy remote vehicle for the broker-dealer, who for purposes of trading and insurance represented themselves to be the owner of the loans and mortgage bonds that purportedly derive their value from the loans. Neither representation was true. And the execution of fabricated, forged and unauthorized assignments or endorsements does not mean that there is any underlying business transaction with offer, acceptance and consideration. Hence, when a Court order is entered requiring that the parties claiming rights under the note and mortgage prove their claim by showing the money trail, the case is dropped or settled under seal of confidentiality.

The essential problem for enforcement of a note and mortgage in this scenario is that there are two deals, not one. In the first deal the investors agreed to lend money based upon a promise to pay from a trust that was never funded, has no assets and has no income. In the second deal the borrower promises to pay an entity that never loaned any money, which means that they were not the lender and should not have been put on the mortgage or note.

Since the originator is an agent of the broker-dealer who was not acting within the course and scope of their relationship with the investors, it cannot be said that the originator was a nominee for the investors. It isn’t legal either. TILA requires disclosure of all parties to the deal and all compensation. The two deals were never combined at either level. The investor/lenders were never made privy to the real terms of the mortgages that violated the terms of the prospectus and the borrower was not privy to the terms of repayment from the Trust to the investors and all the fees that went with the creation of multiple co-obligors where there had only been one in the borrower’s “closing.”.

The identity of the lender was intentionally obfuscated. The identity of the borrower was also intentionally obfuscated. Neither party would have completed the deal in most cases if they had actually known what was going on. The lender would have objected not only to the underwriting standards but also because their interest was not protected by a note and mortgage. The borrower  would have been alerted to the fact that huge fees were being taken along the false securitization trail. The purpose of TILA is to avoid that scenario, to wit: borrower should have a choice as to the parties with whom he does business. Those high feelings would have alerted the borrower to seek an alternative loan elsewhere with less interest and greater security of title —  or not do the deal at all because the loan should never have been underwritten or approved.

Filed under: AMGAR, CORRUPTION, evidence, expert witness, foreclosure, foreclosure defenses, GARFIELD KELLEY AND WHITE, GTC | Honor, investment banking, Investor, MBS TRUSTEE, MODIFICATION, Mortgage, Pleading, securities fraud, Servicer, STATUTES, TRUST BENEFICIARIES, trustee | Tagged: , , , , , , , , , , , | 77 Comments »

Prommis Holdings LLC Files for Bankruptcy Protection

Posted on March 21, 2013 by Neil Garfield

I have not followed Prommis Holdings closely but I can recall that some people have sent in reports that Prommis was the named creditor in some foreclosure proceedings. The reason I am posting this is because the bankruptcy filings including the statement of affairs will probably give some important clues to the real money story on those mortgages where Prommis was involved. I’m sure you will not find the loan receivables account that are mysteriously absent from virtually all such filings and FDIC resolutions.

And remember that when the petition for bankruptcy is filed it must include a look-back period during which any assignments or transfers must be disclosed. So there is a very narrow window in which the petitioner could even claim ownership of the loan with or without any fabricated evidence.

US Trustees in bankruptcy are making a mistake when they do not pay attention to alleged assignments executed AFTER the petition was filed and sometimes AFTER the plan is confirmed or the company is liquidated. Such an assignment would indicate that either the petitioner lied about its assets or was committing fraud in executing the assignment — particularly without the US Trustee’s consent and joinder.

The Courts are making the same mistake if they accept such an assignment that does not have US Trustees consent and joinder, besides the usual mistake of not recognizing that the petitioner never had a stake in the loan to begin with. The same logic applies to receivership created by court order, the FDIC or any other “estate” created.

That would indicate, as I have been saying all along, that the origination and transfer paperwork is nothing more than paper and tells the story of fictitious transactions, to wit: that someone “bought” the loan. Upon examination of the money trail and demanding wire transfer receipts or canceled checks it is doubtful that you find any consideration paid for any transfer and in most cases you won’t find any consideration for even the origination of the loan.

Think of it this way: if you were the investor who advanced money to the underwriter (investment bank) who then sent the investor’s funds down to a closing agent to pay for the loan, whose name would you want to be on the note and mortgage? Who is the creditor? YOU! But that isn’t what happened and there is nothing the banks can do and no amount of paperwork can cover up the fact that there was consideration transferred exactly once in the origination and transfer of the loans — when the investors put up the money which the investment bank acting as intermediary sent to the closing agent.

The fact that the closing documents and transfer documents do not show the investors as the creditors is incompatible with the realities of the money trail. Thus the documents were fabricated and any signature procured by the parties from the alleged borrower was procured by fraud and deceit — causing an immediate cloud on title.

At the end of the day, the intermediaries must answer one simple question: why didn’t you put the investors’ name or the trust name on the note and mortgage or a “valid” assignment when the loan was made and within the 90 day window prescribed by the REMIC statutes of the Internal Revenue Code and the Pooling and Servicing Agreement? Nobody would want or allow someone else’s name on the note or mortgage that they funded. So why did it happen? The answer must be that the intermediaries were all breaching every conceivable duty to the investors and the borrowers in their quest for higher profits by claiming the loans to be owned by the intermediaries, most of whom were not even handling the money as a conduit.

By creating the illusion of ownership, these intermediaries diverted insurance mitigation payments from investors and diverted credit default swap mitigation payments from the investors. These intermediaries owe the investors AND the borrowers the money they took as undisclosed compensation that was unjustly diverted, with the risk of loss being left solely on the investors and the borrowers.

That is an account payable to the investor which means that the accounts receivables they have are off-set and should be off-set by actual payment of those fees. If they fail to get that money it is not any fault of the borrower. The off-set to the receivables from the borrowers caused by the receivables from the intermediaries for loss mitigation payments reduces the balance due from the borrower by simple arithmetic. No “forgiveness” is necessary. And THAT is why it is so important to focus almost exclusively on the actual trail of money — who paid what to whom and when and how much.

And all of that means that the notice of default, notice of sale, foreclosure lawsuit, and demand for payments are all wrong. This is not just a technical issue — it runs to the heart of the false securitization scheme that covered over the PONZI scheme cooked up on Wall Street. The consensus on this has been skewed by the failure of the Justice department to act; but Holder explained that saying that it was a conscious decision not to prosecute because of the damaging effects on the economy if the country’s main banks were all found guilty of criminal fraud.

You can’t do anything about the Holder’s decision to prosecute but that doesn’t mean that the facts, strategy and logic presented here cannot be used to gain traction. Just keep your eye on the ball and start with the money trail and show what documents SHOULD have been produced and what they SHOULD have said and then compare it with what WAS produced and you’ll have defeated the foreclosure. This is done through discovery and the presumptions that arise when a party refuses to comply. They are not going to admit anytime soon that what I have said in this article is true. But the Judges are not stupid. If you show a clear path to the Judge that supports your discovery demands, coupled with your denial of all essential elements of the foreclosure, and you persist relentlessly, you are going to get traction.

Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GARFIELD GWALTNEY KELLEY AND WHITE, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , | 70 Comments »

Another Ruse: Realtors Gleeful over Equator Short Sale Platform

Posted on May 16, 2012 by Neil Garfield

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Editor’s Comment:

Banks have adopted a technology platform to process short sale applications. It is called Equator, presumably to imply that it equates one thing with another, and produces a result that either gives a pass or fail to the application. In theory it is a good thing for those people who want to save their homes, save their credit (up to a point) and move on. In practice it essentially licenses the real estate broker to take control over the negotiations and police the transactions so that the new “network” rules are not violated. This reminds me of VISA and MasterCard who control the payment processing business with the illusion of being a quasi governmental agency. Nothing could be further from the truth, but bankers react to net work threats as though the IRS was after them.

Equator is meant as another layer of illusion to the title problem that realtors and title companies are trying to cover up. The short sale is getting be the most popular form of real estate sale because it is a form of principal reduction where there is some face-saving by the banks and the borrowers. The problem is that while short sales are a legitimate form of workout,  they leave the elephant in the living room undisturbed — short sales approved by banks and servicers who have neither the authority nor the interest in the loan to even be involved except as an agent of Equator but NOT as an agent of the lenders,  if they even exist anymore.

So using the shortsale they get the signature of the borrower as seller which gives them a layer of protection if they are the bank or servicer approving the short-sale. But it fails to cure the title defect, especially in millions of transactions in which Nominees (like MERS and dummy originators) are in the chain of title. 

The true owner of the obligation is a group of investor lenders who appear to have only one thing in common— they all gave money to an investment bank or an affiliate of an investment bank, where it was divided up and put into various accounts, some of which were used to fund mortgages and others were used to pay fees and profits to the investment bank on the closing of the “deal” with the investor lenders. As far as the county recorder is concerned, those deposits and splits are nonexistent. 

The investor lenders were then told that their money was pooled in a “Trust” when no such entity ever existed or was registered to do business and no attempt was made to fund the trust. An unfunded trust is not a trust. This, the investor lenders were told was a REMIC entity.  While a REMIC could have been established it never happened  in the the real world because the only communications between participants in the securitization chain consisted of a spreadsheet describing “closed loans.” Such communications did not include transfer, assignment or even transmittal or delivery of the closing papers with the borrower. Thus as far as the county recorder’s office is concerned, they still knew nothing. Now in the shortsales, they want a stranger the transaction to take the money and run — with no requirement that they establish themselves as creditors and no credible documentation that they are the owner of the loan.

This is another end run around the requirements of basic law in property transactions. They are doing it because our government officials are letting them do it, thus implicitly ratifying the right to foreclose and submit a credit bid without any requirement of proof or even offer of proof.

It gets worse. So we have BOA agreeing to accept dollars in satisfaction of a loan that they have no record of owning. The shortsale seller might still be liable to someone if the banks and servicers continue to have their way with creating false chains of ownership. But the real tragedy is that the shortsale seller is probably getting the shaft on a false premise — I.e, that the mortgage or deed of trust had any validity to begin with. 

The shortsale Buyer is most probably buying a lawsuit along with the house. At some point, the huge gaps in the chain of title are going to cause lawyers in increasing numbers to object to title and demand that it be fixed or that the client be adequately covered by insurance arising from securitizatioin claims. Thus when the shortsale Buyer becomes a seller, that is when the problems will first start to surface.

Realtors understand this analysis whereas buyers from Canada and other places do not understand it. But realtors see shortsales as the salvation to their diminished incomes. Thus most realtors are incentivized to misrepresent the risk factors and the title issues in favor of controlling the buyer and the seller into accepting pre-established criteria published by the members of Equator. It is securitization all over again, it is MERS all over again, it is a further corruption of our title system and it is avoiding the main issue — making the victims of this fraud whole even if it takes every penny the banks have. Realtors who ignore this can expect that they and their insurance carriers will be part of the gang of targeted deep pockets when lawyers smell the blood on the floor and go after the perpetrators.

Latest Changes to The Bank of America Short Sale Process

by Melissa Zavala

When processing short sales, it’s important to know about how each of the lending institutions handles loss mitigation and paperwork processing. If you have done a few short sales in Equator with different lenders, you may see what while your same Equator account is used for all your short sales at all the lending institutions, each of the servicers uses the platforms in a different manner.

Using the Equator system

When processing short sales, it’s important to know about how each of the lending institutions handles loss mitigation and paperwork processing. Many folks already know that Equator is the online platform used by 5 major lenders (Bank of America, Wells Fargo, Nationstar, GMAC, and Service One). If you have done a few short sales in Equator with different lenders, you may see what while your same Equator account is used for all your short sales at all the lending institutions, each of the servicers uses the platforms in a different manner.

And, my hat goes off to Bank of America for really raising the bar when it comes to short sale processing online. And, believe me, after processing short sales with Bank of America in 2007, this change is much appreciated.

New Bank of America Short Sale Process

Effective April 13, 2012, Bank of America made a few major changes that may make our short sale processing times more efficient.  The goal of these changes is to make short sale processing through Equator (the Internet-based platform) at Bank of America so efficient that short sale approval can be received in less than one month.

First off, Bank of America now requires their new third party authorization for all short sales being processed through the Equator system. Additionally, the folks at Bank of America will be working to improve task flow for short sales in Equator by making some minor changes to the process.

According to the Bank of America website,

Now you are required to upload five documents (which you can obtain at http://www.bankofamerica.com/realestateagent) for short sales initiated with an offer:

  • Purchase Contract including Buyer’s Acknowledgment and Disclosure
  • HUD-1
  • IRS Form 4506-T
  • Bank of America Short Sale Addendum
  • Bank of America Third-Party Authorization Form

And, now, you will have only 5 days to submit a backup offer if your buyer has flown the coop.

The last change is a curious one, especially for short sale listing agents, since it often takes awhile to find a new buyer after you learn that the current buyer has changed his or her mind.

Short sale listings agents should be familiar with these changes in order to assure that they are providing their client with the most efficient short sale experience possible.


Filed under: foreclosure | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 28 Comments »

Colorado Moves Forward with Legislation to Prevent Fraudulent Foreclosures

Posted on May 2, 2012 by Neil Garfield

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Editor’s Comment: 

Once upon a time it was a simple thing. If you sued someone, you had to say why, plead facts that supported the relief you wanted, and then demand the relief. Today it is considered nearly revolutionary to require foreclosers to prove the loan, prove the facts supporting foreclosures, using real evidence and not suppositions. As Colorado moves closer to Nevada’s law there is ample reason to hope that foreclosures will plummet there too. Isn’t it odd though that mediated settlements are not rising substantially either? 

We can only assume that there is something the Banks and servicers are not telling the pensioners who rely upon funds that were heavily invested in the bogus mortgage bonds. Could it be that if the pensioners collectively and the homeowners collectively got together and compared notes they would discover the problem: that when their fund manager put up the money for loans, there were no loans? Or that the investment bank removed 20%–40% of the funds and converted them to fees and profits leaving only a fraction of the money of the pensioners to fund mortgages?

Pensioners and homeowners have more in common than they might realize. In fact they might even be the same person.  Someone whose pension funds are going down because of losses on mortgage bonds in their pension fund and someone who is losing their house in foreclosure because of the decrease in pension income and trickery used by the Banks in securing their signature in bogus loan deals. Many pensioners are going to hear soon that the benefits they were expecting must be reduced because of chicanery on Wall Street. Some of those same people are angry at the thought of providing relief to homeowners who were also tricked into these bogus loan deals. Now that you see the effect, are still sure that borrowers in distress are deadbeats?

Foreclosure: Initiative 84 changes language, pushes for signatures

By Kelsey Whipple

Initiative 84, a proposed constitutional amendment that would require lenders to prove ownership of property before foreclosing on it, has passed another hurdle in its move toward legalization. On Friday, proponents and opponents met before the state title board to discuss its language, which made it through relatively unchanged. The next step, however, might prove the hardest.

Before the potential amendment makes it to a statewide ballot, the Colorado Progressive Coalition, the body heading up its support, must collect a minimum of 87,000 signatures — which could cost $200,000 or more, CPC economic justice director Corrine Fowler says. Now that the effort’s language has been cemented, the coalition is gathering volunteers and paid representatives to launch its signature drive.

Initiative 84, which was created after House Bill 1156, a similar foreclosure measure, died in committee before making it to the floor, seeks to reverse 2006 legislation that changed the standards for legally processing Colorado foreclosures. Since that year, it has been legal for lawyers to sign a “statement of qualified holder,” which indicates ownership without a pattern of proof, and it is no longer mandatory to show a paperwork chain.

If approved, the amendment would require financial institutions to verify ownership of any property through a county note or a certified copy presented during the court stage of a foreclosure.

So far, the language has come under fire from a handful of financial institutions, and while both sides made arguments regarding the initiative’s appropriateness on Friday, most were rejected because they did not apply to title board proceedings. In the meantime, the board denied efforts to stage a rehearing to slow down the initiative.

Fowler says the CPC is satisfied with the slight change in wording, which now reads, “An amendment to the Colorado Constitution changing the existing evidentiary requirements for foreclosure of real property and in connection there with requiring the evidence be filed to sufficiently establish a party’s right to enforce a valid recorded security interest prior to the foreclosure of any real property.”

The central change here is that now sufficient evidence is required, rather than “complete” evidence. The difference could become a significant one at court in the future.

“Special interests like the Colorado Bankers Association won’t be able to come back and change it in future years,” Fowler told Westword. “This is going to affect the bottom line of the lawyers and the bankers, and we know that and don’t take this lightly. We believe that the foreclosure crisis is the biggest issue our national economy is facing.”


Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: , , , , , , , , , , , , , , , , , , | 15 Comments »

Wells Fargo, Option One, American Home Mortgage Relationship

Posted on March 30, 2010 by Neil Garfield

Wells Fargo Bank, N.A. appears in many ways including as servicer (America Servicing Company), Trustee (although it does not appear to be qualified as a “Trust Company”), as claimed beneficiary, as Payee on the note, as beneficiary under the title policy, as beneficiary under the property and liability insurance, and it may have in actuality acted as a mortgage broker without getting licensed as such.

In most securitized loan situations, Wells Fargo appears with the word “BANK” used, but it acted neither as a commercial nor investment bank in the deal. Sometimes it acted as a commercial bank meaning it processed a deposit and withdrawal, sometimes (rarely, perhaps 3-4% of the time) it did act as a lender, and sometimes it acted as a securities underwriter or co-underwriter of asset backed securities.

It might also be designated as “Depositor” which in most cases means that it performed no function, received no money, disbursed no money and neither received, stored, handled or transmitted any documentation despite third party documentation to the contrary.

In short, despite the sue of the word “BANK”, it was not acting as a bank in any sense of the word within the securitization chain. However, it is the use of the word “BANK” which connotes credibility to their role in the transaction despite the fact that they are not, and never were a creditor. The obligation arose when the funds were advanced for the benefit of the homeowner. But the pool from which those funds were advanced came from investors who purchased certificates of asset backed securities. Those investors are the creditors because they received a certificate containing three promises: (1) repayment of principal non-recourse based upon the payments by obligors under the terms of notes and mortgages in the pool (2) payment of interest under the same conditions and (3) the conveyance of a percentage ownership in the pool, which means that collectively 100% of the ivnestors own 100% of the the entire pool of loans. This means that the “Trust” does NOT own the pool nor the loans in the pool. It means that the “Trust” is merely an operating agreement through which the ivnestors may act collectively under certain conditions.  The evidence of the transaction is the note and the mortgage or deed of trust is incident to the transaction. But if you are following the money you look to the obligation. In most  transactions in which a residential loan was securitized, Wells Fargo did not work under the scope of its bank charter. However it goes to great lengths to pretend that it is acting under the scope of its bank charter when it pursues foreclosure.

Wells Fargo will often allege that it is the holder of the note. It frequently finesses the holder in due course confrontation by this allegation because of the presumption arising out of its allegation that it is the holder. In fact, the obligation of the homeowner is not ever due to Wells Fargo in a securitized residential note and mortgage or deed of trust. The allegation of “holder” is disingenuous at the least. Wells Fargo is not and never was the creditor although ti will claim, upon challenge, to be acting within the scope and course of its agency authority; however it will fight to the death to avoid producing the agency agreement by which it claims authority. remember to read the indenture or prospectus or pooling and service agreement all the way to the end because these documents are created to give an appearance of propriety but they do not actually support the authority claimed by Wells Fargo.

Wells Fargo often claims to be Trustee for Option One Mortgage Loan Trust 2007-6 Asset Backed Certificates, Series 2007-6, c/o American Home Mortgage, 4600 Regent Blvd., Suite 200, P.O. Box 631730, Irving, Texas 75063-1730. Both Option One and American Home Mortgage were usually fronts (sham) entities that were used to originate loans using predatory, fraudulent and otherwise illegal loan practices in violation of TILA, RICO and deceptive lending practices. ALL THREE ENTITIES — WELLS FARGO, OPTION ONE AND AMERICAN HOME MORTGAGE SHOULD BE CONSIDERED AS A SINGLE JOINT ENTERPRISE ABUSING THEIR BUSINESS LICENSES AND CHARTERS IN MOST CASES.

WELLS FARGO-OPTION ONE-AMERICAN HOME MORTGAGE IS OFTEN REPRESENTED BY LERNER, SAMPSON & ROTHFUSS, more specifically Susana E. Lykins. They list their address as P.O. Box 5480, Cincinnati, Oh 45201-5480, Telephone 513-241-3100, Fax 513-241-4094. Their actual street address is 120 East Fourth Street, Suite 800 Cincinnati, OH 45202. Documents purporting to be assignments within the securitization chain may in fact be executed by clerical staff or attorneys from that firm using that address. If you are curious, then pick out the name of the party who executed your suspicious document and ask to speak with them after you call the above number.

Ms. Lykins also shows possibly as attorney for JP Morgan Chase Bank, N.A. as well as Robert B. Blackwell, at 620-624 N. Main street, Lima, Ohio 45801, 419-228-2091, Fax 419-229-3786. He also claims an office at 2855 Elm Street, Lima, Ohio 45805

Kathy Smith swears she is “assistant secretary” for American Home Mortgage as servicing agent for Wells Fargo Bank. Yet Wells shows its own address as c/o American Home Mortgage. No regulatory filing for Wells Fargo acknowledges that address. Ms. Smith swears that Wells Fargo, Trustee is the holder of the note even though she professes not to work for them. Kathy Smith’s signature is notarized by Linda Bayless, Notary Public, State of Florida commission# DD615990, expiring November 19, 2010. This would indicate that despite the subject property being in Ohio, Kathy Smith, who presumably works in Texas, had her signature notarized in Florida or that the Florida Notary exceeded her license if she was in Texas or Ohio or wherever Kathy Smith was when she allegedly executed the instrument.

Filed under: bubble, CDO, CORRUPTION, Eviction, expert witness, foreclosure, foreclosure mill, GTC | Honor, HERS, Investor, Mortgage, securities fraud, Servicer | Tagged: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 52 Comments »

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