Credit Charles Koppa (Poppa Koppa) with putting me onto this. He does GREAT work. poppakoppa@hotmail.com. He’s not lawyer but I trust him more than I do most lawyers to get to the bottom of things. He’s kind like one of those dogs that gets a bite of something and then NEVER lets go as the teeth go in deeper and deeper. I like that approach. The pretenders deserve it.
Credit Dan Edstrom with compiling everyone’s work including my own into securitization commentaries that work the material they way it should be done. Besides doing the Subscriber Members COMBO TITLE and Securitization Analysis, and the component parts, he also does a magnificent job of drilling down even further proving two points: (1) that while the borrower is dealing with a “Notice of Default” the Trust and investors are getting reports specifically stating that the same loan is performing — and they a re getting paid! and (2) that the distribution reports at the pool level are either on-going (Meaning the pool still exists) or they are no longer being sent (meaning the pool has been dissolved).
There are so many chairs and shells moving around I know it is difficult to keep them straight. That is exactly the point. The pretender lenders are going to keep them moving as long as they can because they are getting thousands of free houses every week through intimidation, fraud and deception of borrowers, court clerks, and Judges. But there are a few points in time at which the the chairs and shells stop moving or at least slow down. One of them is at the sale on the courthouse steps.
Charles Koppa pointed out the chicanery when he shared an ongoing study with me that showed changes in the bid price just hours before the sale and the resulting windfall to the new “buyer.” With pretenders swarming like flies around you-know-what it is no wonder that they find it easy to slip different entities in and out of the foreclosure process. But here is a simple proposition with far reaching implications regarding tracking the money, tracking the title and tracking the real obligation and the real creditor. ONLY THE CREDITOR CAN MAKE THE CREDIT BID. Anyone else must actually pay money.
Oops. It turns out that virtually no money is exchanging hands at these sales. And the Trustee is accepting a credit bid from an entity that wasn’t even named in the Notice of Default or the Trustee is issuing the deed to an entity that never made the credit bid or any bid at all. THAT TRANSACTION IS VOID ACCORDING TO MY READING OF THE STATUTES, WHETHER YOU ARE IN A JUDICIAL OR NON-JUDICIAL STATE. Maybe in some states it would be considered voidable but either way there is no “clear title” transferred and there is no successor in interest, which means that the homeowner still owns the home after the sale and can file a quiet title action against the originating lender and the party who received the title from the Trustee or Clerk, depending upon the procedure used. There is no defense as far as I can see and there might not even be an attempt at defending. Easier to let one slip by than risk a ruling that says these sales are all void.
But there is the rub. You can kick the can down the road for only so long. It doesn’t change the facts. NONE of the creditors filed foreclosure actions or sales in any of the securitized loan transactions. NONE of the creditors even knew the loan was not performing because they were being told quite the contrary by the very same group that declared the loan in default. ALL of the loans had co-obligors who in fact did pay but were not disclosed to either the borrower or the actual lender (investor). NONE of the notes were assigned at or near the time of the closing of the loans. NONE of the security interests were assigned at or near the time of the loan closing. NONE of the notes or security interests were endorsed or even transmitted to anyone after the loan closed unless the case went into litigation in which case they either “found” or re-created the documentation without admitting what they had done.
NONE OF THE OBLIGATIONS WERE COMPLETELY DESCRIBED IN THE NOTE, MORTGAGE OR DEED OF TRUST. AS PAUL HARVEY LIKED TO SAY, THE “REST OF THE STORY” WAS IN THE MORTGAGE BOND, PROSPECTUS, PSA, ASSIGNMENT AND ASSUMPTION, INSURANCE CONTRACTS, CREDIT DEFAULT SWAPS, TRANCHE STRUCTURING THAT THE LENDER RECEIVED. As I said at the beginning of this blog, this is all going to come down to two doctrines that are inescapably in favor of the homeowners and borrowers, including the ones who THINK they lost their homes: the single transaction doctrine and the step transaction doctrine. NONE of the actions of the securitization intermediaries would have any business reason to occur without the investment by the lender (investor) and the acceptance of the obligation by the borrower. That makes it ONE transaction between the the investor and the borrower no matter how complicated you WANT to describe it.
THE ONLY THING THAT WAS ACTUALLY MOVED WAS MONEY UNDER QUESTIONABLE CIRCUMSTANCES. A SPREADSHEET WAS USED AND SENT ELECTRONICALLY UPSTREAM TO TRANSMIT THE ALLEGED RECEIVABLES THAT WOULD BE CLAIMED AS PART OF POOLS THAT WERE NEVER OFFICIALLY FORMED. THE TERMS OF THAT TRANSACTION INCLUDED CO-OBLIGORS WITHOUT WHICH THE LENDERS WOULD NOT HAVE ADVANCED THE FUNDS FOR WORTHLESS (AND IN MANY CASES NON-EXISTENT) MORTGAGE BONDS.
THE WAY THEY DID IT WAS SIMPLE: GIVE THE BORROWER MONEY, HAVE THE BORROWER SIGN A NOTE TO A SHAM ENTITY AND GIVE THE LENDER EVIDENCE OF A BOND WHICH HAS ENTIRELY DIFFERENT TERMS FROM THE NOTE. THAT WAY THEY COULD USE PLAUSIBLE DENIABILITY AND PLAUSIBLE EXCUSES FOR NOT SHARING CONFIDENTIAL INFORMATION WITH THE THE ONLY TWO REAL PARTIES TO THE TRANSACTION — THE BORROWER AND THE LENDER.
So they wait until nobody is looking, for that moment that appears clerical (ministerial) in nature and then they slip in new entities again, thus cheating the lender (again), but leaving the homeowner with legal title. The homeowner walks from the deal thinking it is over. But in truth, it is only just beginning. Now we enter the NEXT chapter of the mortgage meltdown.
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Filed under: bubble, CASES, CORRUPTION, Eviction, evidence, expert witness, Fannie MAe, foreclosure, foreclosure mill, GTC | Honor, HERS, investment banking, Investor, Mortgage, Motions, Pleading, securities fraud, Servicer, STATUTES, trustee | Tagged: Auction, Charles Koppa, credit bid, Dan edstrom, real parties, securitization search, title, title search, void title | 11 Comments »
Canadian Buyers Beware!!!
Many Canadians and U.S. investors are causing a buying “spike” that is creating the illusion that the market has hit bottom in some places and even going up. This illusion is self-perpetuating until it becomes clear that the buyers of these properties have bought into problems that they never knew existed. This is not the 1980’s. In a previous post I wrote about the 14 things Canadian buyers should know before committing to purchase property in the U.S. See 14 Things Canadians Need to Know Before Buying
The list is enlarging practically daily. In addition to to the items mentioned in that article, Forbes and the Wall Street Journal are advising buyers to get a complete title record and NOT rely on the title company. We offer such a service here at Loan Specific title Search and Commentary.
Starting with bad title at the start (origination) of the “loan” that was foreclosed, the banks and servicers are compounding the problem with the complicity of the title companies. The title companies when confronted with a claim for payment or to fix the title are pointing to language buried deep within the title policy that specifically excludes title issues arising from securitization, assignment or sale of the loan into the secondary markets which means that practically no title policy covers the most common title problem to be encountered today.
The list now has been enlarged. The revelation that Libor (London InterBank Offered rate) has been manipulated since 2005 for the trading profit and pleasure of the banks reporting to the index managers, means that the “former” homeowner was not presented with the correct amount for redemption or reinstatement. This alone might be grounds to overturn the eviction, the foreclosure, the notice of default and probably even the substitution of trustee in non-judicial states. The result is that the buyer gets nothing — he is dispossessed from title, right to possession and his tenant, who might now sue him, is kicked out as the homeowner is restored to ownership and possession.
But wait there is more! The cities and counties are getting closer and closer to saving their cities by use of the power of eminent domain in which the city seizes the mortgage, pays the fair market value of what it is worth and potentially ends up with the property as well. These risks to buyers have not as yet been quantified but are present and should be accounted for in the negotiations between the buyer and the title insurance company.
And add to that the fact that because the first “foreclosure” was illegal, and based upon debt that was not reported properly or possibly even paid by third parties, the junior lienholders — homeowner associations, HELOC lenders, and others have the power to foreclose on both the new “owner/buyer” and the bank that sold them the property.
During the break of an interview I had this morning with Saint Johns 103.5 they told me a story about a mortgage fraud up there where it is cool. The mortgage broker and lawyer involved conspired to put the property in their own names. The surprised borrower is in the process of being evicted from a home in which he did nothing wrong.
This might seem off-track but it isn’t. The banks deliberately put in the name of a third party as lender when it wasn’t the lender. There was no financial transaction between the named lender and the named borrower. The funds for closing came from an undisclosed third party.
This creates an immediate title problem for the mortgage. It secures a transaction between the named lender and the named borrower that never occurred. The note, being unenforceable is thus secured by a mortgage that is equally worthless. With no actual financial transaction between THOSE PARTIES, the mortgage secures nothing. Any foreclosure on that mortgage also results in nothing. Any buyer from such a pretender lender is getting the same — nothing.
Some of these issues can be ascertained through title analysis, but many required a title and securitization analysis. See Title and Securitization Analysis and Commentary. The extra cost is a pittance compared to the cost of defending your investment or defending a lawsuit from a tenant who feels misled about your ability to rent the property.
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Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud | Tagged: LOAN SPECIFIC TITLE SEARCH AND ANALYSIS, Title and Securitization Analysis and Commentary, title search | 16 Comments »