Legal Research Society Uncovering the CUSIP Applications: Converting Notes into Bonds


COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

Editor’s Note: I’m not sure about the submission below and I invite comments. The point missing, I think, is that the notes themselves were not EACH converted into bonds. The securitization structure appears to me to be the intermingling of notes (which are probably invalid because they do not accurately reflect the loan obligation). The notes are thrown into a pool by a wave of a magic wand (i.e., just by entering them on a proprietary spreadsheet instead of actually transferring the documents legally). The principal amount of the notes, according to Charles Koppa who has researched this thoroughly, exceeds the principal amount of the bonds issued from the pool (i.e., the trust or SPV) by a factor of 20%. That’s called overcollateralization.

The interesting question which I think Koppa and the LRS are beginning to hone in on is this: how could the bond payable to investors be overcollateralized? If the investors advanced $1,000,000 and they have receivables from loans to homeowners totaling $1,200,000. But if you think about it, that is not possible. The receivables would either have to be overstated (fraud) or something else is working here. If the nominal value of the receivables is $1,200,000 that means that $1.2 million was FUNDED. Since the pretender lenders are not funding the loans except by use of investor money who thought they were buying bonds (that in many cases might not have ever existed in reality, something that the CUSIP research might reveal), where did the extra $200,000 of FUNDING come from?

Once you eliminate all possibilities except one, that ONE regardless of how improbable or counter-intuitive, must be the answer. So my answer three years ago and now is the same: the pretender lenders entered data on the same loan obligation with minor differences in dates or other index on more than one spreadsheet for more than one pool and issued bonds including the same loan obligation in multiple pools. The investor buying the bond under the mistaken belief that he has the protection of the property values and the protection of the receivables turns out to have neither.

The concept of overcollateralization was probably accepted because of the essential LIE at the base of the securitization scheme and which has yet to be completely absorbed by the courts or mainstream media: investors thought they were buying loans that had already been funded by originating banks. Hence the question of where did the money come from was solved. It appeared to come from the funds of the originators who were then selling them upstream into securitization chains. It made perfect sense. It just wasn’t true. The TRUTH was that the all the money came from the investors not the loan originators. The TRUTH is that the sale of “bonds” to investors took place first, before the loans were funded, exactly the converse of what the investors thought.

Thus the illusion of overcollateralization could only be created by literally selling the same asset (receivables from a funded loan) several times. It was an illusion because at the time of the purchase of the bond there were no loans and thus there were no receivables. Like the foreclosure procedures that have landed the pretenders in hot water, the method of operation was to back-fill where necessary. All eyes were on the flow of money and cutting up the money pie as it came down from the investors and then as it came up from the homeowners. The investors were never meant to be paid in full, like every Ponzi scheme. They were intended to be lulled into thinking it was working long enough for them to be “reloaded” (i.e., to sell them more garbage).


Sent: 11/11/2010 11:16:35 P.M. Central Standard Time
Subj: VERY VERY IMPORTANT// from the desk of John Stuart

This just in:
I attended a weekly meeting of legal researchers in AZ, I have not attended in a while. They have started meeting at our workshop, every Thursday 7pm to 9pm. The Legal Research Society,, (I think)

Terry, the group leader and old friend brought up a concept, I will tell you what happened, how I think we should use, and then why I think it might work.

1. Terry had a friend being sued by a credit card company. The friend, just for the hell of it, asked the cc company for the CUSIP number for the APPLICATION. The banks dismissed the case and has not come back. So Terry, after going thru RFAs and interroitories to no avail, decided to try it. On his next document he asked the bank for the CUSIP number for the APLLICATION. They have since disappeared.

2. I think we should ask the banks for CURRENT COMPLETE copies of the ORIGINAL APPLICATION:
Inclusive of: legible copy of the stamping that states:

This applies whether it is a mortgage or a deed of trust.

3. Why I think this may work:
a. Notes are converted to bonds all the time, that is what CUSIP numbers are for. You can buy a bond with any note or instrument. Promissory note, Federal Reserve Note, any note can be used to buy a bond.
b. Applications are NOT instruments and CANNOT be converted to instruments.
c. If the bank obtained a CUSIP number for an application that means they illegally converted an application to an instrument to purchase a bond that they then used to obtain a loan from the government to pass thru money to convert real property.

If they really do get CUSIP numbers for applications the whole game is over with. No case, no foreclosure, no payments, no contest of ownership. Its done.

Thinking about it makes my head spin because of the simplicity. If that is what they have to do to get the loan from the feds so they don’t risk their own money everything makes sense. That would be why they can claim there is a loan and we are in on it, its our application. Then really, the ONLY law broken was that of unlawfully converting an application to an instrument. Which would then cause the instrument to be invalid, the bond invalid, the loan have to be repaid by the bank IF they foreclose, but NOT if they don’t and just drop the case. That’s one hell of a barganing chip.

Could it be this simple? Its possible. It sure would answer the question why are the judges ruling against Notes and accepting the other documents as evidence of the deal.

I do not know if this will work. The idea is less than two hours old. But I think everyone should start trying to figure it out. If no one comes up with a good argument I think we should go for it.

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