Deny and Discover Strategy Working

For representation in South Florida, where I am both licensed and familiar with the courts and Judges, call 520-405-1688. If you live in another state we provide direct support to attorneys. call the same number.

Having watched botched cases work their way to losing conclusions and knowing there is a better way, I have been getting more involved in individual cases — pleading, memos, motions, strategies and tactics — and we are already seeing some good results. Getting into discovery levels the playing field and forces the other side to put up or shut up. Since they can’t put up, they must shut up.

If you start with the premise that the original mortgage was defective for the primary reason that it was unfunded by the payee on the note, the party identified as “Lender” or the mortgagee or beneficiary, we are denying the transaction, denying the signature where possible (or pleading that the signature was procured by fraud), and thus denying that any “transfer” afterwards could not have conveyed any more than what the “originator” had, which is nothing.

This is not a new concept. Investors are suing the investment banks saying exactly what we have been saying on these pages — that the origination process was fatally defective, the notes and mortgages unenforceable and the predatory lending practices lowering the value of even being a “lender.”

We’ve see hostile judges turn on the banks and rule for the homeowner thus getting past motions to lift stay, motions to dismiss and motions for summary judgment in the last week.

The best line we have been using is “Judge, if you were lending the money wouldn’t you want YOUR name on the note and mortgage?” Getting the wire transfer instructions often is the kiss of death for the banks because the originator of the wire transfer is not the payee and the instructions do not say that this is for benefit of the “originator.”

As far as I can tell there is no legal definition of “originator.” It is one step DOWN from mortgage broker whose name should also not be on the note or mortgage. An originator is a salesman, and if you look behind the scenes at SEC filings or other regulatory filings you will see your “lender” identified not as a lender, which is what they told you, but as an originator. That means they were a placeholder or nominee just like the MERS situation.

TILA and Regulation Z make it clear that even if there was nexus of connection between the source of funds and the originator, it would till be an improper predatory table-funded loan where the borrower was denied the disclosure and information to know and choose the source of a loan, thus enabling consumers to shop around.

In order of importance, we are demanding through subpoena duces tecum, that parties involved in the fake securitization chain come for examination of the wire transfer, check, ACH or other money transfer showing the original funding of the loan and any other money transactions in which the loan was involved INCLUDING but not limited to transactions with or for the fake pool of mortgages that seems to always be empty with no bank account, no trustee account, and no actual trustee with any powers. These transactions don’t exist. The red herring is that the money showed up at closing which led everyone to the mistaken conclusion that the originator made the loan.

Second we ask for the accounting records showing the establishment on the books and records of the originator, and any assignees, of a loan receivable together with the name and address of the bookkeeper and the auditing firm for that entity. No such entries exist because the loan receivable was converted into a bond receivable, but he bond was worthless because it was based on an empty pool.

And third we ask for the documentation, correspondence and all other communications between the originator and the closing agent and between each “assignor” and “assignee” which, as we have seen they are only too happy to fabricate and produce. But the documentation is NOT supported by underlying transactions where money exchanged hands.

The net goals are to attack the mortgage as not having been perfected because the transaction was and remains incomplete as recited in the note, mortgage and other “closing” documents. The “lender” never fulfilled their part of the bargain — loaning the money. Hence the mortgage secures an obligation that does not exist. The note is then attacked as being fatally defective partly because the names were used as nominees leaving the borrower with nobody to talk to about the loan status — there being a nominee payee, nominee lender, and nominee mortgagee or beneficiary.

The other part, just as serious is that the terms of repayment on the note do NOT match up to the terms agreed upon with the institutional investors that purchased mortgage bonds to which the borrower was NOT a party and did not issue. Hence the basic tenets of contract law — offer, acceptance and consideration are all missing.

The Deny and Discover strategy is better because it attacks the root of the transaction and enables the borrower to deny everything the forecloser is trying to put over on the Court with the appearance of reality but nothing to back it up.

The attacks on the foreclosers based upon faulty or fraudulent or even forged documentation make for interesting reading but if in the final analysis the borrower is admitting the loan, admitting the note and mortgage, admitting the default then all the other stuff leads a Judge to conclude that there is error in the ways of the banks but no harm because they were entitled to foreclose anyway.

People are getting on board with this strategy and they have the support from an unlikely source — the investors who thought they were purchasing mortgage bonds with value instead of a sham bond based upon an empty pool with no money and no assets and no loans. Their allegation of damages is based upon the fact that despite the provisions of the pooling and servicing agreement, the prospectus and their reasonable expectations, that the closings were defective, the underwriting was defective and that there is no way to legally enforce the notes and mortgages, notwithstanding the fact that so many foreclosures have been allowed to proceed.

Call 520-405-1688 for customer service and you will get guidance on how to get help.

  1. Do we agree that creditors should be paid only once?
  2. Do we agree that pretending to borrow money for mortgages sand then using it at the race track is wrong?
  3. Do we agree that if the lender and the borrower sign two different documents each containing different terms, they don’t have a deal?
  4. Can we agree that if you were lending money you would want your name on the note and mortgage and not someone else’s?
  5. Can we agree that banks who loaned nothing and bought nothing should be worth nothing when the chips are counted in mortgage assets?

 

Weidner: Notes Are Not Negotiable Instruments

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Editor’s Notes:  

Matt Weidner appears to have mastered the truth about securitization and how to apply it in foreclosure defense cases. The article below is really for lawyers, paralegals and very sophisticated pro se litigants. His point about being careful about how you present this is very well taken. This is for lawyers to do and lawyers should read this and get with the program. Securitization turned about to be virtually all SHAM transactions with the real financial transaction hidden away from the view of the borrower, the courts and even securitization analysts. The operative rule here is that the existence of a financial transaction does not mean that strangers to that transactions can claim any rights. 

These loans were nearly always funded by other parties who had made promises to investors whose money was used to fund the mortgages. The very existence of co-obligors and payments by them defeats the arguments of the banks and servicers. I’d like to see ONE investor come into court and say that yes, they would ratify the inclusion of a defaulted loan into their pool years after the cutoff date which negates their tax benefits. There is o reasonable basis for an investor to do or say that. That leaves the loan undocumented, unsecured and subject to offset for predatory and wrongful lending practices.

The wrong way of approaching this is any way in which you are going into court to disclaim the obligation when everyone knows you received the money or the benefit of the money. The obligation exists. And the only way to discharge that debt is through payment, waiver (or bankruptcy) or forgiveness. Anything that smells like “I don’t owe this money anymore” is going to be rejected in most cases. But an attack on the lien and the reality of the true creditor is a different story. That needs to be presented as simply as possible and I think I good way to start is to deny the loan, obligation, note, mortgage etc on the basis of an absence of any financial transaction between the borrower and the party named on the documents upon which the foreclosers rely. Any discovery at all will reveal that the money never came from the payee on the note or mortgagee or beneficiary on the mortgage or deed of trust. 

by Matt Weidner:

Let’s start with real basic stuff here.  Sometimes law is complex, nuanced,difficult.  Other times it’s black and white…you just read the words, look at the facts and the answer is unavoidable.  Such is the case with the simmering dispute over the fact that the notes that are part of nearly every residential foreclosure case are not negotiable instruments.  Oh sure, too many courts won’t take the time to consider the argument and…just yesterday I heard an appellate court argument where the judges just kept repeating the mantra, “this is a negotiable instrument” without ever doing any analysis at all and without any finding of that “fact” from the trial court.  The attorney needed to stop the appellate judge right there and say, “No Your Honor, it’s Not A Negotiable Instrument”.

Just last week, in a trial court, here’s exactly the way it went down.  Now, keep in mind, this argument in court was supplemented by a long and detailed memo similar to the one attached here.  The best part it was in front of one of Florida’s most respected and brilliant judges.  He’s been on the bench longer than I’ve been alive, he knows more law in the tip of his finger than most lawyers get in their whole bodies in an entire lifetime, he’s presided over tens of thousands of foreclosure cases. It was a beautiful thing to see an argument before a dedicated jurist whose seen and heard it all before that really made him sit up, dig in to those decades of judicial wisdom and then do the heavy lifting. That’s one of the beautiful things about this job….despite decades of work and hundreds of years of law, out of nowhere something new and exciting can still get the intellect and wisdom fired up and shooting like a cannon. Here’s how it goes down:

Your honor, I’ve highlighted and present for you the statutory definition of a “negotiable instrument”.  Because it’s a statutory definition, it’s black and white. We cannot alter or weave or color it with shades of gray….here’s what it is:

673.1041 Negotiable instrument.—
(1) Except as provided in subsections (3), (4), and (11), the term “negotiable instrument” means
an unconditional promise or order to pay a fixed amount of money, with or without interest or other
charges described in the promise or order, if it:
(a) Is payable to bearer or to order at the time it is issued or first comes into possession of a
holder;
(b) Is payable on demand or at a definite time; and
(c) Does not state any other undertaking or instruction by the person promising or ordering
payment to do any act in addition to the payment of money.

FL Article 3

Now, we’re all stuck with exactly that definition. Before we examine the note in this case, let’s first think about what a negotiable instrument is….a check made payable to a person for $100. An IOU for $100.  Bills of lading with a total included.  It’s all real simple.

So now that we’re fixed about what a negotiable instrument is, let’s examine what it ain’t.  What ain’t a negotiable instrument, as defined by Florida law is the standard Fannie/Freddie Promissory note and the following paragraphs are the primary reasons why.  Read each one carefully and ask, “Are these sentences conditions or undertakings other than the promise to repay money?” (Of course they are)

4.         BORROWER’S RIGHT TO PREPAY

I have the right to make payments of Principal at any time before they are due.  A payment of Principal only is known as a “Prepayment.”  When I make a Prepayment, I will tell the Note Holder in writing that I am doing so.  I may not designate a payment as a Prepayment if I have not made all the monthly payments due under the Note.

I may make a full Prepayment or partial Prepayments without paying a Prepayment charge.  The Note Holder will use my Prepayments to reduce the amount of Principal that I owe under this Note.  However, the Note Holder may apply my Prepayment to the accrued and unpaid interest on the Prepayment amount, before applying my Prepayment to reduce the Principal amount of the Note.  If I make a partial Prepayment, there will be no changes in the due date or in the amount of my monthly payment unless the Note Holder agrees in writing to those changes.

5.         LOAN CHARGES

If a law, which applies to this loan and which sets maximum loan charges, is finally interpreted so that the interest or other loan charges collected or to be collected in connection with this loan exceed the permitted limits, then:  (a) any such loan charge shall be reduced by the amount necessary to reduce the charge to the permitted limit; and (b) any sums already collected from me which exceeded permitted limits will be refunded to me.  The Note Holder may choose to make this refund by reducing the Principal I owe under this Note or by making a direct payment to me.  If a refund reduces Principal, the reduction will be treated as a partial Prepayment.

10.  UNIFORM SECURED NOTE

This Note is a uniform instrument with limited variations in some jurisdictions.  In addition to the protections given to the Note Holder under this Note, a Mortgage, Deed of Trust, or Security Deed (the “Security Instrument”), dated the same date as this Note, protects the Note Holder from possible losses which might result if I do not keep the promises which I make in this Note.  That Security Instrument describes how and under what conditions I may be required to make immediate payment in full of all amounts I owe under this Note.  Some of those conditions are described as follows:

If all or any part of the Property or any Interest in the Property is sold or transferred (or if Borrower is not a natural person and a beneficial interest in Borrower is sold or transferred) without Lender’s prior written consent, Lender may require immediate payment in full of all sums secured by this Security Instrument. However, this option shall not be exercised by Lender if such exercise is prohibited by Applicable Law.

If Lender exercises this option, Lender shall give Borrower notice of acceleration.  The notice shall provide a period of not less than 30 days from the date the notice is given in accordance with Section 15 within which Borrower must pay all sums secured by this Security Instrument.  If Borrower fails to pay these sums prior to the expiration of this period, Lender may invoke any remedies permitted by this Security Instrument without further notice or demand on Borrower.

3210-FloridaFRNote-Freddie_UI

So, the deal is, if we were sitting in a law school classroom, there’s not a chance in the world but that every student in the room and the professor would agree and understand that the document being examined side by side is not covered by the definition provided.  The problem is we get into courtrooms and we get infected by considerations that are beyond and above the operative law.  Judgment gets clouded by preconceived notions and prejudices against our neighbors and favoritism for the criminal banking institutions that caused all this mess. Even to this day, years into this, years into all the fraud and the lies and the deceit, it’s like we’re still hypnotized by the banks and their black magic and voodoo.

Now, if you really want to take it a step deeper, Margery Golant makes a very credible argument that in doing this analysis we cannot just look at the note alone, but that we must also examine the mortgage that follows with it.  They truly are two integrated documents and you can see from her highlights that so many of the provisions in the mortgage have nothing to do with security and everything to do with conditions on the payment of money….these provisions are just jammed into the mortgage and kept out of the note to try and prop up this artifice of negotiability.  Read her highlights with this analysis in mind:

Fannie Florida Mortgage with Golant Highlights

Further supported by this case Sims v New Falls

Now, understand the industry never intended these notes and mortgages to transfer via endorsement.  The industry set this whole system up so that the notes and mortgage would transfer via Article 9 of the UCC.  It’s just so plain and simple.  They never set it up or intended that million dollar notes and mortgages would transfer via forged endorsements, undated squiggles and rubber stamps or floating allonges.  Of course not…that’s just crazy.  The entire system was created such that notes and mortgages and all the servicing agreements and rights and liabilities would transfer via far more formalized Assignments, with names and dates and notary stamps and witnesses.  The Article 9 transfer regime had nothing to do with protecting consumers, but everything to do with protecting the players in the industry from the scams, the lies, the cons that they all like to play on one another. (Hello, LIBOR anyone?)

But when the shifty con artists that set this whole securitization card game up, they were so focused on how much money they were making, they never considered what would happen when the whole house of cards blew down.  When it blew down, they threw their Article 9 intentions out the window and adopted the whole Article 3 negotiable instrument delusion.  Isn’t it an absurd argument when they cannot answer the question, “if assignments don’t matter, why do you still bother to do them?”  It’s because they do matter….assignments were and remain the foundation of their transfers.  The problem is Assignments, what with their pesky dates and legible names and notaries and all reveal the lies and the fraud and the con that developed once the system came crashing down and they all started stealing from one another. (With the explicit approval of our state and federal government to do so….too big to jail you know.)

Anywhoo, there’s still some faint glimmer of hope as long as we still have good judges out there that are willing to think these things through and do the heavy lifting, we might be able to rescue our nation’s judicial system and in fact our nation as a whole from this deep, dark black pit that we’ve all descended down.

I urge everyone to be very careful with these arguments.  I’m a very big supporter of pro se people and consumers being integrated into their courtrooms and being fully engaged in the public spaces they own. I’ve also seen some very good pro se people go into courtrooms and do some very beautiful things.  In some ways it’s like a “From the mouths of babes” experience.  Language and arguments stripped away from all their lawyerly pretense can have a magic effect on a judge’s ear and thoughtfully and well-prepared arguments are often received with great enthusiasm from our circuit courts….particularly those judges that recognize the roots of our civilian circuit justice system.  The danger is that ill-prepared and poorly presented arguments will taint the ears and poison the minds of judges that might otherwise accept with an open mind…..keep that in mind.  Max Gardner is the Obi One Kenobe of all this and there’s just something about the way he lays it out so clear and clean and simple that has it all make sense.  I really encourage everyone to get all his material and invest in the week long bootcamp before you go trying any of this out…..MAX GARDNER BOOTCAMP

And now my briefs:

Motion-to-Dismiss

Initial-Brief


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Did you take a loan?  Did you sign that note?

Editor’s Comment:  The question from the bench is always the same and either  pro se litigant or the attorney is too skittish to take a stand. The question is something like “Did you take a loan?” And the answer could be “Judge I have taken lots of loans,  but I never took any money from these people or any of the their predecessors. I deny the loan, I deny the debt, I deny the default. I deny the note, I deny the mortgage. I deny their right to collection or enforcement of the note or mortgage because I never did any business with them.” If they want to plead and prove otherwise, let them. [This of course ONLY applies to loans that are subject to claims of securitization, which we all know now were routinely ignored by the investment banker just as the assignments into the non-existent pools were routinely ignored, just as the attempt to get a foreclosure judge to rule that an investor without knowing anything about these proceedings is about to get stuck with a bad loan in which there is no value, improperly originated, and never properly assigned or delivered years after the 90 day cutoff period expired.]

The other questions is “Is that your signature on the note? Is that your signature on the mortgage (or Deed of Trust)?” And your answer could be “I don’t know which documents have my actual signature or which ones have been Photoshopped. Therefore I deny and demand they prove that this was my signature on that document. I do know that if they procured my signature on any document it was by trickery, deceit and fraud.” If they want to plead and prove otherwise, let them. But all you are going to see is paper. You will never see a financial transaction between me and them or any of their affiliates or predecessors because no such transaction ever took place.

If the Judge or anyone else asks you anymore questions, and frankly if you are bold enough, if you are asked any questions, your answer could be, “Judge, this is not an evidentiary hearing. If an allegation is being made against me I have a right to know who is making the allegation and what they are accusing me of doing.  Then you have a right to your answers once I have examined the books of records of all servicers — not just the ones that they want to show you, and all depositories wherein documents were supposedly stored. You will not find any record of any kind in which I entered into a financial transaction, loan or otherwise, with these people or any of their predecessors.

CONTRIBUTION: Many payments were made to the creditor that advanced you money. You must remember that they did not advance you money through the securitization chain but instead advanced you money directly from an escrow account, a Superfund, that commingled the money of all investors without regard to REMICS, trusts or any of those niceties and the people to whom the note was made payable and for which the mortgage secured an interest in your property never consummated any financial transaction with you. If they made a payment to the creditors (investors in parternship with each other at the time of the funding) THEN the money received by the agents of the those investors should have been credited against the money owed to those creditors. And part of that allocation should have been applied against the balance due on your loan, meaning your loan balance, unsecured, would be correspondingly reduced or eliminated. End of mortgage, no matter how you approach it. The obligation that originally gave rise to the supposedly secured debt has been satisfied either in part or more likely entirely. 

That leaves a new debt replacing the old debt, which is undocumented and unsecured — and a creditor with an action for contribution because they were obviously a co-obligor. If they say they are not the co-obligor then they are saying the PSA doesn’t apply. If the PSA doesn’t apply then they are not the authorized the servicer or whoever they are pretending to be because there was not actual securitization process.

I’ve been writing about this for years specifically in relation to payments by the servicer and assignments to the servicer or to the REMIC which would in fact extinguish the old debt and originate a new obligation that was neither memorialized by a promissory note from the borrower (because it had been extinguished) nor of course a mortgage or Deed of Trust that secured the extinguished note.

The new obligation may arise between the original borrower and the Assignee or between the original borrower and the payee (where the servicer continued to make payments) but only if the contributor could establish that portion of the claim to which they were entitled.  In other words, an assignment of the entire obligation to a co-obligor would extinguish the entire obligation.  The partial payment by a co-obligor would extinguish the old obligation only to the extent of the payment.  

The problem with getting traction on this is obvious.  It is a frontal assault on the obligation itself leaving the original creditor (if there ever was one) without a claim or with a partial claim, in the event of a partial payment giving rise to an action for contribution. This is only a problem though to the extent that you are asking the court to extinguish an existing obligation between you and the actual creditor — and the only way you can know that is by getting full and complete discovery from the Master Servicer and the Creditor. It’s only a problem if it looks like you are trying to  get out of the debt altogether instead of just attacking the the fact that the new debt could not possibly be recorded.

Complicating issues include establishment of a party as a co-obligor and perhaps even more so, the fact that the promissory note does not actually describe the financial transaction, as we have discussed.  Since the originator of the note did not actually consummate a financial transaction with the borrower, the note is either void or voidable for lack of consideration.  

Further complications arise when the borrower makes payment on the note thus “ratifying” the terms expressed in the note.  But this only occurs because the borrower was the only one at the closing table who did not know the payee, lender and beneficiary were all naked nominees who neither control nor their finances involved in the financial transaction between the borrower and the actual source of funds. 

If the would-be forecloser wants to rely on the PSA then they must accept the WHOLE PSA, which means that a loan in default does not qualify to be assigned, even if in proper form and the trustee or manager of the “pool” has no authority to accept it.  If the Judge in foreclosure court says the trustee or manager MUST accept it then he is adjudicating the rights of investors who explicitly agreed to advance money for performing loans that would be put in a  pool within 90 days to satisfy the requirements of the Internal Revenue Code and the provisions of the PSA which merely recite the REMIC provisions of the IRC.  They can’t have it both ways. They can’t say that those provisions don’t apply to the assignment and say that the OTHER PSA provisions giving them the right to service the loans and manage the portfolio also apply.

The fact that the borrower made a payment to a servicer under directions from a representative within the false securitization scheme should not give rise to an obligation to continue such payments; this is because the obligation arose with the actual financial transaction that was consummated between the borrower and the source of funds.  The source of funds was a stranger to the documentation that the borrower signed.  Since the actual handling of the money involved an escrow Superfund (or at least it appears that this is the case) we do not know if the “lender” is or could be identified from the larger group of investors whose money was intermingled and combined into a single escrow account.

The problem with the relationship of loans in “the pool” is that there doesn’t appear to have been a pool in which such a relationship could exist.  The co-mingling of funds in the accounts held by the investment banker might make all of the investors general partners in a common law general partnership.  We have found NO EVIDENCE OF SEPARATE ACCOUNTS for the individual REMICS. And the investment banker, sub-servicer and  Master servicer are fighting us tooth and nail in discovery requests to get that information. IF they had a legitimate claim, they would have produced it as exhibits to their own pleading. Instead they are trying to hide those facts and including the flow of funds starting from before the actual origination of the loan. Too many cases, we see Ginny or Fannie report ownership of a loan that has not even closed in the false sense , much less in the true sense where the borrower and lender are properly disclosed and the terms of repayment are known by both sides of the transaction.

However, this wouldn’t be the first time that we were correct and the judge did not follow the law.  It is for that reason that I have largely abandoned the argument about contribution and I have now started writing about the fact that if the assignment of the note was in fact an assignment of the obligation, the assignment was merely one element out of three required for a valid contract (offer, acceptance, consideration).   And while many people have now picked up on the fact that the trustee of the pool did not have the right to accept a loan which has been declared in default years after the cut off period expired, I have been going a little further suggesting that the state and federal judges are making decisions adverse to the investors by forcing them to accept a loan that they obviously wanted to avoid, and the acceptance of which would violate the terms under which they loaned the money.  

This is a tricky area to navigate because on the one hand you’re saying that the loan never made it into the pool but on the other you’re saying maybe it did get into the pool but if the only vehicle by which it made entry into the pool was a judicial order declaring in effect that the loan became part of the pool and therefore the entity representing the pool had a right to foreclosure, that order would constitute a judicial determination of the rights of investors who did not receive any notice of the proceeding nor any opportunity to be represented or heard before such an order could be entered.  These are difficult waters to navigate.  

Considerable thought should be given as to which strategy will be used.  There is an old adage that basically says you have approximately 30 seconds to get the judge’s attention (at most) and perhaps 5 minutes to make your point (at most).  Thus if you’re going to proceed along any of the tracks stated or discussed in this email you must be prepared to be limited to a ruling on that track alone.  If you have 20 other tracks that you think have validity, then make sure they are in the record by way of pleadings, affidavits and a memorandum of law before the hearing in which you raise one of the above defenses.  It is a good idea to bring up defenses for which the other side is unprepared and which the judge has not yet heard.  It diminishes the appearance of making a decision that will affect 5 million other mortgages.  Ultimately though the decision is between you and your lawyer.

This article was prompted by a very reasoned argument presented by CA Attorney Dan Hanacek:

Even In the Event the Court Finds the “Assignment” Valid, the Assigning of the Note to a Co-Obligor Makes it Functus Officio

“It has long been established in California that the assignment of a joint and several debt to one of the co-obligors extinguishes that debt.” (Gordon v. Wansey (1862) 21 Cal. 77, 79.) “The assignment amounts to payment and consequently the evidence of that debt, i.e., the note or judgment, becomes functus officio (of no further effect)”-and precludes any further action on the note itself. Any action would not be on the note itself, but rather one for contribution. (Id.; Quality Wash Group V, Ltd. V. Hallak (1996) 50 Cal.App.4th 1687, 1700; Civ. Code §1432.) In the instant case, even if the alleged assignment is seen to be valid, then a co-obligor was assigned the note and the debt has been extinguished.

Note: the trustee of the securitized trust is a co-obligor.

Note: Fannie Mae, Freddie Mac and Ginnie Mae are co-obligors.

Note: the servicer is almost always a co-obligor.

Questions for Neil:

Have they extinguished this debt by endorsing it and/or assigning it to the transaction parties?

Does this only apply in CA?  I cannot believe that this would be the case.

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Bankers Using Foreclosure Judges to Force Investors into Bad Deals

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“Foreclosure judges don’t realize that they are entering orders and judgments on cases that are not in front of them or in which they have any jurisdiction. Foreclosure Judges are forcing bad loans down the throat of investors when the investor signed an agreement (PSA and prospectus) excluding that from happening. The problem is that most lawyers and pro se litigants don’t know enough to make that argument. The investor bought exclusively “good” loans. Foreclosure judges are shoving bad loans down their throats without notice or an opportunity to be heard. This is a classic case of necessary and indispensable parties being ignored.”

— Neil F Garfield, www.livinglies.me

Editor’s Comment:  About three times per week, something occurs to me about what is going on here and then I figure it out or get the information from someone else. The layers of the onion are endless. But this one is a showstopper. When I started blogging in October 2007 I thought the issue of necessary and indispensable parties John Does 1-1000 and Jane Roes 1-100 were important enough that it would slow if not stop foreclosures. The Does are the pension funds and other investors who thought that they were buying mortgage bonds and the Roes were the dozens of intermediaries in the securitization chain.

Of course we know that the Does never got their bond in most cases, and even if they did they received it issued from a “REMIC” vehicle that wasn’t a REMIC and which did not have any money or bonds before, during or after the transaction. Instead of following the requirements of the Prospectus and Pooling and Servicing Agreement, the investment banker ignored the securitization documents (i.e., the agreement that induced the investor to advance the funds on a forward sale — i.e., sale of something the investment bank didn’t have yet). The money went from the investor into a Superfund escrow account. It is unclear as to whether the gigantic fees were taken out before or after the money went into the Superfund (my guess is that it was before). But one thing is clear — the partnership with other investors far larger than anything disclosed to the investors because the escrow account was from all investors and not for investors in each REMIC, which existed only in the imagination of the CDO manager at the investment bank that cooked this up.

We now know that in all but a scant few cases, the loan was (1) not documented properly in that it identified not the REMIC or the investor as the lender and creditor, but rather a naked straw-man that was a thinly capitalized or bankruptcy remote relationship and (2) the loan that was described in the documentation that the homeowner signed never occurred. The third thing, and the one I wish to elaborate on today, is that even if the note and mortgage were valid (i.e., referred to any actual transaction in which money exchanged hands between the parties to the agreements and documents that borrower signed) they never made it into the “pools” a/k/a REMICs, a/k/a Special Purpose Vehicle (SPV), a/k/a/ Trust (of which there were none according to my research).

The fact that the loan never made it into the pool is what caused all the robo-signing, fabrication of documents, fraudulent documents, forgeries, misrepresentations and corruption of both the title system and the court system. Because if the loan never made it into the pool, the investment banker and all the intermediaries that were used were depending upon a transaction that never took place at the level of the investor, to wit: the loan was not in the pool, the originator didn’t lend the money and therefore was not the lender, and the “mortgage” or “Deed of trust” was useless because it was the tail of a tiger that did not exist — an enforceable note. This left the pools empty and the loan from the Superfund of thousands of investors who thought they were in separate REMICS (b) subject to nothing more than a huge general partnership agreement.

But that left the note and mortgage unenforceable because it should have (a) disclosed the lender and (b) disclosed the terms of the loan known to the lender and the terms of the loan known to the borrower. They didn’t match. The answer was that those loans HAD to be in those pools and Judges HAD to be convinced that this was the case, so we ended up with all those assignments, allonges, endorsements, forgeries, improper notarizations etc. Most Judges were astute enough to understand that the documents were fabricated. But they felt that since the loan was valid, the note was real, the mortgage was enforceable, the issues of where the loan was amounted to internal bookkeeping and they were not about to deliver to borrowers a “free house.”  In a nutshell, most Judges feel that they are not going to let the borrower off scott free just because a document was created or executed improperly.

What Judges did not realize is that they were adjudicating the rights of persons who were not in the room, not in the building, and in fact did not even know the city in which these proceedings were being prosecuted much less the fact that the proceedings even existed. The entry of an order presuming or stating that the loan was in fact in the pool was the Judge’s stamp of approval on a major breach of the Prospectus and pooling and servicing agreement. It forced bad loans down the throat of the investors when their agreement with the investment banker was quite the contrary. In the agreements the cut-off was 90 days after closing and required a fully performing mortgage that was originated utilizing industry standards for due diligence and underwriting. None of those things happened. And each time a Judge enters an order in favor of for example U.S. Bank, as trustee for JP Morgan Chase Bank Trust 1234, the Judge is adjudicating the essential deal between the investor and the investment banker, forcing the investor to accept bad loans at the wrong time.

Forcing the investors to accept bad loans into their pools, probably to the exclusion of the good loans, created a pot of s–t instead of a pot of gold. It isn’t that the investor was not owed money from the investment banker and that the money from the investment banker was supposed to come from borrowers. It is that the pool of actual money sidestepped the REMIC document structure and created a huge general partnership, the governance of which is unknown.

By sidestepping the securitization document structure and the agreements, terms, conditions and provisions therein, the investment banker was able, for his own purposes, to claim ownership of the loans for as long as it took to buy insurance making the investment banker the insured and payee. But the fact is that the investment banker was at all times in an agent/fiduciary relationship with the investor and ALL the proceeds of ALL insurance, Credit Default Swaps, guarantees, and credit enhancements were required to be applied FIRST to the obligation to the investor. In turn the investor, as the real creditor, would have reduced the amount due from the borrower on each residential loan. This means that the accounting from the Master Servicer is essential to knowing the actual amount due, if any, under the original transaction between the borrower and the investors.

Maybe “management” would now be construed as a committee of “trustees” for the REMICs each of whom was given the right to manage at the beginning of the PSA and prospectus and then saw it taken away as one reads further and further into the securitization documents. But regardless of who or what controls the management of the pool or general partnership (majority of partners is my guess) they must be disclosed and they must be represented in each and every foreclosure and Trustees on deeds of trust are creating huge liability for themselves by accepting assignments of bad loans after the cut-off date as evidence of ownership fo the loan. The REMIC lacked the authority to accept the bad loan and it lacked the authority to accept a loan that was assigned after the cutoff date.

Based upon the above, if this isn’t a case where necessary and indispensable parties is the key issue, I do not know of one — and I won the book award in procedure when I was in law school besides practicing trial law for over 30 years.

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TITLE AND SECURITIZATION ANALYSIS

I HAD A QUESTION FROM ONE OF OUR BLOG READER-CUSTOMERS AND I REALIZED EVERYONE SHOULD SEE THE ANSWER.

Chris: Your question is a smart one. Here is the deal. We provide the search capacity and if you want a complete analysis and accounting you’ll need to retain someone for that. we have that available if you want us to do it.

But the main point I want to stress hear is that the subject of securitization was the receivables and not the obligation, note or mortgage from the borrower.

  • The receivables consist of the proceeds of payment from MULTIPLE sources as you have no doubt seen on the blog.

    The borrower signs a note that is never actually given to the investor.

  • The investor receives a mortgage bond or actually evidence of a mortgage bond that was never disclosed, seen or signed by the borrower.

  • In practice, the obligation, note and mortgage (Deed of Trust) are never actually transmitted, transferred, assigned or indorsed to the lender.

  • It is all an illusion. Any transfer is from one intermediary pretender lender to another intermediary pretender lender. The actual loan transaction never actually reaches the loan pool — but in every foreclosure it is claimed to be there.

  • The legal issue that ensues is whether the originating lender still is the only lender of record without any money owed to it (which means the loan is unsecured but does NOT mean there is no obligation) OR whether the pretender lender can convince the Judge that despite the lack of legal proof and legal requirements, the loan should be treated as equitably in the pool even if it is not legally in the pool.
  • The problem is of course there is no such thing. And in Missouri when they tried to make the legal argument, it was soundly rejected and they never tried it again.
  • But they don’t have to try again because Judges are still confused by the legal effect of securitization. In their confusion they are treating the loan as part of the pool even though they have no actual evidence (because none exists) that the loan ever made it into the pool through normal assignments, indorsements etc..
  • As far as they are concerned, the borrower signed a note, owes the money, didn’t pay it and the case is closed.
  • The idea that that there are MULTIPLE channels of payment between the borrower and the real lender and that therefore the documents in the middle tell the real story is not one they really want to hear — it raises a complexity they don’t wish to deal with.

    It also raises a political hot potato. Any one of these cases if they were considered alone and not in the context of millions of others would be decided in favor of the borrower (in my opinion). Judges are loathe to issue an order that in essence turns the entire mortgage mess on its head in favor of borrowers — which really only means that the real parties in interest must come forward and the real parties in interests must strike a deal in light of the obvious defects in the securitization and title process.

  • So we are presently stuck between a majority of Judges who don’t want to apply the normal rules of evidence, pleadings and substantive law and the minority of Judges who see all too clearly the coming title cliff we are heading toward.
  • What this means for you is that you must realize that the title part of your search is the ground level search which shows the breaks in the chain and the securitization portion of your search shows the REST of the terms that were not contained in the note, describes but does not name the real lender, and adds co-obligors who are providing cover for the bond the the investor thinks he bought with virtually no risk.
  • Without the liability of third parties, the investor would not have entered the deal. Just as with knowledge that the home appraisal was falsely inflated neither the borrower nor the lender would have entered the deal and all that money, billions in bonuses and billions in “profits” would never have been recorded.
  • THIS IS WHY YOU MUST POUND AND POUND AND POUND ON THE FACT THAT THIS WAS A SINGLE TRANSACTION BETWEEN BORROWER AND ACTUAL LENDER AND THAT THE ORIGINATING LENDER AND EVERYONE ELSE WERE INTERMEDIARIES IN THE DEAL. THE REQUIREMENTS OF LAW IN PERFECTING A LIEN WERE NOT PRESENT.

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Discovery Issues Revealed: PRINCIPAL REDUCTION IS A RIGHT NOT A GIFT – CA Class Action V BOA on TARP funds

REGISTER NOW FOR DISCOVERY AND MOTION PRACTICE WORKSHOP MAY 23-24

PRINCIPAL REDUCTION IS A RIGHT NOT A GIFT. IF THE OBLIGATION HAS BEEN PAID BY THIRD PARTIES, THEN THE OBLIGATION HAS ALREADY BEEN REDUCED. THE ONLY FUNCTION REMAINING IS TO DO THE ACCOUNTING.

There should be no doubt in your mind now that virtually none of the foreclosures processed, initiated or threatened so far have been anything other than wrong. The payments from third parties clearly reduced the principal due, might be allocable to payments that were due (thus eliminating even the delinquency status) and thus eviscerates the amount demanded by the notice of delinquency or notice of default.

Thus in addition to the fact that the wrong party is pursuing foreclosure, they are seeking to enforce an obligation that does not exist.”

Editor’s Note: This is what we cover in the upcoming workshop. Connect the dots. Recent events point out, perhaps better than I have so far, why you should press your demands for discovery. In particular identification of the creditor, the recipients of third party payments, and accounting for ALL financial transactions that refer to or are allocable to a specific pool in which your specific loan is claimed to have been pledged or transferred for sale to investors in pieces.

This lawsuit seeks to force BOA to allocate TARP funds to the pools that were referenced when TARP funds were paid. In turn, they want the money allocated to individual loans in those pools on a pro rata basis. It is simple. You can’t pick up one end of the stick without picking up the other end too.

The loans were packaged into pools that were then “processed” into multiple SPV pools, shares of which were sold to investors. Those shares “derived” their value from the loans. TARP paid 100 cents on the dollar for those shares. Thus the TARP payments were received based upon an allocation that “derived” its value from the loans. The only possible conclusion is to allocate the funds to the loans.

But that is only part of the story. TARP, TALF and other deals on a list that included insurance, and credit default swaps (synthetic derivatives) also made such payments. Those should also be allocated to the loans. Instead, BOA wants to keep the payments without applying the payments to the loans. In simple terms they their TARP and then still be able to keep eating, even though the “cake” has been paid off (consumed) by third party payments.

Now that the Goldman Sachs SEC lawsuit has been revealed, I can point out that there are other undisclosed fees, profits, and advances made that are being retained by the intermediaries in the securitization and servicing chains that should also be allocated to the loans, some of which are ALSO (as previously mentioned in recent articles posted here) subject to claims from the SEC on behalf of the investors who went “long” (i.e., who advanced money and bought these derivative shares) based upon outright lies, deception and an interstate and intercontinental scheme of fraud.

In plain language, the significance of this accounting is that if you get it, you will have proof beyond any doubt that the notice of default and notice of sale, the foreclosure suit and the demands from the servicer were all at best premature and more likely fraudulent in that they KNEW they had received payments that had paid all or part of the borrower’s obligation and which should have been allocated to the benefit of the homeowner.

There should be no doubt in your mind now that virtually none of the foreclosures processed, initiated or threatened so far have been anything other than wrong. The payments from third parties clearly reduced the principal due, might be allocable to payments that were due (thus eliminating even the delinquency status) and thus eviscerates the amount demanded by the notice of delinquency or notice of default.

Thus in addition to the fact that the wrong party is pursuing foreclosure, they are seeking to enforce an obligation that does not exist. This is a breach of the terms of the obligation as well as the pooling and service agreement.

INVESTORS TAKE NOTE: IF THE FUNDS HAD BEEN PROPERLY ALLOCATED THE LOANS WOULD STILL BE CLASSIFIED AS PERFORMING AND THE VALUE OF YOUR INVESTMENT WAS MUCH HIGHER THAN REPORTED BY THE INVESTMENT BANK. YOU TOOK A LOSS WHILE THE INVESTMENT BANK TOOK THE MONEY. THE FORECLOSURES THAT FURTHER REDUCED THE VALUE OF THE COLLATERAL WERE ILLUSORY SCHEMES CONCOCTED TO DEFLECT YOUR ATTENTION FROM THE FLOW OF FUNDS. THUS YOU TOO WERE SCREWED OVER MULTIPLE TIMES. JOINING WITH THE BORROWERS, YOU CAN RECOVER MORE OF YOUR INVESTMENT AND THEY CAN RECOVER THEIR EQUITY OR AT LEAST THE RIGHTS TO THEIR HOME.

On Thu, Apr 15, 2010 at 9:35 PM, sal danna <saldanna@gmail.com> wrote:

California homeowners file class action suit against Bank of America for withholding TARP funds

Thu, 2010-04-08 11:43 — NationalMortgag…

California homeowners have filed a class action lawsuit against Bank of America claiming the lending giant is intentionally withholding government funds intended to save homeowners from foreclosure, announced the firm of Hagens Berman Sobol Shapiro. The case, filed in United States District Court in Northern California, claims that Bank of America systematically slows or thwarts California homeowners’ access to Troubled Asset Relief Program (TARP) funds by ignoring homeowners’ requests to make reasonable mortgage adjustments or other alternative solutions that would prevent homes from being foreclosed.

“We intend to show that Bank of America is acting contrary to the intent and spirit of the TARP program, and is doing so out of financial self interest,” said Steve Berman, managing partner of Hagens Berman Sobol Shapiro.

Bank of America accepted $25 billion in government bailout money financed by taxpayer dollars earmarked to help struggling homeowners avoid foreclosure. One in eight mortgages in the United State is currently in foreclosure or default. Bank of America, like other TARP-funded financial institutions, is obligated to offer alternatives to foreclosure and permanently reduce mortgage payments for eligible borrowers struck by financial hardship but, according to the lawsuits, hasn’t lived up to its obligation.

According to the U.S. Treasury Department, Bank of America services more than one million mortgages that qualify for financial relief, but have granted only 12,761 of them permanent modification. Furthermore, California has one of the highest foreclosure rates in the nation for 2009 with 632,573 properties currently pending foreclosure, according to the California lawsuit.

“We contend that Bank of America has made an affirmative decision to slow the loan modification process for reasons that are solely in the bank’s financial interests,” Berman said.

The complaints note that part of Bank of America’s income is based on loans it services for other investors, fees that will drop as loan modifications are approved. The complaints also note that Bank of America would need to repurchase loans it services but has sold to other investors before it could make modifications, a cumbersome process. According to the TARP regulations, banks must gather information from the homeowner, and offer a revised three-month payment plan for the borrower. If the homeowner makes all three payments under the trial plan, and provides the necessary documentation, the lender must offer a permanent modification.

Named plaintiffs and California residents Suzanne and Greg Bayramian were forced to foreclose their home after several failed attempts to make new arrangements with Bank of America that would reduce their monthly loan payments. According to the California complaint, Bank of America deferred Bayramian’s mortgage payments for three months but failed to tell them that they would not qualify for a loan modification until 12 consecutive payments. Months later, Bank of America came back to the Bayramian family and said would arrange for a loan modification under the TARP home loan program but never followed through. The bank also refused to cooperate to a short-sale agreement saying they would go after Bayramian for the outstanding amount.

“Bank of America came up with every excuse to defer the Bayramian family from a home loan modification which forced them into foreclosure,” said Berman. “And we know from our investigation this isn’t an isolated incident.”

The lawsuits charge that Bank of America intentionally postpones homeowners’ requests to modify mortgages, depriving borrowers of federal bailout funds that could save them from foreclosure. The bank ends up reaping the financial benefits provided by taxpayer dollars financing TARP-funds and also collects higher fees and interest rates associated with stressed home loans.

For more information, visit www.hbsslaw.com.

NPR Interview with Author Lewis Reveals Profits in Bad Loans.

Bear in mind now, that underneath this all are subprime mortgage loans and pool of subprime mortgage loans in which only eight percent have to go bad for the whole CDO to be worth zero.

NPR Interveiw with Lewis Author

Submitted by Ron Ryan, Esq. (Tucson) with the following comment:

The story broke on 60 minutes last week and on NPR Tuesday about people getting filthy rich from buying multiple CDS, which was a large cause of the economy almost sending the world into Apocalypse.  While so far they got that part right, they are selling it like there were just some smart people that noticed that the the pools were doomed to “fail,” meaning there would be a moment when the trigger defining failure would surely hit (8% default rate), what they are missing is that this was pre-planned as part of a grand scheme.

Editor’s Note: I agree with Ron. These people were obviously not stupid. They walked away with trillions. The task of homeowners, litigators, forensic analysts, and experts is to explain the counter-intuitive nature of this scheme — to engineer as large a pool of cash or cash equivalents in exchange for zero value; that means by definition creating inherently defective loan products and selling them to unsophisticated homeowners who were not in a position to know the difference.

In economics it is called asymmetric access to information. On the other end, the investors were led to purchase inherently defective bonds thinking they were backed by mortgage loans, which collectively created a low-risk pool.

Only the middle-men knew the truth. So only the middlemen purchased credit default swaps betting against the very loans they created and against the securities they sold. And only the middlemen presented claims that were satisfied by the Federal bailout under the false representation that THEY were holding toxic assets when in fact it was the the homeowners and investors that were holding toxic assets.


Walking Away and Keeping Your House: Strategic Default Strategy

A provocative paper by Brent White, a law professor at the University of Arizona, makes the case that borrowers are actually suffering from a “norm asymmetry.” In other words, they think they are obligated to repay their loans even if it is not in their financial interest to do so, while their lenders are free to do whatever maximizes profits. It’s as if borrowers are playing in a poker game in which they are the only ones who think bluffing is unethical.

borrowers in nonrecourse states pay extra for the right to default without recourse. In a report prepared for the Department of Housing and Urban Development, Susan Woodward, an economist, estimated that home buyers in such states paid an extra $800 in closing costs for each $100,000 they borrowed. These fees are not made explicit to the borrower, but if they were, more people might be willing to default, figuring that they had paid for the right to do so.

Editor’s Note: Here is a strategy straight out of the tax shelter playbook that could result in widespread relief for homeowners underwater. It comes from a high-finance tax shelter expert who shall remain unnamed. He and a group of other people with real money are thinking of establishing a clearinghouse for these transactions.The author of this strategy ranks very high in finance and law but he cautions, as do I, that you should utilize the services of only the most sophisticated property lawyers licensed to do business in appropriate jurisdictions before initiating any action under this delightful reversal of fortune, restoring equity, possession and clearing title to the millions of properties that could fall under the rubric of his plan. He even invites others to compete with his group, starting their own clearing houses (like a dating service) since he obviously could not handle all the volume.

The bottom line is that it leaves you in your home paying low rent on a long-term lease, forces the pretender lender (non-creditor) to file a judicial foreclosure, and throws a monkey wrench into the current  foreclosure scheme. I am not endorsing it, just reporting it. This is not legal advice. It is for information and entertainment purposes.

  1. John Smith and Mary Jones each own homes that are underwater. Maybe they live near each other, maybe they don’t. To make it simple let’s assume they are in the same subdivision in the same model house and each owes $500,000 on a house that is now worth $250,000. Their payments for amortization and interest are currently $3500 per month. The likelihood that their homes will ever be worth more than the principal due on the mortgage is zero.
  2. John and Mary are both up to date on their payments but considering just walking away because they have no stake in the outcome. Rents for comparable homes in their neighborhoods are a fraction of what they are paying monthly now on a mortgage based upon a false appraisal value.
  3. In those states where mortgages are officially or unofficially “non-recourse” they can’t be sued for the loss that the bank takes on repossession, sale or foreclosure.
  4. John and Mary find out about each other and enter into the following deal:
  5. First, John and Mary enter into 15 year lease wherein Mary takes possession of John’s house and pays $1,000 per month in a net-net lease (Tenant pays all expenses — taxes, insurance, maintenance and utilities). There are some laws around (Federal and State) that state that even if the house is foreclosed, the “Buyer” must honor the terms of the lease. But even in those jurisdictions where the lease itself is subject to being foreclosed, John and Mary agree to RECORD the lease along with an option to purchase the house for $250,000 (fair market value) wherein the seller takes a note for the balance at a 3% interest rate amortized over 30 years.
  6. So now Mary can have possession of the John house under a lease like any tenant. And she has an option to purchase the house for $250,000. And it’s all recorded just like the state’s recording statutes say you should.
  7. Second, John and Mary enter into a 15 year lease wherein John takes possession of Mary’s house and pays $1,000 per month in a net-net lease (Tenant pays all expenses — taxes, insurance, maintenance and utilities). There are some laws around (Federal and State) that state that even if the house is foreclosed, the “Buyer” must honor the terms of the lease. But even in those jurisdictions where the lease itself is subject to being foreclosed, John and Mary agree to RECORD the lease along with an option to purchase the house for $250,000 (fair market value) wherein the seller takes a note for the balance at a 3% interest rate amortized over 30 years.
  8. So now John can have possession of the Mary house under a lease like any tenant. And he has an option to purchase the house for $250,000. And it’s all recorded just like the state’s recording statutes say you should.
  9. Third, John and Mary enter into a sublease (expressly permitted under the terms of the original lease) where in John (or his wife or other relative) sublet the John house from Mary for $1100 per month.
  10. So John now has rights to possession of the John house under a sublease. In other words, he doesn’t move.
  11. Fourth John and Mary enter into a sublease (expressly permitted under the terms of the original lease) where in Mary (or her husband or other relative) sublet the Mary house from John for$1100 per month.
  12. So Mary now has rights to possession of the Mary house under a sublease. In other words, she doesn’t move.
  13. Fifth, under terms expressly allowed in the lease and sublease, John and Mary SWAP options to purchase and record that instrument as well as an assignment.
  14. So now John has an option to purchase the home he started with for $250,000 and Mary has an option to purchase the home she started with for $250,000 and both of them are now tenants in their own homes.
  15. Presumably under this plan eviction or unlawful detainer is not an option for anyone claiming to be a creditor, wanting to foreclose. Obviously you would want to consult with a very knowledgeable property lawyer licensed in the appropriate jurisdiction before launching this strategy.
  16. In the event of foreclosure, even in a non-judicial state, would be subject to rules requiring a judicial foreclosure which means the pretender lender would be required to plead and prove their status as creditor and their right to collect on the note and foreclose on the mortgage.
  17. Meanwhile, after all their documents are duly recorded, John and Mary start paying rent pursuant to their sublease and stop paying anyone on the mortgages.
  18. Any would-be forecloser would probably have a claim to collect that rent, but other than that they are stuck with a house where they got title (under dubious color of authority) without any right to possession (unless they prove a case to the contrary — the burden is on them).
  19. If you want to slip in a poison pill, you could put a provision in the lease that in the event of foreclosure or any proceedings that threaten dispossession or derogation of the lease rights, the lease converts from a net-net lease to a gross lease so the party getting title still gets the rent payment but now is required to pay the taxes, insurance and maintenance. Hence the commencement of foreclosure proceedings would trigger a negative cash flow for the would-be forecloser.
  20. To further poison the well, you could provide expressly in the lease that the failure of the landlord or successor to the Landlord to properly maintain tax, insurance and maintenance payments on the property is a material breach, triggering the right of the Tenant to withhold rent payments, and triggering a reduction of the option price from $250,000 to $125,000 with the same terms — tender of a  note, unsecured, for the full purchase price payable in equal monthly installments of interest and principal.

Not much difference than the chain of securitization is it?

January 24, 2010
Economic View New York Times

Underwater, but Will They Leave the Pool?

By RICHARD H. THALER

MUCH has been said about the high rate of home foreclosures, but the most interesting question may be this: Why is the mortgage default rate so low?

After all, millions of American homeowners are “underwater,” meaning that they owe more on their mortgages than their homes are worth. In Nevada, nearly two-thirds of homeowners are in this category. Yet most of them are dutifully continuing to pay their mortgages, despite substantial financial incentives for walking away from them.

A family that financed the entire purchase of a $600,000 home in 2006 could now find itself still owing most of that mortgage, even though the home is now worth only $300,000. The family could rent a similar home for much less than its monthly mortgage payment, saving thousands of dollars a year and hundreds of thousands over a decade.

Some homeowners may keep paying because they think it’s immoral to default. This view has been reinforced by government officials like former Treasury Secretary Henry M. Paulson Jr., who while in office said that anyone who walked away from a mortgage would be “simply a speculator — and one who is not honoring his obligation.” (The irony of a former investment banker denouncing speculation seems to have been lost on him.)

But does this really come down to a question of morality?

A provocative paper by Brent White, a law professor at the University of Arizona, makes the case that borrowers are actually suffering from a “norm asymmetry.” In other words, they think they are obligated to repay their loans even if it is not in their financial interest to do so, while their lenders are free to do whatever maximizes profits. It’s as if borrowers are playing in a poker game in which they are the only ones who think bluffing is unethical.

That norm might have been appropriate when the lender was the local banker. More commonly these days, however, the loan was initiated by an aggressive mortgage broker who maximized his fees at the expense of the borrower’s costs, while the debt was packaged and sold to investors who bought mortgage-backed securities in the hope of earning high returns, using models that predicted possible default rates.

The morality argument is especially weak in a state like California or Arizona, where mortgages are so-called nonrecourse loans. That means the mortgage is secured by the home itself; in a default, the lender has no claim on a borrower’s other possessions. Nonrecourse mortgages may be viewed as financial transactions in which the borrower has the explicit option of giving the lender the keys to the house and walking away. Under these circumstances, deciding whether to default might be no more controversial than deciding whether to claim insurance after your house burns down.

In fact, borrowers in nonrecourse states pay extra for the right to default without recourse. In a report prepared for the Department of Housing and Urban Development, Susan Woodward, an economist, estimated that home buyers in such states paid an extra $800 in closing costs for each $100,000 they borrowed. These fees are not made explicit to the borrower, but if they were, more people might be willing to default, figuring that they had paid for the right to do so.

Morality aside, there are other factors deterring “strategic defaults,” whether in recourse or nonrecourse states. These include the economic and emotional costs of giving up one’s home and moving, the perceived social stigma of defaulting, and a serious hit to a borrower’s credit rating. Still, if they added up these costs, many households might find them to be far less than the cost of paying off an underwater mortgage.

An important implication is that we could be facing another wave of foreclosures, spurred less by spells of unemployment and more by strategic thinking. Research shows that bankruptcies and foreclosures are “contagious.” People are less likely to think it’s immoral to walk away from their home if they know others who have done so. And if enough people do it, the stigma begins to erode.

A spurt of strategic defaults in a neighborhood might also reduce some other psychic costs. For example, defaulting is more attractive if I can rent a nearby house that is much like mine (whose owner has also defaulted) without taking my children away from their friends and their school.

So far, lenders have been reluctant to renegotiate mortgages, and government programs to stimulate renegotiation have not gained much traction.

Eric Posner, a law professor, and Luigi Zingales, an economist, both from the University of Chicago, have made an interesting suggestion: Any homeowner whose mortgage is underwater and who lives in a ZIP code where home prices have fallen at least 20 percent should be eligible for a loan modification. The bank would be required to reduce the mortgage by the average price reduction of homes in the neighborhood. In return, it would get 50 percent of the average gain in neighborhood prices — if there is one — when the house is eventually sold.

Because their homes would no longer be underwater, many people would no longer have a reason to default. And they would be motivated to maintain their homes because, if they later sold for more than the average price increase, they would keep all the extra profit.

Banks are unlikely to endorse this if they think people will keep paying off their mortgages. But if a new wave of foreclosures begins, the banks, too, would be better off under this plan. Rather than getting only the house’s foreclosure value, they would also get part of the eventual upside when the owner voluntarily sold the house.

This plan, which would require Congressional action, would not cost the government anything. It may not be perfect, but something like it may be necessary to head off a tsunami of strategic defaults.

Richard H. Thaler is a professor of economics and behavioral science at the Booth School of Business at the University of Chicago.

DISCOVERY TIPS: Thieves Guild: Bank of America Flubs Foreclosure, Seizes Wrong House — AGAIN

In virtually all cases you will not find a person with any relationship to the creditor, investor, or pool. This is because servicers, trustees and other firms in the securitization chain are proceeding on their own initiating foreclosures without instructions, knowledge or any documentation from the creditor, investor or pool.

Editor’s Note: Greyhawk is of course right. But his assumption that this doesn’t happen very often is wrong. We have seen Wells Fargo foreclose on the wrong house and Wells Fargo sue itself because it securitized the first mortgage into one pool and securitized the second mortgage into another pool.

The central importance of these articles is NOT that the banks are stupid or negligent. For the litigator, the central importance is EVIDENCE. Think about it. Work backwards from the event. What would need to be absolutely true for a firm to seize a house in which it had no interest? And how can that help you in other cases where the facts are not quite as clear?

Well, for one thing it would require a belief on the part of someone without any personal knowledge of their own (witness is not competent to testify, plausible deniability thus given a layer of support to other firms in the securitization chain) that they DO have an interest. How could that be? It could only be true if they were using documents and a chain of possession of documents that were either falsified (fabricated) or incomplete (in which case they made assumptions that turned out to be false).

In order for them to make those assumptions they would have had to receive the instructions OR the documents from a “Trusted Source”. Find out the identity for the trusted source and work your way back to the person who actually wrote the document, the person who actually signed the document and the person who gave instructions concerning the creation of that documentation along with any written evidence contemporaneous with those events.

In virtually all cases you will not find a person with any relationship to the creditor, investor, or pool. This is because servicers, trustees and other firms in the securitization chain are proceeding on their own initiating foreclosures without instructions, knowledge or any documentation from the creditor, investor or pool.

The reason we know that documents are falsified and that it is not only common practice but institutionalized pattern of conduct to fabricate documents is simple: when you have a  mortgage that is still “performing” (i.e., payments are up to date) and you ask for the the documentation, they don’t have it.

It is ONLY when the “loan” becomes delinquent, or in default or the notice of sale is issued or there is a challenge to the notice of sale that the documents finally show up. And usually it takes 6-12 weeks to get all the documents. Why? If they started foreclosure proceedings, they would have needed those documents ahead of time.

Trustees routinely pull up a title report before starting a non-judicial sale. You shoudl ask for that and anything else the Trustee had at the time of the initiation of foreclosure proceedings and the date of receipt or creation (under oath in interrogatories as to the date of creation of the documents).

Plaintiffs routinely pull up a title report before they file a foreclosure lawsuit in judicial states. Yet when you ask for them, it takes weeks to produce them and when finally produced and examined and investigated, you will often find that the signature was not authorized, the witnesses were in a different state, the notary was in a a different state from either the witnesses or the signatory or that the signatures are forged (i.e., don’t match the normal signatures of the people who signed.

As for the “negligence” theory, here is the problem for them. How could they think they have something when it doesn’t exist. ANSWER: Because it does exist (or WILL exist when they get around to it) and it was thus fabricated and forged.

But it also means something else when you drill down on these transactions. The pressure to get these loans moving in the securitization chain was immense. Many mortgage brokers or originators took the MORTGAGE APPLICATION, changed it and completed the rest of the closing documents by forgery or simply described the loan as completed when they sent data to the first pool, the aggregator, who then took that description and attached it as an exhibit to his “assignment” to the second pool, the SPV pool.

This is precisely what probably happened in the case reported below. Somebody signed a loan application, never went through with the closing but the loan description went up through the securitization chain and so the originators had to treat it as real even though it didn’t exist. And when its number came up, which was fast because if you don’t have any borrower it isn’t hard to imagine that the “loan” went into default immediately due to non-payment from the non-existent borrower, they foreclosed.

This is where April Charney’s “Produce the Note” fame has been misused and misapplied by those who do not understand the rules of evidence as she does. It’s not just the note she’s after. She wants the Plaintiff in Florida and other judicial states, to prove their case and not be permitted to fake it. Those who report negative results using her material have not mastered the basics, applied a non-existent magic bullet and falsely concluded that April and others are wrong. Those who are too lazy to learn the whole story should withhold their judgment. April Charney is right and what she teaches is correct.

Thieves Guild: Bank of America Flubs Foreclosure, Seizes Wrong House — AGAIN

Sun, 01/17/2010 – 14:46 |  GreyHawk

Hat-tip Consumerist.

For some, the slogan “practice makes perfect” is a motto of encouragement to try again, try harder and achieve perfection. For Bank of America, it should be taken as a strong hint to try and do the right thing the first time, not to try and find a better way to seize the wrong house and then attempt to abstain from any recognizable responsibility.

It should be, but it’s not.

BoA has apparently attempted to foreclose on the wrong house once again, according to an article by Laura Elder in the Galveston County Daily News:

GALVESTON — A West End property owner is suing Bank of America Corp., asserting its agents mistakenly seized a vacation house he owns free and clear, then changed the locks and shut the power off, resulting in the smelly spoiling of about 75 pounds of salmon and halibut from an Alaska fishing trip and other damages.

Agents working for Bank of America cut off power to the property by turning off the main switch in the lower part of the house, according to the lawsuit. They also changed the locks, so Schroit was unable to reach the switch to turn the power back on, according to the lawsuit.

“The property sustained water damage, potential mold contamination arising from the standing freezer residue, water, heat and high humidity conditions during the time the electrical power was off,” according to the lawsuit.

This marks the second time known this has known to occur. The Wheelright, Ky, homeowner in that incident filed a lawsuit against the bank for a similar incident: the locks were changed, and the bank refused to pay any damages other than replacement locks.

Accidents happen, but the bank’s responsibility for its actions doesn’t cease to exist simply because it’s a corporate behemoth. If an average person had “accidentally” shut off power to someone else’s home, changed the locks and caused untold damage, that person would be held liable in both criminal and civil court for the actions — amends and liability would most certainly be assigned.

Bank of America’s incapacity to deal responsibly with “errors” that significantly impact the public should be a wake-up call that the bank has other serious issues that need to be addressed, and that the rights and liberties of “corporate personhood” should not ever exceed the rights and liberties of real living people.

Yield Spread Premiums Prove Appraisal Fraud: The Key to Understanding The Mortgage Mess

OK I’m upping the ante here with some techno-speak. But I’ll try to make it as simple as possible.

YIELD is the percentage or dollar return on investment. For example,

  1. if you buy a bond for $1,000 and the interest rate is 5%, the yield is 5%.
  2. You are expecting to receive $50 per year in interest, which is your yield, assuming the bond is repaid in full when it is due.
  3. Another example is if you buy the same bond for $900.
  4. The interest rate is still 5% which means it still pays $50 per year in interest. But instead of investing $1,000, you have invested $900 and you are still getting $50 per year in interest.
  5. Your yield has increased because $50 is more than 5% of $900.
  6. In fact, it is a yield of 5.55% (yield base). You compute it by dividing the dollar amount of the interest paid ($50) by the dollar amount of the investment ($900). $50/$900=5.55%.
  7. But you are also getting repaid the full $1,000 when the bond comes due so adding to the money you get in interest is the gain you made on the bond (assuming you hold it to maturity). That difference in our example is $100, which is the difference between $900 and $1,000.
  8. If the bond is a ten year bond, for simplicity sake we will divide the extra $100 you are going to make by 10 years which means you will be getting an extra $10 per year.
  9. If you divide that extra $10 by your investment of $900 you are getting an average annual gain of 1.1%. Adding the base yield of 5.5% to the extra yield on gain of 1.1%, you get a total yield of 6.6%.
  10. The difference between the interest rate on the bond (5%) and the real yield to you as the investor (6.6%) is 1.6%, which could be expressed as a yield spread.

YIELD SPREAD can be expressed in either principal dollar terms or in interest rate. In the above example the dollar value of the yield spread is $100, being the difference between the par value of the bond (the amount that you hope will be repaid in full) and the amount you actually invested.

For decades there has been an illegal trick played between originating lenders using yield spread that resutled in an additional commission or kickback paid to the mortgage broker, commonly referred to as a yield spread premium. This occurs when the broker, with full consent of the “lender” steers the homeowner into a loan product that is more expensive than the one the homeowner would get from another more honest broker and lender.

  1. So for example, if you qualify for a 5% (interest) thirty year fixed loan, but the broker convinces you that a different loan is the only one you can qualify for or that the different loan is “better” than the other one, we shall say in our example that he steers you into a loan for 7%.
  2. The yield spread is 2% which may not sound like much, but it means everything to your loan broker and originating lender.
  3. The kickback to the broker is often several hundred or evens several thousand dollars — which is the very thing consumers were intended to be protected against in TILA (Truth in Lending Act).
  4. By not disclosing the yield spread premium he deprived you of the knowledge that you get get better terms elsewhere and he didn’t bother tell you that instead of working for you he was working for himself.
  5. Sometimes this is discovered right on the HUD statement disguised amongst the myriad of numbers that you didn’t understand when you signed the closing papers. They were required by federal law to disclose this to you and they are required to send you back the money that was paid as the kickback and for a variety of reasons it is grounds to rescind the transaction, making the Deed of Trust or mortgage unenforceable or void.
  6. The kickback is called a yield spread premium in the language of the industry. On this phase of the transaction we’ll call it Yield Spread Premium #1 or YSP1.

Now we get to the securitization part of the “loan.” If you will go back to the beginning of this article you will see that the investor was seeking and expecting $50 per year in interest. Buying the deal for $1,000 gives the investor the 5% YIELD he was seeking.

What Wall Street did was work backwards from the $50, and asked the following stupid and illegal question: What is the least amount of money we could fund in mortgages and still show the $50 in income? Answer: Anything we can get homeowners to sign.

  1. In our simple example, if they get a homeowner to sign a note calling for 10% interest, then all Wall Street needs to come up with is $500. Because 10% of $500 is $50 and $50 is what the investor was expecting.
  2. Wall Street sells the bond for $1,000 and funds $500 leaving themselves with a YIELD SPREAD PREMIUM of 5%+ or a value of $500, which is just as illegal as the kickbacks described above. We will call this YIELD SPREAD PREMIUM #2.
  3. They take $50 out of this $500 YIELD SPREAD PREMIUM and put into a reserve fund so they can pay the interest whether the homeowner pays or not. That is why they don’t want homeowners and investors to get together, because they will discover that the investor was paid the first year out of the reserve and payments from homeowners and then stopped receiving payment even though there was continued revenue.
  4. But Wall Street also had another problem. Since they had siphoned off $450 and probably sent most of it off-shore in an off balance sheet transaction (to a Structured Investment vehicle [SIV]). the time would eventually come when the investor would want his $1,000 repaid in full just like they said it would. That would leave them $450 short and possibly criminally liable for taking $1,000 to fund a $500 mortgage.
  5. So you can see that if the homeowner pays every cent owed, this is bad news to the people on Wall Street. They would be required to give the investor $1,000 when all they received from the homeowner was $500. Therefore they had to make certain that they (a) had a method of covering the difference that would give them “cover” when demand was made for the $1,000 and (b) a method of triggering that coverage.
  6. They also needed to make it as difficult as possible for investors to get together to fire the agent of the partnership (SPV) formed to issue the bonds they bought, which they did in the express terms of the bond indenture. So logistically they needed to keep investors away from investors and to keep investors away from borrowers so that none of them could compare notes.
  7. To cover the money they took from the investor they purchased insurance contracts (credit default swaps is one form). They wrote the terms themselves so that when a certain percentage of the pool failed they could declare it a failure and stop paying the ivnestors anything. The failure of the pool would trigger the insurance contracts.
  8. Under normal circumstances if you buy a car, you can insure it once and if it is wrecked you get the money for it. Imagine if you could buy insurance on it thirty times over at discounted rates. So you smash the car up and instead of receiving $30,000 for the car you receive $900,000. That is what Wall Street did with your mortgage. This was not risk taking much less excessive risk taking. It was fraud.
  9. So IF THE LOAN FAILED or was declared a failure as being part of a pool that went into failure, the insurance paid off.
  10. Hence the only way they could cover themselves for taking $1,000 on a $500 loan was by making absolutely certain the loan would fail.
  11. It wasn’t enough to use predatory loan tactics to trick people into loans that resulted in resets that were higher than their annual income. Wall Street still had the problem of people somehow making the payments anyway or getting bailed out by parents or even the government.
  12. They had to make sure the homeowner didn’t want the loan anymore and the only way to do that was to make certain that the homeowner would end up in a position wherein far more was owed on the loan than the house ever was worth and far more than it would ever be worth in the foreseeable future.
  13. They had to make sure that the federal government didn’t step in and help the homeowners, so they created a scheme wherein the federal government used all its resources to bail out Wall Street which had created the myth of losses on loan defaults for notes and mortgages they never owned. It would then become politically and economically impossible for the government to bail out the homeowners.
  14. This is why principal reduction is off the table. If these loans become performing again, insurance might not be triggered and the investors might demand the full $1,000. With insurance on the $500 loan they stand to collect $15,000. without it, they stand to lose $1000. There is no middle ground.
  15. So they needed a method to get the “market” to rise in values as much as possible to levels they were sure would be unsustainable. That was easy. They blacklisted the appraisers who wanted to practice honestly and paid appraisers, mortgage brokers and “originating lenders” (often owned by Wall Street firms) 3-10 times their normal fees to get these loans closed. They created “lenders” that were not banks or funding the loans that had no assets and then bankrupted them.
  16. With the demand for the AAA rated and insured MBS at an all-time high the demand went out to mortgage brokers not to bring them a certain number of mortgages but to bring in a certain dollar amount of obligations because Wall Street had already sold the bonds “forward” (meaning they didn’t have the underlying loans yet).
  17. With demand for loans exceeding the supply of houses, they successfully created the “market”conditions to inflate the market values on a broad scale thus giving them plausible deniability as to the appraisal fraud on any one particular house.

Whether you call it appraisal fraud or simply an undisclosed yield spread premium, the result is the same. That money is due back to the homeowner and there is a liability to the investors that they don’t know about. Why are the fund managers so timid about pressing the claims? Perhaps because they were not fooled.

Semantics: What a difference a word makes — Creditor — Trustee

Using the voluminous amount of feedback to Livinglies.wordpress.com, some observations about the words you use in litigation and in your correspondence, QWR and DVL might well be of some assistance.

  1. CREDITOR: It seems that using the word creditor has much more power than lender, pretender lender or even holder in due course. I’ve been told that the word “creditor” conveys a relationship of business vs. consumer that is a lot closer to the truth than “lender” which implies that the party who initiated the foreclosure was a bank and that the homeowner is trying to get out of a legitimate debt. A creditor is one who has advanced money, goods or services with the intention of getting it back through the payment of money, the delivery of services or goods or the return of what was extended by the creditor. The simple statement is that the Plaintiff (in judicial states) or party initiating foreclosure proceedings is NOT the creditor and that the obligation you signed for calls for you to pay money to the creditor, not the opposing party in your foreclosure. The party you are up against has advanced no funds, goods or services. Thus they are not the creditor. Ask them in open court if you need to do so. Yet they want the court to pretend that they are a creditor anyway — or phrased another way, they want to assert that they have the right to collect on the obligation and foreclose on the home even though they are NOT the creditor. If their position is that they are foreclosing on behalf of the creditor, your answer would be that they must then disclose the creditor and name them as nominal plaintiffs, and show how they, as non-creditors, have the right to sue on behalf of the creditor. You must be given the chance to inquire in discovery whether this revelation is in fact the creditor and if so, you must be given a chance under Federal Law to attempt modification or mediation with the real decision-maker — i.e., the creditor. BEWARE: Attorney representations in or out of court are not evidence and should be objected to, pointing out that such representations raise an issue of fact that you deny and therefore you have a right to at least inquire through discovery the truth or falsehood of those representations.
  2. SPV MBS POOL: There are at least two pools of assets in every securitization scheme involving home mortgages — the aggregator’s pool which is made up of multiple assets usually all home mortgages, and the SPV or MBS Pool which receives an assignment from the aggregator. Don’t use the word “TRUST” to describe the second pool (the one that goes into the pool of assets that is then fractionally sold to buyers of certificates in which the ownership is conveyed in fractional interests and the promise to pay comes from the SPV in the form of a note or bond). Since the SPV or MBS pool is part of a REMIC transaction, it may be fairly assumed and argued that the equitable and legal owners of the assets in the pool are actually the certificate holders. In addition, the holders of a certificate are not described as beneficiaries, which would be the words associated with a trust. Since the SPV pool is a REMIC (Real Estate Mortgage Investment Conduit)under the Internal Revenue Code the reference to the existence of a trust is a reference in name only. In fact, there is no trust and there are no beneficiaries. The owners of the pool are quite clearly the certificate holders of mortgage backed securities (MBS). The pool is owned by those owners of the certificates not by some non-existent trust.
  3. AGENT With Limited Power of Attorney: Examination of the enabling documents in their totality clearly shows that the party named as “Trustee” is not a trustee and has no trustee powers. This was done intentionally by the investment banks so that they could avoid the implication of a fiduciary duty of a Trustee, which would have included telling the investors the truth about the crap they were buying. So you might want to say that (a) there is no trust, there is just a pool owned by investors. (b) You might want to say the Conduit status of the SPV (Special Purpose Vehicle) mandates that no actual transactions are occurring in the name of the REMIC (SPV) or else it loses its “tax-exempt” status, something that would be contrary to the interests of the investors. (c) you might want to say that therefore there is nothing in any trust, so even if it DID exist, it has no assets. And (d) you might want to say that the party designated as “TRUSTEE is in reality merely an agent for the certificate holders and that the indentures or enabling documents simply appoint the Agent to act with limited power of attorney under certain circumstances. Remember that neither the “TRUSTEE” nor the “TRUST” ever physically receives the notes, mortgages or assignment or any other pieces of paper except for the mortgage backed security. The paper is held elsewhere, which is where the investment banks actually had the opportunity to trade and bet on those securities, since they were the ones (directly or indirectly) who always controlled the possession and distribution of the actual notes, mortgages, assignments or other paper documents.

More to come

How to Search for the Trust or SPV Claiming Your Loan to Be Part of the SPV Pool

Thank You ABBY!

This post is from Abby. You can catch her email in comments where she originally posted. Just one word of caution: Just because the Trustee or officer of the SPV pool claims to have your loan doesn’t mean they really do. In fact they may only have a spreadsheet with no documentation, no original notes, no copies of the note, no copy of the deed, deed of trust or mortgage deed. They may have something they called an allonge and are treating it as though it was an assignment. The attempted transfer will almost ALWAYS violate the terms of the the SPV mortgage backed bonds and almost certainly violate the terms of the pooling and service agreement which is the document governing the pools created by aggregators before they were “sold” to the SPV. For one thing these documents usually state that the execution of the transfer documentation must be in recordable form and some of them even say they should be recorded. There are many other terms as well that conflict with each other and conflict with the actions of the intermediary participants in the securitization chain.

This is why this research is so important — but you should not be doing it to prove your case. You should be doing it to make them justify their position.

By delving deep in discovery or seeking an order compelling them to answer the QWR or DVL, they will eventually anger the judge by their stonewalling. Judicial anger is behind some of the most favorable decisions on record so far. The Judge gets there by recognizing that he/she has been duped and now the truth is coming out that these foreclosing parties are illegiitimate: they are not creditors, they are not lenders, they are not beneficiaries. They are simply interlopers seeking a windfall leaving the homeowners and the investor who advanced the funds in the dark. Shine the light and they scatter like roaches in the middle of the night.

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WANT TO SEARCH FOR THE TRUST YOUR LOAN WENT INTO??

Some steps below to use the SEC website to locate your loan and the trust it is in (mortgage pool).

This example uses WAMU (Washington Mutual).
Typically, Chase had JPMAC (JP Morgan Acquisition Corp) as the name of trusts.

http://www.sec.gov/

1. click on above link
2. if you have not yet created a free account and it asks you for login info…create the account
3. click on ’search’ in upper right corner
4. in the blue area, type in WAMU in the ‘company name’ field
5. click find companies at bottom
6. this brings up all the WAMU filings
7. search around for one that is the year you got your WAMU refi
8. it will be tedious, but you have to click on each CIK number (in red) over on left, and that will take you to a whole big list of more filings for that particular trust
9. go through and click on any ‘fwp’….read/scan to see if it lists any loan numbers….some will….check to see if your loan number is in it.
10. when you click on an ‘fwp’, which means free writing prospectus, you will see even more files…try to avoid looking at the ones that have .txt ending (the other, usually an html file, will have any infor you may need.

Note: you may want to also search around in years just prior to or just after your loan was done.

Some of these deals were set up even prior to you getting your loan.

Again, another place you may find the trust name is on your recorded docs, in MERS or on a Power of Attorney filed at the county recorder by the Securities trustee in your local county (if required by law).

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